-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PYv8zFGMlNo4aLQ6QthepFRURkekl7DVhB5kSZ3V46g/FAgySBfdkNVpPzQNJbjQ cQqlSkft9Mm2v6mBXk6iLg== 0001035704-99-000125.txt : 19990317 0001035704-99-000125.hdr.sgml : 19990317 ACCESSION NUMBER: 0001035704-99-000125 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 27 FILED AS OF DATE: 19990310 DATE AS OF CHANGE: 19990316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUEPASA COM INC CENTRAL INDEX KEY: 0001078099 STANDARD INDUSTRIAL CLASSIFICATION: IRS NUMBER: 860879433 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: SEC FILE NUMBER: 333-74201 FILM NUMBER: 99562229 BUSINESS ADDRESS: STREET 1: ONE ARIZONA CENTER STREET 2: 400 E VAN BUREN CITY: PHOENIX STATE: AZ ZIP: 85004 BUSINESS PHONE: 6027160100 MAIL ADDRESS: STREET 1: ONE ARIZONA CENTER STREET 2: 400 E VAN BUREN CITY: PHOENIX STATE: AZ ZIP: 85004 S-1 1 FORM S-1 1 As filed with the Securities and Exchange Commission on _____________, 1999. Registration No. 333-__________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 QUEPASA.COM, INC. (Exact Name of registrant as specified in charter) NEVADA 7379 86-0879433 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification Number)
ONE ARIZONA CENTER 400 EAST VAN BUREN, FOURTH FLOOR PHOENIX, ARIZONA 85004 (602) 716-0106 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) JEFFREY S. PETERSON, CHIEF EXECUTIVE OFFICER QUEPASA.COM, INC. ONE ARIZONA CENTER 400 EAST VAN BUREN, FOURTH FLOOR PHOENIX, ARIZONA 85004 (602) 716-0106 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of all communications to: Gary A. Agron Jeffrey M. Knetsch Joseph P. Richardson Law Office of Gary A. Agron Brownstein Hyatt Farber Bryan Cave LLP 5445 DTC Parkway & Strickland, P.C. Two North Central Ave., #22000 Suite 520 410 Seventeenth Street Phoenix, AZ 85004 Englewood, CO 80111 Denver , CO 80202 (602) 364-7000 (303) 770-7254 (303) 534-6335 (602) 364-7070 (Fax) (303) 770-7257 (Fax) (303) 623-1956 (Fax)
Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this registration statement. 2 If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. |_| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box: |_| [EXHIBIT INDEX LOCATED ON PAGE _____ OF THIS FILING] CALCULATION OF REGISTRATION FEE
========================================================================================================================= Title of Each Class Amount Proposed Proposed Maximum Amount of Securities To Be Maximum Price Aggregate of to be Registered Registered Per Share Offering Price(1) Registration Fee ========================================================================================================================= Common Stock, $.001 par value 4,600,000 $12.00 $ 55,200,000 $16,284 Shares(2) ------------- - - - - ------------------------------------------------------------------------------------------------------------------------- Common Stock underlying the 400,000 $14.40 $ 5,760,000 $1,699 Representative's Warrants(3) Shares - - - - ------------------------------------------------------------------------------------------------------------------------- Total..........................................................................................$17,983 =========================================================================================================================
(1) Estimated solely for computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act. (2) Includes the overallotment option granted to the representative of 600,000 shares. (3) Pursuant to Rule 416 of the Securities Act of 1933, as amended, the number of shares of common stock issuable upon exercise of the representative's warrants is subject to adjustment in accordance with the anti-dilution provisions of such warrants. THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. 3 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion dated March 10, 1999 4,000,000 Shares of Common Stock [QUEPASA!COM LOGO] Quepasa.com, inc. operates an Internet portal and search engine that provides users with information and interactive content centered around the Spanish language. The quepasa!com portal includes a search engine, free e-mail, Spanish-language news feeds and chat rooms. We are offering 4,000,000 shares of common stock on a firm commitment basis at between $10 and $12 per share. We intend to apply for listing of our common stock on the Nasdaq National Market under the symbol "PASA." See "Risk Factors" beginning on page 6 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Per Share Total --------- ----- Public offering price: $ $ ------------- ------------ Underwriting discounts and commissions: $ $ ------------- ------------ Proceeds to quepasa.com, inc.: $ $ ------------- ------------
We have granted the underwriters an option for 45 days to purchase up to an additional 600,000 shares at the same price indicated above solely to cover overallotments. PARADISE VALLEY SECURITIES, INC. The date of this prospectus is , 1999. 4 [INSIDE FRONT COVER PAGE: SCREENSHOT OF QUEPASA!COM HOMEPAGE IN SPANISH LANGUAGE] 5 PROSPECTUS SUMMARY You should read the following summary together with the more detailed information and financial statements and notes thereto appearing elsewhere in this prospectus. OUR BUSINESS Quepasa!com is a Spanish-language Internet portal and search engine. Search engines are located on "portal" Internet sites and provide Internet users with guides to on-line World Wide Web information and content. In addition to offering search engines, portals draw viewers to their Web sites by providing a one-stop destination for identifying, selecting and accessing resources, services, content and information on the Web. Quepasa!com provides users with information and interactive content centered around the Spanish language. Because the language preference of many assimilated U.S. Hispanics is English, we also offer our users the ability to access information and services in the English language at the preference of the user. The quepasa!com portal includes a search engine, free e-mail, Spanish-language news feeds and chat rooms. We are a development stage company having launched the quepasa!com Web site in November 1998 and have not yet generated any revenue. We anticipate generating revenue by charging fees to advertise products and services on our Web site. We believe that quepasa!com is the first portal completely dedicated to Spanish-language Internet users to offer its securities for sale to the public. OUR MARKET OPPORTUNITY Our objective is to establish quepasa!com as a leading worldwide Spanish-language portal and search engine, offering the quepasa!com brand to Spanish-speaking Internet users residing in the United States, Latin America and throughout the world. We believe that the Spanish-language Internet market is presently underserved. Dramatic growth is expected to continue in the U.S. Hispanic population as well as among U.S. Hispanic Internet users. With respect to the Spanish-language Internet market: o Spanish is the world's third most spoken language, used by approximately 400 million people; o Twenty-one countries consider Spanish their primary language; o The U.S. Hispanic population totals 29.6 million people (11% of the U.S. population) and is expected to grow to 31.4 million and 41.1 million (11.4% and 13.8% of the total U.S. population) in 2000 and 2010, respectively; 2 6 o Total U.S. Hispanic purchasing power exceeded $350 billion in 1997, representing an increase of approximately 66% since 1990; o Between 1994 and 1998, the percentage of U.S. Hispanic households that owned computers increased from 13% to 30% (approximately 130% growth in four years); and o Between 1994 and 1998, the percentage of U.S. Hispanic households with Internet access grew from 2% to 15% (approximately 650% growth in four years). OUR STRATEGY We are establishing quepasa!com as a leading Spanish-language portal and search engine by executing a business strategy that includes: o Developing quepasa!com globally as a leading brand associated with the Internet for Spanish-language users; o Significantly increasing user traffic by aggressively advertising on Spanish-language media outlets and on high-traffic Spanish-language Web sites; o Acquiring and developing additional content and features for the quepasa!com Web site; o Entering into strategic relationships with business partners who offer unique technological and distribution capabilities; and o Generating revenue from the sale of advertising and through electronic commerce. OUR STRATEGIC RELATIONSHIPS Our search engine is powered by Inktomi, a leader in search technology. We currently advertise our Web site principally through Heftel Broadcasting Company, the largest Spanish-language radio broadcaster in the U.S. and the Telemundo Network Group, a U.S. Spanish-language television network jointly owned by Sony and Liberty Media. In February 1999, we initiated a 60-day national radio campaign with Heftel and we are currently discussing with Heftel certain complimentary aspects of our businesses and an equity participation by Heftel. In March 1999, we launched a nationwide advertising campaign with Telemundo. Exodus and GTE, two of the largest connectivity companies on the Internet, provide high-speed connections between Inktomi, quepasa!com and our users. Our advertising sales are outsourced through 24/7 Media, Inc., a leading provider of Internet advertising solutions. 3 7 OUR HISTORY We were incorporated in Nevada in June 1997 under the name Internet Century, Inc. and changed our name in December 1998 to quepasa.com, inc. to reflect our decision to operate a Spanish-language portal and search engine. Our corporate offices are located at One Arizona Center, 400 East Van Buren, Fourth Floor, Phoenix, Arizona 85004, telephone number (602) 716-0106. THE OFFERING Securities Offered (1)........................... 4,000,000 shares of common stock. Common Stock Outstanding Prior to Offering....... 9,075,833 shares of common stock. Common Stock to be Outstanding After Offering(2)............................... 13,075,833 shares of common stock. Use of Proceeds.................................. Marketing and advertising expenses; development and acquisition costs for additional Web site content and features; general, administrative and other operating expenses; technology and equipment purchases; and working capital. See "Use of Proceeds." Proposed Nasdaq National Market Symbol................................... PASA Risk Factors..................................... Please read the Risk Factors section of this prospectus because investment in our common stock involves a high degree of risk and could result in a loss of your entire investment. See "Risk Factors."
(1) If the overallotment option granted to the underwriters is exercised in full, 600,000 additional shares of common stock will be sold, with estimated net proceeds to be received of $6,138,000 after deducting commissions and expenses. (2) Excludes an aggregate of 2,463,000 shares of common stock issuable upon exercise of outstanding stock options and 400,000 shares of common stock issuable upon exercise of purchase warrants to be issued to the representative of the underwriters upon completion of the offering. See "Management--1998 Stock Option Plan" and "Underwriting." 4 8 SUMMARY FINANCIAL INFORMATION The following tables set forth certain financial information which has been derived from our audited financial statements for the period from inception, June 25, 1997, through December 31, 1997, for the year ended December 31, 1998 and cumulative from inception, June 25, 1997, through December 31, 1998:
Period from inception Cumulative from inception Year Ended (June 25, 1997) though (June 25, 1997) through Statement of Operations Data December 31, 1998 December 31, 1997 December 31, 1998 - - - - ---------------------------- ----------------- ---------------------- ----------------------- Product and content development expenses $ 414,873 $ -- $ 414,873 Sales and marketing expenses 250,419 -- 250,419 Stock-based compensation expense 5,265,364 -- 5,265,364 General and administrative expenses 931,172 3,703 934,875 Net loss $ (6,909,768) $ (2,903) $ (6,912,671) ============= ============ ============== Weighted average number of shares outstanding 9,075,833 9,075,833 9,075,833 ============= ============ ============== Net loss per share, basic $ (.76) -- $ (.76) and diluted ============= ============ ==============
Balance Sheet Data December 31, 1998 Historical Pro Forma(1) As Adjusted(1)(2) - - - - ------------------ ---------- ------------ ----------------- Working capital $2,958,000 $4,958,000 $45,278,000 Total assets $4,861,000 $6,861,000 $47,181,000 Total liabilities $1,337,000 $3,337,000 $ 3,337,000 Stockholders' equity $3,524,000 $3,524,000 $43,844,000
(1) As adjusted to reflect an aggregate of $2,000,000 of loans to us from an affiliate in March 1999. See "Certain Transactions." (2) As adjusted to reflect the sale of 4,000,000 shares of common stock offered hereby at an assumed offering price of $11 per share and the application of the net proceeds. See "Use of Proceeds" and "Capitalization." Unless otherwise indicated, all information in this prospectus assumes no exercise of the overallotment option granted to the underwriters. 5 9 RISK FACTORS This offering involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information in this prospectus before deciding whether to invest in shares of our common stock. If any of these risks occur, our business, results of operations and financial condition could be adversely affected. This could cause the trading price of our common stock to decline, and you might lose part or all of your investment. This prospectus also contains certain forward-looking statements that are based on beliefs and assumptions of our management. Often you can recognize these statements because we use words such as "believe," "anticipate," "intend," "estimate" and "expect" in the statements. Our actual performance in 1999 and beyond could differ materially from the forward-looking statements contained in this prospectus. However, we are not obligated to release publicly any revisions to the forward-looking statements contained in this prospectus. WE HAVE AN EXTREMELY LIMITED OPERATING HISTORY, EXPECT FUTURE LOSSES AND MAY NEED MORE CAPITAL. We were incorporated in June 1997 and have generated no revenue from our quepasa!com Web site. Accordingly, we have no operating history upon which an investor can evaluate us, and our prospects are subject to the risks and uncertainties encountered by companies that operate in the new and rapidly evolving Internet market. 6 10 As of December 31, 1998, we had an accumulated deficit of approximately $6,913,000. Our limited operating history and the uncertainty of the Internet market in which we operate our business make any prediction of our future results of operations difficult or impossible. We expect to increase considerably our operating expenses in the future, particularly advertising expenses to develop and extend our quepasa!com brand and expenses relating to content and features that we intend to develop, purchase or otherwise acquire and add to our Web site. We do not expect that our revenue will cover those expenses. As a result, we will continue to incur significant losses and may need to raise additional capital. We cannot assure that we will be able to raise additional capital and we do not know what the terms of such capital raising would be. Any future sale of our equity securities would dilute the ownership and control of our stockholders and could be at prices substantially below the offering price. OUR TARGET AUDIENCE MAY NOT ACCEPT OUR PRODUCTS AND SERVICES Our quepasa!com Web site is targeted toward the worldwide Spanish-speaking population, but we have only recently begun to promote our site and we cannot give assurances that the population that we have targeted will accept our products and services or that we will attract sufficient numbers of repeat users to our Web site to generate any material revenues from the sale of advertising on our site or from electronic commerce through our site. Because the market for our products and services is new and evolving, it is difficult to predict the future growth rate, if any, and the size of the market we have targeted. If the market develops more slowly than we expect or becomes saturated with competitors, or if our products and services are not accepted by the market, our business will be materially and adversely affected. WE MAY BE UNABLE TO DEVELOP THE QUEPASA!COM BRAND We intend to spend a significant portion of the net proceeds from this offering to create and sustain a distinct brand loyalty among our targeted population of Internet users. We believe that establishing and maintaining the quepasa!com brand is of critical importance to our efforts to attract and expand our audience. We also believe that brand recognition will become more important due to the increasing number of Internet sites. Promotion and enhancement of the quepasa!com will depend largely on our success in providing high quality products and services and Web site content that is of interest to the worldwide Spanish-speaking population. We cannot assure that success. Even if our desired results are achieved, it is likely that we will expend significant additional amounts in further developing and maintaining brand loyalty. WEB-BASED ADVERTISING IS AN UNPROVEN SOURCE OF REVENUE Although we have not generated advertising revenue to date, we anticipate that we will derive primarily all of our revenue in the foreseeable future from the sale of advertisements on our Web pages. At the present time, Web advertisers generally enter into only short-term advertising contracts. Because Web site advertising is a new phenomenon, few advertisers have significant experience with the Web as an advertising medium. Consequently, many advertisers have not devoted a substantial portion of their advertising expenditures to Web-based advertising, and may not find Web-based advertising to be effective for promoting their products and services as compared to traditional print and 7 11 broadcast media. No standards have yet been widely accepted for the measurement of the effectiveness of Web-based advertising, and we can give no assurance that such standards will be developed or adopted sufficiently to sustain Web-based advertising as a significant advertising medium. We cannot give assurances that banner advertising, the predominant revenue producing mode of advertising currently used on the Web, will be accepted as an effective advertising medium or that we can effectively transition to any other forms of Web-based advertising, should they develop. Certain advertising filter software programs are available that limit or remove advertisments from an Internet user's desktop. Such software, if generally adopted by users, may materially and adversely affect Web-based advertising. These factors are largely outside our control. OUR BUSINESS DEPENDS UPON THIRD PARTIES Our business depends upon third parties, including providers of technology, infrastructure, content and features. We supplement our Web site directory listings with Web search results provided by Inktomi under a non-exclusive agreement. We depend upon Inktomi for ongoing maintenance and technical support to ensure accurate and rapid presentation of search results to users of our Web site. Termination of our relationship with Inktomi or Inktomi's failure to renew our agreement upon expiration could result in substantial additional costs to us in developing or replacing technology. We also rely upon Exodus and GTE for our Internet and e-mail connections. Any interruption in the Internet access provided by Exodus or GTE or any other provider of access could have a material adverse effect on our business. We license content, including technology and related databases, from third parties for portions of our quepasa!com Web site, including news from Reuters and UPI, weather from WeatherLabs and chat services from Volano. Any errors, delays or failures experienced in connection with these third party technologies and services could have a negative effect on our relationship with users of our Web site, could materially and adversely affect our brand and our business and could subject us to liability to third parties for business negligence such as defamation or libel. 8 12 We will try to enter into formal and informal relationships and arrangements with third parties with the goal of increasing traffic on our Web site. For example, other Internet portal sites have developed and continue to try to develop relationships with Web browser providers such as Netscape and Microsoft, leading Web sites, and computer manufacturers to feature their portal site as a default portal site or otherwise provide "click-through" features to the portal site. These arrangements are particularly helpful in directing new Internet users to particular sites. We have no such arrangements or relationships in place presently, and can offer no assurances that we will be successful in securing any such relationships or arrangements in the future. OUR BUSINESS IS SUBJECT TO THE RISK OF SYSTEM FAILURE The continued and uninterrupted performance of our hardware and software is critical to our reputation and our success in attracting traffic to our Web site. Users of our site and our services, such as our e-mail services, may become dissatisfied by system failures that may limit our Web site services. Sustained or repeated system failures could significantly reduce the traffic on our Web site and may impair our reputation and brand name. Our operations depend on our ability to protect our computer systems from damage from fire, power loss, water damage, telecommunications failures, vandalism and other malicious acts, and similar unexpected adverse events. We may not carry enough business interruption insurance to compensate for losses that may occur as a result of any of these events. We also depend upon Internet browsers and Internet service providers that provide users with access to the Internet and our Web site. Users may experience difficulties due to system failures unrelated to our systems. Any disruption in Internet access by Internet service providers and other third party access providers, or any failure of such providers to handle higher volumes of user traffic, could materially and adversely effect our business. WE NEED TO MANAGE OUR GROWTH. Our recent growth has placed, and is expected to continue to place, a significant strain on our managerial, operational and financial resources. Any inability by us to manage growth effectively could have a material adverse effect on our business. Several executive officers joined us recently. Our management team has worked together for only a short time, and none of our executive officers has extensive experience managing a rapidly growing business enterprise. OUR BUSINESS AND INDUSTRY ARE SUBJECT TO GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES There are presently few laws or regulations directly applicable to the Internet. It is possible that laws and regulations may be adopted with respect to the Internet, covering issues ranging from user privacy and defamation to taxation and intellectual property ownership. Any laws or regulations adopted in the future affecting the Internet could subject us to substantial liability. Such laws or regulations could also adversely affect the growth of the Internet generally, and decrease the acceptance of the Internet as a communications and commercial medium. In addition, the growing use of the Internet has burdened the existing telecommunications infrastructure. Certain areas with high Internet use relative to the existing telecommunications structure have experienced interruptions in phone service leading local telephone carriers to petition regulators to govern Internet service providers and impose access fees on them. Such regulations, if adopted in the United States or other places, could increase significantly the costs of communicating over the Internet, which could in turn 9 13 decrease the demand for our products and services. The adoption of various proposals to impose additional taxes on the sale of goods and services through the Internet could also reduce the demand for Web-based commerce. WE MAY FACE LIABILITY FOR INFORMATION CONTENT AND COMMERCE-RELATED ACTIVITIES Because materials may be downloaded by the services that we operate or facilitate and the materials may subsequently be distributed to others, we could face claims for errors, defamation, negligence, or copyright or trademark infringement based on the nature and content of such materials. We could also be exposed to liability because of the listings that we select and make available through our Web site, or through content and materials posted by users in chat room and message board services that we provide. Even to the extent that claims made against us do not result in liability, we may incur substantial costs in investigating and defending such claims. WE FACE INTENSE COMPETITION The market for Internet products and services and the market for Internet advertising and electronic commerce arrangements are extremely competitive, and we expect that competition will continue to intensify. We believe that the principal competitive factors in these markets are name recognition, distribution arrangements, functionality, performance, ease of use, the number of value-added services and features, and the quality of support. Our primary competitors are other companies providing portal services, especially to Spanish-language Internet users such as Yahoo!, America Online, StarMedia Network, Microsoft, Lycos and Ole. Most of our competitors, as well as a number of potential new competitors, have significantly greater financial, technical and marketing resources than we do. Our competitors may offer Internet products and services that are superior to ours or that achieve greater market acceptance. There can be no assurance that we will be able to compete successfully against our current or future competitors or that competition will not otherwise have a material adverse effect on our business. OUR BUSINESS IS SUBJECT TO RISKS OF TECHNOLOGICAL CHANGE The market for Internet products and services is characterized by rapid technological developments, frequent new product introductions and evolving industry standards. The emerging character of these products and services and their rapid evolution will require that we continually improve the performance, features and reliability of our Internet content, particularly in response to competitive offerings. There can be no assurance that we will be successful in responding quickly, cost effectively and sufficiently to these developments. In addition, the widespread adoption of new Internet technologies or standards could require substantial expenditures by us to modify or adapt our Web site and services and could fundamentally affect the character, viability and frequency of Web-based advertising, either of which could have a material adverse 10 14 effect on our business,. In addition, new Internet services or enhancements offered by us may contain design flaws or other defects that could require costly modifications or result in a loss of consumer confidence. FAILURE OF OUR COMPUTER SYSTEM OR THE SYSTEMS OF THIRD PARTIES TO ACHIEVE YEAR 2000 COMPLIANCE COULD ADVERSELY AFFECT OUR BUSINESS Many currently installed computer systems and software products are coded to accept only two-digit entries to represent years in the date code field. Computer systems and products that do not accept four-digit entries will need to be upgraded or replaced to accept four-digit entries to distinguish years beginning with 2000 from prior years. We are currently evaluating the Year 2000 issue as it relates to our entire internal computer system as well as computer systems operated by third parties. We anticipate that we may incur internal staff costs as well as consulting and other expenses related to making our computer systems Year 2000 compliant. We will expense these costs as incurred. In addition, computer systems operated by third parties with which our systems interface may not continue to properly interface with our systems or be compliant on a timely basis with Year 2000 requirements. Any failure of our computer system or the systems of third parties to achieve Year 2000 compliance could adversely affect our business. WE MAY BE REQUIRED TO MAKE SIGNIFICANT CASH PAYMENTS UNDER OUR CHIEF EXECUTIVE OFFICER'S EMPLOYMENT AGREEMENT. Our employment agreement with Jeffrey S. Peterson, our chief executive officer, requires us to pay Mr. Peterson between $5 million and $6 million if he is terminated without cause or if his duties or responsibilities are materially changed and he terminates his employment for that reason. See "Management--Executive Compensation." OUR MANAGEMENT WILL CONTINUE TO CONTROL OUR OPERATIONS; OUR AUTHORIZED PREFERRED STOCK AND OUR CHIEF EXECUTIVE OFFICER'S EMPLOYMENT AGREEMENT MAY PREVENT A CHANGE IN OUR CONTROL Upon completion of the offering, our officers and directors will own or control through a voting trust approximately 47.7% of our common stock and will, as a practical matter, continue to be able to elect all of our directors and control our business. Our Articles of Incorporation authorize the issuance of up to 5,000,000 shares of preferred stock without our stockholders' approval, which could impair the voting power or other rights of the holders of the common stock. The issuance of preferred stock could also be used by our Board of Directors to prevent a change in control of our Company. The change of duties or responsibilities provisions of our Chief Executive Officer's employment agreement could also prevent a change in control of our company. See "Management--Executive Compensation." 11 15 FUTURE SALES OF OUR COMMON STOCK OR SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS COULD ADVERSELY AFFECT OUR STOCK PRICE AND OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS We currently have 9,075,833 shares of common stock outstanding, of which 2,113,386 shares may be sold, subject to certain volume restrictions, immediately under Rule 144 of the Securities Act and of which 6,962,447 shares may be sold from May 1999 through December 1999. Sale of substantial amounts of common stock, or the perception that sales could occur, could reduce the market price of the common stock. All of our stockholders have agreed not to sell or otherwise transfer any of their shares until 180 days from the date of this prospectus without the prior written consent of the representative of the underwriters. A total of 2,500,000 shares of common stock have been reserved for issuance upon the exercise of stock options granted under our 1998 Stock Option Plan and 400,000 shares have been reserved upon exercise of common stock purchase warrants to be issued to the representative of the underwriters. Currently, there are outstanding stock options to acquire 2,463,000 shares of common stock at exercise prices ranging from $1.00 to $8.00 per share. In addition, Jeffrey S. Peterson, our Chief Executive Officer, will receive stock options to purchase up to 2,000,000 shares of common stock at 120% of the public offering price upon our achieving specified performance goals. See "Management - - - - -- Executive Compensation." The holders of our stock options and common stock purchase warrants will have the opportunity to profit from an increase in the market price of our common stock. The existence of these stock options and common stock purchase warrants may also affect our ability to obtain other financing. 12 16 USE OF PROCEEDS After payment of underwriting commissions and other expenses of the offering, the net proceeds of the offering are estimated to be $ 40,320,000, or $ 46,458,000 if the overallotment option is exercised. We expect to use the net proceeds approximately as follows: o $ 28,000,000 for marketing and advertising expenses in order to globally develop the quepasa!com brand; o $3,250,000 to further develop and acquire additional content and features for the quepasa!com Web site; o $5,000,000 for general, administrative and other operating expenses including the recruitment, training and payment of salaries of new employees; o $2,000,000 to purchase additional technology and equipment; and o $2,000,000 for working capital. There may be changes in our proposed use of proceeds due to changes in our business or the Internet industry in general. Proceeds not immediately needed will be invested in bank certificates of deposit, treasury bills, insured bank deposits or similar investments. DIVIDEND POLICY We have never declared or paid dividends on our common stock and do not intend to pay dividends on our common stock in the foreseeable future. Instead, we will retain any earnings to finance the expansion of our business and for general corporate purposes. 13 17 DILUTION At December 31, 1998, the net tangible book value of our outstanding shares of common stock was $2,878,000, or $.32 per common share. "Net tangible book value" per share represents the total amount of our tangible assets, less the total amount of our liabilities, divided by the number of shares of common stock outstanding. Without taking into account any changes in net tangible book value after December 31, 1998, other than to give effect to the sale of the shares of common stock offered hereby at an assumed initial public offering price of $11.00 per share, less underwriting discounts and commissions and estimated costs of the offering, our net tangible book value at December 31, 1998 would have been $43,198,000 or approximately $3.30 per share. This represents an immediate increase in net tangible book value of $2.98 per share of common stock to our existing stockholders and an immediate dilution of $7.70 per share to new investors. "Dilution" per share represents the difference between the price to be paid by the new stockholders and the net tangible book value per share of common stock immediately after this offering. The following table illustrates this per share dilution: Assumed initial public offering price per share $11.00 Net tangible book value per share before the offering $ .32 Increase in net tangible book value per share attributable to new investors purchasing in the offering $ 2.98 ------- Net tangible book value per share after the offering $ 3.30 ------ Dilution per share to new investors $ 7.70 ======
The following table sets forth the number of shares of common stock purchased, the total consideration paid and the average price per share paid by our existing stockholders as of December 31, 1998 and new investors purchasing the shares of common stock offered hereby:
Average Shares Purchased Total Consideration Price Number Percentage Amount Percentage Per Share --------- ---------- ----------- ---------- --------- New investors 4,000,000 30.6% $44,000,000 88.4% $11.00 Existing stockholders(1) 9,075,833 69.4% $ 5,771,996 11.6% $ .64 ---------- ---- ----------- ---- TOTALS 13,075,833 100% $49,771,996 100% ========== ===========
(1) Excludes shares of common stock issuable upon exercise of stock options and common stock purchase warrants issued to the representative of the underwriters. See "Management--1998 Stock Option Plan" and "Underwriting." 14 18 CAPITALIZATION The following table sets forth our historical, pro forma and as adjusted capitalization as of December 31, 1998, after deducting underwriting discounts and commissions and estimated offering expenses.
Historical December 31, 1998 December 31, 1998 December 31, 1998 Pro Forma (1) As Adjusted(1)(2) ----------------- ----------------- ------------------- Long-term liabilities $ 710,000 $ 2,710,000 $ 2,710,000 Stockholders' equity Preferred stock, 5,000,000 no par value shares authorized, no shares issued -- -- -- Common stock, 50,000,000, $.001 par value shares authorized, 9,075,833 shares outstanding, 13,075,833 shares outstanding as adjusted (1) 9,000 9,000 13,000 Additional paid-in capital 10,427,000 10,427,000 50,743,000 Retained earnings (loss) (6,912,000) $ (6,912,000) (6,912,000) ----------- ------------ ------------- Total stockholders' equity $ 3,524,000 $ 3,524,000 $ 43,844,000 =========== ============ ============= Total capitalization $ 4,234,000 $ 6,234,000 $ 46,554,000 =========== ============ =============
(1) As adjusted to reflect an aggregate of $2,000,000 of loans to us from an affiliate in March 1999. See "Certain Transactions." (2) As adjusted to reflect the sale of 4,000,000 shares of common stock offered hereby at an assumed offering price of $11 per share and the application of the net proceeds. See "Use of Proceeds." 15 19 SELECTED FINANCIAL DATA The following tables set forth certain financial information which has been derived from our audited financial statements for the period from inception, June 25, 1997, through December 31, 1997, for the year ended December 31, 1998 and cumulative from inception, June 25, 1997 to December 31, 1998.
Period from Inception Cumulative from Inception Year Ended (June 25, 1997) through (June 25, 1997) through Statement of Operations Data December 31, 1998 December 31, 1997 December 31, 1998 - - - - ---------------------------- ----------------- ----------------------- ------------------------- Product and content development expenses $ 414,873 $ -- $ 414,873 Sales and marketing expenses 250,419 -- 250,419 Stock-based compensation expense 5,265,364 -- 5,265,364 General and administrative expenses 931,172 3,703 934,875 Net loss $(6,909,768) $ (2,903) $ (6,912,671) =========== ========== ============= Weighted average number of shares outstanding 9,075,833 9,075,833 9,075,833 =========== ========== ============= Net loss per share $ (.76) -- $ (.76) =========== ========== =============
Balance Sheet Data December 31, 1998 Historical Pro Forma(1) As Adjusted(1)(2) - - - - ------------------ ---------- ------------ ----------------- Working capital $2,958,000 $4,958,000 $45,278,000 Total assets $4,861,000 $6,861,000 $47,181,000 Total liabilities $1,337,000 $3,337,000 $ 3,337,000 Stockholders' equity $3,524,000 $3,524,000 $43,844,000
(1) As adjusted to reflect an aggregate of $2,000,000 of loans to us from an affiliate in March 1999. See "Certain Transactions." (2) As adjusted to reflect the sale of 4,000,000 shares of common stock offered hereby at an assumed offering price of $11 per share and the application of the net proceeds. See "Use of Proceeds." 16 20 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations for the year ended December 31, 1998 and the period from June 25, 1997 (inception) through December 31, 1997 should be read in conjunction with our financial statements, the notes related thereto, and the other financial data included elsewhere in this prospectus. RESULTS OF OPERATIONS We are a development stage company and commenced operations on June 25, 1997. Our operations for the period June 25, 1997 through December 31, 1997 were limited to organizing our company, raising operating capital, hiring initial employees and drafting our business plan. For this reason our results of operations for the period ended December 31, 1997 are not comparable to the results of operations for the year ended December 31, 1998. In 1998 we hired most of our current management and employees, raised significant amounts of working capital for development and operations and launched the quepasa!com Website. We had no significant revenue during the year, but incurred $6.9 million of operating losses of which $5.3 million represented a non-cash charge for the issuance of stock based compensation and $1.3 million represented general and administrative expenses and product and content development costs. We expect in the near term to incur significant continuing losses due to ongoing substantial operating expenses offset by negligible revenue. 17 21 LIQUIDITY AND CAPITAL RESOURCES Since inception on June 25, 1997, we have received approximately $5.1 million to fund our operations from private placements of common stock and convertible debt. As of December 31, 1998, we had approximately $2.2 million in cash. Net cash used in operations was approximately $2.4 million for the year ended December 31, 1998. This resulted from the approximately $6.9 million net loss of which approximately $5.3 million was a non-cash charge for stock based compensation and the timing of receipt of an approximately $1.5 million deposit refundable offset by accrued private placement commissions and a stock subscription refundable of approximately $200,000 and $300,000, respectively. Net cash used in investing activities was approximately $400,000 consisting of purchases of approximately $360,000 for fixed assets including technology purchases and $40,000 for payments under a licensing agreement. We spent approximately $21,000 through March 3, 1999 on leasehold improvements for a new office facility. We had no other commitments for capital expenditures as of December 31, 1998. However, as of December 31, 1998, we had commitments under non-cancelable operating leases for our Arizona and Nevada offices and office equipment requiring monthly payments of approximately $160,000 through September 2001. We have an additional commitment to pay $710,000 pursuant to the terms of the Inktomi licensing agreement through August 2001. In January and February of 1999, we entered into sponsorship agreements for television and radio advertising with Telemundo and Heftel, respectively. The contracts required payments of $800,000 for the television advertising and $1.6 million for the radio advertising which were paid upon execution of the agreements. In March 1999, we received a $2 million loan from The Monolith Limited Partnership, one of our principal stockholders. The loan bears interest at 12% per annum through June 1999 and then 14% per annum through maturity in March 2001. Jeffrey S. Peterson, our Chief Executive Officer, has agreed to lend us up to $3 million as needed for operations. Mr. Peterson's loans will bear interest at 12% per annum for the first four months and 14% per annum thereafter and mature 24 months from issuance. We expect to incur significantly higher costs, particularly product content and development costs, sales and marketing costs, general and administrative costs and additional technology and equipment purchase cost in the future to expand our business. We believe that the proceeds from this offering, together with our cash on hand and The Monolith Limited Partnership loan will be sufficient to meet our working capital and capital expenditure needs for two years. Nevertheless, we may need to raise additional funds to respond to competitive pressures or to acquire complementary products and features, businesses or technologies. 18 22 OUR BUSINESS INTRODUCTION Quepasa!com is a Spanish-language Internet portal and search engine. Search engines are located on "portal" Internet sites and provide Internet users with guides to on-line World Wide Web information and content. In addition to offering search engines, portals draw viewers to their Web sites by providing a one-stop destination for identifying, selecting and accessing resources, services, content and information on the Web. Quepasa!com is targeted to provide users with information and interactive content centered around the Spanish language. Because the language preference of many assimilated U.S. Hispanics is English, we also offer our users the ability to access information and services in the English language at the preference of the user. The quepasa!com portal includes a search engine, free e-mail, Spanish-language news feeds and chat rooms. We are a development stage company having launched the quepasa!com Web site in November 1998 and have not yet generated any revenue. We anticipate generating revenue by charging fees to advertise products and services on our Web site. We believe that quepasa!com is the first portal completely dedicated to Spanish-language Internet users to offer its securities to the public. INDUSTRY BACKGROUND Growth of the Internet and the World Wide Web The Internet is evolving into a global medium, allowing millions of individuals throughout the world to communicate, share information and engage in commerce electronically. The Web is an interactive environment which facilitates the exchange of information and entertainment among users worldwide. According to International Data Corporation, the number of people worldwide accessing the Web will grow from approximately 100 million at year end 1998 to 320 million by 2002. This growth is expected to be driven by the large and growing number of personal computers installed in homes and offices, the declining prices of personal computers, the improvements in network infrastructure, the availability of faster and cheaper Internet access, and the increasing familiarity with and acceptance of the Internet by businesses and consumers. Web usage is also expected to continue to grow rapidly due to unique characteristics that differentiate it from traditional media, such as real-time access to interactive content, real-time communication capabilities and the absence of geographic or temporal limitations. Growth of Internet Advertising and Internet Commerce With the growth in the number of Internet users and content providers, the Internet is developing the attributes of a conventional mass medium, where advertising subsidizes content delivered to users. In fact, technological advances and the acceptance of the medium by businesses have led to rapid growth in Internet advertising spending. Tools not available in traditional advertising media, such as real-time measurement of "click-through" on advertising banners, further increase the attractiveness of Web advertising by giving advertisers real-time feedback on advertising campaigns. Forrester Research, Inc. estimates that spending on Web-based advertising will increase from $1.5 billion in 1998 to more than $15 billion in 2003. The growing acceptance and use of the Web has created an opportunity for businesses to conduct commerce over the Internet. International Data Corporation estimates that transactions on the Internet are expected to increase from approximately $32 billion in 1998 to more than $425 billion in 2002. Businesses typically use the Internet to offer standard products and services that can be easily described with graphics and text and that do not necessarily require a physical presence for purchase, such as airline tickets, books and securities transactions. The focus of electronic commerce transactions evolved from companies facilitating Internet transactions between businesses to, more recently, companies targeting business-to-consumer transactions. Internet commerce enables these companies to develop relationships with customers on a global basis without making significant investments in traditional sales and distribution infrastructure. 19 23 OUR MARKET IN THE UNITED STATES We believe that the Spanish-language Internet market in the United States is characterized by a growing Hispanic population, increasing Hispanic purchasing power, greater advertising spending on Spanish-language media, continuing use of the Spanish language by U.S. Hispanics and increasing computer ownership and Internet usage by Hispanic households. Hispanic Population Growth and Concentration A large number of our users are Hispanics, one of the most rapidly growing segments of the U.S. population. The U.S. Census Bureau estimated the Hispanic population to be 29.6 million (11.0% of the total U.S. population) in 1998, an increase of approximately 31% from 22.5 million (9.0% of the total U.S. population) in 1990. The Hispanic population is expected to account for 40% of the total U.S. population growth between 1995 and 2010 and is expected to grow to 31.4 million and 41.1 million (11.4% and 13.8% of the total U.S. population) in 2000 and 2010, respectively. Almost 70% of U.S. Hispanics are under 35, compared with less than 50% of non-Hispanics. The median age of Hispanics is 26, compared to 35 for the rest of the population. We believe the relative youth of the Hispanic population will furnish growth opportunities for products and services that appeal to a younger market, such as that found on the Internet. In addition, 70% of all U.S. Hispanics live in 12 metropolitan areas. This geographic concentration makes U.S. Hispanics an attractive demographic group for advertisers because it enables them to cost effectively deliver messages to a highly targeted audience. Increasing Hispanic Purchasing Power Over a recent five-year period, U.S. Hispanic purchasing power has risen at a compound annual growth rate of 7.5%, compared with 4.9% for the rest of the population. Total Hispanic purchasing power exceeded $350 billion in 1997, an increase of approximately 66% since 1990. U.S. Hispanics are expected to account for $443 billion (7.0% of U.S. consumer expenditures) by 2000, and $938 billion (8.9% of U.S. consumer expenditures) by 2010. Greater Spanish-Language Advertising Spending According to published sources, $1.7 billion of total advertising expenditures in the U.S. were directed toward Spanish-language media in 1998, representing a 21% increase over 1997's total, and the highest year-to-year percentage increase since 1993. In only five years, total advertising expenditures in the Hispanic market have more than doubled from $829.7 million. Continuing Use of the Spanish Language by U.S. Hispanics According to published sources, approximately 90% of U.S. Hispanics speak Spanish at home. Moreover, U.S. Hispanics are expected to continue to speak Spanish because (1) approximately two-thirds of U.S. Hispanic adults were born outside the U.S.; (2) there continues to be significant Hispanic immigration into the U.S.; (3) Hispanics generally seek to preserve their cultural identity; and (4) there is geographic concentration of Hispanics, which encourages communication in Spanish. 20 24 Increasing Computer Ownership and Internet Usage by Hispanics A February 1998 study by the Tomas Rivera Policy Institute estimates that between 1994 and 1998 the percentage of U.S. Hispanic households that owned computers increased from 13% to 30%, while U.S. Hispanic households with Internet access grew from 2% to 15% (approximately 650% Internet access growth in four years). In addition, an independent study indicated that as of 1998 approximately 2.4 million Hispanics owned personal home computers in the top seven U.S. Hispanic markets, an increase of 58% from 1996. OUR MARKET OUTSIDE THE UNITED STATES Spanish is the world's third most spoken language, used by approximately 400 million people. Twenty-one countries consider Spanish their primary language and 266 million people worldwide consider Spanish their first language. Internet usage in Spain is increasing rapidly. For example, a recent study indicated that approximately 2.3 million Spaniards accessed the Internet in 1998 and the number is projected to grow to 8.7 million by 2001. The Spanish-speaking Latin American market is comprised of Mexico, Central America, parts of South America and the Spanish-speaking countries of the Caribbean. Factors such as growing competition and investment in telecommunications markets, favorable demographics and declining prices for personal computers and Internet access position Latin America as a strong potential growth market for Internet products and services. THE QUEPASA!COM STRATEGY We believe that a branded, multi-featured, Spanish-language Internet portal and search engine that focuses primarily on the needs of the Spanish-language market is uniquely positioned to capitalize on the growth of this market segment. Therefore, our strategy is to establish quepasa!com as a leading worldwide Spanish-language portal and search engine offering the quepasa!com brand to Spanish-speaking Internet users residing in the United States, Latin America and the rest of the world. In order to accomplish this objective, we intend to continue to focus on building a high volume of traffic and strong brand recognition of the quepasa!com name. The basis of our strategy is to provide Spanish-language Internet users with an innovative, technologically-advanced, content-rich Web portal that creates value for the user and establishes our platform as an attractive medium for advertisers, marketers and companies engaged in electronic commerce. We are establishing quepasa!com as a leading Spanish-language Web portal and search engine by executing a business strategy that includes: o Developing quepasa!com globally as a leading brand associated with the Internet for Spanish-language users 21 25 We believe that establishing and leveraging the quepasa!com brand is critical to our ultimate success. We also believe that branding and consumer loyalty on the Internet are dependent upon our ability to differentiate our services and to enhance our users' experience by continually offering innovative technology and appealing features and effectively marketing these features to existing and potential users of our Web site. We intend to improve our technical expertise to develop innovative new services, as well as enhance and expand existing services. We also intend to increase brand value through effective marketing and promotion, increased customer service and the establishment of strategic alliances. o Significantly increasing user traffic by aggressively advertising on Spanish-language media outlets and on high-traffic Spanish-language Web sites In February 1999, we initiated a 60-day nationwide radio advertising campaign with Heftel Broadcasting Corporation, the largest Spanish-language radio broadcaster in the U.S. In March 1999, we launched a 26-week nationwide advertising campaign with the Telemundo Network Group, a leading U.S. Spanish-language television broadcaster. The goal of our advertising campaigns is to significantly increase traffic on the quepasa!com Web site which we believe in turn will improve our ability to attract advertisers to our Web site. We will also seek to increase our Web site traffic by increasing the number and visibility of entry points to the quepasa!com Web site through advertising on other high-traffic Spanish-language Web sites. o Acquiring and developing additional content and features for the quepasa!com Web site In addition to its search engine, quepasa!com provides content and Web site features for the Spanish-speaking Internet user, including free e-mail, Spanish-language news feeds, worldwide weather information and chat rooms. In order to provide such content, we have entered into agreements with content providers such as Reuters and UPI for Spanish-language news, and WeatherLabs for worldwide weather information. These arrangements allow us to increase our Web site content in order to attract and retain Spanish-speaking Internet users and to solidify our position as an easy-to-use interface for Spanish-language Web services and information. We intend to add additional content and features by acquisition, licensing and internal development. o Entering into strategic relationships with business partners who offer unique technological and distribution capabilities We intend to continue to develop strategic relationships with companies that offer the most advanced Internet technologies. Our search engine is powered by Inktomi, a leader in Internet search technology. Connectivity services are provided to us by Exodus and GTE, both leaders in Internet networking services. We also seek to expand the distribution of the quepasa!com brand through marketing arrangements with computer hardware manufacturers, software providers, Internet access providers and commercial on-line services. 22 26 o Generating revenue from the sale of advertising and through electronic commerce We have entered into an agreement with 24/7 Media, Inc., a leading provider of Internet advertising solutions, to outsource our advertising sales function. When user traffic justifies, we also intend to offer products and services directly to consumers through the quepasa!com Web site. These products and services will be targeted toward the distinct tastes and preferences of Spanish-speaking consumers and may include recorded music, educational software and books. We may also generate revenue from other electronic commerce retailers that sell products or services to users through the quepasa!com Web site. 23 27 THE QUEPASA!COM WEB SITE Services and Content. In November 1998, we launched the quepasa!com Web site which allows individuals to quickly access content and features which appeal to Spanish-language Internet users. Although our content is directed toward Spanish-speaking users, to better serve the assimilated U.S. Hispanic population, quepasa!com is also offered in English. By combining existing services with specialized information from leading content providers, quepasa!com provides subject or category specific content including topical news, worldwide weather information, free e-mail, chat and search capabilities. The quepasa!com Web site currently offers a number of categories of topical interest, including the following: Arte y Cultura (Art and Culture) Computadoras y Internet (Computers and Internet) Economia y Negocios (Economy and Business) Educacion (Education) Entretenimiento (Entertainment) Salud (Health) Empleos (Jobs) Noticias y Medios (News and Media) Politica y Gobierno (Politics and Government) Regional (Regional) Ciencia y Techologia (Science and Technology) Ciencias Sociales (Social Sciences) Deportes y Recreacion (Sports and Recreation) Viajes y Turismo (Travel and Tourism) Search Engine. The quepasa!com search engine helps users find information on the Web by searching through quepasa!com's index of Web documents. Our search technology is powered by Inktomi which enables us to provide customers with a variety of on-line search services. Personalization Feature. We offer our users the ability to personalize their quepasa!com home page. Quepasa!com users can create a personal profile to select and update information of interest by category, such as news headlines, business, sports scores, weather information and horoscopes. Users can also arrange the position and location of the content on their quepasa!com home page to suit their specific tastes and preferences. Free E-Mail and Chat. Quepasa!com offers free e-mail and a free customized chat service powered by Volano, a leading provider of chat services. Through this chat service, users can discuss topics of mutual interest by participating in ongoing discussions or by creating their own topics for discussion. 24 28 24 Hour Real-time News and Weather. Quepasa!com offers worldwide news coverage from Reuters and UPI. Reuters provides us with worldwide editorialized, topical news covering areas of special interest to Spanish-speaking users (in Spanish and English), as well as a Spanish-language news feed that we intend to format and edit internally to provide broad coverage of news that will be of special interest to Spanish-speaking users. UPI provides real-time, news stories written in Spanish by pool reporters from around the world. These pool stories will enable us to supply a broad range of region-specific news items of interest to Spanish-speaking Internet users. Our users are also able to search a database of archived news stories from Reuters (over the prior 30-day period) and UPI (over the prior two-year period but not earlier than December 1998). Through an agreement with WeatherLabs, we also offer worldwide weather information, including real time weather reports and forecasts, for 5,000 U.S. and 2,400 international cities. MARKETING AND ADVERTISING OF THE QUEPASA!COM SITE Our marketing goal is to develop the quepasa!com brand globally as a leading brand associated with the Internet for Spanish-speaking users. In February 1999, we initiated a 60-day approximately $1,600,000 nationwide radio advertising campaign with Heftel Broadcasting Corporation, the largest Spanish radio broadcaster in the United States, with approximately 19 million Spanish-speaking listeners. Heftel owns and operates 39 stations in 11 of the top 15 Hispanic markets, including the most-listened to Spanish-language stations in nine markets. We believe the sponsorship with Heftel will provide us with an effective platform to communicate our message to our target audience, because approximately 65% of U.S. Hispanics reside in Heftel's top 15 markets. The quepasa!com sponsorship with Heftel includes the purchase of air time in the top Hispanic radio markets, "on-air promos" by radio personalities and prominent sponsorships of Hispanic community festivals and events involving Heftel radio stations, such as the Calle Ocho Festival in the Little Havana area of Miami. Calle Ocho is the largest street festival in the U.S., attended by more than one million people in 1998. In March 1999, we launched an approximately $800,000 26-week nationwide advertising campaign with the Telemundo Network Group. Telemundo, recently acquired by Sony and Liberty Media, is a leading Spanish-language television broadcaster that has served the U.S. Hispanic market for over 11 years. Telemundo's affiliate base, covering 63 television markets, reaches approximately 85% of all U.S. Hispanic households. Sony and Liberty Media provide Telemundo with substantial financial resources, strong management and a vast programming library. Telemundo intends to draw on this library in order to target a younger, bilingual Hispanic audience. Telemundo's programming includes shows such as "Cinemundo Primer" (a primetime program featuring popular U.S. and Latin American movies, many appearing for the first time on Spanish-language television), "Ocurrio Asi de Noche" (an Emmy award-winning investigative news magazine), and "Discovery" (offering nature, science, technology and history programming from the Discovery Channel). 25 29 Our sponsorship arrangement with Telemundo extends from March 1999 through August 1999. We believe that this sponsorship arrangement will significantly assist us in building brand awareness for quepasa!com within the emerging Spanish-language Internet market. The goal of the advertising campaign is to significantly increase traffic on our Web site, which in turn will improve our ability to attract Web site advertisers. We also intend to increase our Web site traffic by increasing the number and visibility of entry points to the quepasa!com Web site through advertising on other high-traffic Spanish-language Web sites. We will also seek to develop relationships with on-line services, Internet access providers and providers of computer hardware and software in order to expose quepasa!com to other Internet users. We intend to use a substantial portion of the proceeds of the offering (approximately $28,000,000) to advertise the quepasa!com Web site on Spanish-language and English language media. See "Use of Proceeds." In an effort to increase hits, Web site operators are increasingly adding content and other features to their sites to encourage users to spend more time there. We intend to regularly enhance our technological features and services and update our content in order to encourage consumers to use our Web site more frequently. To this end, we have launched a flexible, subject-based format for our services and content to provide consumers with ease of use and flexibility to customize their quepasa!com site to fit their specific tastes and preferences. Because customizing these services typically requires some effort and time on the part of the consumer, we believe that consumers who use these personalized services are more likely to continue to use quepasa!com and not change to a competitive service. ADVERTISING REVENUE We have had no advertising revenue to date, but we expect to earn a significant portion of our future revenue from the sale of advertisements placed on our Web site. In exchange for up to 50% of our advertising revenue, we have entered into an agreement with 24/7 Media, Inc. to use its best efforts to place our advertising with customers solicited by 24/7 Media. The agreement may be terminated by either party by giving the other at least four months' written notice. 24/7 Media is a leading provider of Internet advertising and on-line direct marketing solutions with one of the largest Internet sales forces in the industry. 24/7 Media's clients include AT&T WorldNet, EarthLink and the Associated Press. In the future, we may elect to develop an internal advertising staff. We expect advertisements on the quepasa!com site to be of the banner or billboard style, which are designed to display additional advertisements as the consumer clicks through the Web site. From each advertisement screen, users can hyperlink directly to an advertiser's own Web site, thus enabling the advertiser to directly interact with a user who has expressed interest in the advertisement. We believe that since users view advertisements only after they request a new page, the focus of the user's attention to the advertisement is likely to be higher than it is in other forms of media. With our subject-based format, growing number of services and ability to target user interest from an attractive demographic group with appropriate advertising, we believe we can increase the effectiveness of advertisements placed on the quepasa!com Web site. We hope this will permit us to command higher advertising returns than many other Web sites. 26 30 We also intend to develop innovative approaches for advertisers through advancements by others in demographic trending and consumer tracking. We seek to attract the largest possible Web audience in the Spanish-speaking Internet market, in order to give advertisers the most efficient and effective advertising placements. We are developing services that encourage consumers to provide demographic and interest information that can be used to more effectively target our advertising. TECHNOLOGY We believe we can differentiate our services and promote the quepasa!com brand by developing innovative proprietary technology and integrating technology licensed from third parties where appropriate. Our strategy is to develop or obtain technologies that are able to expand with the growth in content of the Internet. For instance, we recently developed our own proprietary e-mail service which we believe provides superior functionality, message volume, data storage and incoming and outgoing file attachment capabilities than most other free e-mail services. In July 1998, we entered into a three-year agreement with Inktomi to power search engine capability for our quepasa!com Web site. Under the terms of the agreement, we will pay Inktomi a minimum fee of $750,000 over the three-year period for Inktomi's search engine services. The annual fee could significantly increase based upon the number of searches performed by Inktomi for our users. Inktomi's search engine technology enables us to provide a variety of on-line search services to our customers. Inktomi provides and manages all hardware, software and operational aspects of its search engine and the associated database of Internet content. Inktomi also provides us with a programming interface and software tools to enable us to custom design our search service user interface. Separating the user interface enables this portion of the service to reside in a different physical location from the Inktomi search engine and to run on our choice of computer equipment. In addition, we can customize our user interface as to look, feel and functionality and can change the user interface at any time without affecting the operation of the Inktomi search engine. 27 31 Inktomi's search engine consists of a crawler, an indexer and search engine servers. The crawler and indexer are software programs that collect and organize information and store that information on the cluster of search engine servers. The search engine servers are a collection of workstations that are linked together as a coupled cluster through the use of Inktomi's software. The search engine servers provide powerful full-text query operations, including full Boolean support, phrase and adjacency searching, date restrictions and the recognition of multimedia files and other embedded objects. Search results are relevance-ranked using state-of-the-art text indexing methods. Connectivity services are provided to us by Exodus and GTE. Exodus is one of the largest providers of connectivity, with a client list that includes Microsoft Hotmail, Ebay, GeoCities, HotBot and Inktomi. GTE delivers complete network solutions, dedicated Internet access, high performance Internet hosting, managed Internet security, network management, systems integration and Web-based applications development for integrating the Internet into business operations. COMPETITION The market for Internet products, services, advertising and commerce is intensely competitive, and we expect that competition will continue to intensify. We believe that the principal competitive factors in these markets are name recognition, distribution arrangements, functionality, performance, ease of use, the number of value-added services and features, and quality of support. Our primary competitors are other companies providing portal services, especially to the Spanish-language Internet users, such as Yahoo!, America Online, StarMedia Network, Microsoft (MSN LatinAmerica, MSN Mexico and MSN Espana), Lycos and Ole. Other portal competitors include Alta Vista, Excite and Infoseek. In addition, a number of companies offering Internet products and services, including our direct competitors, recently began integrating multiple features within the products and services they offer to users. Integration of Internet products and services is occurring through development of competing products and through acquisitions of, or entering into joint ventures and/or licensing arrangements involving, competitors. For example, the Web browsers offered by Netscape and Microsoft, which are the two most widely-used browsers and substantial sources of traffic for us, may incorporate and promote information, search and retrieval capabilities in future releases or upgrades that could make it more difficult for Internet viewers to find and use our products and services. Microsoft recently announced it intended to license products and services from Alta Vista and that it will feature and promote Alta Vista services on the Microsoft Network and other Microsoft on-line properties. We expect that such search services may be tightly integrated into the Microsoft operating system, the Internet Explorer browser, and other software applications, and that Microsoft will promote such services within the Microsoft Network or through other Microsoft-affiliated end-user services such as MSNBC or WebTV Networks, Inc. 28 32 Many large media companies have announced that they are contemplating developing Internet navigation services and are attempting to become "gateway" sites for Web users. In the event these companies develop such portal sites, we could lose a substantial portion of our user traffic. Further, entities that sponsor or maintain high-traffic Web sites or that provide an initial point of entry for Internet viewers, such as the Regional Bell Operating Companies or Internet service providers, such as Microsoft and America Online, currently offer and can be expected to consider further development, acquisition or licensing of Internet search and navigation functions. These functions may be competitive with those offered by us. Our competitors could also take actions that could make it more difficult for viewers to find and use our products and services. Consolidations, integration and strategic relationships involving competitors could have a material adverse effect on our business. In addition to the large multinational portals, we compete with a number of smaller portals and search engines that provide region-specific information to users or market to users with specific interests. Most of our competitors, as well as potential new competitors (such as Spanish-language media companies, other portals and Internet industry consolidators), have significantly greater financial, technical and marketing resources than we do. There can be no assurance that our competitors will not offer Internet products and services that are superior to ours or that achieve greater market acceptance. There can be no assurance that we will be able to compete successfully against current or future competitors or that competition will not have a material adverse effect on our business. EMPLOYEES At March 1, 1999, we had 34 employees, including our six executive officers. FACILITIES We lease approximately 11,500 square feet of space for our executive offices in Phoenix, Arizona for $21,083 per month pursuant to a sub-lease which expires in May 1999. We are currently negotiating a new five year lease for this space with our landlord. 29 33 OUR MANAGEMENT OFFICERS AND DIRECTORS Information concerning each of our executive officers and directors is set forth below:
Name Age Position - - - - ---- --- -------- Jeffrey S. Peterson 26 Chairman of the Board of Directors, Chief Executive Officer and President Michael A. Hubert 33 Chief Operating Officer and Director Bryan L. Ross 25 Chief Technical Officer and Director Juan C. Galan 33 Chief Financial Officer Robert J. Taylor 30 Vice President -- Strategy and Operations Victor H. Roldan 31 Vice President Lionel Sosa 59 Director Gregory J. Kolanck 29 Director
Directors hold office for a period of one year from their election at the annual meeting of stockholders or until their successors are duly elected and qualified. Officers are elected by, and serve at the discretion of, the Board of Directors. Our audit committee consists of Messrs. Hubert and Sosa, and our compensation committee consists of Messrs. Peterson, Hubert and Sosa. We intend to increase our Board of Directors to seven individuals following the offering, four of whom will be independent directors. We also intend to add at least one independent director to the audit committee as soon as practicable following the offering, but in no event later than 90 days from this date. JEFFREY S. PETERSON has served as Chairman of the Board of Directors and Chief Executive Officer since May 1998 and was our Chief Technology Officer from July 1997 until May 1998. From January 1997 to June 1997, Mr. Peterson served as co-owner of NetCentury, an Internet design firm he founded. From July 1995 until December 1996, Mr. Peterson was a General Securities Principal and Registered Representative with West America Securities Corporation. From February 1995 to May 1995, he was a General Securities Principal and Registered Representative with Kensington Securities, Inc. From August 1993 to April 1995, Mr. Peterson was a self-employed computer consultant 30 34 for JP Consulting, a computer-based consulting company he founded. Mr. Peterson is an experienced Modula, Java, and C++ programmer, who has been involved in the programming and operations of computers and digital communications for over 15 years. He has developed software applications for operating systems and digital platforms, beginning with Cp/M based systems in the early 1980s to Unix (Sun Solaris, BSD, Linux, Irix) and Windows NT. Mr. Peterson is bilingual in English and Spanish. MICHAEL A. HUBERT joined us in December 1998, became our Chief Operating Officer in January 1999 and was appointed a director in February 1999. From May 1998 to November 1998, Mr. Hubert was employed by WGM Corporation, the General Partner of The Monolith Limited Partnership, a venture capital fund which is one of our principal stockholders. At Monolith he assisted early stage businesses in strategy and organizational development. From May 1992 to April 1998, Mr. Hubert was employed by The Barrington Consulting Group, a national business advisory consulting firm, where he last served as Senior Manager. Mr. Hubert holds a B.S. degree in Finance from Arizona State University and an M.B.A. degree from Southern Methodist University. BRYAN L. ROSS joined us in November, 1998 as Chief Technology Officer and became a director in March 1999. From July 1998 to November 1998, he was Director of Software Development for Today.com, Inc., a Web design firm. From July 1997 to June 1998, he was lead computer programmer for the Kemtah Group, an Internet consulting firm. From 1994 to 1997, he was a Web Master first at Bethany College and subsequently at MicroAge, a computer distributor, where he designed and maintained Interactive Web sites. From 1991 to July 1996, Mr. Ross was an independent computer consultant in Scotts Valley, California. JUAN C. GALAN joined us in January 1999 as our Chief Financial Officer. From April 1997 to January 1999, he was employed by Vistoso Partners LLC, a Phoenix, Arizona real estate development company, as Controller. From June 1993 to April 1997, Mr. Galan was employed by Nielsen Media Research, formerly a Dun & Bradstreet company, as Administration Manager-Technology and Business Services, having joined the company initially as a Senior Financial Analyst. From March 1992 to June 1993, Mr. Galan was the Controller and Project Manager for Newport Realty, Inc. in Tampa, Florida. Mr. Galan holds a B.S. degree in Finance from Western Kentucky University. ROBERT J. TAYLOR joined us in March 1999 as Vice President of Strategy and Operations. From August 1995 to March 1999, he was a Senior Consultant for CSC Index, the management consulting division of Computer Sciences Corporation. During his tenure with CSC, Mr. Taylor focused his business consulting on large-scale change initiatives, strategy implementation, new business start-ups and organizational design for Fortune 500 organizations. From January 1992 to August 1995, Mr. Taylor held the positions of Production Supervisor and Senior Industrial Engineer with Michelin Tire Corporation. Mr. Taylor received a Bachelor of Science degree in Industrial and Systems Engineering from Virginia Tech University and an M.M.M. degree from the J.L. Kellogg Graduate School of Management at Northwestern University. 31 35 VICTOR H. ROLDAN joined us in January 1999 as a Vice President. From October 1997 to January 1999, Mr. Roldan founded and operated Roldan & Associates, a business consulting firm. From January 1995 to October 1997 he practiced law in Costa Rica, first for Montero Bejarano & Associates and then for Alfredo Fournier & Associates. Mr. Roldan holds a B.A. and a degree of Law from the Francisco Marroquin University, Guatemala and a degree of Law from the University of Costa Rica, San Jose. LIONEL SOSA joined us as a director in February 1999 and has been Chief Executive Officer of Garcia/KJS Advertising Agency since January 1996. From January 1994 to December 1995 Mr. Sosa was Chairman of DMB&B/Americas, a network of 23 advertising agencies in the U.S. and Latin America. From June 1980 to December 1993, he founded and was Chief Executive Officer of Sosa, Bromley, Aguilar & Associates, an advertising agency. Mr. Sosa is the author of The American Dream: How Latinos Can Achieve Success in Business and Life. He was named one of the 100 most influential Hispanics in the U.S. for 1998-99 by Hispanic Business magazine and was chosen as Adweek magazine's Advertising Executive of the Year in 1993 and its Marketing Executive of the Year in 1994. Mr. Sosa is a director of Taco Cabana, a publicly-traded restaurant chain. GREGORY J. KOLANEK joined us as a director in February 1999. He was employed by Cisco Systems, Inc. from January 1995 to November 1998, first as a sales application support engineer, then as a Web Project Production Manager. Since November 1998 he has been a private investor. From October 1992 to January 1995, he was a Desktop Publishing Specialist for Delco Systems and from July 1990 to July 1994, he was co-founder and keyboardist for the band Dishwalla. KEY EMPLOYEES MICHAEL J. OFFENBECHER has served as our Vice President - Technology since November 1998. He was the Chief Engineer for software development of InfoPak, Incorporated, a Web design firm, from 1993 to 1997 where he was responsible for software development projects. From 1997 until November 1998, he was a Senior Software Engineer for Cyclone Software Corporation in Scottsdale, Arizona. Mr. Offenbecher earned a Bachelor of Science degree and Electrical Engineering degree from Kansas State University. LUIS GARCIA has served as our Vice President - Design and Content since February 1999. He was a Web developer, Software Engineer and subsequently, Vice President of Operations for Cybertoons Digital of Milwaukee, Wisconsin from September 1996 until February 1999. From April 1996 until September 1996, he was a Web developer for Platinum Creative in Winter Park, Florida. Mr. Garcia received a B.S. degree in Systems Engineering from the Universidad Metropolitana in Caracas, Venezuela and subsequently was a programming instructor there from October 1994 to April 1996. 32 36 EXECUTIVE COMPENSATION The following table provides certain summary information concerning compensation paid to our Chief Executive Officer since we were formed in June 1997. No officer has been paid compensation for services in excess of $100,000 per year through December 31, 1998. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ANNUAL COMPENSATION AWARDS ------------------------------------------------------- ------------------------------------------- Name and Other Restricted Shares All Principal Annual Stock Underlying Other Position Year Salary Bonus Compensation Award(s) Options Compensation - - - - --------- ---- ------ ----- ------------ ---------- ---------- ------------ Jeffrey S. Peterson, 1998 $31,500 -- -- -- 50,000 $81,500 Chief Executive 1997 -- -- -- -- -- -- Officer and President
The following executive officers are expected to receive total compensation in excess of $100,000 for the year ending December 31, 1999. Each of these executive officers has executed employment agreements expiring on the dates indicated and providing for the payment of annual salaries and forgiveness of loans indicated below.
Forgiveness Total Expiration Name Annual Salary of Loan(3) Compensation(4) Date - - - - ---- ------------- ----------- --------------- ---------- Jeffrey S. Peterson(1) $150,000 $100,000 $250,000 11/02 Michael A. Hubert(2) $120,000 $ 35,000 $155,000 12/00 Bryan L. Ross(2) $ 75,000 $ 30,000 $105,000 11/00 Juan C. Galan(2) $100,000 $ 20,000 $120,000 1/02 Victor H. Roldan(2) $ 60,000 $ 5,000 $ 65,000 1/02 Robert J. Taylor(2) $ 80,000 $ 25,000 $105,000 3/02
(1) Mr. Peterson's employment agreement also provides for (a) the issuance of 1,500,000 stock options exercisable at $8.00 per share and 50,000 stock options exercisable at $1.50 per share, (b) the possible issuance of 250,000 additional stock options exerciseable at 120% of the public offering price for each 250,000 e-mail subscribers up to 1,000,000 stock options and 250,000 additional stock options exerciseable at 120% of the public offering price for each 250,000 chat subscribers up to 1,000,000 stock options and (c) the payment of $5,000,000 plus salary for the remainder of the term of the employment agreement if Mr. Peterson's services are terminated for any reason other than cause or if we materially change his duties as defined by his employment agreement. (2) Messrs. Hubert, Ross, Galan, Roldan and Taylor have been granted stock options to purchase 75,000 shares at $8.00 per share, 115,000 shares at $8.00 per share, 100,000 shares at $8.00 per share, 20,000 shares at $1.00 per share and 60,000 shares at $8.00 per share, respectively. (3) We have made loans to each of the executive officers in the amounts shown. 50% of each loan will be forgiven on the six month anniversary of employment and the balance of the loan will be forgiven on the one year anniversary of employment, except that 100% of Mr. Hubert's loan will be forgiven on his six month anniversary of employment. (4) Does not include car allowances, health insurance, housing allowances and other non-material compensation. Our outside directors do not receive any cash compensation for services as directors, although they are reimbursed for out-of-pocket expenses in attending Board of Directors' meetings and we intend to issue them stock options in the future. 33 37 1998 STOCK OPTION PLAN In November 1998, we adopted a stock option plan (the "Plan") which provides for the grant of options intended to qualify as "incentive stock options" or "nonqualified stock options" within the meaning of Section 422 of the United States Internal Revenue Code of 1986 (the "Code"). Incentive stock options are issuable only to employees. The purposes of the Plan are to attract and retain the best available personnel, to provide additional incentives to our employees and to promote the success of our business. We have reserved 2,500,000 shares of common stock for issuance under the Plan, which is administered by our Board of Directors. Under the Plan, the Board of Directors determines which individuals will receive options, the time period during which the options may be partially or fully exercised, the number of shares of common stock that may be purchased under each option and the option price. As of the date hereof, options to purchase 2,463,000 shares of common stock at a weighted average exercise price of $7.43 per share were outstanding under the Plan and 37,000 shares remained available for future option grants. Of these options, 1,970,000 have been issued to executive officers and directors at an average exercise price of $7.75. The per share exercise price of the common stock subject to options must not be less than the fair market value of the common stock on the date the option is granted. Subject to certain exceptions in the case of incentive stock options, the aggregate fair market value (determined as of the date the option is granted) of the common stock that any person may purchase in any calendar year pursuant to the exercise of incentive stock options must not exceed $100,000. No person who owns, directly or indirectly, at the time of the granting of an incentive stock option, more than 10% of the total combined voting power of all classes of our stock is eligible to receive incentive stock options under the Plan unless the option price is at least 110% of the fair market value of the common stock subject to the option on the date of grant. The stock options are subject to anti-dilution provisions in the event of stock splits, stock dividends and the like. No incentive stock options are transferable by an optionee other than by will or the laws of descent and distribution, and during the lifetime of an optionee, the option is only exercisable by the optionee. The exercise date of an option granted under the Plan must not be later than ten years from the date of grant. Any options that expire unexercised or that terminate upon an optionee's ceasing to be employed by us will become available once again for issuance. Shares issued upon exercise of an option rank equally with other shares then outstanding. No options have been exercised under the Plan. 34 38 The following table sets forth certain information regarding grants of stock options to Jeffrey S. Peterson, the only executive officer who received stock options for the year ended December 31, 1998. The fair value of the option grant has been estimated on the date of the grant utilizing the Black-Scholes option pricing model with the following assumptions: No volatility, ten year life, risk free rate of return of 6% and a 0% dividend yield.
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Grant Date Individual Grants Option Term(1) Value --------------------------------------------- ------------------------ -------------- Number Of Securities % of Total Underlying Options/SARs Exercise Grant Options/SARs Granted to or Base Grant Date Present Granted Employees Price Date Expiration Value ------------ ------------ --------- ------ ---------- ------- Jeffrey Peterson 50,000 23% $1.50 November 1998 November 2008 $ 146,000
35 39 PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding the holdings of common stock (1) by each person who, as of March 8, 1999, holds of record or is known by us to hold beneficially or of record, more than 5% of our common stock, (3) by each executive officer and director, and (2) by all officers and directors as a group. The address of each person is our address at One Arizona Center, 400 E. Van Buren, Fourth Floor, Phoenix, Arizona 85004.
Percent Percent Shares of Class of Class Name Owned(2) Prior to Offering(2) After Offering - - - - ---- --------- --------------------- -------------- Jeffrey S. Peterson(1) 1,436,083 15.7% 10.9% Michael A. Hubert 347,621 3.8% 2.6% Bryan L. Ross 115,000 1.3% .9% Juan C. Galan 20,000 .2% .2% Robert J. Taylor 25,000 .3% .2% Victor H. Roldan 20,000 .2% .2% Lionel Sosa 25,000 .3% .2% Gregory J. Kolanek 25,000 .3% .2% Michael D. Silberman 1,048,508 11.5% 8.0% Kevin Dieball 1,071,434 11.8% 8.2% The Monolith Limited Partnership 1,390,715 15.3% 10.6% All executive officers and directors as a group (8 persons) 2,013,704 21.4% 15.0% ---------
(1) Excludes 4,397,557 shares which Mr. Peterson has the right to vote pursuant to a voting trust agreement. See "Certain Transactions". (2) Includes shares of common stock subject to stock options which are presently exercisable or which may be exercisable within 60 days following the date of this prospectus ("exercisable options"). 36 40 CERTAIN TRANSACTIONS In May 1998 Jeffrey S. Peterson, our Chairman, Chief Executive Officer and President, and Michael D. Silberman, a principal stockholder, conveyed an aggregate of 3,863,106 shares of their common stock to five persons for $.00035 per share. The shares were conveyed at that time to induce these five persons to provide strategic planning and business development services to us. In May 1998 we issued a $100,000 promissory note to an investor, $50,000 of which was subsequently converted into our common stock at $1.00 per share. In July 1998 we issued a $1 million promissory note to two investors which was subsequently converted into our common stock at $1.56 per share. In November and December 1998 we sold 1,259,167 shares of our common stock to a group of investors for $3.75 per share. We are paying Garcia/KJS, an advertising agency owned in part by Lionel Sosa, one of our directors, for advertising services for a monthly retainer fee of $78,000. We intend to sign an agreement with Garcia/KJS on these terms, cancelable by either party on 30 days notice. In March 1999, The Monolith Limited Partnership, a principal stockholder, loaned us $2,000,000 for working capital. The loan bears interest at 12% per annum through June 1999 and then 14% per annum through March 2001 when the loan is due. In March 1999 Jeffrey S. Peterson, our Chief Executive Officer, agreed to loan us up to $3 million at any time prior to the completion of the offering to be used for working capital. Any such loans will bear interest at 12% per annum for four months and then 14% per annum for the next 20 months, at which time each loan will become due. In March 1999 Michael D. Silberman, Kevin Dieball and The Monolith Limited Partnership, all of whom are principal stockholders of our company, and two other stockholders executed a voting trust agreement covering a total of 4,397,557 shares of our common stock for the benefit of Jeffrey S. Peterson. Under the terms of the voting trust, Mr. Peterson is entitled to vote all shares held by the five stockholders until March 31, 2003. 37 41 DESCRIPTION OF SECURITIES COMMON STOCK We are authorized to issue 50,000,000 shares of $.001 par value common stock, of which 9,075,833 shares are outstanding as of the date of this prospectus. Each share of common stock is entitled to one vote on all matters submitted to a vote of the stockholders, and cumulative voting is not permitted. Upon issuance, shares of common stock are not subject to further assessment or call. Subject to the prior rights of any series of preferred stock that may be issued by us in the future, holders of common stock are entitled to receive ratably such dividends that may be declared by the Board of Directors out of funds legally available therefor and are entitled to share ratably in all assets remaining after payment of liabilities in the event of our liquidation, dissolution or winding up. Holders of common stock have no preemptive rights or rights to convert their common stock into any other securities. The outstanding common stock is fully paid and nonassessable. We have not paid dividends on our common stock since inception and do not plan to pay dividends in the foreseeable future. Any earnings will be retained to finance growth. PREFERRED STOCK Our Articles of Incorporation authorize the issuance of up to 5,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our Board of Directors. Accordingly, under the Articles of Incorporation, the Board of Directors may, without stockholder approval, issue preferred stock with dividend, liquidation, conversion, voting, redemption or other rights which could adversely affect the voting power or other rights of the holders of the common stock. The issuance of any shares of preferred stock having rights superior to those of the common stock may result in a decrease of the value or market price of the common stock and could further be used by the Board of Directors as a device to prevent a change in our control. We have no other anti-takeover provisions in our Articles of Incorporation or Bylaws. Holders of the preferred stock may have the right to receive dividends, certain preferences in liquidation and conversion rights. SHARES ELIGIBLE FOR FUTURE SALE Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of common stock in the public market could adversely affect prevailing market prices. Furthermore, since only a limited number of shares will be available for sale shortly after this offering because of certain contractual and legal restrictions on resale (as described below), sales of substantial amounts of our common stock in the public market after the restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future. Upon completion of this offering, we will have outstanding 13,075,833 shares of common stock. Of these shares, 4,000,000 shares sold in the offering (plus any shares issued upon exercise of the underwriters' overallotment option) will be freely tradable without restriction under the Securities Act, unless purchased by our "affiliates" as that term is defined in Rule 144 under the Securities Act (generally, officers, directors or 10% stockholders). 38 42 The remaining 9,075,833 shares outstanding are "restricted securities" within the meaning of Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 of the Securities Act. Sales of restricted securities in the public market, or the availability of such securities for sale, could adversely affect the market price of the common stock. Our stockholders have entered into lock-up agreements generally providing that they will not offer, sell, contract to sell, pledge, hypothecate or grant any option to purchase or otherwise dispose of our common stock or any securities exercisable for or convertible into our common stock owned by them for a period of 180 days after the effective date of the registration statement filed pursuant to this offering without the prior written consent of the representative of the underwriters. As a result of these contractual restrictions, notwithstanding possible earlier eligibility for sale under the provisions of Rule 144, shares subject to lock-up agreements will not be salable until such agreements expire or are waived by the representative of the underwriters. Notwithstanding the lock-up agreements, 2,113,386 shares may be sold, subject to the volume limitations set forth below, immediately under Rule 144 of the Securities Act and the remaining 6,962,447 shares may be sold from May 1999 through December 1999. In general, under Rule 144 as currently in effect, and beginning after the expiration of the lock-up agreements (180 days after the date of this prospectus), a person (or persons whose shares are aggregated) who has beneficially owned restricted securities for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of: (i) one percent of the number of shares of common stock then outstanding (which will equal 13,075 shares immediately after the offering); or (ii) the average weekly trading volume of the common stock during the four calendar weeks preceding the sale. Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144(k), a person who is 39 43 not deemed to have been our affiliate at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell such shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. We have granted certain demand and piggy-back registration rights covering 400,000 shares of common stock underlying the common stock purchase warrants to be issued to the representative of the underwriters. TRANSFER AGENT Corporate Stock Transfer, Inc., Denver, Colorado, is our transfer agent. The transfer agent's address is 370-17th Street, Suite 2350, Denver, Colorado 80202-4614, and its telephone number is 303.595.3300. LIMITATION ON LIABILITY Our Bylaws provide our directors, officers, employees and agents substantial protection against personal liability related to actions taken in their capacity as representatives of the Company. The effect of this provision is that we may be required to pay reasonably incurred expenses such as attorney's fees, judgments, penalties, fines and amounts paid in settlements associated with work related actions, suits or proceedings. We shall pay these expenses if an independent group, as defined in our Bylaws, determines that the individuals (1) conducted themselves in good faith, and (2) that they reasonably believed (a) in the case of conduct in their official capacity with us, that their conduct was in our best interest, or (b) in all other cases (except criminal cases), that their conduct was at least not opposed to our best interest, or (c) in the case of any criminal proceeding, that they had no reason to believe their conduct was unlawful. Our Bylaws specifically limit the payment of expenses in connection with a proceeding brought by or in the right of the Company to reasonable expenses, including attorney's fees. 40 44 UNDERWRITING Subject to the terms and conditions of an underwriting agreement dated __________, 1999 the underwriters named below have agreed to purchase from us the number of shares of common stock set forth opposite their names below.
Underwriters Number of Shares ------------ ---------------- Paradise Valley Securities, Inc. Total 4,000,000
The underwriting agreement provides that the obligations of the underwriters to purchase and accept delivery of the shares of common stock offered hereby are subject to approval by their counsel of certain legal matters and to certain other conditions. The underwriters are obligated to purchase and accept delivery of all the shares of common stock offered hereby (other than those shares covered by the overallotment option described below) if any are purchased. The underwriters initially propose to offer the shares of common stock in part directly to the public at the initial public offering price set forth on the cover page of this prospectus and in part to certain dealers (including the Underwriters) at such price less a concession not in excess of $_____ per share. The underwriters may allow, and such dealers may re-allow, to certain other dealers a concession not in excess of $_____ per share. After the initial offering of the common stock, the public offering price and other selling terms may be changed by the representative of the underwriters at any time without notice. The underwriters do not intend to confirm sales to any accounts over which they exercise discretionary authority. 41 45 We have granted to the underwriters an option, exercisable within 45 days after the date of this prospectus, to purchase, from time to time, in whole or in part, up to an aggregate of __________ additional shares of common stock at the initial public offering price less underwriting discounts and commissions. The underwriters may exercise such option solely to cover overallotments, if any, made in connection with the offering. To the extent that the underwriters exercise such option, each underwriter will become obligated, subject to certain conditions, to purchase its pro rata portion of such additional shares based on such underwriter's percentage underwriting commitment as indicated above. We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the underwriters may be required to make in respect thereof. Prior to the offering, there has been no established trading market for the common stock. The initial public offering price for the shares of common stock offered hereby will be determined by negotiation among us and the representative of the underwriters. Among the factors to be considered in determining the initial public offering price will be: o the history of and the prospects for the industry in which we compete; o our past and present operations; o our historical results of operations; o our prospects for future earnings; o the recent market prices of securities of generally comparable companies and o the general condition of the securities markets at the time of the offering. 42 46 Certain persons participating in this offering may engage in transactions that stabilize, maintain or otherwise affect the price of the securities, including overallotment, stabilizing and short-covering transactions in such securities, and the imposition of a penalty bid in connection with the offering. LEGAL MATTERS The validity of the common stock offered hereby will be passed upon for us by the Law Office of Gary A. Agron, Englewood, Colorado. Certain legal matters in connection with the offering will be passed upon for us by Brownstein Hyatt Farber & Strickland, P.C., Denver, Colorado and for the Underwriters by Bryan Cave LLP, Phoenix, Arizona. EXPERTS Our financial statements for the year ended December 31, 1998 and for the period from inception (June 25, 1997) to December 31, 1997, have been included in this prospectus in reliance on the report of Ehrhardt Keefe Steiner & Hottman P.C., independent public accountants, as given upon the authority of said firm as experts in accounting and auditing. CHANGE OF ACCOUNTANTS On December 11, 1998 we engaged BDO Seidman, LLP as our independent public accountant. BDO Seidman, LLP resigned as our independent public accountant on February 4, 1999 because they were unwilling to be associated with our financial statements due to the background of one of our employees. We employed this employee from January 1, 1999 through February 15, 1999 at which time he resigned. This employee was never appointed as an officer or director of quepasa.com, inc. He owns 443,450 shares of our common stock and remains an employee of WGM Corporation, the general partner of The Monolith Limited Partnership, one of our principal stockholders. Prior to their resignation, BDO Seidman, LLC had not completed their audits of any of our financial statements for any period. There were no disagreements between us and BDO Seidman, LLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures which, if not resolved to the satisfaction of BDO Seidman, LLC would have caused them to make reference to the matter in their report. We allowed BDO Seidman, LLC to read and make comment on this disclosure. On February 10, 1999, we engaged Ehrhardt Keefe Steiner & Hottman, P.C. as our independent public accountants. Prior to their appointment, we did not consult with them on issues relating to our accounting principles or the type of audit opinion with respect to our financial statements to be issued by them. ADDITIONAL INFORMATION We have filed with the Securities and Exchange Commission a Registration Statement under the Securities Act of 1933, as amended, covering the common stock. As permitted by the rules and regulations of the Commission, this prospectus does not contain all of the information set forth in the Registration Statement and the exhibits. For further information with respect to our company and the common stock, reference is made to the Registration Statement and the exhibits, which may be examined without charge at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549, copies of which may be obtained from the Commission upon payment of the prescribed fees. We will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will file reports, proxy statements and other information with the Commission. Such reports, proxy 43 47 statements and other information may be inspected at the public reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of these materials may be obtained at prescribed rates from the Commission at that address. The reports, proxy statements and other information can also be inspected at the Commission's regional offices at 7 World Trade Center, Suite 300, New York, New York 10048, at Northwestern Atrium Center, 500 West Madison, Chicago, Illinois 60621 and on the Commission's Web site at www.sec.gov. We will furnish to our stockholders annual reports which will include audited financial statements. We may also furnish to our stockholders quarterly financial statements and other reports that may be authorized by our Board of Directors. 44 48 INDEX TO FINANCIAL STATEMENTS
Page ---- Independent Auditors' Report..............................................F-2 Financial Statements Balance Sheets....................................................F-3 Statements of Operations..........................................F-4 Statement of Changes in Stockholders' Equity (Deficit)............F-5 Statements of Cash Flows..........................................F-6 Notes to Financial Statements.............................................F-7
F-1 49 INDEPENDENT AUDITORS' REPORT Board of Directors quepasa.com, inc. Phoenix, Arizona We have audited the accompanying balance sheets of quepasa.com, inc. (A Development Stage Company) as of December 31, 1998 and 1997 and the related statements of operations, changes in stockholders' equity (deficit) and cash flows for the year ended December 31, 1998 and from inception (June 25, 1997) to December 31, 1997 and cumulative from inception to December 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of quepasa.com, inc. as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years ended December 31, 1998 and from Inception (June 25, 1997) to December 31, 1997 and cumulative from Inception to December 31, 1998 in conformity with generally accepted accounting principles. Ehrhardt Keefe Steiner & Hottman PC February 17, 1999 Denver, Colorado F-2 50 QUEPASA.COM, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS
December 31, ------------------------------ 1998 1997 ------------ ------------ ASSETS Current assets Cash and cash equivalents $ 2,199,172 $ 2,582 Deposit receivable 1,533,632 -- Stock subscription receivable (Note 7) 125,000 -- ------------ ------------ Total current assets 3,857,804 2,582 ------------ ------------ Property and equipment, net of accumulated depreciation of $6,532 (Note 2) 354,620 -- Other assets License agreements, net of accumulated amortization of $104,165 (Note 3) 645,835 -- Other assets 2,500 -- ------------ ------------ Total other assets 648,335 -- ------------ ------------ Total assets $ 4,860,759 $ 2,582 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable $ 71,222 $ 5,465 Accrued Commissions (Note 7) 215,233 -- Stock subscription (Note 7) 337,500 -- Current portion of license agreement fees payable (Note 3) 272,500 -- Payroll taxes payable 2,922 -- ------------ ------------ Total current liabilities 899,377 5,465 Long-term liabilities Licensing agreement fees payable (Note 3) 437,500 -- ------------ ------------ Total liabilities 1,336,877 5,465 ------------ ------------ Commitments and contingencies (Note 6) Stockholders' equity (deficit) (Notes 4 and 7) Preferred stock, authorized 5,000,000 shares - none issued or outstanding -- -- Common stock, authorized 50,000,000 shares, $0.001 par value; issued and outstanding 9,075,833 and 5,680,000 shares, respectively 9,076 5,680 Additional paid-in capital 10,427,477 (5,660) Deficit accumulated during the development stage (6,912,671) (2,903) ------------ ------------ Total stockholders' equity (deficit) 3,523,882 (2,883) ------------ ------------ $ 4,860,759 $ 2,582 ============ ============
See notes to financial statements. F-3 51 STATEMENTS OF OPERATIONS
Cumulative from Inception Inception (June (June Year Ended 25, 1997) to 25, 1997) to December 31, December 31, December 31, 1998 1997 1998 ------------ ------------ ------------ Product and content development expenses $ 414,873 $ $ 414,873 Sales and marketing expenses 250,419 250,419 Stock based compensation expense(7) 5,265,364 -- 5,265,364 General and administrative expenses 931,172 3,703 934,875 ------------ ------------ ------------ Total operating expenses 6,861,828 3,703 6,865,531 ------------ ------------ ------------ Loss from operations (6,861,828) (3,703) (6,865,531) Other income (expense) Interest expense (48,994) -- (48,994) Other 1,054 800 1,854 ------------ ------------ ------------ Net other income (expenses) (47,940) 800 (47,140) ------------ ------------ ------------ Net loss $ (6,909,768) $ (2,903) $ (6,912,671) ============ ============ ============ Net loss per share, basic and diluted $ (.76) $ -- $ (.76) ============ ============ ============ Weighted average number of shares outstanding, basic and diluted 9,075,833 9,075,833 9,075,833 ============ ============ ============
See notes to financial statements. F-4 52 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) FOR THE PERIOD INCEPTION (JUNE 25, 1997) TO DECEMBER 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1998
Deficit Accumulated Additional During the Common Stock Paid-in Development Shares Amount Capital Stage Total ----------- ----------- ----------- ----------- ----------- Issuance of common stock for cash from initial capitalization, June 1997 (Note 7) 5,680,000 $ 5,680 $ (5,660) $ -- $ 20 Net loss for the period -- -- -- (2,903) (2,903) ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1997 5,680,000 5,680 (5,660) (2,903) (2,883) Issuance of common stock and stock based compensation May 1998 (Note 7) 1,420,000 1,420 4,985,294 -- 4,986,714 Issuance of common stock in conversion of note payable $1.56 per share) November 1998 (Note 4) 666,666 667 1,039,113 -- 1,039,780 Issuance of common stock in conversion of note payable ($1.00 per share), November 1998 (Note 4) 50,000 50 49,950 -- 50,000 Issuance of common stock for cash at $3.75 per share, net of $640,587 of offering costs November and December 1998 (Note 7) 1,259,167 1,259 4,080,030 -- 4,081,289 Issuance of compensatory stock options to employees October through December 1998 (Note 7) -- -- 278,750 -- 278,750 Net loss for the year -- -- -- (6,909,768) (6,909,768) ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1998 9,075,833 $ 9,076 $10,427,477 $(6,912,671) $ 3,523,882 =========== =========== =========== =========== ===========
See notes to financial statements. F-5 53 STATEMENTS OF CASH FLOWS
Cumulative from Inception Inception Year Ended (June 25, 1997) (June 25, 1997) December 31, to December 31, to December 31, 1998 1997 1998 --------------- --------------- --------------- Cash flows from operating activities Net loss $ (6,909,768) $ (2,903) $ (6,912,671) --------------- --------------- --------------- Adjustments to reconcile net loss to net cash (used in) provided by operating activities Depreciation and amortization 110,697 -- 110,697 Stock based compensation 5,265,364 -- 5,265,364 Accrued interest on convertible notes payable 39,780 -- 39,780 Change in assets and liabilities Deposit receivable (1,533,632) -- (1,533,632) Deposits (2,500) -- (2,500) Accounts payable 65,757 5,465 71,222 Accrued commissions 215,233 -- 215,233 Stock subscription 337,500 -- 337,500 Payroll taxes payable 2,922 -- 2,922 --------------- --------------- --------------- 4,501,121 5,465 4,506,586 --------------- --------------- --------------- Net cash (used in) provided by operating activities (2,408,647) 2,562 (2,406,085) --------------- --------------- --------------- Cash flows from investing activities Purchase of fixed assets (361,152) -- (361,152) Payments on license agreement (40,000) -- (40,000) --------------- --------------- --------------- Net cash used in investing activities (401,152) -- (401,152) --------------- --------------- --------------- Cash flows from financing activities Net proceeds from private placements 3,956,289 -- 3,956,289 Proceeds from convertible notes payable 1,100,000 -- 1,100,000 Proceeds from issuance of common stock 100 20 120 Payments on notes payable (50,000) -- (50,000) --------------- --------------- --------------- Net cash provided by financing activities 5,006,389 20 5,006,409 --------------- --------------- --------------- Net increase in cash and cash equivalents 2,196,590 2,582 2,199,172 Cash and cash equivalents, beginning of period 2,582 -- 2,582 --------------- --------------- --------------- Cash and cash equivalents, end of period $ 2,199,172 $ 2,582 $ 2,201,754 =============== =============== ===============
Supplemental disclosure of cash flow information: Cash paid for interest was $48,994 for the year ended December 31, 1998 and $0 from Inception (June 25, 1997) to December 31, 1997. Supplemental schedule of non-cash investing and financing activities: During 1998, the Company entered into a licensing agreement requiring total future payments of $750,000 (Note 3). During 1998, convertible notes totaling $1,050,000 were converted into common stock. See notes to financial statements. F-6 54 QUEPASA.COM, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES quepasa.com, inc. (the Company), a Nevada Corporation, was incorporated in June 1997. The Company is a Spanish Language Internet portal and search engine. The portal offers a number of services such as news, chat and free e-mail. The Company's portal draws viewers to their Web sites by providing a one-stop destination for identifying, selecting and accessing resources, services, content and information on the Web. The Company is targeted to provide users with information and interactive content centered around the Spanish language. The Company is a development-stage company that has not had any significant revenue since inception. The Company realized a net loss of approximately $6.9 million including a $5.3 million non-cash charge for stock-based compensation during the year ended December 31, 1998 and there is no assurance that the Company will generate revenue or earn profit in the future. During 1998, the Company changed its name from Internet Century, Inc. to quepasa.com, inc. Stock Split In October 1998, the Company's Board of Directors authorized a 284 for one stock split. The financial statements have been presented as if the split had occurred at inception. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and investments with original maturities of three months or less. Deposit Receivable Accounts receivable at December 31, 1998 represents refunds due from a media company for advances paid by the Company under an advertising agreement which was canceled prior to advertising services being rendered. The receivable was paid subsequent to December 31, 1998. Property and Equipment Property and equipment are recorded at cost. Depreciation and amortization expense is generally provided on a straight-line basis using estimated useful lives of three to five years. License Agreement The Company entered into a licensing agreement pursuant to which the Company licenses an internet-based search engine. The minimum annual royalty has been capitalized and is being amortized over three years, which is the minimum term of the agreement (Note 3). F-7 55 QUEPASA.COM, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenue Recognition Advertising revenues are expected to be derived principally from short-term advertising contracts. Revenues are generally recognized ratably over the term of the agreement, provided that the Company does not have any significant remaining obligations and collection of the resulting receivable is probable. To the extent that Web site impression deliveries are falling short of the guarantees, the Company would defer recognition of the corresponding revenues. Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statements and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized. Basic and Diluted Net Loss Per Share The Company computes net loss per share in accordance with the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS 128 and SAB 98, basic and diluted net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of common shares outstanding for the period. The calculation of basic and diluted net loss per share excludes shares of common stock issuable upon exercise of employee stock options as the effect of the exercise would be antidilutive. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. Actual results could differ from those estimates. Advertising Costs Advertising costs are expensed as incurred in accordance with Statement of Position 93-7, "Reporting on Advertising Costs". Advertising costs for the year ended December 31, 1998 and for the period from Inception (June 25, 1997) to December 31, 1997 and totaled $132,377 and $0, respectively. F-8 56 QUEPASA.COM, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Product and Content Development Product and content development costs, including Web-site development costs, are charged to expense as incurred. Fair Value of Financial Instruments The carrying amount of the Company's financial instruments, which principally include cash, deposit receivable, accounts payable and accrued expenses, approximate fair value due to the relatively short maturity of the financial instruments. The fair value of the Company's debt instruments are based on the amount of future cash flows associated with cash instrument using the Company's borrowing rate. At December 31, 1998 and December 31, 1997, the carrying value of all financial instruments was not materially different from fair values. Recently Issued Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities", which is effective for financial statements issued for all fiscal quarters of fiscal years beginning after June 15, 1999. This statement requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are not met a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. Historically, the Company has not entered into derivative contracts to hedge existing risks or for speculative purposes. Accordingly, the Company does not expect adoption of the new standards on January 1, 2000 to effect its financial statements. NOTE 2 - PROPERTY AND EQUIPMENT
December 31, ---------------------------------- 1998 1997 -------------- -------------- Computer equipment and software $ 344,948 $ -- Furniture, fixtures and equipment 16,204 -- -------------- -------------- 361,152 -- Less accumulated depreciation and amortization (6,532) -- -------------- -------------- Property and equipment $ 354,620 $ -- ============== ==============
F-9 57 QUEPASA.COM, INC. NOTES TO FINANCIAL STATEMENTS NOTE 3 - LICENSE AGREEMENT On July 21, 1998, the Company entered an Information Services Agreement (the "Agreement") with Inktomi Corporation ("Inktomi") whereby Inktomi will provide certain services, including but not limited to, search services enabling the Company to access Inktomi database of internet websites. The agreement requires quarterly payments ranging from $60,000 to $75,000 and expires in August 2001. The total service fees payable may increase based upon actual use of Inktomi services. The license was capitalized and is being amortized on a straight-line basis over the term of the agreement of three years. Minimum payments under the licensing agreement are as follows:
Year Ending December 31, ------------------------ 1999 $ 272,500 2000 250,000 2001 187,500 ------------ $ 710,000 ============
NOTE 4 - NOTES PAYABLE Convertible Note Payable In May 1998, the Company issued $100,000 of convertible debt. The convertible debt accrued interest at 12% per annum and was scheduled to mature on the earlier of May 31, 2000 or the closing date of the Company's initial public offering, if any. The Company had the right to convert unpaid note principal plus any accrued interest into 100,000 shares of common stock at any time during the term of the Note. In November 1998, the Company converted $50,000 of the note into 50,000 shares of the Company's common stock and repaid the balance of $50,000. In July 1998, the Company issued $1,000,000 of convertible debt. The convertible debt accrued interest at 12% per annum and was payable on the earlier of May 31, 2000 or at the closing date of the Company's initial public offering, if any. The Company had the right to convert unpaid principal plus any accrued interest into 666,666 shares of common stock at any time during the term of the notes. In November 1998, the notes and accrued interest of $39,780 were converted into 666,666 shares of the Company's common stock. F-10 58 QUEPASA.COM, INC. NOTES TO FINANCIAL STATEMENTS NOTE 5 - INCOME TAXES No provision for federal and state income taxes has been recorded as the Company has incurred net operating losses through December 31, 1998. The following table sets forth the primary components of deferred tax assets:
December 31, ------------------------------------- 1998 1997 -------------- ------------- Net operating loss carryforwards $ 6,910,000 $ 3,000 Nondeductible expenses (5,265,000) -- -------------- ------------- Gross deferred tax assets 1,645,000 3,000 Valuation allowance (1,645,000) (3,000) -------------- ------------- $ -- $ -- ============== =============
At December 31, 1998 and 1997, the Company fully reserved its deferred tax assets. The Company believes sufficient uncertainty exists regarding the reliability of tax assets such that a full valuation allowance is appropriate. At December 31, 1998, the Company had approximately $1,645,000 of federal net operating loss carryforwards for tax reporting purposes available to offset future taxable income. These carryforwards expire in 2013. The Company has approximately $1,645,000 of state net operating loss carryforwards for tax reporting purposes which expire in 2003. NOTE 6 - COMMITMENTS AND CONTINGENCIES Operating Leases The Company signed a three year lease agreement for an office located in Las Vegas, Nevada commencing August 15, 1998. The monthly lease payments range from $1,670 to $1,770. The lease expires August 14, 2001. The Company signed a three year lease agreement for office equipment commencing in August 1998. The monthly rent payment is $328 and the lease expires in September of 2001. Future minimum rental payments under non-cancelable operating and equipment leases are as follows:
Year Ending December 31, ------------------------ 1999 $ 20,240 2000 20,847 2001 14,168 -------------- $ 55,255 ==============
F-11 59 QUEPASA.COM, INC. NOTES TO FINANCIAL STATEMENTS NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED) Operating Leases (continued) Facilities and equipment leases expense for the year ended December 31, 1998 and for the period from Inception (June 25, 1997) to December 31, 1997 was $45,068 and $0, respectively. Employment Agreements The Company has employment agreements with many of its employees and all of its executive officers. The agreements provide for base salary and bonus provisions. The chief executive officer's agreement provides for a $5,000,000 payment upon termination without cause. NOTE 7 - STOCKHOLDERS' EQUITY Upon incorporation on June 25, 1997, the Company issued 20,800 shares (post-split) of common stock for $20 to the Chief Executive Officer and the other founder of the Company. Employee Compensatory Stock and Stock Options During May of 1998, the Company issued 1,420,000 shares of common stock and the original stockholders of the Company transferred existing shares to several employees and one advisor. The fair market value of the common stock on the date of these issuances were determined to be $1.00 based on the issuance of convertible debt in May of 1998 which was convertible into common stock at $1.00 per share. Approximately $5 million in compensation expense is reflected in the December 31, 1998 financial statements as a result of these transactions. Throughout 1998, the Company issued options to purchase common stock to several employees. Compensation expense of approximately $279,000 was recognized based on the difference between the exercise price and fair value of the stock in accordance with APB No. 25 of the options on the date of grant. Private Placements During November and December of 1998, the Company issued 1,259,167 shares of common stock in a private placement for cash at $3.75 per share. The Company received proceeds of $4,081,289 net of related costs of $640,587. In January 1999, $125,000 of the proceeds were received and are reflected as stock subscription receivable. Of the related costs, $215,233 were paid in January 1999. During December 1998, the Company received excess proceeds of $337,500 with respect to these private placements which were refunded in January 1999. F-12 60 TENTATIVE AND PRELIMINARY QUEPASA.COM, INC. NOTES TO FINANCIAL STATEMENTS NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED) Stock Option Plan In October 1998, the Company adopted a Stock Option Plan (the "Plan") which provides for the granting of options to officers, directors, and consultants. 2,500,000 shares of common stock have been restricted under the plan for the granting of options. The Plan will be in effect until November 1, 2009, unless extended by the Company's stockholders. The options are exercisable to purchase stock for a period of ten years from the date of grant. Incentive Stock Options granted pursuant to this Plan may not have an option price that is less than the fair market value of the stock on the date the option is granted. Incentive stock options granted to significant stockholder shall have an option price of not less than 110% of the fair market value of the stock on the date of the grant. Options granted under the plan vest one third at the end of each of the three years of service following the grant date. The Board of Directors of the Company may waive the vesting requirements at its discretion. All stock options issued under the Plan have an exercise price not less than the fair market value of the Company's common stock on the date of grant, and in accordance with accounting for such options utilizing the intrinsic value method. As of December 31, 1998, 215,000 options had been issued under the Plan. Stock Options Had compensation cost for stock-based compensation been determined based on the fair value on the grant date consistent with the method of SFAS 123, the Company's net income and earnings per share for the year ended December 31, 1998 and for the period from Inception (June 25, 1997) to December 31, 1997 would have been reduced to the pro forma amounts presented below:
Cumulative Inception From Inception (June 25, (June 25, Year Ended 1997) to 1997) to December 31, December 31, December 31, 1998 1997 1998 ------------- ------------- -------------- Net loss (6,912,671) As reported $ (6,909,768) $ 2,903 (7,127,671) Pro forma $ (7,124,768) $ 2,903 Basic and diluted loss per share As reported (.76) -- (.76) Pro forma (.79) -- (.79)
F-13 61 QUEPASA.COM, INC. NOTES TO FINANCIAL STATEMENTS NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED) Stock Options (continued) The fair value of option grants is estimated on the date of grants utilizing the Black-Scholes option pricing model with the following assumptions for 1998: expected life of 10 years, no volatility, risk-free interest rates of 6%, and a 0% dividend yield. Summarized information relating to stock options at December 31, 1998 is as follows:
Outstanding and Exercisable Weighted Average Exercise --------------------------- Price Per Exercise Share Shares Price ----------- --------- -------- $ 1.00-3.75 215,000 $ 2.45 =========== ========= ========
NOTE 8 - SUBSEQUENT EVENTS Proposed Public Offering On January 15, 1999, the Company entered into a letter-of-intent with an investment banker relating to a proposed initial public offering of shares of common stock of the Company. The initial public offering is expected to consist of the sale of 4,000,000 shares of common stock, plus an option for the underwriters to sell an additional 600,000 shares to cover overallotments. The Company has also authorized the issuance of 400,000 warrants to purchase common stock at a maximum of $14.40 per share. In conjunction with the proposed offering, the underwriter's are expected to receive compensation equal to the maximum allowable under the Corporate Finance Rule of the National Association of Securities Dealers, Inc. for comparable size offerings. Advertising Contracts In January 1999, the Company entered a 26-week sponsorship agreement with a Spanish language television broadcaster. Based on the terms of the agreement, the Company will receive media spots in exchange for approximately $800,000. In February 1999, the Company entered a contract for an 8-week nationwide advertising campaign with a Spanish language radio broadcaster located in the United States. The contract calls for an initial payment of $1.6 million and subsequent monthly payments for broadcasting as incurred. In February 1999, the Company entered into an advertising agreement with an entity partially owned by a Director of the Company. The agreement provides for advertising services for a flat fee of $78,000 per month and is cancelable by either party with 30 days written notice. F-14 62 QUEPASA.COM, INC. NOTES TO FINANCIAL STATEMENTS NOTE 8 - SUBSEQUENT EVENTS (CONTINUED) Options Granted In January 1999, the Company granted 1,500,000 stock options to purchase common stock to the Chief Executive Officer. The options are exercisable at $8.00, vest immediately and have a term of 10 years. In January 1999, the Chief Executive Officer was also granted the right to earn stock options to purchase up to 2,000,000 shares of common stock tied to certain performance goals. For every 250,000 subscribers to the Company's e-mail service, the Chief Executive Officer will be granted 100,000 stock options exercisable at 120% of the stock price at the time of issuance. For every 250,000 subscribers to the Company's chat room service, the Chief Executive Officer will be granted 100,000 stock options exercisable at 120% of the stock price at the time of issuance. Each of these performance goals specify a maximum of 1,000,000 options to be granted. In January 1999, the Company granted 55,000 options to employees with an exercise price of $1.00. Based on the fair market value of the Company's common stock on the date of grant, approximately $385,000 of compensation expense will be recorded on the date of the transaction. Additionally, 883,000 options were granted to employees with an exercise price of $8.00 which was determined to be the fair value on the date of grant. Loans from Related Parties (unaudited) In March of 1999, the Company received a $2 million loan from a stockholder of the Company. The note bears interest at 12% per annum through June 1999 and then 14% per annum through maturity. Additionally, the Chief Executive Officer has agreed to lend the Company up to $3 million as needed for operations. Any amounts loaned will bear interest at 12% per annum for four months and 14% per annum for the next 20 months and mature 24 months from issuance. F-15 63 [INSIDE BACK COVER PAGE - SCREEN SHOT OF quepasa.com's E-MAIL AND CHAT SERVICE] 64 =============================================================================== NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF. --------------- TABLE OF CONTENTS Page Prospectus Summary....................................2 Risk Factors..........................................6 Use of Proceeds......................................17 Dividend Policy......................................17 Dilution.............................................18 Capitalization.......................................19 Selected Financial Data..............................20 Management's Discussion and Analysis of Financial Condition and Results of Operations..........................21 Our Business.........................................22 Our Management.......................................34 Principal Stockholders...............................40 Certain Transactions.................................41 Description of Securities............................42 Underwriting.........................................46 Legal Matters........................................48 Experts..............................................48 Change in Accountants................................48 Additional Information...............................48 Financial Statements................................F-1 UNTIL __________, 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. ================================================================================ ================================================================================ 4,000,000 SHARES quepasa!com, inc. [Logo] COMMON STOCK --------------- PROSPECTUS --------------- PARADISE VALLEY SECURITIES, INC. _____________, 1999 ================================================================================ 65 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1) SEC Registration Statement ................................$ 17,983 NASD Filing Fee............................................$ 6,596 Blue Sky Filing Fees.......................................$ 2,500 Blue Sky Legal Fees........................................$ 5,000 Printing Expenses..........................................$ 100,000 Legal Fees and Expenses....................................$ 300,000 Accounting Fees............................................$ 100,000 Transfer Agent Fees........................................$ 25,000 Nasdaq Application Fee.....................................$ 25,000 Miscellaneous Expenses.....................................$ 18,421 --------- Total.............................................$ 600,000 =========
(1) All expenses, except the SEC registration fee and NASD filing fee, are estimated. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. ARTICLE TWELFTH OF THE REGISTRANT'S AMENDED ARTICLES OF INCORPORATION PROVIDE AS FOLLOWS: "The liability of the directors of the Corporation for monetary damages for breach of fiduciary duty is eliminated to the fullest extent provided by Nevada law. Directors and officers of the Corporation shall be indemnified by the Corporation against any liability to the fullest extent provided by Nevada law." II-1 66 ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES During the last three years, the Registrant sold the following securities which were not registered under the Securities Act, as amended.
Name Date Number of Shares Price Per Share - - - - ---- ---- ---------------- --------------- JEFFREY PETERSON Jun-97 2,840,000 $.0000035 JENNIFER FERLAINO Jun-97 2,840,000 $.0000035 MICHAEL SILBERMAN May-98 1,420,000 $0.0001 ENVER ZAKY(1) Nov-98 50,000 $1.00 MITCHELL PIERCE(2) Nov-98 333,333 $1.56 TIM PRING(2) Nov-98 333,333 $1.56 LOUIS GRUBB Nov-98 66,667 $3.75 DANIEL LOUIS GRUBB Nov-98 66,667 $3.75 BRADLEY T. PRING Nov-98 106,667 $3.75 MARSHALL CHESROWN Nov-98 100,000 $3.75 JOHN PRING Nov-98 26,667 $3.75 JOHN ELWAY Nov-98 133,333 $3.75 FELIX SABATES Nov-98 66,666 $3.75 MAYER SHIRAZIPOUR Nov-98 100,000 $3.75 MITCHELL PIERCE Dec-98 103,333 $3.75 AL MONJAZEB Dec-98 30,000 $3.75 ANTHONY BILY Dec-98 53,333 $3.75 LAURENCE R. DAVIS Dec-98 20,000 $3.75 D.A. HUSCHKE Dec-98 26,667 $3.75 FREDRICK KAEFER Dec-98 27,000 $3.75 MICHAEL MAYNARD Dec-98 40,000 $3.75 JOHN MCGRATH Dec-98 20,000 $3.75 JAMES PETERSON Dec-98 20,000 $3.75 PETER A. PFER Dec-99 27,000 $3.75 LYLE REIGEL Dec-98 52,700 $3.75 CHESTER SAWKO Dec-98 20,000 $3.75 RICK SCHEER Dec-98 31,800 $3.75 JOE SEIWERT III Dec-98 20,000 $3.75 DAVID SOLANA Dec-98 26,667 $3.75 MIARTIN SOUSA Dec-98 20,000 $3.75 KEITH STONE Dec-98 27,000 $3.75 DONALD STRATE Dec-98 27,000 $3.75 --------- Total 9,075,833
(1) Conversion of a promissory note issued by the Registrant in May 1998. (2) Conversion of a promissory note issued by the Registrant in July 1998. II-2 67 With respect to the sales made, the Registrant relied on Section 4(2) and Regulation D Rule 506 of the Securities Act of 1933, as amended (the "Securities Act"). No advertising or general solicitation was employed in offering the securities. The securities were offered to a limited number of persons all of whom were business associates of the Registrant or its executive officers and directors, and the transfer thereof was appropriately restricted by the Registrant. All persons were accredited investors as that term is defined in Rule 501 of Regulation D under the Securities Act and were capable of analyzing the merits and risks of their investment and who acknowledged in writing that they were acquiring the securities for investment and not with a view toward distribution or resale and understood the speculative nature of their investment. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit No. Title ----------- ------ 1.01 Form of Underwriting Agreement (to be filed by amendment) 1.02 Form of Representative's Warrant (to be filed by amendment) 3.01 Articles of Incorporation of the Registrant, as amended 3.02 Bylaws of the Registrant 5.01 Opinion of Gary A. Agron, regarding legality of the common stock (includes Consent) (to be filed by amendment) 10.01 Agreement with Inktomi Corporation 10.02 Agreements with UPI 10.03 Agreement with Reuters NewMedia, Inc., as amended 10.04 Office Lease (Arizona) (to be filed by amendment) 10.05 Employment Agreement with Mr. Peterson, as amended 10.06 Employment Agreement with Mr. Silberman, as amended 10.07 Employment Agreement with Mr. Galan 10.08 Employment Agreement with Mr. Ross 10.09 Employment Agreement with Mr. Offenbecher 10.10 Employment Agreement with Mr. Roldan 10.11 Employment Agreement with Mr. Garcia (Luis) 10.12 Agreement with WeatherLabs, Inc. 10.13 Agreement with Heftel Broadcasting Company 10.14 Agreement with GTE Internetworking, Inc. 10.15 Agreement with Exodus Communications, Inc. 10.16 Agreement with Telemundo Network Group, Inc. 10.17 Agreement with 24/7 Media, Inc. 10.18 Employment Agreement with Mr. Hubert, as amended 10.19 Office Lease (Nevada) 10.20 1998 Stock Option Plan, as amended and forms of Option Agreements 10.21 Monolith Promissory Notes 10.22 Agreement with Garcia/KJS (to be filed by amendment) 10.23 Employment Agreement with Mr. Taylor 10.24 Voting Trust Agreement (to be filed by amendment) 10.25 Jeffrey S. Peterson Loan Agreement 16.01 Letter from BDO Seidman, LLP 23.05 Consent of Gary A. Agron (See 5.01, above) 23.06 Consent of Ehrhardt, Keefe, Steiner & Hottman, P.C.
II-3 68 ITEM 17. UNDERTAKINGS. The Registrant hereby undertakes: (a) That insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b) That subject to the terms and conditions of Section 13(a) of the Securities Exchange Act of 1934, it will file with the Securities and Exchange Commission such supplementary and periodic information, documents and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. (c) That any post-effective amendment filed will comply with the applicable forms, rules and regulations of the Commission in effect at the time such post-effective amendment is filed. (d) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; II-4 69 (e) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (f) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (g) To provide to the Underwriter at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriter to permit prompt delivery to each purchaser. II-5 70 SIGNATURES Pursuant to the requirements of the Securities Act, as amended, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Phoenix, state of Arizona, on March 10, 1999. quepasa.com, inc. By: /s/ Jeffrey S. Peterson -------------------------------------------- Jeffrey S. Peterson, Chief Executive Officer Pursuant to the requirements of the Securities Act, as amended, this registration statement has been signed below by the following persons on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Jeffrey S. Peterson - - - - ---------------------------- President, Chief Executive March 10, 1999 Jeffrey S. Peterson Officer and Chairman of the Board of Directors /s/ Michael A. Hubert - - - - ---------------------------- Chief Operating Officer March 10, 1999 Michael A. Hubert and Director /s/ Bryan L. Ross - - - - ---------------------------- Chief Technical Officer March 10, 1999 Bryan L. Ross and Director /s/ Juan C. Galan - - - - ---------------------------- Chief Financial Officer March 10, 1999 Juan C. Galan (Principal Accounting Officer) /s/ Robert J. Taylor - - - - ---------------------------- Vice President - March 10, 1999 Robert J. Taylor Strategy and Operations and Director /s/ Lionel Sosa - - - - ---------------------------- Director March 10, 1999 Lionel Sosa /s/ Gregory J. Kolanek - - - - ---------------------------- Director March 10, 1999 Gregory J. Kolanek
71 QUEPASA.COM,INC. EXHIBIT INDEX
Exhibit No. Title ----------- ----- 1.01 Form of Underwriting Agreement (to be filed by amendment) 1.02 Form of Representative's Warrant (to be filed by amendment) 3.01 Articles of Incorporation of the Registrant, as amended 3.02 Bylaws of the Registrant 5.01 Opinion of Gary A. Agron, regarding legality of the common stock (includes Consent) (to be filed by amendment) 10.01 Agreement with Inktomi Corporation 10.02 Agreements with UPI 10.03 Agreement with Reuters NewMedia Inc., as amended 10.04 Office Lease (Arizona) (to be filed by amendment) 10.05 Employment Agreement with Mr. Peterson, as amended 10.06 Employment Agreement with Mr. Silberman, as amended 10.07 Employment Agreement with Mr. Galan 10.08 Employment Agreement with Mr. Ross 10.09 Employment Agreement with Mr. Offenbecher 10.10 Employment Agreement with Mr. Roldan 10.11 Employment Agreement with Mr. Garcia (Luis) 10.12 Agreement with WeatherLabs, Inc. 10.13 Agreement with Heftel Broadcasting Company 10.14 Agreement with GTE Internetworking, Inc. 10.15 Agreement with Exodus Communications, Inc. 10.16 Agreement with Telemundo Network Group, Inc. 10.17 Agreement with 24/7 Media, Inc. 10.18 Employment Agreement with Mr. Hubert, as amended 10.19 Office Lease (Nevada) 10.20 1998 Stock Option Plan, as amended and forms of Option Agreements 10.21 Monolith Promissory Notes 10.22 Agreement with Garcia/KJS (to be filed by amendment) 10.23 Employment Agreement with Mr. Taylor 10.24 Voting Trust Agreement (to be filed by amendment) 10.25 Jeffrey S. Peterson Loan Agreement 16.01 Letter from BDO Seidman, LLP 23.05 Consent of Gary A. Agron (See 5.01, above) 23.06 Consent of Ehrhardt, Keefe, Steiner & Hottman, P.C.
EX-3.01 2 ARTICLES OF INCORPORATION OF THE REGISTRANT 1 EXHIBIT 3.01 FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA JUN 25 1997 NO. C13600-97 ------------- /s/ DEAN HELLER DEAN HELLER, SECRETARY OF STATE ARTICLES OF INCORPORATION OF INTERNET CENTURY, INC. FIRST. The name of the corporation is: INTERNET CENTURY, INC. SECOND. Its registered office in the State of Nevada is located at 2533 North Carson Street, Carson City, Nevada 89706 that this Corporation may maintain an office, or offices, in such other place within or without the State of Nevada as may be from time to time designated by the Board of Directors, or by the By-Laws of said Corporation, and that this Corporation may conduct all Corporation business of every kind and nature, including the holding of all meetings of Directors and Stockholders, outside the State of Nevada as well as within the State of Nevada THIRD. The objects for which this Corporation is formed are: To engage in any lawful activity, including, but not limited to the following: (A) Shall have such rights, privileges and powers as may be conferred upon corporations by any existing law. (B) May at any time exercise such rights, privileges and powers, when not inconsistent with the purposes and objects for which this corporation is organized. 1 2 (C) Shall have power to have succession by its corporate name for the period limited in its certificate or articles of incorporation, and when no period is limited, perpetually, or until dissolved and its affairs wound up according to law. (D) Shall have power to sue and be sued in any court of law or equity. (E) Shall have power to make contracts. (F) Shall have power to hold, purchase and convey real and personal estate and to mortgage or lease any such real and personal estate with its franchises. The power to hold real and personal estate shall include the power to take the same by devise or bequest in the State of Nevada, or in any other state, territory or country. (G) Shall have power to appoint such officers and agents as the affairs of the corporation shall require, and to allow them suitable compensation. (H) Shall have power to make By-Laws not inconsistent with the constitution or laws of the United States, or of the State of Nevada, for the management, regulation and government of its affairs and property, the transfer of its stock, the transaction of its business, and the calling and holding of meetings of its stockholders. (I) Shall have power to wind up and dissolve itself, or be wound up or dissolved. (J) Shall have power to adopt and use a common seal or stamp, and alter the same at pleasure. The use of a seal or stamp by the corporation on any corporate documents is not necessary. The corporation may use a seal or stamp, if it desires, but such use or nonuse shall not in any way affect the legality of the document. (K) Shall have power to borrow money and contract debts when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or franchises, 2 3 or for any other lawful purpose of its incorporation; to issue bonds, promissory notes, bills of exchange, debentures, and other obligations and evidences of indebtedness, payable at a specified time or times, or payable upon the happening of a specified event or events, whether secured by mortgage, pledge or otherwise, or unsecured, for money borrowed, or in payment for property purchased, or acquired, or for any other lawful object. (L) Shall have power to guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities or evidences of the indebtedness created by, any other corporation or corporations of the State of Nevada, or any other state or government, and, while owners of such stock, bonds, securities or evidences of indebtedness, to exercise all the rights, powers and privileges of ownership, including the right to vote, if any. (M) Shall have power to purchase, hold, sell and transfer shares of its own capital stock, and use therefor its capital, capital surplus, surplus, or other property or fund. (N) Shall have power to conduct business, have one or more offices, and hold, purchase, mortgage and convey real and personal property in the State of Nevada, and in any of the several states, territories, possessions and dependencies of the United States, the District of Columbia, and any foreign countries. (O) Shall have power to do all and everything necessary and proper for the accomplishment of the objects enumerated in its certificate or articles of incorporation, or any amendment thereof, or necessary or incidental to the protection and benefit of the corporation, and, in general, to carry on any lawful business necessary or incidental to the attainment of the 3 4 objects of the corporation, whether or not such business is similar in nature to the objects set forth in the certificate or articles of incorporation of the corporation, or any amendment thereof. (P) Shall have power to make donations for the public welfare or for charitable, scientific or educational purposes. (Q) Shall have power to enter into partnerships, general or limited, or joint ventures, in connection with any lawful activities, as may be allowed by law. FOURTH. That the total number of common stock authorized that may be issued by the Corporation is TWENTY FIVE THOUSAND (25,000) shares of stock without nominal par value and no other class of stock shall be authorized. Said shares may be issued by the corporation from time to time for such considerations as may be fixed by the Board of Directors. FIFTH. The governing board of this corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the By-Laws of this Corporation, providing that the number of directors shall not be reduced to fewer than one (1). The name and post office address of the first board of Directors shall be one (1) in number and listed as follows:
NAME POST OFFICE ADDRESS ---- ------------------- Brent Buscay 2533 North Carson Street Carson City, Nevada 89706
SIXTH. The capital stock, after the amount of the subscription price, or par value, has been paid in, shall not be subject to assessment to pay the debts of the corporation. 4 5 SEVENTH. The name and post office address of the Incorporator signing the Articles of Incorporation is as follows: NAME POST OFFICE ADDRESS ---- ------------------- Brent Buscay 2533 North Carson Street Carson City, Nevada 89706 EIGHTH. The resident agent for this corporation shall be: LAUGHLIN ASSOCIATES, INC. The address of said agent, and, the registered or statutory address of this corporation in the state of Nevada, shall be: 2533 North Carson Street Carson City, Nevada 89706 NINTH. The corporation is to have perpetual existence. TENTH. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized: Subject to the By-Laws, if any, adopted by the Stockholders, to make, alter or amend the By-Laws of the Corporation. To fix the amount to be reserved as working capital over and above its capital stock paid in: to authorize and cause to be executed, mortgages and liens upon the real and personal property of this Corporation. By resolution passed by a majority of the whole Board, to designate one (1) or more committees, each committee to consist of one or more of the Directors of the Corporation. 5 6 which, to the extent provided in the resolution, or in the By-Laws of the Corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation. Such committee, or committees, shall have such name, or names, as may be stated in the By-Laws of the Corporation, or as may be determined from time to time by resolution adopted by the Board of Directors. When and as authorized by the affirmative vote of the Stockholders holding stock entitling them to exercise at least a majority of the voting power given at a Stockholders meeting called for that purpose, or when authorized by the written consent of the holders of at least a majority of the voting stock issued and outstanding, the Board of Directors shall have power and authority at any meeting to sell, lease or exchange all of the property and assets of the Corporation, including its good will and its corporate franchises, upon such terms and conditions as its board of Directors deems expedient and for the best interests of the Corporation. ELEVENTH. No shareholder shall be entitled as a matter of right to subscribe for or receive additional shares of any class of stock of the Corporation, whether now or hereafter authorized, or any bonds, debentures or securities convertible into stock, but such additional shares of stock or other securities convertible into stock may be issued or disposed of by the Board of Directors to such persons and on such terms as in its discretion it shall deem advisable. TWELFTH. No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of any such director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or 6 7 officer (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of law, or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification. THIRTEENTH. This Corporation reserves the right to amend, alter, change or repeal any provision contained in the Articles of Incorporation, in the manner now or hereafter prescribed by statute, or by the Articles of Incorporation, and all rights conferred upon Stockholders herein are granted subject to this reservation. 7 8 FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA AUG. 26, 1998 NO. C13600-97 /s/ DEAN HELLER DEAN HELLER, SECRETARY OF STATE CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION INTERNET CENTURY, INC. The undersigned, Jennifer Ferlaino, as President and Secretary of Internet Century, Inc., a Nevada corporation does hereby certify: That the Board of Directors and the Shareholders of said corporation by unanimous written consent effective July 15, 1998, adopted resolutions to amend the original Articles of Incorporation as follows: Article FOURTH is hereby amended to read as follows: "The aggregate number of shares of Common Stock which the corporation shall have authority to issue is 10,000,000 shares with par value of $.001 per share. The shares of this class of Common Stock shall have unlimited voting rights and shall constitute the sole voting group of the Corporation, except to the extent any additional voting group or groups may hereafter be established in accordance with the Nevada Revised Statutes. The shares of this class shall also be entitled to receive the net assets of the corporation upon dissolution. Cumulative voting shall not be permitted in the election of directors or otherwise. Preemptive rights to purchase additional shares of stock are denied. The Corporation shall have the authority to issue 5,000,000 shares of Preferred Stock with par value of $.001 per share, which may be issued in one or more series at the discretion of the board of directors. In establishing a series, the board of directors shall give to it a distinctive designation so as to distinguish it form the share of all other series and classes, shall fix the number of shares in such series, and the preferences, rights and restrictions thereof. All shares of any one series shall be alike in every particular except as otherwise provided by these Articles of Incorporation or the Nevada Revised Statutes." Article TWELFTH is hereby amended to read as follows: "The liability of the directors of the Corporation for monetary damages for breach of fiduciary duty is eliminated to the fullest extent provided by Nevada law. Directors and officers of the Corporation shall be indemnified by the Corporation against any liability to the fullest extent provided by Nevada law." The number of shares of the corporation outstanding and entitled to vote on amendments to the Articles of Incorporation is 25,000; that the said change and amendments have been consented to and approved by a majority vote of the stockholders holding at least a majority of each class of stock outstanding and entitled to vote thereon. /s/ JENNIFER L. FERLAINO --------------------------------------- President and Secretary State of Arizona ) )Section County of Maricopa ) On August 24, 1998, personally appeared before me, a Notary Public, Jennifer L. Ferlaino, - - - - ---------------------------------------------- who acknowledged that they Name of Persons Appearing and Signing Document executed the above instrument. /s/ Lucy J. Vesterby -------------------------------------- Signature of Notary [Notary Seal] 9 EXHIBIT 3.01 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION INTERNET CENTURY, INC. The undersigned, Jeffrey Peterson, as President and Jennifer Ferlaino as Secretary of Internet Century, Inc., a Nevada corporation does hereby certify: That the Board of Directors of said corporation by unanimous written consent effective December 2, 1998, adopted a resolution to amend the Articles of Incorporation as follows: Article FIRST is hereby amended to read as follows: "The name of the corporation is: quepasa.com, inc." The number of shares of the corporation outstanding and entitled to vote on an amendment to the Articles of Incorporation is 8,483,333; that the said change and amendment has been consented to and approved by a majority vote of the stockholders holding at least a majority of each class of stock outstanding and entitled to vote thereon. /s/ Jeffrey Peterson ------------------------------------- Jeffrey Peterson, President /s/ Jennifer Ferlaino ------------------------------------- Jennifer Ferlaino, Secretary State of Arizona ) ) ss. County of Maricopa ) On December 15, 1998, personally appeared before me, a Notary Public Jeffrey Peterson and Jennifer Ferlaino, who acknowledged that they executed the above instrument. /s/ Sharon A. Olson ------------------------------------- Signature of Notary (Notary Stamp or Seal) 10 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION QUEPASA.COM, INC. The undersigned, Jeffrey Peterson, as President and Jennifer Ferlaino as Secretary of quepasa.com, inc., a Nevada corporation does hereby certify: That the Board of Directors of said corporation by unanimous written consent effective January 29, 1999, adopted a resolution to amend the Articles of Incorporation as follows: Article FOURTH is hereby amended to read as follows: "The aggregate number of shares of Common Stock which the corporation shall have authority to issue is 50,000,000 shares with par value of $.001 per share, which may be issued in one or more series at the discretion of the board of directors. In establishing a series, the board of directors shall give to it a distinctive designation so as to distinguish it from the shares of all other series and classes, shall fix the number of shares in such series, and the voting powers, designations, limitations, restrictions and relative rights of each such series thereof. All shares of any one series shall be alike in every particular except as otherwise provided by these Articles of Incorporation or the Nevada Revised Statutes. The shares of Common Stock shall constitute the sole voting group of the Corporation, except to the extent any additional voting group or groups may hereafter be established in accordance with the Nevada Revised Statutes. The shares of this class shall also be entitled to receive the net assets of the corporation upon dissolution. Cumulative voting shall not be permitted in the election of directors or otherwise. Preemptive rights to purchase additional shares of stock are denied." The corporation shall have the authority to issue 5,000,000 shares of Preferred Stock with par value of $.001 per share, which may be issued in one or more series at the discretion of the board of directors. In establishing a series, the board of directors shall give to it a distinctive designation so as to distinguish it from the shares of all other series and classes, shall fix the number of shares in such series, and the preferences, rights and restrictions thereof. All shares of any one series shall be alike in every particular except as otherwise provided by these Articles of Incorporation or the Nevada Revised Statutes." The number of shares of the corporation outstanding and entitled to vote on an amendment to the Articles of Incorporation is 9,075,833; that the said change and amendment has been consented to and approved by a majority vote of the stockholders holding at least a majority of each class of stock outstanding and entitled to vote thereon. /s/ Jeffrey Peterson ----------------------------------- Jeffrey Peterson, President /s/ Jennifer Ferlaino ----------------------------------- Jennifer Ferlaino, Secretary State of Arizona ) ) ss. County of Maricopa ) ------------------------------ On March 8, 1999 , personally appeared before _______________________________________ me, a Notary Public Jeffrey Peterson and Jennifer Ferlaino _____________________________________________________, who Name of Persons Appearing and Signing Document acknowledged that they executed the above instrument. /s/ Danielle Miller ----------------------------------- Signature of Notary (Notary Stamp or Seal) EX-3.02 3 BYLAWS OF THE REGISTRANT 1 EXHIBIT 3.02 BYLAWS OF INTERNET CENTURY, INC. A NEVADA CORPORATION 2 BYLAWS Table of Contents ARTICLE PAGE I. Offices....................................................... 1 II. Shareholders.................................................. 1 III. Board of Directors............................................ 8 IV. Officers and Agents........................................... 12 V. Stock......................................................... 15 VI. Indemnification of Certain Persons............................ 17 VII. Provision of Insurance........................................ 20 VIII. Miscellaneous................................................. 20 Effective: May 21, 1998 3 BYLAWS OF INTERNET CENTURY, INC. ARTICLE I OFFICES The principal office of the corporation shall be designated from time to time by the corporation and may be within or outside of Nevada. The corporation may have such other offices, either within or outside Nevada, as the board of directors may designate or as the business of the corporation may require from time to time. The registered office of the corporation required by the Nevada General Corporation Law to be maintained in Nevada may be, but need not be, identical with the principal office, and the address of the registered office may be changed from time to time by the board of directors. ARTICLE II SHAREHOLDERS Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall be held during the month of May of each year on a date and at a time fixed by the board of directors of the corporation (or by the president in the absence of action by the board of directors), beginning with the year 1999, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors is not held on the day fixed as provided herein for any annual meeting of the shareholders, or any adjournment thereof, the board of directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as it may conveniently be held. A shareholder may apply to the district court in the county in Nevada where the corporation's principal office is located or, if the corporation has no principal office in Nevada, to the district court of the county in which the corporation's registered office is located to seek an order that a shareholder meeting be held (i) if an annual meeting was not held within six months after the close of the corporation's most recently ended fiscal year or fifteen months after its last annual meeting, whichever is earlier, or (ii) if the shareholder participated in a proper call of or proper demand for a special meeting and notice of the special meeting was not given within thirty days after the date of the call or the date the last of the demands necessary to require calling of the meeting was received by the corporation pursuant to Nevada corporate law, or the special meeting was not held in accordance with the notice. Section 2. SPECIAL MEETINGS. Unless otherwise prescribed by statute, special meetings of the shareholders may be called for any purpose by the president or by the board of directors. The president shall call a special meeting of the shareholders if the corporation receives one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, 4 signed and dated by holders of shares representing at least ten percent of all the votes entitled to be cast on any issue proposed to be considered at the meeting. Section 3. PLACE OF MEETING. The board of directors may designate any place, either within or outside Nevada, as the place for any annual meeting or any special meeting called by the board of directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or outside Nevada, as the place for such meeting. If no designation is made, or if a special meeting is called other than by the board, the place of meeting shall be the principal office of the corporation. Section 4. NOTICE OF MEETING. Written notice stating the place, date, and hour of the meeting shall be given not less than ten nor more than sixty days before the date of the meeting, except that (i) if the number of authorized shares is to be increased, at least thirty days' notice shall be given, or (ii) any other longer notice period is required by the Nevada General Corporation Law. The secretary shall be required to give such notice only to shareholders entitled to vote at the meeting except as otherwise required by the Nevada General Corporation Law. Notice of a special meeting shall include a description of the purpose or purposes of the meeting. Notice of an annual meeting need not include a description of the purpose or purposes of the meeting except the purpose or purposes shall be stated with respect to (i) an amendment to the articles of incorporation of the corporation, (ii) a merger or share exchange in which the corporation is a party and, with respect to a share exchange, in which the corporation's shares will be acquired, (iii) a sale, lease, exchange or other disposition, other than in the usual and regular course of business, of all or substantially all of the property of the corporation or of another entity which this corporation controls, in each case with or without the goodwill, (iv) a dissolution of the corporation, (v) restatement of the articles of incorporation, or (vi) any other purpose for which a statement of purpose is required by the Nevada General Corporation Law. Notice shall be given personally or by mail, private carrier, telegraph, teletype, electronically transmitted facsimile or other form of wire or wireless communication by or at the direction of the president, the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed and if in a comprehensible form, such notice shall be deemed to be given and effective when deposited in the United States mail, properly addressed to the shareholder at his address as it appears in the corporation's current record of shareholders, with first class postage prepaid. If notice is given other than by mail, and provided that such notice is in a comprehensible form, the notice is given and effective on the date actually received by the shareholder. If requested by the person or persons lawfully calling such meeting, the secretary shall give notice thereof at corporate expense. No notice need be sent to any shareholder if three successive notices mailed to the last known address of such shareholder have been returned as undeliverable until such time as another address for such shareholder is made known to the corporation by such shareholder. In order to be entitled to receive notice of any meeting, a shareholder shall advise 2 5 the corporation in writing of any change in such shareholder's mailing address as shown on the corporation's books and records. When a meeting is adjourned to another date, time or place, notice need not be given of the new date, time or place if the new date, time or place of such meeting is announced before adjournment at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which may have been transacted at the original meeting. If the adjournment is for more than 120 days, or if a new record date is fixed for the adjourned meeting, a new notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting as of the new record date. A shareholder may waive notice of a meeting before or after the time and date of the meeting by a writing signed by such shareholder. Such waiver shall be delivered to the corporation for filing with the corporate records, but this delivery and filing shall not be conditions to the effectiveness of the waiver. Further, by attending a meeting either in person or by proxy, a shareholder waives objection to lack of notice or defective notice of the meeting unless the shareholder objects at the beginning of the meeting to the holding of the meeting or the transaction of business at the meeting because of lack of notice or defective notice. By attending the meeting, the shareholder also waives any objection to consideration at the meeting of a particular matter not within the purpose or purposes described in the meeting notice unless the shareholder objects to considering the matter when it is presented. Section 5. FIXING OF RECORD DATE. For the purpose of determining shareholders entitled to (i) notice of or vote at any meeting of shareholders or any adjournment thereof, (ii) receive distributions or share dividends, (iii) demand a special meeting, or (iv) make a determination of shareholders for any other proper purpose, the board of directors may fix a future date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days, and, in case of a meeting of shareholders, not less than ten days, prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed by the directors, the record date shall be the day before the notice of the meeting is given to shareholders, or the date on which the resolution of the board of directors providing for a distribution is adopted, as the case may be. When a determination of shareholders entitled to vote at any meeting of shareholders is made as provided in this section, such determination shall apply to any adjournment thereof unless the board of directors fixes a new record date, which it must do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. Unless otherwise specified when the record date is fixed, the time of day for such determination shall be as of the corporation's close of business on the record date. Notwithstanding the above, the record date for determining the shareholders entitled to take action without a meeting or entitled to be given notice of action so taken shall be the date a writing upon which the action is taken is first received by the corporation. The record date for 3 6 determining shareholders entitled to demand a special meeting shall be the date of the earliest of any of the demands pursuant to which the meeting is called. Section 6. VOTING LISTS. After a record date is fixed for a shareholders' meeting, the secretary shall make, at the earlier of ten days before such meeting or two business days after notice of the meeting has been given, a complete list of the shareholders entitled to be given notice of such meeting or any adjournment thereof. The list shall be arranged by voting groups and within each voting group by class or series of shares, shall be in alphabetical order within each class or series, and shall show the address of and the number of shares of each class or series held by each shareholder. For the period beginning the earlier of ten days prior to the meeting or two business days after notice of the meeting is given and continuing through the meeting and any adjournment thereof, this list shall be kept on file at the principal office of the corporation, or at a place (which shall be identified in the notice) in the city where the meeting will be held. Such list shall be available for inspection on written demand by any shareholder (including for the purpose of this Section 6 any holder of voting trust certificates) or his agent or attorney during regular business hours and during the period available for inspection. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. Any shareholder, his agent or attorney may copy the list during regular business hours and during the period it is available for inspection, provided (i) the shareholder has been a shareholder for at least three months immediately preceding the demand or holds at least five percent of all outstanding shares of any class of shares as of the date of the demand, (ii) the demand is made in good faith and for a purpose reasonably related to the demanding shareholder's interest as a shareholder, (iii) the shareholder describes with reasonable particularity the purpose and the records the shareholder desires to inspect, (iv) the records are directly connected with the described purpose, and (v) the shareholder pays a reasonable charge covering the costs of labor and material for such copies, not to exceed the estimated cost of production and reproduction. Section 7. RECOGNITION PROCEDURE FOR BENEFICIAL OWNERS. The board of directors may adopt by resolution a procedure whereby a shareholder of the corporation may certify in writing to the corporation that all or a portion of the shares registered in the name of such shareholder are held for the account of a specified person or persons. The resolution may set forth (i) the types of nominees to which it applies, (ii) the rights or privileges that the corporation will recognize in a beneficial owner, which may include rights and privileges other than voting, (iii) the form of certification and the information to be contained therein, (iv) if the certification is with respect to a record date, the time within which the certification must be received by the corporation, (v) the period for which the nominee's use of the procedure is effective, and (vi) such other provisions with respect to the procedure as the board deems necessary or desirable. Upon receipt by the corporation of a certificate complying with the procedure established by the board of directors, the persons specified in the certification shall be deemed, for the purpose or purposes set forth in the certification, to be the registered holders of the number of shares specified in place of the shareholder making the certification. 4 7 Section 8. QUORUM AND MANNER OF ACTING. A majority of the votes entitled to be cast on a matter by a voting group represented in person or by proxy, shall constitute a quorum of that voting group for action on the matter. If less than a majority of such votes are represented at a meeting, a majority of the votes so represented may adjourn the meeting from time to time without further notice, for a period not to exceed 120 days for any one adjournment. If a quorum is present at such adjourned meeting, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, unless the meeting is adjourned and a new record date is set for the adjourned meeting. If a quorum exists, action on a matter other than the election of directors by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast within the voting group opposing the action, unless the vote of a greater number or voting by classes is required by law or the articles of incorporation. Section 9. PROXIES. At all meetings of shareholders, a shareholder may vote by proxy by signing an appointment form or similar writing, either personally or by his duly authorized attorney-in-fact. A shareholder may also appoint a proxy by transmitting or authorizing the transmission of a telegram, teletype, or other electronic transmission providing a written statement of the appointment to the proxy, a proxy solicitor, proxy support service organization, or other person duly authorized by the proxy to receive appointments as agent for the proxy, or to the corporation. The transmitted appointment shall set forth or be transmitted with written evidence from which it can be determined that the shareholder transmitted or authorized the transmission of the appointment. The proxy appointment form or similar writing shall be filed with the secretary of the corporation before or at the time of the meeting. The appointment of a proxy is effective when received by the corporation and is valid for eleven months unless a different period is expressly provided in the appointment form or similar writing. Any complete copy, including an electronically transmitted facsimile, of an appointment of a proxy may be substituted for or used in lieu of the original appointment for any purpose for which the original appointment could be used. Revocation of a proxy does not affect the right of the corporation to accept the proxy's authority unless (i) the corporation had notice that the appointment was coupled with an interest and notice that such interest is extinguished is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment, or (ii) other notice of the revocation of the appointment is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment. Other notice of revocation may, in the discretion of the corporation, be deemed to include the appearance at a shareholders' meeting of the shareholder who granted the proxy and his voting in person on any matter subject to a vote at such meeting. 5 8 The death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment. The corporation shall not be required to recognize an appointment made irrevocable if it has received a writing revoking the appointment signed by the shareholder (including a shareholder who is a successor to the shareholder who granted the proxy) either personally or by his attorney-in-fact, notwithstanding that the revocation may be a breach of an obligation of the shareholder to another person not to revoke the appointment. Subject to Section 11 and any express limitation on the proxy's authority appearing on the appointment form, the corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment. Section 10. VOTING OF SHARES. Each outstanding share, regardless of class, shall be entitled to one vote, except in the election of directors, and each fractional share shall be entitled to a corresponding fractional vote on each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are limited or denied by the articles of incorporation as permitted by the Nevada Business Corporation Code. Cumulative voting shall not be permitted in the election of directors or for any other purpose. Each record holder of stock shall be entitled to vote in the election of directors and shall have as many votes for each of the shares owned by him as there are directors to be elected and for whose election he has the right to vote. At each election of directors, that number of candidates equaling the number of directors to be elected, having the highest number of votes cast in favor of their election, shall be elected to the board of directors. Except as otherwise ordered by a court of competent jurisdiction upon a finding that the purpose of this Section would not be violated in the circumstances presented to the court, the shares of the corporation are not entitled to be voted if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the first corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation except to the extent the second corporation holds the shares in a fiduciary capacity. Redeemable shares are not entitled to be voted after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares. Section 11. CORPORATION'S ACCEPTANCE OF VOTES. If the name signed on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a 6 9 shareholder, the corporation, if acting in good faith, is entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and give it effect as the act of the shareholder. If the name signed on a vote, consent, waiver, proxy appointment or proxy appointment revocation does not correspond to the name of a shareholder, the corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and to give it effect as the act of the shareholder if: (i) the shareholder is an entity and the name signed purports to be that of an officer or agent of the entity; (ii) the name signed purports to be that of an administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (iii) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (iv) the name signed purports to be that of a pledgee, beneficial owner or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (v) two or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-tenants or fiduciaries, and the person signing appears to be acting on behalf of all the co-tenants or fiduciaries; or (vi) the acceptance of the vote, consent, waiver, proxy appointment or proxy appointment revocation is otherwise proper under rules established by the corporation that are not inconsistent with this Section 11. The corporation is entitled to reject a vote, consent, waiver, proxy appointment or proxy appointment revocation if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. Neither the corporation nor its officers nor any agent who accepts or rejects a vote, consent, waiver, proxy appointment or proxy appointment revocation in good faith and in 7 10 accordance with the standards of this Section is liable in damages for the consequences of the acceptance or rejection. Section 12. INFORMAL ACTION BY SHAREHOLDERS. Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if a written consent (or counterparts thereof) that sets forth the action so taken is signed by all of the shareholders entitled to vote with respect to the subject matter thereof and received by the corporation. Such consent shall have the same force and effect as a unanimous vote of the shareholders and may be stated as such in any document. Action taken under this Section 12 is effective as of the date the last writing necessary to effect the action is received by the corporation, unless all of the writings specify a different effective date, in which case such specified date shall be the effective date for such action. If any shareholder revokes his consent as provided for herein prior to what would otherwise be the effective date, the action proposed in the consent shall be invalid. The record date for determining shareholders entitled to take action without a meeting is the date the corporation first receives a writing upon which the action is taken. Any shareholder who has signed a writing describing and consenting to action taken pursuant to this Section 12 may revoke such consent by a writing signed by the shareholder describing the action and stating that the shareholder's prior consent thereto is revoked, if such writing is received by the corporation before the effectiveness of the action. Section 13. MEETINGS BY TELECOMMUNICATION. Any or all of the shareholders may participate in an annual or special shareholders' meeting by, or the meeting may be conducted through the use of, any means of communication by which all persons participating in the meeting may hear each other during the meeting. A shareholder participating in a meeting by this means is deemed to be present in person at the meeting. ARTICLE III BOARD OF DIRECTORS Section 1. GENERAL POWERS. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, its board of directors, except as otherwise provided in the Nevada General Corporation Law or the articles of incorporation. Section 2. NUMBER, QUALIFICATIONS AND TENURE. The number of directors of the corporation shall be fixed from time to time by the board of directors, within a range of no less than one or more than nine, but no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. A director shall be a natural person who is eighteen years of age or older. A director need not be a resident of Nevada or a shareholder of the corporation. 8 11 Directors shall be elected at each annual meeting of shareholders. Each director shall hold office until the next annual meeting of shareholders following his election and thereafter until his successor shall have been elected and qualified. Directors shall be removed in the manner provided by the Nevada General Corporation Law. Any director may be removed by the shareholders of the voting group that elected the director, with or without cause, at a meeting called for that purpose. The notice of the meeting shall state that the purpose or one of the purposes of the meeting is removal of the director. A director may be removed only if the number of votes cast in favor of removal exceeds the number of votes cast against removal. Section 3. VACANCIES. Any director may resign at any time by giving written notice to the secretary. Such resignation shall take effect at the time the notice is received by the secretary unless the notice specifies a later effective date. Unless otherwise specified in the notice of resignation, the corporation's acceptance of such resignation shall not be necessary to make it effective. Any vacancy on the board of directors may be filled by the affirmative vote of a majority of the shareholders at a special meeting called for that purpose or by the board of directors. If the directors remaining in office constitute fewer than a quorum of the board, the directors may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. If elected by the directors, the director shall hold office until the next annual shareholders' meeting at which directors are elected. If elected by the shareholders, the director shall hold office for the unexpired term of his predecessor in office; except that, if the director's predecessor was elected by the directors to fill a vacancy, the director elected by the shareholders shall hold office for the unexpired term of the last predecessor elected by the shareholders. Section 4. REGULAR MEETINGS. A regular meeting of the board of directors shall be held without notice immediately after and at the same place as the annual meeting of shareholders. The board of directors may provide by resolution the time and place, either within or outside Nevada, for the holding of additional regular meetings without other notice. Section 5. SPECIAL MEETINGS. Special meetings of the board of directors may be called by or at the request of the president or any one (1) of the directors. The person or persons authorized to call special meetings of the board of directors may fix any place, either within or outside Nevada, as the place for holding any special meeting of the board of directors called by them. Section 6. NOTICE. Notice of the date, time and place of any special meeting shall be given to each director at least two days prior to the meeting by written notice either personally delivered or mailed to each director at his business address, or by notice transmitted by private courier, telegraph, telex, electronically transmitted facsimile or other form of wire or wireless communication. If mailed, such notice shall be deemed to be given and to be effective on the earlier of (i) five days after such notice is deposited in the United States mail, properly addressed, with first class postage prepaid, or (ii) the date shown on the return receipt, if mailed by registered or certified mail return receipt requested, provided that the return receipt is signed by the director to whom the notice is addressed. If notice is given by telex, electronically transmitted facsimile or other similar form of wire or wireless communication, such notice shall be deemed to be given 9 12 and to be effective when sent, and with respect to a telegram, such notice shall be deemed to be given and to be effective when the telegram is delivered to the telegraph company. If a director has designated in writing one or more reasonable addresses or facsimile numbers for delivery of notice to him, notice sent by mail, telegraph, telex, electronically transmitted facsimile or other form of wire or wireless communication shall not be deemed to have been given or to be effective unless sent to such addresses or facsimile numbers, as the case may be. A director may waive notice of a meeting before or after the time and date of the meeting by a writing signed by such director. Such waiver shall be delivered to the secretary for filing with the corporate records, but such delivery and filing shall not be conditions to the effectiveness of the waiver. Further, a director's attendance at or participation in a meeting waives any required notice to him of the meeting unless at the beginning of the meeting, or promptly upon his later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. Section 7. QUORUM. A majority of the number of directors fixed by the board of directors pursuant to Article III, Section 2 or, if no number is fixed, a majority of the number in office immediately before the meeting begins, shall constitute a quorum for the transaction of business at any meeting of the board of directors. Section 8. 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 board of directors. Section 9. COMPENSATION. By resolution of the board of directors, any director may be paid any one or more of the following: his expenses, if any, of attendance at meetings, a fixed sum for attendance at each meeting, a stated salary as director, or such other compensation as the corporation and the director may reasonably agree upon. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Section 10. PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the board of directors or committee of the board at which action on any corporate matter is taken shall be presumed to have assented to all action taken at the meeting unless (i) the director objects at the beginning of the meeting, or promptly upon his arrival, to the holding of the meeting or the transaction of business at the meeting and does not thereafter vote for or assent to any action taken at the meeting, (ii) the director contemporaneously requests that his dissent or abstention as to any specific action taken be entered in the minutes of the meeting, or (iii) the director causes written notice of his dissent or abstention as to any specific action to be received by the presiding officer of the meeting before its adjournment or by the secretary promptly after the adjournment of the meeting. A director may dissent to a specific action at a meeting, while assenting to others. The right to dissent to a specific action taken at a meeting of the board of 10 13 directors or a committee of the board shall not be available to a director who voted in favor of such action. Section 11. COMMITTEES. By resolution adopted by a majority of all the directors in office when the action is taken, the board of directors may designate from among its members an executive committee and one or more other committees, and appoint one or more members of the board of directors to serve on them. To the extent provided in the resolution, each committee shall have all the authority of the board of directors, except that no such committee shall have the authority to (i) authorize distributions, (ii) approve or propose to shareholders actions or proposals required by the Nevada General Corporation Law to be approved by shareholders, (iii) fill vacancies on the board of directors or any committee thereof, (iv) amend articles of incorporation, (v) adopt, amend or repeal the bylaws, (vi) approve a plan of merger not requiring shareholder approval, (vii) authorize or approve the reacquisition of shares unless pursuant to a formula or method prescribed by the board of directors, or (viii) authorize or approve the issuance or sale of shares, or contract for the sale of shares or determine the designations and relative rights, preferences and limitations of a class or series of shares, except that the board of directors may authorize a committee or officer to do so within limits specifically prescribed by the board of directors. The committee shall then have full power within the limits set by the board of directors to adopt any final resolution setting forth all preferences, limitations and relative rights of such class or series and to authorize an amendment of the articles of incorporation stating the preferences, limitations and relative rights of a class or series for filing with the Secretary of State under the Nevada General Corporation Law. Sections 4, 5, 6, 7, 8 or 12 of Article III, which govern meetings, notice, waiver of notice, quorum, voting requirements and action without a meeting of the board of directors, shall apply to committees and their members appointed under this Section 11. Neither the designation of any such committee, the delegation of authority to such committee, nor any action by such committee pursuant to its authority shall alone constitute compliance by any member of the board of directors or a member of the committee in question with his responsibility to conform to the standard of care set forth in Article III, Section 14 of these bylaws. Section 12. INFORMAL ACTION BY DIRECTORS. Any action required or permitted to be taken at a meeting of the directors or any committee designated by the board of directors may be taken without a meeting if a written consent (or counterparts thereof) that sets forth the action so taken is signed by all of the directors entitled to vote with respect to the action taken. Such consent shall have the same force and effect as a unanimous vote of the directors or committee members and may be stated as such in any document. Unless the consent specifies a different effective time or date, action taken under this Section 12 is effective at the time or date the last director signs a writing describing the action taken, unless, before such time, any director has revoked his consent by a writing signed by the director and received by the president or the secretary of the corporation. 11 14 Section 13. TELEPHONIC MEETINGS. The board of directors may permit any director (or any member of a committee designated by the board) to participate in a regular or special meeting of the board of directors or a committee thereof through the use of any means of communication by which all directors participating in the meeting can hear each other during the meeting. A director participating in a meeting in this manner is deemed to be present in person at the meeting. Section 14. STANDARD OF CARE. A director shall perform his duties as a director, including without limitation his duties as a member of any committee of the board, in good faith, in a manner he reasonably believes to be in the best interests of the corporation, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. In performing his duties, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by the persons herein designated. However, he shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A director shall not be liable to the corporation or its shareholders for any action he takes or omits to take as a director if, in connection with such action or omission, he performs his duties in compliance with this Section 14. The designated persons on whom a director is entitled to rely are (i) one or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented, (ii) legal counsel, public accountant, or other person as to matters which the director reasonably believes to be within such person's professional or expert competence, or (iii) a committee of the board of directors on which the director does not serve if the director reasonably believes the committee merits confidence. ARTICLE IV OFFICERS AND AGENTS Section 1. GENERAL. The officers of the corporation shall be a president, a secretary and a treasurer, and may also include one or more vice presidents, each of which officer shall be appointed by the board of directors and shall be a natural person eighteen years of age or older. One person may hold more than one office. The board of directors or an officer or officers so authorized by the board may appoint such other officers, assistant officers, committees and agents, including a chairman of the board, assistant secretaries and assistant treasurers, as they may consider necessary. Except as expressly prescribed by these bylaws, the board of directors or the officer or officers authorized by the board shall from time to time determine the procedure for the appointment of officers, their authority and duties and their compensation, provided that the board of directors may change the authority, duties and compensation of any officer who is not appointed by the board. Section 2. APPOINTMENT AND TERM OF OFFICE. The officers of the corporation to be appointed by the board of directors shall be appointed at each annual meeting of the board held after each annual meeting of the shareholders. If the appointment of officers is not made at such 12 15 meeting or if an officer or officers are to be appointed by another officer or officers of the corporation, such appointments shall be made as determined by the board of directors or the appointing person or persons. Each officer shall hold office until the first of the following occurs: his successor shall have been duly appointed and qualified, his death, his resignation, or his removal in the manner provided in Section 3. Section 3. RESIGNATION AND REMOVAL. An officer may resign at any time by giving written notice of resignation to the president, secretary or other person who appoints such officer. The resignation is effective when the notice is received by the corporation unless the notice specifies a later effective date. Any officer or agent may be removed at any time with or without cause by the board of directors or an officer or officers authorized by the board. Such removal does not affect the contract rights, if any, of the corporation or of the person so removed. The appointment of an officer or agent shall not in itself create contract rights. Section 4. VACANCIES. A vacancy in any office, however occurring, may be filled by the board of directors, or by the officer or officers authorized by the board, for the unexpired portion of the officer's term. If an officer resigns and his resignation is made effective at a later date, the board of directors, or officer or officers authorized by the board, may permit the officer to remain in office until the effective date and may fill the pending vacancy before the effective date if the board of directors or officer or officers authorized by the board provide that the successor shall not take office until the effective date. In the alternative, the board of directors, or officer or officers authorized by the board of directors, may remove the officer at any time before the effective date and may fill the resulting vacancy. Section 5. PRESIDENT. The president shall preside at all meetings of shareholders and all meetings of the board of directors unless the board of directors has appointed a chairman, vice chairman, or other officer of the board and has authorized such person to preside at meetings of the board of directors. Subject to the direction and supervision of the board of directors, the president shall be the chief executive officer of the corporation, and shall have general and active control of its affairs and business and general supervision of its officers, agents and employees. Unless otherwise directed by the board of directors, the president shall attend in person or by substitute appointed by him, or shall execute on behalf of the corporation written instruments appointing a proxy or proxies to represent the corporation, at all meetings of the stockholders of any other corporation in which the corporation holds any stock. On behalf of the corporation, the president may in person or by substitute or by proxy execute written waivers of notice and consents with respect to any such meetings. At all such meetings and otherwise, the president, in person or by substitute or proxy, may vote the stock held by the corporation, execute written consents and other instruments with respect to such stock, and exercise any and all rights and powers incident to the ownership of said stock, subject to the instructions, if any, of the board of directors. The president shall have custody of the treasurer's bond, if any. The president shall have such additional authority and duties as are appropriate and customary for the office of 13 16 president and chief executive officer, except as the same may be expanded or limited by the board of directors from time to time. Section 6. VICE PRESIDENTS. The vice presidents shall assist the president and shall perform such duties as may be assigned to them by the president or by the board of directors. In the absence of the president, the vice president, if any (or, if more than one, the vice presidents in the order designated by the board of directors, or if the board makes no such designation, then the vice president designated by the president, or if neither the board nor the president makes any such designation, the senior vice president as determined by first election to that office), shall have the powers and perform the duties of the president. Section 7. SECRETARY. The secretary shall (i) prepare and maintain as permanent records the minutes of the proceedings of the shareholders and the board of directors, a record of all actions taken by the shareholders or board of directors without a meeting, a record of all actions taken by a committee of the board of directors in place of the board of directors on behalf of the corporation, and a record of all waivers of notice of meetings of shareholders and of the board of directors or any committee thereof, (ii) see that all notices are duly given in accordance with the provisions of these bylaws and as required by law, (iii) serve as custodian of the corporate records and of the seal of the corporation and affix the seal to all documents when authorized by the board of directors, (iv) keep at the corporation's registered office or principal place of business a record containing the names and addresses of all shareholders in a form that permits preparation of a list of shareholders arranged by voting group and by class or series of shares within each voting group, that is alphabetical within each class or series and that shows the address of, and the number of shares of each class or series held by, each shareholder, unless such a record shall be kept at the office of the corporation's transfer agent or registrar, (v) maintain at the corporation's principal office the originals or copies of the corporation's articles of incorporation, bylaws, minutes of all shareholders' meetings and records of all action taken by shareholders without a meeting for the past three years, all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group, a list of the names and business addresses of the current directors and officers, a copy of the corporation's most recent corporate report filed with the Secretary of State, and financial statements showing in reasonable detail the corporation's assets and liabilities and results of operations for the last three years, (vi) have general charge of the stock transfer books of the corporation, unless the corporation has a transfer agent, (vii) authenticate records of the corporation, and (viii) 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 board of directors. Assistant secretaries, if any, shall have the same duties and powers, subject to supervision by the secretary. The directors and/or shareholders may however respectively designate a person other than the secretary or assistant secretary to keep the minutes of their respective meetings. 14 17 Any books, records, or minutes of the corporation may be in written form or in any form capable of being converted into written form within a reasonable time. Section 8. TREASURER. The treasurer shall be the principal financial officer of the corporation, shall have the care and custody of all funds, securities, evidences of indebtedness and other personal property of the corporation and shall deposit the same in accordance with the instructions of the board of directors. Subject to the limits imposed by the board of directors, he shall receive and give receipts and acquittances for money paid in on account of the corporation, and shall pay out of the corporation's funds on hand all bills, payrolls and other just debts of the corporation of whatever nature upon maturity. He shall perform all other duties incident to the office of the treasurer and, upon request of the board, shall make such reports to it as may be required at any time. He shall, if required by the board, give the corporation a bond in such sums and with such sureties as shall be satisfactory to the board, conditioned upon the faithful performance of his duties and for the restoration to the corporation of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. He shall have such other powers and perform such other duties as may from time to time be prescribed by the board of directors or the president. The assistant treasurers, if any, shall have the same powers and duties, subject to the supervision of the treasurer. The treasurer shall also be the principal accounting officer of the corporation. He shall prescribe and maintain the methods and systems of accounting to be followed, keep complete books and records of account as required by the Nevada General Corporation Law, prepare and file all local, state and federal tax returns, prescribe and maintain an adequate system of internal audit and prepare and furnish to the president and the board of directors statements of account showing the financial position of the corporation and the results of its operations. ARTICLE V STOCK Section 1. CERTIFICATES. The board of directors shall be authorized to issue any of its classes of shares with or without certificates. The fact that the shares are not represented by certificates shall have no effect on the rights and obligations of shareholders. If the shares arerepresented by certificates, such shares shall be represented by consecutively numbered certificates signed, either manually or by facsimile, in the name of the corporation by the president. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, such certificate may nonetheless be issued by the corporation with the same effect as if he were such officer at the date of its issue. All certificates shall be consecutively numbered, and the names of the owners, the number of shares, and the date of issue shall be entered on the books of the corporation. Each certificate representing shares shall state upon its face: (i) That the corporation is organized under the laws of Nevada; 15 18 (ii) The name of the person to whom issued; (iii) The number and class of the shares and the designation of the series, if any, that the certificate represents; (iv) The par value, if any, of each share represented by the certificate; (v) Any restrictions imposed by the corporation upon the transfer of the shares represented by the certificate. If shares are not represented by certificates, within a reasonable time following the issue or transfer of such shares, the corporation shall send the shareholder a complete written statement of all of the information required to be provided to holders of uncertificated shares by the Nevada General Corporation Law. Section 2. CONSIDERATION FOR SHARES. Certificated or uncertificated shares shall not be issued until the shares represented thereby are fully paid. The board of directors may authorize the issuance of shares for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed or other securities of the corporation. Future services shall not constitute payment or partial payment for shares of the corporation. The promissory note of a subscriber or an affiliate of a subscriber shall not constitute payment or partial payment for shares of the corporation unless the note is negotiable and is secured by collateral, other than the shares being purchased, having a fair market value at least equal to the principal amount of the note. For purposes of this Section 2, "promissory note" means a negotiable instrument on which there is an obligation to pay independent of collateral and does not include a non-recourse note. Section 3. LOST CERTIFICATES. In case of the alleged loss, destruction or mutilation of a certificate of stock, the board of directors may direct the issuance of a new certificate in lieu thereof upon such terms and conditions in conformity with law as the board may prescribe. The board of directors may in its discretion require an affidavit of lost certificate and/or a bond in such form and amount and with such surety as it may determine before issuing a new certificate. Section 4. TRANSFER OF SHARES. Upon surrender to the corporation or to a transfer agent of the corporation of a certificate of stock duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, and receipt of such documentary stamps as may be required by law and evidence of compliance with all applicable securities laws and other restrictions, the corporation shall issue a new certificate to the person entitled thereto, and cancel the old certificate. Every such transfer of stock shall be entered on the stock books of the corporation which shall be kept at its principal office or by the person and at the place designated by the board of directors. 16 19 Except as otherwise expressly provided in Article II, Sections 7 and 11, and except for the assertion of dissenters' rights to the extent provided in Article 113 of the Nevada General Corporation Law, the corporation shall be entitled to treat the registered holder of any shares of the corporation as the owner thereof for all purposes, and the corporation shall not be bound to recognize any equitable or other claim to, or interest in, such shares or rights deriving from such shares on the part of any person other than the registered holder, including without limitation any purchaser, assignee or transferee of such shares or rights deriving from such shares, unless and until such other person becomes the registered holder of such shares, whether or not the corporation shall have either actual or constructive notice of the claimed interest of such other person. Section 5. TRANSFER AGENT, REGISTRARS AND PAYING AGENTS. The board may at its discretion appoint one or more transfer agents, registrars and agents for making payment upon any class of stock, bond, debenture or other security of the corporation. Such agents and registrars may be located either within or outside Nevada. They shall have such rights and duties and shall be entitled to such compensation as may be agreed. ARTICLE VI INDEMNIFICATION OF CERTAIN PERSONS Section 1. INDEMNIFICATION. For purposes of Article VI, a "Proper Person" means any person (including the estate or personal representative of a director) 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, and whether formal or informal, by reason of the fact that he is or was a director, officer, employee, fiduciary or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary or agent of any foreign or domestic profit or nonprofit corporation or of any partnership, joint venture, trust, profit or nonprofit unincorporated association, limited liability company, or other enterprise or employee benefit plan. The corporation shall indemnify any Proper Person against reasonably incurred expenses (including attorneys' fees), judgments, penalties, fines (including any excise tax assessed with respect to an employee benefit plan) and amounts paid in settlement reasonably incurred by him in connection with such action, suit or proceeding if it is determined by the groups set forth in Section 4 of this Article that he conducted himself in good faith and that he reasonably believed (i) in the case of conduct in his official capacity with the corporation, that his conduct was in the corporation's best interests, or (ii) in all other cases (except criminal cases), that his conduct was at least not opposed to the corporation's best interests, or (iii) in the case of any criminal proceeding, that he had no reasonable cause to believe his conduct was unlawful. Official capacity means, when used with respect to a director, the office of director and, when used with respect to any other Proper Person, the office in a corporation held by the officer or the employment, fiduciary or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the corporation. Official capacity does not include service for any other domestic or foreign corporation or other person or employee benefit plan. 17 20 A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement in (ii) of this Section 1. A director's conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirement of this section that he conduct himself in good faith. No indemnification shall be made under this Article VI to a Proper Person with respect to any claim, issue or matter in connection with a proceeding by or in the right of a corporation in which the Proper Person was adjudged liable to the corporation or in connection with any proceeding charging that the Proper Person derived an improper personal benefit, whether or not involving action in an official capacity, in which he was adjudged liable on the basis that he derived an improper personal benefit. Further, indemnification under this section in connection with a proceeding brought by or in the right of the corporation shall be limited to reasonable expenses, including attorneys' fees, incurred in connection with the proceeding. Section 2. RIGHT TO INDEMNIFICATION. The corporation shall indemnify any Proper Person who was wholly successful, on the merits or otherwise, in defense of any action, suit, or proceeding as to which he was entitled to indemnification under Section 1 of this Article VI against expenses (including attorneys' fees) reasonably incurred by him in connection with the proceeding without the necessity of any action by the corporation other than the determination in good faith that the defense has been wholly successful. Section 3. EFFECT OF TERMINATION OF ACTION. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person seeking indemnification did not meet the standards of conduct described in Section 1 of this Article VI. Entry of a judgment by consent as part of a settlement shall not be deemed an adjudication of liability, as described in Section 2 of this Article VI. Section 4. GROUPS AUTHORIZED TO MAKE INDEMNIFICATION DETERMINATION. Except where there is a right to indemnification as set forth in Sections 1 or 2 of this Article or where indemnification is ordered by a court in Section 5, any indemnification shall be made by the corporation only as determined in the specific case by a proper group that indemnification of the Proper Person is permissible under the circumstances because he has met the applicable standards of conduct set forth in Section 1 of this Article. This determination shall be made by the board of directors by a majority vote of those present at a meeting at which a quorum is present, which quorum shall consist of directors not parties to the proceeding ("Quorum"). If a Quorum cannot be obtained, the determination shall be made by a majority vote of a committee of the board of directors designated by the board, which committee shall consist of two or more directors not parties to the proceeding, except that directors who are parties to the proceeding may participate in the designation of directors for the committee. If a Quorum of the board of directors cannot be obtained and the committee cannot be established, or even if a Quorum is obtained or the 18 21 committee is designated and a majority of the directors constituting such Quorum or committee so directs, the determination shall be made by (i) independent legal counsel selected by a vote of the board of directors or the committee in the manner specified in this Section 4 or, if a Quorum of the full board of directors cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full board (including directors who are parties to the action) or (ii) a vote of the shareholders. Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible except that, if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of expenses shall be made by the body that selected such counsel. Section 5. COURT-ORDERED INDEMNIFICATION. Any Proper Person may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction for mandatory indemnification under Section 2 of this Article, including indemnification for reasonable expenses incurred to obtain court-ordered indemnification. If a court determines that the Proper Person is entitled to indemnification under Section 2 of this Article, the court shall order indemnification, including the Proper Person's reasonable expenses incurred to obtain court-ordered indemnification. If the court determines that such Proper Person is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he met the standards of conduct set forth in Section 1 of this Article or was adjudged liable in the proceeding, the court may order such indemnification as the court deems proper except that if the Proper Person has been adjudged liable, indemnification shall be limited to reasonable expenses incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification. Section 6. ADVANCE OF EXPENSES. Reasonable expenses (including attorneys' fees) incurred in defending an action, suit or proceeding as described in Section 1 may be paid by the corporation to any Proper Person in advance of the final disposition of such action, suit or proceeding upon receipt of (i) a written affirmation of such Proper Person's good faith belief that he has met the standards of conduct prescribed by Section 1 of this Article VI, (ii) a written undertaking, executed personally or on the Proper Person's behalf, to repay such advances if it is ultimately determined that he did not meet the prescribed standards of conduct (the undertaking shall be an unlimited general obligation of the Proper Person but need not be secured and may be accepted without reference to financial ability to make repayment), and (iii) a determination is made by the proper group (as described in Section 4 of this Article VI) that the facts as then known to the group would not preclude indemnification. Determination and authorization of payments shall be made in the same manner specified in Section 4 of this Article VI. Section 7. ADDITIONAL INDEMNIFICATION TO CERTAIN PERSONS OTHER THAN DIRECTORS. In addition to the indemnification provided to officers, employees, fiduciaries or agents because of their status as Proper Persons under this Article, the corporation may also indemnify and advance 19 22 expenses to them if they are not directors of the corporation to a greater extent than is provided in these bylaws, if not inconsistent with public policy, and if provided for by general or specific action of its board of directors or shareholders or by contract. Section 8. WITNESS EXPENSES. The sections of this Article VI do not limit the corporation's authority to pay or reimburse expenses incurred by a director in connection with an appearance as a witness in a proceeding at a time when he has not been made or named as a defendant or respondent in the proceeding. Section 9. REPORT TO SHAREHOLDERS. Any indemnification of or advance of expenses to a director in accordance with this Article VI, if arising out of a proceeding by or on behalf of the corporation, shall be reported in writing to the shareholders with or before the notice of the next shareholders' meeting. If the next shareholder action is taken without a meeting at the instigation of the board of directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action. 20 23 ARTICLE VII Section 1. PROVISION OF INSURANCE. By action of the board of directors, notwithstanding any interest of the directors in the action, the corporation may purchase and maintain insurance, in such scope and amounts as the board of directors deems appropriate, on behalf of any person who is or was a director, officer, employee, fiduciary or agent of the corporation, or who, while a director, officer, employee, fiduciary or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary or agent of any other foreign or domestic profit or nonprofit corporation or of any partnership, joint venture, trust, profit or nonprofit unincorporated association, limited liability company, other enterprise or employee benefit plan, against any liability asserted against, or incurred by, him in that capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of Article VI or applicable law. Any such insurance may be procured from any insurance company designated by the board of directors of the corporation, whether such insurance company is formed under the laws of Nevada or any other jurisdiction of the United States or elsewhere, including any insurance company in which the corporation has an equity interest or any other interest, through stock ownership or otherwise. ARTICLE VIII MISCELLANEOUS Section 1. SEAL. The board of directors may adopt a corporate seal, which shall contain the name of the corporation and the words, "Seal, Nevada." Section 2. FISCAL YEAR. The fiscal year of the corporation shall be as established by the board of directors. Section 3. AMENDMENTS. The board of directors shall have power, to the maximum extent permitted by the Nevada General Corporation Law, to make, amend and repeal the bylaws of the corporation at any regular or special meeting of the board unless the shareholders, in making, amending or repealing a particular bylaw, expressly provide that the directors may not amend or repeal such bylaw. The shareholders also shall have the power to make, amend or repeal the bylaws of the corporation at any annual meeting or at any special meeting called for that purpose. Section 4. RECEIPT OF NOTICES BY THE CORPORATION. Notices, shareholder writings consenting to action, and other documents or writings shall be deemed to have been received by the corporation when they are actually received: (1) at the registered office of the corporation in Nevada; (2) at the principal office of the corporation (as that office is designated in the most recent document filed by the corporation with the secretary of state for Nevada designating a principal office) addressed to the attention of the secretary of the corporation; (3) by the secretary of the corporation wherever the secretary may be found; or (4) by any other person authorized from time to time by the board of directors or the president to receive such writings, wherever such person is found. 21 24 Section 5. GENDER. The masculine gender is used in these bylaws as a matter of convenience only and shall be interpreted to include the feminine and neuter genders as the circumstances indicate. Section 6. CONFLICTS. In the event of any irreconcilable conflict between these bylaws and either the corporation's articles of incorporation or applicable law, the latter shall control. Section 7. DEFINITIONS. Except as otherwise specifically provided in these bylaws, all terms used in these bylaws shall have the same definition as in the Nevada General Corporation Law. 22 25 AMENDMENT TO BYLAWS By resolution of the Board of Directors of quepasa.com, Inc. (the "Company") dated January 22, 1999, the first sentence of Section 4 of Article II of the Company's Bylaws are hereby amended to read as follows: "written notice stating the place, date, and hour of the meeting shall be given not less than ten nor more than sixty days before the date of the meeting, except if any other longer period is required by the Nevada General Corporation Law." Any and all other terms and conditions of the Company's 1998 Stock Option Plan not amended or modified as stated above remain the same and in full force and effect. The foregoing is effective as of January 22, 1999. quepasa.com, inc. By: /s/ Jennifer Ferlaino ------------------------------- Jennifer Ferlaino, Secretary EX-10.01 4 AGREEMENT WITH INKTOMI CORP 1 EXHIBIT 10.01 EXECUTION COPY INFORMATION SERVICES AGREEMENT This Information Services Agreement ("Agreement") is entered into as of July 21, 1998 (the "Effective Date"), by and between Inktomi Corporation, a Delaware corporation with its principal place of business at 1900 South Norfolk Street, Suite 310, San Mateo, California, 94403 ("Inktomi") and Internet Century, Inc., a Nevada corporation with its principal place of business at 2533 N. Carson Street, Suite 3232, Carson City, NV, 89706 ("Customer"). RECITALS A. Inktomi provides services utilizing certain technology for searching and indexing the Internet (the "Inktomi Search Engine," as more fully defined below). B. Customer wishes Inktomi to provide search engine services using the Inktomi Search Engine in accordance with the terms and conditions of this Agreement. AGREEMENT In consideration of the foregoing and the mutual promises contained herein the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following terms will have the indicated meanings: 1.1. "Database" means Inktomi's full text index database of Web pages accessible by end users of the Site at any given time. 1.2. "Initial Search Page" means the first Web page, accessible on the Site, which enables end-users of the Site to initiate and send search queries to the Inktomi Search Engine. 1.3. "Inktomi Data Protocol" means the written specification on how an Interface communicates and interacts with the Inktomi Search Engine. 1.4. "Inktomi Search Engine" means Inktomi's current Search Engine as of the Effective Date, inclusive of the Database, as the same may be (i) updated as provided on Exhibit A and (ii) otherwise updated, upgraded, modified, changed, or enhanced by Inktomi from time to time at its sole discretion. The Inktomi Search Engine does not and will not include features, options and modules developed and customized specifically for third parties and provided to such third parties on an exclusive basis, or features, options, modules and future products which Inktomi licenses or provides separately. 2 1.5. "Inktomi Technology" means the Inktomi Search Engine, the Inktomi Data Protocol, the Interface Construction Tools and all other computer software, technology and/or documentation which is supplied by Inktomi for use in or in connection with delivery of the Services, including without limitation all source code and object code therefor and all algorithms, ideas and Intellectual Property Rights therein. 1.6. "Intellectual Property Rights" means any and all rights existing from time to time under patent law, copyright law, semiconductor chip protection law, moral rights law, trade secret law, trademark law, unfair competition law, publicity rights law, privacy rights law, and any and all other proprietary rights, and any and all applications, renewals, extensions and restorations thereof, now or hereafter in force and effect worldwide. 1.7. "Interface" means the editorial and graphical content and design of the Web pages served to end users of the Site, including without limitation the Initial Search Page, all Results Pages, instruction pages, frequently asked questions pages and any Site end user terms and guidelines. 1.8. "Interface Construction Tools" means all software tools, if any, in object code form, provided by Inktomi to assist Customer to build the Interface to the Inktomi Search Engine, including without limitation Inktomi's application server currently known as Forge. 1.9. "Results Pages" means all Web pages displaying search results presented to end-users directly as a result of accessing the query mechanisms of the Inktomi Search Engine or indirectly through a cache controlled or influenced by Customer. 1.10. A "Results Set" means a set of results consisting of between zero and one hundred records presented to an end user of the Customer online service (either directly from the Inktomi Search Engine or indirectly through a cache controlled or influenced by Customer) in response to a search query. 1.11. "Search Engine" means computer software which crawls the Internet, downloads and analyzes text and other data, sorts and organizes the data, creates an index of accessible data, and, after receiving a particular search request (in the form of a word query), locates material accessible in the database, and presents the results of the search. 1.12. "Site" means a single Web site established and maintained by Customer through which end-users may access the Inktomi Search Engine and run searches against the Database. 1.13. "Services" means the Internet search engine services to be provided by Inktomi for Customer under this Agreement, as more fully described on Exhibit A. 1.14. "Term" shall have the meaning indicated in Section 10. 2 3 1.15. "Web" means the so-called World Wide Web, containing, inter alia, pages written in hypertext markup language (HTML) and/or any similar successor technology. 1.16. "Web page" means a document on the Internet which may be viewed in its entirety without leaving the applicable distinct URL address. 1.17. "Web site" means a collection of inter-related Web pages. 2. Provision of Services; Site Implementation. 2.1. Services and Site Implementation. Subject to the terms and conditions of this Agreement, Inktomi shall provide the Services to Customer for use in the Site, such services to be provided substantially in accordance with the functionality specifications, performance criteria and limitations specified on Exhibit A. Inktomi, at its own expense, shall provide all data transmission capacity (bandwidth), disk storage, server capacity and other hardware and software required to run the Inktomi Search Engine and maintain the Database. Customer, at its own expense, shall create the Interface to the Inktomi Search Engine for the Site, and shall provide all disk storage, server capacity and other hardware and software required to run and maintain the Site and the Interface, and to serve advertisements on the Interface. Inktomi shall provide reasonable assistance (through telephone, e-mail, the Web, or fax) to Customer during regular business hours regarding development of the Interface and integration of the same with the Inktomi Search Engine. Customer, at its own expense, shall provide all data transmission capacity (bandwidth) required to connect to and receive information from the Inktomi Search Engine. Customer may only provide search services based the Services to end users of the Site, and shall have no right to distribute or resell or provide services based on the Services to other service providers. 2.2. Test Cluster. During the development period for the Interface, Customer shall only have access through the Inktomi Data Protocol to a non-production version of the Inktomi Search Engine (the "Test Cluster"). Upon completion of the Interface and all desired testing against the Test Cluster, Customer shall present the Interface to Inktomi for review and testing against the production version of the Inktomi Search Engine. Inktomi shall promptly notify Customer of any problems or issues discovered by Inktomi regarding the Interface. Once cleared by Inktomi, Inktomi shall provide access to Customer to the production version of the Inktomi Search Engine. Customer may run reasonable tests against the Test Cluster and the production version of the Inktomi Search Engine, provided however that Customer may not conduct any load testing (prior to commercial launch of its search service) without the prior consent of Inktomi. Load testing as used herein means the generation and delivery of more than five queries per second. 2.3. Inktomi Data Protocol. Promptly following execution of this Agreement, Inktomi shall provide the Inktomi Data Protocol and the Interface Construction Tools to Customer. Inktomi grants to Customer a nontransferable, nonexclusive license during the Term to use the Inktomi Data Protocol and the Interface Construction Tools solely to create and maintain the Interface to the Inktomi Search Engine for the Site. 3 4 2.4. Other Services. Upon request, and provided that Customer is current with service fees due under this Agreement, Inktomi may provide additional services beyond the services set forth herein. Any such additional service shall be mutually agreed by the parties and set forth in written work authorizations signed by both parties, shall be provided at Inktomi's then applicable consulting rates and charges, and shall be deemed rendered pursuant to and in accordance with the terms of this Agreement. Work authorizations issued under this Agreement shall be sequentially numbered. 2.5. Inktomi Technology. As between Customer and Inktomi, Customer acknowledges that Inktomi owns all right, title and interest in and to the Inktomi Technology (except for any software licensed by third parties to Inktomi), and that Customer shall not acquire any right, title, and interest in or to the Inktomi Technology, except as expressly set forth in this Agreement. Customer shall not modify, adapt, translate, prepare derivative works from, decompile, reverse engineer, disassemble or otherwise attempt to derive source code from any Inktomi software or documentation. Customer will not remove, obscure, or alter Inktomi's copyright notice, trademarks, or other proprietary rights notices affixed to or contained within any Inktomi software or documentation. 2.6. Interface. As between Inktomi and Customer, Inktomi acknowledges that Customer owns all right, title and interest, including without limitation all Intellectual Property Rights, in and to the Interface (except for any software licensed by third parties to Customer and except for editorial content regarding the use and functionality of the Inktomi Search Engine provided by Inktomi to Customer for incorporation into the Site, which content shall be and remain Inktomi Technology), and that Inktomi shall not acquire any right, title or interest in or to the Interface, except as expressly set forth in this Agreement. 2.7. Nonexclusive Services. Customer understands that Inktomi will provide the Services on a nonexclusive basis. Customer acknowledges that Inktomi has customized and provided, and will continue to customize and provide, its software and technology to other parties for use in connection with a variety of applications, including search engine applications. Nothing in this Agreement will be deemed to limit or restrict Inktomi from customizing and providing its software and technology to other parties for any purpose, including in connection with search engine applications, or in any way affect the rights granted to such other parties. Inktomi reserves the right to notify other customers of the signing of this Agreement, but agrees not to provide such notice earlier than two weeks before a public announcement by Customer of its business relationship with Inktomi or two weeks before commercial launch of its search service, whichever is later. 3. Attribution; Trademark License; House Ads. 3.1. Attribution. The Initial Search Page and all Results Pages shall conspicuously display an icon to be provided by Inktomi (the "Inktomi Icon") that indicates that Inktomi's technology is being used. The Inktomi Icon shall measure at least 50 x 160 pixels and shall provide a link to Inktomi's Web site located at www.inktomi.com. The Inktomi Icon shall 4 5 be visible "above the fold" (that is, visible when the applicable Web page is loaded by a browser displaying an active region of 650x320 pixels). 3.2. Trademark License. Inktomi hereby grants Customer a nontransferable, nonexclusive license under Inktomi's trademarks during the Term to display the Inktomi Icon on the Site. Customer hereby grants to Inktomi a nontransferable, nonexclusive license under Customer's trademarks during the Term to advertise that Customer is using Inktomi's services. Each party will submit all materials of any kind containing the other party's trademarks to the other party before release to the public for inspection, and such other party will have the right to approve such material prior to its distribution. Except as set forth in this Section, nothing in this Agreement shall grant or shall be deemed to grant to one party any right, title or interest in or to the other party's trademarks. All use of Customer trademarks by Inktomi shall inure to the benefit of Customer, and all use of Inktomi trademarks by Customer shall inure to the benefit of Inktomi. At no time during or after the term of this Agreement shall one party challenge or assist others to challenge the trademarks of the other party (except to the extent such restriction is prohibited by applicable law) or the registration thereof or attempt to register any trademarks, marks or trade names confusingly similar to those of the other party. 3.3. House Ads. To the extent there is unsold advertising inventory on the Site during the Term, Inktomi may run advertisements on the Site on a rotating basis (or, if available, based on key words), provided however that Inktomi may not use more than ten percent (10%) of the unsold Site inventory in any one month without Customer's prior approval. Any such unpaid house ads delivered to Customer on behalf of Inktomi shall be subject to Customer's standard online advertising terms and conditions. 4. Warranties and Disclaimer. 4.1. Inktomi Warranties. Inktomi warrants that (i) it has full power and authority to enter into this Agreement, (ii) it has not previously and will not grant any rights in the Inktomi Technology to any third party that are inconsistent with the rights granted to Customer hereunder, and (iii) throughout the Term, the Inktomi Technology and the Services provided for Customer shall be free of material errors and defects and shall perform substantially in accordance with the performance criteria set forth on Exhibit A. Inktomi does not warrant that the Services will meet all of Customer's requirements or that performance of the Services will be uninterrupted or error-free. INKTOMI MAKES NO OTHER WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, AND NONINFRINGEMENT. 4.2. Inktomi Obligations. Inktomi's sole obligation under the foregoing warranties is to use its reasonable best efforts to correct any portion of the Inktomi Technology or its business practices that does not meet the foregoing warranties within a reasonable period of time, and if Inktomi fails to do so, then Customer shall have the right to immediately terminate this Agreement and receive as a sole remedy a refund of all amounts paid by Customer applicable to Services to be rendered following the date of such termination. 5 6 4.3. Customer Warranties. Customer warrants that (i) has full power and authority to enter into this Agreement, (ii) it will seek all necessary governmental approvals required to effectuate this Agreement, and (iii) it shall perform the online services provided by Customer through the Site in accordance with all federal, state and local laws, including all professional registration requirements related thereto. CUSTOMER MAKES NO OTHER WARRANTIES OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, AND NONINFRINIGEMENT. 5. End-User Support. Customer, at its own expense shall provide first level customer support services to end-users of the Site. Inktomi, at its own expense, shall provide second level technical support services to Customer regarding the operation of the Inktomi Search Engine. Such support services will be provided as set forth on Exhibit B. 6. Payments. 6.1. Service Fees. Customer shall pay Inktomi service fees in the amount and on terms specified on Exhibit C attached hereto. In addition, Customer shall grant Inktomi a fully vested option exercisable for a period of three years from the Effective Date to purchase shares of the Common Stock of Customer. The option shall be in standard venture capital form and shall contain a net exercise feature and customary representations and warranties of the parties. Customer shall issue the option to Inktomi within thirty (30) days following the Effective Date. Inktomi and Customer shall confer in good faith promptly following the Effective Date to determine the total number of shares subject to the option and the exercise price per share under the option. 6.2. Records. Customer shall keep complete and accurate records pertaining to the number of Results Sets served from a cache controlled or maintained by Customer. Such records shall be maintained for a two-year period following the year in which any payments pertaining to such revenue were due. Inktomi shall have the right to examine Customer's records from time to time but no more than once every six (6) months to determine the correctness of any payment made under this Agreement. Such examination shall be conducted at reasonable times during Customer's normal business hours and upon at least ten (10) business days' advance notice and in a manner so as not to interfere unreasonably with the conduct of Customer's business. If any such examination indicates that Customer has underpaid by more than five percent (5%) of the aggregate payments due for the period subject to such examination, Customer shall reimburse Inktomi for reasonable costs of such examination. 6.3. Taxes. Customer shall be responsible for all sales taxes and other similar taxes imposed by any federal, state or local governmental entity on the transactions contemplated by this Agreement, excluding taxes based upon Inktomi's net income. When Inktomi has the legal obligation to pay or collect such taxes, the appropriate amount shall be invoiced to and paid by Customer unless Customer provides Inktomi with a valid tax exemption certificate authorized by the appropriate taxing authority. 6 7 6.4. Payment. All fees quoted and payments made hereunder shall be in U.S. Dollars. Customer shall pay all amounts due under this Agreement to Inktomi at the address indicated at the beginning of this Agreement or such other location as Inktomi designated in writing. 7. Confidentiality. 7.1. Definition of Confidential Information. All information and documents disclosed or produced by either party in the course of this Agreement which are disclosed in written form and identified by a marking thereon as proprietary, or oral information which is defined at the time of disclosure and confirmed in writing within ten (10) business days of its disclosure, shall be deemed the "Confidential Information" of the disclosing party. Notwithstanding the above, the parties agree that any information (in any form, whether in tangible or intangible) relating to the Inktomi Search Engine, the Inktomi Technology, the Inktomi Data Protocol, the Interface Construction Tools is considered Confidential Information of Inktomi. 7.2. Treatment of Confidential Information. Each party agrees to protect the other party's Confidential Information in the same manner as such party protects its own Confidential Information of substantially similar proprietary value, but in no case less than reasonable care. Each party agrees that it will use the Confidential Information of the other party only for the purposes of this Agreement and that it will not divulge, transfer, sell, license, lease, or otherwise disclose or release any such information or documents to third parties, with the exception of (i) its employees or subcontractors who require access to such for purposes of carrying out such party's obligation hereunder and (ii) persons who are employed as auditors by a public accounting firm or by a federal or state agency. Each party will use reasonable efforts to advise any person obtaining Confidential Information that such information is proprietary and to obtain a written agreement obligating such person to maintain the confidentiality of any Confidential Information belonging to the party or its suppliers. 7.3. No Other Confidential Information. Neither party shall have any obligation under this Section 7 for information of the other party which the receiving party can substantiate with documentary evidence that has been or is (i) developed by the receiving party independently and without the benefit of information disclosed hereunder by the disclosing party; (ii) lawfully obtained by the receiving party from a third party without restriction and without breach of this Agreement; (iii) publicly available without breach of this Agreement; (iv) disclosed without restriction by the disclosing party to a third party; or (v) known to the receiving party prior to its receipt from the disclosing party. 8. Indemnification. 8.1. Inktomi Indemnification. Inktomi shall defend and/or settle, and pay damages awarded pursuant to, any third party claim brought against Customer alleging the Inktomi Search Engine improperly includes any third party copyrighted subject matter, third 7 8 party patented subject matter or third party trade secrets; provided that Customer promptly notifies Inktomi in writing of any such claim and promptly tenders the control of the defense and settlement of any such claim to Inktomi at Inktomi's expense and with Inktomi's choice of counsel. Customer shall cooperate with Inktomi, at Inktomi's expense, in defending or settling such claim and Customer may join in defense with counsel of its choice at its own expense. Inktomi shall not reimburse Customer for any expenses incurred by Customer without the prior written approval of Inktomi. 8.2. Customer Indemnification. Customer shall defend and/or settle, and pay damages awarded pursuant to, any third party claim brought against Inktomi (i) related to the services provided by Customer through the Site or representations, claims or statements pertaining thereto, and (ii) which, if true, would constitute a breach of any warranty, representation or covenant made by Customer under Section 4.3 of this Agreement; provided that Inktomi promptly notifies Customer in writing of any such claim and promptly tenders the control of the defense and settlement of any such claim to Customer at Customer's expense and with Customer's choice of counsel. Inktomi shall cooperate with Customer, at Customer's expense, in defending or settling such claim and Inktomi may join in defense with counsel of its choice at its own expense. Customer shall not reimburse Inktomi for any expenses incurred by Inktomi without the prior written approval of Customer. 9. Limitation of Liability. EXCEPT FOR AMOUNTS INKTOMI MAY BE REQUIRED TO PAY UNDER SECTION 8.1 ABOVE, IN NO EVENT WILL THE LIABILITY OF INKTOMI AND ITS LICENSORS AND SUPPLIERS ARISING OUT OF THIS AGREEMENT EXCEED THE NET AMOUNT INKTOMI HAS ACTUALLY RECEIVED FROM CUSTOMER UNDER THIS AGREEMENT. INKTOMI AND ITS LICENSORS AND SUPPLIERS SHALL NOT BE LIABLE FOR ANY LOST PROFITS OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING DAMAGES FOR LOST DATA, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, INCLUDING BUT NOT LIMITED TO CONTRACT, PRODUCTS LIABILITY, STRICT LIABILITY AND NEGLIGENCE, AND WHETHER OR NOT IT WAS OR SHOULD HAVE BEEN AWARE OR ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. 10. Term and Termination. 10.1. Term. The term of this Agreement (the "Term") shall commence on the Effective Date and shall continue in force for a period of three years thereafter, unless earlier terminated as provided herein. 10.2. Termination for Breach. Either party may suspend performance and/or terminate this Agreement if the other party materially breaches any term or condition of this Agreement and fails to cure that breach within thirty (30) days after receiving written notice of the breach. 8 9 10.3. Termination due to Warranty. Customer may terminate this Agreement in accordance with the provisions of Section 4.2. 10.4. Termination due to Insolvency. Either party may suspend performance and/or terminate this Agreement if the other party becomes insolvent or makes any assignment for the benefit of creditors or similar transfer evidencing insolvency, or suffers or permits the commencement of any form of insolvency or receivership proceeding, or has any petition under bankruptcy law filed against it, which petition is not dismissed within sixty (60) days of such filing, or has a trustee or receiver appointed for its business or assets or any party thereof. 10.5. Effect of Termination. Upon the termination of this Agreement for any reason (i) all license rights granted herein shall terminate, (ii) Customer shall immediately pay to Inktomi all amounts due and outstanding as of the date of such termination and (iii) each party shall return to the other party, or destroy and certify the destruction of, all Confidential Information of the other party. 10.6. Survival. In the event of any termination or expiration of this Agreement for any reason, Sections 1, 2.5, 2.6, 4, 6, 7, 8, 9, 10 and 11 shall survive termination. Neither party shall be liable to the other party for damages of any sort resulting solely from terminating this Agreement in accordance with its terms. 10.7. Remedies. Each party acknowledges that its breach of the confidentiality or service/license restrictions contained herein may cause irreparable harm to the other party, the extent of which would be difficult to ascertain. Accordingly, each party agrees that, in addition to any other remedies to which the other party may be legally entitled, such party shall have the right to seek immediately injunctive relief in the event of a breach of such sections by the other party or any of its officers, employees, consultants or other agents. 11. Miscellaneous. 11.1. Capacity. Each party warrants that it has full power to enter into and perform this Agreement, and the person signing this Agreement on either party's behalf has been duly authorized and empowered to enter in such agreement. Each party further acknowledges that it has read this Agreement, understands it and agrees to be bound by it. Each party acknowledges that such party has not been induced to enter into such agreements by any representations or statements, oral or written, not expressly contained herein or expressly incorporated by reference. 11.2. Notice. Any notice required for or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally, (ii) by overnight courier upon written verification of receipt, (iii) by telecopy or facsimile transmission when confirmed by telecopier or facsimile transmission report, or (iv) by certified or registered mail, return receipt requested, upon verification of receipt. All notices must be sent to the addresses first described above or to such 9 10 other address that the receiving party may have provided for the purpose of notice in accordance with this Section. 11.3. Assignment. Neither party may assign its rights or delegate its obligations under this Agreement without the other party's prior written consent, except to the surviving entity in a merger or consolidation in which it participates or to a purchaser of all or substantially all of its assets, so long as such surviving entity or purchaser shall expressly assume in writing the performance of all of the terms of this Agreement. 11.4. No Third Party Beneficiaries. All rights and obligations of the parties hereunder are personal to them. This Agreement is not intended to benefit, nor shall it be deemed to give rise to, any rights in any third party. 11.5. Governing Law. This Agreement will be governed and construed, to the extent applicable, in accordance with United States law, and otherwise, in accordance with California law, without regard to conflict of law principles. Any dispute or claim arising out of or in connection with this Agreement shall be finally settled by binding arbitration in San Mateo County, California under the Commercial Rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. 11.6. Independent Contractors. The parties are independent contractors. Neither party shall be deemed to be an employee, agent, partner or legal representative of the other for any purpose and neither shall have any right, power or authority to create any obligation or responsibility on behalf of the other. 11.7. Force Majeure. Neither party shall be liable hereunder by reason of any failure or delay in the performance of its obligations hereunder (except for the payment of money) on account of strikes, shortages, riots, insurrection, fires, flood, storm, explosions, earthquakes, telecommunications outages, acts of God, war, governmental action, or any other cause which is beyond the reasonable control of such party. 11.8. Compliance with Law. Each party shall be responsible for compliance with all applicable laws, rules and regulations, if any, related to the performance of its obligations under this Agreement. 11.9. Waiver. The failure of either party to require performance by the other party of any provision shall not affect the full right to require such performance at any time thereafter; nor shall the waiver by either party of a breach of any provision hereof be taken or held to be a waiver of the provision itself. 11.10. Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be contrary to law, such provision shall be changed and interpreted so as to best accomplish the objectives of the original provision to the fullest extent allowed by law and the remaining provisions of this Agreement shall remain in full force and effect. 10 11 11.11. Headings. The section headings appearing in this Agreement are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or extent of such paragraph, or in any way affect such agreements. 11.12. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which will be considered an original, but all of which together will constitute one and the same instrument. 11.13. Entire Agreement. This Agreement, and the Exhibits hereto, constitute the entire agreement between the parties with respect to the subject matter hereof. This Agreement supersedes, and the terms of this Agreement govern, any other prior or collateral agreements with respect to the subject matter hereof. Any amendments to this Agreement must be in writing and executed by an officer of the parties. IN WITNESS WHEREOF, the parties have caused this Information Services Agreement to be signed by their duly authorized representatives. CUSTOMER INKTOMI CORPORATION By: /s/ JEFFREY PETERSON By: /s/ JERRY KENNELLY ---------------------------- ----------------------------- Name: Jeffrey Peterson Name: Jerry Kennelly --------------------------- --------------------------- Title: Chief Financial Officer Title: CFO -------------------------- -------------------------- 11 12 EXHIBIT A SERVICES Basic Services: Inktomi will use the Inktomi Search Engine to crawl the Internet, download and analyze text and other data, sort and organize the data, create an index of accessible data, and, after receiving a particular search request from an end user (in the form of a word query), locate material accessible in the Database, and present the results of the search to the end user. The functionality specifications and performance criteria applicable to such services are as follows: Functionality specifications: Inktomi will operate the Inktomi Search Engine so as to enable end users of the Site to run queries against the Database with the following functionality. Implementation of any of the following features will be at the discretion of the Customer. o Inktomi will provide a minimum 54 million document searchable Web index for all queries and will provide a minimum 110 million document searchable Web index database that may be accessed by up to 20% of daily queries o Ability to search by keyword, file type, domain (up to three levels), document title, modification dates, document contents, depth and metaword o Ability to search by full text and phrase, and search with Boolean operators (including AND, NOT and OR) o Search on included object, covering the following objects: Acrobat, Java applets, active x controls, audio, plugins, Flash, form, frame, image, script, Shockwave, table, video and vrml o Search on included file type, by file extension o Search on specific script language, covering Javascript and Vbscript o Limit search to pages containing links to a specified domain o Limit search to words in the HTML "title" field o Grammatical stemming o Search by language o Case sensitivity support o Pornography filtration o Ability to selectively control the size of each Results Set (0-10 records, 11-20 records, 21-30 records, 31-50 records, 51-75 records, 76-100 records) 13 Performance Criteria o Size of Database - Minimum 54 million documents for all queries and a minimum of 110 documents that may be accessed for up to 20% of daily queries o Database Freshness - Objective is minimum 17 updates per year (approximately every 3 weeks, may vary depending on operational circumstances) o Uptime/Downtime - Minimum 99% uptime (1% downtime) over monthly windows. Downtime = any 1 minute period in which Inktomi Technology processes no requests. o Query/Response Speed - Average speed <= 750 milliseconds Once a month, Inktomi will provide standard crawl and uptime reports to Customer. 14 EXHIBIT B SUPPORT GUIDELINES 1. DEFINITIONS. (a) Hours of Operation. Inktomi Technical Support Hours of Operation are Monday to Friday 9:00 a.m. - 5:00 p.m. Pacific Time. Inktomi may, at its reasonable discretion, change the Hours of Operation with reasonable notice to Customer. (b) Problem. Any error, bug, or malfunction that makes any feature of the Inktomi Search Engine perform unpredictably or to otherwise become intermittently unavailable, or that causes the Inktomi Search Engine to have a material degradation in response time performance. (c) Severe Problem. Any error, bug, or malfunction that causes the Inktomi Search Engine to become inaccessible to Customer and its Site end users, or that causes any feature of the Inktomi Search Engine to become continuously unavailable. (d) Enhancement Request. A request by Customer to incorporate a new feature or enhance an existing feature of the Inktomi Search Engine. (e) Fix. A correction, fix, alteration or work around that solves a Problem or a Severe Problem. 2. Contact points. (a) Customer Technical Support Personnel. Customer will designate no more than three Customer employees as qualified to contact Inktomi for technical support. (b) Inktomi Technical Support Personnel. Inktomi will ensure that its Technical Support Personnel are adequately trained to provide technical support to Customer. Inktomi will provide Customer with a web interface or an email address (the "Support Address"), as well as an email pager address (the "Support Pager") for contacting the Inktomi Technical Support Personnel no later than one week prior to the Launch Date. Inktomi will also provide Customer with contact information for executive escalation personnel no later than one week prior to the Launch Date. Inktomi may change its designated Technical Support Personnel and executive escalation personnel at its discretion with reasonable notice to Customer. 15 3. Support procedures. (a) All Problems reported by Customer Technical Support Personnel to Inktomi must be submitted via web site or email to the Support Address. (b) If Customer believes it is reporting a Severe Problem, Customer will accompany its email request with a page via the Support Pager. (c) Upon receiving a report from Customer, Inktomi will determine whether the request is a Problem, a Severe Problem, or an Enhancement Request. Inktomi will respond to the request and use reasonable commercial efforts to provide a Fix as described in the support table set forth below. (d) Inktomi will use commercially reasonable efforts to inform Customer Technical Support Personnel of Fixes. 4. Support levels. (a) Customer will provide technical support to end users of the Sites who email or otherwise contact Customer directly with questions about the Sites. Customer will use its commercially reasonable efforts to Fix any Problems without escalation to Inktomi. (b) Inktomi will provide the following technical support solely to Customer Technical Support Personnel:
================================================================================================ RECEIPT OF TYPE OF EMAIL TARGET RESPONSE TARGET FIX TIME AND REPORTING EMAIL REQUEST REQUEST TIME FROM EMAIL RECEIPT - - - - ------------------------------------------------------------------------------------------------ During Hours Problem Within one Commercially reasonable best efforts of Operation business day with weekly status reports to Customer or other times - - - - ------------------------------------------------------------------------------------------------ During Hours Severe Within two Commercially reasonable best efforts of Operation Problem hours with daily status reports to Customer - - - - ------------------------------------------------------------------------------------------------ During other Severe Within four Commercially reasonable best efforts times Problem hours with daily status reports to Customer - - - - ------------------------------------------------------------------------------------------------ During Hours Enhancement Within five At Inktomi's discretion of Operation Requests business days or others times ================================================================================================
16 (c) In the event Inktomi does not respond to Customer within the target response time from email receipt set forth above, then Customer may contact the following Inktomi executive escalation personnel in order: Ken Lutz - Director of Technical Operations Alex Edelstein - General Manager, Search Business Unit Dick Pierce - Vice President Marketing Dave Peterschmidt - CEO 17 EXHIBIT C SERVICES Customer shall pay Inktomi monthly service fees equal to the Total Results Sets Served charge for such month. The Total Results Sets Served charge for each month equals: (1) the total number of Results Sets served during the month divided by the total number of days in such month ("Average Daily Results Sets Served"), (2) multiplied and added in accordance with the following graduated schedule For the first 1 million Average Daily Results Sets Served $0.0044 per Results Sets Served For the next 2 million Average Daily Results Sets Served $0.00418 per Results Sets Served For the next 4 million Average Daily Results Sets Served $0.00396 per Results Sets Served For the next 8 million Average Daily Results Sets Served $0.00374 per Results Sets Served For the next 16 million Average Daily Results Sets Served $0.00352 per Results Sets Served For all subsequent Average Daily Results Served $0.0033 per Results Sets Served, (3) multiplied by the total number of days in such month, (4) plus an amount for each Results Sets served during the month containing more than ten records as follows:
Size of Results Set Incremental pricing ------------------- ------------------- 11-20 records $0.00022 per Results Set served (5%) 21-30 records $0.00055 per Results Set served (12.5%) 31-50 records $0.00132 per Results Set served (30%) 51-75 records $0.00264 per Results Set served (60%) 76-100 records $0.0044 per Results Set served (100%)
Monthly service fees shall be paid in arrears within thirty (30) calendar days following the end of each month. The total service fees payable by Customer shall not be less than $250,000 per year. For the first year under the Agreement, this minimum shall be paid as follows: $40,000 shall be paid on October 1, 1998, $60,000 shall be paid on January 31, 1999, $75,000 shall be paid on April 30, 1999 18 and $75,000 shall be paid on July 31, 1999. For subsequent years, the annual minimum shall be paid in four equal installments of $62,500 on October 31, January 31, April 30 and July 31. All such minimum payments shall be credited against monthly service fees otherwise due and payable. The service fees set forth above are for all services provided by Inktomi as set forth on Exhibit A. In the event Inktomi and Customer mutually agree to modify the specifications on Exhibit A (include without limitation the size of the available database), additional charges may apply. EX-10.02 5 AGREEMENT WITH UPI 1 EXHIBIT 10.02 [UPI WORLDWIDE NEWS, INC. LETTERHEAD] SUBSCRIPTION AGREEMENT SUBSCRIBER INFORMATION Internet Century, Inc. Corporate Name 400 E. Van Buren, One Arizona Center, Suite 545 Address Phoenix AZ 85004 City State Zip Code ================================================================================ 1. PRODUCT(S): Subject to compliance by Subscriber with all of the terms of this Agreement, UPI grants to subscriber the non-exclusive right and privilege to use the "Product(s)" described in the Schedule below. These "Product(s)" are to be used for news and informational purposes only. Subscriber agrees that the "Product(s)" are to be used at the following "User's Location" only and by the named "Organization" only, except for the immediate distribution to Subscriber's readers, listeners, or viewers: User Location: Same as above Address: E-Mail administration@netcentury.com ----------------------------- City State Zip Code Jeff Peterson 602-716-0100 Contact Name Telephone Number 2. PRODUCT INSTALLATION TARGET DATE: 3. TERM: This Agreement shall continue for 24 months, commencing on actual initiation of service, Paragraph 2 notwithstanding. 4. RATE: Subscriber agrees to pay UPI a "Total Monthly Rate" of $750 based upon the following Schedule: A royalty of 35% is payable to UPI on all ad banners adjacent to UPI content. PRODUCT(S), EQUIPMENT, DELIVERY, SOFTWARE MONTHLY RATE $750.00 + ROYALTY US & World News & Spotlights Delivery ftp PULL I hereby certify that I have read and agree to be bound by all terms and conditions of this agreement. Upon the signing or upon the first receipt of the Product(s), whichever occurs first, this agreement goes into effect and binds both parties and/or their successors and assigns. Made this 15th day of November, 1998, in Washington, DC. /s/ Jeffrey Peterson PRESIDENT 11-11-98 - - - - -------------------------------------- ------------- -------- AUTHORIZED SIGNATURE FOR SUBSCRIBER TITLE DATE /s/ Anthony Jay CFO 11-12-98 - - - - -------------------------------------- ------------- -------- ACCEPTED BY (AUTHORIZED UPI SIGNATURE) TITLE DATE 2 5. DELIVERY: UPI shall deliver the Product(s) by the appropriate UPI delivery system. 6. USE: Subscriber shall not use or permit the use of the Product(s) in any way that compromises the integrity thereof or which infringes any copyrights or proprietary interests. Subscriber shall respect all [illegible] pledges on [illegible] [illegible] and shall carry copyright and UPI credit lines. The Product(s) shall be used only by the Subscriber on terminals of the Subscriber and only in accordance with the terms of this agreement. No material distribution is allowed. Subscriber may receive, convert, accumulate, manage and maintain up to 120 days of historical information accumulated from UPI. 7. ASSIGNMENT: This Agreement may be assigned by UPI at any time. The sale or transfer of Subscriber's business or licence(s) shall not relieve Subscriber from its obligations under this Agreement. This Agreement may not be assigned by Subscriber without the prior written consent of UPI. An executed copy of such assumption shall be sent by certified mail to UPI at the address stated above. Prior written consent to such assignment shall not release Subscriber from obligations and liabilities to UPI which have accrued hereunder as of the date of such assignment. 8. UPI EQUIPMENT: Throughout the term of this Agreement, Subscriber shall protect any UPI equipment which may be in its possession. At the termination of this Agreement, Subscriber shall return such equipment to UPI in as good condition as when received, ordinary wear excepted. Failure by Subscriber to comply with this Paragraph shall entitle UPI to charge Subscriber for the cost of repair or replacement of the UPI equipment. 9. SEPARATE EQUIPMENT AND WORK CHARGES: Upon reasonable notice from Subscriber, UPI shall install, relocate, and/or reinstall services in existing or relocated premises of the User's Location, and Subscriber shall pay to UPI the full one-time costs of such work, said costs to include, but not be limited to, any charges from third-parties incurred by UPI in completion of such. Subscriber shall have the option of performing such relocations of service itself, provided reasonable written advance notification is provided to UPI. Notice from Subscriber to UPI to relocate service to a new User's Location shall be construed as a modification of the User's Location as defined in Paragraph 1 of this Agreement and shall become an integral part of the Agreement. 10. SUBSCRIBER PAYMENTS: UPI shall invoice the Subscriber in advance of each month, and Subscriber shall, on or before the first day of each month, pay UPI in advance the Monthly Rates including terminal fees for such month. Subscriber will provide to UPI a current detailed list of terminal locations and all necessary information to document the amount of the terminal fees. If such documentation is not received within 14 days of payment due date, UPI may suspend delivery of the Product(s) until such documentation is provided, or terminate delivery of the Product(s). Suspension of delivery will not relieve Subscriber of his obligations under this Agreement. 11. DEFAULT OF SUBSCRIBER: The following events shall be a default ("Default") of Subscriber under this Agreement: (a) Subscriber neglects or fails, in whole or in part, to observe any of its obligations to UPI, including, but not limited to, making all timely payments due under this Agreement; (b) Subscriber assigns this Agreement or any of its rights hereunder (except as permitted under the terms of Paragraph 7); or (c) a receiver, trustee in bankruptcy or similar officer is appointed to take charge of all or a part of Subscriber's property. 12. REMEDIES UPON DEFAULT: Upon the occurrence of a Default, UPI may terminate delivery of the Product(s) and recover from Subscriber (a) any payments due hereunder; (b) the total of Subscriber's then current monthly rate ("Current Monthly Rate," as defined below in this Paragraph 12) multiplied by the number of months between termination of delivery and the date of expiration of the then current Term (as Term is defined in Paragraph 3) less savings UPI realizes by canceling delivery of the Product(s) to Subscriber; (c) all costs and expenses of collection, including reasonable attorneys' fees; and (d) any and all damages available under law. The term "Current Monthly Rate" as used herein shall include not only the Monthly Rate(s) payable at the time delivery of the Product(s) is terminated, but also the Monthly Rate(s) which from time to time would have become payable had delivery thereof not been terminated, and in the calculation set forth above in Subparagraph (b), each such charge shall be multiplied by the number of months for which it would have been made payable. Should Subscriber fail to pay any rates or fees when due, then UPI shall have the right to invoice Subscriber for a late payment charge equal to the lesser of 1.5% per month or the lawful maximum rate on the unpaid balance from the date due until the date paid. 13. INDEMNITY: UPI SHALL NOT IN ANY EVENT BE LIABLE TO SUBSCRIBER FOR ANY LOSS, EXPENSE, OR DAMAGES, INCLUDING BUT NOT LIMITED TO SPECIAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES, AND ANY LOSS OF BUSINESS OR PROFITS, WHETHER OR NOT FORESEEABLE, ARISING OUT OF OR IN CONNECTION WITH THE PRODUCT(S), ANY FAILURE TO DELIVER OR DISTRIBUTE THE PRODUCT(S), OR ANY INTERRUPTION IN DELIVERY OR DISTRIBUTION THEREOF. Subscriber shall indemnify and hold UPI harmless against any claim, damage, loss, liability or expense arising out of Subscriber's use of the Product(s) contrary to this agreement or instructions by UPI. The obligations of Subscriber under this Paragraph shall continue notwithstanding any termination of this Agreement. 14. CONTRACT DURATION AND CANCELLATION: Upon completion of the Term in Paragraph 3 of the Agreement, Subscriber or UPI may cancel by providing written notice to the second party by certified mail at least 30 days before the effective date of cancellation. Said notice of cancellation shall be mailed to the addresses set forth above or to such other address as either party hereto may designate by written notice to the other, given in accordance with this Paragraph 14. In the absence of said notice of cancellation, Subscriber's service shall continue for a further term of one year, until either party delivers to the other written notice of termination not less than thirty days prior to the end of the then-current term. 15. OTHER AGREEMENTS: Oral representations or agreements not embodied in this Agreement are not binding, and this Agreement may not be changed or terminated orally. This Agreement supersedes and abrogates, as of its effective date, any preceding agreement between the parties relating to the Product(s) and terminates and cancels all obligations and liabilities which may exist thereunder, except Subscriber's obligation to pay for Product(s) rendered under such agreement prior to the effective date of this Agreement or commencement of delivery of the Product(s) provided for herein, whichever is later. 16. TIME IS OF THE ESSENCE: With respect to all payments required under this Agreement, time is of the essence. 17. WAIVER: UPI's waiver of any breach of this Agreement or of any Default hereunder shall not be construed as a waiver of any future breach or Default. Any waiver by UPI must be in writing and signed by a duly authorized representative of UPI. Failure by UPI to enforce any provision of this Agreement, for whatever reason, shall not affect the validity of UPI's right of subsequent enforcement of that or any other provision of this Agreement. UPI's acceptance of any full or partial payment due hereunder during the continuance of any breach or Default shall not constitute a waiver of such Default or breach. 18. ACCEPTANCE BY UPI: This Agreement shall not be effective until accepted and executed by UPI's office located in Washington, DC, provided however, in the event UPI elects to provide Product(s) to Subscriber prior to such execution of the Agreement by UPI. Subscriber shall pay UPI for all such Product(s) it receives at the rate specified in the rate Schedule of this Agreement. Subject to the provisions of Paragraph 7 this Agreement shall bind each party's successors and assigns. 19. GOVERNING LAW: The parties agree that this Agreement is entered into in the District of Columbia. This Agreement shall be governed by and construed in accordance with the laws of the District of Columbia. The parties to this Agreement consent and agree to be subject to the jurisdiction of any court of record in the District of Columbia for the adjudication or resolution of any money or right in connection with this Agreement, and agree that venue in such jurisdiction is proper. 20. CONFIDENTIALITY: The terms of this Agreement are confidential and neither party shall disclose the contents herein to any third party. This confidentiality shall survive termination of the Agreement. Please Initial Here /s/ JP ------------- 3 [UPI WORLDWIDE NEWS, INC. LETTERHEAD] SUBSCRIPTION AGREEMENT SUBSCRIBER INFORMATION Internet Century, Inc. Corporate Name 414 S. Mill Ave., Suite 202 Address Tempe, AZ 85281 City State Zip Code - - - - ---------------------------------------------------------------------------- 1. PRODUCT(S): Subject to compliance by subscriber with all of the terms of this Agreement, UPI grants to subscriber the non-exclusive right and privilege to use the "Product(s)" described in the Schedule below. These "Products(s)" are to be used for news and informational purposes only. Subscriber agrees that the "Product(s)" are to be used at the following "Usar's Location" only and by the named "Organization" only, except for the immediate distribution to Subscriber's readers, listeners, or viewers: User Location: Same as above Address: E-Mail: administration@netcentury.com City State Zip Code Jeff Peterson 800-354-2008 Contact Name Telephone Number 2. PRODUCT INSTALLATION TARGET DATE: 3. TERM: This Agreement shall continue for 24 months, commencing on actual initiation of service. Paragraph 2 notwithstanding. 4. RATE: Subscriber agrees to pay UPI a "Total Monthly Rate" of $750 based upon the following Schedule: A royalty of 35% is payable to UPI on all ad banners adjacent to UPI content. PRODUCT(S), EQUIPMENT, DELIVERY, SOFTWARE, MONTHLY RATE: $750.00 Spanish News with accents Delivery ftp PULL - - - - ------------------------------------------------------------------------------- I hereby certify that I have read and agree to be bound by all terms and conditions of this agreement. Upon the signing or upon the first receipt of the Product(s), whichever comes first, this agreement goes into effect and binds both parties and/or their successors and assigns. Made this 6th day of October, 1998, in Washington, D.C. - - - - ------------------------------------------------------------------------------- /s/ Jeffrey Peterson C.E.O. 10-6-98 - - - - ------------------------------ ---------------- -------- Authorized Signature for Subscriber Title Date /s/ Amado Izaguirre Sales Director 10-8-98 - - - - ------------------------------ -------------------- -------- Accepted by Authorized UPI Signature Title Date initials: [AJ] 10/8/98 4 5. DELIVERY: UPI shall deliver the Product(s) by the appropriate UPI delivery system. 6. USE: Subscriber shall not use or permit the use of the Product(s) in any way that compromises the integrity thereof or which infringes any copyrights or proprietary interests. Subscriber shall respect all [illegible] pledges on [illegible] [illegible] and shall carry copyright and UPI credit lines. The Product(s) shall be used only by the Subscriber on terminals of the Subscriber and only in accordance with the terms of this agreement. No material distribution is allowed. Subscriber may receive, convert, accumulate, manage and maintain up to 120 days of historical information accumulated from UPI. 7. ASSIGNMENT: This Agreement may be assigned by UPI at any time. The sale or transfer of Subscriber's business or licence(s) shall not relieve Subscriber from its obligations under this Agreement. This Agreement may not be assigned by Subscriber without the prior written consent of UPI. An executed copy of such assumption shall be sent by certified mail to UPI at the address stated above. Prior written consent to such assignment shall not release Subscriber from obligations and liabilities to UPI which have accrued hereunder as of the date of such assignment. 8. UPI EQUIPMENT: Throughout the term of this Agreement, Subscriber shall protect any UPI equipment which may be in its possession. At the termination of this Agreement, Subscriber shall return such equipment to UPI in as good condition as when received, ordinary wear excepted. Failure by Subscriber to comply with this Paragraph shall entitle UPI to charge Subscriber for the cost of repair or replacement of the UPI equipment. 9. SEPARATE EQUIPMENT AND WORK CHARGES: Upon reasonable notice from Subscriber, UPI shall install, relocate, and/or reinstall services in existing or relocated premises of the User's Location, and Subscriber shall pay to UPI the full one-time costs of such work, said costs to include, but not be limited to, any charges from third-parties incurred by UPI in completion of such. Subscriber shall have the option of performing such relocations of service itself, provided reasonable written advance notification is provided to UPI. Notice from Subscriber to UPI to relocate service to a new User's Location shall be construed as a modification of the User's Location as defined in Paragraph 1 of this Agreement and shall become an integral part of the Agreement. 10. SUBSCRIBER PAYMENTS: UPI shall invoice the Subscriber in advance of each month, and Subscriber shall, on or before the first day of each month, pay UPI in advance the Monthly Rates including terminal fees for such month. Subscriber will provide to UPI a current detailed list of terminal locations and all necessary information to document the amount of the terminal fees. If such documentation is not received within 14 days of payment due date, UPI may suspend delivery of the Product(s) until such documentation is provided, or terminate delivery of the Product(s). Suspension of delivery will not relieve Subscriber of his obligations under this Agreement. 11. DEFAULT OF SUBSCRIBER: The following events shall be a default ("Default") of Subscriber under this Agreement: (a) Subscriber neglects or fails, in whole or in part, to observe any of its obligations to UPI, including, but not limited to, making all timely payments due under this Agreement; (b) Subscriber assigns this Agreement or any of its rights hereunder (except as permitted under the terms of Paragraph 7); or (c) a receiver, trustee in bankruptcy or similar officer is appointed to take charge of all or a part of Subscriber's property. 12. REMEDIES UPON DEFAULT: Upon the occurrence of a Default, UPI may terminate delivery of the Product(s) and recover from Subscriber (a) any payments due hereunder; (b) the total of Subscriber's then current monthly rate ("Current Monthly Rate," as defined below in this Paragraph 12) multiplied by the number of months between termination of delivery and the date of expiration of the then current Term (as Term is defined in Paragraph 3) less savings UPI realizes by canceling delivery of the Product(s) to Subscriber; (c) all costs and expenses of collection, including reasonable attorneys' fees; and (d) any and all damages available under law. The term "Current Monthly Rate" as used herein shall include not only the Monthly Rate(s) payable at the time delivery of the Product(s) is terminated, but also the Monthly Rate(s) which from time to time would have become payable had delivery thereof not been terminated, and in the calculation set forth above in Subparagraph (b), each such charge shall be multiplied by the number of months for which it would have been made payable. Should Subscriber fail to pay any rates or fees when due, then UPI shall have the right to invoice Subscriber for a late payment charge equal to the lesser of 1.5% per month or the lawful maximum rate on the unpaid balance from the date due until the date paid. 13. INDEMNITY: UPI SHALL NOT IN ANY EVENT BE LIABLE TO SUBSCRIBER FOR ANY LOSS, EXPENSE, OR DAMAGES, INCLUDING BUT NOT LIMITED TO SPECIAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES, AND ANY LOSS OF BUSINESS OR PROFITS, WHETHER OR NOT FORESEEABLE, ARISING OUT OF OR IN CONNECTION WITH THE PRODUCT(S), ANY FAILURE TO DELIVER OR DISTRIBUTE THE PRODUCT(S), OR ANY INTERRUPTION IN DELIVERY OR DISTRIBUTION THEREOF. Subscriber shall indemnify and hold UPI harmless against any claim, damage, loss, liability or expense arising out of Subscriber's use of the Product(s) contrary to this agreement or instructions by UPI. The obligations of Subscriber under this Paragraph shall continue notwithstanding any termination of this Agreement. 14. CONTRACT DURATION AND CANCELLATION: Upon completion of the Term in Paragraph 3 of the Agreement, Subscriber or UPI may cancel by providing written notice to the second party by certified mail at least 30 days before the effective date of cancellation. Said notice of cancellation shall be mailed to the addresses set forth above or to such other address as either party hereto may designate by written notice to the other, given in accordance with this Paragraph 14. In the absence of said notice of cancellation, Subscriber's service shall continue for a further term of one year, until either party delivers to the other written notice of termination not less than thirty days prior to the end of the then-current term. 15. OTHER AGREEMENTS: Oral representations or agreements not embodied in this Agreement are not binding, and this Agreement may not be changed or terminated orally. This Agreement supersedes and abrogates, as of its effective date, any preceding agreement between the parties relating to the Product(s) and terminates and cancels all obligations and liabilities which may exist thereunder, except Subscriber's obligation to pay for Product(s) rendered under such agreement prior to the effective date of this Agreement or commencement of delivery of the Product(s) provided for herein, whichever is later. 16. TIME IS OF THE ESSENCE: With respect to all payments required under this Agreement, time is of the essence. 17. WAIVER: UPI's waiver of any breach of this Agreement or of any Default hereunder shall not be construed as a waiver of any future breach or Default. Any waiver by UPI must be in writing and signed by a duly authorized representative of UPI. Failure by UPI to enforce any provision of this Agreement, for whatever reason, shall not affect the validity of UPI's right of subsequent enforcement of that or any other provision of this Agreement. UPI's acceptance of any full or partial payment due hereunder during the continuance of any breach or Default shall not constitute a waiver of such Default or breach. 18. ACCEPTANCE BY UPI: This Agreement shall not be effective until accepted and executed by UPI's office located in Washington, DC, provided however, in the event UPI elects to provide Product(s) to Subscriber prior to such execution of the Agreement by UPI. Subscriber shall pay UPI for all such Product(s) it receives at the rate specified in the rate Schedule of this Agreement. Subject to the provisions of Paragraph 7 this Agreement shall bind each party's successors and assigns. 19. GOVERNING LAW: The parties agree that this Agreement is entered into in the District of Columbia. This Agreement shall be governed by and construed in accordance with the laws of the District of Columbia. The parties to this Agreement consent and agree to be subject to the jurisdiction of any court of record in the District of Columbia for the adjudication or resolution of any money or right in connection with this Agreement, and agree that venue in such jurisdiction is proper. 20. CONFIDENTIALITY: The terms of this Agreement are confidential and neither party shall disclose the contents herein to any third party. This confidentiality shall survive termination of the Agreement. Please Initial Here /s/ JP ------------- EX-10.03 6 AGREEMENT WITH REUTERS NEWSMEDIA, INC. 1 EXHIBIT 10.03 CONFIDENTIAL CONTRACT NO. __________ DISTRIBUTOR: INTERNET CENTURY, INC. REUTERS NEWMEDIA INC. INTERNET SERVICES TERMS AND CONDITIONS 1. TERM 1.1. The Agreement will take effect on the Effective Date, and, unless terminated earlier as permitted hereunder, will terminate twenty-six (26) months from the first day of the month immediately following the Effective Date (the "Term"). 2. REUTERS SERVICES 2.1. Provision of Services. Reuters will provide Distributor with access to the Reuters Services at Distributor's Installation Address in accordance with all of the terms and conditions of this Agreement. The text, data, graphics, moving and still images and sound recordings contained in the Reuters Services, and any portion thereof, shall hereinafter be referred to, individually and collectively, as the "Reuters Content". 2.2. Withdrawal of Service. Reuters may cancel all or part of any Reuters Service if: (a) the Reuters Service becomes the subject of a claim that such service infringes the rights of any third person or that Reuters otherwise does not have the right to permit others to use it; (b) the Reuters Service becomes illegal or contrary to any applicable law or regulation; or (c) Reuters for any reason discontinues the Reuters Service (or part thereof) as a Reuters product offering. If Reuters cancels all or part of any Reuters Service, Reuters only obligations to Distributor will be to notify Distributor reasonably promptly and to refund, pro rata, any fees paid in advance for the affected Reuters Service. Except as set forth in this subsection 2.2, such cancellation shall not give rise to a right of Distributor to cancel the affected Reuters Service or terminate the Agreement. In the event, pursuant to this subsection 2.2, Reuters cancels: (a) a whole Reuters Service, Distributor may terminate this Agreement if Distributor is receiving only one Reuters Service at the time; (b) part of a Reuters Service, Distributor may cancel the affected Reuters Service if Reuters cancellation substantially frustrates Distributor's purpose in subscribing to such service. In each case, Distributor shall pay any fees and charges due at the time of termination. 3. USE OF REUTERS CONTENT 3.1. License. Reuters hereby, grants to Distributor during the Term the worldwide, non-exclusive non-transferable right, subject to the terms and conditions of this Agreement, to distribute the Reuters Content solely by displaying it on Distributor's Internet Service, and to make such internal copies as are necessary to create that display. Except as set forth herein, no other use, copying, display or distribution, in any form, of the Reuters Content, in whole or in part, by Distributor is permitted without the prior written consent of Reuters. 3.2. Limitations and Restrictions. Unless otherwise stated in this Agreement, Distributor shall display the Reuters Content verbatim as received and may not edit, modify or translate the Reuters Content in any way; provided that Distributor shall be permitted to: (a) modify the layout of the Reuters Content to fit within the layout of Distributor's Internet Service; and (b) extract headlines from the Reuters Content for display in accordance with Sec. 3.1 hereof, provided that each such headline shall contain a hypertext link to the corresponding story as displayed on Distributor's Internet Service. Distributor shall not re-write or otherwise use any portion of the Reuters Content to create original content for publication. By way of example, but not limitation, Distributor shall not use the Reuters Content as source (factual background) material to create content for publication without Reuters prior written consent. The rights granted to Distributor herein shall be subject to the additional limitations and restrictions, if any, specified in this Agreement. 3.3. Editorial Control. Reuters reserves to itself complete editorial freedom in the form and content of the Reuters Content and may alter the same from time to time, such alterations including retracting and canceling stories (which, for clarity, shall not constitute a cancellation of part of a Reuters Service as described in Sec. 2.2 hereof) and publishing corrections. Distributor shall comply with any editorial codes contained in the Reuters Content, including mandatory delay codes, or any other reasonable limitations or restrictions placed by Reuters or its third party content providers on the use, display or distribution of any Reuters Content. Reuters shall inform Distributor of the meaning of any such codes. 3.4. Release of Content. Distributor will display Reuters Content promptly after the later of (a) the time the Reuters Content is received at Distributor's Installation Address; or (b) the end of any applicable delay period. In no event may any applicable delay period. In no event may Distributor display Reuters Content received more than 18 hours earlier in any section entitled "Today's News", "Current", or any title of similar import. 3.5. Storage. Distributor may not store or authorize any person to store the Reuters Content in any medium for more than seven (7) days without the prior written consent of Reuters. Distributor acknowledges that Reuters may impose additional fees if it grants permission to extend such storage period. 4. SOFTWARE (if applicable - see Order Form) 4.1 License. Reuters grants to Distributor during the Term a non-exclusive, non-transferable right to use the Software at Distributor's Installation 1 2 CONFIDENTIAL Address solely for the purpose of accessing the Reuters Content. Distributor may not sub-license, assign, copy (except for back-up purposes), distribute, modify, merge, transfer, decompile or reverse engineer the Software except to the extent permitted in writing by Reuters or to the extent this restriction is not permitted by applicable law. 5. USE OF EQUIPMENT (if applicable - see Order Form) 5.1 Installation. Reuters or its nominees will supply and install the Equipment at Distributor's Installation Address so that Distributor may access the Reuters Content. Reuters may, at any time and upon thirty (30) days' written notice (or upon less notice if reasonably necessary), replace the Equipment with other equipment (which will then be deemed to form part of the Equipment) or replace the means of transmission of the Reuters Services with another means of transmission. 5.2 Distributor Obligations. Distributor will, at its own cost and expense, obtain any and all consents, rights of access, easements, governmental approvals, building permits, zoning authorizations, or other rights or authorizations necessary for the installation and use of the Equipment. Distributor will not move the Equipment from its location as installed without the prior written consent and supervision of Reuters, nor will Distributor allow the Equipment to become subject to any claims, liens or encumbrances. Distributor will not allow any person other than Reuters or its nominees to maintain and/or repair the Reuters Equipment. Distributor will provide, at his own cost and expense, all connections from its own computer systems to the Equipment, and will be solely responsible for all transmission and communication of the Reuters Content from the Equipment to Distributor's computer systems. All such connections will be in accordance with applicable standards, including those of Underwriters Laboratories, Inc. 5.3 Insurance and Damage. Distributor will provide risk insurance coverage sufficient to protect the Equipment. Distributor will be responsible for any damages caused to or by the Equipment from any cause whatsoever including but not limited to unexplained disappearance or theft, or in connection with its use, maintenance or repair, unless such loss or damage is attributable to any act or omission of Reuters. 5.4 Upgrades. Distributor acknowledges and agrees that, from time to time, it may be necessary for it, at its own cost and expense, to upgrade its hardware and/or software in order to maintain compatibility with modifications to any part of the Reuters Services and the means of accessing the same. In the event that the cost to maintain such compatibility would have a material effect on Distributor's capacity to perform hereunder, at Reuter election, Reuters may pay for such upgrades or grant Distributor the right to terminate this Agreement on Sixty (60) days' notice subject only to payment of any fees and charges owed at such time. 6. SUPPORT 6.1 Extent of Support. Reuters or its nominees will, at Reuters cost and expense, use reasonable efforts to maintain the Software and Equipment in standard operating condition. Reuters shall not have any obligation to provide support that is required because of: (a) accident, negligence or misuse not attributable to Reuters; (b) failure of an operating environment or causes other than ordinary use; (c) attempts made to repair, service or modify the Software or Equipment by Persons other than the personnel of Reuters or its nominees; (d) use of non-current versions of the Software and/or Equipment where current versions have been made available to Distributor; or (e) use of software or hardware not supplied by Reuters. In the event Reuters provides support for any of the foregoing reasons (i.e., (a)-(e)), Distributor will pay for Reuters time and materials at Reuters then-current rates. Distributor will allow Reuters or its nominees access to Distributor's Installation Address, and any other applicable location, at all reasonable times, with reasonable prior notice, in order to install, inspect, maintain, repair, replace or remove all or part of the software and/or Equipment. 7. CREDIT AND BRANDING 7.1 Notices. Distributor will not remove or conceal any copyright or other proprietary notice or any credit-line or date-line included in the Reuters Services. Distributor will insert on any page that contains any Reuters Content, and in close proximity to the Reuters Content, the following notice: "Copyright [insert current year] Reuters Limited. Click Here for Limitations and Restrictions on Use." Such notice (and any "Teaser Notice" as set forth below) shall contain a hypertext link to the following notice, which shall appear in a legal notice are on Distributor's Internet Service: "Reuters content is the intellectual property of Reuters Limited. Any copying, republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent or Reuters. Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon." Reuters reserves the right to alter these notices from time to time. Notwithstanding the foregoing, if the only Reuters Content on a page is three or fewer headlines per Reuters Service, Distributor shall be permitted to substitute "Reuters Headlines", or a similar Reuters identifier mutually agreed by the parties ("Teaser Notice"), for the copyright notice first set forth above. 7.2 Reuters Branding. Reuters will provide Distributor with a graphics file containing the Reuters logo ("Logo"). Distributor shall insert the Logo at the top of any page containing any Reuters Content, except a page whose only Reuters Content is three or fewer headlines per Reuters Service, in a size not smaller than 164 X 41 pixels square. Reuters reserves the right to replace this Logo with another graphic identifying the Reuters Services. If Distributor is receiving the 2 3 CONFIDENTIAL Reuters/Variety service, the Logo may include the Variety logo. 7.3 Use of Reuters Marks. Except as specifically authorized in this Section 7, Distributor shall not use the Reuters name or any Reuters trademarks without Reuters prior written consent. Distributor may not make any statement (whether oral or in writing) in any external advertising, marketing or promotion materials regarding Reuters or the Reuters Services without the prior written consent of Reuters, provided that materials that are substantially identical to those previously approved need not be submitted for re-approval. 7.4 Linking and Framing. Distributor may not solicit or encourage other internet sites or on-line services to frame, or hypertext link directly to, the Reuters Content on Distributor's Internet Service without the prior written consent of Reuters. To the extent technologically feasible and commercially reasonable. Distributor shall not permit any third party internet site or on-line service to frame Distributor's Internet Service such that any Reuters Content appears on the same screen as such third party's internet site or on-line service. To the extent that it is not technologically feasible or commercially reasonable to prevent such framing, upon Reuters request and at Reuters expense, Distributor shall cooperate with Reuters in causing such third party to cease and desist from such framing. 7.5 No Co-Branding. Distributor may not co-brand pages containing any Reuters Content. For purposes of this subsection 7.5 to "co-brand" means to display the name, logo, trademark or other identifier of another entity (except for Reuters) in such a manner as to give the viewer the impression that such other entity is a publisher or distributor of the content. This section is not intended to prohibit conventional advertising or sponsorships that do not create such impression. 7.6 Misleading Advertising. Distributor will not include any advertising on pages containing Reuters content that falsely imply that the advertiser is associated with Reuters or the Reuters Content. 8. INTELLECTUAL PROPERTY 8.1 Rights of Reuters. The Reuters Services and Reuters name and trademarks are the valuable intellectual property of Reuters Limited. All rights with respect to the Reuters Services and Reuters name and trademarks, whether now existing or which may hereafter come into existence, which are not expressly granted to Distributor herein are reserved to Reuters Limited. Any goodwill generated through Distributor's use of the Reuters name and trademarks shall inure solely to the benefit of Reuters Limited. 8.2 Distributor's Obligations. Distributor will promptly notify Reuters of any infringement or threatened infringement of any right of Reuters of which Distributor becomes aware and will provide reasonable assistance to Reuters, at Reuters expense, in connection therewith. 9. FEES, CHARGES AND REPORTING 9.1 Monthly Fees. In consideration of the rights granted to Distributor in this Agreement, Distributor will pay Reuters all fees and charges set forth on the Order Form and any schedules thereto ("Fees"). All Fees shall be paid within 30 days of receipt of an invoice for the same from Reuters. Unless otherwise agreed, billing shall commence when Reuters permissions Distributor to receive the Reuters Services. 9.2 Late Payments. All amounts owed hereunder not paid when due and payable will bear interest from the date such amounts are due and payable at the greater of (a) 1.5 percent per month and (b) the maximum allowable rate of interest in the State of New York for transactions between sophisticated commercial entities. 9.3 Taxes. In addition to the amounts set forth above, Distributor will pay to Reuters or to the relevant taxing authority, as appropriate, any applicable sales, use goods and services, value added or other taxes payable under this Agreement (other than taxes levied or imposed on Reuters income). In all cases, the amounts due under this Agreement will be paid by Distributor to Reuters in full without any right of set-off or deduction. 9.4 CPI Increase. During each year of the Term and any renewal term of this Agreement, Reuters reserves the right to increase the Fees by the yearly percentage increase in the Consumer Price Index for all urban consumers as issued by the Bureau of Labor Statistics of the U.S. Department of Labor in the New York/New Jersey Metropolitan area ("CPI"), reported each September (as measured by the increase in the CPI from September of the previous year to August of the present year). Reuters will notify Distributor of any such increase in Fees for the following year by October 1 of the prior year, and such percentage increase will become effective as of January 1st of the following year. 9.5 Reporting. In addition to any other report required hereunder, each month during the Term Distributor shall submit to Reuters a statement ("Statement") containing an accurate count of the total number of page views of pages containing any Reuters Content served by Distributor's Internet Service in the prior month. Such count shall include the number of hits to any proxy cache where such pages are stored and Distributor hereby agrees to use commercially reasonable means to count the number of such proxy cache hits. Distributor shall set forth in its Statement a description of the means used to count proxy cache hits. 10. CONFIDENTIALITY 10.1 Definition. "Confidential Information" means any information regarding the terms of this Agreement and any information, in whatever form, regarding the business or operations of Reuters or Distributor that the disclosing party designates as confidential at the time of disclosure; provided that Confidential Information shall not include information which: (a) at or prior to the time of disclosure by the disclosing party was known to the receiving party through lawful means; (b) at or after the time of disclosure by the disclosing party becomes generally available to the public through no act or omission on the receiving party's part; (c) is developed by the receiving 3 4 CONFIDENTIAL party independent of any Confidential Information it receives from the disclosing party; or (d) the receiving party receives from a third person free to make such disclosure without breach of any legal obligation. 10.2 Obligations. The receiving party acknowledges the confidential nature of the disclosing party's Confidential Information and agrees that it shall not disclose the disclosing party's Confidential Information to any other person, or use any Confidential Information for any purpose other than as contemplated hereby, without the prior written consent of the disclosing party. Each party hereto agrees to take reasonable precautions (no less rigorous than the receiving party takes with respect to its own comparable Confidential Information) to prevent unauthorized or inadvertent disclosure of the other party's Confidential Information. Notwithstanding the foregoing, a receiving party may disclose Confidential Information of a disclosing party pursuant to any statute, regulation, order, subpoena or document discovery request, provided that prior written notice of such disclosure is furnished to the disclosing party as soon as practicable in order to afford the disclosing party an opportunity to seek, at its own expense, a protective order (it being agreed that if the disclosing party is unable to obtain or does not seek a protective order and the receiving party is legally compelled to disclose such information, disclosure of such information may be made without liability). 11. LIMITATION OF LIABILITY 11.1 Acts of God. Neither party will be liable for any failure to perform any obligation hereunder, or from any delay in the performance thereof, due to causes beyond its control, including industrial disputes of whatever nature, acts of God, public enemy, acts of government, failure of telecommunications, fire or other casualty. 11.2 Special Damages. Under no circumstances will either party be liable for any indirect, incidental, special or consequential damages with respect to the subject matter hereof, including lost profits, regardless of whether such damages could have been foreseen or prevented by either party. 11.3 Aggregate Liability. Except for the parties' obligations under Section 13, in no event will the aggregate liability of either party to the other party or to any third party for damages, direct or otherwise, arising out of or in connection with this Agreement exceed the total value of the Fees payable to Reuters during the Term regardless of the cause or form of action; provided, however, that the foregoing limitation on liability shall not apply to any violation by Distributor of the provisions of Sections 3 and 7 hereof. 12. REPRESENTATIONS AND WARRANTIES 12.1 General. Each party hereto represents and warrants that: (a) it has the full right and power to enter into and fully perform this Agreement in accordance with its terms; and (b) the execution, delivery and performance of this Agreement will not violate rights granted by such party to any third party or violate the provisions of any agreement to which it is a party. 12.2 EXCLUSION OF WARRANTIES. REUTERS SHALL NOT BE LIABLE FOR ANY DAMAGES SUFFERED OR INCURRED BY DISTRIBUTOR OR ANY THIRD PERSON ARISING OUT OF ANY FAULTS, INTERRUPTIONS OR DELAYS IN THE REUTERS SERVICES AND ANY INACCURACIES, ERRORS OR OMISSIONS IN THE REUTERS CONTENT. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, THERE ARE NO WARRANTIES, CONDITIONS, GUARANTIES OR REPRESENTATIONS (as used in this subsection, "WARRANTIES") AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, IN LAW OR IN FACT, ORAL OR IN WRITING. ALL SOFTWARE IS LICENSED "AS IS", WITHOUT ANY WARRANTIES. EACH PARTY HEREBY ACKNOWLEDGES THAT IT HAS NOT RELIED UPON ANY WARRANTY MADE BY THE OTHER EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT. 13. INDEMNIFICATION 13.1 Indemnification by Distributor. Distributor will indemnify and hold Reuters harmless from and against any and all liabilities, damages, awards, settlements, losses, claims and expenses, including reasonable attorneys fees and costs of investigation ("Damages"), due to any claim by a third party relating to or arising out of Distributor's Internet Service or any other activities of Distributor, including infringement of any third person's intellectual property rights, except Damages arising solely out of Distributor's use of the Reuters Content, unmodified, in accordance with this Agreement. 13.2 Indemnification by Reuters. Reuters will indemnify and hold Distributor harmless from and against any and all Damages due to any claims by a third party that the Reuters Content or the Software infringes any third party's intellectual property rights, provided that: (i) the relevant claim does not arise from any modification to the Reuters Content or Software made by Distributor or any person receiving the Reuters Content through Distributor; (ii) the relevant claim does not concern Reuters Content that Reuters notified Distributor should not be used; (iii) the relevant claim is not based upon content obtained by Reuters from a third party; and (iv) with respect to the Software, Reuters obligation to indemnify Distributor shall not apply to any claims for infringement of patent rights. 13.3 Notice and Participation. A party seeking indemnification pursuant to this Section 13 (an "Indemnified Party") from or against the assertion of any claim by a third party will give prompt notice to the party from whom indemnification is sought (the "Indemnifying Party"); provided however, that failure to give prompt notice will not relieve the Indemnifying Party of any liability hereunder (except to the extent the Indemnifying Party has suffered actual material prejudice by such failure). The Indemnifying Party and the Indemnified Party will cooperate in the defense or prosecution of any third party claims. 14. TERMINATION 4 5 CONFIDENTIAL 14.1 Termination by Either Party. In addition to any other remedy available at law or in equity, either party may terminate this Agreement immediately, without further obligation to the other party, in the event of any breach of this Agreement by the other party that is not remedied within 30 days' written notice of such breach; provided that Reuters may terminate this Agreement for any breach of Sections 3 or 7 that is not remedied within 5 days' notice of such breach. 14.2 Termination by Reuters. In additional to the right of termination set forth in Sec. 14.1, Reuters shall have the right to terminate this agreement immediately in the event of: (a) any sale, lease or other transfer of all or substantially all of the assets of Distributor to any entity; (b) any change in control of Distributor (whether by merger, stock transfer or otherwise); or (c) Distributor's making an assignment for the benefit of its creditors, the filing of a voluntary or involuntary petition under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under the provisions of any law of like import in connection with the other party, or the appointment of a trustee or receiver for Distributor or its property. 14.3 Obligations Upon Termination. Promptly upon termination of this Agreement for any reason, Distributor will: (a) delete or destroy any Reuters Content stored pursuant to Section 3.5 or otherwise in its possession, custody or control; (b) pay all fees accrued pursuant to this Agreement; and (c) allow Reuters or its nominees to access Distributor's Installation Address to remove the Equipment and Software. 15. GENERAL 15.1 Similar Agreements. Nothing will be deemed to limit or restrict either party from entering into similar agreements with any other Person or from offering services similar to the other party's. 15.2 Press Releases. Neither party will issue any external press statement regarding the availability of the Reuters Services on Distributor's Internet Site unless (a) it has received the express written consent of the other party, which will not be unreasonably withheld; or (b) it is required to do so by Law. 15.3 Controlling Law. This Agreement will be deemed to have been executed and delivered in the State of New York and it will be governed by and construed in accordance with the laws of New York. 15.4 Notices. Except as otherwise provided herein, whenever any notice, request, consent, approval or other communication shall be given by one party hereto to the other, such communication shall be in writing and shall be delivered by registered or certified mail, return receipt requested, addressed as follows: To Reuters: Reuters NewMedia Inc. 1750 Presidents Street Reston, Virginia 20190 (703) 471-2222 (Facsimile) Attn: Senior Vice President - Sales To Distributor: See Contact Person on Order Form Notices shall be effective on the date received. 15.6 Assignments. This Agreement will be binding upon and inure to the benefit of the parties, their respective personal representatives, and permitted successors and assigns. Distributor may not assign or otherwise transfer any of its rights or delegate any of its duties under this Agreement without the prior written consent of Reuters. Reuters reserves the right, at its sole discretion, to assign or transfer any of its rights and delegate any of its duties hereunder, in whole or in part, to any direct or indirect subsidiary of Reuters Limited. 15.7 Relationship Between the Parties. There is no joint venture, partnership, agency or fiduciary relationship existing between the parties and the parties do not intend to create any such relationship by this Agreement. 15.8 Amendments, Waivers. This Agreement may not be amended, modified or superseded, unless expressly agreed to in writing by both parties. No provision of this Agreement may be waived except by an instrument in writing executed by the party against whom the waiver is to be effective. The failure of either party at any time or times to require full performance of any provision hereof will in no manner affect the right of such party at a later time to enforce the same. 15.9 Severability. If any provision or term of this Agreement, not being of a fundamental nature, is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this Agreement will not be affected. 15.10 Survival. The provisions of Sections 3, 9, 10, 11, 12, 13, and 15 of this Agreement will survive the termination of this Agreement. ADDENDUM TO TERMS AND CONDITIONS 1.1 Distributor is permitted to store the Reuters Content for up to 30 days /s/ MH --------------- DISTR. INITIALS 6 CONFIDENTIAL CONTRACT NO.__________ REUTERS NEWMEDIA, INC. INTERNET SERVICES ORDER FORM INTERNET CENTURY, INC. NEVADA - - - - ----------------------------------------------------------------------------------------------------- Name of Legal Entity Subscribing to Services ("Distributor") State/Country of Incorporation 1. ARIZONA CENTER, SUITE 545 PHOENIX AZ. 85004 - - - - ----------------------------------------------------------------------------------------------------- Distributor's Principal Street Address City State Zip Code MR. MICHAEL HUBERT 602-716-0100 602-716-0200 - - - - ----------------------------------------------------------------------------------------------------- Distributor's Contact Person Phone Fax E-Mail (must be at above address) SAME - - - - ----------------------------------------------------------------------------------------------------- Distributor's Billing Contact Name Street Address City State Zip Code SAME - - - - ----------------------------------------------------------------------------------------------------- Address Where Distributor Will Receive Services ("Distributor's Installation Address") Description and URL of Distributor's Internet Service(s) ("Distributor's Internet Service"): AN INTERNET SITE WHICH PROVIDES NEWS AND INFORMATION ABOUT LATIN AMERICA AND IS AVAILABLE AT THE URL WWW.QUEPASA.COM - - - - -----------------------------------------------------------------------------------------------------
DISTRIBUTOR SUBSCRIBES TO THE FOLLOWING SERVICES ("REUTERS SERVICES")
- - - - -------------------------------------------------------------------------------- REUTERS SERVICE FEE (per month) - - - - -------------------------------------------------------------------------------- - - - - -------------------------------------------------------------------------------- REUTERS ONLINE SPANISH REPORT - A selection of top stories $5,000.00 in Spanish, including the following topics: general news, business, and sports. - - - - -------------------------------------------------------------------------------- - - - - -------------------------------------------------------------------------------- EXTENDED ARCHIVE FEE $1,000.00 - - - - -------------------------------------------------------------------------------- - - - - -------------------------------------------------------------------------------- - - - - -------------------------------------------------------------------------------- - - - - -------------------------------------------------------------------------------- TOTAL MONTHLY SERVICE FEES ("SERVICE FEES") $6,000.00 - - - - --------------------------------------------------------------------------------
1 7 CONFIDENTIAL Contract No. REUTERS NEWMEDIA, INC. ----------------------- Distributor: Internet Century, Inc. INTERNET SERVICES ORDER FORM - P.2 EQUIPMENT PROVIDED TO RECEIVE REUTERS SERVICES ("Equipment"): None - - - - ------------------------------------------------------------------------------- SOFTWARE PROVIDED TO RECEIVE REUTERS SERVICES ("Software"): Winds - - - - ------------------------------------------------------------------------------- ADDITIONAL FEES AND CHARGES INSTALLATION CHARGE: None COMMUNICATIONS CHARGE (per month): $75.00 SOFTWARE FEE (per month): $75.00 SECURITY DEPOSIT: A security deposit ("Security Deposit") in the amount of $0 will be paid by the Distributor upon the execution hereof. This Security Deposit may be used, applied or retained by Reuters, in whole or in part, to the extent required for the payment of any fees or charges payable hereunder as to which the Distributor is in default, or for any sum which Reuters may expend or may be required to expend by reason of the Distributor's default hereunder. The balance of the Security Deposit, if any, will be returned to the Distributor upon the termination of this Agreement after the return of the Equipment and Software, if any, to Reuters. OTHER FEES: $1,000.00 per month for 30 day archive right BY SIGNING BELOW, DISTRIBUTOR AGREES TO SUBSCRIBE TO THE REUTERS SERVICES SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH ON THIS REUTERS NEWMEDIA INTERNET SERVICES ORDER FORM ("ORDER FORM"), THE ATTACHED REUTERS NEWMEDIA, INC. INTERNET SERVICES TERMS AND CONDITIONS ("TERMS AND CONDITIONS"), AND ALL ADDENDA, AMENDMENTS AND SCHEDULES THERETO. THE ORDER FORM AND TERMS AND CONDITIONS, INCLUDING ALL ADDENDA, AMENDMENTS AND SCHEDULES THERETO, SHALL HEREINAFTER COLLECTIVELY BE REFERRED TO AS THE "AGREEMENT," AND SHALL TOGETHER FORM THE ENTIRE AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREOF. REUTERS NEWMEDIA INC. INTERNET CENTURY, INC. ("Reuters") ("Distributor") By: Andrew Nibley By: /s/ MICHAEL A. HUBERT -------------------------- ----------------------------- Title: President Title: COO ----------------------- --------------------------- Date: 2/4/99 Date: 1-20-99 ------------------------ ---------------------------- ("Effective Date") 2 8 CONFIDENTIAL CONTRACT NO. -------------- REUTERS NEWMEDIA, INC. DISTRIBUTOR: INTERNET CENTURY, INC. INTERNET SERVICES ORDER FORM FEE SCHEDULE (ROYALTY) 1. Monthly Reuters Royalty. Distributor shall pay to Reuters a royalty ("Reuters Royalty") each month equal to fifty (50) percent of Distributor's Net Advertising Revenue for the prior month, where: "Distributor's Net Advertising Revenue" means Distributor's gross revenues from the sale of Advertising Space (as defined below) on Reuters Qualifying Pages (as defined below) less any sales commissions or other fees paid to third person advertising agents directly relating to sales on such pages, such commissions and fees not to exceed in the aggregate thirty-five (35) percent of Distributor's gross revenues from such sales. In the event that Distributor barters or otherwise does not charge for Advertising Space, Distributor will apply the fair market value of such space for purposes of computing Distributor's Net Advertising Revenue. "Reuters Qualifying Page" means any page that contains any Reuters Content, as that term is defined in the Terms and Conditions, except a page whose only Reuters Content is up to three (3) headlines per Reuters Service, unless such headlines are the only substantive content on the page. "Advertising Space" means, with respect to a page, the total area designated by Distributor for advertising or promotion, including sponsorships. 1.1 Reuters Royalty Additional Terms: Distributor shall pay the greater of (i) the service fee plus the extended archive fee or (ii) the royalty 2. Reporting. Distributor shall keep such books and records as are necessary to verify the amounts owed to Reuters under this Agreement. Distributor will provide with each Reuters Royalty payment: (a) a report in the form attached hereto, signed by an authorized representative of Distributor, setting forth the manner in which the Reuters Royalty was calculated and certain relevant advertising statistics for Distributor's Internet Service ("Monthly Reuters Royalty Report"); and (b) the relevant portions of any third person reports used in the preparation of the Monthly Reuters Royalty Report, including, where applicable, any advertising "rep" or booking firm reports and any third person tracking service reports. 3. Advertising Sales. Distributor shall: (a) use reasonable commercial efforts in collecting receivable in connection with sales of Advertising Space; (b) use reasonable commercial efforts to sell Advertising Space on Reuters Qualifying Pages that are at least equal to the efforts it employs to sell Advertising Space on all other pages; (c) ensure that the sell-out rate and commercial inventory of Advertising Space on Reuters Qualifying Pages are comparable to the sell-out rate and commercial inventory for Distributor's Internet service as a whole; (d) sell Advertising Space on Reuters Qualifying Pages at a rate comparable to that being charged for other pages on Distributor's Internet Service; (c) make unsold Advertising Space on Reuters Qualifying Pages available to Reuters to place advertising relating Reuters or its affiliates at no cost to Reuters. 4. Audit Rights. Once a year during the term of this Agreement and the first year thereafter, Reuters, at its expense and upon 10 days' notice to Distributor, will have the right to examine Distributor's relevant books and records in order to verify the figures reported in any report or statement required hereunder and the amounts owed to Reuters pursuant to this Agreement. Such books and records will be made available at the place where these records are kept in the ordinary course of business. Reuters shall have the right to make two (2) copies of such relevant books and records for the sole purpose of carrying out its examination, subject to Distributor's right to redact, prior to copying, any sensitive information not relevant to the examination. If, as a result of such examination, Reuters determines that Distributor mis-reported any figure or underpaid any amount, Reuters will promptly furnish to Distributor a copy of the results of its audit setting forth the discrepancy, and showing, in reasonable detail, the bases upon which the same was determined. Distributor will remit to Reuters a sum equal to the amount of any underpayment within 30 days after notification of the discrepancy. If such discrepancy is greater than 10% of the total amount reported by Distributor for the period audited, then Distributor will reimburse Reuters for the cost of the examination. /s/ MH --------------- DISTR. INITIALS 9 AMENDMENT TO INTERNET SERVICES AGREEMENT BETWEEN REUTERS NEWMEDIA INC. AND INTERNET CENTURY, INC. This Amendment, dated February 12, 1999 amends the January 20, 1999 Agreement by and between REUTERS NEWMEDIA INC. and INTERNET CENTURY, INC. (the "Agreement"). Capitalized terms not defined herein shall have the same meaning as set forth in the Agreement. The parties hereby agree to amend the Agreement as follows: 1. The Reuters Spanish Language Service is hereby added to the Reuters Services provided to Internet Century, Inc. ("Distributor") under the Agreement. Distributor shall have the right to display the Spanish Language Service solely in accordance with the terms and conditions of the Agreement (as amended hereby), provided that Distributor shall not display more than fifteen (15) stories or headlines on a single page. 2. Distributor hereby agrees to pay to Reuters an additional monthly fee of $3,000.00 for the Spanish Language Service. 3. Except as specifically set forth herein, all terms and conditions of the Agreement shall remain in full force and effect. REUTERS NEWMEDIA INC. INTERNET CENTURY, INC. By: /s/ Andrew Nibley By: /s/ Michael Hubert -------------------- -------------------- Title: President Title: COO ----------------- ----------------- Date: Date: 2/12/99 ------------------ ------------------ 10 AMENDMENT TO INTERNET SERVICES AGREEMENT BETWEEN REUTERS NEWMEDIA INC. AND INTERNET CENTURY, INC. This Amendment, dated February 22, 1999 amends the January 20, 1999 Agreement by and between REUTERS NEWMEDIA INC. and INTERNET CENTURY, INC. (the "Agreement"). Capitalized terms not defined herein shall have the same meaning as set forth in the Agreement. The parties hereby agree to amend the Agreement as follows: 1. The Reuters Online Reports is hereby added to the Reuters Services provided to Internet Century, Inc. ("Distributor") under the Agreement. Distributor shall have the right to display the Online Reports solely in accordance with the terms and conditions of the Agreement (as amended hereby). 2. Distributor hereby agrees to pay to Reuters an additional monthly fee of $8,400.00 for the Reuters Online Reports. 3. Except as specifically set forth herein, all terms and conditions of the Agreement shall remain in full force and effect. REUTERS NEWMEDIA INC. INTERNET CENTURY, INC. By: /s/ Andrew Nibley By: /s/ Michael A. Hubert ------------------ --------------------- Title: President Title: C.O.O. --------------- ------------------ Date: Date: 2/22/99 ---------------- ------------------- EX-10.05 7 EMPLOYMENT AGREEMENT - MR. PETERSON 1 EXHIBIT 10.05 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 1st day of November, 1998, by and among INTERNET CENTURY, INC., a Nevada corporation (the "Company") and JEFFREY S. PETERSON ("Peterson"). WHEREAS, the Company desires to employ Peterson as provided herein; and, WHEREAS, Peterson desires to accept such employment, NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company hereby employs Peterson and Peterson hereby accepts employment with the Company as its President and Chief Executive Officer upon the terms and conditions hereinafter set forth. Peterson's employment shall not be deemed an "at will" employment. 2. DUTIES. Peterson will serve the Company as its President and its Chief Executive Officer and will faithfully and diligently perform the services and functions relating to such office and position or otherwise reasonably incident to such office and position, provided that all such services and functions will be reasonable and within Peterson's areas of expertise. Peterson's specific duties shall include those related to (i) all phases of the Company's overall operations, (ii) coordination of the Company's overall operations and strategic planning and (iii) such other duties as the Company may reasonably direct. Peterson will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company. 3. TERM. This Agreement and Peterson's employment shall commence on the 1st day of November, 1998, (the "Effective Date") and shall continue for a term of seven (7) years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Peterson. 4. COMPENSATION. As compensation for the services rendered to the Company under this Agreement commencing on the effective date hereof, Peterson will be paid a base salary of One Hundred Thousand dollars ($100,000) per year payable in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the board of directors of the Company after a review of Peterson's performance of this duties hereunder. 5. TERMINATION. This Agreement will terminate upon the occurrence of any of the following events: a. The death of Peterson; b. The "Total Disability" (as hereinafter defined) of Peterson; c. Written notice to Peterson from the Company of termination for "Cause" (as hereinafter defined); 2 d. The voluntary termination of this Agreement by Peterson upon thirty (30) days prior written notice; e. The later of seven (7) years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above; or For purposes of Section 5(b), the term "Total Disability" means physical or mental disability, or both, determined to be (or reasonably expected to be, based upon then available medical information) of not less than twelve (12) months duration or more where Peterson is unable to reasonably perform the duties he was performing for the Company immediately prior to such disability. The determination shall rest upon the opinion of the physician regularly attending Peterson. If the Company disagrees with said physician's opinion, the Company may engage at their own expense a physician to examine the Peterson, and Peterson hereby consents to such examination and to waive, if applicable any privilege between the physician and Peterson that may arise as a result of said examination. If after conferring, the two physicians cannot concur on a final opinion, they shall choose a third consulting physician whose opinion shall control. The expense of the third consulting physician shall be borne equally by the Peterson and the Company. For purposes of Section 5(c), "Cause" means (i) Peterson has failed to substantially perform his duties as reasonably determined by the chief executive officer of the Company or the Board of Directors of the Company, (ii) Peterson engages in poor performance that is not cured within thirty (30) days after counseling by the Company, (iii) Peterson has failed to comply with the reasonable directives and policies of the Board of Directors of the Company or of the chief executive officer of the Company, or (iv) Peterson breaches his fiduciary duty to the Company or commits any dishonest, unethical, fraudulent, or felonious act in respect to Peterson's duties to the Company. 6. STOCK OPTIONS. Contingent upon Peterson being employed by the Company, Peterson shall be granted options to purchase up to 50,000 shares of the Company's common stock (post 284 for 1 forward stock split) at $1.50 per share pursuant to the Company's 1998 Stock Option Plan to be vested and exercisable in accordance with the terms of the 1998 Stock Option Plan, except that the options shall vest immediately on the Effective Date and the exercise of such options shall not be contingent upon Peterson being employed by the Company. Further, the Company agrees to register the options and the underlying shares on Form S-8 within 90 days of the effective date of any initial public offering of the Company's securities. 7. TERMINATION PAYMENT. It is agreed that (i) if Peterson's employment by the Company is terminated without "Cause", (ii) if his duties and responsibilities are materially changed by the Company and Peterson voluntarily terminates his employment due to such change in duties or responsibilities, or (iii) if Peterson's employment terminates due to Total Disability, the Company shall pay Peterson severance of $200,000 immediately upon the occurrence of either 7(i), (ii) or (iii) above, together with the amount due for the remaining portion of the term of this Agreement. If Peterson's employment terminates due to death, the Company will be obligated to only pay to Peterson's estate any amounts accrued under this Agreement together with $200,000. It is agreed that the Company may purchase a disability income insurance policy and/or a life insurance policy to pay all or part of the amounts due upon termination of Peterson's employment due to either Total Disability or death, respectively, and that Peterson agrees to cooperate in the obtaining of such insurance. 2 3 8. BENEFITS. Peterson shall be entitled to receive any benefits, including health insurance, life insurance, automobile allowance, vacation time, etc., which are offered to other Company executives. 9. EXPENSES. Peterson is authorized to incur reasonable expenses for promoting the business of the Company, including expenses for entertainment, travel and similar items. The Company shall reimburse Peterson for all such expenses on the presentation by Peterson of itemized accounts of such expenditures in accordance with guidelines set forth by the Internal Revenue Service. 10. NON-COMPETITION AND CONFIDENTIALITY. a. Peterson agrees that during the term of this Agreement, Peterson will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit Peterson or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Peterson will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded Internet service provider company. b. For purposes of Section 10a, restrictions regarding competition by Peterson shall only apply to competing businesses or entities that operate in the continental United States. c. In the event of the breach of the covenants contained in this Section 10, it is understood that damages will be difficult to ascertain and the Company may petition a court of law or equity for injunctive relief in addition to any other relief which the Company may have under the law, this Agreement or any other agreement executed in connection herewith. In connection with the bringing of any legal or equitable action for the enforcement of this Agreement, the Company shall be entitled to recover, whether the Company seeks equitable relief, and regardless of what relief is afforded, such reasonable attorneys' fees and expenses as the Company may incur in prosecution of the Company's claim for breach hereof. d. It is hereby agreed that the provisions of this Section 10 are separate and independent from the other provisions of this Agreement, that these provisions are specifically enforceable by the Company notwithstanding any claim by Peterson that the Company has violated or breached this Agreement or any claim that Peterson is entitled to any offset or compensation. e. To induce the Company to enter into this Agreement, Peterson represents and warrants to the Company that Section 10 of this Agreement is enforceable by the Company in accordance with its terms. 11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party. 3 4 12. NOTICES. Any notices, consents, demands, request, approvals and other communications to be given under this Agreement by either party to the other will be deemed to have been duly given if given in writing and personally delivered, faxed or if sent by mail, registered or certified, postage prepaid with return receipt requested, as follows: If to the Company: Internet Century, Inc. 400 E. Van Buren, Suite 545 Phoenix, AZ 85004 If to Peterson: Jeffrey S. Peterson 400 E. Van Buren, Suite 545 Phoenix, AZ 85004 Notices delivered personally will be deemed communicated as of actual receipt, notices by fax shall be deemed delivered when such notices are faxed to recipient's fax number and notices by mail shall be deemed delivered when mailed. 13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understanding, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 14. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during this Agreement, such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically, as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 15. GOVERNING LAW. To the extent permitted by applicable law, this Agreement and the rights and obligations of the parties will be governed by and construed and enforced exclusively in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Arizona and the State of Arizona shall have exclusive jurisdiction regarding any legal actions relating to this Agreement. 16. CAPTIONS. The captions in this Agreement are for convenience of reference only and will not limit or otherwise affect any of the terms or provisions hereof. 17. GENDER AND NUMBER. When the context requires, the gender of all words used herein will include the masculine, feminine and neuter, and the number of all words will include the singular and plural. 18. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument. 4 5 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: INTERNET CENTURY, INC., a Nevada corporation By: /s/ Michael D. Silberman ---------------------------------------------- Michael D. Silberman, Chief Operating Officer PETERSON: /s/ Jeffrey S. Peterson ---------------------------------------------- Jeffrey S. Peterson 5 6 AMENDMENT OF EMPLOYMENT AGREEMENT This Amendment of Employment Agreement is entered into as of the 20th day of January, 1999, by and between quepasa.com, inc., a Nevada corporation (the "Employer"), and Jeffrey S. Peterson (the "Employee"). Explanatory Statements A. Employer and Employee entered into an Employment Agreement dated as of November 1, 1998 (the "Employment Agreement") whereby the Employer employed the Employee. B. The Employer and Employee desire to amend and modify certain terms and conditions of the Employment Agreement. NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Employment Agreement is hereby amended and modified as follows: 1. Section numbered 4, "Compensation" is amended to provide that the base salary of Employee shall be One Hundred Fifty Thousand dollars ($150,000) per year. 2. Section numbered 6, "Stock Options" is hereby amended to read as follows: "Contingent upon Peterson being employed by the Company, Peterson shall be granted options to purchase up to 1,550,000 shares of the Company's common stock (post 284 for 1 forward stock split which was effective November 1, 1998) pursuant to the Company's 1998 Stock Option Plan to be vested and exercisable in accordance with the terms of the 1998 Stock Option Plan, except that 50,000 options shall be exercisable at $1.50 per share and vest immediately on the Effective Date with the remaining 1,500,000 options to be exercisable at $8.00 per share and with the options for 1,500,000 shares to vest immediately upon shareholder approval of an increase in the number of shares of the Company's Common Stock made available and reserved under the Company's 1998 Stock Option Plan to 2,500,000 shares. The exercise of all options hereunder shall not be contingent upon Peterson being employed by the Company. Further, the Company agrees to register the options and the underlying shares on Form S-8 within 90 days of the effective date of any initial public offering of the Company's securities". 3. The first sentence of Section numbered 7, "Termination Payment" is hereby amended to read as follows: "It is agreed that (i) if Peterson's employment by the Company is terminated without "Cause", (ii) if his duties and responsibilities are materially changed by the 7 Company and Peterson voluntarily terminates his employment due to such change in duties or responsibilities, (iii) there is a change in the control of the Company or (iv) if Peterson's employment terminates due to Total Disability, the Company shall pay Peterson severance of $5,000,000 immediately upon the occurrence of either 7(i), (ii), (iii) or (iv) above, together with the amount due for the remaining portion of the term of this Agreement". 4. Section numbered 10, "Non-Competition Confidentiality" is deleted in its entirety and replaced with the following: "10. INCENTIVE STOCK OPTION BONUSES. So long as Peterson is employed by the Company, Peterson shall be entitled to incentive stock option bonuses as follows: a. E-Mail Service. For each 250,000 subscribers that join the Company's E-Mail service, Peterson shall be granted options to purchase up to an additional 100,000 shares of the Company's Common Stock at 120% of the current fair market value of such Shares of Common Stock. The maximum number of shares for which Peterson shall be granted an option based upon the number of subscribers to the Company's E-Mail shall be 1,000,000 shares. b. Chat Room Services. For each 250,000 subscribers that join the Company's Chat Room Service, Peterson shall be granted options to purchase up to an additional 100,000 shares of the Company's Common Stock at 120% of the current fair market value of such Shares of Common Stock. The maximum number of shares for which Peterson shall be granted an option based upon the number of subscribers to the Company's Chat Room shall be 1,000,000 shares. 5. A new Section numbered 11 shall be added which reads as follows: "11. BONUS STOCK. It is acknowledged that the Company is in the process of authorizing "Series B Convertible Common Stock" which shall have the same rights as all other shares of the Company's Common Stock except that each one (1) share of the Series B Convertible Common Stock shall have the same votes as ten thousand (10,000) shares of all other Company Common Stock and the Series B Convertible Common Stock shall automatically convert to shares of the Company's remaining Common Stock on the basis of one share for one share three (3) years from the date of issuance of such Series B Convertible Common Stock. As part consideration for executing this Agreement, the Company hereby agrees to issue ten thousand (10,000) shares of its $.001 par value Series B Convertible Common Stock to Peterson upon the Company obtaining the appropriate corporate approvals for the establishment and issuance of such Series B Convertible Common Stock." 2 8 6. Section numbered 12, "Notices" is amended by changing the notification addresses to read as follows: "If to the Company: quepasa.com, inc. 400 E. Van Buren, Suite 400 Phoenix, AZ 85004 If to Silberman: Jeffrey S. Peterson 400 E. Van Buren, Suite 400 Phoenix, AZ 85004" 7. Section numbers 11 through 18 shall be re-numbered 12 through 19, respectively. 8. Any and all other terms and conditions of the Employment Agreement not amended or modified herein shall remain the same and in full force and effect. Employer: QUEPASA.COM, INC. By: /s/ Michael D. Silberman --------------------------------------------- Michael D. Silberman, Chief Financial Officer Employee: /s/ Jeffrey S. Peterson --------------------------------------------- Jeffrey S. Peterson 3 9 SECOND AMENDMENT OF EMPLOYMENT AGREEMENT This Second Amendment of Employment Agreement is entered into as of the 9th day of March, 1999, by and between quepasa.com, inc., a Nevada corporation (the "Company"), and JEFFREY S. PETERSON ("Peterson"). Explanatory Statements ---------------------- A. The Company and Peterson entered into an Employment Agreement dated November 1, 1998 and an Amendment of Employment Agreement dated January 20, 1999 (together, the "Employment Agreement"). B. The Company and Peterson desire to amend and modify certain terms and conditions of the Employment Agreement. NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Employment Agreement is hereby amended and modified as follows: 1. Section numbered 3, "Term" is hereby amended to read as follows: "3. TERM. This Agreement and Peterson's employment shall commence on the 1st day of November, 1998 (the "Effective Date") and shall continue for a term of four years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Peterson." 2. Section numbered 4, "Compensation" is hereby amended to read as follows: "4. COMPENSATION. As compensation for services rendered to the Company under this Agreement commencing on the Effective Date hereof, Peterson will be paid a base salary of One Hundred Fifty Thousand Dollars ($150,000) per year payable in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the Compensation Committee or the Board of Directors of the Company after a review of Peterson's performance of his duties hereunder." 3. Subsection (e) of Section numbered 5, "Termination" is hereby amended to read as follows: "e. The later of four years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above." 4. Section numbered 6, "Stock Options" is hereby amended to read as follows: "6. STOCK OPTIONS. Contingent upon Peterson being employed by the Company, Peterson shall be granted options to purchase up to 1,550,000 shares of the Company's common stock (post 284 for 1 forward stock split which was effective November 1, 1998) pursuant to the Company's 1998 Stock Option Plan to be vested and exercisable in accordance with the terms of the 1998 Stock Option Plan, except that 50,000 options shall be exercisable at $1.50 per share and vest immediately on the Effective Date with the remaining 1,500,000 options to be exercisable at $8.00 per share and vest immediately upon shareholder approval of an increase in the number of shares of the Company's common stock made available and reserved under the Company's 1998 Stock Option Plan to 2,500,000 shares. Further, the Company agrees to register the options and the underlying shares granted hereunder on Form S-8 within 180 1 10 days of the effective date of any initial public offering of the Company's securities." 5. The first paragraph of Section numbered 7, "Termination Payment" is hereby amended to read as follows: "7. TERMINATION PAYMENT. It is agreed that (i) if Peterson's employment by the Company is terminated without "Cause" or (ii) if his duties and responsibilities are materially changed by the Company and Peterson voluntarily terminates his employment due to such change in duties or responsibilities, the Company shall pay Peterson severance of $5,000,000 immediately upon the occurrence of either 7(i) or (ii) above, together with the amount due for the remaining portion of the term of this Agreement. If Peterson's employment terminates due to "Total Disability", the Company will be obligated to only pay Peterson the sum of $150,000." 6. Section numbered 9, "Expenses" is hereby amended to read as follows: "9. EXPENSES. Peterson is authorized to incur reasonable expenses for promoting the business of the Company, including expenses for entertainment, travel and similar items. The Company shall reimburse Peterson for all such expenses on the presentation by Peterson of itemized accounts of such expenditures in accordance with guidelines set forth by the Company and the Internal Revenue Service." 7. Section 11, "Bonus Stock" shall be eliminated in its entirety. 8. Sections 12 through 19 shall be re-numbered 11 through 18, respectively. 9. Any and all other terms and conditions of the Employment Agreement not amended or modified herein shall remain the same and in full force and effect. The Company: quepasa.com, inc. By:/s/ Michael A. Hubert -------------------------- Name: Michael A. Hubert Title: Chief Operating Officer Peterson: /s/ Jeffrey S. Peterson -------------------------- Jeffrey S. Peterson 2 EX-10.06 8 EMPLOYMENT AGREEMENT - MR. SILBERMAN 1 EXHIBIT 10.06 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 15th day of October, 1998, by and among INTERNET CENTURY, INC., a Nevada corporation (the "Company") and MICHAEL D. SILBERMAN ("Silberman"). WHEREAS, the Company desires to employ Silberman as provided herein; and, WHEREAS, Silberman desires to accept such employment, NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company hereby employs Silberman and Silberman hereby accepts employment with the Company as its Chief Financial Officer and Chief Operating Officer upon the terms and conditions hereinafter set forth. Silberman's employment shall not be deemed an "at will" employment. 2. DUTIES. Silberman will serve the Company as its Chief Financial Officer and its Chief Operating Officer and will faithfully and diligently perform the services and functions relating to such office and position or otherwise reasonably incident to such office and position, provided that all such services and functions will be reasonable and within Silberman's areas of expertise. Silberman's specific duties shall include those related to (i) all phases of the Company's finances, (ii) coordination of the Company's daily operations and strategic planning and (iii) such other duties as the Company may reasonably direct. Silberman will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company. 3. TERM. This Agreement and Silberman's employment shall commence on the 15th day of October, 1998, (the "Effective Date") and shall continue for a term of seven (7) years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Silberman. 4. COMPENSATION. As compensation for the services rendered to the Company under this Agreement commencing on the effective date hereof, Silberman will be paid a base salary of Eighty Thousand dollars ($80,000) per year payable in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the board of directors of the Company after a review of Silberman's performance of this duties hereunder. 5. TERMINATION. This Agreement will terminate upon the occurrence of any of the following events: a. The death of Silberman; b. The "Total Disability" (as hereinafter defined) of Silberman; 2 c. Written notice to Silberman from the Company of termination for "Cause" (as hereinafter defined); d. The voluntary termination of this Agreement by Silberman upon thirty (30) days prior written notice; e. The later of seven (7) years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above; or For purposes of Section 5(b), the term "Total Disability" means physical or mental disability, or both, determined to be (or reasonably expected to be, based upon then available medical information) of not less than twelve (12) months duration or more where Silberman is unable to reasonably perform the duties he was performing for the Company immediately prior to such disability. The determination shall rest upon the opinion of the physician regularly attending Silberman. If the Company disagrees with said physician's opinion, the Company may engage at their own expense a physician to examine the Silberman, and Silberman hereby consents to such examination and to waive, if applicable any privilege between the physician and Silberman that may arise as a result of said examination. If after conferring, the two physicians cannot concur on a final opinion, they shall choose a third consulting physician whose opinion shall control. The expense of the third consulting physician shall be borne equally by the Silberman and the Company. For purposes of Section 5(c), "Cause" means (i) Silberman has failed to substantially perform his duties as reasonably determined by the chief executive officer of the Company or the Board of Directors of the Company, (ii) Silberman engages in poor performance that is not cured within thirty (30) days after counseling by the Company, (iii) Silberman has failed to comply with the reasonable directives and policies of the Board of Directors of the Company or of the chief executive officer of the Company, or (iv) Silberman breaches his fiduciary duty to the Company or commits any dishonest, unethical, fraudulent, or felonious act in respect to Silberman's duties to the Company. 6. STOCK OPTIONS. Contingent upon Silberman being employed by the Company, Silberman shall be granted options to purchase up to 25,000 shares of the Company's common stock (post 284 for 1 forward stock split) at $1.50 per share pursuant to the Company's 1998 Stock Option Plan to be vested and exercisable in accordance with the terms of the 1998 Stock Option Plan, except that the options shall vest immediately on the Effective Date and the exercise of such options shall not be contingent upon Silberman being employed by the Company. Further, the Company agrees to register the options and the underlying shares on Form S-8 within 90 days of the effective date of any initial public offering of the Company's securities. 7. TERMINATION PAYMENT. It is agreed that (i) if Silberman's employment by the Company is terminated without "Cause", (ii) if his duties and responsibilities are materially changed by the Company and Silberman voluntarily terminates his employment due to such change in duties or responsibilities, or (iii) if Silberman's employment terminates due to Total Disability, the Company shall pay Silberman severance of $200,000 immediately upon the occurrence of either 7(i), (ii) or (iii) above, together with the amount due for the remaining portion of the term of this Agreement. If Silberman's employment terminates due to death, the Company will be obligated to only pay to Silberman's estate any amounts accrued under this Agreement together with $200,000. It is agreed that the Company may purchase a disability income insurance policy and/or a life insurance policy to pay all or part of the amounts due upon 2 3 termination of Silberman's employment due to either Total Disability or death, respectively, and that Silberman agrees to cooperate in the obtaining of such insurance. 8. LOAN. The Company will loan to Silberman up to One Hundred Fifty Thousand dollars ($150,000) with Twenty Five Thousand Dollars ($25,000) to be loaned and disbursed on the Effective Date and the remaining One Hundred Twenty Five Thousand ($125,000) to be loaned and disbursed on the closing of any portion of the Company's private placement offering of its securities to raise between $1,750,000 and $3,000,000. All amounts shall be evidenced by a promissory note with interest each year of the term of the note to be variable and at the prime rate charged by Norwest Bank or its successor at the close of business on the Effective Date and on the anniversary date of each year thereafter and with all principal and accrued but unpaid interest due seven (7) years from the loan (the "Loan"). The Company agrees that if Silberman is employed by the Company two years from the Effective Date or his employment has been previously terminated by the company without "Cause" as that term is defined in Section 5 above, then all loan amounts including principal and accrued but unpaid interest shall be forgiven by the Company and the Note evidencing such loan shall be canceled. 9. BENEFITS. Silberman shall be entitled to receive any benefits, including health insurance, life insurance, automobile allowance, vacation time, etc., which are offered to other Company executives. 10. EXPENSES. Silberman is authorized to incur reasonable expenses for promoting the business of the Company, including expenses for entertainment, travel and similar items. The Company shall reimburse Silberman for all such expenses on the presentation by Silberman of itemized accounts of such expenditures in accordance with guidelines set forth by the Internal Revenue Service. 11. NON-COMPETITION AND CONFIDENTIALITY. a. Silberman agrees that during the term of this Agreement, Silberman will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit Silberman or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Silberman will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded Internet service provider company. b. For purposes of Section 11a, restrictions regarding competition by Silberman shall only apply to competing businesses or entities that operate in the continental United States. c. In the event of the breach of the covenants contained in this Section 11, it is understood that damages will be difficult to ascertain and the Company may petition a court of law or equity for injunctive relief in addition to any other relief which the Company may have under the law, this Agreement or any other agreement executed in connection herewith. In connection with the bringing of any legal or equitable action for the enforcement of this Agreement, the Company shall be entitled to 3 4 recover, whether the Company seeks equitable relief, and regardless of what relief is afforded, such reasonable attorneys' fees and expenses as the Company may incur in prosecution of the Company's claim for breach hereof. d. It is hereby agreed that the provisions of this Section 11 are separate and independent from the other provisions of this Agreement, that these provisions are specifically enforceable by the Company notwithstanding any claim by Silberman that the Company has violated or breached this Agreement or any claim that Silberman is entitled to any offset or compensation. e. To induce the Company to enter into this Agreement, Silberman represents and warrants to the Company that Section 11 of this Agreement is enforceable by the Company in accordance with its terms. 12. WAIVER OF BREACH. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party. 13. NOTICES. Any notices, consents, demands, request, approvals and other communications to be given under this Agreement by either party to the other will be deemed to have been duly given if given in writing and personally delivered, faxed or if sent by mail, registered or certified, postage prepaid with return receipt requested, as follows: If to the Company: Internet Century, Inc. 414 S. Mill Avenue, Suite 202 Tempe, AZ 85281 Attn: Jeffrey L. Peterson If to Silberman: Michael D. Silberman 414 South Mill Avenue, Suite 202 Tempe, AZ 85281 Notices delivered personally will be deemed communicated as of actual receipt, notices by fax shall be deemed delivered when such notices are faxed to recipient's fax number and notices by mail shall be deemed delivered when mailed. 14. ENTIRE AGREEMENT. This Agreement and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understanding, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 15. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during this Agreement, such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added 4 5 automatically, as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 16. GOVERNING LAW. To the extent permitted by applicable law, this Agreement and the rights and obligations of the parties will be governed by and construed and enforced exclusively in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Arizona and the State of Arizona shall have exclusive jurisdiction regarding any legal actions relating to this Agreement. 17. CAPTIONS. The captions in this Agreement are for convenience of reference only and will not limit or otherwise affect any of the terms or provisions hereof. 18. GENDER AND NUMBER. When the context requires, the gender of all words used herein will include the masculine, feminine and neuter, and the number of all words will include the singular and plural. 19. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: INTERNET CENTURY, INC., a Nevada corporation By: /s/ Jeffrey Peterson ------------------------------------------ Jeffrey Peterson, Chief Executive Officer SILBERMAN: /s/ Michael D. Silberman ------------------------------------------ Michael D. Silberman 5 6 AMENDMENT OF EMPLOYMENT AGREEMENT This Amendment of Employment Agreement is entered into as of the 21st day Of January, 1999, by and between quepasa.com, inc., a Nevada corporation (the "Employer"), and Michael D. Silberman (the "Employee"). Explanatory Statements A. Employer and Employee entered into an Employment Agreement dated as of October 15, 1998 (the "Employment Agreement") whereby the Employer employed the Employee. B. The Employer and Employee desire to amend and modify certain terms and conditions of the Employment Agreement. NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Employment Agreement is hereby amended and modified as follows: 1. Section numbered 1, "Employment" is amended to read as follows: "The Company hereby employs Silberman and Silberman hereby accepts employment with the Company as its Operations Coordinator upon the terms and conditions hereinafter set forth. Silberman's employment shall not be deemed an "at will" employment". 2. Section numbered 2, "Duties" is hereby amended to read as follows: "Silberman will serve the Company as its Operation's Coordinator and will faithfully and diligently perform the services and functions relating to such office and position or otherwise reasonably incident to such office and position, provided that all such services and functions will be reasonable and within Silberman's areas of expertise. Silberman's specific duties shall include those related to (i) coordinating all phases of the Company's finances, (ii) coordination of the Company's daily operations and strategic planning and (iii) such other duties as the Company may reasonably direct. Silberman will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company". 3. Section numbered 3, "Term" is hereby amended by the addition of the following at the end of such section: "This Agreement and Silberman's employment shall commence on the 15th day of October, 1998, (the "Effective Date") and shall continue for a term of seven (7) years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Silberman. Notwithstanding 7 the foregoing, unless otherwise terminated pursuant to this Agreement, for a period of ten (10) years, the term of this Agreement shall automatically renew each year for one (1) additional year on the yearly anniversary date of the Effective Date". 4. The first sentence of Section numbered 7, "Termination Payment" is hereby amended to read as follows: "It is agreed that (i) if Silberman's employment by the Company is terminated without "Cause", (ii) if his duties and responsibilities are materially changed by the Company and Silberman voluntarily terminates his employment due to such change in duties or responsibilities, or (iii) if Silberman's employment terminates due to Total Disability, the Company shall pay Silberman severance of $200,000 immediately upon the occurrence of either 7(i), (ii) or (iii) above, together with one hundred fifty percent (150%) of the amount due for the remaining portion of the term of this Agreement". 5. Section numbered 13, "Notices" is amended by changing the notification address to read as follows: "If to the Company: quepasa.com, inc. 400 E. Van Buren, Suite 400 Phoenix, AZ 85004 If to Silberman: Michael D. Silberman 400 E. Van Buren, Suite 400 Phoenix, AZ 85004" 6. Any and all other terms and conditions of the Employment Agreement not amended or modified herein shall remain the same and in full force and effect. Employer: QUEPASA.COM, INC. By: /s/ Jeffrey Peterson ------------------------------------------ Jeffrey Peterson, Chief Executive Officer Employee: /s/ Michael D. Silberman ------------------------------------------ Michael D. Silberman 2 8 AMENDMENT OF EMPLOYMENT AGREEMENT This Amendment of Employment Agreement is entered into as of the 21st day of, Jan., 1999 by and between QUEPASA.COM,INC., a Nevada corporation (the "Employer"), and MICHAEL D. SILBERMAN (the "Employee"). Explanatory Statements A. Employer and Employee entered into an Employment Agreement dated as of October 15, 1998 (the "Employment Agreement") whereby the Employer employed the Employee. B. The Employer and Employee desire to amend and modify certain terms and conditions of the Employment Agreement. NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Employment Agreement is hereby amended and modified as follows: 1. Section numbered 1, "Employment" is amended to read as follows: "The Company hereby employs Silberman and Silberman hereby accepts employment with the Company as its Operations Coordinator upon the terms and conditions hereinafter set forth. Silberman's employment shall not be deemed an "at will" employment. It is acknowledged, and agreed to that Silberman resides in California and that he discharges the majority of his responsibilities as set forth in (2) below of this amendment from California. Further there are no requirements that Silberman be on corporate headquarter premises at any time to discharge any or all of his duties.". 2. Section numbered 2, "Duties" is hereby amended to read as follows: "Silberman will serve the Company as its Operations Coordinator and will faithfully and diligently perform the services and functions relating to such office and position or otherwise reasonably incident to such office and position, provided that all such services and functions will be reasonable and within Silberman's areas of expertise. Silberman's specific duties shall include those related to; (i) troubleshooting as a beta tester, the Company's website and links, (ii) assisting management in the coordination of the Company's operations and strategic planning, and (iii) such other duties as the Company may reasonably direct. Silberman will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company.". 1 9 4. The first sentence of Section numbered 7, "Termination Payment" is hereby amended to read as follows: "It is agreed that (i) if Silberman's employment by the Company is terminated without "Cause", (ii) if his duties and responsibilities are materially changed by the Company and Silberman voluntarily terminates his employment due to such change in duties or responsibilities, (iii) if Silberman's employment terminates due to Total Disability, (iv) the Company shall forgive Mr. Silberman's $150,000 forgivable loan in full. 5. Section numbered 13, "Notices" is amended by changing the notification address to read as follows: "If to the Company: quepasa.com, inc. One Arizona Center 400 E. Van Buren, 4th Floor Phoenix, AZ 85004 If to Silberman: Michael D. Silberman 6. Any and all other terms and conditions of the Employment Agreement not amended or modified herein shall remain the same and in full force and effect. Employer: Employee: Quepasa.com, inc. By: /s/ Jeffrey S. Peterson By: /s/ Michael D. Silberman ------------------------------- ------------------------------------- Jeffrey S. Peterson Michael D. Silberman President and CEO 2 EX-10.07 9 EMPLOYMENT AGREEMENT - MR. GALAN 1 EXHIBIT 10.07 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 29th day of January, 1999, by and among QUEPASA.COM, INC., a Nevada corporation (the "Company") and JUAN GALAN ("Galan"). WHEREAS, the Company desires to employ Galan as provided herein; and, WHEREAS, Galan desires to accept such employment, NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company hereby employs Galan and Galan hereby accepts employment with the Company as Chief Financial Officer and as Vice President of Finance upon the terms and conditions hereinafter set forth. 2. DUTIES. Galan will serve the Company as Chief Financial Officer and as Vice President of Finance and will faithfully and diligently perform the services and functions relating to such positions or otherwise reasonably incident to such position, provided that all such services and functions will be reasonable and within Galan's area of expertise. Galan's specific duties shall include those related to (i) coordinating all financial matters, (ii) financial management, (iii) accounting, (iv) budgeting, (v) cash management, and (vi) such other duties as the Company may reasonably direct. Galan will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company. 3. TERM. This Agreement and Galan's employment shall commence on the 29th day of January, 1999, (the "Effective Date") and shall continue for a term of three years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Galan. 4. COMPENSATION. As compensation for the services rendered to the Company under this Agreement commencing on the Effective Date hereof, Galan will be paid a base salary of One Hundred Thousand dollars ($100,000) per year, payable monthly, in arrears, in two monthly installments or in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the Company's board of directors after a review of Galan's performance of his duties hereunder. 5. TERMINATION. This Agreement will terminate upon the occurrence of any of the following events: a. The death of Galan; b. The "Total Disability" (as herein defined) of Galan; c. Written notice to Galan from the Company of termination for "Cause" (as hereinafter defined); d. The voluntary termination of this Agreement by either party upon sixty (60) days' prior written notice; 2 e. The later of three (3) years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above; or f. Written notice to Galan from the Company for any reason without "Cause". For purposes of Section 5b, the term "Total Disability" means physical or mental disability, or both, determined to be (or reasonably expected to be, based upon then available medical information) of not less than twelve (12) months duration or more. The determination shall rest upon the opinion of the physician regularly attending Galan. If the Company disagrees with said physician's opinion, the Company may engage at their own expense a physician to examine the Galan, and Galan hereby consents to such examination and to waive, if applicable any privilege between the physician and Galan that may arise as a result of said examination. If after conferring, the two physicians cannot concur on a final opinion, they shall choose a third consulting physician whose opinion shall control. The expense of the third consulting physician shall be borne equally by the Galan and the Company. For purposes of Section 5c, "Cause" means (i) Galan has failed to substantially perform his duties as reasonably determined by any Officer of the Company or the Board of Directors of the Company, (ii) Galan engages in poor performance that is not cured within thirty (30) days after counseling by the Company, (iii) Galan has failed to comply with the reasonable directives and policies of the Board of Directors of the Company or of any Officer of the Company, or (iv) Galan breaches his fiduciary duty to the Company or commits any dishonest, unethical, fraudulent, or felonious act in respect to Galan's duties to the Company. 6. BENEFITS. Galan shall be entitled to participate in any Company benefits as they become available, if at all, including group medical and dental insurance, life insurance, incentive compensation, deferred compensation, stock option plans or other Company programs or plans. At reasonable times and upon prior Company approval, Galan shall be entitled to three weeks paid vacation per calendar year for each year employed during the term of this Agreement. 7. STOCK OPTIONS. Specifically subject to Section 10c and contingent upon Galan being employed by the Company, Galan shall be granted options to purchase 100,000 shares of the Company's Common Stock (the "Stock Options") exercisable at $8.00 per share, with 20,000 Stock Options to vest upon the Effective Date and with the remaining 80,000 Stock Options to vest and be exercisable over the three (3) year period from the Effective Date in accordance with Section 7.3(b) of the Company's 1998 Stock Option Plan. In the event of any termination of Galan's employment, any Stock Options that have not previously vested shall immediately terminate. In addition, all Stock Options to be granted herein shall be exercisable, except as otherwise set forth herein, in accordance with the Company's 1998 Stock Option Plan and subject to Section 10c below. 8. LOAN. The Company will loan to Galan Twenty Thousand dollars ($20,000) to be loaned and disbursed on the Effective Date. All amounts loaned will be evidenced by a promissory note with interest at 10% per annum and with all principal and accrued but unpaid interest due one (1) year from the Effective Date if not sooner paid. The Company agrees that if Galan has been employed by the Company for six continuous months from the Effective Date, 50% of the principal balance and accrued but unpaid interest shall be forgiven and, if Galan has been employed by the Company for a total of twelve continuous months of employment by the Company, then the remaining principal balance and accrued, but unpaid interest shall be forgiven by the Company and the Note evidencing such loan shall be canceled. -2- 3 9. BUSINESS EXPENSES. Upon submission of proper documentation, the Company shall pay or reimburse Galan for all reasonable and necessary office, telephone, travel and other expenses, which are incurred by Galan in the pursuit of Galan's duties on behalf of the Company. 10. NON-COMPETITION AND CONFIDENTIALITY. a. Non-Competition. The Company and Galan acknowledge and agree that Galan's services are of a special and unusual character which have a unique value to the Company, the loss of which cannot be adequately compensated by damages in an action at law and if used in competition with the Company, could cause serious harm to the Company. Accordingly, Galan agrees that during the term of this Agreement and for a period of two (2) years after the termination of this employment by the Company, irrespective of the reason for such termination, Galan will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit any employee or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Galan will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged, was engaged during Galan's employment or is engaged at the time of Galan's termination of employment, except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded company. b. Confidentiality. (1) Galan acknowledges that in Galan's employment hereunder, Galan will be making use of, acquiring and adding to the Company's trade secrets and its confidential and proprietary information of a special and unique nature and value relating to such matters as, but not limited to, the Company's business operations, internal structure, financial affairs, programs, software systems, procedures, manuals, confidential reports, lists of clients and prospective clients and sales and marketing methods, as well as the amount, nature and type of services, equipment and methods used and preferred by the Company's clients and the fees paid by such clients, all of which shall be deemed to be confidential information. Galan acknowledges that such confidential information has been and will continue to be of central importance to the business of the Company and that disclosure of it to or its use by others could cause substantial loss to the Company. In consideration of employment by the Company, Galan agrees that during the Initial Term and any renewal term of this Agreement and upon and after leaving the employ of the Company for any reason whatsoever, Galan shall not, for any purpose whatsoever, directly or indirectly, divulge or disclose to any person or entity any of such confidential information which was obtained by Galan as a result of the Galan's employment with the Company or any trade secrets of the Company, but shall hold all of the same confidential and inviolate. (2) All contracts, agreements, financial books, records, instruments and documents; client lists; memoranda; data; reports; programs; software, tapes; Rolodexes; telephone and address books; letters; research; card decks; listings; programming; and any other instruments, records or documents relating or pertaining to clients serviced by the Company or Galan, the services rendered by Galan, or the business of the Company (collectively, the "Records") shall at all times be and remain the property of the Company. Upon termination of this Agreement and Galan's employment under this Agreement for any reason whatsoever, Galan shall return to the Company all Records (whether furnished by the Company or prepared by Galan), and Galan shall neither make nor retain any copies of any of such Records after such termination. -3- 4 (3) All inventions and other creations, whether or not patentable or copyrightable, and all ideas, reports and other creative works, including, without limitation, computer programs, manuals and related materials, made or conceived in whole or in part by Galan while employed by the Company and within one year thereafter, which relate in any manner whatsoever to the business, existing or proposed, of the Company or any other business or research or development effort in which the Company or any of its subsidiaries or affiliates engages during Galan's employment by the Company will be disclosed promptly by Galan to the Company and shall be the sole and exclusive property of the Company. All copyrightable works created by Galan and covered by this Section 10b(3) shall be deemed to be works for hire. Galan shall cooperate with the Company in patenting or copyrighting all such inventions, ideas, reports and other creative works, shall execute, acknowledge, seal and deliver all documents tendered by the Company to evidence its ownership thereof through the world, and shall cooperate with the Company obtaining, defending and enforcing its rights therein. c. Certain Claims Upon Termination. Galan understands that if within one year prior to the termination of Galan's employment with the Company, Galan has either (i) committed an act of theft, dishonesty, gross dereliction of duty, fraud, embezzlement, misappropriation, or breach of fiduciary duty against the Company or any other act of comparable misconduct against the Company; or (ii) breached any of his obligations under this Agreement, then the Company shall have the right to purchase any or all shares of Common Stock of the Company owned by Galan at the time of such termination for a purchase price equal to the amount that Galan paid for such shares, together with interest thereon at a rate of ten percent (10%) per annum. If the Company desires to exercise such right, it shall notify Galan within 60 days after the date of such termination and Galan shall tender the shares being purchased by the Company at the time and place designated in such notice from the Company upon receipt of the purchase price for such shares. If Galan fails to tender such shares, the shares shall be deemed to be canceled as of the date the Company tenders payment of the purchase price thereof. d. Enforceability. In the event of the breach of the covenants by either party contained in this Section 10, it is understood that damages will be difficult to ascertain and the Company may petition a court of law or equity for injunctive relief in addition to any other relief which the Company may have under the law, this Agreement or any other agreement executed in connection herewith. In connection with the bringing of any legal or equitable action for the enforcement of this Agreement, the Company shall be entitled to recover, whether the Company seeks equitable relief, and regardless of what relief is afforded, such reasonable attorneys' fees and expenses as the Company may incur in prosecution of the Company's claim for breach hereof. It is hereby agreed that the provisions of this Section 10 are separate and independent from the other provisions of this Agreement, that these provisions are specifically enforceable by the Company notwithstanding any claim by Galan that the Company has violated or breached this Agreement or any claim that Galan is entitled to any offset or compensation. To induce the Company to enter into this Agreement, Galan represents and warrants to the Company that Section 10 of this Agreement is enforceable by the Company in accordance with its terms. The parties hereto agree that to the extent that any provision or portion of Section 10 of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court of competent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision or portion thereof shall be legally enforceable to the fullest extent permitted by applicable law; and the parties hereto do further agree that any court of -4- 5 competent jurisdiction shall, and the parties hereto do hereby expressly authorize, request and empower any court of competent jurisdiction to, enforce any such provision or portion thereof or to modify any such provision or portion thereof in order that any such provision or portion thereof shall be enforced by such court to the fullest extent permitted by applicable law. 11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party. 12. NOTICES. Any notices, consents, demands, request, approvals and other communications to be given under this Agreement by either party to the other will be deemed to have been duly given if given in writing and personally delivered, faxed or if sent by mail, registered or certified, postage prepaid with return receipt requested, as follows: If to the Company: quepasa.com, inc. One Arizona Center 400 East Van Buren, Suite 400 Phoenix, AZ 85004 If to Galan: Juan Galan Notices delivered personally will be deemed communicated as of actual receipt, notices by fax shall be deemed delivered when such notices are faxed to recipient's fax number and notices by mail shall be deemed delivered when mailed. 13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understanding, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 14. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during this Agreement, such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically, as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 15. GOVERNING LAW. To the extent permitted by applicable law, this Agreement and the rights and obligations of the parties will be governed by and construed and enforced exclusively in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Arizona and the State of Arizona shall have exclusive jurisdiction regarding any legal actions relating to this Agreement. 16. CAPTIONS. The captions in this Agreement are for convenience of reference only and will not limit or otherwise affect any of the terms or provisions hereof. -5- 6 17. GENDER AND NUMBER. When the context requires, the gender of all words used herein will include the masculine, feminine and neuter, and the number of all words will include the singular and plural. 18. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: quepasa.com, inc., a Nevada corporation By: /s/ Jeffrey Peterson ----------------------------------- Jeffrey Peterson, Chief Executive Officer GALAN: /s/ Juan Galan -------------------------------- Juan Galan -6- EX-10.08 10 EMPLOYMENT AGREEMENT WITH MR. ROSS 1 EXHIBIT 10.08 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 9th day of November, 1998, by and among INTERNET CENTURY, INC., a Nevada corporation (the "Company") and BRYAN ROSS ("Ross"). WHEREAS, the Company desires to employ Ross as provided herein; and, WHEREAS, Ross desires to accept such employment, NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company hereby employs Ross and Ross hereby accepts employment with the Company as its Chief Technical Officer upon the terms and conditions hereinafter set forth. 2. DUTIES. Ross will serve the Company as its Chief Technical Officer and will faithfully and diligently perform the services and functions relating to such position or otherwise reasonably incident to such position, provided that all such services and functions will be reasonable and within Ross's area of expertise. Ross's specific duties shall include overseeing applications' development and such other duties as the Company may reasonably direct. Ross will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company. 3. TERM. This Agreement and Ross's employment shall commence on the 9th day of November, 1998, (the "Effective Date") and shall continue for a term of two years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Ross. 4. COMPENSATION. As compensation for the services rendered to the Company under this Agreement commencing on the Effective Date hereof, Ross will be paid a base salary of Seventy Five Thousand dollars ($75,000) per year, payable in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the Company's board of directors after a review of Ross's performance of his duties hereunder. 5. TERMINATION. This Agreement will terminate upon the occurrence of any of the following events: a. The death of Ross; b. The "Total Disability" (as hereinafter defined) of Ross; c. Written notice to Ross from the Company of termination for "Cause" (as hereinafter defined); d. The voluntary termination of this Agreement by Ross upon thirty (30) days prior written notice; 2 e. The later of two (2) years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above; or f. Written notice to Ross from the Company for any reason without "Cause". For purposes of Section 5b, the term "Total Disability" means physical or mental disability, or both, determined to be (or reasonably expected to be, based upon then available medical information) of not less than twelve (12) months duration or more. The determination shall rest upon the opinion of the physician regularly attending Ross. If the Company disagrees with said physician's opinion, the Company may engage at their own expense a physician to examine the Ross, and Ross hereby consents to such examination and to waive, if applicable any privilege between the physician and Ross that may arise as a result of said examination. If after conferring, the two physicians cannot concur on a final opinion, they shall choose a third consulting physician whose opinion shall control. The expense of the third consulting physician shall be borne equally by the Ross and the Company. For purposes of Section 5c, "Cause" means (i) Ross has failed to substantially perform his duties as reasonably determined by any Officer of the Company or the Board of Directors of the Company, (ii) Ross engages in poor performance that is not cured within thirty (30) days after counseling by the Company, (iii) Ross has failed to comply with the reasonable directives and policies of the Board of Directors of the Company or of any Officer of the Company, or (iv) Ross breaches his fiduciary duty to the Company or commits any dishonest, unethical, fraudulent, or felonious act in respect to Ross's duties to the Company. 6. BENEFITS. Ross shall be entitled to receive any benefits, including health insurance, life insurance, vacation time, etc., which are normal and customary Company benefits for a like position. 7. LOAN. The Company will loan to Ross up to Thirty Thousand dollars ($30,000) with Fifteen Thousand dollars ($15,000) to be loaned and disbursed on the Effective Date and the remaining Fifteen Thousand ($15,000) to be loaned and disbursed thirty (30) days from the Effective Date. All amounts loaned will be evidenced by a promissory note with interest at 10% per annum and with all principal and accrued but unpaid interest due one (1) year from the Effective Date if not sooner paid. The Company agrees that if Ross has been employed by the Company for six continuous months from the Effective Date, 50% of the principal balance and accrued but unpaid interest shall be forgiven and, if Ross has been employed by the Company for an additional six continuous months for a total of twelve continuous months of employment by the Company, then the remaining principal balance and accrued, but unpaid interest shall be forgiven by the Company and the Note evidencing such loan shall be canceled. 8. STOCK BONUS. It is acknowledged that during the initial term of this Agreement, the Company may complete an initial public offering of its securities. The Company agrees to reserve 50,000 shares of its Common Stock (the "Shares") for issuance to Ross in accordance with the terms of this Section 8, and, as an inducement for Ross's continued employment by the Company, agrees to issue such Shares to Ross as follows: a. 25,000 shares to be issued six (6) months from the closing of the IPO (the "Initial Issuance Date") so long as Ross has been continually employed by the Company from the Effective Date until the Initial Issuance Date. -2- 3 b. The remaining 25,000 Shares to be issued one (1) year from the Closing of the IPO (the "Second Issuance Date") so long as Ross has been continually employed by the Company from the Effective Date until the Second Issuance Date. Prior to the issuance of the Shares, Ross shall execute a Subscription Agreement and Letter of Investment Intent substantially the form as set forth in Exhibit A attached hereto and made a part hereof. 9. NON-COMPETITION AND CONFIDENTIALITY. a. Non-Competition. Ross agrees that during the term of this Agreement, Ross will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit any employee or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Ross will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded company. Restrictions regarding competition by Ross shall only apply to competing businesses or entities that operate in the continental United States. b. Confidentiality. (1) Ross acknowledges that in Ross's employment hereunder, Ross will be making use of, acquiring and adding to the Company's trade secrets and its confidential and proprietary information of a special and unique nature and value relating to such matters as, but not limited to, the Company's business operations, internal structure, financial affairs, programs, software systems, procedures, manuals, confidential reports, lists of clients and prospective clients and sales and marketing methods, as well as the amount, nature and type of services, equipment and methods used and preferred by the Company's clients and the fees paid by such clients, all of which shall be deemed to be confidential information. Ross acknowledges that such confidential information has been and will continue to be of central importance to the business of the Company and that disclosure of it to or its use by others could cause substantial loss to the Company. In consideration of employment by the Company, Ross agrees that during the Initial Term and any renewal term of this Agreement and upon and after leaving the employ of the Company for any reason whatsoever, Ross shall not, for any purpose whatsoever, directly or indirectly, divulge or disclose to any person or entity any of such confidential information which was obtained by Ross as a result of the Ross's employment with the Company or any trade secrets of the Company, but shall hold all of the same confidential and inviolate. (2) All contracts, agreements, financial books, records, instruments and documents; client lists; memoranda; data; reports; programs; software, tapes; Rolodexes; telephone and address books; letters; research; card decks; listings; programming; and any other instruments, records or documents relating or pertaining to clients serviced by the Company or Ross, the services rendered by Ross, or the business of the Company (collectively, the "Records") shall at all times be and remain the property of the Company. Upon termination of this Agreement and Ross's employment under this Agreement for any reason whatsoever, Ross shall return to the Company all Records (whether furnished by the Company or prepared by Ross, and Ross shall neither make nor retain any copies of any of such Records after such termination. -3- 4 (3) All inventions and other creations, whether or not patentable or copyrightable, and all ideas, reports and other creative works, including, without limitation, computer programs, manuals and related materials, made or conceived in whole or in part by Ross while employed by the Company and within one year thereafter, which relate in any manner whatsoever to the business, existing or proposed, of the Company or any other business or research or development effort in which the Company or any of its subsidiaries or affiliates engages during Ross's employment by the Company will be disclosed promptly by Ross to the Company and shall be the sole and exclusive property of the Company. All copyrightable works created by Ross and covered by this Section 9b(3) shall be deemed to be works for hire. Ross shall cooperate with the Company in patenting or copyrighting all such inventions, ideas, reports and other creative works, shall execute, acknowledge, seal and deliver all documents tendered by the Company to evidence its ownership thereof through the world, and shall cooperate with the Company obtaining, defending and enforcing its rights therein. c. Enforceability. In the event of the breach of the covenants contained in this Section 9, it is understood that damages will be difficult to ascertain and the Company may petition a court of law or equity for injunctive relief in addition to any other relief which the Company may have under the law, this Agreement or any other agreement executed in connection herewith. In connection with the bringing of any legal or equitable action for the enforcement of this Agreement, the Company shall be entitled to recover, whether the Company seeks equitable relief, and regardless of what relief is afforded, such reasonable attorneys' fees and expenses as the Company may incur in prosecution of the Company's claim for breach hereof. It is hereby agreed that the provisions of this Section 9 are separate and independent from the other provisions of this Agreement, that these provisions are specifically enforceable by the Company notwithstanding any claim by Ross that the Company has violated or breached this Agreement or any claim that Ross is entitled to any offset or compensation. To induce the Company to enter into this Agreement, Ross represents and warrants to the Company that Section 9 of this Agreement is enforceable by the Company in accordance with its terms. 10. WAIVER OF BREACH. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party. 11. NOTICES. Any notices, consents, demands, request, approvals and other communications to be given under this Agreement by either party to the other will be deemed to have been duly given if given in writing and personally delivered, faxed or if sent by mail, registered or certified, postage prepaid with return receipt requested, as follows: If to the Company: Internet Century, Inc. One Arizona Center 400 East Van Buren, Suite 545 Phoenix, AZ 85004 If to Ross: Bryan Ross 1515 S. Extension #1088 Mesa, AZ 85210 -4- 5 Notices delivered personally will be deemed communicated as of actual receipt, notices by fax shall be deemed delivered when such notices are faxed to recipient's fax number and notices by mail shall be deemed delivered when mailed. 12. ENTIRE AGREEMENT. This Agreement and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understanding, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 13. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during this Agreement, such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically, as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 14. GOVERNING LAW. To the extent permitted by applicable law, this Agreement and the rights and obligations of the parties will be governed by and construed and enforced exclusively in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Arizona and the State of Arizona shall have exclusive jurisdiction regarding any legal actions relating to this Agreement. 15. CAPTIONS. The captions in this Agreement are for convenience of reference only and will not limit or otherwise affect any of the terms or provisions hereof. 16. GENDER AND NUMBER. When the context requires, the gender of all words used herein will include the masculine, feminine and neuter, and the number of all words will include the singular and plural. 17. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: INTERNET CENTURY, INC., a Nevada corporation By: /s/ Michael D. Silberman ---------------------------------------------- Michael D. Silberman, Chief Financial Officer ROSS: /s/ Bryan Ross ---------------------------------------------- Bryan Ross -6- 6 AMENDMENT OF EMPLOYMENT AGREEMENT This Amendment of Employment Agreement is entered into as of the 17th day of February, 1999, by and between quepasa.com, inc., a Nevada corporation (the "Employer"), and Bryan Ross (the "Employee"). Explanatory Statements A. Employer and Employee entered into an Employment Agreement dated as of November 9, 1998 (the "Employment Agreement") whereby the Employer employed the Employee. B. The Employer and Employee desire to amend and modify certain terms and conditions of the Employment Agreement. NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Employment Agreement is hereby amended and modified as follows: 1. Section numbered 8, "Stock Bonus" is deleted in its entirety and a new Section numbered 8 is inserted in its place to read as follows: "8. STOCK OPTIONS. Specifically subject to Section 8a and 8b below and Section 10c Ross shall be granted options to purchase 150,000 shares of the Company's Common Stock (the "Shares") exercisable at $8.00 per share to vest and be exercisable immediately and otherwise in accordance with the Company's 1998 Stock Option Plan and in accordance with the following and Section 10c below: (a) If Ross' employment is terminated for any reason other than "for Cause" as defined herein, then the unexercised options shall be exercisable for a period of either (i) forty-five (45) days from the termination of Ross' employment or (ii) the end of the initial term of this Agreement or any extension thereof; whichever period is later. (b) If Ross' employment by the Company is terminated "for Cause" as defined in this Agreement, then all unexercised options granted to Ross shall immediately terminate and not be exercisable upon notice of Ross' termination of employment "for Cause." Ross acknowledges that the Company is in the process of completing an initial public offering ("IPO") of its securities and that as part of the IPO, Ross may be required to lock up the Shares for a period of six months from the effective date of the IPO. Accordingly, Ross agrees the Shares will be subject to any lock up agreement required in regard to the IPO and will execute any agreement to evidence such lock up of Shares." 2. Section numbered 9, Subsection a "Non-competition" is hereby amended to read as follows: "a. Non-Competition. The Company and Ross acknowledge and agree that Ross' services are of a special and unusual character which have a unique value to the Company, the loss of which cannot be adequately compensated by damages in an action at law and if used in competition with 7 the Company, could cause serious harm to the Company. Accordingly, Ross agrees that during the term of this Agreement and for a period of two (2) years after the termination of this employment by the Company, irrespective of the reason for such termination, Ross will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit any employee or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Ross will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged, was engaged during Ross' employment or is engaged at the time of Ross' termination of employment, except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded company." 3. Section numbered 9, "NON-COMPETITION AND CONFIDENTIALITY" is hereby amended by the addition of a new subsection c to read as follows: "c. Certain Claims Upon Termination. Ross understands that if within one year prior to the termination of Ross employment with the Company, Ross has either (i) committed an act of theft, dishonesty, gross dereliction of duty, fraud, embezzlement, misappropriation, or breach of fiduciary duty against the Company or any other act of comparable misconduct against the Company; or (ii) breached any of his obligations under this Agreement, then the Company shall have the right to purchase any or all shares of Common Stock of the Company owned by Ross at the time of such termination for a purchase price equal to the amount that Ross paid for such shares, together with interest thereon at a rate of ten percent (10%) per annum. If the Company desires to exercise such right, it shall notify Ross within 60 days after the date of such termination and Ross shall tender the shares being purchased by the Company at the time and place designated in such notice from the Company upon receipt of the purchase price for such shares. If Ross fails to tender such shares, the shares shall be deemed to be canceled as of the date the Company tenders payment of the purchase price thereof." 4. Section numbered 9, Subsection c "Enforceability " is hereby amended to be Section numbered 9, Subsection d and is amended by the addition of the following at the end of such Subsection: "The parties hereto agree that to the extent that any provision or portion of Section 9 of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court of competent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision or portion thereof shall be legally enforceable to the fullest extent permitted by applicable law; and the parties hereto do further agree that any court of competent jurisdiction shall, and the parties hereto do hereby expressly authorize, request and empower any court of competent jurisdiction to, enforce any such provision or portion thereof or to modify any such provision or portion thereof in order that any such provision or portion thereof shall be enforced by such court to the fullest extent permitted by applicable law." 5. Section numbered 11, "NOTICES" is amended by changing the notification address of the Company to read as follows: "If to the Company: quepasa.com, inc. One Arizona Center 400 E. Van Buren, Suite 400 Phoenix, AZ 85004" 8 6. Any and all other terms and conditions of the Employment Agreement not amended or modified herein shall remain the same and in full force and effect. Employer: QUEPASA.COM, INC. By: /s/ Jeffrey Peterson ------------------------------------------ Jeffrey Peterson, Chief Executive Officer Employee: /s/ Bryan Ross ------------------------------------------ Bryan Ross 3 EX-10.09 11 EMPLOYMENT AGREEMENT - MR. OFFENBECHER 1 EXHIBIT 10.09 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 9th day of November, 1998, by and among INTERNET CENTURY, INC., a Nevada corporation (the "Company") and MICHAEL OFFENBECHER ("Offenbecher"). WHEREAS, the Company desires to employ Offenbecher as provided herein; and, WHEREAS, Offenbecher desires to accept such employment, NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company hereby employs Offenbecher and Offenbecher hereby accepts employment with the Company as a Programer upon the terms and conditions hereinafter set forth. 2. DUTIES. Offenbecher will serve the Company as a Programer and will faithfully and diligently perform the services and functions relating to such position or otherwise reasonably incident to such position, provided that all such services and functions will be reasonable and within Offenbecher's area of expertise. Offenbecher's specific duties shall include those related to those of a Programer and such other duties as the Company may reasonably direct. Offenbecher will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company. 3. TERM. This Agreement and Offenbecher's employment shall commence on the 9th day of November, 1998, (the "Effective Date") and shall continue for a term of two years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Offenbecher. 4. COMPENSATION. As compensation for the services rendered to the Company under this Agreement commencing on the Effective Date hereof, Offenbecher will be paid a base salary of Sixty Five Thousand dollars ($65,000) per year, payable in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the Company's board of directors after a review of Offenbecher's performance of his duties hereunder. 5. TERMINATION. This Agreement will terminate upon the occurrence of any of the following events: a. The death of Offenbecher; b. The "Total Disability" (as hereinafter defined) of Offenbecher; c. Written notice to Offenbecher from the Company of termination for "Cause" (as hereinafter defined); d. The voluntary termination of this Agreement by Offenbecher upon thirty (30) days prior written notice; 2 e. The later of two (2) years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above; or f. Written notice to Offenbecher from the Company for any reason without "Cause". For purposes of Section 5b, the term "Total Disability" means physical or mental disability, or both, determined to be (or reasonably expected to be, based upon then available medical information) of not less than twelve (12) months duration or more. The determination shall rest upon the opinion of the physician regularly attending Offenbecher. If the Company disagrees with said physician's opinion, the Company may engage at their own expense a physician to examine the Offenbecher, and Offenbecher hereby consents to such examination and to waive, if applicable any privilege between the physician and Offenbecher that may arise as a result of said examination. If after conferring, the two physicians cannot concur on a final opinion, they shall choose a third consulting physician whose opinion shall control. The expense of the third consulting physician shall be borne equally by the Offenbecher and the Company. For purposes of Section 5c, "Cause" means (i) Offenbecher has failed to substantially perform his duties as reasonably determined by any Officer of the Company or the Board of Directors of the Company, (ii) Offenbecher engages in poor performance that is not cured within thirty (30) days after counseling by the Company, (iii) Offenbecher has failed to comply with the reasonable directives and policies of the Board of Directors of the Company or of any Officer of the Company, or (iv) Offenbecher breaches his fiduciary duty to the Company or commits any dishonest, unethical, fraudulent, or felonious act in respect to Offenbecher's duties to the Company. 6. BENEFITS. Offenbecher shall be entitled to receive any benefits, including health insurance, life insurance, vacation time, etc., which are normal and customary Company benefits for a like position. 7. LOAN. The Company will loan to Offenbecher up to Five Thousand dollars ($5,000) with Two Thousand Five Hundred Dollars ($2,500) to be loaned and disbursed on the Effective Date and the remaining Two Thousand Five Hundred ($2,500) to be loaned and disbursed thirty (30) days from the Effective Date. All amounts loaned will be evidenced by a promissory note with interest at 10% per annum and with all principal and accrued but unpaid interest due one (1) year from the Effective Date if not sooner paid. The Company agrees that if Offenbecher has been employed by the Company for six continuous months from the Effective Date, 50% of the principal balance and accrued but unpaid interest shall be forgiven and, if Offenbecher has been employed by the Company for an additional six continuous months for a total of twelve continuous months of employment by the Company, then the remaining principal balance and accrued, but unpaid interest shall be forgiven by the Company and the Note evidencing such loan shall be canceled. 8. NON-COMPETITION AND CONFIDENTIALITY. a. Non-Competition. Offenbecher agrees that during the term of this Agreement, Offenbecher will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit any employee or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Offenbecher will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged except for the ownership of less than five percent -2- 3 (5%) of the outstanding capital stock of a publicly traded company. Restrictions regarding competition by Offenbecher shall only apply to competing businesses or entities that operate in the continental United States. b. Confidentiality. (1) Offenbecher acknowledges that in Offenbecher's employment hereunder, Offenbecher will be making use of, acquiring and adding to the Company's trade secrets and its confidential and proprietary information of a special and unique nature and value relating to such matters as, but not limited to, the Company's business operations, internal structure, financial affairs, programs, software systems, procedures, manuals, confidential reports, lists of clients and prospective clients and sales and marketing methods, as well as the amount, nature and type of services, equipment and methods used and preferred by the Company's clients and the fees paid by such clients, all of which shall be deemed to be confidential information. Offenbecher acknowledges that such confidential information has been and will continue to be of central importance to the business of the Company and that disclosure of it to or its use by others could cause substantial loss to the Company. In consideration of employment by the Company, Offenbecher agrees that during the Initial Term and any renewal term of this Agreement and upon and after leaving the employ of the Company for any reason whatsoever, Offenbecher shall not, for any purpose whatsoever, directly or indirectly, divulge or disclose to any person or entity any of such confidential information which was obtained by Offenbecher as a result of the Offenbecher's employment with the Company or any trade secrets of the Company, but shall hold all of the same confidential and inviolate. (2) All contracts, agreements, financial books, records, instruments and documents; client lists; memoranda; data; reports; programs; software, tapes; Rolodexes; telephone and address books; letters; research; card decks; listings; programming; and any other instruments, records or documents relating or pertaining to clients serviced by the Company or Offenbecher, the services rendered by Offenbecher, or the business of the Company (collectively, the "Records") shall at all times be and remain the property of the Company. Upon termination of this Agreement and Offenbecher's employment under this Agreement for any reason whatsoever, Offenbecher shall return to the Company all Records (whether furnished by the Company or prepared by Offenbecher, and Offenbecher shall neither make nor retain any copies of any of such Records after such termination. (3) All inventions and other creations, whether or not patentable or copyrightable, and all ideas, reports and other creative works, including, without limitation, computer programs, manuals and related materials, made or conceived in whole or in part by Offenbecher while employed by the Company and within one year thereafter, which relate in any manner whatsoever to the business, existing or proposed, of the Company or any other business or research or development effort in which the Company or any of its subsidiaries or affiliates engages during Offenbecher's employment by the Company will be disclosed promptly by Offenbecher to the Company and shall be the sole and exclusive property of the Company. All copyrightable works created by Offenbecher and covered by this Section 8b(3) shall be deemed to be works for hire. Offenbecher shall cooperate with the Company in patenting or copyrighting all such inventions, ideas, reports and other creative works, shall execute, acknowledge, seal and deliver all documents tendered by the Company to evidence its ownership thereof through the world, and shall cooperate with the Company obtaining, defending and enforcing its rights therein. c. Enforceability. In the event of the breach of the covenants contained in this Section 8, it is understood that damages will be difficult to ascertain and the Company may petition a court of law or -3- 4 equity for injunctive relief in addition to any other relief which the Company may have under the law, this Agreement or any other agreement executed in connection herewith. In connection with the bringing of any legal or equitable action for the enforcement of this Agreement, the Company shall be entitled to recover, whether the Company seeks equitable relief, and regardless of what relief is afforded, such reasonable attorneys' fees and expenses as the Company may incur in prosecution of the Company's claim for breach hereof. It is hereby agreed that the provisions of this Section 8 are separate and independent from the other provisions of this Agreement, that these provisions are specifically enforceable by the Company notwithstanding any claim by Offenbecher that the Company has violated or breached this Agreement or any claim that Offenbecher is entitled to any offset or compensation. To induce the Company to enter into this Agreement, Offenbecher represents and warrants to the Company that Section 8 of this Agreement is enforceable by the Company in accordance with its terms. 9. WAIVER OF BREACH. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party. 10. NOTICES. Any notices, consents, demands, request, approvals and other communications to be given under this Agreement by either party to the other will be deemed to have been duly given if given in writing and personally delivered, faxed or if sent by mail, registered or certified, postage prepaid with return receipt requested, as follows: If to the Company: Internet Century, Inc. One Arizona Center 400 East Van Buren, Suite 545 Phoenix, AZ 85004 If to Offenbecher: Michael Offenbecher 1202 E. Seahorse Lane Gilbert, AZ 85234 Notices delivered personally will be deemed communicated as of actual receipt, notices by fax shall be deemed delivered when such notices are faxed to recipient's fax number and notices by mail shall be deemed delivered when mailed. 11. ENTIRE AGREEMENT. This Agreement and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understanding, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 12. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during this Agreement, such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added -4- 5 automatically, as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 13. GOVERNING LAW. To the extent permitted by applicable law, this Agreement and the rights and obligations of the parties will be governed by and construed and enforced exclusively in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Arizona and the State of Arizona shall have exclusive jurisdiction regarding any legal actions relating to this Agreement. 14. CAPTIONS. The captions in this Agreement are for convenience of reference only and will not limit or otherwise affect any of the terms or provisions hereof. 15. GENDER AND NUMBER. When the context requires, the gender of all words used herein will include the masculine, feminine and neuter, and the number of all words will include the singular and plural. 16. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: INTERNET CENTURY, INC., a Nevada corporation By: /s/ Michael D. Silberman --------------------------------------------- Michael D. Silberman, Chief Financial Officer OFFENBECHER: /s/ Michael Offenbecher --------------------------------------------- Michael Offenbecher -5- EX-10.10 12 EMPLOYMENT AGREEMENT WITH MR. ROLDAN 1 EXHIBIT 10.10 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 11th day of January, 1999, by and among quepasa.com, inc., a Nevada corporation (the "Company") and VICTOR ROLDAN ("Roldan"). WHEREAS, the Company desires to employ Roldan as provided herein; and, WHEREAS, Roldan desires to accept such employment, NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company hereby employs Roldan and Roldan hereby accepts employment with the Company as Vice President - Legal Affairs upon the terms and conditions hereinafter set forth. 2. DUTIES. Roldan will serve the Company as Vice President - Legal Affairs and will faithfully and diligently perform the services and functions relating to such position or otherwise reasonably incident to such position, provided that all such services and functions will be reasonable and within Roldan's area of expertise. Roldan's specific duties shall include those related to (i) coordinating legal matters, (ii) negotiating contracts with companies commonly known as Univision, Galavision, Telemuendo and Sony, or their subsidiaries or affiliates, and (iii) and such other duties as the Company may reasonably direct. Roldan will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company. 3. TERM. This Agreement and Roldan's employment shall commence on the 11th day of January, 1999, (the "Effective Date") and shall continue for a term of three years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Roldan. 4. COMPENSATION. As compensation for the services rendered to the Company under this Agreement commencing on the Effective Date hereof, Roldan will be paid a base salary of Sixty Thousand dollars ($60,000) per year, payable in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the Company's board of directors after a review of Roldan's performance of his duties hereunder. 5. TERMINATION. This Agreement will terminate upon the occurrence of any of the following events: a. The death of Roldan; b. The "Total Disability" (as hereinafter defined) of Roldan; c. Written notice to Roldan from the Company of termination for "Cause" (as hereinafter defined); 2 d. The voluntary termination of this Agreement by Roldan upon thirty (30) days prior written notice; e. The later of three (3) years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above; or f. Written notice to Roldan from the Company for any reason without "Cause". For purposes of Section 5b, the term "Total Disability" means physical or mental disability, or both, determined to be (or reasonably expected to be, based upon then available medical information) of not less than twelve (12) months duration or more. The determination shall rest upon the opinion of the physician regularly attending Roldan. If the Company disagrees with said physician's opinion, the Company may engage at their own expense a physician to examine the Roldan, and Roldan hereby consents to such examination and to waive, if applicable any privilege between the physician and Roldan that may arise as a result of said examination. If after conferring, the two physicians cannot concur on a final opinion, they shall choose a third consulting physician whose opinion shall control. The expense of the third consulting physician shall be borne equally by the Roldan and the Company. For purposes of Section 5c, "Cause" means (i) Roldan has failed to substantially perform his duties as reasonably determined by any Officer of the Company or the Board of Directors of the Company, (ii) Roldan engages in poor performance that is not cured within thirty (30) days after counseling by the Company, (iii) Roldan has failed to comply with the reasonable directives and policies of the Board of Directors of the Company or of any Officer of the Company, or (iv) Roldan breaches his fiduciary duty to the Company or commits any dishonest, unethical, fraudulent, or felonious act in respect to Roldan's duties to the Company. 6. BENEFITS. Roldan shall be entitled to receive any benefits, including health insurance, life insurance, vacation time, etc., which are normal and customary Company benefits for a like position. In addition, for the first six (6) months of the term of this Agreement, the Company shall pay the rental for the current apartment used by Roldan at 200 E. Fillmore, Apartment 219, Phoenix, Arizona 85004. In addition, for four (4) months from the Effective Date, the Company agrees to reimburse Roldan for airfare expense in coach class between Phoenix, Arizona and Santa Barbara, California no more than once per week. 7. LOAN. The Company will loan to Roldan Five Thousand dollars ($5,000) to be loaned and disbursed on the Effective Date. All amounts loaned will be evidenced by a promissory note with interest at 10% per annum and with all principal and accrued but unpaid interest due one (1) year from the Effective Date if not sooner paid. The Company agrees that if Roldan has been employed by the Company for six continuous months from the Effective Date, 50% of the principal balance and accrued but unpaid interest shall be forgiven and, if Roldan has been employed by the Company for a total of twelve continuous months of employment by the Company, then the remaining principal balance and accrued, but unpaid interest shall be forgiven by the Company and the Note evidencing such loan shall be canceled. 8. STOCK OPTIONS. Specifically subject to Section 8a and 8b below and contingent upon Roldan being employed by the Company, Roldan shall be granted options to purchase 20,000 shares of the Company's Common Stock exercisable at $1.00 per share (the "Stock Options"), pursuant to and in accordance with the following: -2- 3 (a) If Roldan's employment is terminated for any reason other than "for Cause" as defined herein, then the unexercised options shall be exercisable for a period of either (i) forty-five (45) days from the termination of Roldan's employment or (ii) the end of the initial term of this Agreement or any extension thereof; whichever period of later. (b) If Roldan's employment by the Company is terminated "for Cause" as defined in this Agreement, then all unexercised options granted to Roldan shall immediately terminate and not be exercisable upon notice of Roldan's termination of employment "for Cause." 9. NON-COMPETITION AND CONFIDENTIALITY. a. Non-Competition. Roldan agrees that during the term of this Agreement, Roldan will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit any employee or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Roldan will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded company. Restrictions regarding competition by Roldan shall only apply to competing businesses or entities that operate in the continental United States. b. Confidentiality. (1) Roldan acknowledges that in Roldan's employment hereunder, Roldan will be making use of, acquiring and adding to the Company's trade secrets and its confidential and proprietary information of a special and unique nature and value relating to such matters as, but not limited to, the Company's business operations, internal structure, financial affairs, programs, software systems, procedures, manuals, confidential reports, lists of clients and prospective clients and sales and marketing methods, as well as the amount, nature and type of services, equipment and methods used and preferred by the Company's clients and the fees paid by such clients, all of which shall be deemed to be confidential information. Roldan acknowledges that such confidential information has been and will continue to be of central importance to the business of the Company and that disclosure of it to or its use by others could cause substantial loss to the Company. In consideration of employment by the Company, Roldan agrees that during the Initial Term and any renewal term of this Agreement and upon and after leaving the employ of the Company for any reason whatsoever, Roldan shall not, for any purpose whatsoever, directly or indirectly, divulge or disclose to any person or entity any of such confidential information which was obtained by Roldan as a result of the Roldan's employment with the Company or any trade secrets of the Company, but shall hold all of the same confidential and inviolate. (2) All contracts, agreements, financial books, records, instruments and documents; client lists; memoranda; data; reports; programs; software, tapes; Rolodexes; telephone and address books; letters; research; card decks; listings; programming; and any other instruments, records or documents relating or pertaining to clients serviced by the Company or Roldan, the services rendered by Roldan, or the business of the Company (collectively, the "Records") shall at all times be and remain the property of the Company. Upon termination of this Agreement and Roldan's employment under this Agreement for any reason whatsoever, Roldan shall return to the Company all Records (whether furnished by the -3- 4 Company or prepared by Roldan), and Roldan shall neither make nor retain any copies of any of such Records after such termination. (3) All inventions and other creations, whether or not patentable or copyrightable, and all ideas, reports and other creative works, including, without limitation, computer programs, manuals and related materials, made or conceived in whole or in part by Roldan while employed by the Company and within one year thereafter, which relate in any manner whatsoever to the business, existing or proposed, of the Company or any other business or research or development effort in which the Company or any of its subsidiaries or affiliates engages during Roldan's employment by the Company will be disclosed promptly by Roldan to the Company and shall be the sole and exclusive property of the Company. All copyrightable works created by Roldan and covered by this Section 9b(3) shall be deemed to be works for hire. Roldan shall cooperate with the Company in patenting or copyrighting all such inventions, ideas, reports and other creative works, shall execute, acknowledge, seal and deliver all documents tendered by the Company to evidence its ownership thereof through the world, and shall cooperate with the Company obtaining, defending and enforcing its rights therein. c. Enforceability. In the event of the breach of the covenants contained in this Section 9, it is understood that damages will be difficult to ascertain and the Company may petition a court of law or equity for injunctive relief in addition to any other relief which the Company may have under the law, this Agreement or any other agreement executed in connection herewith. In connection with the bringing of any legal or equitable action for the enforcement of this Agreement, the Company shall be entitled to recover, whether the Company seeks equitable relief, and regardless of what relief is afforded, such reasonable attorneys' fees and expenses as the Company may incur in prosecution of the Company's claim for breach hereof. It is hereby agreed that the provisions of this Section 9 are separate and independent from the other provisions of this Agreement, that these provisions are specifically enforceable by the Company notwithstanding any claim by Roldan that the Company has violated or breached this Agreement or any claim that Roldan is entitled to any offset or compensation. To induce the Company to enter into this Agreement, Roldan represents and warrants to the Company that Section 9 of this Agreement is enforceable by the Company in accordance with its terms. 10. WAIVER OF BREACH. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party. 11. NOTICES. Any notices, consents, demands, request, approvals and other communications to be given under this Agreement by either party to the other will be deemed to have been duly given if given in writing and personally delivered, faxed or if sent by mail, registered or certified, postage prepaid with return receipt requested, as follows: If to the Company: quepasa.com, inc. One Arizona Center 400 East Van Buren, Suite 545 Phoenix, AZ 85004 If to Roldan: Victor Roldan 200 E. Fillmore, Apt. 219 Phoenix, AZ 85004 -4- 5 Notices delivered personally will be deemed communicated as of actual receipt, notices by fax shall be deemed delivered when such notices are faxed to recipient's fax number and notices by mail shall be deemed delivered when mailed. 12. ENTIRE AGREEMENT. This Agreement and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understanding, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 13. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during this Agreement, such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically, as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 14. GOVERNING LAW. To the extent permitted by applicable law, this Agreement and the rights and obligations of the parties will be governed by and construed and enforced exclusively in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Arizona and the State of Arizona shall have exclusive jurisdiction regarding any legal actions relating to this Agreement. 15. CAPTIONS. The captions in this Agreement are for convenience of reference only and will not limit or otherwise affect any of the terms or provisions hereof. 16. GENDER AND NUMBER. When the context requires, the gender of all words used herein will include the masculine, feminine and neuter, and the number of all words will include the singular and plural. 17. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: quepasa.com, inc., a Nevada corporation By: /s/ Jeffrey Peterson ----------------------------------------- Jeffrey Peterson, Chief Executive Officer ROLDAN: /s/ Victor Roldan ----------------------------------------- Victor Roldan -5- EX-10.11 13 EMPLOYMENT AGREEMENT WITH MR. LUIS GARCIA 1 EXHIBIT 10.11 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 20th day of January, 1999, by and among quepasa.com, inc., a Nevada corporation (the "Company") and Luis Emiro Garcia ("Garcia"). WHEREAS, the Company desires to employ Garcia as provided herein; and, WHEREAS, Garcia desires to accept such employment, NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company hereby employs Garcia and Garcia hereby accepts employment with the Company as Vice President of Content and Design upon the terms and conditions hereinafter set forth. 2. DUTIES. Garcia will serve the Company as Vice President of Content and Design and will faithfully and diligently perform the services and functions relating to such positions or otherwise reasonably incident to such position, provided that all such services and functions will be reasonable and within Garcia's area of expertise. Garcia's specific duties shall include those related to coordinating the design and content of the Company's products to increase their appeal to the Spanish speaking community and such other duties as the Company may reasonably direct. Garcia will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company. 3. TERM. This Agreement and Garcia's employment shall commence on the 15th day of February, 1999, (the "Effective Date") and shall continue for a term of two years ("Initial Term") unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Garcia. 4. COMPENSATION. As compensation for the services rendered to the Company under this Agreement commencing on the Effective Date hereof, Garcia will be paid a base salary of Seventy Five Thousand dollars ($75,000) per year, payable in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the Company's board of directors after a review of Garcia's performance of his duties hereunder. After six months of continuous employment by the Company, the Company will review Garcia's performance and Garcia, based upon such review, shall have the opportunity to negotiate an increase of his salary and/or a bonus in the form of cash and/or stock. 5. TERMINATION. This Agreement will terminate upon the occurrence of any of the following events: a. The death of Garcia; b. The "Total Disability" (as hereinafter defined) of Garcia; c. Written notice to Garcia from the Company of termination for "Cause" (as hereinafter 2 defined); d. The voluntary termination of this Agreement by either party upon sixty (60) days prior written notice; e. The later of two (2) years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above; or f. Written notice to Garcia from the Company for any reason without "Cause". For purposes of Section 5b, the term "Total Disability" means physical or mental disability, or both, determined to be (or reasonably expected to be, based upon then available medical information) of not less than twelve (12) months duration or more. The determination shall rest upon the opinion of the physician regularly attending Garcia. If the Company disagrees with said physician's opinion, the Company may engage at their own expense a physician to examine the Garcia, and Garcia hereby consents to such examination and to waive, if applicable any privilege between the physician and Garcia that may arise as a result of said examination. If after conferring, the two physicians cannot concur on a final opinion, they shall choose a third consulting physician whose opinion shall control. The expense of the third consulting physician shall be borne equally by the Garcia and the Company. For purposes of Section 5c, "Cause" means (i) Garcia has failed to substantially perform his duties as reasonably determined by any Officer of the Company or the Board of Directors of the Company, (ii) Garcia engages in poor performance that is not cured within thirty (30) days after counseling by the Company, (iii) Garcia has failed to comply with the reasonable directives and policies of the Board of Directors of the Company or of any Officer of the Company, (iv) the U.S. Government or an agency thereof determines that Garcia is not eligible to work within the United States, or (v) Garcia breaches his fiduciary duty to the Company or commits any dishonest, unethical, fraudulent, or felonious act in respect to Garcia's duties to the Company. 6. BENEFITS. Garcia shall be entitled to participate in any Company benefits as they become available, if at all, and which are normal and customary Company benefits for a like position, including life insurance, incentive compensation, deferred compensation, stock option plans or other Company programs or plans. In addition, Garcia shall be entitled to the following benefits: (a) full coverage health insurance to be paid by the Company with a maximum premium not to exceed $350 per month; (b) at reasonable times and upon prior Company approval, Garcia shall be entitled to two weeks paid vacation per calendar year for each year employed during the term of this Agreement; (c) the Company will contribute and reimburse Garcia up to $5,000 for moving expenses from his current residence to Phoenix, Arizona. 7. LOAN. The Company will loan to Garcia Five Thousand dollars ($5,000) to be loaned and disbursed on the Effective Date. All amounts loaned will be evidenced by a promissory note with interest at 10% per annum and with all principal and accrued but unpaid interest due one (1) year from the Effective Date if not sooner paid. The Company agrees that if Garcia has been employed by the Company for six continuous months from the Effective Date, 50% of the principal balance and accrued but unpaid interest shall be forgiven and, if Garcia has been employed by the Company for a total of twelve continuous months - 2 - 3 of employment by the Company, then the remaining principal balance and accrued, but unpaid interest shall be forgiven by the Company and the Note evidencing such loan shall be canceled. 8. STOCK OPTIONS. Specifically subject to Section 8a and 8b below and Section 10c and contingent upon Garcia being employed by the Company, Garcia shall be granted options to purchase 15,000 shares of the Company's Common Stock exercisable at $1.00 per share to vest and be exercisable in accordance with the Company's 1998 Stock Option Plan and in accordance with the following and Section 10c below: (a) If Garcia's employment is terminated for any reason other than "for Cause" as defined herein, then the unexercised options shall be exercisable for a period of either (i) forty-five (45) days from the termination of Garcia's employment or (ii) the end of the initial term of this Agreement or any extension thereof; whichever period of later. (b) If Garcia's employment by the Company is terminated "for Cause" as defined in this Agreement, then all unexercised options granted to Garcia shall immediately terminate and not be exercisable upon notice of Garcia's termination of employment "for Cause." 9. BUSINESS EXPENSES. Upon submission of proper documentation, the Company shall pay or reimburse Garcia for all reasonable and necessary office, telephone, travel and other expenses which are incurred by Garcia in the pursuit of Garcia's duties on behalf of the Company. 10. NON-COMPETITION AND CONFIDENTIALITY. a. Non-Competition. The Company and Garcia acknowledge and agree that Garcia's services are of a special and unusual character which have a unique value to the Company, the loss of which cannot be adequately compensated by damages in an action at law and if used in competition with the Company, could cause serious harm to the Company. Accordingly, Garcia agrees that during the term of this Agreement and for a period of two (2) years after the termination of this employment by the Company, irrespective of the reason for such termination, Garcia will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit any employee or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Garcia will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged, was engaged during Garcia's employment or is engaged at the time of Garcia's termination of employment, except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded company. b. Confidentiality. (1) Garcia acknowledges that in Garcia's employment hereunder, Garcia will be making use of, acquiring and adding to the Company's trade secrets and its confidential and proprietary information of a special and unique nature and value relating to such matters as, but not limited to, the Company's business operations, internal structure, financial affairs, programs, software systems, procedures, manuals, confidential reports, lists of clients and prospective clients and sales and marketing methods, as well as the amount, nature and type of services, equipment and methods used and preferred by the Company's clients and the fees paid by such clients, all of which shall be deemed to be confidential information. Garcia acknowledges that such confidential information has been and will continue to be of central importance to the business of the Company and that disclosure of it to or its use by others could cause substantial loss to - 3 - 4 the Company. In consideration of employment by the Company, Garcia agrees that during the Initial Term and any renewal term of this Agreement and upon and after leaving the employ of the Company for any reason whatsoever, Garcia shall not, for any purpose whatsoever, directly or indirectly, divulge or disclose to any person or entity any of such confidential information which was obtained by Garcia as a result of the Garcia's employment with the Company or any trade secrets of the Company, but shall hold all of the same confidential and inviolate. (2) All contracts, agreements, financial books, records, instruments and documents; client lists; memoranda; data; reports; programs; software, tapes; Rolodexes; telephone and address books; letters; research; card decks; listings; programming; and any other instruments, records or documents relating or pertaining to clients serviced by the Company or Garcia, the services rendered by Garcia, or the business of the Company (collectively, the "Records") shall at all times be and remain the property of the Company. Upon termination of this Agreement and Garcia's employment under this Agreement for any reason whatsoever, Garcia shall return to the Company all Records (whether furnished by the Company or prepared by Garcia), and Garcia shall neither make nor retain any copies of any of such Records after such termination. (3) All inventions and other creations, whether or not patentable or copyrightable, and all ideas, reports and other creative works, including, without limitation, computer programs, manuals and related materials, made or conceived in whole or in part by Garcia while employed by the Company and within one year thereafter, which relate in any manner whatsoever to the business, existing or proposed, of the Company or any other business or research or development effort in which the Company or any of its subsidiaries or affiliates engages during Garcia's employment by the Company will be disclosed promptly by Garcia to the Company and shall be the sole and exclusive property of the Company. All copyrightable works created by Garcia and covered by this Section 10b(3) shall be deemed to be works for hire. Garcia shall cooperate with the Company in patenting or copyrighting all such inventions, ideas, reports and other creative works, shall execute, acknowledge, seal and deliver all documents tendered by the Company to evidence its ownership thereof through the world, and shall cooperate with the Company obtaining, defending and enforcing its rights therein. c. Certain Claims Upon Termination. Garcia understands that if within one year prior to the termination of Garcia's employment with the Company, Garcia has either (i) committed an act of theft, dishonesty, gross dereliction of duty, fraud, embezzlement, misappropriation, or breach of fiduciary duty against the Company or any other act of comparable misconduct against the Company; or (ii) breached any of his obligations under this Agreement, then the Company shall have the right to purchase any or all shares of Common Stock of the Company owned by Garcia at the time of such termination for a purchase price equal to the amount that Garcia paid for such shares, together with interest thereon at a rate of ten percent (10%) per annum. If the Company desires to exercise such right, it shall notify Garcia within 60 days after the date of such termination and Garcia shall tender the shares being purchased by the Company at the time and place designated in such notice from the Company upon receipt of the purchase price for such shares. If Garcia fails to tender such shares, the shares shall be deemed to be canceled as of the date the Company tenders payment of the purchase price thereof. - 4 - 5 d. Enforceability. In the event of the breach of the covenants contained in this Section 10, it is understood that damages will be difficult to ascertain and the Company may petition a court of law or equity for injunctive relief in addition to any other relief which the Company may have under the law, this Agreement or any other agreement executed in connection herewith. In connection with the bringing of any legal or equitable action for the enforcement of this Agreement, the Company shall be entitled to recover, whether the Company seeks equitable relief, and regardless of what relief is afforded, such reasonable attorneys' fees and expenses as the Company may incur in prosecution of the Company's claim for breach hereof. It is hereby agreed that the provisions of this Section 10 are separate and independent from the other provisions of this Agreement, that these provisions are specifically enforceable by the Company notwithstanding any claim by Garcia that the Company has violated or breached this Agreement or any claim that Garcia is entitled to any offset or compensation. To induce the Company to enter into this Agreement, Garcia represents and warrants to the Company that Section 10 of this Agreement is enforceable by the Company in accordance with its terms. The parties hereto agree that to the extent that any provision or portion of Section 10 of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court of competent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision or portion thereof shall be legally enforceable to the fullest extent permitted by applicable law; and the parties hereto do further agree that any court of competent jurisdiction shall, and the parties hereto do hereby expressly authorize, request and empower any court of competent jurisdiction to, enforce any such provision or portion thereof or to modify any such provision or portion thereof in order that any such provision or portion thereof shall be enforced by such court to the fullest extent permitted by applicable law. 11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party. 12. NOTICES. Any notices, consents, demands, request, approvals and other communications to be given under this Agreement by either party to the other will be deemed to have been duly given if given in writing and personally delivered, faxed or if sent by mail, registered or certified, postage prepaid with return receipt requested, as follows: If to the Company: quepasa.com, inc. One Arizona Center 400 East Van Buren, Suite 545 Phoenix, AZ 85004 If to Garcia: Luis Emiro Garcia ----------------- ----------------- - 5 - 6 Notices delivered personally will be deemed communicated as of actual receipt, notices by fax shall be deemed delivered when such notices are faxed to recipient's fax number and notices by mail shall be deemed delivered when mailed. 13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understanding, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 14. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during this Agreement, such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically, as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 15. GOVERNING LAW. To the extent permitted by applicable law, this Agreement and the rights and obligations of the parties will be governed by and construed and enforced exclusively in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Arizona and the State of Arizona shall have exclusive jurisdiction regarding any legal actions relating to this Agreement. 16. CAPTIONS. The captions in this Agreement are for convenience of reference only and will not limit or otherwise affect any of the terms or provisions hereof. 17. GENDER AND NUMBER. When the context requires, the gender of all words used herein will include the masculine, feminine and neuter, and the number of all words will include the singular and plural. 18. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: quepasa.com, inc., a Nevada corporation By: /s/ Jeffrey Peterson ------------------------------------------ Jeffrey Peterson, Chief Executive Officer GARCIA: /s/ Luis Emiro Garcia -------------------------------------------- Luis Emiro Garcia - 6 - EX-10.12 14 AGREEMENT WITH WEATHER LABS, INC. 1 EXHIBIT 10.12 [WEATHERLABS LOGO] DOUBLE WEBSITE WEATHER DATA LICENSE AGREEMENT This Agreement, dated November 5, 1998 between WeatherLabs, Inc., a wholly owned subsidiary of Digital Courier Technologies, Inc., a Delaware corporation, with its principal place of business at 187 Fremont St., San Francisco, California ("WeatherLabs"), and, Internet Century with its principal place of business at 400 E. VanBuren Ste. 545, Phoenix, AZ 85004 ("Company"). WITNESSETH: WHEREAS, Company desires to provide its electronic subscribers on the Internet's Worldwide Web with weather data, weather content and related weather services WHEREAS, WeatherLabs is in the business of providing weather information worldwide to companies for distribution to end-users. AGREEMENT: NOW, THEREFORE, in consideration of the respective representations and warranties hereinafter set forth and of the mutual covenants and agreements contained herein, the parties agree as follows: 1. Provision of Services. (a) WeatherLabs will license weather data to Company in the format set forth in Exhibit A to this Agreement (the "Weather Data"). Subject to the availability of an online connection to the Internet communications infrastructure (the "Internet"), the Weather Data will be provided to Company on a schedule set forth in Exhibit A for selected U.S. and/or International city locations (defined in Exhibit B). Company may only use the Weather Data to respond to requests for weather information from its users or subscribers on the following Worldwide Web site address (the "Licensee Web Site") with a URL that resolves to: * see below. Company may not modify or alter the Weather Data in any manner, except to display the Weather Data on the Licensee Web Site in the form of a Hypertext Markup Language (HTML) template format set forth in Exhibit C to this Agreement. In the event Company desires to present the Weather Data to its subscribers in a format other than that set forth in Exhibit C, then Company must have such new format approved in writing by WeatherLabs prior to its use, which approval WeatherLabs shall not unreasonably withhold or delay. * Quepasa.com Netcentury.com 2 (b) WeatherLabs will commence providing Company with Weather Data within 30 days after receiving a written request from Company for Weather Data (the first date that Weather Data is provided is referred to herein as the "Initial Service Date"). In no event shall the Initial Service Date be a date after three months from the date of this Agreement without the prior written consent of WeatherLabs. 2. Payment. "Fees" means, collectively, the following charges (in U.S. dollars): for a total cost of $36,000.00 per year. A. A service set-up fee of: $0.00, for which Company shall receive databases, related manuals, and up to 10 hours of technical support. B. Product Line Overview. Forecast products provide reliable and timely information for over 5000 U.S. cities and 2400 international locations. In addition to city level reporting, WeatherLabs can forecast for any zip code in the U.S. or for any latitude and longitude coordinate (geocode) worldwide. 1. Forecast Products. a. 24 hour detailed (morning, afternoon, evening, overnight). b. 5-day extended. c. Long range climate/weather. 2. Real-time products. a. Current hourly conditions. b. Regional Doppler radar images. c. Composite Doppler radar images. d. Satellite maps. e. Weather maps 3. Special Interest reports. a. Ski reports for US and International resorts. b. Airport delay forecasts. c. Astronomy report. 4. Editorial products. a. Weather stores. b. Weather glossary c. Barrington Report d. Ask the WeatherLab e. Educational weather information. 5. Weather Almanac. a. "On this day" trivia. b. Monthly averages for thousands of cities worldwide with 30 year history. C. Additional fee of: 0. Technical support in excess of 10 hours will be charged at $100.00 per hour. Company shall pay all Fees to WeatherLabs within 30 calendar days after the receipt of the invoice. In addition to any other rights hereunder, Company shall pay to WeatherLabs interest equal to 1.5% of an unpaid Fee which is not disputed, for each 30 day period, or portion thereof, in which any Fee remains unpaid. The Fees may be made payable via company check or electronic wire transfer to WeatherLabs' global Citibank bank account from Company's bank. 3 3. Term of Agreement. (a) The term of this Agreement shall be for a period of one (1) year, commencing on the date hereof and continuing through and including the day immediately preceding the first (lst) anniversary of the date hereof (the "Initial Term"). Unless terminated by either party by providing a 90-day written notice prior to the expiration of the Initial Term, this Agreement will be automatically renewed on a year-to-year basis at the expiration of the Initial Term. 4. Termination of Agreement. (a) After the expiration of the Initial Term, this Agreement may be terminated at the option of the non-defaulting party, by delivery of a written notice thereof to the defaulting party, specifying in reasonable detail the reason for termination, if (i) the defaulting party breaches or otherwise fails to perform or comply in a material respect with a material obligation or covenant, and such breach or failure is not cured to the non-defaulting party's reasonable satisfaction within 30 days receipt of such notice; or (ii) the defaulting party fails to comply strictly with the provisions of this Agreement. If the non-defaulting party is Company, then the sole and exclusive remedy of the Company shall be that WeatherLabs refunds to Company all Fees paid by Company up to the amount of the loss incurred. If the non-defaulting party is WeatherLabs, then the sole and exclusive remedy of WeatherLabs shall be that Company pays to WeatherLabs an amount equal to the unpaid Fees to have accrued the remainder of the Term of Agreement up to the amount of the loss incurred. 5. Ownership. (a) All rights, title and interest in and to the Weather Data and any modifications or enhancements thereto, including all trademarks, copyrights and patent rights are and shall remain the exclusive property of WeatherLabs. This Agreement does not grant to Company or any of its affiliates or customers any right of ownership therein. The Weather Data, including any weather forecast contained therein may not be re-transmitted, re-distributed, re-sold or re-broadcast (in any electronic, video or print format) by the Company in whole or in part to any party, other than a Company user or subscriber on the Licensee Web Site in accordance with this Agreement, without the express written consent of WeatherLabs. 6. Promotion. (a) Neither party will make any public statement, press release or other announcement relating to the terms of or existence of this Agreement without the prior written approval of the other. Notwithstanding the foregoing, Company hereby grants to WeatherLabs the right to issue an initial press release, the timing and wording of which will be subject to Company's reasonable approval, regarding the relationship between WeatherLabs and Company. 4 7. Representations and Warranties. (a) WeatherLabs warrants that it has full power and authority to provide the Weather Data hereunder and the Weather Data will conform to the specifications set forth in Exhibit A. WeatherLabs represents that it will deliver the Weather Data to Company in the form of electronic data file(s). The actual transfer method will be based on the standard Internet File Transfer Protocol (FTP), via the Internet. WeatherLabs makes no representation or warranty as to the capability of the Internet to provide a continuous online connection for delivery of the Weather Data. WeatherLabs will make commercially reasonable efforts to ensure that such online connection to the Internet is upheld. WeatherLabs does not warrant or guarantee the accuracy of its weather forecasts. All other warranties, including any WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE are hereby EXCLUDED. (b) The parties represent that they have the equipment and software necessary to adequately service the request by the counter party and by the users or subscribers for the information in question. 8. Limitation of Liability. (a) Neither party shall be liable to the other for any special or consequential damages of any character, including without limitation, damages for loss of good will, lost revenue, lost prospective economic advantage or lost profit, arising from any performance or failure to perform under this Agreement, irrespective of whether or not such damages are foreseeable or whether or not any exclusive remedy is deemed to have failed, and each party hereby releases and waives any claims against the other party regarding such damages. WeatherLabs' liability to Company for damages arising out of the performance or breach of this Agreement shall not exceed the total Fees paid to WeatherLabs by Company under this Agreement. In no event shall WeatherLabs be liable for its failure to perform under this Agreement as a result of the malfunction of the connection to the Internet or Company's equipment or software. 9. Confidentiality. (a) Each party will reasonably protect any and all information obtained about the other party and at a minimum provide the same safeguards afforded its own confidential information. Each party will keep confidential information to which it has access in the performance of this Agreement. Confidential information includes information contained herein with respect to Weather Data, and data bases that WeatherLabs provides to Company, as well as information relating to all Fees applicable to this Agreement. Confidential information shall not include information now or hereafter in the public domain, information already in the possession of the other party, information obtained from another source without obligation of confidentiality, information independently developed or information required by a court or government order. 5 10. General. (a) Notices. Except as otherwise permitted herein, any notices or consents required or permitted by this Agreement shall be in writing and delivered in person or by registered or certified mail, postage prepaid, return receipt requested, or by a reputable courier delivery service, or by facsimile during regular business hours (provided that a confirmation copy follows by first-class U.S. Mail or any other method of delivery permitted under this Section), as follows unless such address is changed by written notice hereunder, and such notice shall be deemed given for purposes of this Agreement on the day that such writing is sent to the intended recipient thereof in accordance with the provisions of this Section: (i) IF TO: WeatherLabs: BRENDAN L. Larson, CEO WeatherLabs, Inc. 187 Fremont Street San Francisco, California 94105 (USA) Phone: (415) 777-0577 Fax: (415) 243-9679 (ii) IF TO: Internet Century Bryan Ross 400 E. Van Buren Ste. 545 Phoenix, AZ 85004 Phone: (602)716-0100 FAX: (602)716-0200 bryan@netcentury.com (b) Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other party hereto; provided, that such consent shall not be required with respect to any successor-in-interest to all or substantially all of either party's business or assets. (c) Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of California. (d) Captions. The captions and headings used in this Agreement are for convenience of reference only, and shall not affect the construction or interpretation of any of the provisions hereof. 6 f (e) Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereon were upon the same instrument. This Agreement shall become effective when all parties hereto shall have executed and delivered counterparts hereof. (f) Entire Agreement. This Agreement, together with the Exhibits hereto and the other documents referred to herein, constitutes the sole and entire understanding between and among the parties with respect to the subject matter hereof, and supersedes all prior agreements and understandings among the parties with respect to such subject matter. This Agreement may be modified only in writing, signed by both parties. (g) Waiver. The failure by either party to insist upon strict enforcement of any terms and conditions of this Agreement shall not be construed as a waiver or relinquishment of the right to assert or rely upon any such terms on any future occasion. (h) Relationship of the Parties. The parties recognize that they are independent contractors and that neither is an agent, employee, partner or joint venturer of the other. Furthermore, neither party is authorized to waive any right, or assume or create any contract or obligation of any kind in the name of, or on behalf of, the other or to make any statement that it has the authority to do so. (i) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement (j) Reliance and Benefit. This Agreement is intended for the sole and exclusive benefit of the parties hereto, and is not intended to confer any benefit upon any other persons whatsoever. Except for the parties hereto, no other person shall have any right to rely upon this Agreement for any purpose whatsoever, absent the written consent of the party to be charged with such reliance. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. WEATHERLABS, INC. By: /s/ Brendan L. Larson ----------------------- Title: CEO -------------------- Internet Century By: /s/ Jennifer Ferlaino ----------------------- Title: Secretary/Treasurer -------------------- EX-10.13 15 AGREEMENT WITH HEFTEL BROADCASTING CO. 1 EXHIBIT 10.13 - - - - -------------------------------------------------------------------------------- HBC NETWORK, INC. CONTRACT - - - - -------------------------------------------------------------------------------- ADVERTISER: QUE PASA.COM SPOT AND ANNOUNCEMENT SCHEDULE: START DATE: FEBRUARY 15, 1999
# OF DAYS TIMES FREQUENCY AND RATE: WEEKS TOTAL COST ---- ----- ------------------- ----- ---------- M-SUN 6A-10A 14 X/WK @ $5,300.00 8 $ 593,600 6 X/WK TRAFFIC @ $2,650 8 127,200 1 X/WK (SUN) READ @ $2,400 8 19,200 M-F 10A-3P 10 X/WK @ $3,300.00 8 264,000 M-F 3P-6P 10 X/WK @ $2750.00 8 220,000 5 X/WK TRAFFIC @ $1375.00 8 55,000 M-F 6P-9P 10 X/WK @ $2,075.00 8 166,000 M-F 9P-12M 10 X/WK @ $2,000.00 8 160,000 TOTAL INVESTMENT $1,605,000 THIS CONTRACT IS NON-CANCELLABLE
-CONTINUED- Que Pasa.com Contract Page 1 2 MEDIA ELEMENTS M-F 6A-10A 14 X/WK "LIVE READS", 30 SECONDS AM/FM STATIONS 7 X/WK TRAFFIC SPONSORSHIP WITH 10 SECOND READ 2 "LIVE READS" PER SHOW WITH 1 HOUR SEPERATION. TRAFFIC SPONSORSHIP BETWEEN "READS" M-F 10A-3P 10 X/WK "LIVE READS", 30 SECONDS FM STATIONS ONLY M-F 3P-6P 10 X/WK "LIVE READS", 30 SECONDS FM STATIONS ONLY 5 X/WK TRAFFIC SPONSORSHIP WITH: 10 SECOND READ 2 X/DAY FROM 3 X/DAY TRAFFIC SPONSORSHIP WOULD BE BETWEEN "READS" M-F 6P-9P 10 X/WEEK AM/FM STATIONS SPORTS ELEMENTS: *SCOREBOARDS 1X/D AM FOR ELEMENTS TRANSACTIONS 1X/D FM FOR "READS", 30 SECONDS *UPDATES 1X/D *TRIVIA QUIZ 1 X/D CHOOSE 3 ELEMENTS -CONTINUED- Que Pasa.com Contract Page 2 3 TERMS AND CONDITIONS OF HBC NETWORK, INC. CONTRACT IN CONSIDERATION of the providing of advertising services, production services, or related services by HBC Network Inc. ("Network") now and/or in the future, the undersigned (referred to herein as "Advertiser") agrees and shall be governed by the following: PAYMENT AND BILLING: * The Advertiser shall pay for this first order, as described above, by wire transfer of funds to Network. Thereafter, the Advertiser agrees to pay for broadcasting, at the office of Network or its authorized representative, on or before the fifteenth of the month following that in which the broadcasting is done unless otherwise stipulated on the face of this agreement. The terms and conditions set forth herein are in addition to and form a part of the agreement between the Advertiser and the Network for purchase of broadcast time. Past due amounts shall accrue interest at the rate of 1.5%, or the maximum rate allowed by law, whichever is less, per month, from the date any such amount becomes past due. RATES: It is understood that this agreement covers Network facilities only. It is further understood that failure of Advertiser to furnish approved advertising copy or spots as provided herein or failure to occupy leased time for any reason, shall not relieve Advertiser's obligation to pay for time contracted for. Notwithstanding anything to the contrary in this contract or any other agreement between the parties, Network reserves the right to increase any of its rates and charges, including charges set forth on the face hereof, by public announcement of a new rate card, but no increase shall be applicable to broadcast under this contract until expiration of the terms of this contract. ADVERTISING COPY: It is understood that each of Advertiser's commercials shall be submitted in typewritten form and shall be available for reading and rehearsal by Network at least 72 hours in advance of scheduled airing. The Advertiser will hold and save the Network harmless against all liability for libel, slander, illegal competition, or trade practice, infringement or trade marks, trade names, or program titles, violation or right or privacy and infringement of copyrights and proprietary rights resulting from the broadcast of any program material, information or music furnished by the Advertiser. SUBSTITUTION OF PROGRAM: It is understood that advertising copy and programs sponsored by Advertiser shall be subject to requirements of Network and governmental regulation. Network shall have the right to cancel any broadcast covered by this contract in order to substitute a program of outstanding public importance. In such case, Network will notify the Advertiser, and the Advertiser and Network will agree on a satisfactory substitute day or time for the broadcast, or, if no such agreement can be reached, the broadcast will be considered as canceled without affecting the rates or rights shown on this contract, provided, however, that Network shall refund Advertiser for the cancelled advertising on a pro rated basis. * $1,000,000 Initial Payment 30 days for balance $605,000. Que Pasa.com Contract Page 4 4 ADDITIONAL ELEMENTS INCLUDED: CALLE OCHO SPONSORSHIP $150,000 level Co sponsorship; package to be discussed NEW YORK o SATURDAY NIGHT DANCE PARTY SPONSORSHIP INCLUDES: o 2 units per hour (10 total) o Open and close audio billboards o 2 mention (on-air) per hour (10 total) o 9P-2A o Exclusivity o $4500 per week value MIAMI o SATURDAY NIGHT DANCE PARTY SPONSORSHIP INCLUDES: o 2 units per hour (6 total) o Open and close audio billboards o 2 mention (on-air) per hour (6 total) o 1OP-1A o Exclusivity o $5000 per week value o All sports elements discussed o Creative fees for Talent Que Pasa.com Contract Page 3 5 INABILITY TO BROADCAST: It is understood that in case of mistake or other failure of Network or its component broadcasting facilities which shall prevent or abbreviate Advertiser's time, such Advertiser is to choose, receive and pay for any other equal length of time which has not been contracted for by others. If such rescheduling cannot be accomplished, the missed advertising shall be considered as canceled without affecting the rates or rights shown on this contract, provided, however, that Network shall refund Advertiser for the canceled advertising on a pro rated basis. GENERAL: All commercial programming is subject to the approval of the Network, and the Network, without restriction or liability, reserves the right to reject or cancel any and all contracts with Advertiser, or to refuse to broadcast any part or all of any material which does not, the opinion of the Network, maintain a quality and character creditable alike to the Network and Advertisers, and/or which, in the opinion of the Network, will not be of benefit to either the Advertiser or to the Network. The Advertiser agrees that its announcements shall contain (1) no unwarranted, exaggerated, doubtful or superlative claims, and the Advertiser hereby guarantees as true all claims and statements made in its programs and/or announcements; (2) no ambiguous statements that may be misleading; (3) no infringements of another advertiser's rights through plagiarism or imitation of either idea or copy slant; (4) no reflections on competitors or competitor's goods; (5) no statements or announcements that are slanderous, obscene, profane, vulgar, repulsive or offensive, either in theme or in treatment; (6) no mention by the Advertiser of another generally advertised company or product; and (7) no lottery or drawing contest under any circumstances. The Network shall have and is hereby granted the right, in its uncontrolled discretion, to omit or delete any part of any announcement violating, in its opinion, any of the foregoing regulations or any terms of this agreement. Any dispute by Advertiser with any broadcast, commercial announcements, any services provided by Network or the amount charged for the same shall be reported to Network in writing within thirty (30) days from the date of invoice relating to the same, time being of the essence (but any such dispute shall not affect Advertiser's obligation to make payment as set forth above). Failure to report any such dispute with such time shall constitute a waiver of any claim by Advertiser with respect to such dispute. The terms and conditions outlined herein shall govern and control all future services, which may be provided by Media Provider from time to time for the Advertiser, unless modified in writing. If credit is approved, Network reserves the right to cancel credit at any time with or without notice for whatever reason. Advertiser understands that should Advertiser place advertising through an advertising agency (or other third parties) that Advertiser will continue to be responsible to Network for payment of such advertising. In the event an agency requests advertising on behalf of an Advertiser, Advertiser acknowledges its joint and several liability for the payment of such advertising under the terms set forth herein above. The failure or delay of the Network to enforce any term or condition of this agreement shall not be construed as a waiver of any right contained herein or of any breach hereof. Que Pasa.com Contract Page 5 6 ACKNOWLEDGED AND AGREED: Advertiser Quepasa.com ------------------------------- Date 1-28-99 ------------------------------------- Authorized Signature /s/ JEFFREY PETERSON --------------------- Printed Name Jeffrey Peterson ----------------------------- Title President, CEO ------------------------------------ HBC Network, Inc. Contract /s/ McHenry Tichenor President Que Pasa.com Contract Page 6 EX-10.14 16 AGREEMENT WITH GTE INTERNETWORKING, INC. 1 [Quepasa.com letterhead] Exhibit 10.14 GTE Internetworking 150 Cambridge Park Drive Cambridge, MA 02140 Attention: Corporate Sales Administration Dear Sir/Madam: Please accept this letter in lieu of a Purchase Order. We are hereby authorizing BBN Planet to provision services in the dollar amount specified in Quote #97610.9999.1 attached hereto. Sincerely, /s/ Jennifer L. Ferlaino - - - - ------------------------------------- Jennifer L. Ferlaino Secretary/Treasurer 2 [GTE LOGO] CREDIT LIMIT REQUESTED $ ------------ PRODUCT/SERVICES DESIRED: ----------- ARE P.O.'S REQUIRED FOR PAYMENT? / / YES / / NO CREDIT APPLICATION =============================================================================== COMPANY INFORMATION Name of Company: quepasa.com, inc. Telephone: (602) 716-0100 ---------------------------------- --------------- Street: One Arizona Center - 400 E. Van Buren Suite 545 --------------------------------------------------------------------- City: Phoenix State: AZ Zip: 85004 ---------------------------- -------- ------- Type of Business: Internet Applications Developer ----------------------------------------------------------- # of years in business: 1 1/2 --------------- Type of ownership: /X/ Corporation / / Partnership / / Proprietorship / / Other ------------------------ (Describe) Officers and titles, name(s) of partners or owners: Jeffrey S. Peterson, ---------------------------- President & CEO, Michael D. Silberman, Chief Financial Officer & Chief - - - - ------------------------------------------------------------------------------ Operations Officer, Jennifer L. Ferlaino, Secretary/Treasurer, Kevin Dieball, - - - - ------------------------------------------------------------------------------ Vice President, Michael Hubert, Director of Marketing Vice President. - - - - ------------------------------------------------------------------------------ Authorized Buyer(s): Jennifer L. Ferlaino, Michael D. Silberman, Jeffrey --------------------------------------------------------- Peterson Federal ID #: 86-0879433 - - - - -------- -------------- OWNER INFORMATION (Must be completed for all partnerships, sole proprietorships and corporations in business less than 3 years.) Name: Michael D. Silberman Home Phone: (818) 348-6093 ------------------------------------- ----------------------- Address, City, State, Zip: 22960 Burbank Blvd, Woodland Hills, CA 91367 ----------------------------------------------------- Title: CFO & COO ----------- Ownership % SS# ###-##-#### ----------------------- ------------- Name: Jennifer L. Ferlaino Home Phone: (602) 315-4387 ------------------------------------- ----------------------- Address, City, State, Zip: 4400 N. Scottsdale Rd. #9302, Scottsdale, AZ 85251 ----------------------------------------------------- Title: Secretary/Treasurer --------------------- Ownership % SS# ###-##-#### ----------------------- ------------- BANK REFERENCES: Bank(s): Wells Fargo Bank Contact: Rick Chambers (branch manager) ----------------------------- ------------------------------- Address: 2424 S. Carson St., Carson City, NV 89701 Telephone: 702-885-1111 ------------------------------------------ ------------- Account #: 0455836379 Line of Credit: ----------------------------- -------------------------- AUTHORIZATION TO RELEASE INFORMATION: I hereby authorize our bank(s) and vendor(s) to release any information necessary to assist in establishing a line of credit. Signature /s/ Jennifer L. Ferlaino Title: Secretary/Treasurer Date: 12/21/98 ------------------------- -------------------- --------- TRADE REFERENCES (Please provide complete street address, city, state, zip and account number.) BUSINESS REFERENCES: Company #1: Exodus Communications Company #2: Arizona Republic --------------------------- --------------------------- Address: 2650 San Tomas Expressway Address: 106 E. Baseline Road ------------------------------ ------------------------------ Santa Clara, CA 95051 Mesa, AZ ------------------------------ ------------------------------ Account #: Customer ID ICI003 Account #: Acct #38562 ---------------------------- ---------------------------- Telephone: 408-346-2200 Telephone: 602-444-7915 ---------------------------- ---------------------------- Company #3: The Business Journal Company #4: Westec Security --------------------------- --------------------------- Address: PO BOX 16718 Address: 4602 E. University Dr. ------------------------------ ------------------------------ Phoenix, AZ 85011-6718 Phoenix, AZ 85034 ------------------------------ ------------------------------ Account #: Account #: ---------------------------- ---------------------------- Telephone: 602-230-8400 Telephone: 602-829-3778 ---------------------------- ---------------------------- PLEASE INCLUDE A COPY OF YOUR MOST RECENT AUDITED FINANCIAL STATEMENT WITH THIS APPLICATION. THIS STATEMENT IS REQUIRED FOR CREDIT APPROVAL. THANK YOU. ---------------------------------------------------------- 3 [GTE LOGO} Master Agreement for Internetworking Services Rev: February 19, 1998 THIS MASTER AGREEMENT BETWEEN GTE INTERNETWORKING INCORPORATED ("WE") AND THE CUSTOMER IDENTIFIED BELOW ("YOU") INCLUDES THE ATTACHED SERVICE SCHEDULES AND SERVICE QUOTATIONS (COLLECTIVELY "SCHEDULES") TOGETHER WITH ANY ADDITIONAL SCHEDULES MUTUALLY AGREED IN WRITING IN THE FUTURE. 1. SERVICES. We will provide you the Internetworking services ("Services") specified in the Schedule(s). Our commencement of providing any of the Services shall constitute our acceptance of this Master Agreement. 2. PRICES. Prices are stated in the Schedules and are guaranteed for the Term stated in the Schedules. If any of the Services are on a month-to-month basis, we will give you at least 30 days notice of a price change. In addition, you are responsible for applicable taxes, tariffs, telecommunications surcharges or other governmental charges due on account of the Services. 3. PAYMENT. Unless otherwise stated in a Schedule, we will invoice you monthly. You agree to pay within 30 days from receipt of invoice. For overdue invoices, you will pay interest of 1.5% for each month or part of a month (or the maximum allowed by law, whichever is less). 4. OUR RESPONSIBILITY. We are responsible for providing the Services by qualified personnel in a professional manner. WE DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 5. YOUR RESPONSIBILITY. You are responsible for the manner in which you use the Services, including the maintenance and security of your data, computer network and other facilities; your choice of equipment, software and online content, and all other matters related to how you use the Services. Unless expressly permitted by a Schedule or separate reseller agreement with us, you shall not resell Services, or access to Services, directly or indirectly to third parties. 6. INDEMNIFICATION. We will indemnify you for damages, costs and attorneys fees you incur from any claim that our design of the Services infringes any U.S. patent, copyright, trademark, trade secret or other intellectual property right. You will indemnify us for damages, costs and attorneys fees we incur from any claim arising from your manner of using of the Services, your combination of the Services with other products or services not provided by us, or your modification of the Services. The indemnifying party shall conduct the defense and shall have control of the litigation; the other party shall give prompt notice of claims and shall cooperate in defending against the claim. THE PARTIES DISCLAIM THE IMPLIED WARRANTY OF NON-INFRINGEMENT, RELYING INSTEAD ON THE TERMS OF THIS SECTION. 7. IP ADDRESSES. Upon expiration, cancellation or termination of the Agreement or applicable Schedule, you shall relinquish any IP addresses or address blocks assigned to you by us. 8. ACKNOWLEDGEMENT. You agree that we may include your name in listings of our customers. 9. COMPLIANCE WITH LAWS. You shall not use or permit your end users to use the Services in ways that violate laws or our acceptable use policy which is published on our web site at http://www.bbn.com/aup/, infringe the rights of others, or interfere with users of our network or other networks. For example, you shall not distribute chain letters or unsolicited bulk electronic mail ("spamming"); propagate computer worms or viruses; use a false identity; attempt to gain unauthorized entry to any site or network; distribute child pornography, obscenity or defamatory material over the Internet; or infringe copyrights, trademarks or other intellectual property rights. You further agree to comply with U.S. export laws concerning the transmission of technical data and other regulated materials via the Services. 10. TERMINATION. Either party may terminate or cancel this Agreement if the other fails to cure a material breach of the Agreement within 30 days after receiving written notice of the breach. We reserve the right, but assume no obligation, to suspend performance immediately if you are more than 30 days overdue in payments or if, in our reasonable judgment, you have violated Section 9. 11. LIMITATION OF LIABILITY. EXCEPT FOR (A) INDEMNIFICATIONS PURSUANT TO SECTION 6, (B) BREACH OF ANY CONFIDENTIALITY OBLIGATIONS STATED IN A SERVICE SCHEDULE, AND (C) BREACHES BY YOU OF LICENSE TERMS APPLICABLE TO GTE-PROVIDED SOFTWARE, NEITHER PARTY (NOR ITS SUPPLIERS OR CUSTOMERS) SHALL BE LIABLE TO THE OTHER PARTY FOR PUNITIVE, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES INCLUDING WITHOUT LIMITATION, LOST PROFITS OR LOSS OR DAMAGE TO DATA ARISING OUT OF THE USE OR INABILITY TO USE SERVICES, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 12. LIMITATION OF DAMAGES. OUR AGGREGATE LIABILITY TO YOU RELATING TO OR ARISING OUT OF THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED (a) THE TOTAL AMOUNTS PAID BY YOU TO US FOR THE SERVICE IN QUESTION, DURING THE ONE-YEAR PERIOD IMMEDIATELY PRECEDING THE EVENT WHICH GAVE RISE TO YOUR CLAIMS OR (b) $100,000, WHICHEVER IS LESS. 13. MISCELLANEOUS. The terms and conditions of this Agreement supercede all previous agreements, proposals or representations related to the Services. Except for assignments to GTE affiliates, neither party may assign this Agreement without the prior written consent of the other party. This Agreement shall be governed by the substantive laws of the Commonwealth of Massachusetts. Any changes to this Agreement, or any additional or different terms in your purchase orders, acknowledgments or other documents, will not be effective unless expressly agreed to in writing by us. - - - - -------------------------------------------------------------------------------- Please sign below to indicate your understanding and acceptance of the terms of this Agreement. Company (Type or Print Full Customer Name): quepasa.com, inc. ----------------------------------- Signature: /s/ Jennifer L. Ferlaino Date: 12/21/98 --------------------------------- ----------------------------- Print Name: Jennifer L. Ferlaino Title: Secretary/Treasurer -------------------------------- ---------------------------- 1 of 1 MA 4 [GTE LETTERHEAD] Service Quotation For Quepasa.com, Inc. - - - - -------------------------------------------------------------------------------- TO: Jeff Peterson Quote Date: Dec 22, 1998 Quepasa.com, Inc. Quote Valid To: One Arizona Center Quote Number: 87610.9999.1 Phoenix, AZ 85004 Service Level: Web Advantage, USA Collocated 2.0 (100mb) Additional Terms: - - - - ----------------- (a) The Service Quotation and all Services that may be provided pursuant to this Service Quotation are subject to the terms and conditions of (a) the Master Agreement for Internetworking Services or the Master Agreement for Internet Services or Internet Services and Products Master Agreement previously signed by you (or, if you have not signed such a Master Agreement, the terms and conditions of the current Master Agreement for Internetworking Services), and (b) the Service Schedule for the applicable Services you are purchasing as indicated in this Service Quotation. (b) Final acceptance of this Service Quotation by us is subject to credit check approval, and confirmation of a valid Master Agreement and Service Schedule signed by Customer. (c) are different from or in addition to the terms and conditions contained in this Service Quotation, the applicable Master Agreement, and/or the applicable Service Schedule(s) signed by Customer, shall not be binding on us unless expressly accepted in writing, herein or otherwise, by our authorized representative, and we hereby object to and reject all terms and conditions not so accepted. (d) Advance payment of $87,000.00 must be received by GTE Internetworking on or before December 28, 1998. Customer (Type or Print Full Name): Quepasa.com, Inc. ---------------------------------------- Signature: /s/ Jennifer L. Ferlaino Date: 12/23/98 ----------------------------- --------------------------- Print Name: Jennifer L. Ferlaino Title: Secretary/Treasurer ---------------------------- --------------------------- Purchase orders should be made out to: GTE Internetworking Attention: Dean Wirtz 4041 N. Central Ave., Suite 400 Phoenix, AZ 85012 Should you have questions about this quotation, please contact Dean Wirtz at 602-207-8447, E-mail: dwirtz@bbnplanet.com 5 [GTE LOGO] SERVICE SCHEDULE SERVICES This Service Schedule is part of and is governed by the Master Agreement for Internetworking Services ("Master Agreement"). The terms and conditions of the Master Agreement are incorporated herein by reference. 1. COVERED SERVICES. We will provide you with the level of Web Advantage(SM) Service ("WA Service") indicated in the Service Quotation ("Quotation"). The Service Period and fees for the WA Service are as described in the Quotation. Our commencement of providing WA Service to you as described in the Quotation shall constitute our acceptance of this Service Schedule. 2. SERVICE DESCRIPTION. WA Service provides you with web hosting services. Further details of the WA Service are set forth in the applicable Service Description for the level of WA Service selected on the Quotation. Service Descriptions are available from your GTE sales representative. 3. RENEWAL. We encourage you to contact us, via email to: renew@bbnplanet.com, prior to the expiration of the then-current Service Period, to renew the WA Service for an additional term of one year or greater. If the Service Period expires before it has been renewed in writing, then we may continue to provide you with the WA Services on a month-to-month basis at 105% of our then-current undiscounted list prices, until the Service Period has been renewed in writing. 4. SERVICE CANCELLATION. You may cancel WA Service at any time by providing 60 days prior notice via email to: cancel@bbnplanet.com. If you cancel during the Service Period, you agree to pay us (a) all WA Service fees accrued as of the cancellation date and (b) an early cancellation fee in an amount equal to 50% of WA Service fees due for the canceled portion of the Service Period. 5. DOMAIN NAME FEES. Domain name registration fees and periodic maintenance fees are your responsibility and will be billed directly to you by InterNIC. Such fees are not included in the prices for WA Service. 6. CONTENT. Our provision of WA Services does not alter any of your pre-existing right, title, and interest in content material (including but not limited to text, software, scripts, multimedia images, graphics, audio, video, and other data) which you install or have installed on our server computer (collectively "Content"). 7. THIRD PARTY SOFTWARE. If you purchase any optional functionality which involves the acquisition of third party software through us (e.g., Real Networks Software), you agree to sign any required third party license agreements prior to delivery of the third party software. If we install third party software for you and acceptance of license terms is effected electronically, you authorize us to accept third party license terms on your behalf. In the event we make any software available to you in connection with WA Service, you acknowledge and agree that title to such software remains with us and our suppliers, if any, that the content and design of such software are valuable trade secrets, and that you may use such software only for purposes of the WA Service. You agree not to (a) copy or duplicate such software; (b) reverse engineer, decompile or disassemble such software; (c) make derivative works from such software; or (4) modify such software. In the event we install any software on equipment owned by you we shall remove the software before returning the equipment to you. 8. WEB ADVANTAGE(SM) CUSTOMER ADMINISTRATION AND WEB ADVANTAGE(SM) COLLOCATED HOSTING SERVICES. If you are also purchasing Web Advantage(SM) Service Customer Administration Service ("CA Service"), Web Advantage(SM) Collocated Housing Services ("CO Service") or Customer Support Services, or any other optional services, the nature of the service and the extent of your responsibilities in connection therewith are set forth in the then-current Service Description for the applicable optional service. For CA Service and CO Service, you will have full server access, including remote power cycling. Because you have full server access, you will be solely responsible for administration and support of the server, including the operating system, application software and Content. You agree to designate qualified personnel to manage such access. 9. TIME & MATERIALS SERVICES. If you are purchasing qualified (see applicable Service Descriptions) Web Advantage(SM) Dedicated UNIX and/or Dedicated NT, you may engage us to perform certain optional Time & Materials Services. (For Web Advantage(SM) Collocated Hosting Service we may be required to perform Emergency Time & Materials Services at a premium hourly rate, with regard to such services the balance of this provision applies). Upon receipt of a written or electronic request from you, we will provide Time & Materials Services in accordance with and to the extent, described in the Web Advantage(SM) Server Support Services Service Description. All Time & Materials Services shall be provided on an "AS IS" basis. For Time and Materials Services we shall provide services at our then current standard hourly rates and shall provide materials at our then current standard prices. Costs incurred by us for travel, subsistence, supplies and/or services shall be billed at our cost plus our standard administrative handling charge. You agree to pay for any such Time & Materials Services, costs, and handling charges promptly in accordance with the terms of this Agreement. YOU AGREE THAT OUR LIABILITY TO YOU FOR ANY AND ALL CLAIMS OR DAMAGES RELATING TO OR ARISING OUT OF OUR PROVISION OF TIME & MATERIALS SERVICES, WHETHER IN CONTRACT, TORT OR OTHERWISE, WILL NOT EXCEED (a) THE TOTAL AMOUNTS PAID BY YOU TO US FOR TIME & MATERIALS SERVICES DURING THE ONE-YEAR PERIOD IMMEDIATELY PRECEDING THE EVENT WHICH CAUSED THE LIABILITY, OR (b) $100,000, WHICHEVER IS LESS. In the event we provide any of our pre-existing software to you in connection with the Time & Materials Services, you acknowledge and agree that title to such software remains with us and that the content and design of such software are valuable trade secrets, and that you may use such software only for purposes of the WA Service. You agree not to (a) copy or duplicate such software; (b) reverse engineer, decompile or disassemble such software; (c) make derivative works from such software; or (d) modify such software. 10. IP ADDRESSES. Upon expiration, cancellation or termination of the Agreement or applicable Schedule, you shall relinquish any IP addresses or address blocks assigned to you by us. 11. ACCEPTABLE USE. You agree to use the WA Service in accordance with our acceptable use policy. Our current acceptable use policy is published on our web site at http://www.bbn.com/aup/. 6 [GTE LOGO] SERVICE SCHEDULE WEB ADVANTAGE SERVICES 12. COMPLIANCE WITH LAW. You shall not use or permit your end users to use the Services in ways that violate laws, infringe the rights of others, or interfere with users of our network or other networks, for example, you shall not distribute chain letters or unsolicited bulk electronic mail ("Spamming"): propagate computer worms or viruses; use a false identity; attempt to gain unauthorized entry to any site or network; distribute child pornography, obscenity or defamatory material over the Internet; or infringe copyrights, trademarks or other intellectual property rights. You further agree to comply with U.S. export laws concerning the transmission of technical data and other regulated materials via the Services. 13. COMMERCE RE@ASM SERVICE OPTIONS: iCat SOFTWARE OPTION. If you are purchasing Web Advantage(SM) Dedicated Unix 4.0 (or greater) Select or Premier Service from us, you may also purchase a license to iCat software from us. Once you have paid us the applicable fees stated in the Quotation, we will grant you a non-exclusive, royalty-free, non-transferable sublicense to use the applicable iCat software in accordance with the iCat license terms. In addition to iCat Commerce Publisher, an iCat Catalog license must be purchased before an iCat Catalog can be hosted. For purposes of this Agreement, the term "Catalog" means an original interactive multimedia presentation of products, services, digital assets or information in an electronic format, that is uniquely branded, uses a unique database, is defused by a unique "Catalog Preference File," and is registered with iCat to the name of the catalog owner. DIGITAL DELIVERY OPTION. If you are purchasing Web Advantage(SM) Dedicated Unix 4.0 (or greater) Select or Premier Service, Cybercash Service, and Secure Socket Layer ("SSL") from us, you may also purchase the Digital Delivery Service option, which is a service that is designed to enable electronic distribution of software by you. Further details concerning the service and your responsibilities in connection with the Digital Delivery, SSL and CyberCash Service options are stated in the applicable Service Description; your selection of this optional service is indicated by the statement of the applicable fee in the Quotation. PLEASE SIGN BELOW TO INDICATE YOUR ACCEPTANCE OF THE TERMS OF THIS SERVICE SCHEDULE. CUSTOMER (Type or Print Name): quepasa.com, inc. --------------------------------------------- SIGNATURE: /s/ Jennifer L. Ferlaino DATE: 12/23/98 ---------------------------- --------------------------- PRINT NAME: Jennifer L. Ferlaino TITLE: Secretary/Treasurer --------------------------- --------------------------- 7 [GTE LOGO] SERVICE QUOTATION FOR QUEPASA.COM, INC. - - - - -------------------------------------------------------------------------------- TO: Jeff Peterson Quote Date: Dec 22, 1998 Quepasa.com, Inc. Quote Valid To: One Arizona Center Quote Number: 87610.9999.1 400 E. Van Buren Service Level: Web Advantage, Phoenix, AZ 85004 Collocated 2.0 USA (100mb) Service Period (please check one as applicable): X 1 Year 2 Years 3 Years The Service Period shall commence upon the provisioning by BBN Corporation, a subsidiary of GTE Internetworking Incorporated ("we", "our", or "us"), to you of the services listed on this Service Quotation.
RECURRING FEES (1 YEAR CONTRACT) MONTHLY ANNUAL - - - - -------------------------------- ------- ------ WA Collocated Svc Fee - Full Rack............ $ 2,000.00 $ 24,000.00 WA Collocated Svc Fee - Full Rack............ $ 2,000.00 $ 24,000.00 WA Collocated Svc Fee - Full Rack............ $ 2,000.00 $ 24,000.00 WA 100Mbps - Committed 10Mbps of bandwidth... $ 8,000.00 $ 96,000.00 ---------- ----------- $14,000.00 $168,000.00 ONE-TIME FEES ONE-TIME - - - - -------------- ---------- WA Collocated Setup Fee...................... $ 3,000.00 ---------- $ 3,000.00
Web Advantage is a high performance, highly reliable, cost-effective Web hosting service, providing the industry's best operations management and monitoring for organizations who see an expanding role for the Web in reaching their strategic business goals. Web Advantage Collocated 2.0 bandwidth fee above coverage usage up to 2.0 Mbit/sec. This bandwidth fee may vary month-to-month, as it is based on the customer's actual usage, and will be billed according to the following fee schedule: Over 10.0 Mbit/sec Additional $750 per 1.0 Mbit/sec An invoice for the first prorated month of service plus the setup fees will be issued at the time of setup. Web Advantage Collocated customers whose service setup date occurs after the first of the month will receive a prorated bill for that first partial month based on the service fee and minimum bandwidth fee noted above, regardless of the actual usage. Normal 95th percentile usage-based monthly billing will commence with the first full month following setup. This service quotation is applicable only for Version 2.0 of Web Advantage Collocated at 100-0 Mbit/sec connectivity. EX-10.15 17 AGREEMENT WITH EXODUS COMMUNICATIONS, INC. 1 EXHIBIT 10.15 EXODUS COMMUNICATIONS, INC. INTERNET DATA CENTER SERVICES AGREEMENT THIS INTERNET DATA CENTER SERVICES AGREEMENT (This "Agreement") is made effective as of the Submission Date (5/15, 1998) indicated in the initial Internet Data Center Services Order Form accepted by Exodus, by and between Exodus Communications, Inc. ("Exodus") and the customer identified below ("Customer"). PARTIES: CUSTOMER NAME: Internet Century, Inc. ADDRESS: 2533 N. Carson St. #3232 Carson City, NV 89706 PHONE: 702-841-1526 FAX: 602-557-8900 EXODUS COMMUNICATIONS, INC. 2650 San Tomas Expressway Santa Clara, CA 95051 Phone: (408) 346-2200 Fax: (408) 346-2206 1. INTERNET DATA CENTER SERVICES. Subject to the terms and conditions of this Agreement, during the term of this Agreement, Exodus will provide to Customer the services described in the Internet Data Center Services Order Form(s) ("IDC Services Order Form(s)") accepted by Exodus, or substantially similar services if such substantially similar services would provide Customer with substantially similar benefits ("Internet Data Center Services"). All IDC Services Order Forms accepted by Exodus are incorporated herein by this reference, each as of the Submission Date indicated in such form. 2. FEES AND BILLING. 2.1 Fees. Customer will pay all fees due according to the IDC Services Order Form(s). 2.2 Billing Commencement. Billing for Internet Data Center Services, other than Setup Fees, indicated in the initial IDC Services Order Form shall commence on the earlier to occur of (i) the "Installation Date" indicated in the initial IDC Services Order Form, regardless of whether Customer has commenced use of the Internet Data Center Services, unless Customer is unable to install the Customer Equipment and/or use the Internet Data Center Services by the Installation Date due to the fault of Exodus, then billing will not begin until the date Exodus has remedied such fault and (ii) the date the "Customer Equipment" (Customer's computer hardware and other tangible equipment, as identified in the Customer Equipment List which is incorporated herein by this reference) is placed by Customer in the "Customer Area" (the portion(s) of the Internet Data Centers, as defined in Section 3.1 below, made available to Customer hereunder for the placement of Customer Equipment) and is operational. All Setup Fees will be billed upon receipt of a Customer signed IDC Services Order Form. In the event that Customer orders additional Internet Data Center Services, billing for such services shall commence on the date Exodus first provides such additional Internet Data Center Services to Customer or as otherwise agreed to by Customer and Exodus. 2.3 Billing and Payment Terms. Customer will be billed monthly in advance of the provision of Internet Data Center Services, and payment of such fees will be due within thirty (30) days of the date of each Exodus invoice. All payments will be made in U.S. dollars. Late payments hereunder will accrue interest at a rate of one and one-half percent (1 1/2%) per month, or the highest rate allowed by applicable law, whichever is lower. If in its judgment Exodus determines that Customer is not creditworthy or is otherwise not financially secure, Exodus may, upon written notice to Customer, modify the payment terms to require full payment before the provision of Internet Data Center Services or other assurances to secure Customer's payment obligations hereunder. 2.4 Taxes. All payments required by this Agreement are exclusive of all national, state, municipal or other governmental excise, sales, value-added, use, personal property, and occupational taxes, excises, withholding taxes and obligations and other levies now in force or enacted in the future, all of which Customer will be responsible for and will pay in full, except for taxes based on Exodus' net income. 3. CUSTOMER'S OBLIGATIONS. 3.1 Compliance with Law and Rules and Regulations. Customer agrees that Customer will comply at all times with all applicable laws and regulations and Exodus' general rules and regulations relating to its provision of Internet Data Center Services, as updated by Exodus from time to time ("Rules and Regulations"). Customer acknowledges that Exodus exercises no control whatsoever over the content of the information passing through its sites containing the Customer Area and equipment and facilities used by Exodus to provide Internet Data Center Services ("Internet Data Centers"), and that it is the sole responsibility of customer to ensure that the information it transmits and receives complies with all applicable laws and regulations. 3.2 Customer's Costs. Customer agrees that it will be solely responsible, and at Exodus's request will reimburse Exodus, for all costs and expenses (other than the those included as part of the Internet Data Center Services and except as otherwise expressly provided herein) it incurs in connection with this agreement. 3.3 Access and Security. Customer will be fully responsible for any charges, costs, expenses (other than those included in the Internet Data Center Services), and third party claims that may result from its use of, or access to, the Internet Data Centers and/or the Customer Area including but not limited to any unauthorized use of any access devices provided by Exodus hereunder. Except with the advanced written consent of Exodus, Customer's access to the Internet Data Centers will be limited solely to the individuals identified and authorized by Customer to have access to the Internet Data Centers and the Customer Area in accordance with this Agreement, as identified in the Customer Registration Form, as amended from time to time, which is hereby incorporated by this reference ("Representatives"). 3.4 No Competitive Services. Customer may not at any time permit any Internet Data Center Services to be utilized for the provision of any services that compete with any Exodus services, without Exodus' prior written consent. 3.5 Insurance. (a) Minimum Levels. Customer will keep in full force and effect during the term of this Agreement: (i) comprehensive general liability insurance in an amount not less than $5 million per occurrence for bodily injury and property damage; (ii) employer's liability insurance in an amount not less than $1 million per occurrence; and (iii) workers' compensation insurance in an amount not less than that required by applicable law. Customer also agrees that it will, and will be solely responsible for ensuring that its agents (including contractors and subcontractors) maintain, other insurance at levels no less than those required by applicable law and customary in Customer's and its agents' industries. (b) Certificates of Insurance. Prior to installation of any Customer Equipment in the Customer Area, Customer will furnish Exodus with certificates of insurance which evidence the minimum levels of insurance set forth above. (c) Naming Exodus as an Additional Insured. Customer agrees that prior to the installation of any Customer Equipment, Customer will cause its insurance provider(s) to name Exodus as an additional insured and notify Exodus in writing of the effective date thereof. 4. CONFIDENTIAL INFORMATION. 4.1 Confidential Information. Each party acknowledges that it will have access to certain confidential information of the other party concerning the other party's business, plans, customers, technology, and products, including the terms and conditions of this Agreement ("Confidential Information"). Confidential Information will include, but not be limited to, each party's proprietary software and customer information. Each party agrees that it will not use in any way, for its own account or the account of any third party, except as expressly permitted by this Agreement, nor disclose to any third party (except as required by law or to that party's attorneys, accountants and other advisors as reasonably necessary), any of the other party's Confidential Information and will take reasonable precautions to protect the confidentiality of such information. 4.2 Exceptions. Information will not be deemed Confidential Information hereunder if such information; (i) is known to the receiving party prior to receipt from the disclosing party directly or indirectly from a source other than one having an obligation of confidentiality to the disclosing party; (ii) becomes known (independently of disclosure by the disclosing party) to the receiving party directly or indirectly from a source other than one having an obligation of confidentiality to the disclosing party; (iii) becomes publicly known or otherwise ceases to be secret or confidential, except through a breach of this Agreement by the receiving party; or (iv) is independently developed by the receiving party. 5. REPRESENTATIONS AND WARRANTIES. 5.1 Warranties by Customer. (a) Customer Equipment. Customer represents and warrants that it owns or has the legal right and authority, and will continue to own or maintain the legal right and authority during the term of this Agreement, to place and use the Customer Equipment as contemplated by this Agreement. Customer further represents and warrants that its placement, arrangement, and use of the Customer Equipment in the Internet Data Centers complies with the Customer Equipment Manufacturer's environmental and other specifications. (b) Customer's Business. Customer represents and warrants that Customer's services, products, materials, data, information and Customer Equipment used by Customer in connection with this Agreement as well as Customer's and its permitted customers' and users' use of the Internet Data Center Services (collectively, "Customer's Business") does not as of the Installation Date, and will not during the term of this Agreement operate in any manner that would violate any applicable law or regulation. (c) Rules and Regulations. Customer has read the Rules and Regulations and represents and warrants that Customer and Customer's Business are currently in full compliance with the Rules and Regulations, and will remain so at all times during the term of this Agreement. (d) Breach of Warranties. In the event of any breach, or reasonably anticipated breach, of any of the foregoing warranties, in addition to any other remedies available at law or in equity, Exodus will have the right immediately, in Exodus' sole discretion, to suspend any related Internet Data Center Services if deemed reasonably necessary by Exodus to prevent any harm to Exodus and its business. EXODUS COMMUNICATIONS, INC. CONFIDENTIAL (rev 11/97) Page 1 2 5.2 Warranties and Disclaimers by Exodus. (a) Service Level Warranty. In the event Customer is unable to transmit and receive information from Exodus' Internet Data Centers to other portions of the Internet and Customer notifies Exodus immediately of such event and Exodus determines in its reasonable judgment that such inability was caused by Exodus' failure to provide Internet Data Center Services for reasons within Exodus' reasonable control and not as a result of any actions or inactions of Customer or any third parties (including failure of third party equipment), Exodus will, upon Customer's request, credit Customer's account as follows: If Exodus failed to provide the Internet Data Center Services for (i) more than two (2) consecutive hours in a calendar month. Exodus will credit Customer's account the connectivity charges for one (1) day of service; and (ii) more than eight (8) consecutive hours in a calendar month, Exodus will credit Customer's account the connectivity charges for one (1) week of service. Customer may receive only one of the foregoing credits in any single calendar month, regardless of the number of such occurrences. Exodus' scheduled maintenance of the Internet Data Centers and Internet Data Center Services, as described in the Rules and Regulations, shall not be deemed to be a failure of Exodus to provide Internet Data Center Services. THIS WARRANTY DOES NOT APPLY TO ANY INTERNET DATA CENTER SERVICES THAT EXPRESSLY EXCLUDE THIS WARRANTY. THIS SECTION 5.2(a) STATES CUSTOMER'S SOLE AND EXCLUSIVE REMEDY (OTHER THAN TERMINATION OF THIS AGREEMENT) FOR ANY FAILURE BY EXODUS TO PROVIDE INTERNET DATA CENTER SERVICES. (b) No Other Warranty. EXCEPT FOR THE EXPRESS WARRANTY SET OUT IN SUBSECTION (a) ABOVE, THE INTERNET DATA CENTER SERVICES ARE PROVIDED ON AN "AS IS" BASIS, AND CUSTOMER'S USE OF THE INTERNET DATA CENTER SERVICES IS AT ITS OWN RISK. EXODUS DOES NOT MAKE, AND HEREBY DISCLAIMS, ANY AND ALL OTHER EXPRESS AND/OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT AND TITLE, AND ANY WARRANTIES ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE. EXODUS DOES NOT WARRANT THAT THE INTERNET DATA CENTER SERVICES WILL BE UNINTERRUPTED, ERROR-FREE, OR COMPLETELY SECURE. (c) Disclaimer of Actions Caused by and/or Under the Control of Third Parties. EXODUS DOES NOT AND CANNOT CONTROL THE FLOW OF DATA TO OR FROM EXODUS' INTERNET DATA CENTERS AND OTHER PORTIONS OF THE INTERNET, SUCH FLOW DEPENDS IN LARGE PART ON THE PERFORMANCE OF INTERNET SERVICES PROVIDED OR CONTROLLED BY THIRD PARTIES. AT TIMES, ACTIONS OR INACTIONS CAUSED BY THESE THIRD PARTIES CAN PRODUCE SITUATIONS IN WHICH EXODUS' CUSTOMERS' CONNECTIONS TO THE INTERNET (OR PORTIONS THEREOF) MAY BE IMPAIRED OR DISRUPTED. ALTHOUGH EXODUS WILL USE COMMERCIALLY REASONABLE EFFORTS TO TAKE ACTIONS IT DEEMS APPROPRIATE TO REMEDY AND AVOID SUCH EVENTS, EXODUS CANNOT GUARANTEE THAT THEY WILL NOT OCCUR. ACCORDINGLY, EXODUS DISCLAIMS ANY AND ALL LIABILITY RESULTING FROM OR RELATED TO SUCH EVENTS. 6. LIMITATIONS OF LIABILITY. 6.1 Personal Injury. EACH REPRESENTATIVE AND ANY OTHER PERSONS VISITING THE INTERNET DATA CENTERS DOES SO AT ITS OWN RISK AND EXODUS ASSUMES NO LIABILITY WHATSOEVER FOR ANY HARM TO SUCH PERSONS RESULTING FROM ANY CAUSE OTHER THAN EXODUS' GROSS NEGLIGENCE OR WILLFUL MISCONDUCT RESULTING IN PERSONAL INJURY TO SUCH PERSONS DURING SUCH A VISIT. 6.2 Damage to Customer Equipment or Business. EXODUS ASSUMES NO LIABILITY FOR ANY DAMAGE TO, OR LOSS RELATING TO, CUSTOMER'S BUSINESS RESULTING FROM ANY CAUSE WHATSOEVER. CERTAIN CUSTOMER EQUIPMENT, INCLUDING BUT NOT LIMITED TO CUSTOMER EQUIPMENT LOCATED ON CYBERRACKS, MAY BE DIRECTLY ACCESSIBLE BY OTHER CUSTOMERS. EXODUS ASSUMES NO LIABILITY FOR ANY DAMAGE TO, OR LOSS OF, ANY CUSTOMER EQUIPMENT RESULTING FROM ANY CAUSE OTHER THAN EXODUS' GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. TO THE EXTENT EXODUS IS LIABLE FOR ANY DAMAGE TO, OR LOSS OF, THE CUSTOMER EQUIPMENT FOR ANY REASON, SUCH LIABILITY WILL BE LIMITED SOLELY TO THE THEN-CURRENT VALUE OF THE CUSTOMER EQUIPMENT. 6.3 Exclusions. EXCEPT AS SPECIFIED IN SECTIONS 6.1 AND 6.2, IN NO EVENT WILL EXODUS BE LIABLE TO CUSTOMER, ANY REPRESENTATIVE, OR ANY THIRD PARTY FOR ANY CLAIMS ARISING OUT OF OR RELATED TO THIS AGREEMENT, CUSTOMER EQUIPMENT, CUSTOMER'S BUSINESS OR OTHERWISE, AND ANY LOST REVENUE, LOST PROFITS, REPLACEMENT GOODS, LOSS OF TECHNOLOGY, RIGHTS OR SERVICES, INCIDENTAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES, LOSS OF DATA, OR INTERRUPTION OR LOSS OF USE OF SERVICE OR OF ANY CUSTOMER EQUIPMENT OR CUSTOMER'S BUSINESS, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE. 6.4 Maximum Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, EXODUS'S MAXIMUM AGGREGATE LIABILITY TO CUSTOMER RELATED TO OR IN CONNECTION WITH THIS AGREEMENT WILL BE LIMITED TO THE TOTAL AMOUNT PAID BY CUSTOMER TO EXODUS HEREUNDER FOR THE PRIOR TWELVE (12) MONTH PERIOD. 6.5 Customer's Insurance. Customer agrees that it will not pursue any claims against Exodus for any liability Exodus may have under or relating to this Agreement until Customer first makes claims against Customer's insurance provider(s) and such insurance provider(s) finally resolve(s) such claims. 6.6 Basis of the Bargain; Failure of Essential Purpose. Customer acknowledges that Exodus has set its prices and entered into this Agreement in reliance upon the limitations of liability and the disclaimers of warranties and damages set forth herein, and that the same is an essential basis of the bargain between the parties. The parties agree that the conditions and exclusions of liability and disclaimers specified in this Agreement will survive and apply even if found to have failed of their essential purpose. 7. INDEMNIFICATION. 7.1 Exodus' Indemnification of Customer. Exodus will indemnify, defend and hold Customer harmless from and against any and all costs, liabilities, losses, and expenses (including, but not limited to, reasonable attorneys' fees) (collectively, "Losses") resulting from any claim, suit, action, or proceeding (each, an "Action") brought against Customer alleging (i) the infringement of any third party registered U.S. copyright or issued U.S. patent resulting from the provision of Internet Data Center Services pursuant to this Agreement (but excluding any infringement contributorily caused by Customer's Business or Customer Equipment) and (ii) personal injury to Customer's Representatives from Exodus's gross negligence or willful misconduct. 7.2 Customer's Indemnification of Exodus. Customer will indemnify, defend and hold Exodus, its affiliates and customers harmless from and against any and all Losses resulting from or arising out of any Action brought by or against Exodus, its affiliates or customers alleging: (a) with respect to the Customer's Business: (i) infringement or misappropriation of any intellectual property rights; (ii) defamation, libel, slander, obscenity, pornography, or violation of the rights of privacy or publicity; or (iii) spamming, or any other offensive, harassing or illegal conduct or violation of the Rules and Regulations; (b) any damage or destruction to the Customer Area, the Internet Data Centers or the equipment of Exodus or any other customer by Customer or Representative(s) or Customer's designees; or (c) any other damage arising from the Customer Equipment or Customer's Business. 7.3 Notice. Each party will provide the other party prompt written notice upon of the existence of any such event of which it becomes aware, and an opportunity to participate in the defense thereof. 8. TERM AND TERMINATION. 8.1 Term. This Agreement will be effective for a period of one (1) year from the Installation Date, unless earlier terminated according to the provisions of this Section 8. The Agreement will automatically renew for additional terms of one (1) year each. 8.2 Termination. (a) For Convenience. (i) By Customer During First Thirty Days. Customer may terminate this Agreement for convenience by providing written notice to Exodus at any time during the thirty (30) day period beginning on the Installation Date. (ii) By Either Party. Either party may terminate this Agreement for convenience at any time effective after the first (1st) anniversary of the Installation Date by providing ninety (90) days' prior written notice to the other party at any time thereafter. (b) For Cause. Either party will have the right to terminate this Agreement if: (i) the other party breaches any material term or condition of this Agreement and fails to cure such breach within thirty (30) days after receipt of written notice of the same, except in the case of failure to pay fees, which must be cured within five (5) days after receipt of written notice from Exodus; (ii) the other party becomes the subject of a voluntary petition in bankruptcy or any voluntary proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors; or (iii) the other party becomes the subject of an involuntary petition in bankruptcy or any involuntary proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors, if such petition or proceeding is not dismissed within sixty (60) days of filing. 8.3 No Liability for Termination. Neither party will be liable to the other for any termination or expiration of this Agreement in accordance with its terms. 8.4 Effect of Termination. Upon the effective date of expiration or termination of this Agreement: (a) Exodus will immediately cease providing the Internet Data Center Services; (b) any and all payment obligations of Customer under this Agreement will become due immediately; (c) within thirty (30) days after such expiration or termination, each party will return all Confidential Information of the other party in its possession at the time of expiration or termination and will not make or retain any copies of such Confidential Information except as required to comply with any applicable legal or accounting record keeping requirement; and (d) Customer will remove from the Internet Data Centers all Customer Equipment and any of its other property within the Internet Data Centers within five (5) days of such expiration or termination and return the Customer Area to Exodus in the same condition as it was on the Installation Date, normal wear and tear excepted. If Customer does not remove such property within such five-day period, Exodus will have the option to (i) move any and all such property to secure storage and charge Customer for the cost of such removal and storage, and/or (ii) liquidate the property in any reasonable manner. 8.5 Customer Equipment as Security. In the event that Customer fails to pay Exodus all amounts owed Exodus under this Agreement when due, Customer Agrees that upon written notice, Exodus may take possession of any Customer Equipment and store it, at Customer's expense, until taken in full or partial satisfaction of any lien or judgment, all without being liable to prosecution or for damages. 8.6 Survival. The following provisions will survive any expiration or termination of the Agreement: Sections 2, 3, 4, 5, 6, 7, 8 and 9. 9. MISCELLANEOUS PROVISIONS. 9.1 Force Majeure. Except for the obligation to pay money, neither party will be liable for any failure or delay in its performance under this Agreement due to any cause beyond its reasonable control, including act of war, acts of God, earthquake, flood, embargo, riot, sabotage, labor shortage or dispute, governmental act or failure of the Internet, provided that the delayed party: (a) gives the other party prompt notice of such cause, and (b) uses its reasonable commercial efforts to correct promptly such failure or delay in performance. 9.2 No Lease. This Agreement is a services agreement and is not intended to and will not constitute a lease of any real or personal property. Customer acknowledges and agrees that (i) it has been granted only a license to occupy the Customer Space and use the Internet EXODUS COMMUNICATIONS, INC. CONFIDENTIAL (REV 11/97) PAGE 2 3 Data Centers and any equipment provided by Exodus in accordance with this Agreement, (ii) Customer has not been granted any real property interest in the Customer Space or Internet Data Centers, and (iii) Customer has no rights as a tenant or otherwise under any real property or landlord/tenant laws, regulations, or ordinances. For good cause, including the exercise of any rights under Section 8.5 above, Exodus may suspend the right of any Representative or other person to visit the Internet Data Centers. 9.3 Marketing. Customer agrees that Exodus may refer to Customer by trade name and trademark, and may briefly describe Customer's Business, in Exodus' marketing materials and web site. Customer hereby grants Exodus a license to use any Customer trade names and trademarks solely in connection with the rights granted to Exodus pursuant to this Section 9.3. 9.4 Government Regulations. Customer will not export, re-export, transfer, or make available, whether directly or indirectly, any regulated item or information to anyone outside the U.S. in connection with this Agreement without First complying with all export control laws and regulations which may be imposed by the U.S. Government and any country or organization of nations within whose jurisdiction Customer operates or does business. 9.5 Non-Solicitation. During the period beginning on the Installation Data and ending on the first anniversary of the termination or expiration of this Agreement in accordance with its terms, Customer agrees that it will not, and will ensure that its affiliates do not, directly or indirectly, solicit or attempt to solicit for employment any persons employed by Exodus during such period. 9.6 Governing Law; Dispute Resolution, Severability; Waiver. This Agreement is made under and will be governed by and construed in accordance with the laws of the State of California (except that body of law controlling conflicts of law) and specifically excluding from application to this Agreement that law known as the United Nations Convention on the International Sale of Goods. Any dispute relating to the terms, interpretation or performance of this Agreement (other than claims for preliminary injunctive relief or other pre-judgment remedies) will be resolved at the request of either party through binding arbitration. Arbitration will be conducted in Santa Clara County, California, under the rules and procedures of the Judicial Arbitration and Mediation Society ("JAMS"). The parties will request that JAMS appoint a single arbitrator possessing knowledge of online services agreements; however the arbitration will proceed even if such a person is unavailable. In the event any provision of this Agreement is held by a tribunal of competent jurisdiction to be contrary to the law, the remaining provisions of this Agreement will remain in full force and effect. The waiver of any breach or default of this Agreement will not constitute a waiver of any subsequent breach or default, and will not act to amend or negate the rights of the waiving party. 9.7 Assignment; Notices. Neither party may assign its rights or delegate its duties under this Agreement either in whole or in part without the prior written consent of the other party, except that this Agreement may be assigned in whole as part of a corporate reorganization, consolidation, merger, or sale of substantially all of its assets. Any attempted assignment or delegation without such consent will be void. This Agreement will bind and inure to the benefit of each party's successors and permitted assigns. Any notice or communication required or permitted to be given hereunder may be delivered by hand, deposited with an overnight courier, sent by confirmed facsimile, or mailed by registered or certified mail, return receipt requested, postage prepaid, in each case to the address of the receiving party indicated on the signature page hereof, or at such other address as may hereafter be furnished in writing by either party hereto to the other. Such notice will be deemed to have been given as of the date it is delivered, mailed or sent, whichever is earlier. 9.8 Relationship of Parties. Exodus and Customer are independent contractors and this Agreement will not establish any relationship of partnership, joint venture, employment, franchise or agency between Exodus and Customer. Neither Exodus nor Customer will have the power to bind the other or incur obligations on the other's behalf without the other's prior written consent, except as otherwise expressly provided herein. 9.9 Entire Agreement; Counterparts. This Agreement, including all documents incorporated herein by reference, constitutes the complete and exclusive agreement between the parties with respect to the subject matter hereof, and supersedes and replaces any and all prior or contemporaneous discussions, negotiations, understandings and agreements, written and oral, regarding such subject matter. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. Customers's and Exodus' authorized representatives have read the foregoing and all documents incorporated therein and agree and accept such terms effective as of the date first above written. CUSTOMER EXODUS COMMUNICATIONS, INC. Signature: /s/ Jennifer L. Ferlaino Signature: /s/ Sue Irvine ------------------- Print Name: Jennifer L. Ferlaino Print Name: Sue Irvine ------------------------- ---------------------- Title: Corp. Operations Officer Title: Contract Mgr. ---------------------------------- --------------------------- EXODUS COMMUNICATIONS, INC. CONFIDENTIAL (rev 11/97) Page 3 4 EXODUS COMMUNICATIONS SERVICE INSTALLATION AND CUSTOMER ACCEPTANCE Customer Name: Internet Century Service Installed: Yes ------------------- --- Sales Order Number: Customer Installed: Yes ------------------- --- Project Manager: Rick Harris Scheduled Install. Date: 05/26/98 ------------------- ------------- Form Completed By: Rick Harris Actual Install. Date: 05/22/98 ------------------- ------------- Date Form Completed: 05/22/98 ------------- Services Installed: Installation of 1/2 Rack, 10 meg ckt, 20 amp ckt and installation of IP information to customer server. Services ordered, but not Installed or Available: None Additional Services Installed: None Customer Acceptance /s/ Jeffrey Peterson Date 5/22/98 Addendum Signed No --------------------- ------------ -- Expo Data Entry Summary: Additional Notes: Basic Customer Information: Completed Installation of the following: Project Manager, Salesperson: Completed Basic Circuit Info: Completed - 1/2 rack. IP Info: Completed - 10 meg ckt. Basic Facilities Info: Completed - 20 amp ckt for power. Contact Info: Completed - Installation of IP Server Inventory: Completed information on server. Monitoring Systems: HP Open View: Not Completed WebWatcher: Not Completed Bandwidth Reports: Not Completed 29June97 EX-10.16 18 AGREEMENT WITH TELEMUNDO NETWORK GROUP, INC. 1 EXHIBIT 10.16 [TELEMUNDO LETTERHEAD] January 21, 1999 Mr. Richard Whelan quepasa.com Dear Richard: The following confirms the agreement between quepasa.com and the Telemundo Network: MEDIA: Total Investment: $738,800 (net) TH A18-49 IMPs: 53,118 CPM: $13.91 SPONSORSHIPS: Product Integration: Cinemundo Premier: Production of one: 20 product integration pitch to air lx per week for 26 weeks o Production materials due: Thursday, February 4, 1999 (:20 copy points) o Taping: Thursday, February 11, 1999 (on air Sunday, March 7, 1999) MONEY WIRE INFORMATION Dollar commitment to be wire transferred to: First Union BK Acct# 2090002375767 4695 Aviation Parkway Atlanta, GA 30349 ABA# 067006432 CANCELLATION OPTION: Schedule is non-cancelable This is a very exciting time at Telemundo and we are committed to delivering the Hispanic market audience to quepasa.com. We thank you for your business and we look forward to strengthening our partnership in the years ahead. Confirmed and approved by: /s/ MAUREEN ALLEGRO /s/ JEFFREY PETERSON /s/ MICHAEL HUBERT - - - - ------------------------ ---------------------- ----------------------- Maureen Allegro Jeffrey Peterson Michael Hubert Telemundo Network Group quepasa.com quepasa.com PC: Alan Sokol Steve Levin Sylvia Reed 2 TELEMUNDO NETWORK/QUEPASA.COM 1999 MEDIA AGREEMENT
EST EST TOTAL TOTAL A18-49 A18-49 A18-49 A18-49 A18-49 TOTAL DAY TIME PROGRAM FRQ RTG 000'S GRPS 000'S CPM COST - - - - --- ---- ------- --- --- ----- ---- ----- --- ---- SUN 8-10P Cinemundo Premier 52 2.9 374 150.8 19,448 - - - - ----------------------------------------------------------------------------------------------- SUN 8-10p :20 Product Pitch 26 2.9 374 75.4 9,724 - - - - ----------------------------------------------------------------------------------------------- M-F 5-6P Ocurrio Asi 52 2.2 320 114.4 16,640 - - - - ----------------------------------------------------------------------------------------------- MON 7-8P Discovery 26 2.0 281 52.0 7,306 - - - - ----------------------------------------------------------------------------------------------- - - - - ----------------------------------------------------- ---------------------------------------------- 26 WEEK TOTALS 156 392.6 53,118 $13.91 $738,800 (NET) - - - - ----------------------------------------------------- ----------------------------------------------
26 CONSECUTIVE WEEKS: --------------------- Source: NHTI, Q1-Q4'99AVG EST, TA18-49 3/1/99-8/29/99 REVISED: 1/25/99 EX-10.17 19 AGREMEENT WITH 24/7 MEDIA, INC. 1 EXHIBIT 10.17 24/7 MEDIA INC. NETWORK AFFILIATION AGREEMENT WHEREAS, the undersigned (hereinafter the "Network Affiliate") is the operator and owner of the Internet website(s) (the "Web Site") specified on the signature pages hereto; WHEREAS, 24/7 Media, Inc. ("24/7"), a Delaware corporation with an address at 1250 Broadway, 27th floor, New York, NY 10001, operates a network of internet web sites (the "24/7 Network") for which it solicits advertisers, advertising agencies, buying services or others ("Advertisers") regarding the placement of advertising banners and similar devices and sponsorships ("Advertising") for display on pages, screens, and other segments or spaces on web sites reasonably suitable for the display of advertising and to which the Tags (as defined in Section 2(A) below) can be affixed as provided herein (the "Pages"); WHEREAS, Network Affiliate wishes to subscribe to include the Web Site in the 24/7 Network, and 24/7 wishes to accept such subscription; NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows: 1. AFFILIATION. The Network Affiliate hereby subscribes as a member of 24/7 Network and hereby grants to 24/7 the exclusive right to sell all Advertising on the Web Site. 2. OBLIGATIONS OF 24/7. In furtherance of the foregoing, 24/7 covenants and agrees to: A. provide the Network Affiliate, during the term of this Agreement (the "Term") and only for use in the performance of this Agreement, with unique tags in HTML/Java or other appropriate languages (the "Tags") (in which the Network Affiliate will not have or acquire any proprietary or property rights or interests, including any intellectual property rights), which shall be affixed appropriately by Network Affiliate to the Web Site's Pages to enable 24/7 to serve Advertising to those Pages; B. utilize its best efforts to sell to Advertisers Advertising on the Web Site's Pages, including sales of the Web Site as a single site, through multi-site packages and through the 24/7 Network package, at such prices as 24/7 shall deem appropriate; 2 C. serve or cause to be served Advertising to the Web Site's Pages; D. provide the Network Affiliate with notice, via on-line posting, of new Advertising that has been solicited by 24/7 to be displayed on the Web Site's Pages, and to use its best efforts to honor any decision by Network Affiliate to decline any Advertising, in accordance with the provisions in 3(D) below; E. provide the Network Affiliate with real-time access to records that will allow it to monitor the volume of paid Advertising delivered to the Web Site's Pages and the revenue produced (subject to billing corrections and adjustments) thereby; all such records, including data, statistical information or other traffic analysis, produced or provided by 24/7 shall be the joint property of 24/7 and Network Affiliate; and F. 24/7 agrees to deliver to the Network Affiliate, (i) a monthly statement showing revenues earned by Network Affiliate during the calendar month and any sum(s) due the Network Affiliate on account thereof, and (ii) within 30 days of collection, payment representing the Network Affiliate's portion of such revenues; G. maintain suitable and qualified personnel in administrative, sales and technical positions necessary for 24/7 to perform effectively the terms of this Agreement. 3. OBLIGATIONS OF NETWORK AFFILIATE. The Network Affiliate covenants and agrees: A. that during the Term, it shall use its best efforts to continue and maintain the Web Site and the Web Site's Pages in a manner consistent with the intent and purpose of the Web Site; B. to insert the Tags on each of the Web Site's Pages and only on such Pages in such a manner as to assure that the Advertising to be affixed to said Tag is fully and clearly visible on the first Web Site Page viewed when that Page is viewed at a 640 x 480 pixel resolution; C. to insert a button with the 24/7 logo on the Web Site's Home Page directing potential advertisers to the 24/7 web site. D. to notify 24/7 within one business day from the time of notice of any new Advertising is given of the Network Affiliate's rejection of any new Advertising. Failure to provide timely notice of rejection of the new Advertising shall be deemed acceptance thereof, until such time as Network Affiliate notifies 24/7 of Network Affiliate's rejection thereof at which time 24/7 will use its best efforts to remove the Advertising; 2 3 E. to furnish 24/7 with all subscribership, viewership, inventory, and usage reports, reviews and audience studies, deliveries, census requirements, and any other information regarding the Web Site and the Web Site's Pages as is reasonably available to the Network Affiliate and appropriate for use by 24/7 for the sale of Advertising; and F. not to engage, contract with, license or permit any person, firm or entity (including the Network Affiliate and its employees) other than 24/7 and its employees to sell, or represent the Network Affiliate for the sale of, Advertising on the Web Site; 4. PAYMENTS. A. Advertisers shall be directed to pay all cash and other consideration (the "Payment") generated from the sale of Advertising by 24/7 during the term of this Agreement. 24/7 shall retain a percentage of such Payment (reduced by those advertising agency commissions actually retained by agencies or paid by 24/7 to agencies with respect to the sale of Advertising on the Web Site in accordance with the following chart, and shall pay to the Network Affiliate the remainder of the Payment received by 24/7 for the sale of Advertising on the Web:
- - - - -------------------------------------------------------------------------------- Number of Impressions Percentage Retained by 24/7 Delivered in Preceding Month for Current Month - - - - -------------------------------------------------------------------------------- 999,999 to 2,000,000 50% - - - - -------------------------------------------------------------------------------- 2,000,000 to 2,999,999 45% - - - - -------------------------------------------------------------------------------- 3,000,000 to 4,999,999 40% - - - - -------------------------------------------------------------------------------- 5,000,000 to 14,999,999 35% - - - - -------------------------------------------------------------------------------- 15,000,000+ 30% - - - - --------------------------------------------------------------------------------
Subject to verification of monthly Ad Impressions, the initial commission rate to 24/7 Media is 50%. B. The Network Affiliate may elect to have 24/7 serve promotional or barter advertisements not sold by 24/7, for which Network Affiliate will pay 24/7 a serving fee of $2.50 cost per thousand ("CPM"); such promotional and barter advertisements shall not exceed thirty percent (30%) of the Pages. C. In the event any Advertiser remits any payment for Advertising sold by 24/7 Media directly to the Network Affiliate rather than to 24/7 Media, the Network Affiliate agrees to make prompt payment to 24/7 of any and all such payments. D. Network Affiliate will be obligated to compensate 24/7 Media on any business contracted by 24/7 Media prior to termination date. 3 4 5. INTELLECTUAL PROPERTY. All hardware, software, programs, codes, trade names, technology, intellectual property, licenses, patents, trademarks, copyrights, trade secrets, know-how, and processes (collectively, the "24/7 Technology") used by 24/7 under this Agreement shall remain the sole property of 24/7. Network Affiliate shall have no rights, title or interest in the 24/7 Technology. Upon the expiration or termination of this Agreement, each party shall promptly return all information, documents, manuals and other materials belonging to the other party except as otherwise provided in this Agreement. 6. CONFIDENTIALITY. 24/7 and Network Affiliate covenant to each other that neither party shall disclose to any third party (other than its employees and directors, in their capacity as such, and the employees and directors of any affiliate on a need to know basis so long as they are bound by the terms of this Agreement) any information regarding the terms and provisions of this Agreement or any non-public confidential information which has been identified as such by the other Party hereto except (i) to the extent necessary to comply with any law or valid order of a court of competent jurisdiction (or any regulatory or administrative tribunal), in which event the party so complying shall so notify the others as promptly as practicable (and, if possible, prior to making any disclosure) and shall seek confidential treatment of such information, if available; (ii) as part of its normal reporting or review procedure to its auditors or its attorneys, as the case may be, so long as they are notified of the provisions of this Agreement; (iii) in order to enforce its rights pursuant to this Agreement; (iv) in connection with any filing with any governmental body or as otherwise required by law, including the federal securities laws and any applicable rules and regulations of any stock exchange or quotation system; and (v) in a confidential disclosure made in connection with a contemplated financing, merger, consolidation or sale of capital stock of 24/7 or the Network Affiliate. Information which is or should be reasonably understood to be confidential or proprietary includes, but is not limited to, information about the 24/7 Network, sales, cost and other unpublished financial information, product and business plans, projections, marketing data, and sponsors but shall not include information (a) already lawfully known to or independently developed by a party, (b) disclosed in published materials, (c) generally known to the public, (d) lawfully obtained from any third party or (e) required to be disclosed by law. 7. TERM. The term of this Agreement (the "Term") shall commence on the Effective Date and shall continue in effect until either party terminates it. Termination will be effective four (4) months after the date on which written notice is given, as determined under the provisions of Section 13 below, to the other party. 8. CONTENT OF WEB SITE. Network Affiliate covenants and agrees not to include or provide via the Web Site or the Web Site's Pages any material that is or may be considered: (i) libelous, pornographic, obscene, or defamatory under any federal or state law; (ii) an infringement of any third party's intellectual property rights (including copyright, patent, trademark, trade secret or other proprietary rights); or (iii) an infringement on any third party's rights of publicity or privacy. Network Affiliate further covenants and agrees, with 4 5 respect to the operation of its Web Site and its Pages, to comply with all laws, statutes, ordinances, and regulations. 9. INDEMNIFICATION. Network Affiliate shall indemnify and hold harmless 24/7, its advertisers and other suppliers and any related third parties, against and in respect of any and all claims, suits, actions, proceedings (formal and informal), investigations, judgments, deficiencies, damages, settlements, liabilities, and legal and other expenses (including reasonable legal fees and expenses of attorneys chosen by 24/7) as and when incurred, arising out of or based upon any act or omission or alleged act or alleged omission by Network Affiliate in connection with the acceptance of, or the performance or non-performance by Network Affiliate of, any of its duties under this Agreement or arising from the breach by Network Affiliate of its warranties, representations or covenants contained in this Agreement. 24/7 shall indemnify and hold harmless the Network Affiliate, against and in respect of any and all claims, suits, actions, proceedings (formal and informal), investigations, judgments, deficiencies, damages, settlements, liabilities, and legal and other expenses (including reasonable legal fees and expenses of attorneys chosen by Network Affiliate) as and when incurred, arising out of or based upon any act or omission or alleged act or alleged omission by 24/7 in connection with the acceptance of, or the performance or non-performance by 24/7 of, any of its duties under this Agreement or arising from the breach by 24/7 of its warranties, representations or covenants contained in this Agreement. 10. NO POACHING. Network Affiliate agrees that, for a period of one year from the end of the Term, neither it nor its affiliates will solicit or recruit the services of any 24/7 employees, or hire any such employees. 11. NO WAIVER. This Agreement shall not be waived, modified, assigned or transferred except by a written consent to that effect signed by Network Affiliate and 24/7. Network Affiliate agrees that if it assigns or transfers this Agreement, it shall cause such successor, assignee, or transferee to assume all of the Network Affiliate's obligations hereunder. Any assignment, transfer, or assumption shall not relieve the Network Affiliate of liability hereunder. 12. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and performed therein, without regard to principles of conflicts of laws. 13. NOTICES. All notices required or permitted to be given hereunder shall be in writing and either hand-delivered, telecopied, mailed by certified first class mail, postage prepaid, or sent via electronic mail to the other party or parties hereto at the address(es) set forth below. A notice shall be deemed given when delivered personally, when the telecopied notice is transmitted by the sender, three business days after mailing by certified first class mail, or on the delivery date if delivered by electronic mail. 5 6 14. ENTIRE AGREEMENT. This Agreement, including the Additional Terms attached hereto, constitutes the entire agreement and supersedes all prior agreements of the Parties with respect to the transactions set forth herein and, except as otherwise expressly provided herein, is not intended to confer upon any other person any rights or remedies hereunder. 15. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. 6 7 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement this_______________day of_____________________, 1998 (the "Effective Date"). 24/7 MEDIA, INC. By: /s/ Mark A. Burchill ---------------------------- Name: Mark A. Burchill Title: SVP, Business Development E-mail address: MBurchill@247Media.com ---------------------------- NETWORK AFFILIATE: Name of Web Site: quepasa.com ---------------------------- Web Site URL: www.quepasa.com ---------------------------- Corporate Name: quepasa.com, Inc. ---------------------------- Address: ONE ARIZONA CENTER ---------------------------- Address: 400 E. VAN BUREN, 4TH FLOOR ---------------------------- By: /s/ MICHAEL HUBERT ---------------------------- Name: Michael Hubert Title: COO E-mail address: 7 EX-10.18 20 EMPLOYMENT AGREEMENT WITH MR. HUBERT 1 EXHIBT 10.18 EMPLOYMENT AGREEMENT EFFECTIVE DATE: November 9, 1998 EMPLOYER: INTERNET CENTURY, INC., A NEVADA CORPORATION One Arizona Center 400 East Van Buren, Suite 545 Phoenix, AZ 85004 EMPLOYEE: MICHAEL A. HUBERT One Arizona Center 400 East Van Buren 4th Floor Phoenix, AZ 85004 PURPOSE: Employer is in the business of Internet website design and hosting, Internet-based software applications development, and Internet services. Employer desires to employ Employee and Employee desires to accept such employment, on the terms, covenants and conditions set forth in this Employment Agreement (this "Agreement"). AGREEMENTS: For the reasons set forth above, and in consideration of the mutual promises and agreements set forth in this Agreement, Employer and Employee agree as follows: 1. Employment: Duties. 1.1 Subject to and in accordance with this Agreement, Employer employs Employee as Senior Vice President of Marketing and Employee accepts employment with Employer subject to the general supervision and pursuant to the orders, advice and direction of Employer. In such capacity, employee's specific duties shall include marketing and strategic development and such other duties as the Employer may reasonably direct. 1.2 Employee agrees to perform all of the duties that may be required of and from Employee pursuant to the express and implicit terms of this Agreement faithfully, industriously and to the best of Employee's ability and experience at all times. Employee shall perform all duties required hereunder in a satisfactory manner and employment hereunder shall continue only so long as the performance of such duties is and remains satisfactory. Employer shall be the sole judge of whether Employee's duties are performed satisfactorily. Employee shall obey all rules and regulations of Employer. Such duties shall be rendered in Phoenix, Arizona, and at such other places as Employer and Employee shall mutually agree upon. Employee shall be required to dedicate Employee's full time and attention to Employee's duties hereunder. 1.3 Employee represents and warrants that there are no agreements or arrangements, written or oral, in effect that would prevent Employee from rendering services to Employer during the term of this Agreement. 1.4 Nothing herein contained shall be construed to create a partnership or joint venture between Employer and Employee. Neither party hereto shall be liable for the debts or obligations of the other unless expressly assumed in writing and signed by the parties hereto. 1 2 2. Term. This Agreement shall become effective on the date first written above and, unless terminated sooner pursuant to Section 5, continue through December 1, 2000 ("initial term"). Employee shall have the right but not the obligation to extend the initial term for an additional period of 2 years (an "extension"), subject to the termination provisions of Section 5 below and the other terms and provisions of this Agreement, by giving written notice of extension to Employer on or before December 1, 2000. 3. Compensation and Other Benefits. 3.1 Compensation. For services rendered to Employer hereunder, in whatever capacity rendered, Employee shall have and receive, subject to withholding and other applicable taxes, a base salary of Ninety Thousand dollars ($90,000.00), per year, payable in accordance with the then current payroll policies of the Employer. This base salary excludes performance bonuses and stock options. 3.2 Business Expenses. Upon submission of proper documentation, Employer shall pay or reimburse Employee for all reasonable and necessary office, telephone, travel and other expenses which are incurred by Employee in the pursuit of Employee's duties on behalf of Employer. 3.3 Employee Benefits. Employee shall be entitled to participate in any other bonus, stock option, incentive compensation, deferred compensation, group medical and dental insurance plans or other plans or programs and to receive any other benefits for which Employee is eligible and which Employer may provide its employees generally. 3.4 Loan. Employer will loan Employee Thirty-five Thousand dollars ($35,000) to be disbursed thirty (30) days from the Effective Date. The Employer agrees that if Employee has been employed by the Employer for six months from the Effective Date, 100% of the principal balance and accrued but unpaid interest shall be forgiven by the Company and the Note evidencing such loan shall be canceled. 3.5 Vacation. At such reasonable times as Employer shall in its sole discretion permit, Employee shall be entitled, without loss of pay, to absence himself voluntarily from the performance of this employment under this agreement. Employee shall be entitled to such period of absence of not more than four weeks per calendar year, during the agreement term. 3.6 Bonus. Employee shall be entitled to participate in any other bonus, stock option, incentive compensation, deferred compensation, group medical and dental insurance plans or other plans or programs and to receive any other benefits for which he is eligible and which Employer may provide its employees generally or its officers specifically. 3.7 Temporary Housing. Employer shall pay the temporary housing expenses or hotel expenses incurred by Employee in Phoenix, Arizona. In addition, Employer shall pay the Employee's travel expenses commuting from Chicago, Illinois to Phoenix, Arizona. 3.8 Severance Pay. In the event this Agreement is terminated by the Employer at any time on or before December 1, 2000, for any reason other than pursuant to Section 5.2(a) or (b) of this Agreement or the voluntary resignation, death, disability or incompetence of Employee, then Employer shall pay to Employee severance pay representing the balance of the amounts owed pursuant to this agreement. 4. Facilities. Employer shall provide and maintain (or cause to be provided and maintained) such facilities, equipment, offices, secretarial help, and other services and supplies as are necessary for Employee's performance of Employee's duties under this Agreement, as established from time to time by Employer. 2 3 5. Termination. 5.1 With Notice. This Agreement and Employee's employment hereunder may be terminated by either party at any time upon 30 days prior written notice. 5.2 With Cause. Employer may terminate Employee's employment hereunder immediately and without notice, for any of the following reasons: (a) upon Employee's breach of any provision of this Agreement, (b) upon Employer determining that there is good cause. For purposes of this Agreement, the term "good cause" shall include, but not be limited to, the following: dishonesty, conduct reflecting moral turpitude, conduct disloyal to Employer, arrest or indictment for any crime, dependence on any addictive substance, conduct on the part of Employee which is intended to result directly or indirectly in substantial gain or personal enrichment to Employee or any person or entity affiliated with Employee, at the expense of Employer. 5.3 Additional Provisions. Further, this Agreement and Employee's employment hereunder shall automatically terminate upon the death, disability (meaning Employee is found to be unable to fully perform substantially all material aspects of Employee's duties as an employee of employer on a regular and consistent basis for a consecutive period of 180 calendar days or for shorter periods aggregating 180 calendar days during any 12 month period) or insanity of Employee or the bankruptcy of employer or the discontinuance of Employer's Business. 5.4 Affect of Termination. Notwithstanding the termination of this Agreement or of Employee's employment hereunder, the parties hereto shall be required to carry out any provision hereof which contemplate performance by them subsequent to such termination, nor shall such termination affect any liability or obligation which has accrued prior to such termination, including but not limited to, accrued but unpaid compensation and any liability for loss or damage on account of default. 5.5 Cooperation. During the 30 day period after notice of termination of employment pursuant to paragraph 5.1, Employee shall fully cooperate with Employer in all matters relating to the winding up of Employee's pending work on behalf of Employer and the orderly transfer of any such pending work to other employees of Employer as may be designated by Employer. Employer shall pay Employee for any services rendered after the 30 day period at a mutually agreeable rate. 5.6 Obligations. Upon termination of this Agreement, or whenever requested by Employer, Employee shall immediately turn over to Employer all of Employer's property, including all items used by Employee in rendering services hereunder, that may be in Employee's possession or under Employee's control. 6. Covenant Not to Compete: Disclosure of Information. 6.1 Solicitation. 6.1.1 For a period of twelve (12) months after the date of termination of this Agreement, Employee shall not, whether alone or as a partner, officer, director, employee or shareholder (or other holder of an equity interest) of, or consultant, advisor or lender to, any other corporation, partnership or other entity, or as a trustee, fiduciary or other representative, solicit Employer's customers with respect to, engage in or have any interest, including as a creditor, in any person, partnership, corporation, association, or other business entity, whether as employee, officer, director, agent, consultant, stockholder or holder of any right to any form of equity ownership, or otherwise, that engages in the Business. 6.1.2 Employee shall not, during or for a period of twelve (12) months after the date of termination of this Agreement, solicit any employee, sales representative or independent contractor of Employer for employment by any person, firm, partnership, corporation, association or other entity for any reason or purpose allied or related to the Business whatsoever. 3 4 6.2 Non-Disclosure. 6.2.1 Employee hereby recognizes and acknowledges that: (i) Employee will be making use of, acquiring, and/or adding to proprietary information of a special and unique nature and value relating to and including, but not limited to, such matters as Employer's trade secrets, systems, procedures, manuals, confidential reports, lists of suppliers, research and development projects, policies, processes, formulas, techniques, know-how and facts relating to sales, advertising, mailing, promotions, financial matters, customers, customer lists, purchases or requirements or other methods used and preferred by Employer in its operations, (ii) the Company will disclose certain proprietary information to Employee including, but not limited to, the details of any statistical or financial data, the operations and structure of the business of Employer, and manuals, forms, techniques, methods or procedures of Employer used by or made available to Employee in the course of Employee's employment (the information referenced in paragraphs 6.2.1 (i) and (ii) above are hereinafter collectively referred to as the "Proprietary Information", except for such information which at the time of disclosure is generally available to the public or thereafter becomes available to the public by publication or otherwise through no act of Employee). 6.2.2 Employee hereby recognizes and acknowledges that the Proprietary Information is a valuable, special and unique asset of Employer's business. 6.2.3 Employee will not at any time, directly or indirectly make use of, divulge or disclose any of the Proprietary Information or any part thereof for any purpose whatsoever to any person, firm, corporation, association or other entity for any reason or purpose whatsoever that has been obtained by, or disclosed to, Employee as a result of Employee's relationship with Employer. Immediately upon request by Employer, Employee shall return to Employer any and all materials relating to Proprietary Information. 6.3 Acknowledgment. 6.3.1 Employee acknowledges that the covenants contained in this Section 6 are a material inducement for Employer to enter into this Agreement and to perform its obligations hereunder and that the services Employee is to render to Employer hereunder are of a special and unusual character with a unique value to Employer. Employee acknowledges that it would take at least twelve (12) months for Employer to retain and train personnel to replace Employee. Accordingly, Employee acknowledges that the restrictions contained in this Section 6 are reasonably necessary for the protection of Employer's business and that a breach of any such restriction could not adequately be compensated by damages in an action at law. 6.3.2 In the event of a breach or threatened breach by Employee of any provision contained in this Section 6, Employer shall be entitled to obtain, by posting an appropriate bond, an injunction (preliminary or permanent, or a temporary restraining order) restraining Employee from the activity or threatened activity constituting or that would constitute a breach. 6.3.3 In the event of a breach by Employee of any provision contained under this Section 6, Employer shall be entitled to an accounting and repayment of all profits, compensation, commissions, remuneration or other benefits that Employee, directly or indirectly, has realized and/or may realize as a result of, arising out of or in connection with any such breach. 6.3.4 The remedies provided in this Section 6 shall be in addition to, and not in lieu of, any and all other remedies of Employer at law or in equity. 4 5 7. Miscellaneous. 7.1 Notice. Notices required or permitted to be given hereunder shall be sufficient if in writing and delivered or deposited in the mail, postage prepaid, certified mail, return receipt requested (or the equivalent in a foreign country), addressed, if to Employer, at its principal place of business and, if to Employee, at the home address set forth in Employer's employee records or to such other address as may be designated in writing hereafter by either party hereto. All notices hereunder shall be effective: (a) five (5) days after deposit in the mail; or (b) upon delivery, if delivered in person or by commercial express service. 7.2 Burden. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of any successor of Employer and any such successor of Employer and any such successor shall be deemed substituted for Employer under the terms of this Agreement. As used in this Agreement, the term "successor" shall mean any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the assets or business of Employer. 7.3 Entire Agreement. This Agreement contains the entire agreement and understanding by and between Employer and Employee with respect to the employment of Employee and no representations, promises, agreements or understandings, written or oral, not contained herein shall be of any force or effect. No change or modification of this Agreement shall be valid or binding unless it is in writing and signed by the parties intended to be bound. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the parties against whom the waiver is sought to be enforced. No valid waiver of any provision of this Agreement at any time shall be deemed a waiver of any other provision of this Agreement at such time or any other time. All prior agreements, if any, are null and void. 7.4 Arbitration. In the event any dispute or controversy arising out of this Agreement cannot be settled by Employer and Employee, such controversy or dispute, at the election of either Employer or Employee, by written notice to the other may be submitted to arbitration in Phoenix, Arizona, and for this purpose Employer and Employee each hereby expressly consent to such arbitration and such place. In the event Employer and Employee cannot, within 15 days following the election to submit the dispute or controversy to arbitration, mutually agree upon an arbitrator to settle their dispute or controversy, then Employer and Employee shall each select one arbitrator and the two arbitrators shall select a third arbitrator. The decision of the majority of said arbitrators shall be binding upon Employer and Employee for all purposes, and judgment to enforce any such binding decision may be entered in the Superior Court, Maricopa County, Arizona (and for this purpose Employer and Employee hereby irrevocably consent to the jurisdiction of said court). If either Employer or Employee fails to select an arbitrator within fifteen (15) days after written demand from the other party to do so, then the chief Judge in the United State District Court of the District of Arizona shall select such other arbitrator. At the election of either Employer or Employee, all arbitrators shall be selected pursuant to the then existing rules and regulations of the Employee, all arbitrators shall be selected pursuant to the then existing rules and regulations of the American Arbitration Association governing commercial transactions. At the request of either Employer or Employee, arbitration proceedings shall be conducted in the utmost secrecy. The parties agree that the manner, method and scope of discovery conducted for purposes of the arbitration will be defined and governed by Rules 26-37 of the Arizona Rules of Civil Procedure then in effect. In such case, all documents, testimony and records shall be available for inspection only for purposes of the arbitration and only by either party and their respective attorneys and experts who shall agree, in advance and in writing, to receive all such information in secrecy. In all other respects, the arbitrators shall conduct all proceedings pursuant to the Uniform Arbitration Act as adopted by the State of Arizona and the then existing rules and regulations of the American Arbitration Association governing commercial transactions. The costs of the arbitration and the arbitrators shall be borne by the non-prevailing party, as determined by the arbitrators, and each party shall bear their own attorneys' fees. 7.5 Prohibition Against Assignment. This Agreement is personal to Employee and employee shall not assign or delegate any Employee's rights or obligations hereunder without first obtaining the written consent of Employer. 5 6 7.6 Governing Law. This Agreement shall be governed in all respects whether as to validity, construction, capacity, performance or otherwise by the laws of the State of Arizona. The section headings used in this Agreement are included solely for convenience and shall not affect or be used in connection with the interpretation of this Agreement. 7.7 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any one or more of the provisions of this Agreement shall not affect the validity and enforceability of the other provisions. IN WITNESS WHEREOF, the parties have executed this document to be effective the date first above written. EMPLOYER: INTERNET CENTURY, INC., a Nevada corporation By: /s/ JEFFREY PETERSON ----------------------------------------- Name: Jeffrey Peterson --------------------------------------- Title: Chief Executive Officer -------------------------------------- EMPLOYEE: /s/ MICHAEL A. HUBERT -------------------------------------------- Michael A. Hubert 6 7 AMENDMENT OF EMPLOYMENT AGREEMENT This Amendment of Employment Agreement is entered into as of the 21st day of January, 1999, by and between QUEPASA.COM, INC., formally known as Internet Century, Inc., a Nevada corporation (the "Employer"), and MICHAEL A. HUBERT (the "Employee"). Explanatory Statements A. Employer and Employee entered into an Employment Agreement dated as of November 9, 1998 (the "Employment Agreement") whereby the Employer employed the Employee. B. The Employer and Employee desire to amend and modify certain terms and conditions of the Employment Agreement. NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Employment Agreement is hereby amended and modified as follows: 1. Section numbered 1, "Employment: Duties " is hereby amended to read as follows: "Employee will serve the Company as its Chief Operating Officer and will faithfully and diligently perform the services and functions relating to such office and position or otherwise reasonably incident to such office and position, provided that all such services and functions will be reasonable and within Employee's areas of expertise. Employee's specific duties shall include the coordination of the Company's daily operations and strategic planning and such other duties as the Company may reasonably direct." 2. Section numbered 3.1 "Compensation" is hereby amended by the addition of the following at the end of Section numbered 3.1: "It is acknowledged that the Employee is in the process of completing an initial public offering of its securities (the "IPO"). It is agreed that upon the closing of the IPO, Employee's base salary hereunder shall increase to One Hundred Twenty Thousand dollars ($120,000) per year." 3. Section numbered 3.8, "Severance Pay" is hereby amended to read as follows: "In the event this Agreement is terminated by the Employer at any time on or before December 1, 2000, for any reason other than pursuant to Section 5.2(a) or (b) of this Agreement or the voluntary resignation, death, disability or incompetence of Employee, then Employer shall pay to Employee severance pay representing the balance of the amounts owed pursuant to this Agreement plus a payment of $100,000. 4. Section numbered 3, "Compensation and Other Benefits" is hereby amended by the addition of a new subsection 3.9 to read as follows: 8 "3.9 Lease of Automobile. During the term of this Agreement, Employer shall lease or make available a new or late model mid-size automobile for the use of Employee and shall pay all monthly lease payments, not to exceed $500 per month, together with insurance and maintenance costs relating to such automobile." 5. The address of the Employer, quepasa.com, inc., formally known as Internet Century, Inc., is hereby changed to: quepasa.com, inc. 400 E. Van Buren, Suite 400 Phoenix, AZ 85004" 6. Any and all other terms and conditions of the Employment Agreement not amended or modified herein shall remain the same and in full force and effect. Employer: QUEPASA.COM, INC. By: /s/ Jeffrey Peterson ------------------------------------------ Jeffrey Peterson, Chief Executive Officer Employee: /s/ Michael A. Hubert ------------------------------------------ Michael A. Hubert 2 EX-10.19 21 BANK OF AMERICA (NEVADA) OFFICE LEASE 1 EXHIBIT 10.19 STANDARD OFFICE LEASE - GROSS BANK OF AMERICA CENTER INTERNET CENTURY, INC. 2 STANDARD OFFICE LEASE - GROSS BANK OF AMERICA CENTER INTERNET CENTURY, INC. TABLE OF CONTENTS
Page ---- 1. Basic Lease Provisions ................................................ 1 2. Premises, Parking and Common Areas .................................... 2 3. Term .................................................................. 3 4. Rent .................................................................. 4 5. Security Deposit ...................................................... 6 6. Use ................................................................... 6 7. Maintenance, Repairs, Alterations and Common Area Services ............ 7 8. Insurance; Indemnity .................................................. 9 9. Damage or Destruction ................................................. 11 10. Real Property Taxes ................................................... 13 11. Utilities ............................................................. 14 12. Assignment and Subletting ............................................. 14 13. Default; Remedies ..................................................... 17 14. Condemnation .......................................................... 18 15. Broker's Fee .......................................................... 19 16. Estoppel Certificate; Financial Statements ............................ 19 17. Landlord's Liability .................................................. 20 18. Severability .......................................................... 20 19. Interest on Past-due Obligations ...................................... 20 20. Time of Essence ....................................................... 20 21. Additional Rent ....................................................... 20
3 22. Incorporation of Prior Agreements; Amendments .......................... 20 23. Notices ................................................................ 20 24. Waivers ................................................................ 21 25. Recording .............................................................. 21 26. Holding Over ........................................................... 21 27. Cumulative Remedies .................................................... 21 28. Covenants and Conditions ............................................... 21 29. Binding Effect; Choice of Law .......................................... 21 30. Subordination .......................................................... 21 31. Attorneys' Fees ........................................................ 22 32. Landlord's Access ...................................................... 22 33. Auctions ............................................................... 22 34. Signs .................................................................. 22 35. Merger ................................................................. 22 36. Consents ............................................................... 22 37. Guarantor .............................................................. 23 38. Quiet Possession ....................................................... 23 39. Omitted ................................................................ 23 40. Security Measures-Landlord's Reservations .............................. 24 41. Easements .............................................................. 24 42. Performance Under Protest .............................................. 24 43. Authority .............................................................. 25 44. Conflict ............................................................... 25 45. No Offer ............................................................... 25 46. Lender Modification .................................................... 25 47. Multiple Parties ....................................................... 25 48. Intentionally Omitted .................................................. 25
ii 4 49. Nondisclosure of Lease Terms ....................................... 25 50. Attachments ........................................................ 25
EXHIBITS & RIDERS Exhibit "A" - Floor Plan of Premises Exhibit "B" - Rules and Regulations THIS LEASE IS NOT IN EFFECT UNTIL DULY SIGNED BY LANDLORD AND TENANT iii 5 STANDARD OFFICE LEASE - GROSS BANK OF AMERICA CENTER 1. BASIC LEASE PROVISIONS ("Basic Lease Provisions"). 1.1 PARTIES: This Standard Office Lease - Gross ("Lease"), dated, for reference purposes only, August 21, 1998, is made by and between 101 CONVENTION CENTER DRIVE CORPORATION, a Delaware corporation (herein called "Landlord"), and INTERNET CENTURY, INC., a Nevada corporation, (herein called "Tenant"). 1.2 PREMISES: Suite Number 690, consisting of approximately 1,012 rentable square feet, more or less, as defined in paragraph 2 and as shown on Exhibit "A" hereto (the "Premises"). 1.3 BUILDING: Commonly described as being located at 101 Convention Center Drive, in the City of Las Vegas, County of Clark, State of Nevada. 1.4 USE: General office use only, subject to paragraph 6. 1.5 TERM: Thirty-Six (36) months commencing on September 1, 1998 ("Commencement Date") and ending August 31, 2001, subject to the terms of paragraph 3 below. 1.6 BASE RENT: Initially, $1,669.80 per month, payable on the first day of each month, per paragraph 4.1, subject to adjustment as provided in paragraph 1.7 below. 1.7 BASE RENT INCREASE: The monthly Base Rent payable under paragraph 1.6 above shall be adjusted as follows:
Lease Year Base Rent Per Month ---------- ------------------- 1 $1,669.80 2 $1,720.40 3 $1,771.00
1.8 BASE RENT TO BE PAID UPON EXECUTION: $1,669.80. 1.9 SECURITY DEPOSIT: $1,771.00. 1.10 TENANT'S SHARE OF OPERATING EXPENSE INCREASE: 0.33% as defined in paragraph 4.2. 1.11 PARKING SPACES: 3 unreserved parking spaces. 1.12 BROKERS: CB Richard Ellis, representing Landlord as "listing broker" and Cambridge Group, as "cooperating broker", both licensed real estate brokers. 1.13 LEASE YEAR: Shall refer to each 365-day period during the Term commencing on the Commencement Date and ending on each anniversary thereof. 1.14 GUARANTORS (IF ANY): None. 6 2. PREMISES, PARKING AND COMMON AREAS. 2.1 PREMISES. The Premises are a portion of a building, herein sometimes referred to as the "Building" identified in paragraph 1.3 of the Basic Lease Provisions. "Building" shall include adjacent parking structures used in connection therewith. The Premises, the Building, the Common Areas, the land upon which the same are located, along with all other buildings and improvements thereon or thereunder, are herein collectively referred to as the "Office Building Project." Landlord hereby leases to Tenant and Tenant leases from Landlord for the term, at the rental, and upon all of the conditions set forth herein, the real property referred to in the Basic Lease Provisions, paragraph 1.2, as the "Premises", including rights to the Common Areas as hereinafter specified. 2.2 VEHICLE PARKING. So long as Tenant is not in default, and subject to the rules and regulations attached hereto, and as established by Landlord from time to time, Tenant shall be entitled to rent and use the number and type of parking spaces in the Office Building Project described in the Basic Lease Provisions, paragraph 1.11, at the monthly rate applicable from time to time for monthly parking as set by Landlord and/or its licensee. 2.2.1 If Tenant commits, permits or allows any of the prohibited activities described in this Lease or the rules then in effect, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Tenant, which cost shall be immediately payable upon demand by Landlord. 2.2.2 Tenant acknowledges and agrees that Landlord shall charge for visitor and reserved parking for the Office Building Project and that Landlord reserves the right to charge Tenant for the unreserved parking spaces provided to Tenant during any renewal terms exercised by Tenant pursuant to any rider or addendum attached hereto. 2.2.3 Landlord reserves the right to institute and operate, as an Operating Expense of the Office Building Project, a valet parking service at the Building and to require Tenant and its employees to use the valet service, at no cost or expense to Tenant (other than Tenant's proportionate share of such services as part of Tenant's Share of any Operating Expense Increase), as the unreserved parking space rights granted to Tenant pursuant to paragraph 2.2 above. 2.3 COMMON AREAS - DEFINITION. The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Office Building Project that are provided and designated by the Landlord from time to time for the general non-exclusive use of Landlord, Tenant and of other tenants of the Office Building Project and their respective employees, suppliers, shippers, customers and invitees, including, but not limited to, common entrances, lobbies, corridors, stairways and stairwells, public restrooms, elevators, escalators, parking areas to the extent not otherwise prohibited by this Lease, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, ramps, driveways, landscaped areas and decorative walls. 2.4 COMMON AREAS - RULES AND REGULATIONS. Tenant agrees to abide by and conform to the rules and regulations attached hereto as Exhibit "B" with respect to the Office Building Project and Common Areas, and to cause its employees, suppliers, shippers, customers, and invitees to so abide and conform. Landlord or such other person(s) as Landlord may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to modify, amend and enforce said rules and regulations. Landlord shall not be responsible to Tenant for the noncompliance with said rules and regulations by other lessees, their agents, employees and invitees of the Office Building Project, provided Landlord takes reasonable steps to enforce the rules and regulations. 2.5 COMMON AREAS - CHANGES. Landlord shall have the right, in Landlord's sole discretion, from time to time: -2- 7 2.5.1 To make changes to the Building interior and exterior and Common Areas, including, without limitation, changes in the location, size, shape, number, and appearance thereof, including, but not limited to, the lobbies, windows, stairways, air shafts, elevators, escalators, restrooms, driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, decorative walls, landscaped areas and walkways; provided, however, Landlord shall at all times provide the parking facilities required by applicable law; 2.5.2 To close temporarily any of the Common Areas for maintenance and repair purposes so long as reasonable access to the Premises remains available; 2.5.3 To designate other land and improvements outside the boundaries of the Office Building Project to be a part of the Common Areas, provided that such other land and improvements have a reasonable and functional relationship to the Office Building Project; 2.5.4 To add additional buildings and improvements to the Common Areas; 2.5.5 To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Office Building Project, or any portion thereof; 2.5.6 To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Office Building Project as Landlord may, in the exercise of sound business judgment, deem to be appropriate. 2.6 SUBSTITUTED PREMISES. If the Premises contain an area of 3,500 square feet or less, Landlord shall have the right at any time during the term hereof, upon giving Tenant not less than 30 days notice in writing, to provide and furnish Tenant with reasonably comparable space elsewhere in the Office Building Project of approximately the same size as the Premises, and to remove and place Tenant in such space. Should Tenant refuse to permit Landlord to move Tenant to such new space at the end of said 30-day period, Landlord shall have the right to terminate this Lease, effective 60 days from the date of original notification by Landlord. If Landlord moves Tenant to such new space, (i) Landlord shall pay all reasonable moving expenses of Tenant which are directly attributable to such substitution of Premises, (ii) this Lease and all of its terms, covenants and conditions shall remain in full force and effect, and shall be deemed applicable to such new space, except that a revised Exhibit "A" shall become part of this Lease and shall reflect the location of the new space, (iii) the Lease shall be amended to include and state all correct information as to the new space, and (iv) such new space shall thereafter be deemed to be the "Premises". Notwithstanding the foregoing, if such new space is smaller than the Premises, the base rent under paragraphs 1.6 and 1.7 of the Basic Lease Provisions, and Tenant's share of Operating Expense Increase under paragraph 1. 10 of the Basic Lease Provisions, shall be reduced proportionately, based upon the reduction in square footage between the new space and the Premises. If the new space is larger than the Premises, then there will be no increase in base rent or Tenant's share of Operating Expense Increase, unless Landlord and Tenant mutually agree to expand the Premises and/or extend the lease term. 3. TERM. 3.1 TERM. The term and Commencement Date of this Lease shall be as specified in paragraph 1.5 of the Basic Lease Provisions, subject to the terms of paragraphs 3.2 and 3.4 below. 3.2 DELAY IN POSSESSION. Notwithstanding said Commencement Date, if for any reason Landlord cannot deliver possession of the Premises to Tenant on said date and subject to paragraph 3.2.2, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Tenant hereunder, but, in such case, Tenant shall not be obligated to pay rent or perform any other obligation of Tenant under the terms of this Lease, except as may be otherwise provided in this Lease, until possession of the Premises is tendered to Tenant, as hereinafter defined. -3- 8 3.2.1 POSSESSION TENDERED - DEFINED. Possession of the Premises shall be deemed tendered to Tenant ("Tender of Possession") when (1) the Building utilities are ready for use in the Premises, and (2) Tenant has reasonable access to the Premises. Tenant hereby agrees to accept possession of the Premises "as is," in their present state and condition. 3.2.2 DELAYS CAUSED BY TENANT. There shall be no abatement of rent to the extent of any delays caused by acts or omissions of Tenant, Tenant's agents, employees and contractors. 3.3 EARLY POSSESSION. If Tenant occupies the Premises prior to said Commencement Date, such occupancy shall be subject to all provisions of this Lease, such occupancy shall not change the termination date, and Tenant shall pay rent for such occupancy at the rate applicable for the first Lease Year. 3.4 UNCERTAIN COMMENCEMENT. In the event that the Commencement Date is a date other than as specified in Section 1.5 as a result of a delay in possession as defined in Section 3.2 hereinabove, then the commencement of the Lease term shall be defined as the date of Tender of Possession as further described in Section 3.2.1. In such event, Tenant and Landlord shall execute an Amendment to this Lease establishing the date of Tender of Possession as defined in paragraph 3.2.1, or the date of actual taking of possession by Tenant, whichever first occurs, as the Commencement Date. 4. RENT. 4.1 BASE RENT. Tenant shall pay to Landlord the Base Rent for the Premises set forth in paragraph 1.6 of the Basic Lease Provisions, subject to adjustment as provided in paragraph 1.7 of the Basic Lease Provisions, without notice, offset or deduction on or before the first day of each month during the term. Tenant shall pay Landlord upon execution hereof the advance Base Rent described in paragraph 1.8 of the Basic Lease Provisions. Rent for any period during the term hereof which is for less than one month shall be prorated based upon the actual number of days of the calendar month involved. Rent shall be payable in lawful money of the United States to Landlord at the address stated herein or to such other persons or at such other places as Landlord may designate in writing. 4.2 OPERATING EXPENSE INCREASE. Tenant shall pay to Landlord during the term hereof, in addition to the Base Rent, Tenant's Share, as hereinafter defined, of the amount by which all Operating Expenses, as hereinafter defined, for each Comparison Year exceeds the amount of all Operating Expenses for the Base Year, such excess being hereinafter referred to as the "Operating Expense Increase", in accordance with the following provisions: 4.2.1 "Tenant's Share" is defined, for purposes of this Lease, as the percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which percentage has been determined by dividing the approximate square footage of the Premises by the total approximate square footage of the Office Building Project. It is understood and agreed that the square footage figures set forth in the Basic Lease Provisions are approximations which Landlord and Tenant agree are reasonable and shall not be subject to revision except in connection with an actual change in the size of the Premises or a change in the space available for lease in the Office Building Project. 4.2.2 "Base Year" is defined as the calendar year in which the Lease term commences. 4.2.3 "Comparison Year" is defined as each calendar year during the term of this Lease subsequent to the Base Year. Tenant's Share of the Operating Expense Increase for each Comparison Year of the Lease Term shall be prorated according to that portion of such Comparison Year as to which Tenant is responsible for a share of such increase. If the average occupancy of the Office Building Project is not at least 95% for any Comparison Year, then Landlord will make an appropriate adjustment of the operating expenses for such Comparison Year to determine what the annual operating expenses would have been if the average occupancy of the Office Building Project had been 95%, and the amount so determined shall be deemed to have been the amount of operating expenses for such Comparison Year. For any Comparison Year in which Landlord adjusts the -4- 9 operating costs to reflect an average occupancy of 95%, the operating costs for the Base Year also shall be adjusted to reflect an average occupancy of 95% for the Base Year (unless the average occupancy, of the Office Building Project was 95% or more for the Base Year, in which case it shall be unnecessary to adjust the operating costs for the Base Year). 4.2.4 "Operating Expenses" is defined, for purposes of this Lease, to include all costs, if any, incurred by Landlord in the exercise of its reasonable discretion, for: (i) The operation, repair, maintenance, and replacement, in neat, clean, safe, good order and condition, of the Office Building Project, including, but not limited to, the following: (aa) The Common Areas, including their surfaces, coverings, decorative items, carpets, drapes and window coverings, and including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, stairways, parkways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, building exteriors and roofs, fences and gates; (bb) All heating, air conditioning, plumbing, electrical systems, life safety equipment, telecommunication and other equipment used in common by, or for the benefit of, lessees or occupants of the Office Building Project, including elevators and escalators, tenant directories, fire detection systems, including sprinkler system maintenance and repair. (ii) Trash disposal, janitorial and security services; (iii) Any other service to be provided by Landlord that is elsewhere in this Lease stated to be an "Operating Expense"; (iv) The cost of the premiums for the liability and property insurance policies to be maintained by Landlord under paragraph 8 hereof, (v) The amount of the real property taxes to be paid by Landlord under paragraph 10.1 hereof including any fees paid by Landlord to contest or appeal the tax assessment for purposes of lowering such assessment; (vi) The cost of water, sewer, gas, electricity, and other publicly mandated services to the Office Building Project; (vii) Labor, salaries and applicable fringe benefits and costs, materials, supplies and tools, used in maintaining and/or cleaning the Office Building Project and accounting and a management fee attributable to the operation of the Office Building Project; (viii) Replacing and/or adding improvements mandated by any law or governmental agency and any repairs or removals necessitated thereby amortized over its useful life according to Federal income tax regulations or guidelines for depreciation thereof (including interest on the unamortized balance as is then reasonable in the judgment of Landlord's accountants); (ix) Operating Expenses shall include the cost of any capital improvements made to the Office Building Project, the common facilities or any part thereof for the purpose of reducing operating expenses, such costs to be amortized over such reasonable period as Landlord shall determine; (x) Replacements of equipment or improvements that have a useful life for depreciation purposes according to Federal income tax guidelines of five (5) years or less, as amortized over such life. 4.2.5 Operating Expenses shall not include the following: -5- 10 (i) costs of replacements of equipment or improvements that have a useful life for Federal income tax purposes in excess of five (5) years unless the item is of the type described in paragraph 4.2.4(viii) or (ix), in which case their cost for such item shall be included as above provided; or (ii) any expenses paid by any lessee directly to third parties, or as to which Landlord is otherwise reimbursed by any third party, other tenant, or by insurance proceeds. 4.2.6 Tenant's Share of Operating Expense Increase shall be payable by Tenant within fifteen (15) days after a reasonably detailed statement of actual expenses is presented to Tenant by Landlord. At Landlord's option, however, an amount may be estimated by Landlord from time to time, in advance of Tenant's Share of the Operating Expense Increase for any Comparison Year, and the same shall be payable monthly or quarterly, as Landlord shall designate during each Comparison Year of the Lease term, on the same day as the Base Rent is due hereunder. If Tenant pays Landlord's estimate of Tenant's Share of Operating Expense Increase as aforesaid, Landlord shall deliver to Tenant after the expiration of each Comparison Year a reasonably detailed statement showing Tenant's Share of the actual Operating Expense Increase incurred during such year. If Tenant's payments under this paragraph 4.2.6 during said Comparison Year exceed Tenant's Share as indicated on said statement, Tenant shall be entitled to credit the amount of such overpayment against Tenant's Share of Operating Expense Increase next falling due. If Tenant's payments under this paragraph during said Comparison Year were less than Tenant's Share as indicated on said statement, Tenant shall pay to Landlord the amount of the deficiency within fifteen (15) days after delivery by Landlord to Tenant of said statement. Landlord and Tenant shall forthwith adjust between them by cash payment any balance determined to exist with respect to that portion of the last Comparison Year for which Tenant is responsible as to Operating Expense Increases, notwithstanding that the Lease term may have terminated before the end of such Comparison Year. 5. SECURITY DEPOSIT. Tenant shall deposit with Landlord upon execution hereof the security deposit set forth in paragraph 1.9 of the Basic Lease Provisions as security for Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails to pay rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Landlord may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default, for the payment of any other sum to which Landlord may become obligated by reason of Tenant's default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby. If Landlord so uses or applies all or any portion of said deposit, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore said deposit to the full amount then required of Tenant. Landlord shall not be required to keep said security deposit separate from its general accounts. If Tenant performs all of Tenant's obligations hereunder, said deposit, or so much thereof as has not heretofore been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant (or at Landlord's option, to the last assignee, if any, of Tenant's interest hereunder) within a reasonable time after the expiration of the term hereof, and after Tenant has vacated the Premises. No trust relationship is created herein between Landlord and Tenant with respect to said Security Deposit. 6. USE. 6.1 USE. The Premises shall be used and occupied only for the purpose set forth in paragraph 1.4 of the Basic Lease Provisions or any other use which is reasonably comparable to that use and for no other purpose, without the express written permission of Landlord. 6.2 COMPLIANCE WITH LAW. 6.2.1 LANDLORD'S WARRANTY. Landlord warrants to Tenant that to Landlord's actual knowledge, the Premises, in the state existing on the date that the Lease term commences, but without regard to alterations or improvements made by Tenant or the use for which Tenant will occupy the Premises, does not violate any covenants or restrictions of record, or any applicable building code, regulation or ordinance with which the Premises must comply. -6- 11 6.2.2 TENANT'S COMPLIANCE. Except as provided in paragraph 6.2.1. Tenant shall, at Tenant's expense, promptly comply with all applicable statutes, ordinances, rules, regulations, orders. covenants and restrictions of record, and requirements of any fire insurance underwriters or rating bureaus, now in effect or which may hereafter come into effect whether or not they reflect a change in policy from that now existing, during the term or any part of the term hereof, relating in any manner to the Premises and the occupation, use, alteration or improvement by Tenant of the Premises. Tenant shall conduct its business in a lawful manner and shall not use or permit the use of the Premises or the Common Areas in any manner that will tend to create waste or a nuisance or shall tend to disturb other occupants of the Office Building Project. 6.3 CONDITION OF PREMISES. 6.3.1 DELIVERY OF POSSESSION. Landlord shall deliver the Premises to Tenant in a clean condition on the Lease Commencement Date (unless Tenant is already in possession) and Landlord warrants to Tenant that the plumbing, lighting, air conditioning, and heating system in the Premises shall be in good operating condition. If Tenant notifies Landlord in writing within the first six (6) months of the term of this Lease ("Warranty Period") that this warranty has been violated, then it shall be the obligation of Landlord, after receipt of written notice from Tenant setting forth with specificity the nature of the violation, to initiate, at Landlord's sole cost, measures to rectify such violation. From and after the expiration of the Warranty Period, and provided that Tenant has not delivered written notice to Landlord during the Warranty Period of any alleged violation of such warranty, the foregoing warranty of Landlord shall be deemed to be true and correct during the Warranty Period and Landlord shall have no further obligation to initiate or otherwise undertake any measures to rectify any purported violation of the warranty. 6.3.2 ACCEPTANCE OF POSSESSION. Except as otherwise provided in this Lease, Tenant hereby accepts the Premises and the Office Building Project in their condition existing as of the Lease Commencement Date or the date that Tenant takes possession of the Premises, whichever is earlier, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any easements, covenants or restrictions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that the Premises are in good order and repair and that it has satisfied itself by its own independent investigation that the Premises are suitable for its intended use, and that neither Landlord nor Landlord's agent or agents has made any representation or warranty as to the present or future suitability of the Premises, Common Areas, or Office Building Project for the conduct of Tenant's business. 7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES. 7.1 LANDLORD'S OBLIGATIONS. Subject to being reimbursed by Tenant for Tenant's Share of Operating Expense Increase, and subject to Tenant's repair obligations contained in paragraph 7.2 below, Landlord shall keep the Office Building Project, including the roof, and Common Areas, and the equipment, whether used exclusively for the Premises or in common with other premises, in good condition and repair; provided, however, Landlord shall not be obligated to paint, repair or replace wall coverings, or to repair or replace any improvements that are not ordinarily a part of the Building or are above generally accepted Building standards. Except as provided in paragraph 9.5, there shall be no abatement of rent or liability of Tenant on account of any injury or interference with Tenant's business with respect to any improvements, alterations or repairs made by Landlord to the Office Building Project or any part thereof, nor shall such improvement, alteration or repair constitute an eviction or disturbance of Tenant's use or possession of the Premises. 7.2 TENANT'S OBLIGATIONS. 7.2.1 TENANT'S REPAIR OBLIGATIONS. Notwithstanding Landlord's obligation to keep the Office Building Project in good condition and repair, Tenant shall be responsible for payment of the cost thereof to Landlord as additional rent for that portion of the cost of any maintenance and repair of the Premises, or any equipment (wherever located) that serves only Tenant or the Premises, to the extent such cost is attributable to -7- 12 causes beyond normal wear and tear. Tenant shall be responsible for the cost of painting, repairing or replacing wall coverings, and to repair or replace any Premises improvements that are not ordinarily a part of the Building or that are above Building standards including, without limitation, all alterations, special or supplemental HVAC systems and electrical systems, all fixtures, furniture and equipment, Tenant's signs, locks, closing devices, security devices, floor coverings, shelving, kitchen and/or restroom facilities and appliances located within the Premises, if any, custom lighting, and any alterations, additions and other personal property located within the Premises. Landlord may, at its option, upon reasonable notice, elect to have Tenant perform any part of such maintenance or repairs, the cost of which is otherwise Tenant's responsibility hereunder. 7.2.2 SURRENDER. On the last day of the term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in the same condition as received, ordinary wear and tear excepted, clean and free of debris. Any damage or deterioration of the Premises shall not be deemed ordinary wear and tear if the same could have been prevented by good maintenance practices by Tenant. Tenant shall repair any damage to the Premises occasioned by the installation or removal of Tenant's trade fixtures, alterations, furnishings and equipment. Except as otherwise stated in this Lease, Tenant shall leave the air lines, power panels, electrical distribution systems, lighting fixtures, air conditioning, window coverings, wall coverings, carpets, wall paneling, ceilings and plumbing on the Premises and in good operating condition. 7.3 ALTERATIONS AND ADDITIONS. 7.3.1 ALTERATIONS. Tenant shall not, without Landlord's prior written consent make any alterations, improvements, additions, Utility Installations or repairs in, on or about the Premises, or the Office Building Project. As used in this paragraph 7.3 the term "Utility Installation" shall mean carpeting, window and wall coverings, power panels, electrical distribution systems, lighting fixtures, air conditioning, plumbing, and telephone and telecommunication wiring and equipment. At the expiration of the term, Landlord may require the removal of any or all of said alterations, improvements, additions or Utility Installations, and the restoration of the Premises and the Office Building Project to their prior condition, at Tenant's expense. Should Landlord permit Tenant to make its own alterations, improvements, additions or Utility Installations, Tenant shall use only such contractor as has been expressly approved by Landlord, and Landlord may require Tenant to provide Landlord, at Tenant's sole cost and expense, a lien and completion bond in an amount equal to one and one-half times the estimated cost of such improvements, to insure Landlord against any liability for mechanic's and materialmen's liens and to insure completion of the work. Should Tenant make any alterations, improvements, additions or Utility Installations without the prior approval of Landlord, or use a contractor not expressly approved by Landlord, Landlord may, at any time during the term of this Lease, require that Tenant remove any part or all of the same. 7.3.2 LANDLORD'S CONSENT. Any alterations, improvements, additions or Utility Installations in or about the Premises or the Office Building Project that Tenant shall desire to make shall be presented to Landlord in written form, with proposed detailed plans. If Landlord shall give its consent to Tenant's making such alteration, improvement, addition or Utility Installation, the consent shall be deemed conditioned upon Tenant acquiring a permit to do so from the applicable governmental agencies, furnishing a copy thereof to Landlord prior to the commencement of the work, and compliance by Tenant with all conditions of said permit in a prompt and expeditious manner. 7.3.3 CLAIMS AND LIENS. Tenant shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Tenant at or for use in the Premises, which claims are or may be secured by any mechanics' or materialmen's lien against the Premises, the Building or the Office Building Project, or any interest therein. Tenant shall give Landlord not less than ten (10) day's notice prior to the commencement of any work in the Premises by Tenant, and Landlord shall have the right to post notices of nonresponsibility in or on the Premises or the Building as provided by law. If Tenant shall, in good faith, contest the validity of any such lien, claim or demand, then Tenant shall, at its sole expense defend itself and Landlord against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Landlord or the Premises, the Building or the Office Building Project, upon the condition that if -8- 13 Landlord shall require, Tenant shall furnish to Landlord a surety bond satisfactory to Landlord in an amount equal to such contested lien claim or demand indemnifying Landlord against liability for the same and holding the Premises, the Building and the Office Building Project free from the effect of such lien or claim. In addition, Landlord may require Tenant to pay Landlord reasonable attorneys' fees and costs in participating in such action if Landlord shall decide it is to Landlord best interest so to do. 7.3.4 QUALITY OF WORK. All alterations, improvements, additions and Utility Installations (whether or not such Utility Installations constitute trade fixtures of Tenant), which may be made to the Premises by Tenant, including but not limited to, floor coverings, panelings, doors, drapes, built-ins, moldings, sound attenuation, and lighting and telephone or communication systems, conduit, wiring and outlets, shall be made and done in a good and workmanlike manner and of good and sufficient quality and materials and shall be the property of Landlord and remain upon and be surrendered with the Premises at the expiration of the Lease term, unless Landlord requires their removal pursuant to paragraph 7.3.1. Provided Tenant is not in default, notwithstanding the provisions of this paragraph 7.3.4, Tenant's personal property and equipment, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises or the Building, and other than Utility Installations, shall remain the property of Tenant and may be removed by Tenant subject to the provisions of paragraph 7.2. 7.3.5 AS-BUILT PLANS. Tenant shall provide Landlord with as-built plans and specifications for any alterations, improvements, additions or Utility Installations. 7.4 UTILITY ADDITIONS. Landlord reserves the right to install new or additional utility facilities throughout the Office Building Project for the benefit of Landlord or Tenant, or any other lessee of the Office Building Project, including, but not by way of limitation, such utilities as plumbing, electrical systems, communication systems, and fire protection and detection systems, so long as such installations do not unreasonably interfere with Tenant's use of the Premises. 8. INSURANCE; INDEMNITY. 8.1 LIABILITY INSURANCE-TENANT. Tenant shall, at Tenant's expense, obtain and keep in force during the term of this Lease a policy of Commercial General Liability insurance utilizing an Insurance Services Office standard form with Broad Form General Liability Endorsement (GL0404), or equivalent, in an amount of not less than $1,000,000 per occurrence of bodily injury and property damage combined or in a greater amount as reasonably determined by Landlord and shall insure Tenant with Landlord (and Landlord's property manager and all other agents and lenders designated by Landlord) as additional insureds against liability arising out of the use, occupancy or maintenance of the Premises. Compliance with the above requirement shall not, however, limit the liability of Tenant hereunder. 8.2 LIABILITY INSURANCE-LANDLORD. Landlord shall obtain and keep in force during the term of this Lease a policy of Combined Single Limit Bodily Injury and Broad Form Property Damage Insurance, plus coverage against such other risks Landlord deems advisable from time to time, insuring Landlord, but not Tenant, against liability arising out of the ownership, use, occupancy or maintenance of the Office Building Project in an amount not less than $2,000,000.00 per occurrence; however, Landlord may elect to self insure. 8.3 PROPERTY INSURANCE-TENANT. Tenant shall, at Tenant's expense, obtain and keep in force during the term of this Lease for the benefit of Tenant, replacement cost "All-Risk" insurance, with vandalism and malicious mischief, sprinkler leakage and earthquake sprinkler leakage endorsements, in an amount sufficient to cover not less than 100% of the full replacement cost, as the same may exist from time to time, of all of Tenant's personal property, fixtures, equipment and tenant improvements. 8.4 PROPERTY INSURANCE-LANDLORD. Landlord shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Office Building Project improvements, but not Tenant's personal property, fixtures, equipment or tenant improvements, in the amount of the full replacement -9- 14 cost thereof, as the same may exist from time to time, utilizing Insurance Services Office standard form, or equivalent, such other perils as Landlord deems advisable or may be required by a lender having a lien on the Office Building Project. In addition, Landlord shall obtain and keep in force, during the term of this Lease, a policy of rental value insurance covering a period of one year, with loss payable to Landlord, which insurance shall also cover all Operating Expenses for said period. Tenant will not be named in any such policies carried by Landlord and shall have no right to any proceeds therefrom. The policies required by these paragraphs 8.2 and 8.4 shall contain such deductibles as Landlord or the aforesaid lender may determine. In the event that the Premises shall suffer an insured loss as defined in paragraph 9.1(f) hereof, the deductible amounts under the applicable insurance policies shall be deemed an Operating Expense. Tenant shall not do or permit to be done anything which shall invalidate the insurance policies carried by Landlord. Tenant shall pay the entirety of any increase in the property insurance premium for the Office Building Project over what it was immediately prior to the commencement of the term of this Lease if the increase is specified by Landlord's insurance carrier as being caused by the nature of Tenant's occupancy or any act or omission of Tenant. Landlord may elect to self insure. 8.5 INSURANCE POLICIES. Tenant shall deliver to Landlord copies of liability insurance policies required under paragraph 8.1 or certificates evidencing the existence and amounts of such insurance prior to Tenant taking possession or early entry of the Premises. No such policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Landlord. Tenant shall, at least thirty (30) days prior to the expiration of such policies, furnish Landlord with renewals thereof. 8.6 WAIVER OF SUBROGATION. Tenant and Landlord each hereby release and relieve the other, and waive their entire right of recovery against the other, for direct or consequential loss or damage arising out of or incident to the perils covered by property insurance carried by such party, whether due to the negligence of Landlord or Tenant or their agents, employees, contractors and/or invitees. All property insurance policies required under this Lease shall be endorsed to so provide. 8.7 INDEMNITY. Tenant shall indemnify, protect, defend and hold harmless Landlord and its agents, Landlord's master or ground lessor, partners and lenders, from and against any and all claims for damage to the person or property of anyone or any entity arising from Tenant's use of the Office Building Project, or from the conduct of Tenant's business or from any activity, work or things done, permitted or suffered by Tenant in or about the Premises or elsewhere and shall further indemnify, protect, defend and hold harmless Landlord from and against any and all claims, costs and expenses arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease, or arising from any act or omission of Tenant, or any of Tenant's agents, contractors, employees, or invitees, and from and against all costs, attorneys' fees, expenses and liabilities incurred by Landlord as the result of any such use, conduct, activity, work, things done, permitted or suffered, breach, default or negligence, and in dealing reasonably therewith, including, but not limited to, the defense or pursuit of any claim or any action or proceeding involved therein; and in case any action or proceeding be brought against Landlord by reason of any such matter, Tenant, upon notice from Landlord, shall defend the same at Tenant's expense by counsel reasonably satisfactory to Landlord and Landlord shall cooperate with Tenant in such defense. Landlord need not have first paid any such claim in order to be so indemnified. 8.8 EXEMPTION OF LANDLORD FROM LIABILITY. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property of Tenant or injury to persons, in, upon or about the Office Building Project arising from any cause and Tenant hereby waives all claims in respect thereof against Landlord. Tenant hereby agrees that Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom or for loss of or damage to the goods, wares, merchandise or other property of Tenant, Tenant's employees, invitees, customers, or any other person in or about the Premises or the Office Building Project, nor shall Landlord be liable for injury to the person of Tenant, Tenant's employees, agents or contractors, whether such damage or injury is caused by or results from theft, fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether said damage or injury results from conditions arising upon the Premises or upon other portions of the Office Building Project, or from other sources or places, or from new construction or the repair, alteration or improvement of any part of the Office Building Project, or of the equipment, fixtures or -10- 15 appurtenances applicable thereto, and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible, Landlord shall not be liable for any damages arising from any act or neglect of any other lessee, occupant or user of the Office Building Project, nor from the failure of Landlord to enforce the provisions of any other Lease Agreement between Landlord and any other Tenant of the Office Building Project. 8.9 NO REPRESENTATION OF ADEQUATE COVERAGE. Landlord makes no representation that the limits or forms of coverage of insurance specified in this paragraph 8 are adequate to cover Tenant's property or obligations under this Lease. 9. DAMAGE OR DESTRUCTION. 9.1 DEFINITIONS. 9.1.1 "Premises Damage" shall mean if the Premises are damaged or destroyed to any extent. 9.1.2 "Premises Building Partial Damage" shall mean if the Building of which the Premises are a part is damaged or destroyed to the extent that the cost to repair is less than fifty percent (50%) of the then Replacement Cost of the Building. 9.1.3 "Premises Building Total Destruction" shall mean if the Building of which the Premises are a part is damaged or destroyed to the extent that the cost to repair is fifty percent (50%) or more of the then Replacement Cost of the Building. 9.1.4 "Office Building Project Buildings" shall mean all of the buildings on the Office Building Project site. 9.1.5 "Office Building Project Buildings Total Destruction" shall mean if the Office Building Project Buildings are damaged or destroyed to the extent that the cost of repair is fifty percent (50%) or more of the then Replacement Cost of the Office Building Project Buildings. 9.1.6 "Insured Loss" shall mean damage or destruction which was caused by an event required to be covered by the insurance described in paragraph 8. The fact that an Insured Loss has a deductible amount shall not make the loss an uninsured loss. 9.1.7 "Replacement Cost" shall mean the amount of money necessary to be spent in order to repair or rebuild the damaged area to the condition that existed immediately prior to the damage occurring, which shall include the unamortized cost of the improvements installed by Landlord pursuant to the Work Letter, but shall exclude all improvements made by Tenant (other than those installed by Landlord at Tenant's expense). 9.2 PREMISES DAMAGE; PREMISES BUILDING PARTIAL DAMAGE. 9.2.1 Insured Loss: Subject to the provisions of paragraphs 9.4 and 9.5, if at any time during the term of this Lease there is damage which is an Insured Loss and which falls into the classification of either Premises Damage or Premises Building Partial Damage, then Landlord shall, as soon as reasonably possible and to the extent the required materials and labor are readily available through usual commercial channels, at Landlord's expense, repair such damage (but not Tenant's fixtures, equipment or tenant improvements originally paid for by Tenant) to its condition existing at the time of the damage, and this Lease shall continue in full force and effect. 9.2.2 Uninsured Loss: Subject to the provisions of paragraphs 9.4 and 9.5, if at any time during the term of this Lease there is damage which is not an Insured Loss and which falls within the classification of Premises Damage or Premises Building Partial Damage, unless caused by a negligent or willful act of Tenant (in which event Tenant shall make the repairs at Tenant's expense), which damage prevents Tenant from making any substantial use of the Premises, Landlord may at Landlord's option either (i) repair such damage as soon as -11- 16 reasonably possible at Landlord's expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Tenant within thirty (30) days after the date of the occurrence of such damage of Landlord's intention to cancel and terminate this Lease as of the date of the occurrence of such damage, in which event this Lease shall terminate as of the date of the occurrence of such damage. 9.3 PREMISES BUILDING TOTAL DESTRUCTION; OFFICE BUILDING PROJECT TOTAL DESTRUCTION. Subject to the provisions of paragraphs 9.4 and 9.5, if at any time during the term of this Lease there is damage, whether or not it is an Insured Loss, which falls into the classifications of either (i) Premises Building Total Destruction, or (ii) Office Building Project Total Destruction, then Landlord may at Landlord's option either (i) repair such damage or destruction as soon as reasonably possible at Landlord's expense (to the extent the required materials are readily available through usual commercial channels) to its condition existing at the time of the damage, but not Tenant's fixtures, equipment or tenant improvements, and this Lease shall continue in full force and effect, or (ii) give written notice to Tenant within thirty (30) days after the date of occurrence of such damage of Landlord's intention to cancel and terminate this Lease, in which case this Lease shall terminate as of the date of the occurrence of such damage. 9.4 DAMAGE NEAR END OF TERM. 9.4.1 Subject to paragraph 9.4.2, if at any time during the last twelve (12) months of the term of this Lease there is substantial damage to the Premises, Landlord may at Landlord's option cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Tenant of Landlord's election to do so within 30 days after the date of occurrence of such damage. 9.4.2 Notwithstanding paragraph 9.4.1, in the event that Tenant has an option to extend or renew this Lease, and the time within which said option may be exercised has not yet expired, Tenant shall exercise such option, if it is to be exercised at all (and otherwise in accordance with the terms hereof), no later than twenty (20) days after the occurrence of an Insured Loss falling within the classification of Premises Damage during the last twelve (12) months of the term of this Lease. If Tenant duly exercises such option during said twenty (20) day period, Landlord shall, at Landlord's expense, repair such damage, but not Tenant's fixtures, equipment or tenant improvements, as soon as reasonably possible and this Lease shall continue in full force and effect. If Tenant fails to exercise such option during said twenty (20) day period, then Landlord may at Landlord's option terminate and cancel this Lease as of the expiration of said twenty (20) day period by giving written notice to Tenant of Landlord's election to do so within ten (10) days after the expiration of said twenty (20) day period, notwithstanding any term or provision in the grant of option to the contrary. 9.5 ABATEMENT OF RENT; TENANT'S REMEDIES. 9.5.1 In the event Landlord repairs or restores the Building or Premises pursuant to the provisions of this paragraph 9, and any part of the Premises are not usable (including loss of use due to loss of access or essential services), the rent payable hereunder (including Tenant's Share of Operating Expense Increase) for the period during which such damage, repair or restoration continues shall be abated, provided (1) the damage was not the result of the negligence of Tenant, and (2) such abatement shall only be to the extent the operation and profitability of Tenant's business as operated from the Premises is adversely affected. Except for said abatement of rent, if any, Tenant shall have no claim against Landlord for any damage suffered by reason of any such damage, destruction, repair or restoration. 9.5.2 If Landlord shall be obligated to repair or restore the Premises or the Building under the provisions of this Paragraph 9 and shall not commence such repair or restoration within ninety (90) days after such occurrence, or if Landlord shall not complete the restoration and repair within two hundred seventy (270) days after such occurrence for reasons other than delays caused by Tenant, its employees or agents, Tenant may at Tenant's option (and, if elected, as Tenant's sole remedy) cancel and terminate this Lease by giving Landlord written notice of Tenant's election to do so within five (5) days following the expiration of such ninety (90) or two -12- 17 hundred seventy (270) day period, respectively. In such event this Lease shall terminate as of the date of such notice. 9.5.3 Tenant agrees to cooperate with Landlord in connection with any such restoration and repair, including but not limited to the approval and/or execution of plans and specifications required. 9.6 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease pursuant to this paragraph 9, an equitable adjustment shall be made concerning advance rent and any advance payments made by Tenant to Landlord. 9.7 WAIVER. Landlord and Tenant waive the provisions of any statute which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease. 10. REAL PROPERTY TAXES. 10.1 PAYMENT OF TAXES. Landlord shall pay all real property taxes, as defined in paragraph 10.3, applicable to the Office Building Project subject to reimbursement by Tenant of Tenant's Share of such taxes in accordance with the provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2. 10.2 ADDITIONAL IMPROVEMENTS. Tenant shall not be responsible for paying any increase in real property taxes specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Office Building Project by other lessees or by Landlord for the exclusive enjoyment of any other lessee. Tenant shall, however, pay to Landlord at the time that Operating Expenses are payable under paragraph 4.2.3 the entirety of any increase in real property taxes if assessed solely by reason of additional improvements placed upon the Premises by or for Tenant or at Tenant's request. 10.3 DEFINITION OF "REAL PROPERTY TAXES". As used herein, the term "real property taxes" shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed on the Office Building Project or any portion thereof by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Landlord in the Office Building Project or in any portion thereof, as against Landlord's right to rent or other income therefrom, and as against Landlord's business of leasing the Office Building Project. The term "real property taxes" shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, or in lieu of any increase in any tax, fee, levy, assessment or charge hereinabove included within the definition of "real property taxes", or (ii) the nature of which was hereinbefore included within the definition of "real property taxes", or (iii) which is imposed as a result of a change in ownership, as defined by applicable local statutes for property tax purposes, of the Office Building Project or which is added to a tax or charge hereinbefore included within the definition of "real property taxes" by reason of such change of ownership, or (iv) which is imposed by reason of this transaction, any modifications or changes hereto, or any transfers hereof. 10.4 JOINT ASSESSMENT. If the improvements or property, the taxes for which are to be paid separately by Tenant under paragraph 10.2 or 10.5, are not separately assessed, Tenant's portion of such taxes shall be equitably determined by Landlord from the respective valuations assigned in the assessor's work sheets or such other information (which may include the cost of construction) as may be reasonably available. Landlord's reasonable determination thereof, in good faith, shall be conclusive. 10.5 PERSONAL PROPERTY TAXES. (a) Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. -13- 18 (b) If any of Tenant's personal property shall be assessed with Landlord's real property, Tenant shall pay to Landlord the taxes attributable to Tenant within ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property. 11. UTILITIES. 11.1 SERVICES PROVIDED BY LANDLORD. As part of Operating Expenses, Landlord shall provide heating, ventilation, air conditioning, and janitorial service as reasonably required, reasonable amounts of electricity for normal lighting and office machines, tap water for reasonable and normal drinking and lavatory use, and replacement light bulbs and/or fluorescent tubes and ballasts for standard overhead fixtures. 11.2 SERVICES EXCLUSIVE TO TENANT. Tenant shall pay for all water, gas, heat, light, power, telephone and other utilities and services specially or exclusively supplied and/or metered exclusively to the Premises or to Tenant, together with any taxes thereon. If any such services are not separately metered to the Premises, Tenant shall pay at Landlord's option, either Tenant's Share or a reasonable portion to be determined by Landlord of all charges jointly metered with other premises in the Building. 11.3 HOURS OF SERVICE. Said services and utilities shall be provided during generally accepted business days and hours or such other days or hours as may hereafter be set forth. Utilities and services required at other times shall be subject to advance request and reimbursement by Tenant to Landlord of the cost thereof. 11.4 EXCESS USAGE BY TENANT. Tenant shall not make connection to the utilities except by or through existing outlets and shall not install or use machinery or equipment in or about the Premises that uses excess water, lighting or power, or suffer or permit any act that causes extra burden upon the utilities or services, including, but not limited to security services, over standard office usage for the Office Building Project. Landlord shall require Tenant to reimburse Landlord for any excess expenses or costs that may arise out of a breach of this subparagraph by Tenant. Landlord may, in its sole discretion, install at Tenant's expense supplemental equipment and/or separate metering applicable to Tenant's excess usage or loading, and Tenant will reimburse Landlord for such excess utility use. 11.5 INTERRUPTIONS. Their shall be no abatement of rent and Landlord shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Landlord's reasonable control or in cooperation with governmental request or directions, nor shall such inadequacy, stoppage, interruption or discontinuance be considered an eviction or interruption of Tenant's use or possession of the Premises. 12. ASSIGNMENT AND SUBLETTING. 12.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Tenant's interest in the Lease or in the Premises, without Landlord's prior written consent, which Landlord shall not unreasonably withhold. Landlord shall respond to Tenant's request for consent hereunder in a reasonably timely manner and any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void, and shall constitute a material default and breach of this Lease without the need for notice to Tenant under paragraph 13.1. "Transfer" within the meaning of this paragraph 12 shall include the transfer or transfers aggregating: (a) if Tenant is a corporation, more than twenty-five percent (25%) of the voting stock of such corporation, or (b) if Tenant is a partnership, more than twenty-five percent (25%) of the profit and loss participation in such partnership. 12.2 TENANT AFFILIATE. Notwithstanding the provisions of paragraph 12.1 hereof, Tenant may assign or sublet the Premises, or any portion thereof, without Landlord's consent, to any corporation which controls, is controlled by or is under common control with Tenant, or to any corporation resulting from the merger or consolidation with Tenant, or to any person or entity which acquires all the assets of Tenant as a going concern of the business that is being conducted on the Premises, all of which are referred to as "Tenant Affiliate"; provided -14- 19 that before such assignment shall be effective, (a) said assignee shall assume, in full, the obligations of Tenant under this Lease and (b) Landlord shall be given written notice of such assignment and assumption. Any such assignment shall not, in any way, affect or limit the liability of Tenant under the terms of this Lease even if after such assignment or subletting the terms of this Lease are materially changed or altered without the consent of Tenant, the consent of whom shall not be necessary. 12.3 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING. 12.3.1 Regardless of Landlord's consent, no assignment or subletting shall release Tenant of Tenant's obligations hereunder or alter the primary liability of Tenant to pay the rent and other sums due Landlord hereunder including Tenant's Share of Operating Expense Increase, and to perform all other obligations to be performed by Tenant hereunder. 12.3.2 Landlord may accept rent from any person other than Tenant pending approval or disapproval of such assignment. 12.3.3 Neither a delay in the approval or disapproval of such assignment or subletting, nor the acceptance of rent, shall constitute a waiver or estoppel of Landlord's right to exercise its remedies for the breach of any of the terms or conditions of this paragraph 12 or this Lease. 12.3.4 If Tenant's obligations under this Lease have been guaranteed by third parties, then an assignment or sublease, and Landlord's consent thereto, shall not be effective unless said guarantors give their written consent to such assignment or sublease and the terms thereof. 12.3.4 The consent by Landlord to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting by Tenant or to any subsequent or successive assignment or subletting by the sublessee. However, Landlord may consent to subsequent sublettings and assignments of the sublease or any amendments or modifications thereto without notifying Tenant or anyone else liable on the Lease or sublease and without obtaining their consent and such action shall not relieve such persons from liability under this Lease or said sublease; however, such persons shall not be responsible to the extent any such amendment or modification enlarges or increases the obligations of the Tenant or sublessee under this Lease or such sublease. 12.3.5 In the event of any default under this Lease, Landlord may proceed directly against Tenant, any guarantors or any one else responsible for the performance of this Lease, including the assignee or sublessee, without first exhausting Landlord's remedies against any other person or entity responsible therefor to Landlord, or any security held by Landlord or Tenant. 12.3.6 Landlord's written consent to any assignment or subletting of the Premises by Tenant shall not constitute an acknowledgment that no default then exists under this Lease of the obligations to be performed by Tenant nor shall such consent be deemed a waiver of any then existing default, except as may be otherwise stated by Landlord at the time. 12.3.7 The discovery of the fact that any financial statement relied upon by Landlord in giving its consent to an assignment or subletting was materially false shall, at Landlord's election, render Landlord's consent null and void. 12.4 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. Regardless of Landlord's consent, the following terms and conditions shall apply to any subletting (but not to any permitted assignment) by Tenant of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: 12.4.1 Tenant hereby assigns and transfers to Landlord all of Tenant's interest in all rentals and income arising from any sublease heretofore or hereafter made by Tenant, and Landlord may collect such rent and -15- 20 income and apply same toward Tenant's obligations under this Lease; provided, however, that until a default shall occur in the performance of Tenant's obligations under this Lease, Tenant may receive, collect and enjoy the rents accruing under such sublease. Landlord shall not, by reason of this or any other assignment of such sublease to Landlord nor by reason of the collection of the rents from a sublessee, be deemed liable to the sublessee for any failure of Tenant to perform and comply with any of Tenant's obligations to such sublessee under such sublease. Tenant hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Landlord stating that a default exists in the performance of Tenant's obligations under this Lease, to pay to Landlord the rents due and to become due under the sublease. Tenant agrees that such sublessee shall have the right to rely upon any such statement and request from Landlord, and that such sublessee shall pay such rents to Landlord without any obligation or right to inquire as to whether such default exists and notwithstanding any notice from or claim from Tenant to the contrary. Tenant shall have no right or claim against said sublessee or Landlord for any such rents so paid by said sublessee to Landlord, nor shall Tenant have the right to offset any sums due Landlord under this Lease as the result of payments made directly to Landlord from any sublessee. 12.4.2 No sublease entered into by Tenant shall be effective unless and until it has been approved in writing by Landlord. In entering into any sublease, Tenant shall use only such form of sublessee as is satisfactory to Landlord, and once approved by Landlord, such sublease shall not be changed or modified without Landlord's prior written consent. Any sublease shall, by reason of entering into a sublease under this Lease, be deemed, for the benefit of Landlord to have assumed and agreed to conform and comply with each and every obligation herein to be performed by Tenant other than such obligations as are contrary to or inconsistent with provisions contained in a sublease to which Landlord has expressly consented in writing. 12.4.3 In the event Tenant shall default in the performance of its obligations under this Lease, Landlord at its option and without any obligation to do so, may require any sublessee to attorn to Landlord, in which event Landlord shall undertake the obligations of Tenant under such sublease from the time of the exercise of said option to the termination of such sublease; provided, however, Landlord shall not be liable for any prepaid rents or security deposit paid by such sublessee to Tenant or for any other prior defaults of Tenant under such sublease. 12.4.4 No sublessee shall further assign or sublet all or any part of the Premises without Landlord's prior written consent. 12.4.5 With respect to any subletting to which Landlord has consented, Landlord agrees to endeavor to deliver a copy of any notice of default by Tenant to the sublessee. Such sublessee shall have the right to cure a default of Tenant within three (3) days after service of said notice of default upon such sublessee, and the sublessee shall have a right of reimbursement and offset from and against Tenant for any such defaults cured by the sublessee. 12.5 LANDLORD'S EXPENSES. In the event Tenant shall assign or sublet the Lease or request the consent of Landlord to any assignment or subletting or if Tenant shall request the consent of Landlord for any act Tenant proposes to do then Tenant shall pay Landlord's reasonable costs and expenses incurred in connection therewith, including attorneys', architects, engineers' or other consultants' fees. Landlord and Tenant agree that the fee will be at least $200.00. 12.6 CONDITIONS TO CONSENT. Landlord reserves the right to condition any approval to assign or sublet upon any reasonable factors including, without limitation, Landlord's determination that (a) the proposed assignee or sublessee shall conduct a business on the Premises of a quality substantially equal to that of Tenant and consistent with the general character of the other occupants of the Office Building Project and not in violation of any exclusives or rights then held by other tenants, (b) the proposed assignee or sublessee is at least as financially responsible as Tenant was expected to be at the time of the execution of this Lease or of such assignment or subletting, whichever is greater, (c) the proposed sublease will not result in more than two subleases of portions of the Premises being in effect at any one time during the Term; (d) the proposed assignee or subtenant is not an existing tenant of the Project and/or is not negotiating with Landlord for space in the Project; (e) the proposed -16- 21 assignee or subtenant is not a governmental entity; (f) the portion of the Premises to be sublet or assigned is not irregular in shape with inadequate means of ingress and egress; and (g) the proposed assignment or sublease will not result in significant increase in the use of the parking areas or Common Areas by the transferee's employees or visitors, and/or significantly increase the demand upon utilities and services to be provided by Landlord to the Premises. 13. DEFAULT; REMEDIES. 13.1 DEFAULT. The occurrence of any one or more of the following events shall constitute a material default of this Lease by Tenant: 13.1.1 The vacation or abandonment of the Premises by Tenant. Vacation of the Premises shall include the failure to occupy the Premises for a continuous period of thirty (30) days or more, whether or not the rent is paid. 13.1.2 The breach by Tenant or any of the covenants, conditions or provisions of paragraphs 7.3.1, 7.3.2 or 7.3.4 (alterations), 12.1 (assignment or subletting), 13.1.1 (vacation or abandonment), 13.1.5 (insolvency, 13.1.6 (false statement), 16.1 (estoppel certificate), 30.2 (subordination), 33 (auctions), or 41.1 (easements), all of which are hereby deemed to be material, non-curable defaults without the necessity of any notice by Landlord to Tenant thereof. 13.1.3 The failure by Tenant to make any payment of rent or any other payment required to be made by Tenant hereunder, without deduction or offset, as and when due, where such failure shall continue for a period of three (3) days after written notice thereof from Landlord to Tenant. In the event that Landlord serves Tenant with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph. 13.1.4 The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant other than those referenced in subparagraphs 13.1.2 and 13.1.3, above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's noncompliance is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commenced such cure within said thirty (30) day period and thereafter diligently pursues such cure to completion. To the extent permitted by law, such thirty (30) day notice shall constitute the sole and exclusive notice required to be given to Tenant under applicable Unlawful Detainer statutes. 13.1.5 (i) The making by Tenant of any general arrangement or general assignment for the benefit of creditors; (ii) Tenant becoming a "debtor" as defined in II U.S.C. Section 101 or any successor statute thereto (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within thirty (30) days. In the event that any provision of this paragraph 13.1.5 is contrary to any applicable law, such provision shall be of no force or effect. 13.1.6 The discovery by Landlord that any financial statement given to Landlord by Tenant, or its successor in interest or by any guarantor of Tenant's obligation hereunder, was materially false. 13.2 REMEDIES. In the event of any default or breach of this Lease by Tenant, Landlord may at any time thereafter, with or without notice or demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default or breach: -17- 22 13.2.1 Terminate Tenant's right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default including, but not limited to, all unpaid rent through to the date of award by court having jurisdiction, together with interest on such amount at fourteen percent (14%), the cost of recovering possession of the Premises; expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and any real estate commission actually paid; the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Tenant proves could be reasonably avoided; that portion of the leasing commission paid by Landlord pursuant to paragraph 15 applicable to the unexpired term of this Lease. 13.2.2 Maintain Tenant's right to possession in which case this Lease shall continue in effect whether or not Tenant shall have vacated or abandoned the Premises. In such event Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder. 13.2.3 Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state wherein the Premises are located. Unpaid installments of rent and other unpaid monetary obligations of Tenant under the terms of this Lease shall bear interest from the date due at fourteen percent (14%) per annum. 13.3 DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are reasonably required for performance then Landlord shall not be in default if Landlord commences performance within such 30-day period and thereafter diligently pursues the same to completion. 13.4 LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant to Landlord of Base Rent, Tenant's Share of Operating Expense increase or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Office Building Project. Accordingly, if any installment of Base Rent, Operating Expense Increase, or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days after such amount shall be due, then, without any requirement for notice to Tenant, Tenant shall pay to Landlord a late charge equal to six percent (6%) of such overdue amount, plus interest on such overdue amount at the rate specified above in paragraph 13.2.3. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. 14. CONDEMNATION. If the Premises or any portion thereof or the Office Building Project are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs; provided that if so much of the Premises or the Office Building Project are taken by such condemnation as would substantially and adversely affect the operation and profitability of Tenant's business conducted from the Premises, Tenant shall have the option, to be exercised only in writing within thirty (30) days after Landlord shall have given Tenant written notice of such taking (or in the absence of such notice, within thirty (30) days after the condemning authority shall have taken possession), to terminate this Lease as of the date the condemning authority takes such possession. If Tenant does not terminate this Lease in -18- 23 accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the rent and Tenant's Share of Operating Expense Increase shall be reduced in the proportion that the floor area of the Premises taken bears to the total floor area of the Premises. Common Areas taken shall be excluded from the Common Areas usable by Tenant and no reduction of rent shall occur with respect thereto or by reason thereof. Landlord shall have the option in its sole discretion to terminate this Lease as of the taking of possession by the condemning authority, by giving written notice to Tenant of such election within thirty days after receipt of notice of a taking by condemnation of any part of the Premises or the Office Building Project. Any award for the taking of all or any part of the Premises or the Office Building Project under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Tenant shall be entitled to any separate award for loss or damage to Tenant's trade fixtures, removable personal property and unamortized tenant improvements that have been paid for by Tenant. For that purpose the cost of such improvements shall be amortized over the original term of this Lease excluding any options. In the event that this Lease is not terminated by reason of such condemnation, Landlord shall to the extent of severance damages received by Landlord in connection with such condemnation, repair any damage to the Premises caused by such condemnation except to the extent that Tenant has been reimbursed therefor by the condemning authority. Tenant shall pay any amount in excess of such severance damages required to complete such repair. 15. BROKER'S FEE. 15.1 Landlord shall pay to the broker(s) identified in paragraph 1.12 of the Basic Lease Provisions jointly, or in such separate shares as they may mutually designate in writing, a fee as set forth in a separate agreement between Landlord and said broker(s). 15.2 Tenant and Landlord each represent and warrant to the other that neither has had any dealings with any person, firm, broker or finder (other than the person(s), if any, whose names are set forth in paragraph 1.12 of the Basic Lease Provisions) in connection with the negotiation of this Lease and/or the consummation of the transaction contemplated hereby, and no other broker or other person, firm or entity is entitled to any commission or finder's fee in connection with said transaction and Tenant and Landlord do each hereby indemnify and hold the other harmless from and against any costs, expenses, attorney's fees or liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying party. 16. ESTOPPEL CERTIFICATE; FINANCIAL STATEMENTS. 16.1 Each party (as "responding party") shall at any time upon not less than ten (10) days' prior written notice from the other party ("requesting party") execute, acknowledge and deliver to the requesting party a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the rent and other charges are paid in advance, if any, (ii) acknowledging that there are not, to the responding party's knowledge, any uncured defaults on the part of the requesting party, or specifying such defaults if any are claimed and (iii) such other matters as are reasonably requested by the requesting party. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Office Building Project or of the business of Tenant. 16.2 At the requesting party's option, the failure to deliver such statement within such time shall be a material default of this Lease by the party who is to respond, without any further notice to such party, or it shall be conclusive upon such party that (i) this Lease is in full force and effect, without modification except as may be represented by the requesting party, (ii) there are no uncured defaults in the requesting party's performance, and (iii) if Landlord is the requesting party, not more than one month's rent has been paid in advance. 16.3 If Landlord desires to finance, refinance, or sell the Office Building Project, or any part thereof, Tenant hereby agrees to deliver to any lender or purchaser designated by Landlord such financial statements of -19- 24 Tenant as may be reasonably required by such lender or purchaser. Such statements shall include the past three (3) years' financial statements of Tenant. All such financial statements shall be received by Landlord and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. 17. LANDLORD'S LIABILITY. The term "Landlord" as used herein shall mean only the owner or owners. at the time in question, of the fee title or a lessee's interest in a ground lease of the Office Building Project and except as expressly provided in paragraph 15, in the event of any transfer of such title or interest, Landlord herein named (and in case of any subsequent transfers then the grantor) shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in the hands of Landlord or the then grantor at the time of such transfer, in which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on Landlord's successors and assigns, only during their respective periods of ownership. Notwithstanding anything contained in this Lease to the contrary, the obligations of Landlord under this Lease (including any actual or alleged breach or default by Landlord) do not constitute personal obligations of the individual partners, directors, officers or shareholders of Landlord or Landlord's partners, and Tenant shall not seek recourse against the individual partners, directors, officers or shareholders of Landlord or Landlord's partners, or any of their personal assets for satisfaction of any liability with respect to this Lease. Landlord's total liability under this Lease shall be limited to Landlord's ownership interest in the Office Building Project. 18. SEVERABILITY. The invalidity of any provision of this Lease as determined by a court of competent jurisdiction shall in no way affect the validity of any other provision hereof. 19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any amount due to Landlord not paid when due shall bear interest at fourteen percent (14%) from the due date. Payment of such interest shall not excuse or cure any default by Tenant under this Lease; provided, however, that interest shall not be payable on late charges incurred by Tenant. Interest, however, shall be payable on any amounts upon which late charges are paid by Tenant. 20. TIME OF ESSENCE. Time is of the essence with respect to the obligations to be performed under this Lease. 21. ADDITIONAL RENT. All monetary obligations of Tenant to Landlord under the terms of this Lease, including, but not limited to, Tenant's Share of Operating Expense Increase and any other expenses payable by Tenant hereunder shall be deemed to be rent. 22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior or contemporaneous agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification. Except as otherwise stated in this Lease, Tenant hereby acknowledges that neither the real estate broker listed in paragraph 15 hereof nor any cooperating broker on this transaction nor the Landlord or any employee or agents of any of said persons has made any oral or written warranties or representations to Tenant relative to the condition or use by Tenant of the Premises or the Office Building Project and Tenant acknowledges that Tenant assumes all responsibility regarding the Occupational Safety Health Act, the Americans with Disabilities Act, the legal use and adaptability of the Premises and the compliance thereof with all applicable laws and regulations in effect during the term of this Lease. 23. NOTICES. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal delivery or by certified or registered mail, and shall be deemed sufficiently given if delivered or addressed to Tenant or to Landlord at the address noted below the signature of the respective parties. Mailed notices shall be deemed given upon actual receipt at the address required, or forty-eight (48) hours following deposit in the mail, postage prepaid, whichever first occurs. Either party may by notice to the other specify a different address for notice purposes except that upon Tenant's taking possession of the Premises, the Premises shall constitute Tenant's address for notice purposes. A copy of all notices required or permitted to be given to Landlord hereunder shall be -20- 25 concurrently transmitted to such party or parties at such addresses as Landlord may from time to time hereafter designate by notice to Tenant. 24. WAIVERS. No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision. Landlord's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. 25. RECORDING. Neither this Lease nor a short form memorandum thereof shall be recorded without Landlord's consent. 26. HOLDING OVER. If Tenant, with Landlord's consent, remains in possession of the Premises or any part thereof after the expiration of the term hereof, such occupancy shall be a tenancy from month to month upon all the provisions of this Lease pertaining to the obligations of Tenant, except that the rent payable shall be two hundred percent (200%) of the rent payable immediately preceding the termination date of this Lease, and all Options, if any, granted under the terms of this Lease shall be deemed terminated and be of no further effect during said month to month tenancy. 27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by Tenant shall be deemed both a covenant and a condition. 29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof restricting assignment or subletting by Tenant and subject to the provisions of paragraph 17, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the State where the Office Building Project is located and any litigation concerning this Lease between the parties hereto shall be initiated in the county in which the Office Building Project is located. 30. SUBORDINATION. 30.1 This Lease, and any Option or right of first refusal granted hereby, at Landlord's option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the Office Building Project and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. If any mortgagee, trustee or ground lessor shall elect to have this Lease and any Options granted hereby prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease and such Options shall be deemed prior to such mortgage, deed of trust or ground lease, whether this Lease or such Options are dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof. 30.2 Tenant agrees to execute any documents required to effectuate an attornment, a subordination, or to make this Lease or any Option granted herein prior to the lien of any mortgage, deed of trust or ground lease, as the case may be. Tenant's failure to execute such documents within ten (10) days after written demand shall constitute a material default by Tenant hereunder without further notice to Tenant or, at Landlord's option, Landlord shall execute such documents on behalf of Tenant as Tenant's attorney-in-fact. Tenant does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name, place and stead, to execute such documents in accordance with this paragraph 30.2. -21- 26 31. ATTORNEYS' FEES. 31.1 If either party named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, trial or appeal thereon, shall be entitled to his reasonable attorneys' fees to be paid by the losing party as fixed by the court in the same or a separate suit, and whether or not such action is pursued to decision or judgment. 31.2 The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred in good faith. 31.3 Landlord shall be entitled to reasonable attorneys' fees and all other costs and expenses incurred in the preparation and service of notice of default and consultations in connection therewith whether or not a legal transaction is subsequently commenced in connection with such default. 32. LANDLORD'S ACCESS. 32.1 Landlord and Landlord's agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, performing any services required of Landlord, showing the same to prospective purchasers, lenders, or lessees, taking such safety measures, erecting such scaffolding or other necessary structures, making such alterations, repairs, improvements or additions to the Premises or to the Office Building Project as Landlord may reasonably deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect to Tenant's use of the Premises. Landlord may at any time place on or about the Premises or the Building any ordinary "For Sale" signs and Landlord may at any time during the last 120 days of the term hereof place on or about the Premises any ordinary "For Lease" signs. 32.2 All activities of Landlord pursuant to this paragraph shall be without abatement of rent, nor shall Landlord have any liability to Tenant for the same, nor shall such activities be considered an eviction or disturbance of Tenant's use or possession of the Premises. 32.3 Landlord shall have the right to retain keys to the Premises and to unlock all doors in or upon the Premises other than to files, vaults and safes, and in the case of emergency to enter the Premises by any reasonably appropriate means, and any such entry shall not be deemed a forcible or unlawful entry or detainer of the Premises or an eviction. Tenant waives any charges for damages or injuries or interference with Tenant's property or business in connection therewith. 33. AUCTIONS. Tenant shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises or the Common Areas without first having obtained Landlord's prior written consent. Notwithstanding anything to the contrary in this Lease, Landlord shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent. The holding of any auction on the Premises or Common Areas in violation of this paragraph shall constitute a material default of this Lease. 34. SIGNS. Tenant shall not place any sign upon the Premises or the Office Building Project without Landlord's prior written consent. Under no circumstances shall Tenant place a sign on any roof or in the Common Areas of the Office Building Project. 35. MERGER. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, or a termination by Landlord, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such subtenancies. 36. CONSENTS. Except for paragraphs 33 (auctions) and 34 (signs) hereof, wherever in this Lease the consent of one party is required to an act of the other party such consent shall not be unreasonably withheld or delayed. -22- 27 37. GUARANTOR. In the event that there is a guarantor of this Lease, said guarantor shall have the same obligations as Tenant under this Lease. 38. QUIET POSSESSION. Upon Tenant paying the rent for the Premises and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease. The individuals executing this Lease on behalf of Landlord represent and warrant to Tenant that they are fully authorized and legally capable of executing this Lease on behalf of Landlord and that such execution is binding upon all parties holding an ownership interest in the Office Building Project. 39. OPTIONS. 39.1 DEFINITION. As used in this paragraph the word "Option" has the following meaning: (1) the right or option to extend the term of this Lease or to renew this Lease or to extend or renew any lease that Tenant has on other property of Landlord; (2) The option of right of first refusal to lease the Premises or the right of first offer to lease the Premises or the right of first refusal to lease other space within the Office Building Project or other property of Landlord; (3) the right or option to purchase the Premises or the Office Building Project, or the right of first refusal to purchase the Premises or the Office Building Project or the right of first offer to purchase the Premises or the Office Building Project, or the right or option to purchase other property of Landlord, or the right of first refusal to purchase other property of Landlord or the right of first offer the purchase other property of Landlord. 39.2 OPTIONS PERSONAL. Each Option granted to Tenant in this Lease is personal to the original Tenant and may be exercised only by the original Tenant while occupying the Premises who does so without the intent of thereafter assigning this Lease or subletting the Premises or any portion thereof, and may not be exercised or be assigned, voluntarily or involuntarily, by or to any person or entity other than the Tenant; provided, however, that an Option may be exercised by or assigned to any Lease Affiliate as defined in paragraph 12.2 of this Lease. The Options, if any, herein granted to Tenant are not assignable separate and apart from this Lease, nor may any Option be separated from this Lease in any manner, either by reservation or otherwise. 39.3 MULTIPLE OPTIONS. In the event that Tenant has any multiple options to extend or renew this Lease, a later option cannot be exercised unless the prior option to extend or renew this Lease has been so exercised. 39.4 EFFECT OF DEFAULT ON OPTIONS. (a) Tenant shall have no right to exercise an Option, notwithstanding any provision in the grant of Option to the contrary, (i) during the time commencing from the date Landlord gives to Tenant a notice of default pursuant to paragraph 13.1(c) or 13.1(d) and continuing until the noncompliance alleged in said notice of default is cured, or (ii) during the period of time commencing on the day after a monetary obligation to Landlord is due from Tenant and unpaid (without any necessity for notice thereof to Tenant) and continuing until the obligation is paid, or (iii) in the event that Landlord has given to Tenant three or more notices of default under paragraph 13.1 (c), or paragraph 13.1 (d), whether or not the defaults are cured, during the 12 month period of time immediately prior to the time that Tenant attempts to exercise the subject Option, or (iv) if Tenant has committed any non-curable breach, including without limitation those described in paragraph 13.1 (b), or is otherwise in default of any of the terms, covenants or conditions of this Lease. (b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Tenant's inability to exercise an Option because of the provisions of paragraph 39.4(a). (c) All rights of Tenant under the provisions of an Option shall terminate and be of no further force or effect, notwithstanding Tenant's due and timely exercise of the Option, if, after such exercise and during the term of this Lease, (i) Tenant fails to pay to Landlord a monetary obligation of Tenant for a period of -23- 28 thirty (30) days after such obligation becomes due (without any necessity of Landlord to give notice thereof to Tenant), or (ii) Tenant fails to commence to cure a default specified in paragraph 13.1 (d) within thirty (30) days after the date that Landlord gives notice to Tenant of such default and/or Tenant fails thereafter to diligently prosecute said cure to completion, or (iii) Landlord gives to Tenant three or more notices of default under paragraph 13.1(c) or paragraph 13.1(d) whether or not the defaults are cured, or (iv) if Tenant has committed any non-curable breach, including without limitation those described in paragraph 13.1(b), or is otherwise in default of any of the terms, covenants and conditions of this Lease. 40. SECURITY MEASURES-LANDLORD'S RESERVATIONS. 40.1 Tenant hereby acknowledges that Landlord shall have no obligation whatsoever to provide guard service or other security measures for the benefit of the Premises or the Office Building Project. Tenant assumes all responsibility for the protection of Tenant, its agents, and invitees and the property of Tenant and of Tenant's agents and invitees from acts of third parties. Nothing herein contained shall prevent Landlord, at Landlord's sole option, from providing security protection for the Office Building Project or any part thereof, in which event the cost thereof shall be included within the definition of Operating Expenses, as set forth in paragraph 4.2.2. 40.2 Landlord shall have the following rights: (a) To change the name, address or title of the Office Building Project or building in which the Premises are located upon not less than 60 days prior written notice; (b) To, at Tenant's expense, provide and install Building standard graphics on the door of the Premises and such portions of the Common Areas as Landlord shall reasonably deem appropriate; (c) To permit any lessee the exclusive right to conduct any business as long as such exclusive does not conflict with any rights expressly given herein; or (d) To place such signs, notices or displays as Landlord reasonably deems necessary or advisable upon the roof, exterior of the buildings or the Office Building Project or on pole signs in the Common Areas. 40.3 Tenant shall not: (a) Use a representation (photographic or otherwise) of the Building or the Office Building Project or their name(s) in connection with Tenant's business; or (b) Suffer or permit anyone, except in emergency, to go upon the roof of the Building. 41. EASEMENTS. 41.1 Landlord reserves to itself the right, from time to time, to grant such easements, rights and dedications that Landlord deems necessary or desirable, and to cause the recordation of Parcel Maps and restrictions, so long as such easements, rights, dedications, Maps and restrictions do not unreasonably interfere with the use of the Premises by Tenant. Tenant shall sign any of the aforementioned documents upon request of Landlord and failure to do so shall constitute a material default of this Lease by Tenant without the need for further notice to Tenant. 41.2 The obstruction of Tenant's view, air or light by any structure erected in the vicinity of the Building, whether by Landlord or third parties, shall in no way affect this Lease or impose any liability upon Landlord. 42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a -24- 29 voluntary payment, and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease. 43. AUTHORITY. If Tenant is a corporation, trust, or general or limited partnership, Tenant, and each individual executing this Lease on behalf of such entity represent and warrant that such individual is duly authorized to execute and deliver this Lease on behalf of said entity. If Tenant is a corporation, trust or partnership, Tenant shall, within thirty (30) days after execution of this Lease, deliver to Landlord evidence of such authority satisfactory to Landlord. 44. CONFLICT. Any conflict between the printed provisions, Exhibits or Addenda of this Lease and the typewritten or handwritten provisions, if any, shall be controlled by the typewritten or handwritten provisions. 45. NO OFFER. Preparation of this Lease by Landlord or Landlord's agent and submission of same to Tenant shall not be deemed an offer to Tenant to lease. This Lease shall become binding upon Landlord and Tenant only when fully executed by both parties. 46. LENDER MODIFICATION. Tenant agrees to make such reasonable modifications to this Lease as may be reasonably required by an institutional lender in connection with the obtaining of normal financing or refinancing of the Office Building Project. 47. MULTIPLE PARTIES. If more than one person or entity is named as either Landlord or Tenant herein, except as otherwise expressly provided herein, the obligations of the Landlord or Tenant herein shall be the joint and several responsibility of all persons or entities named herein as such Landlord or Tenant, respectively. 48. INTENTIONALLY OMITTED. 49. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees that the terms of this Lease are confidential and constitute proprietary information of Landlord. Disclosure of the terms could adversely affect the ability of Landlord to negotiate other leases and impair Landlord's relationship with other tenants. Accordingly, Tenant agrees that it, and its partners, officers, directors, employees, agents and attorneys, shall not intentionally and/or voluntarily disclose the terms and conditions of this Lease to any newspaper or other publication or any other tenant or apparent prospective tenant of the Building or other portion of the Office Building Project, or real estate agent, either directly or indirectly, without the prior written consent of Landlord, provided, however, that Tenant may disclose the terms to prospective subtenants or assignees under this Lease. 50. ATTACHMENTS. Attached hereto are the following documents which constitute a part of this Lease: Exhibit "A" - Floor Plan of Premises Exhibit "B" - Rules and Regulations LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE TERMS. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE LANDLORD OR BROKERS AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. -25- 30 LANDLORD TENANT 101 CONVENTION CENTER DRIVE INTERNET CENTURY, INC., CORPORATION, a Delaware corporation a Nevada corporation By: PMRealty Advisors, Inc. By: /s/ JENNIFER L. FERLAINO a Delaware corporation ------------------------- Its: Investment Advisor Its: Treasurer By: /s/ DAVID K. HUBBS ------------------------ ------------------------- David K. Hubbs By: /s/ JEFFREY PETERSON ------------------------- Its: Vice President ----------------------- Its: Chief Executive Officer ------------------------ By: /s/ THOMAS A. HURST ------------------------- Address for Notices: Thomas A. Hurst Internet Century 101 Convention Center Drive, Suite 690 Its: Assistant Secretary Las Vegas, Nevada 89109 ----------------------- Address for Notices: PMRealty Advisors, Inc. 800 Newport Center Drive, Suite 300 Newport Beach, CA 92660 Attn: Asset Management - Ofc. Bldg. Div. With a copy to: CB Commercial Real Estate Services, Inc. 101 Convention Center Drive Las Vegas, NV 89109 -26- 31 THE PREMISES [DIAGRAM] scale: 1/16" = 1'-0" EXHIBIT "A" 32 RULES AND REGULATIONS FOR STANDARD OFFICE LEASE GENERAL RULES 1. Tenant shall not suffer or permit the obstruction of any, Common Areas, including driveways, walkways and stairways. 2. Landlord reserves the right to refuse access to any persons Landlord in good faith judges to be a threat to the safety, reputation, or property of the Office Building Project and its occupants. 3. Tenant shall not make or permit any noise or odors that annoy or interfere with other Tenants or persons having business within the Office Building Project. 4. Tenant shall not keep animals or birds within the Office Building Project, and shall not bring bicycles, motorcycles or other vehicles into areas not designated as authorized for same. 5. Tenant shall not make, suffer or permit litter except in appropriate receptacles for that purpose. 6. Tenant shall not alter any lock or install new or additional locks or bolts. 7. Tenant shall be responsible for the inappropriate use of any toilet rooms, plumbing or other utilities. No foreign substances of any kind are to be inserted therein. 8. Tenant shall not deface the walls, partitions or other surfaces of the premises or Office Building Project. 9. Tenant shall not suffer or permit anything in or around the Premises or Building that causes excessive vibration or floor loading in any part of the Office Building Project. 10. Furniture, significant freight and equipment shall be moved into or out of the building only with the Landlord's knowledge and consent, and subject to such reasonable limitations, techniques and timing, as may be designated by Landlord. Tenant shall be responsible for any damage to the Office Building Project arising from any such activity. 11. Tenant shall not employ any service or contractor for services or work to be performed in the Building, except as approved by Landlord. 12. Landlord reserves the right to close and lock the Building on Saturdays, Sundays and legal holidays, and on other days between the hours of 7:00 P.M. and 7:00 A.M. of the following day. If Tenant uses the Premises during such periods, Tenant shall be responsible for securely locking any doors it may have opened for entry. 13. Tenant shall return all keys at the termination of its tenancy and shall be responsible for the cost of replacing any keys that are lost. 14. No window coverings, shades or awnings shall be installed or used by Tenant. 15. No Tenant, employee or invitee shall go upon the roof of the Building. EXHIBIT "B" 33 16. Tenant shall not suffer or permit smoking or carrying of lighted cigars or cigarettes in areas reasonably designated by Landlord or by applicable governmental agencies as non-smoking areas. 17. Tenant shall not use any method of heating or air conditioning other than as provided by Landlord. 18. Tenant shall not install, maintain or operate any vending machines upon the Premises without Landlord's written consent. 19. The Premises shall not be used for lodging or manufacturing, cooking or food preparation (microwave ovens for Tenant's personal use excepted). 20. Tenant shall comply with all safety, fire protection and evacuation regulations established by Landlord or any applicable governmental agency. 21. Landlord reserves the right to waive any one of these rules or regulations, and/or as to any particular Tenant, and any such waiver shall not constitute a waiver of any other rule or regulation or any subsequent application thereof to such Tenant. 22. Tenant assumes all risks from theft or vandalism and agrees to keep its Premises locked as may be required. 23. Landlord reserves the right to make such other reasonable rules and regulations as it may from time to time deem necessary for the appropriate operation and safety of the Office Building Project and its occupants. Tenant agrees to abide by these and such rules and regulations. 24. Hazardous Substances. (a) Neither Tenant, its successors or assigns, nor any permitted assignee, subtenant, licensee or other person or entity acting at the direction or with the consent of Tenant shall (i) manufacture, treat, use, store or dispose of any "Hazardous Substance" (as hereinafter defined) on the Premises, the Office Building Project, or any part thereof or (ii) permit the "release" (as hereinafter defined) of a Hazardous Substance on or from the Premises, the Office Building Project, or any part thereof unless manufacturing, treatment, use, storage, disposal, or release of a hazardous substance is approved in writing by Landlord. (b) Tenant covenants at its cost and expense, to protect, indemnify, defend and save Landlord harmless against and from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, or expenses of any kind or nature (including, without limitation, attorney's fees and expert's fees) which may at any time be imposed upon, incurred by or asserted or awarded against Landlord arising from or out of any Hazardous Substance on, in, under or affecting the Premises, Office Building Project, or any part thereof occurring as a result of any act or omission by Tenant after the Commencement Date, its successors or assigns, or any assignee, permitted subtenant, licensee or other person or entity acting at the direction, knowledge or implied consent of Tenant. (c) The term "Hazardous Substance" shall mean any waste, substance or material (i) identified in Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as the same may be amended from time to time (hereinafter called "CERCLA", or (ii) determined to be hazardous, toxic, a pollutant or contaminant, under federal, state, or local statute, law, ordinance, rule, regulation or judicial or administrative order or decision, as same may be amended from time to time, including, but not limited to, petroleum and petroleum products. The term "release" shall have the meaning given to such term in Section 101(22) of CERCLA. B-2 34 PARKING RULES 1. Parking areas shall be used only for parking by vehicles no longer than full size, passenger automobiles herein called "Permitted Size Vehicles". 2. Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant's employees, suppliers, shippers, customers, or invitees to be loaded, unloaded, or parked in areas other than those designated by Landlord for such activities. 3. Parking stickers or identification devices shall be the property of Landlord and be returned to Landlord by the holder thereof upon termination of the holder's parking privileges. Tenant will pay such replacement charge as is reasonably established by Landlord for the loss of such devices. 4. Landlord reserves the right to refuse the sale of monthly identification devices to any person or entity that willfully refuses to comply with the applicable rules, regulations, laws and/or agreements. 5. Landlord reserves the right to relocate all or a part of parking spaces from floor to floor, within one floor, and/or to reasonably adjacent offsite location(s), and to reasonably allocate them between compact and standard size spaces, as long as the same complies with applicable laws, ordinances and regulations. 6. Users of the parking area will obey all posted signs and park only in the areas designated for vehicle parking. 7. Unless otherwise instructed, every person using the parking area is required to park and lock his own vehicle. Landlord will not be responsible for any damage to vehicles, injury to persons or loss of property, all of which risks are assumed by the party using the parking area. 8. Validation, if established, will be permissible only by such method or methods as Landlord and/or its licensee may establish at rates generally applicable to visitor parking. 9. The maintenance, washing, waxing or cleaning of vehicles in the parking area is prohibited. 10. Tenant shall be responsible for seeing that all of its employees, agents and invitees comply with the applicable parking rules, regulations, laws and agreements. 11. Landlord reserves the right to modify these rules and/or adopt such other reasonable and non-discriminatory rules and regulations as it may deem necessary for the proper operation of the parking area. 12. Such parking use as is herein provided is intended merely as a license only and no bailment is intended or shall be created hereby. B-3 35 STORAGE SPACE AGREEMENT This document will serve as a Storage Space Agreement (called "Agreement" herein), between the parties hereto as follows: 1. 101 Convention Center Drive Corporation, hereto referred to as "Lessor", hereby leases to Internet Century, Inc., herein referred to as "Lessee", approximately 69 square feet of storage space (the "Storage Space") located at 101 Convention Center Drive, Las Vegas, NV 89109. Said Storage Space is designated as PS-1-10, the location of which is indicated on the floor plan attached hereto as Exhibit "A". 2. The term of the Agreement shall be month to month commencing on September 16, 1998 and may be terminated by either party upon 30 days written notice. 3. The monthly rental for said Storage Space shall be in the amount of $41.4, payable to Lessor in advance on the first day of each and every calendar month that this Agreement is in effect. All rental payments as provided for hereunder shall be by check, payable to 101 Convention Center Drive Corporation, and shall be mailed or delivered to Lessor at 101 Convention Center Drive, Suite #101. Las Vegas, NV 89109. 4. Lessee acknowledges having inspected said Storage Space and accepts same in its present condition (as of the date hereof) as adequate for the purpose set forth in Paragraph 5 hereof. 5. Said Storage Space shall be used only for the purpose of storing Lessee's personal property, and (except for lighting) no utility service whatsoever will be supplied to said Storage Space. No hazardous materials may be stored in the Storage Space. 6. Lessee agrees to fully indemnify Lessor with respect to any liability, damages, expenses, attorney's fees, causes of action, suits, fines, claims or judgements arising from injury to any personal or damage to any property, arising out of or connected with the use of said Storage Space by Lessee. In addition, Lessee shall arrange for liability insurance to cover its use of said Storage Space. Lessee shall not do or permit to be done anything which shall invalidate the Lessor's insurance coverage referred to herein. 7. Upon termination of this Agreement, Lessee shall remove all property placed by it in said Storage Space, and shall promptly repair any damage to said Storage Space caused by Lessee's use of same. Said obligations shall be performed at Lessee's own expense and risk. Any property which is not promptly removed from said Storage Space following termination shall be either stored in said Storage Space or removed and stored elsewhere, in either case, entirely at Lessee's expense, and (if Lessee does not timely claim such property and reimburse Lessor for the aforementioned expenses) disposed of by Lessor. Page 1 of 2 36 8. Lessee shall be responsible for securing (e.g. by means of a lock) said Storage Space against entry by unauthorized person; accordingly, Lessee hereby hold Lessor harmless with respect to any loss of and/or damage to any property stored by Lessee in said Storage Space. 9. This Agreement constitutes the entire agreement between the parties hereto with respect to said Storage Space and supersedes all prior negotiations, representations, or agreements, either oral or written. No modification of this Agreement shall be binding unless evidenced by a written agreement signed by Lessor and Lessee. LESSOR LESSEE 101 Convention Center Drive Corporation Internet Century, Inc. By /s/ LEIGH SCHROM By /s/ MORGAN DUNN ---------------------------------- ---------------------------- Leigh Schrom Morgan Dunn Property Manager Nevada Operations Officer Page 2 of 2 37 [DIAGRAM OF THE COLONNADE] EX-10.20 22 1998 STOCK OPTION PLAN & FORM OF OPTION AGREEMENT 1 EXHIBIT 10.20 INTERNET CENTURY, INC. 1998 STOCK OPTION PLAN Article I. Establishment and Purpose 1.1 Establishment. Internet Century, Inc., a Nevada corporation (the "Company"), hereby establishes a stock option plan for officers, directors, employees and consultants who provide services to the Company, as described herein, which shall be known as the 1998 Stock Option Plan (the "Plan"). It is intended that certain of the options issued under the Plan to employees of the Company shall constitute "Incentive Stock Options" within the meaning of section 422A of the Internal Revenue Code ("Code"), and that other options issued under the Plan shall constitute "Nonstatutory Options" under the Code. The Board of Directors of the Company (the "Board") shall determine which options are to be Incentive Stock Options and which are to be Nonstatutory Options and shall enter into option agreements with recipients accordingly. 1.2 Purpose. The purpose of this Plan is to enhance the Company's stockholder value and financial performance by attracting, retaining and motivating the Company's officers, directors, key employees and consultants and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company's success through stock ownership. Article II. Definitions 2.1 Definitions. Whenever used herein, the following capitalized terms shall have the meanings set forth below, unless the context clearly requires otherwise. (a) "Board" means the Board of Directors of the Company. (b) "Code" means the Internal Revenue Code of 1986, as amended. (c) "Committee" shall mean the Committee provided for by Article IV hereof. (d) "Company" means Internet Century, Inc., a Nevada corporation. (e) "Consultant" means any person or entity, including an officer or director of the Company who provides services (other than as an Employee) to the Company and shall include a Nonemployee Director, as defined below. (f) "Date of Exercise" means the date the Company receives notice, by an Optionee, of the exercise of an Option pursuant to section 8.1 of the Plan. Such notice shall indicate the number of shares of Stock the Optionee intends to exercise. 2 (g) "Employee" means any person, including an officer or director of the Company who is employed by the Company. (h) "Fair Market Value" means the fair market value of Stock upon which an Option is granted under this Plan. (i) "Incentive Stock Option" means an Option granted under this Plan which is intended to qualify as an "incentive stock option" within the meaning of section 422A of the Code. (j) "Nonemployee Director" means a member of the Board who is not an employee of the Company at the time an Option is granted hereunder. (k) "Nonstatutory Option" means an Option granted under the Plan which is not intended to qualify as an Incentive Stock Option within the meaning of section 422A of the Code. Nonstatutory Options may be granted at such times and subject to such restrictions as the Board shall determine without conforming to the statutory rules of section 422A of the Code applicable to Incentive Stock Options. (l) "Option" means the right, granted under the Plan, to purchase Stock of the Company at the option price for a specified period of time. For purposes of this Plan, an Option may be either an Incentive Stock Option or a Nonstatutory Option. (m) "Optionee" means an Employee or Consultant holding an Option under the Plan. (n) "Parent Corporation" shall have the meaning set forth in section 425(e) of the Code with the Company being treated as the employer corporation for purposes of this definition. (o) "Significant Shareholder" means an individual who, within the meaning of section 422A(b)(6) of the Code, owns securities possessing more than ten percent of the total combined voting power of all classes of securities of the Company. In determining whether an individual is a Significant Shareholder, an individual shall be treated as owning securities owned by certain relatives of the individual and certain securities owned by corporations in which the individual is a shareholder; partnerships in which the individual is a partner; and estates or trusts of which the individual is a beneficiary, all as provided in section 425(d) of the Code. (p) "Stock" means the $.001 par value common stock of the Company. 2 3 2.2 Gender and Number. Except when otherwise indicated by the context, any masculine terminology when used in this Plan also shall include the feminine gender, and the definition of any term herein in the singular also shall include the plural. Article III. Eligibility and Participation 3.1 Eligibility and Participation. All Employees are eligible to participate in this Plan and receive Incentive Stock Options and/or Nonstatutory Options hereunder. All Consultants are eligible to participate in this Plan and receive Nonstatutory Options hereunder. Optionees in the Plan shall be selected by the Board from among those Employees and Consultants who, in the opinion of the Board, are in a position to contribute materially to the Company's continued growth and development and to its long-term financial success. Article IV. Administration 4.1 Administration. The Board shall be responsible for administering the Plan. The Board is authorized to interpret the Plan; to prescribe, amend, and rescind rules and regulations relating to the Plan; to provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company; and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Determinations, interpretations or other actions made or taken by the Board, pursuant to the provisions of this Plan, shall be final and binding and conclusive for all purposes and upon all persons. The Plan shall be administered by the standing Compensation Committee of the Board (the "Committee") which is an executive committee of the Board, and consists of not less than three (3) members of the Board, at least two of whom are not executive officers or salaried employees of the Company. The members of the Committee may be directors who are eligible to receive Options under the Plan, but Options may be granted to such persons only by action of the full Board and not by action of the Committee. The Committee shall have full power and authority, subject to the limitations of the Plan and any limitations imposed by the Board, to construe, interpret and administer the Plan and to make determinations which shall be final, conclusive and binding upon all persons, including, without limitation, the Company, the stockholders, the directors and any persons having any interests in any Options which may be granted under the Plan, and, by resolution or resolution providing for the creation and issuance of any such Option, to fix the terms upon which, the time or times at or within which, and the price or prices at which any Stock may be purchased from the Company upon the exercise of Options, which terms, time or times and price or prices shall, in every case, be set forth or incorporated by reference in the instrument or instruments evidencing such Option, and shall be consistent with the provisions of the Plan. 3 4 The Board may from time to time remove members from or add members to, the Committee. The Board may terminate the Committee at any time. Vacancies on the Committee, howsoever caused, shall be filled by the Board. The Committee shall select one of its members as Chairman, and shall hold meetings at such times and places as the Chairman may determine. A majority of the Committee at which a quorum is present, or acts reduced to or approved in writing by all of the members of the Committee, shall be the valid acts of the Committee. A quorum shall consist of two-thirds (2/3) of the members of the Committee. Where the Committee has been created by the Board, references herein to actions to be taken by the Board shall be deemed to refer to the Committee as well, except where limited by the Plan or the Board. The Board shall have all of the enumerated powers of the Committee but shall not be limited to such powers. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it. 4.2 Special Provisions for Grants to Officers or Directors. Rule 16b-3 under the Securities and Exchange Act of 1934 (the "Act") provides that the grant of a stock option to a director or officer of a company subject to the Act will be exempt from the provisions of section 16(b) of the Act if the conditions set forth in said Rule are satisfied. Unless otherwise specified by the Board, grants of Options hereunder to individuals who are officers or directors of the Company shall be made in a manner that satisfies the conditions of said Rule. Article V. Stock Subject to the Plan 5.1 Number. The total number of shares of Stock hereby made available and reserved for issuance under the Plan shall be 500,000. The aggregate number of shares of Stock available under this Plan shall be subject to adjustment as provided in section 5.3. The total number of shares of Stock may be authorized but unissued shares of Stock, or shares acquired by purchase as directed by the Board from time to time in its discretion, to be used for issuance upon exercise of Options granted hereunder. 5.2 Unused Stock. If an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased shares of Stock subject thereto shall (unless the Plan shall have terminated) become available for other Options under the Plan. 5.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock by reason of a stock dividend or split, recapitalization, reclassification or other similar corporate change, the aggregate number of shares of Stock set forth in section 5.1 shall be appropriately adjusted by the Board to reflect such change. The Board's determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share. In any such case, the number and kind of shares of Stock that are subject to any Option (including any Option outstanding after termination of employment) and the Option price per share shall be proportionately and appropriately adjusted without any change in the aggregate Option price to be paid therefor upon exercise of the Option. 4 5 Article VI. Duration of the Plan 6.1 Duration of the Plan. The Plan shall be in effect until September 30, 2008 unless extended by the Company's shareholders. Any Options outstanding at the end of said period shall remain in effect in accordance with their terms. The Plan shall terminate before the end of said period, if all Stock subject to it has been purchased pursuant to the exercise of Options granted under the Plan. Article VII. Terms of Stock Options 7.1 Grant of Options. Subject to section 5.1, Options may be granted to Employees or Consultants at any time and from time to time as determined by the Board; provided, however, that Consultants may receive only Nonstatutory Options, and may not receive Incentive Stock Options. The Board shall have complete discretion in determining the number of Options granted to each Optionee. In making such determinations, the Board may take into account the nature of services rendered by such Employees or Consultants, their present and potential contributions to the Company, and such other factors as the Board in its discretion shall deem relevant. The Board also shall determine whether an Option is to be an Incentive Stock Option or a Nonstatutory Option. In the case of Incentive Stock Options the total Fair Market Value (determined at the date of grant) of shares of Stock with respect to which incentive stock options are exercisable for the first time by the Optionee during any calendar year under all plans of the Company under which incentive stock options may be granted (and all such plans of any Parent Corporations and any subsidiary corporations of the Company) shall not exceed $100,000. (Hereinafter, this requirement is sometimes referred to as the "$100,000 Limitation.") Nothing in this Article VII shall be deemed to prevent the grant of Options permitting exercise in excess of the maximums established by the preceding paragraph where such excess amount is treated as a Nonstatutory Option. The Board is expressly given the authority to issue amended or replacement Options with respect to shares of Stock subject to an Option previously granted hereunder. An amended Option amends the terms of an Option previously granted (including an extension of the terms of such Option) and thereby supersedes the previous Option. A replacement Option is similar to a new Option granted hereunder except that it provides that it shall be forfeited to the extent that a previously granted Option is exercised, or except that its issuance is conditioned upon the termination of a previously granted Option. 5 6 7.2 No Tandem Options. Where an Option granted under the Plan is intended to be an Incentive Stock Option, the Option shall not contain terms pursuant to which the exercise of the Option would affect the Optionee's right to exercise another Option, or vice versa, such that the Option intended to be an Incentive Stock Option would be deemed a tandem stock option within the meaning of the regulations under section 422A of the Code. 7.3 Option Agreement; Terms and Conditions to Apply Unless Otherwise Specified. As determined by the Board on the date of grant, each Option shall be evidenced by an Option agreement (the "Option Agreement") that includes the nontransferability provisions required by section 10.2 hereof and specifies: whether the Option is an Incentive Stock Option or a Nonstatutory Option; the Option price; the term (duration) of the Option; the number of shares of Stock to which the Option applies; any vesting or exercisability restrictions which the Board may impose; in the case of an Incentive Stock Option, a provision implementing the $100,000 Limitation; and any other terms or conditions which the Board may impose. All such terms and conditions shall be determined by the Board at the time of grant of the Option. If not otherwise specified by the Board, the following terms and conditions shall apply to Options granted under the Plan: (a) Term. The Option shall be exercisable to purchase Stock for a period of ten years from the date of grant, as evidenced by the execution date of the Option Agreement. (b) Exercise of Option. Unless an Option is terminated as provided hereunder, an Optionee may exercise his Option for up to, but not in excess of, the number of shares of Stock subject to the Option specified below, based on the Optionee's number of years of continuous service with the Company from the date on which the Option is granted. In the case of an Optionee who is an Employee, continuous service shall mean continuous employment; in the case of an Optionee who is a Consultant, continuous service shall mean the continuous provision of consulting services. In applying said limitations, the amount of shares, if any, previously purchased by the Optionee under the Option shall be counted in determining the amount of shares the Optionee can purchase at any time. The Optionee may exercise his Option in the following amounts: (i) After one (1) year of continuous services to the Company, the Optionee may purchase up to 33.3% of the shares of Stock subject to the Option; (ii) After two (2) years of continuous services to the Company, the Optionee may purchase up to 66.6% of the shares of Stock subject to the Option; 6 7 (iii) After three years of continuous services to the Company, the Optionee may purchase all shares of Stock subject to the Option. The Board may specify terms and conditions other than those set forth above, in its discretion. All Option Agreements shall incorporate the provisions of the Plan by reference, with certain provisions to apply depending upon whether the Option Agreement applies to an Incentive Stock Option or to a Nonstatutory Option. 7.4 Option Price. No Incentive Stock Option granted pursuant to this Plan shall have an Option price that is less than the Fair Market Value of the Stock on the date the Option is granted. Incentive Stock Options granted to Significant Stockholders shall have an Option price of not less than 110 percent of the Fair Market Value of the Stock on the date of grant. The Option price for Nonstatutory Options shall be established by the Board and shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant. 7.5 Term of Options. Each Option shall expire at such time as the Board shall determine, provided, however, that no Option shall be exercisable later than ten years from the date of its grant. 7.6 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Board shall in each instance approve, which need not be the same for all Optionees. 7.7 Payment. Payment for all shares of Stock shall be made at the time that an Option, or any part thereof, is exercised, and no shares shall be issued until full payment therefor has been made. Payment shall be made (i) in cash or certified funds, or (ii) if acceptable to the Board, in Stock or in some other form; provided, however, in the case of an Incentive Stock Option, that said other form of payment does not prevent the Option from qualifying for treatment as an Incentive Stock Option within the meaning of the Code. Article VIII. Written Notice, Issuance of Stock Certificates, Stockholder Privileges 8.1 Written Notice. An Optionee wishing to exercise an Option shall give written notice to the Company, in the form and manner prescribed by the Board. Full payment for the shares exercised pursuant to the Option must accompany the written notice. 8.2 Issuance of Stock Certificates. As soon as practicable after the receipt of written notice and payment, the Company shall deliver to the Optionee or to a nominee of the Optionee a certificate or certificates for the requisite number of shares of Stock. 8.3 Privileges of a Stockholder. An Optionee or any other person entitled to exercise an Option under this Plan shall not have stockholder privileges with respect to any Stock covered by the Option until the date of issuance of a stock certificate for such stock. 7 8 Article IX. Termination of Employment or Services Except as otherwise expressly specified by the Board for Nonstatutory Options, all Options granted under this Plan shall be subject to the following termination provisions: 9.1 Death. If an Optionee's employment in the case of an Employee, or provision of services as a Consultant, in the case of a Consultant, terminates by reason of death, the Option may thereafter be exercised at any time prior to the expiration date of the Option or within 12 months after the date of such death, whichever period is the shorter, by the person or persons entitled to do so under the Optionee's will or, if the Optionee shall fail to make a testamentary disposition of an Option or shall die intestate, the Optionee's legal representative or representatives. The Option shall be exercisable only to the extent that such Option was exercisable as of the date of Optionee's death. 9.2 Termination Other Than For Cause or Due to Death. In the event of an Optionee's termination of employment, in the case of an Employee, or termination of the provision of services as a Consultant, in the case of a Consultant, other than by reason of death, the Optionee may exercise such portion of his Option as was exercisable by him at the date of such termination (the "Termination Date") at any time within three (3) months of the Termination Date; provided, however, that where the Optionee is an Employee, and is terminated due to disability within the meaning of Code section 422A, he may exercise such portion of his Option as was exercisable by him on his Termination Date within one year of his Termination Date. In any event, the Option cannot be exercised after the expiration of the term of the Option. Options not exercised within the applicable period specified above shall terminate. In the case of an Employee, a change of duties or position within the Company, shall not be considered a termination of employment for purposes of this Plan. The Option Agreements may contain such provisions as the Board shall approve with reference to the effect of approved leaves of absence upon termination of employment. 9.3 Termination for Cause. In the event of an Optionee's termination of employment, in the case of an Employee, or termination of the provision of services as a Consultant, in the case of a Consultant, which termination is by the Company for cause, any Option or Options held by him under the Plan, to the extent not exercised before such termination, shall forthwith terminate. Article X. Rights of Optionees 10.1 Service. Nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Employee's employment, or any Consultant's services, at any time, nor confer upon any Employee any right to continue in the employ of the Company, or upon any Consultant any right to continue to provide services to the Company. 9 9 10.2 Nontransferability. Except as otherwise specified by the Board for Nonstatutory Options, Options granted under this Plan shall be nontransferable by the Optionee, other than by will or the laws of descent and distribution, and shall be exercisable during the Optionee's lifetime only by the Optionee. Article XI. Optionee-Employee's Transfer or Leave of Absence 11.1 Optionee-Employee's Transfer or Leave of Absence. For Plan purposes: (a) A transfer of an Optionee who is an Employee within the Company, or (b) a leave of absence for such an Optionee (i) which is duly authorized in writing by the Company, and (ii) if the Optionee holds an Incentive Stock Option, which qualifies under the applicable regulations under the Code which apply in the case of Incentive Stock Options, shall not be deemed a termination of employment. However, under no circumstances may an Optionee exercise an Option during any leave of absence, unless authorized by the Board. Article XII. Amendment, Modification and Termination of the Plan 12.1 Amendment, Modification, and Termination of the Plan. The Board may at any time terminate, and from time to time may amend or modify the Plan, provided, however, that no such action of the Board, without approval of the stockholders, may: (a) increase the total amount of Stock which may be purchased through Options granted under the Plan, except as provided in Article V; (b) change the class of Employees or Consultants eligible to receive Options; No amendment, modification or termination of the Plan shall in any manner adversely affect any outstanding Option under the Plan without the consent of the Optionee holding the Option. Article XIII. Acquisition, Merger and Liquidation 13.1 Acquisition. In the event that an Acquisition occurs with respect to the Company, the Company shall have the option, but not the obligation, to cancel Options outstanding as of the effective date of Acquisition, whether or not such Options are then exercisable, in return for payment to the Optionees of an amount equal to a reasonable estimate of an amount (hereinafter the "Spread") equal to the difference between the net amount per share of Stock payable in the Acquisition, or as a result of the Acquisition, less the exercise price of the 10 10 Option. In estimating the Spread, appropriate adjustments to give effect to the existence of the Options shall be made, such as deeming the Options to have been exercised, with the Company receiving the exercise price payable thereunder, and treating the shares receivable upon exercise of the Options as being outstanding in determining the net amount per share. For purposes of this section, an "Acquisition" shall mean any transaction in which substantially all of the Company's assets are acquired or in which a controlling amount of the Company's outstanding shares are acquired, in each case by a single person or entity or an affiliated group of persons and/or entities. For purposes of this section a controlling amount shall mean more than 50% of the issued and outstanding shares of stock of the Company. The Company shall have such an option regardless of how the Acquisition is effectuated, whether by direct purchase, through a merger or similar corporate transaction, or otherwise. In cases where the acquisition consists of the acquisition of assets of the Company, the net amount per share shall be calculated on the basis of the net amount receivable with respect to shares upon a distribution and liquidation by the Company after giving effect to expenses and charges, including but not limited to taxes, payable by the Company before the liquidation can be completed. Where the Company does not exercise its option under this section 13.1, the remaining provisions of this Article XIII shall apply, to the extent applicable. 13.2 Merger or Consolidation. Subject to any required action by the stockholders, if the Company shall be the surviving corporation in any merger or consolidation, any Option granted hereunder shall pertain to and apply to the securities to which a holder of the number of shares of Stock subject to the Option would have been entitled in such merger or consolidation. 13.3 Other Transactions. A dissolution or a liquidation of the Company or a merger and consolidation in which the Company is not the surviving corporation shall cause every Option outstanding hereunder to terminate as of the effective date of such dissolution, liquidation, merger or consolidation. However, the Optionee either (i) shall be offered a firm commitment whereby the resulting or surviving corporation in a merger or consolidation will tender to the Optionee an option (the "Substitute Option") to purchase its shares on terms and conditions both as to number of shares and otherwise, which will substantially preserve to the Optionee the rights and benefits of the Option outstanding hereunder granted by the Company, or (ii) shall have the right immediately prior to such dissolution, liquidation, merger, or consolidation to exercise any unexercised Options whether or not then exercisable, subject to the provisions of this Plan. The Board shall have absolute and uncontrolled discretion to determine whether the Optionee has been offered a firm commitment and whether the tendered Substitute Option will substantially preserve to the Optionee the rights and benefits of the Option outstanding hereunder. In any event, any Substitute Option for an Incentive Stock Option shall comply with the requirements of Code section 425(a). 11 11 Article XIV. Securities Registration 14.1 Securities Registration. In the event that the Company shall deem it necessary or desirable to register under the Securities Act of 1933, as amended, or any other applicable statute, any Options or any Stock with respect to which an Option may be or shall have been granted or exercised, or to qualify any such Options or Stock under the Securities Act of 1933, as amended, or any other statute, then the Optionee shall cooperate with the Company and take such action as is necessary to permit registration or qualification of such Options or Stock. Unless the Company has determined that the following representation is unnecessary, each person exercising an Option under the Plan may be required by the Company, as a condition to the issuance of the shares pursuant to exercise of the Option, to make a representation in writing (a) that the Optionee is acquiring such shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof, (b) that before any transfer in connection with the resale of such shares, the Optionee will obtain the written opinion of counsel for the Company, or other counsel acceptable to the Company, that such shares may be transferred. The Company may also require that the certificates representing such shares contain legends reflecting the foregoing. Article XV. Tax Withholding 15.1 Tax Withholding. Whenever shares of Stock are to be issued in satisfaction of Options exercised under this Plan, the Company shall have the power to require the recipient of the Stock to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements. Article XVI. Indemnification 16.1 Indemnification. To the extent permitted by law, each person who is or shall have been a member of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of judgment in any such action, suit or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's articles of incorporation or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. Article XVII. Requirements of Law 17.1 Requirements of Law. The granting of Options and the issuance of shares of Stock upon the exercise of an Option shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 12 12 17.2 Governing Law. The Plan and all agreements hereunder shall be construed in accordance with and governed by the laws of the State of Arizona. Article XVIII. Effective Date of Plan 18.1 Effective Date. The Plan shall be effective as of November 1, 1998, the date of its adoption by the Company's stockholders. Article XIX. Compliance with Code 19.1 Compliance with Code. Incentive Stock Options granted hereunder are intended to qualify as Incentive Stock Options under Code section 422A. If any provision of this Plan is susceptible to more than one interpretation, such interpretation shall be given thereto as is consistent with Incentive Stock Options granted under this Plan being treated as Incentive Stock Options under the Code. Article XX. No Obligation to Exercise Option 20.1 No Obligation to Exercise. The granting of an Option shall impose no obligation upon the holder thereof to exercise such Option. Dated at Phoenix, Arizona, November 1, 1998. INTERNET CENTURY, INC. By /s/ Jeffrey S. Peterson ------------------------------------ Jeffrey S. Peterson, President 13 13 AMENDMENT TO 1998 STOCK OPTION PLAN By resolution of the Board of Directors of quepasa.com, Inc. (the "Company") dated January 20, 1999, and by resolution of the Company's shareholders at the Shareholders' Annual Meeting held February 22, 1999, the Company's 1998 Stock Option Plan (the "Plan") is hereby amended by increasing the number of shares of stock available under the Plan from 500,000 shares to 2,500,000 shares in accordance with Section 5.1 of the Plan. Any and all other terms and conditions of the Company's 1998 Stock Option Plan not amended or modified as stated above remain the same and in full force and effect. The foregoing is effective as of February 22, 1999. quepasa.com, inc. By: /s/ Jennifer Ferlaino --------------------------------- Jennifer Ferlaino, Secretary 14 INTERNET CENTURY, INC. FORM OF INCENTIVE STOCK OPTION AGREEMENT UNDER THE 1998 STOCK OPTION PLAN Between: Internet Century, Inc. (the "Company") and _____________________________________ (the "Employee"), dated _______________. The Company hereby grants to the Employee an option (the "Option") to purchase __________ shares of the Company's no par value common stock ("Stock") under the Internet Century, Inc. 1998 Stock Option Plan (the "Plan") upon the following terms and conditions: 1. Purchase Price. The purchase price of the Stock shall be _____ per share, which is not less than the fair market value of the Stock on the date of this Agreement. 2. Incentive Stock Option. The Option shall be an Incentive Stock Option, as defined in the Plan. 3. Period of Exercise. The Option will expire ten years from the date of this Agreement. The Option may be exercised only while the Employee is actively employed by the Company and as provided in Section 6, dealing with termination of employment. The Option may be exercised for up to, but not in excess of, the amounts of shares subject to the Option specified below, based on the Employee's number of years of continuous employment with the Company from the date hereof. In applying the following limitations, the amount of shares, if any, previously purchased by Employee shall be counted in determining the amount of shares the Employee can purchase at any time in accordance with said limitations. The Employee may exercise the Option in the following amounts and in accordance with the conditions set forth in paragraph 7.3 of the Plan: (i) After one (1) year of continuous services to the Company, the Employee may purchase up to 33.3% of the shares of Stock subject to the Option; (ii) After two (2) years of continuous services to the Company, the Employee may purchase up to 66.6% of the shares of Stock subject to the Option; (iii) After three years of continuous services to the Company, the Employee may purchase all shares of Stock subject to the Option. 15 This Option may not be exercised for less than fifty shares at any time unless the number of shares purchased is the total number purchasable at the time under the Option. Where the Employee holds (whether under this Option alone or under this Option in conjunction with other incentive stock options) incentive stock options upon shares of the Company's common stock having an aggregate fair market value (determined at the time of grant of each option) exceeding $100,000, the $100,000 Limitation set forth in Section 4 below may impose additional limitations upon the exercisability of this Option and any other incentive stock options granted to the Employee. Such limitations are in addition to, and not in lieu of, the limitations set forth in this Section 3. 4. $100,000 Limitation. Notwithstanding anything to the contrary contained herein, the total fair market value (determined as of the date of grant of an option) of shares of stock with respect to which this Option (and any other incentive stock options granted by the Company) shall become exercisable for the first time during any calendar year shall not exceed $100,000. (Hereinafter this limitation is sometimes referred to as the "$100,000 Limitation.") If in any calendar year shares of stock having a fair market value of more than $100,000 first would become exercisable, but for the limitations of this section, this Option shall be exercisable in such calendar year only for shares having a fair market value not exceeding $100,000. (Hereinafter, shares with respect to which this Option is not exercisable in a calendar year due to the $100,000 Limitation are referred to as "Excess Shares.") This Option shall become exercisable with respect to Excess Shares from a calendar year in the next succeeding calendar year (subject to any other restrictions on exercise which may be contained herein), provided that the $100,000 limitation shall also be applied to such succeeding calendar year. Subject to the term of this Option, such carryovers of Excess Shares shall be made to succeeding calendar years, including carryovers of any Excess Shares from previous calendar years, without limitation. If as of the date of this Agreement the Employee already holds incentive stock options granted by the Company (hereinafter any such incentive stock options are referred to as "Prior Options"), and the fair market value (determined as the date of grant of each option) of the shares subject to this Option and the Prior Options held by the Employee is such that the $100,000 Limitation must be imposed, the $100,000 Limitation shall be applied as follows unless a special provision is made on Exhibit A attached hereto. If no special provision is made on Exhibit A, the $100,000 Limitation shall be applied by giving priority to options which first become exercisable during a calendar year under the Prior Options. Thus, in applying the $100,000 Limitation under this Option, the fair market value (determined as of the date of grant) of the shares of stock with respect to which options first become exercisable under the Prior Options during the calendar year shall first be determined. Only the balance remaining for the calendar year of the $100,000 Limitation, if any, may be exercisable under this Option for the calendar year, with any excess to be carried over as provided in the preceding paragraph, but with such carryover also to be subject to the provisions of this paragraph. 2 16 Employee acknowledges that it is possible that he or she may be granted incentive stock options by the Company after the date of this Agreement. (Hereinafter such options are referred to as "Subsequent Options.") If the exercise price of a Subsequent Option is less than the exercise price of this Option, and if permitted under the regulations and decisions applicable to the $100,000 Limitation, Employee agrees that the Company may reduce the number of shares of stock for which this Option is exercisable in specified calendar years, so that all or part of the $100,000 limitation for said calendar years may be applied to such Subsequent Option, permitting earlier exercise of such Subsequent Option than would otherwise be possible. Where such reductions are made, Employee agrees to enter into any appropriate documentation to implement such reductions. Employee further acknowledges that, as provided in the Plan, in certain circumstances connected with a dissolution or liquidation of the Company, or a merger, consolidation or other form of reorganization in which the Company is not the surviving corporation, the imposition of the $100,000 Limitation may result in the termination of all or part of this Option or other incentive stock options. 5. Transferability. This Option is not transferable except by will or the laws of descent and distribution and may be exercised during the lifetime of the Employee only by him or her. 6. Termination of Employment. In the event that employment of the Employee with the Company is terminated, the Option may be exercised (to the extent exercisable at the date of his termination) by the Employee within three months after the date of termination; provided, however, that: (a) If the Employee's employment is terminated because he is disabled within the meaning of Internal Revenue Code section 422A, the Employee shall have one year rather than three months to exercise the Option (to the extent exercisable at the date of his termination). (b) If the Employee dies, the Option may be exercised (to the extent exercisable by the Employee at the date of his death) by his legal representative or by a person who acquired the right to exercise such option by bequest or inheritance or by reason of the death of the Employee, but the Option must be exercised within one year after the date of the Employee's death. (c) If the Employee's employment is terminated for cause, this Option shall terminate immediately. (d) In no event (including death of the Employee) may this Option be exercised more than ten years from the date hereof. 3 17 7. No Guarantee of Employment. This Agreement shall in no way restrict the right of the Company to terminate Employee's employment at any time. 8. Investment Representation; Legend. The Employee (and any other purchaser under paragraphs 6(a) or 6(b) hereof) represents and agrees that all shares of Stock purchased by him under this Agreement will be purchased for investment purposes only and not with a view to distribution or resale. The Company may require that an appropriate legend be inscribed on the face of any certificate issued under this Agreement, indicating that transfer of the Stock is restricted, and may place an appropriate stop transfer order with the Company's transfer agent with respect to the Stock. 9. Method of Exercise. The Option may be exercised, subject to the terms and conditions of this Agreement, by written notice to the Company. The notice shall be in the form attached to this Agreement and will be accompanied by payment (in such form as the Company may specify) of the full purchase price of the Stock to be issued, and in the event of an exercise under the terms of paragraphs 6(a) or 6(b) hereof, appropriate proof of the right to exercise the Option. The Company will issue and deliver certificates representing the number of shares purchased under the Option, registered in the name of the Employee (or other purchaser under paragraph 6 hereof) as soon as practicable after receipt of the notice. 10. Withholding. In any case where withholding is required or advisable under federal, state or local law in connection with any exercise by Employee hereunder, the Company is authorized to withhold appropriate amounts from amounts payable to Employee, or may require Employee to remit to the Company an amount equal to such appropriate amounts. 11. Incorporation of Plan. This Agreement is made pursuant to the provisions of the Plan, which Plan is incorporated by reference herein. Terms used herein shall have the meaning employed in the Plan, unless the context clearly requires otherwise. In the event of a conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern. INTERNET CENTURY, INC. By ------------------------------------ President ACCEPTED: - - - - -------------------------------------- Employee 4 18 INTERNET CENTURY, INC. FORM OF NOTICE OF EXERCISE OF STOCK OPTION ISSUED UNDER THE 1998 STOCK OPTION PLAN To: Compensation Committee Internet Century, Inc. 400 E. Van Buren, Suite 545 Phoenix, AZ 85004 I hereby exercise my Option dated __________ to purchase __________ shares of no par value common stock of the Company at the option exercise price of $ per share. Enclosed is a certified or cashier's check in the total amount of $ , or payment in such other form as the Company has specified. I represent to you that I am acquiring said shares for investment purposes and not with a view to any distribution thereof. I understand that my stock certificate may bear an appropriate legend restricting the transfer of my shares and that a stock transfer order may be placed with the Company's transfer agent with respect to such shares. I request that my shares be issued in my name as follows: ------------------------------------------------------------ (Print your name in the form in which you wish to have the shares registered) ------------------------------------------------------------ (Social Security Number) ------------------------------------------------------------ (Street and Number) ------------------------------------------------------------ (City) (State) (Zip Code) Dated: , 19 . ---------------------- -- Signature: ----------------------------------- 6 19 INTERNET CENTURY, INC. FORM OF NON-STATUTORY STOCK OPTION AGREEMENT UNDER THE 1998 STOCK OPTION PLAN Between: INTERNET CENTURY, INC. (the "Company") and ____________________________ (the "Consultant") dated _______________. The Company hereby grants to the Consultant an option (the "Option") to purchase __________ shares of the Company's common stock under the Retrospettiva, Inc. 1998 Stock Option Plan (the "Plan") upon the following terms and conditions: 1. Purchase Price. The purchase price of the Stock shall be __________ per share, which is not less than the fair market value of the Stock on the date of this Agreement. 2. Non-Statutory Option. The Option shall be a Non-Statutory Option, as defined in the Plan. 3. Period of Exercise. The Option will expire ten years from the date of this Agreement. The Option may be exercised only while the Consultant is actively providing consulting services to the Company and as provided in Section 5, dealing with termination of services. 4. The Option may be exercised for up to, but not in excess of, the amounts of shares subject to the Option specified below, based on the Consultant's number of years of continuous services with the Company from the date hereof. In applying the following limitations, the amount of shares, if any, previously purchased by Consultant shall be counted in determining the amount of shares the Consultant can purchase at any time in accordance with said limitations. The Consultant may exercise the Option in the following amounts and in accordance with the conditions set forth in paragraph 7.3 of the Plan: (1) After one (1) year of continuous services to the Company, the Consultant may purchase up to 33.3% of the shares of Stock subject to the Option; (2) After two (2) years of continuous services to the Company, the Consultant may purchase up to 66.6% of the shares of Stock subject to the Option; 20 (3) After three years of continuous services to the Company, the Consultant may purchase all shares of Stock subject to the Option. In the event the Consultant's services with the Company are terminated due to Consultant's disability or death as described in paragraphs 5(a) and 5(b), the foregoing vesting schedule shall be accelerated and the Option shall upon such disability or death become exercisable in whole or in part, but it shall not be exercisable after the expiration of four (4) years from the date hereof. This Option may not be exercised for less than fifty shares at any time unless the number of shares purchased is the total number purchasable at the time under the Option. 5. Transferability. This Option is not transferable except by will or the laws of descent and distribution and may be exercised during the lifetime of the Consultant only by him. 6. Termination of Services. In the event of a termination in the providing of consulting services by Consultant, including serving as a Non-employee Director as defined in the Plan, to the Company, the Option may be exercised (to the extent exercisable at the date of his termination) by the Consultant within three months after the date of such termination; provided, however, that: (a) If the Consultant's consulting relationship is terminated because he is disabled within the meaning of Internal Revenue Code section 422A, the Consultant shall have one year rather than three months to exercise the Option (to the extent exercisable at the date of his termination). (b) If the Consultant dies, the Option may be exercised (to the extent exercisable by the Consultant at the date of his death) by his legal representative or by a person who acquired the right to exercise such option by bequest or inheritance or by reason of the death of the Consultant, but the Option must be exercised within one year after the date of the Consultant's death. (c) If the Consultant's consulting relationship is terminated for cause, this Option shall terminate immediately. (d) In no event (including death of the Consultant) may this Option be exercised more than ten years from the date hereof. 7. No Guarantee of Services. This Agreement shall in no way restrict the right of the Company or any Subsidiary Corporation to terminate Consultant's consulting relationship at any time. 8. Investment Representation; Legend. The Consultant (and any other purchaser under paragraphs 5(a) or 5(b) hereof) represents and agrees that all shares of Stock purchased by him under this Agreement will be purchased for investment purposes only and not with a view to distribution or resale. The 2 21 Company may require that an appropriate legend be inscribed on the face of any certificate issued under this Agreement, indicating that transfer of the Stock is restricted, and may place an appropriate stop transfer order with the Company's transfer agent with respect to the Stock. 9. Method of Exercise. The Option may be exercised, subject to the terms and conditions of this Agreement, by written notice to the Company. The notice shall be in the form attached to this Agreement and will be accompanied by payment (in such form as the Company may specify) of the full purchase price of the Stock to be issued, and in the event of an exercise under the terms of paragraphs 5(a) or 5(b) hereof, appropriate proof of the right to exercise the Option. The Company will issue and deliver certificates representing the number of shares purchased under the Option, registered in the name of the Consultant (or other purchaser under paragraph 5 hereof) as soon as practicable after receipt of the notice. 10. Incorporation of Plan. This Agreement is made pursuant to the provisions of the Plan, which Plan is incorporated by reference herein. Terms used herein shall have the meaning employed in the Plan, unless the context clearly requires otherwise. In the event of a conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern. INTERNET CENTURY, INC. By ---------------------------------------- Jeffrey Peterson, President ACCEPTED: - - - - ----------------------------------- Consultant 3 22 INTERNET CENTURY, INC. FORM OF NOTICE OF EXERCISE OF STOCK OPTION ISSUED UNDER THE 1998 STOCK OPTION PLAN To: Compensation Committee Internet Century, Inc. 400 E. Van Buren, Suite 545 Phoenix, AZ 85004 I hereby exercise my Option dated __________ to purchase __________ shares of _____ par value common stock of the Company at the option exercise price of $__________ per share. Enclosed is a certified or cashier's check in the total amount of $__________, or payment in such other form as the Company has specified. I represent to you that I am acquiring said shares for investment purposes and not with a view to any distribution thereof. I understand that my stock certificate may bear an appropriate legend restricting the transfer of my shares and that a stock transfer order may be placed with the Company's transfer agent with respect to such shares. I request that my shares be issued in my name as follows: - - - - -------------------------------------------------------------------------------- (Print your name in the form in which you wish to have the shares registered) - - - - -------------------------------------------------------------------------------- (Social Security Number) - - - - -------------------------------------------------------------------------------- (Street and Number) - - - - -------------------------------------------------------------------------------- (City) (State) (Zip Code) Dated: , 19 . --------------------- -- Signature: ----------------------------------- 5 23 EXHIBIT 10.21 PROMISSORY NOTE $1,000,000 March 1, 1999 FOR VALUED RECEIVED, the undersigned, QUE PASA.COM, INC. a Nevada Corporation ("Maker"), promises to pay to the Monolith Limited Partnership ("Holder") in lawful money of the United States of America, the aggregate principal sum of One Million Dollars ($1,000,000), together with interest as more fully described below. All payments in respect of this Promissory Note (this "Note") shall be made in immediately available funds. Interest on the principal sum of this Note shall be calculated on the basis of a three hundred sixty (360) day year composed of twelve (12) months of thirty (30) days each except that interest due and payable for a period less than a full month shall be calculated by multiplying the actual number of days elapsed in such period by a daily rate based on said 360 day year. The principal sum of this Note shall bear simple interest at the rate of twelve percent (12%) per annum from the date of this Note through and including the fourth month and fourteen percent (14%) per annum thereafter until Maturity Date, as that term is defined below. The outstanding principal balance under this Note is due and payable on the second anniversary date of this Note. Interest shall be paid monthly on and including the last day of the month. Maker shall have a three day grace period to pay accrued interest for the prior month. If Holder does not receive its interest payment by the end of the grace period, Holder may force Maker into default of its interest payments and cause the remaining interest payments to be paid at fourteen percent (14%) per annum paid monthly for the duration of this Note. Prepayment of principal amounts outstanding under this Note shall be permitted in whole or in part at any time, without penalty. Any prepayment of principal shall be accompanied by a payment of all accrued interest on the amount of principal being prepaid through the date of payment. Time is of the essence in the performance of all obligations hereunder. If default be made in payment hereunder, or if default be made in any other term or condition of this Note or any other event of default occurs, Holder or its successor holder hereof may at their option, without further notice or demand, declare this Note immediately due and payable, whereupon this Note shall become immediately due and payable and Maker will pay to Holder the entire unpaid principal balance of this Note, all accrued and unpaid interest earned thereon and all other sums owing in connection with this Note. Payments received with respect to this Note shall be applied first to costs and expenses of Holder incurred in collecting amounts owed to it under this Note and to enforce its rights or obligations under this Note, then to accrued and unpaid interest and then to principal owing hereunder. If Maker is in default hereunder and Holder undertakes to collect this Note, Maker will pay to Holder in addition to any indebtedness due and unpaid, all costs and expenses of collection including, without limitation, Holder's reasonable attorneys' fees, whether or not legal proceedings shall be instituted. Every person or entity at any time liable for the payment of the indebtedness evidenced hereby severally waives: demand, presentment for payment, protest, notice of presentment for payment, protest, and demand; notice of dishonor and nonpayment of this Note and each and every other notice of any kind respecting this Note except as provided herein. Every such person or entity 24 further consents that Holder may renew or extend the time of payment of any part of the whole of the indebtedness and may amend or modify this Note, release or substitute collateral, release any guarantor, surety or Maker of this Note, at any time and from time to time, without limit as to the number or aggregate period of such renewals, extensions, amendments, modifications, releases or substitutions, at the request of any other person or entity liable therefor. Any such renewals, extensions, amendments, modifications, releases or substitutions may be made without notice to any person or entity liable for the payment of the indebtedness evidenced hereby, and shall not affect the obligation of Maker, endorsers, guarantors or sureties under this Note. This Note and all its provisions, conditions, promises and covenants hereof shall be binding in accordance with the terms hereof upon Maker, its successors, transferees and assigns; and the same shall inure to the benefit of Holder, its successors and assigns. No modification, variation, termination, discharge or abandonment hereof and no waiver of any of the provisions or conditions hereof shall be valid unless in writing and signed by Maker and Holder or their successors, transferees or assigns, as the case may be; and a waiver of any right or remedy on one occasion shall not be construed as continuing or as a bar to or waive of such right or remedy on any other occasion. No remedy herein conferred on or reserved to Holder is intended to be exclusive of any other remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power shall be construed to be a waive of any default or acquiescence therein or a waiver of any right or power; and every such right and power may be exercised from time to time and as often as may be deemed expedient. If any one or more of the provisions contained in this Note shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. This Note shall be governed by the internal substantive laws of the State of Arizona (without reference to choice of law principals) and, to the extent they preempt the laws of such state, the laws of the United States. It is the intent of Maker and Holder to comply with all usury laws ("Applicable Usury Law") applicable pursuant to the terms of the preceding paragraph or such other usury law which is applicable if the laws chosen by the parties is not. Accordingly, it is agreed that notwithstanding any provisions to the contrary in this Note, in no event shall this Note require the payment or permit the collection of interest in excess of the maximum contract rate permitted by the Applicable Usury Law. "MAKER" QUE PASA.COM, INC. By: /s/ Jennifer L. Ferlaino ----------------------------------- Jennifer L. Ferlaino Secretary EX-10.21 23 MONOLITH PROMISSORY NOTE 1 PROMISSORY NOTE $1,000,000.00 March 8, 1999 FOR VALUED RECEIVED, the undersigned, QUE PASA.COM, INC. a Nevada Corporation ("Maker"), promises to pay to the Monolith Limited Partnership ("Holder") in lawful money of the United States of America, the aggregate principal sum of One Million Dollars ($1,000,000.00), together with interest as more fully described below. All payments in respect of this Promissory Note (this "Note") shall be made immediately available funds. Interest on the principal sum of this Note shall be calculated on the basis of a three hundred sixty (360) day year composed of twelve (12) months of thirty (30) days each except that interest due and payable for a period less than a full month shall be calculated by multiplying the actual number of days elapsed in such period by a daily rate based on said 360 day year. The principal sum of this Note shall bear simple interest at the rate of twelve percent (12%) per annum from the date of this Note through and including the fourth month and fourteen percent (14%) per annum thereafter until Maturity Date, as that term is defined below. The outstanding principal balance under this Note is due and payable on the second anniversary date of this Note. Interest shall be paid monthly on and including the last day of the month. Maker shall have a three day grace period to pay accrued interest for the prior month. If Holder does not receive its interest payment by the end of the grace period, Holder may force Maker into default of its interest payments and cause the remaining interest payments to be paid at fourteen percent (14%) per annum paid monthly for the duration of this Note. Prepayment of principal amounts outstanding under this Note shall be permitted in whole or in part at any time, without penalty. Any prepayment of principal shall be accompanied by a payment of all accrued interest on the amount of principal being prepaid through the date of payment. Time is of the essence in the performance of all obligations hereunder. If default be made in payment hereunder, or if default be made in any other term or condition of this Note or any other event of default occurs, Holder or its successor holder hereof may at their option, without further notice or demand, declare this Note immediately due and payable, whereupon this Note shall become immediately due and payable and Maker will pay to Holder the entire unpaid principal balance of this Note, all accrued and unpaid interest earned thereon and all other sums owing in connection with this Note. Payments received with respect to this Note shall be applied first to costs and expenses of Holder incurred in collecting amounts owned to it under this Note and to enforce its rights or obligations under this Note, then to accrued and unpaid interest and then to principal owing hereunder. If Maker is in default hereunder and Holder undertakes to collect this Note, Maker will pay to Holder in addition to any indebtedness due and unpaid, all costs and expenses of collection including, without limitation, Holder's reasonable attorneys' fees, whether or not legal proceedings shall be instituted. Every person or entity at any time liable for the payment of the indebtedness evidenced hereby severally waives: demand, presentment for payment, protest, notice of presentment for payment, protest, and demand; notice of dishonor and nonpayment of this Note and each and every other notice of any kind respecting this Note except as provided herein. Every such person or entity further comments that Holder may renew or extend the time of payment of any part of the whole of the indebtedness and may amend or modify this Note, release or substitute collateral, release any guarantor, surety or Maker of this Note, at any time and from time to time, without limit as to the number or aggregate period of such renewals, extensions, amendments, modifications, releases or substitutions, at the request of any other person or entity liable therefor. Any such renewals, extensions, amendments, modifications, releases or substitutions may be made without notice to any person or entity liable for the payment of the indebtedness evidenced hereby, and shall not affect the obligations of Maker, endorsers, guarantors or articles under this Note. 2 This note and all its provisions, conditions, promises and covenants hereof shall be binding in accordance with the terms hereof upon Maker, its successors, transferees, and assigns; and the same shall inure to the benefit of Holder, its successors and assigns. No modification, variation, termination, discharge or abandonment hereof and no waiver of any of the provisions or conditions hereof shall be valid unless in writing and signed by Maker and Holder or their successors, transferees or assigns, as the case may be; and a waiver of any right or remedy on any other occasion. No remedy herein conferred on or reserved to Holder is intended to be exclusive of any other remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power shall be construed to be a waive of any default or acquiescence therein or a waiver of any right or power; and every such right and power may be exercised from time to time and as often as may be deemed expedient. If any one of more of the provisions contained in this Note shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. This Note shall be governed by the internal substantive laws of the State of Arizona (without reference to choice of law principals) and, to the extent they preempt the laws of such state, the laws of the United States. It is the intent of Maker and Holder to comply with all usury laws (Applicable Usury Law") applicable pursuant to the terms of the preceding paragraph or such other usury law which is applicable if the laws chosen by the parties is not. Accordingly, it is agreed that notwithstanding any provisions to the contrary in this Note, in no event shall this Note require the payment or permit the collection of interest in excess of the maximum contract rate permitted by the Applicable Usury Law. "MAKER" QUE PASA.COM, INC. By: /s/ Jeffrey S. Peterson ------------------------ Jeffrey S. Peterson President EX-10.23 24 EMPLOYMENT AGREEMENT WITH MR. TAYLOR 1 EXHIBIT 10.23 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 23rd day of February, 1999, by and among quepasa.com, inc., a Nevada corporation (the "Company") and Robert Taylor ("Taylor"). WHEREAS, the Company desires to employ Taylor as provided herein; and, WHEREAS, Taylor desires to accept such employment, NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Company hereby employs Taylor and Taylor hereby accepts employment with the Company as a Vice President of Strategy and Operations upon the terms and conditions hereinafter set forth. 2. DUTIES. Taylor will serve the Company as a Vice President of Strategy and Operations and will faithfully and diligently perform the services and functions relating to such positions or otherwise reasonably incident to such position, provided that all such services and functions will be reasonable and within Taylor's area of expertise. Taylor's specific duties shall include those related to organizational development and growth management, strategic operations planning and execution, strategy review and execution and such other duties as the Company may reasonably direct. Taylor will, during the term of this Agreement (or any extension thereof), devote his time, attention and skills and best efforts as a full time employee to the promotion of the business of the Company in the Company's Phoenix, Arizona office. 3. TERM. This Agreement and Taylor's employment shall commence on the 8th day of March 1999 (the "Effective Date"). The term of this Agreement shall be for three years ("Initial Term") from the Effective Date unless terminated earlier in accordance with this Agreement. The term of this Agreement may be extended by agreement of the Company and Taylor. 4. COMPENSATION. As compensation for the services rendered to the Company under this Agreement commencing on the Effective Date hereof, Taylor will be paid a base salary of Eighty Thousand dollars ($80,000) per year, payable in accordance with the then current payroll policies of the Company or as otherwise agreed to by the parties (the "Salary"). At any time and from time to time, the Salary may be increased if so determined by the Company's board of directors after a review of Taylor's performance of his duties hereunder. 5. TERMINATION. This Agreement will terminate upon the occurrence of any of the following events; a. The death of Taylor; b. The "Total Disability" (as hereinafter defined) of Taylor; c. Written notice to Taylor from the Company of termination for "Cause" (as hereinafter defined); 2 d. The voluntary termination of this Agreement by Taylor upon (30) days' prior written notice; e. The later of three (3) years from the Effective Date of this Agreement or the date to which this Agreement is extended in accordance with Section 3 above; or f. Written notice to Taylor from the Company for any reason without "Cause" upon 30 days prior written notice. For purposes of Section 5b, the term "Total Disability" means physical or mental disability, or both, determined to be (or reasonably expected to be, based upon then available medical information) of not less than twelve (12) months duration or more. The determination shall rest upon the opinion of the physician regularly attending Taylor. If the Company disagrees with said physician's opinion, the Company may engage at their own expense a physician to examine Taylor, and Taylor hereby consents to such examination and to waive, if applicable any privilege between the physician and Taylor that may arise as a result of said examination. If after conferring, the two physicians cannot concur on a final opinion, they shall choose a third consulting physician whose opinion shall control. The expense of the third consulting physician shall be borne equally by Taylor and the Company. For purposes of Section 5c, "Cause" means (i) Taylor has failed to substantially perform his duties as reasonably determined by any Officer of the Company or the Board of Directors of the Company, (ii) Taylor engages in poor performance that is not cured within thirty (30) days after counseling by the Company, (iii) Taylor has failed to comply with the reasonable directives and policies of the Board of Directors of the Company or of any Officer of the Company, (iv) the U.S. Government or an agency thereof determines that Taylor is not eligible to work within the United States, or (v) Taylor breaches his fiduciary duty to the Company or commits any dishonest, unethical, fraudulent, or felonious act in respect to Taylor's duties to the Company. 6. BENEFITS. Taylor shall be entitled to participate in any Company benefits as they become available, if at all, and which are normal and customary Company benefits for a like position, including life insurance, incentive compensation, deferred compensation, stock option plans or other Company programs or plans. In addition, Taylor shall be entitled to the following benefits: (a) full coverage health insurance to be paid by the Company with a maximum premium not to exceed $350 per month; (b) at reasonable times and upon prior Company approval, Taylor shall be entitled to three weeks paid vacation per calendar year for each year employed during the term of this Agreement; (c) the Company will provide Taylor with a moving allowance of $15,000 to cover moving and related expenses in conjunction with relocation from his current residence to Phoenix, Arizona; (d) the Company will pay the temporary housing incurred by Taylor for a term not to exceed 90 days from the Effective Date. (e) the Company will reimburse Taylor for airfare and ground transportation costs incurred by either Taylor or his spouse (if Taylor remains in Phoenix over the weekend) in commuting from Chicago to Phoenix for a period not to exceed 90 days from the Effective Date. 3 3 7. LOAN. The Company will loan to Taylor Twenty Thousand dollars ($20,000) to be loaned and disbursed on the Effective Date. All amounts loaned will be evidenced by a promissory note with interest at 10% per annum and with all principal and accrued but unpaid interest due one (1) year from the Effective Date if not sooner paid. The Company agrees that if Taylor has been employed by the Company for six continuous months from the Effective Date, 50% of the principal balance and accrued but unpaid interest shall be forgiven and, if Taylor has been employed by the Company for a total of twelve continuous months of employment by the Company, then the remaining principal balance and accrued, but unpaid interest shall be forgiven by the Company and the Note evidencing such loan shall be canceled. 8. STOCK OPTIONS. Specifically subject to Section 8a and 8b below and Section 10c and contingent upon Taylor being employed by the Company, Taylor shall be granted options to purchase 60,000 shares of the Company's Common Stock exercisable at $8.00 per share, with 25,000 Stock Options to vest upon the Effective Date with the remaining 35,000 to vest and be exercisable over the three (3) year period from the Effective Date in accordance with the Company's 1998 Stock Option Plan and in accordance with the following and Section 10c below: (a) If Taylor's employment is terminated for any reason other than "for Cause" as defined herein, then all options shall vest immediately and will be exercisable in accordance with the Company's 1998 Stock Option Plan. (b) If Taylor's employment by the Company is terminated "for Cause" as defined in this Agreement, then all unexercised options granted to Taylor shall immediately terminate and not be exercisable upon notice of Taylor's termination of employment "for Cause." 9. BUSINESS EXPENSES. Upon submission of proper documentation, the Company shall pay or reimburse Taylor for all reasonable and necessary office, telephone, travel and other expenses that are incurred by Taylor in the pursuit of Taylor's duties on behalf of the Company. 10. NON-COMPETITION AND CONFIDENTIALITY. a. Non-Competition. The Company and Taylor acknowledge and agree that Taylor's services are of a special and unusual character which have a unique value to the Company, the loss of which cannot be adequately compensated by damages in an action at law and if used in competition with the Company, could cause serious harm to the Company. Accordingly, Taylor agrees that during the term of this Agreement and either for a period of two (2) years in the event Taylor's employment is terminated "for Cause" or for a period of six (6) months in the event Taylor's employment is terminated without "Cause", Taylor will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit any employee or other representatives of the Company (the "Company") for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Taylor will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged, was engaged during Taylor's employment or is engaged at the time of Taylor's termination of employment, except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded company. b. Confidentiality. (1) Taylor acknowledges that in Taylor's employment hereunder, Taylor will be making use of, acquiring and adding to the Company's trade secrets and its confidential and proprietary 4 information of a special and unique nature and value relating to such matters as, but not limited to, the Company's business operations, internal structure, financial affairs, programs, software systems, procedures, manuals, confidential reports, lists of clients and prospective clients and sales and marketing methods, as well as the amount, nature and type of services, equipment and methods used and preferred by the Company's clients and the fees paid by such clients, all of which shall be deemed to be confidential information. Taylor acknowledges that such confidential information has been and will continue to be of central importance to the business of the Company and that disclosure of it to or its use by others could cause substantial loss to the Company. In consideration of employment by the Company, Taylor agrees that during the Initial Term and any renewal term of this Agreement and upon and after leaving the employ of the Company for any reason whatsoever, Taylor shall not, for any purpose whatsoever, directly or indirectly, divulge or disclose to any person or entity any of such confidential information which was obtained by Taylor as a result of the Taylor's employment with the Company or any trade secrets of the Company, but shall hold all of the same confidential and inviolate. (2) All contracts, agreements, financial books, records, instruments and documents; client lists; memoranda; data; reports; programs; software, tapes; Rolodexes; telephone and address books; letters; research; card decks; listings; programming; and any other instruments, records or documents relating or pertaining to clients serviced by the Company or Taylor, the services rendered by Taylor, or the business of the Company (collectively, the "Records") shall at all times be and remain the property of the Company. Upon termination of this Agreement and Taylor's employment under this Agreement for any reason whatsoever, Taylor shall return to the Company all Records (whether furnished by the Company or prepared by Taylor), and Taylor shall neither make nor retain any copies of any of such Records after such termination. (3) All inventions and other creations, whether or not patentable or copyrightable, and all ideas, reports and other creative works, including, without limitation, computer programs, manuals and related materials, made or conceived in whole or in part by Taylor while employed by the Company and within one year thereafter which relate in any manner whatsoever to the business, existing or proposed, of the Company or any other business or research or development effort in which the Company or any of its subsidiaries or affiliates engages during Taylor's employment by the Company will be disclosed promptly by Taylor to the Company and shall be the sole and exclusive property of the Company. All copyrightable works created by Taylor and covered by this Section 10b(3) shall be deemed to be works for hire. Taylor shall cooperate with the Company in patenting or copyrighting all such inventions, ideas, reports and other creative works, shall execute, acknowledge, seal and deliver all documents tendered by the Company to evidence its ownership thereof through the world, and shall cooperate with the Company obtaining, defending and enforcing its rights therein. c. Certain Claims Upon Termination. Taylor understands that if within one year prior to the termination of Taylor's employment with the Company, Taylor has either (i) committed an act of theft, dishonesty, gross dereliction of duty, fraud, embezzlement, misappropriation, or breach of fiduciary duty against the Company or any other act of comparable misconduct against the Company; or (ii) breached any of his obligations under this Agreement, then the Company shall have the right to purchase any or all shares of Common Stock of the Company owned by Taylor at the time of such termination for a purchase price equal to the amount that Taylor paid for such shares, together with interest thereon at a rate of ten percent (10%) per annum. If the Company desires to exercise such right, it shall notify Taylor within 60 days after the date of such termination and Taylor shall tender the shares being purchased by the Company at the time and place designated in such notice from the Company upon receipt of the purchase -4- 5 price for such shares. If Taylor fails to tender such shares, the shares shall be deemed to be canceled as of the date the Company tenders payment of the purchase price thereof. d. Enforceability. In the event of the breach of the covenants contained in this Section 10, it is understood that damages will be difficult to ascertain and the Company may petition a court of law or equity for injunctive relief in addition to any other relief which the Company may have under the law, this Agreement or any other agreement executed in connection herewith. In connection with the bringing of any legal or equitable action for the enforcement of this Agreement, the Company shall be entitled to recover, whether the Company seeks equitable relief, and regardless of what relief is afforded, such reasonable attorneys' fees and expenses as the Company may incur in prosecution of the Company's claim for breach hereof. It is hereby agreed that the provisions of this Section 10 are separate and independent from the other provisions of this Agreement, that these provisions are specifically enforceable by the Company notwithstanding any claim by Taylor that the Company has violated or breached this Agreement or any claim that Taylor is entitled to any offset or compensation. To induce the Company to enter into this Agreement, Taylor represents and warrants to the Company that Section 10 of this Agreement is enforceable by the Company in accordance with its terms. The parties hereto agree that to the extent that any provision or portion of Section 10 of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court of competent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision or portion thereof shall be legally enforceable to the fullest extent permitted by applicable law; and the parties hereto do further agree that any court of competent jurisdiction shall, and the parties hereto do hereby expressly authorize, request and empower any court of competent jurisdiction to, enforce any such provision or portion thereof or to modify any such provision or portion thereof in order that any such provision or portion thereof shall be enforced by such court to the fullest extent permitted by applicable law. 11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party. 12. NOTICES. Any notices, consents, demands, request, approvals and other communications to be given under this Agreement by either party to the other will be deemed to have been duly given if given in writing and personally delivered, faxed or if sent by mail, registered or certified, postage prepaid with return receipt requested, as follows: If to the Company: quepasa.com, inc. One Arizona Center 400 East Van Buren, Suite 545 Phoenix, AZ 85004 If to Taylor: Robert Taylor 404 North Marion Street Oak Park, Illinois 60302 -5- 6 Notices delivered personally will be deemed communicated as of actual receipt, notices by fax shall be deemed delivered when such notices are faxed to recipient's fax number and notices by mail shall be deemed delivered when mailed. 13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understanding, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 14. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during this Agreement, such provision will be fully severable and this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically, as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 15. GOVERNING LAW. To the extent permitted by applicable law, this Agreement and the rights and obligations of the parties will be governed by and construed and enforced exclusively in accordance with the substantive laws (but not the rules governing conflicts of laws) of the State of Arizona and the State of Arizona shall have exclusive jurisdiction regarding any legal actions relating to this Agreement. 16. CAPTIONS. The captions in this Agreement are for convenience of reference only and will not limit or otherwise affect any of the terms or provisions hereof. 17. GENDER AND NUMBER. When the context requires, the gender of all words used herein will include the masculine, feminine and neuter, and the number of all words will include the singular and plural. 18. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: quepasa.com, inc., a Nevada corporation By: /s/ Jeffrey Peterson ----------------------------------------- Jeffrey Peterson, Chief Executive Officer TAYLOR: /s/ Robert Taylor ----------------------------------------- Robert Taylor -6- EX-16.01 25 LETTER FROM BDO SEIDMAN, LLP 1 Exhibit 16.01 [BDO LOGO] BDO SEIDMAN LLP 1900 Avenue of the Stars, 11th Floor Accountants and Consultants Los Angeles, California 90067 Telephone (310) 557-0300 Fax (310) 557-1777 March 9, 1999 Securities and Exchange Commission 450 5th Street N.W. Washington D.C. 20549 Gentlemen: We have been furnished with a copy of the response to Item 304 of Regulation S-K included in Item 11 of the Registration Statement on Form S-1, for the event that occurred on February 4, 1999, to be filed by our former client, quepasa.com, inc. We agree with the statements made in response to that item insofar as they relate to our Firm. Very truly yours, /s/ BDO Seidman, LLP EX-23.06 26 CONSENT OF EHRHARDT, KEEFE, STEINER & HOFFMAN P.C. 1 Exhibit 23.06 INDEPENDENT AUDITORS' CONSENT We consent to the use in the Registration Statement of quepasa.com,inc. on Form S-1, of our report dated February 17, 1999 on the financial statements of quepasa.com, inc. appearing in the Prospectus, which is part of the Registration Statement. We also consent to the reference to us under the headings "Selected Financial Data" and "Experts" in such Prospectus. /s/ Ehrhardt Keefe Steiner & Hottman PC ---------------------------------------- Ehrhardt Keefe Steiner & Hottman PC March 9, 1999 Denver, Colorado EX-27 27 FINANCIAL DATA SCHEDULE
5 YEAR DEC-31-1998 DEC-31-1998 2,199,172 0 1,658,632 0 0 3,857,804 354,620 0 4,860,759 899,377 0 0 0 9,076 3,523,882 4,860,759 0 0 0 0 6,861,828 0 47,940 0 0 0 0 0 0 (6,909,768) (.76) 0
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