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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Interactive Telesis, Inc.
(Name of Small Business Issuer in its charter)
Delaware 33-0649915
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(State of incorporation) (IRS Employer Identification No.)
535 Encinitas Boulevard
Suite 116
Encinitas, California 92024
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 760-632-1700
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Copy To: Bruce J. Rushall, Esq.
1903 Wright Place, Suite 250
Carlsbad, CA 92008
(760) 438-6855
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
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PART I.
ITEM 1. DESCRIPTION OF BUSINESS
General
Interactive Telesis Inc. ("the Company" or "ITI") provides customized
interactive voice response (IVR) services. IVR generally consists of accessing
or interacting with information in a computer database using a touch-tone phone.
The Company specializes in providing customized IVR systems meeting specific
customer needs utilizing proprietary software. The Company commenced providing
IVR services in 1993. The Company's initial service offering was an automated
shareholder communication service, marketed to public companies under the
service name InvestorREACH(TM). A description of the Company's current service
offerings is provided below. ITI's services are sold to medium- and large-size
corporations for internal use and, in some instances, are bundled with a
partner's service offering for resale to their customers. The Company offers its
services nationwide in the United States and in Canada.
History
The Company was formed under the laws of the province of British Columbia on
June 19, 1987, under the name "Butter Rock Resources Ltd.," and, on September
23, 1996, the Company's jurisdiction of incorporation was continued to the State
of Delaware. The Company was originally involved in mineral exploration until
its acquisition in 1992 of Investment News Network, a company with a business
concept to utilize IVR to create an automated shareholder communication service
by which public companies could communicate in a timely and cost-effective
manner with their investors.
The Company's shares were originally listed for trading on the Vancouver Stock
Exchange in 1992, under the name "Butter Rock Resources Ltd." In 1993, the
Company acquired Investment News Network Inc., a Nevada corporation, and changed
its name to "INN Investment News Network Ltd." In September of 1995, the
Company's shares were posted for trading on the OTC Bulletin Board. Effective
October of 1995, the Company conducted a one-for-seven share consolidation and
commenced trading under the ticker symbol "TSIS." The Company voluntarily
de-listed from the Vancouver Stock Exchange in March, 1996. The Company's shares
have remained trading on the OTC Bulletin Board under the ticker symbol "TSIS"
since that date.
The Company has not participated in any material reclassification, merger,
consolidation or purchaser sale of assets outside the ordinary course of
business during the last three years.
Research and Development
The Company's estimated time spent on research and development activities is
approximately 18-22%. The Company expenses all development costs as incurred.
The Company does not charge each customer specifically or directly for research
and development costs; the
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application software development and set-up costs are expected to be recovered
over the initial several months of the application's use.
Business
The Company currently offers specific IVR services, both directly to medium and
large corporations, as well as allowing its services to be bundled with its
partners' product offerings. The Company is not a solution-provider - that is,
it does not develop IVR solutions for a fee and then install them at the
customer's site. Rather, the Company hosts all applications and provides all of
its services through its own software and hardware systems located at the
Company's facilities. In some cases, in order to reduce telecommunication costs,
the Company installs equipment at a customer's location, which is remotely
monitored and managed and remains the property of the Company. The Company's
systems consist of industry standard hardware and the Company's proprietary
software. The systems are modular and can be scaled to accommodate even the
largest applications.
The following are descriptions of the Company's current service offerings:
InvestorREACH(TM)
InvestorREACH(TM) is an automated shareholder communication service
which allows client public companies to provide a toll-free telephone
number which the corporations advertise to their investors. Investors
calling the number hear a personalized greeting from the client company,
are provided with a stock quote, and may select from a menu of options
which may include:
- Stock quote (high, low, volume)
- News releases (voice and fax)
- Financial statements (quarterly, annual, and management
discussion)
- Request information material to be mailed
- Be transferred to the investor relations department or
transfer agent of the public corporation.
The Company also provides mail fulfillment services. The Company charges
a monthly service fee, a per-minute usage fee for voice, fax, and call
transfer, and transactional fees for mail fulfillment services.
The Company offers InvestorREACH(TM) on a month-to-month basis, with no
set-up fee, no long-term contract, and no termination fees.
The Company currently has 52 InvestorREACH(TM) customers in various
industries. Clients include Wells Fargo, Nike, Yahoo!, Excite, National
Fuel Gas, and the Tribune Corporation.
To experience the InvestorREACH(TM) service, call 1/888/474-9910.
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The negotiations for the sale of InvestorREACH(TM) referenced in Note 8
to the financial statements have been terminated. The Company continues
to explore the possible disposition of this service line.
Digital Record and Replay Services
In November, 1997, the Company began providing digital record and replay
services to the teleconference industry. The service allows
teleconference providers to digitally record teleconferences they
conduct on behalf of their customers. These calls are then made
available for immediate replay by end users using a touch-tone
telephone. The system is 100% automated (except where special editing is
requested) and is provided on a transparent basis to end users. The
Company invoices the teleconferencing company semi-monthly, based on
per-minute replay usage. The Company complements the telephonic replay
with Internet replay capability, allowing end users to access sound
files from a site hosted on behalf of the teleconference provider or by
the client company.
The Company currently provides these services to two large
teleconferencing providers, as well as directly to certain large
corporations for internal use.
Automated Surveys
The Company has developed proprietary software applications which permit
surveys to be conducted via IVR on an automated basis without human
intervention. Surveys can be linear or branching and responses can be
multiple choice or voice-recorded. The Company has registered the
service mark TeleSurvey(SM) in conjunction with this service.
The Company's initial sales and marketing efforts with respect to this
offering are focused on the prepaid phone card market in the United
States. The Company has partnered with approximately 17 issuers of
prepaid phone cards to add the survey capability as a value-added option
to their prepaid offering, thus enhancing their value proposition to
their customers.
The service involves a user of a prepaid phone card being routed to the
Company's IVR system at the time of activation (only) of the prepaid
phone card for a 3-5-question survey. At the conclusion of the survey,
the customer is returned to the prepaid telecommunication platform to
dial their outgoing telephone call.
Upon securing reselling relationships with these partners, the Company
structured a Channel Partner Program to support the sales and marketing
efforts of the Company's partners with a view to increasing revenue from
this sector. In addition to the prepaid phone card industry, the Company
is pursuing survey application opportunities in the call center and
credit card industries.
There has been strong initial acceptance of the Company's TeleSurvey(SM)
offering and, subject to effective introduction of the Channel Partner
Program and the enlistment of
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additional partners, the Company is anticipating substantial revenues
will be derived from this service in the future.
MarketReach(TM) - Enhanced Services
The Company has developed proprietary software which provides the
following customized IVR functionality:
- Message recording
- Record and replay message (telephone)
- Internet message replay
- Fax-on-demand
- Automated call transfer
- Dealer locator
- Caller surveys
- Credit card transactions
- Broadcast fax
- Broadcast e-mail
The Company has created applications, and is continuing to pursue
additional opportunities utilizing this functionality, including Third
Party Verification (TPV) and contests/sweepstakes applications.
Sales and Marketing
The Company has a proprietary sales force of five individuals targeting
customers in specific industry sectors (e.g., teleconferencing and prepaid long
distance). Sales strategies include telemarketing, face-to-face meetings,
presentations, and providing free demonstrations.
In the Prepaid Channel Program, the purpose is to leverage the existing sales
forces of the Channel partners in selling the Company's services bundled with
the partner's prepaid minutes. The Company has recently created partner
handbooks and an entire Channel Partner Program to support and increase revenues
for the Company and its partners in the sale of automated surveys in combination
with prepaid phone cards.
Competition
To the Company's knowledge, there are more than one hundred companies in the
United States and Canada which have IVR capability, although in most instances,
the IVR functionality is used to supplement live-agent call center services. The
Company does not offer any live-agent services and wherever these services are
required as a complement to the Company's IVR services, the Company out-sources
the live-agent services to one of several call centers with which the Company
has partnered.
The IVR industry is dominated by perhaps ten large corporations capable of
handling extremely high volume applications which are usually associated with
direct response television advertising. There are also dozens of smaller
companies providing IVR service
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bureau services similar to the business strategy of the Company. In general, the
Company finds itself in competition with large call center competitors which
also offer IVR services. The Company is pursuing business with large, national
companies, including a majority of the large telephone companies in the United
States and Canada, and, as a result, usually competes against much larger
companies.
Business Concentration
A majority of the Company's revenues to date has been generated by record and
replay services. 78% and 68% of the Company's revenue was generated by three and
one customer(s) for the years ended July 31, 1999, and 1998, respectively. The
Company's relationship with these customers is good and the Company expects to
be providing additional services in the future to these customers beyond those
currently being provided. All of the Company's contracts are terminable upon
notice by either party.
The Company is anticipating that the majority of its growth in the future will
come from customers other than those referenced above; hence, the Company
expects ultimately to have a lesser dependence on these customers.
Trademark and Copyright Issues
The Company develops all of its proprietary software in house and does not
incorporate any third-party software other than off-the-shelf, commercially
available software.
The Company has applied for the following service marks:
- InvestorREACH(TM)
- MarketREACH
- TeleSurvey
Governmental Regulation
The Company is not currently subject to direct federal, state, or local
regulation in the United States other than regulations applicable to businesses
generally or directly applicable to electronic commerce. However, because the
Internet is becoming increasingly popular, it is possible that a number of laws
and regulations may be adopted in the United States with respect to the
Internet. These laws may cover issues such as user privacy, freedom of
expression, pricing, content and quality of products and services, taxation,
advertising, intellectual property rights and information security. Furthermore,
the growth of electronic commerce may prompt calls for more stringent consumer
protection laws. Several states have proposed legislation to limit the use of
personal user information gathered online or require online services to
establish privacy policies. The Federal Trade Commission has indicated that it
may propose legislation on this issue to Congress in the near future and has
initiated action against at least one online service regarding the manner in
which personal information was collected from users and provided to third
parties. The adoption of such consumer protection laws could create uncertainty
in Internet usage and reduce the demand for all
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products and services. The Company does not provide customer information to
third parties and, therefore, does not anticipate any current or proposed
legislation relating to online privacy to directly affect its activities to a
material extent.
The Company is not certain how its business may be affected by the application
of existing laws governing issues such as property ownership, copyrights,
encryption and other intellectual property issues, taxation, libel, obscenity
and export or import matters. The vast majority of those laws were adopted prior
to the advent of the Internet. As a result, they do not contemplate or address
the unique issues of the Internet and related technologies. Changes in laws
intended to address such issues could create uncertainty in the Internet
marketplace. That uncertainty could reduce demand for the Company's services or
increase the cost of doing business as a result of litigation costs or increased
service delivery costs.
In addition, it is uncertain what impact government regulation may have on
telecommunication providers on which the Company's business depends. Future
government regulation may have an adverse affect on the Company's cost of doing
business.
Employees
The Company currently has 23 full-time employees and three part-time employees.
The Company's success will depend in large part on its ability to attract and
retain skilled and experienced employees. The Company believes that its
relations with its employees is good. The Company does not currently have any
key-man life insurance on any of its employees, directors, or executive
officers.
The Company has no written or oral contracts for employment with any of its
employees, directors, or executive officers.
Risk Factors
The business of the Company involves a number of risks and uncertainties that
could cause actual results to differ materially from results projected in any
forward-looking statement in this report. The Company's securities are
speculative and investment in the Company's securities involves a high degree of
risk and the possibility that the investor will suffer the loss of the entire
amount invested.
RISKS RELATED TO THE COMPANY'S BUSINESS
- THE COMPANY HAS A LIMITED OPERATING HISTORY. The Company implemented
its current plan of business in 1994 and remains dependent upon a
limited variety of services and small number of significant
customers. Because of the Company's limited experience in its
principal markets and its anticipated need to expand the scope of its
services and its customer base, there is no assurance that the
Company's long-term operating strategies for the sales of its
services in its selected markets will be successful.
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- THE COMPANY HAS A HISTORY OF LOSSES AND MAY INCUR LOSSES IN THE
FUTURE. Until its fiscal year ended July 31, 1999, the Company had
incurred significant net losses under its current plan of business.
There is no assurance that the Company's revenues will grow or that
it will maintain profitability in the future. The Company's ability
to increase revenue and maintain profitability will be affected by
other risks and uncertainties described below, most of which are
outside of the Company's control.
- THE COMPANY'S BUSINESS IS DEPENDENT UPON A SMALL NUMBER OF CUSTOMERS
WHO ACCOUNT FOR THE MAJORITY OF THE COMPANY'S REVENUES. The loss of
one or more of these customers and the Company's inability to replace
them would materially adversely affect the Company's business.
- THE COMPANY'S BUSINESS DEPENDS ON CERTAIN SKILLED AND EXPERIENCED
EMPLOYEES. These include the Company's Chief Executive Officer, VP of
Operations and its senior software programmers. The Company does not
maintain long-term employment contracts with its CEO or any of its
key employees. Competition for skilled and experienced software
programmers and supporting skills in the Company's geographic region
is intense and the Company may not be able to hire or retain key
employees. If the Company is unable to hire, train and manage new
skilled and experienced employees as needed, it would be unable to
support its planned growth and future operations.
- REVENUES FROM PORTIONS OF THE COMPANY'S BUSINESS MAY VARY THROUGHOUT
ITS FISCAL YEAR. For example, the Company's Digital Record & Replay
service may be utilized mostly during the quarterly earnings season,
which is typically held by calendar-year companies during the months
of January, April, July and October.
- THE COMPANY DOES NOT SEPARATELY CHARGE ITS CUSTOMERS FOR ITS INITIAL
SET-UP COSTS FOR ESTABLISHING A CUSTOMIZED INTERACTIVE VOICE RESPONSE
SERVICE, BUT RECOUPS THESE COSTS OVER THE FIRST SEVERAL MONTHS OF A
CONTRACT. The Company's services accounts with customers are
cancelable by either party upon notice. Therefore, there is no
assurance that an account, once established, will be maintained for a
time sufficient to allow the Company to recoup its set-up costs.
- THE COMPANY RELIES ON UNPROTECTED INTELLECTUAL PROPERTY RIGHTS IN
CONNECTION WITH ITS PROPRIETARY SOFTWARE PROGRAMS. The Company does
not have trademark, copyright or patent protection for its
proprietary software systems. The Company depends on certain
statutory and common law service mark and trade secret protections to
protect its proprietary interests. If it is unable to protect these
rights, it could face increased competition or greater difficulty in
successfully establishing its service businesses.
- MANY OF THE COMPANY'S CUSTOMERS HAVE GREATER TECHNICAL AND FINANCIAL
RESOURCES THAN THE COMPANY AND COULD, SHOULD THEY DEEM IT ADVISABLE
AND ECONOMICALLY FEASIBLE, PROVIDE INTERNALLY THE SERVICES OTHERWISE
PROVIDED BY
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THE COMPANY. Accordingly, there is no assurance that in the future
one or more of the major customers may not provide internally
services which it now purchases from the Company.
- THE COMPANY DOES NOT BELIEVE SUBSTANTIAL BARRIERS EXIST TO THE ENTRY
BY OTHER COMPANIES INTO ONE OR MORE OF THE SERVICES THE COMPANY
PROVIDES. Accordingly, the Company could, in the future, encounter
significant competition for its services from one or more competitors
which have significantly greater technical and/or financial resources
than the Company.
- IF THE COMPANY IS UNABLE TO DEVELOP NEW SERVICES OR EXPAND FEATURES
OF EXISTING SERVICES, IT MAY NOT BE ABLE TO EXPAND ITS OPERATIONS.
The Company must continually explore additional areas and services
which it may offer to its customers. The Company's inability to
manage its growth could harm its business. Also, if the Company is
unable to continually improve its ability to deliver services to
customers, it may not be able to accommodate the increasing level of
use or expanding needs of its customer base.
- THE COMPANY'S BUSINESS IS SUBJECT TO CHANGES IN THE COMPUTER AND
TELECOMMUNICATION INDUSTRIES WHICH ARE OCCURRING AT A RAPID RATE. It
is possible that future changes in these industries could
significantly change the demand for the Company's services and/or the
means by which the Company provides its services. The Company's
failure to adapt to such changes could adversely affect the Company's
volume or cause the Company's services to become obsolete.
- THE COMPANY'S BUSINESS COULD SUFFER IF IT, OR ITS CUSTOMERS, OR
DISTRIBUTION CHANNELS OR SUPPLIERS DO NOT ADEQUATELY ADDRESS Y2K
RISKS. Failures of the Company's communications and computer software
and hardware systems would harm its business. The Company's ability
to deliver its services depends on its proprietary software, its
internal hardware systems, and its access to telecommunication
systems provided by others. Should any of these systems fail by
reason of Y2K problems or otherwise, the Company's business could be
interrupted for a significant length of time.
- THE COMPANY RELIES SIGNIFICANTLY ON THIRD PARTIES. The Company's
operations depend to a significant degree on a number of other third
parties, including telecommunication service providers. The Company
has no effective control over these third parties and no long-term
contractual relationships with any of them. From time to time, the
Company could experience temporary interruptions in its Internet Web
site connections and its telecommunications access. Continuous or
prolonged interruptions in the Company's Internet Web site
connections or in its telecommunications access would have a material
adverse affect on the Company's business, financial condition, and
results of operations. The Company's agreements with its
telecommunications providers place certain limits
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on the Company's ability to obtain damages from the service providers
for failure to maintain services to the Company's facilities.
RISKS RELATED TO AN INVESTMENT IN THE COMPANY'S COMMON STOCK
- THE COMPANY EXPECTS ITS SHARE PRICE TO REMAIN HIGHLY VOLATILE. The
market price for the Company's stock has in the past fluctuated
significantly and is expected to continue to fluctuate primarily
because of the number of shares outstanding, the low trading price of
the stock, developments in the Company's business, including
announcements of technological innovations, fluctuations in customer
orders, customer cancellations, the introduction of new products by
the Company or its competitors, service problems and/or quarterly
variations in the actual or anticipated results of the Company's
operations. Also, the over-the-counter market in which the Company's
stock trades has historically experienced extreme price and volume
volatility, which has particularly affected market prices of
technology companies. This volatility has often been unrelated to the
operating performance of the companies. Broad market volatility may
adversely affect the market and price of the Company's stock.
- THE COMPANY DOES NOT PAY DIVIDENDS ON ITS COMMON STOCK AND HAS NO
PLANS TO DO SO. The Company has not paid any cash dividends on its
common shares to date. The Company intends to retain any earnings to
finance growth and development of its business and does not
anticipate paying cash dividends in the foreseeable future.
Accordingly, the Company's shareholders will need to look for
appreciation in the market price of the Company's stock for a return
on their investment in the Company.
- MANAGEMENT HAS BROAD DISCRETION OVER ESTABLISHING AND IMPLEMENTING
THE COMPANY'S OPERATIONAL STRATEGIES AND GOALS. Management may
devise, modify, abandon or implement operating strategies at any time
within their discretion without a vote of the Company's shareholders.
Accordingly, investors in the Company must depend on management's
experience and judgment in making critical decisions affecting the
Company's business and operating results.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Revenues for fiscal year 1999 nearly tripled from the prior fiscal year to
$3,022,290. Net operating income totaled $321,740, representing earnings of just
over 1 cent per share. In the fourth quarter of the 1999 fiscal year, revenues
were up 18% over the Company's third quarter revenues, while third quarter
revenues were up 66% from the second quarter of 1999. To October 31, 1999, the
Company has recorded seven consecutive quarters of increasing revenues.
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Cost of Revenue and Major Expenses
Fiscal 1999 versus 1998
Cost of Revenue consists of the expenses associated with providing the
telecommunication services based on usage, systems for T1s, and local loop
charges. These costs are a mix of both variable and fixed costs. For the fiscal
year ended July 31, 1999, cost of revenue increased 125% over 1998, due to
increased usage.
Salaries and wages increased 44% from fiscal 1998 to fiscal 1999 as a result of
adding five full-time employees during fiscal year 1999. The increase in staff
was necessary to provide the Information Technology and Systems skills and
experience needed to meet and support the requirements of the customers, which
enabled the Company's growth in revenue.
Sales and marketing expenses increased during the period 88% as a result of
adding staff and also increased travel expenditures to promote the growth of the
business.
Depreciation and amortization increased 174% during the period as a result of
adding computer and related equipment. The increase in the Company's property
and equipment of approximately $575,000 was financed primarily by way of
operating leases secured by the equipment and personally guaranteed by the
Company's CEO. Management is not aware of any trends or events that are expected
to have a material impact on the Company's revenue or income from continuing
operations. Upon successfully securing additional long-term contracts, the
Company will be required to increase the size of its IVR systems to support the
additional growth. Equipment purchases will be financed through a combination of
cash on hand and operating leases on the equipment purchased.
Liquidity and Capital Resources
Net working capital increased to $864,184 at July 31, 1999, due primarily to an
increase in Accounts Receivable as a result of increased revenue for fiscal year
1999. Fiscal year 1999 revenue nearly tripled from fiscal year 1998, from $1.1
million to $3.0 million.
Based on the current cash flow projections, management expects that the Company
can continue operations for the current fiscal year without any infusions of
cash.
Future Expectations
For the fiscal year ending July 31, 2000, the Company is projecting revenue
increases, with a corresponding increase in net income from operations (before
tax). Achieving growth in both revenues and net operating income will be
contingent upon the Company securing additional contracts with existing
customers as well as long-term, high-margin contracts with new customers, and
there is no certainty that these objectives will be achieved.
The Company's telecommunication costs should be reduced over the next fiscal
year, resulting from volume discounts.
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The Company has both federal and state income tax loss carry-forwards of
approximately $2,255,000 and $1,703,000, respectively, which can be used to
offset future income taxes. To the extent that the Company is able to achieve
net operating income in the future, the tax loss carry-forwards will have a
significant, positive effect on the Company's after-tax income.
Forward Looking Statements
This registration statement contains forward-looking statements that are based
on the Company's beliefs as well as assumptions made by and information
currently available to the Company. When used in this registration statement,
the words "believe," "endeavor," "expect," "anticipate," "estimate," "intends,"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks, uncertainties and assumptions,
including, without limitation, the risks and uncertainties concerning
technological changes, increased competition, and general economic conditions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated, or projected. The Company cautions potential
investors not to place undue reliance on any such forward-looking statements,
all of which speak only as of the date made.
Uncertainty Due to the Year 2000 Issue
Overview:
The Year 2000 Problem generally involves whether a computer system, software
product or business system, when working alone or in conjunction with other
software or hardware systems, accepts input of, stores, manipulates and outputs
dates in the Year 2000 or thereafter without error or interruption (the "Year
2000 Problem"). The Year 2000 Problem potentially impacts the Company in the
following principal areas: (i) the Company's internal technology systems; (ii)
the Company's non-internal technology systems which contain embedded computer
devices; and (iii) the business systems of the Company's partners, vendors and
customers. The Director of Operations and the Corporate Systems staff are
managing the Company's Year 2000 efforts.
Company Products:
As a leading supplier of Interactive Voice Response solutions, the Company is
aware of the Year 2000 Problem and is committed to offering software and
services that are Year 2000 compliant. The Company presently believes that the
current versions of its Voice Response Unit (VRU) software are Year 2000
compliant. The Company believes that the current releases of Microsoft SQL
Server version 7.0 ("the database server") and Microsoft Windows NT 4.0 SP5("the
platform operating system") are Year 2000 compliant by virtue of our own
testing. However, we do not have control or influence over the company that
develops these products. Hence, we cannot implicitly guarantee these products as
Year 2000 compliant without some assurance from Microsoft or any of our other
third party software providers. While the Company's IVR systems are the subject
of a continuing testing program, there can be no assurance that these products
do not contain undetected errors associated with the Year 2000-date functions
that may result in material costs to the Company. See "Risks Associated with
Year 2000 Compliance."
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As part of its IVR services the Company provides certain services that are
dependent upon products manufactured or provided by third parties, both on an
OEM and reseller basis. In addition, such products and services, in certain
cases, include third party technology. The Company has received assurances from
such third parties regarding the Year 2000 compliance of the third party
products and services. Despite these assurances, there can be no guarantee that
the third party products do not contain undetected errors associated with Year
2000 date functions. The Company has formally queried the suppliers of third
party products and services that are provided with or embedded in the Company's
IVR systems as to their progress in identifying and addressing Year 2000
Problems. It is possible that such formal inquiries will uncover unanticipated
Year 2000 issues.
Internal Technology Systems:
The Company's internal technology systems include telecommunications (phones,
voice mail and network connections), computer hardware (personal computers and
network servers) and software. The Company has assessed the Year 2000 Problem
with respect to telecommunications for all offices. The Company has identified
fixes that need to be made to its telecommunications systems to make them Year
2000 compliant. These fixes relate primarily to upgrades to voice mail and phone
systems at some of the Company's offices. The voice and phone upgrades have been
installed at all sites and are scheduled to be completed by December 1, 1999. In
addition, the Company has assessed approximately 98% of its hardware used for
Year 2000 compliance and has not uncovered any material non-compliance. The
Company's principal software systems include accounting, customer support, order
entry and desktop productivity (e-mail, word processing, spreadsheets, etc.).
The Company uses Microsoft Corporation products for desktop productivity which
have been certified by Microsoft as Year 2000 compliant with minor issues. The
Company uses third party accounting software which has been certified by the
developer to be Year 2000 compliant.
Non-internal Technology Systems:
Non-internal technology systems include security systems, elevators and other
systems which contain an embedded computer or computer-like device which is used
to control the operation of plant, machinery and equipment. Most of the embedded
systems on which the Company relies in its daily operations are owned and
managed by the lessors of the facilities in which the Company's operations are
located. The Company has not assessed completely whether there are any Year 2000
Problems with its non-internal technology systems and anticipates that the full
assessment will be completed by December 1, 1999. The Company is in the process
of completing a contingency plan for its internal and non-internal technology
systems which it expects to complete by December 1, 1999.
Third Party Relationships:
The Company has several resellers of its IVR solutions, including Alliance and
Solution partners. No one of these resellers is responsible for a material
amount of the Company's revenue. The Company, from time to time, queries its
resellers as to their progress in identifying and addressing Year 2000 problems.
Although the Company feels confident that its internal technology will be Year
2000 ready, the Company does recognize that it is vulnerable, as are most
organizations, to the inability of significant suppliers and utility
organizations to become Year 2000 ready. For example, the failure or
interruption of
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electrical services would disrupt the Company's ability to communicate with its
customers, suppliers, business partners and others and would adversely affect
the Company's operations.
The Company believes that as the Year 2000 approaches, potential purchasers of
IVR services may curtail or delay their purchases of IVR solutions until the
Year 2000 passes and the potential purchaser is comfortable that its business
operations are not negatively impacted by the Year 2000. As a result, it is
possible that in the remainder of calendar 1999 and into the first six months of
2000 the Company may experience a reduction in revenues from new IVR system
sales and such reduction may materially and adversely affect the Company's
financial results.
To date, the Company has incurred approximately $6,000 in Year 2000 remediation
costs, which was funded from working capital. The Company expects to incur an
additional $3,000 by December 1, 1999, to upgrade voice mail and phone systems
at some of the Company's offices. The Company has designated the Director of
Operations as manager of all Year 2000 efforts. These efforts include continued
product testing and contingency planning. The Company anticipates spending
approximately $10,000 for this effort over the remainder of 1999 and the first
half of 2000. These fees will be expensed as incurred.
Forward Looking Statements:
The Company has made forward looking statements regarding its Year 2000
readiness, anticipated dates for completion of assessment, testing, and
implementation of fixes and anticipated costs to be incurred. The Company has
described many of the risks associated with these forward looking statements.
See "Certain Factors that May Affect Future Results -- Risks Associated with
Year 2000 Compliance." The Company wishes to caution that there are many factors
that could cause its actual results to differ materially from those stated in
the forward looking statements. This is especially the case because many aspects
of Year 2000 readiness are outside the control of the Company, such as the
performance of third party suppliers. All of these factors make it impossible
for the Company to ensure that it will be able to resolve all Year 2000 problems
in a timely manner to avoid materially adversely affecting its operations or
business.
ITEM 3. DESCRIPTION OF PROPERTY
The Company's executive offices are located in Encinitas, California, and
consist of approximately 5063 square feet, under a non-cancelable operating
lease, at a monthly cost of $7,935. The Company's principal computer facility is
located in San Diego in a shared facility with a co-location lease for $2,000
per month with one of the Company's telecommunication suppliers. The Company is
in process of transitioning systems from this facility to its new technology
center at 10180 Telesis Court, San Diego CA. This facility comprises 1,500
square feet that the Company sublets from an existing tenant in exchange for
network services.
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<PAGE> 15
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock as of November 1, 1999, by (i) each
person who is known by the Company to be the beneficial owner of more than five
percent (5%) of the issued and outstanding shares of Common Stock, (ii) each of
the Company's directors and executive officers, and (iii) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage Owned
- ---------------- ---------------- ----------------
<S> <C> <C>
Donald E. Cameron(1)(2) 1,831,008 5.82%
Marc Goyette(1)(3) 200,000 .65%
Robert Wilson(1)(3) 120,000 .39%
David Webb(1)(4) 100,000 .33%
Michael Hutchison 0 N/A
William R. Adams(5) 4,000 *
--------- -------
All directors & officers as a group(6) 2,255,008 7.10%
</TABLE>
(1) Address is 535 Encinitas Blvd., Suite 116, Encinitas, CA 92024
(2) Includes options granted to Mr. Cameron to purchase 395,000 shares of Common
Stock at an exercise price of 40 cents per share and 407,401 warrants
granted to Mr. Cameron pursuant to a 1996 private placement to purchase
407,401 shares of Common Stock at an exercise price of 40 cents per share
(3) Includes options granted to Messrs. Goyette and Wilson to purchase 100,000
shares each of Common Stock at an exercise price of 40 cents per share
(4) Includes options granted to Mr. Webb to purchase 100,000 shares of Common
Stock at an exercise price of 40 cents per share
(5) Includes options granted to Mr. Adams to purchase 4,000 shares of Common
Stock at an exercise price of 40 cents per share, * percentage is less than
.01%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Set forth below are the Directors and Officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Donald E. Cameron 47 President and CEO;
Director since 1993
Marc Goyette(1)(2) 43 Director since 1998
Robert Wilson(1)(2) 55 Director since 1996
David J. Webb 37 Vice President/Operations
Michael Hutchison 38 Vice President/Business Development
</TABLE>
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<PAGE> 16
<TABLE>
<S> <C> <C>
William R. Adams 50 Vice President Finance;
Secretary
</TABLE>
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Donald E. Cameron
Mr. Cameron founded and has served as President and CEO of Interactive Telesis
since 1993. Prior to joining the Company, Mr. Cameron was a lawyer specializing
in the area of corporate/securities law for a period of thirteen years and was
partner in the law firm of Worrall, Scott, and Page, Vancouver, Canada. As CEO
of the Company, Mr. Cameron oversees all areas of the Company's activities,
including sales, marketing, technical development, operations, and
administration.
Marc Goyette
Mr. Goyette has a broadly based general management background and since 1993 has
been the Founder and President of ROI International, an executive recruiting
firm. In 1988, Mr. Goyette joined Phoenix Network, a national long distance
company, as its Chief Operating Officer and was later promoted to President.
Phoenix Network was recognized in the 1992 issue of INC 100 as the ninth fastest
growing public company in America. Prior to Phoenix Network, Mr. Goyette held
positions as head of MIS Development for the electronics division of General
Dynamics and Senior Financial Consultant for Merrill Lynch.
Robert Wilson
Mr. Wilson's business career includes direct management experience and direct
consulting experience in over 50 medium size companies ($2M-$100M annual sales),
primarily in North America in various sectors, including manufacturing,
agricultural, service, financing, transportation, distribution, mining, oil and
gas, forest products, and real estate development. Since 1992, Mr. Wilson has
been an active Board member for several private and public companies in the
United States and Canada, including Nanovation Technologies Inc., a private
company in Miami involved in high-tech optical engineering; Stamford
International Inc., an Ontario, Canada-based merchant banking firm traded on the
OTC Toronto; and Amusement International Ltd., a Calgary company, traded on the
ASE.
David J. Webb
Mr. Webb joined the Company in November, 1995 and is currently Vice President of
Operations. His background includes an M.A. in mathematics and a B.S. in
computer science. His work at IBM (1986-1987) included leading a software
development team in creating an inventory control system used to track over five
million parts at 25 locations. He also taught for several years at Penn State
University (1987-1990). As Vice President of Information Systems for the
publicly-traded telecommunications company, Phoenix Network (1990-1994), Mr.
Webb supported the company's four-year revenue growth of over 400%, to
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<PAGE> 17
$60 million, by managing teams of maintenance, production, and development
staff. In addition to extensive experience in contract negotiation, Mr. Webb has
served as an independent consultant (1994-1995) to several communications firms
based in California.
Michael Hutchison
Mr. Hutchison joined the Company in April, 1998 and is currently Vice President
of Business Development for Interactive Telesis. He began his career in
marketing with Electronic Data Systems as manager of EDS/General Motors'
international operations. He was the Vice President of Sales and Marketing for
Anthony Robbins' multi-million-dollar product and seminar training company from
1987 to 1994. He then served as President of the Ambassador Management Group,
providing sales and marketing services to emerging growth "start -up" companies,
from 1994 to 1998. Mr. Hutchison is a member of the San Diego Telecom Council.
William R. Adams
Mr. Adams joined the Company in June, 1998 and is currently Vice President of
Finance. His financial experience includes over fifteen years (1977 to 1993) at
Hughes Electronics, where he was Group Finance Manager, and Delco Electronics
(1995 to 1997), where he was a Senior Financial Specialist. Mr. Adams also
served as Vice President and Controller of Cubic Applications (1997 to 1998) in
Lacey, WA, and CFO at DQDT, a start-up design engineering firm (1993 to 1995).
In addition to his extensive background in all aspects of financial and
accounting management, Mr. Adams is an experienced contract negotiator.
Each Director holds office until his successor is elected and qualified or until
his earlier resignation in the manner provided in the bylaws of the Company. The
Board of Directors has established an Audit Committee, consisting of Messrs.
Goyette and Wilson, and a Compensation Committee, consisting of Messrs. Goyette
and Wilson. The Audit Committee reviews the Company's independent auditors, the
scope and timing of the audit services, and other services they are asked to
perform, the Auditor's Report on the Company's financial statements following
completion of the audit, and the Company's policies and procedures, with respect
to internal accounting and financial controls. In addition, the Audit Committee
makes annual recommendations to the Board of Directors for the appointment of
independent auditors for the ensuing year. The Compensation Committee reviews
and recommends to the Board of Directors the compensation and benefits of all
officers of the Company and reviews general policy matters relating to
compensation and benefits of employees of the Company.
Compensation of Non-Employee Directors
The Company has the following arrangement by which non-employee directors are
compensated:
- - Cash
$6,000 per annum plus out of pocket expenses to attend meetings - paid
quarterly.
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<PAGE> 18
- - Stock Option
The Company proposes to grant stock options to purchase 25,000 shares of the
Company annually to each director of the Company under the 1996 Stock Option
Plan, to a maximum of 150,000 shares. The options are granted immediately after
the Annual General Meeting with a exercise price equal to the market price at
the time of granting. The options vest at the end of the fiscal year they are
granted. Previously the following directors were granted options to purchase
securities as follows:
<TABLE>
<CAPTION>
No. of Shares Exercise Price
------------- --------------
<S> <C> <C>
Marc Goyette 100,000 40 cents
Robert Wilson 100,000 40 cents
</TABLE>
These options vest annually over four years. Under the 1996 Stock Option
Plan, all stock options terminate ninety (90) days after the optionee
ceases to hold his or her position with the Company.
The Company has granted stock options to directors to assist the Company
in compensating, attracting, retaining, and motivating the directors of
the Company and to closely align the personal interests of the directors
with those of the shareholders.
Board of Directors Meetings
The Board of Directors had six meetings during the fiscal year ended July 31,
1999, which were attended by all directors.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth all annual and long-term compensation for
services in all capacities to the Company for the last three fiscal years in
respect of each of the individuals who were, as at July 31, 1999, the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company (collectively "the Named Executive Officers"), including any
individual who would have qualified as a Named Executive Officer but for the
fact that individual was not serving as such an Officer at the end of the most
recently completed financial year. The Company has one Named Executive Officer.
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<PAGE> 19
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------------
Annual Compensation Awards Payouts
-------------------------- ---------- -----------
Name Other Securities Restricted All
And Annual Under Shares or LTIP other
Principal Financial Salary Bonus Compen- Options Restricted Payouts Compen-
Position Year-End ($U.S.) ($) sation granted(#) Share Units ($) sation($)
- -------------- --------- -------- ------- ------- ---------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald Cameron 1997 $ 96,300 - - 395,000 - - -
President/CEO
Donald Cameron 1998 $108,000 - - - - - -
President/CEO
Donald Cameron 1999 $120,000 $36,250 - - - - -
President/CEO *
</TABLE>
* Bonus to CEO/Director was used to pay off a loan due from CEO/Director of
$21,000 plus the income taxes associated with such bonus.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock
The Company has only one class of stock.
The Company is authorized to issue 50,000,000 shares of Common Stock, $0.001 par
value, of which, as of November 1, 1999, 30,651,138 shares were issued and
outstanding and held of record by 1,049 stockholders. As of November 1, 1999,
the Company had 3,370 beneficial owners of its Common Stock.
Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders generally. Approval of proposals
submitted to shareholders at a duly held meeting, other than the election of
directors, requires a vote of the shareholders holding a majority of the shares
eligible to vote at the meeting who are present in person or by proxy. The
foregoing notwithstanding, the Corporation's Articles of Incorporation provide
that any amendment, alteration, change or repeal of any provision contained in
the Articles of Incorporation require a vote of the shareholders owning at least
75% of the shares entitled to vote on the measure who are present in person or
by proxy at the meeting. Also subject to Delaware law, the Corporation's Bylaws
provide that any ordinary resolution passed by the vote of the shareholders
holding 50% of the shares entitled to vote which are present in person
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<PAGE> 20
or by proxy at a duly called meeting are required to (i) approve a contract
where there are no disinterested directors; or (ii) approve a sale of all or
substantially all the Corporation's assets; or (iii) to approve the dissolution,
winding up or liquidation of the Corporation. The Corporation's Bylaws provide
that the holders of 33-1/3% or more of the Corporation's outstanding stock
entitled to vote at a meeting constitute a quorum at all shareholder meetings
for the transaction of business, except as otherwise required by statute or the
Articles of Incorporation.
Stockholders are entitled to receive dividends as may be declared from time to
time by the Board of Directors out of funds legally available therefore, and in
the event of liquidation, dissolution or winding up of the Company to share
ratably in all assets remaining after payment of liabilities. The holders of
shares of Common Stock have no preemptive, conversion, subscription or
cumulative voting rights.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
Market Information
The Company's Common Stock has been posted for trading on the OTC Bulletin Board
under the symbol "TSIS" since October, 1996.
Commencing with the fiscal quarter ending October 31, 1997, the high and low bid
prices for each quarter were as follows:
<TABLE>
<CAPTION>
Quarter ended High Low
-------------- -------- --------
<S> <C> <C> <C>
Oct. 31, 1997 86 cents 62 cents
Jan. 31, 1998 72 cents 30 cents
April 30, 1998 60 cents 41 cents
July 31, 1998 66 cents 48 cents
Oct. 31, 1998 51 cents 25 cents
Jan. 31, 1999 42 cents 25 cents
April 30, 1999 51 cents 27 cents
July 31, 1999 43 cents 36 cents
Oct. 31, 1999 36 cents 31 cents
</TABLE>
The quotations reflect inter-dealer prices, without retail mark-up, mark-down,
or commission, and may not represent actual transactions.
The Company has not paid any cash dividends since its inception and does not
anticipate paying dividends in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the expansion of the Company's business.
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<PAGE> 21
ITEM 2. LEGAL PROCEEDINGS
The Company is a defendant in a lawsuit brought in the Superior Court of
California in January, 1999, by Dieter Sauer, a former consultant, claiming
wrongful termination by the Company. The consultant alleges special, general and
punitive damages in excess of $400,000.
The Company is a defendant in a lawsuit brought in the District Court of Nevada
in November, 1997, by Scott Madison, a stockholder. The stockholder is claiming
that the Company, an Officer of the Company, and individuals associated with a
fiscal agent who assisted the Company in raising equity capital in 1996, made
misrepresentations to the plaintiff in the sale of shares of the Company's
Common Stock. The plaintiff alleges special, general and punitive damages in
excess of $1,000,000. Although the Company intends to vigorously defend the
action, counsel for the Company believes it is probable the Company will be
required to pay some damages. A reserve of $80,000 has been provided for in the
Company's financial statements.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
In December, 1998, the Company did not reappoint Buckley Dodds and Associates as
independent auditors for the Company and appointed Pannell Kerr Forster as
independent auditors. Pannell Kerr Forster was engaged to perform the audits for
the fiscal years ended July 31, 1998 and 1999. The decision to change
independent auditors was approved by the Board of Directors of the Company.
There were no disagreements between the Company and Buckley Dodds and Associates
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
During the last three years, the Company sold unregistered shares of its Common
Stock as follows:
A. Between March and October, 1997, the Company issued an aggregate of
12,537,572 shares for aggregate consideration of $2,427,999. The offering was
carried out by Capital Resolutions. The sales were made in reliance upon Rule
506 and Section 4.2 of the 1933 Act.
B. In 1998, the Company issued an aggregate of 13,255,530 shares for aggregate
consideration of $3,720,137. The sales were made in reliance upon Rule 506 and
Section 4.2 of the 1933 Act.
Prior to investing, each subscriber was provided with or had access to all
information regarding the Company that would be included in the registration
statement on Form SB 2, except that the financial statements provided to
subscribers were audited in accordance with
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<PAGE> 22
Canadian generally accepted accounting practices. With regards to the sales made
in reliance on Section 4.2 of the 1933 Act or Rule 506 thereunder, the Company
had reasonable grounds to believe, prior to accepting the subscription of each
subscriber, based in part on the subscription agreements or investment letters
executed by the subscribers, that each of the subscribers were sophisticated
enough to evaluate the merits of an investment in Common Stock and that each
subscriber was purchasing with investment intent and not with a view to
distribution. In addition, each subscriber was reasonably believed by the
Company to be an accredited investor within the meaning of Rule 501A of the 1933
Act.
Stock Options
The Company established the Interactive Telesis 1996 Stock Plan as a means
whereby the Company may, through awards of (i) incentive stock options ("ISOs")
within the meaning of Section 422 of the Internal Revenue Code, (ii) stock
appreciation rights ("SARs"), (iii) nonqualified stock options ("NSOs"), (iv)
restricted stock ("Restricted Stock"), and (v) phantom stock ("Phantom Stock"):
(a) provide key full-time employees, non-employee directors, consultants
or advisors, with additional incentive to promote the success of the
Company's business;
(b) encourage such persons to continue to promote the success of the
Company; and
(c) enable such person to acquire proprietary interests in the Company.
The Stock Option Plan as of November 1, 1999, is authorized to grant
options to acquire a maximum of 1,485,000 shares of Common Stock. The
provisions of this Plan do not apply to or affect any option, stock,
stock appreciation right, restricted stock or phantom stock heretofore
or hereafter granted under any other stock plan of the Company, and all
such options, stock, stock appreciation rights, restricted stock or
phantom stock continue to be governed by and subject to the applicable
provisions of the plan under which they were granted.
Since November of 1996, the Company has issued an aggregate of 1,052,000
options to purchase its Common Stock, with exercise prices ranging from
25 cents to 40 cents per share to employees, directors, and service
providers under its 1996 Stock Option Plan. Of these options, 112,000
have been cancelled without being exercised; options for 50,000 shares
have been exercised; as of November 1, 1999, 890,000 options remain
outstanding. The issuance of these option shares were exempt from
registration pursuant to Section 4(2) of the 1933 Act or, where
applicable, Rule 701 under the 1933 Act.
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<PAGE> 23
STOCK OPTIONS AS OF NOVEMBER 1, 1999
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE DATE GRANTED EXPIRATION DATE
---------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Directors 395,000 $0.40 10/3/96 10/3/06
Directors 100,000 $0.40 5/15/98 5/15/08
Directors 100,000 $0.40 5/15/99 5/15/09
Employees 190,000 $0.40 10/3/96 10/3/06
Consultants 105,000 $0.25 5/15/98 5/15/00
Consultant 50,000 $0.40 10/3/96 10/3/06
----------
Subtotal 940,000
Consultant (Exercised 10/14/99) 50,000
Total Outstanding Options ==========
as of November 1, 1999 890,000
==========
</TABLE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that, to the fullest extent
permitted by Section 102(b)(7) of the General Corporation Law of the State of
Delaware, as amended from time to time, or in analogous provisions of successor
law, there shall be no liability on any part of any director of the Corporation
to the Corporation or to its stockholders for monetary damages for breach of
fiduciary duty as a director. Any repeal or modification of Section 102(b)(7)
shall not adversely affect any right or protection of a director of the
Corporation existing hereunder with respect to any act or omission occurring
prior to or at the time of such repeal or modification.
Section 145 of the Delaware General Corporation Law, as amended, provides for
the indemnification of the Company's officers, directors, employees and agents
under certain circumstances as follows:
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
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<PAGE> 24
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
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<PAGE> 25
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such 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 this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
The Company's Bylaws provide for the indemnification of the Company's directors,
officers, employees, or agents under certain circumstances as follows:
6.1 Right to Indemnification. The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter by amended, any person who was or is made or is threatened to be made
a party of is otherwise involved in
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<PAGE> 26
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") by reason of the fact the he or she, or a person
for whom he or she is the legal representative, is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans, against all liability
and loss suffered and expenses reasonably incurred by such person. The
Corporation shall be required to indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was authorized by the
Board of Directors of the Corporation.
6.2 Prepayment of Expenses. The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a director or officer in advance of the
final disposition of the proceeding shall be made only upon receipt of an
undertaking by the director or officer to repay all amounts advanced if it
should be ultimately determined that the director or officer is not entitled to
be indemnified under this Article or otherwise.
6.3 Claims. If a claim for indemnification or payment of expenses under this
Article is not paid in full within sixty days after a written claim therefore
has been received by the Corporation, the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim. In any such action,
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification or payment of expenses under
applicable law.
6.4 Non-Exclusivity of Rights. The rights conferred on any person by this
Article VI shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
6.5 Other Indemnification. The Corporation's obligation, if any, to indemnify
any person who was or is serving at its request as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust enterprise or
non-profit entity shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint venture, trust,
enterprise or non-profit enterprise.
6.6 Amendment of Renewal. Any repeal or modification of the foregoing provisions
of this Article VI shall not adversely affect any right or protection hereunder
of any person with respect to any act or omission occurring prior to the time of
such repeal or modification.
26
<PAGE> 27
PART F/S
INTERACTIVE TELESIS, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C>
INDEPENDENT AUDITOR'S REPORT.......................................... F-1
FINANCIAL STATEMENTS
Balance Sheets................................................. F-2
Statements of Operations ...................................... F-3
Statements of Changes in Shareholders' Equity.................. F-4
Statements of Cash Flows....................................... F-5 - F-6
NOTES TO FINANCIAL STATEMENTS........................................ F-7 - F-15
</TABLE>
<PAGE> 28
[PKF LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Interactive Telesis, Inc.
Encinitas, California
We have audited the balance sheets of Interactive Telesis, Inc. (the "Company")
as of July 31, 1999 and 1998, and the statements of operations, changes in
shareholders' equity, and cash flows for the years then ended. 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 audits 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 Interactive Telesis, Inc. as of
July 31, 1999 and 1998, and the results of its operations and its cash flows for
the years then ended, in conformity with generally accepted accounting
principles.
/s/ PANNELL KERR FORSTER
-----------------------------------
San Diego, California PANNELL KERR FORSTER
September 17, 1999 Certified Public Accountants
A Professional Corporation
F-1
<PAGE> 29
INTERACTIVE TELESIS, INC.
BALANCE SHEETS
July 31, 1999 and 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Current assets:
Cash $ 490,152 $ 406,090
Accounts receivable 682,815 431,422
Deposits 7,730 8,205
Amount due from director -- 21,000
----------- -----------
Total current assets 1,180,697 866,717
----------- -----------
Property and equipment, net 762,508 293,770
----------- -----------
Total assets $ 1,943,205 $ 1,160,487
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 111,469 $ 49,615
Deferred revenue -- 12,500
Current portion of capital lease obligations 205,044 24,000
----------- -----------
Total current liabilities 316,513 86,115
----------- -----------
Capital lease obligations, net of current portion 292,229 75,791
----------- -----------
Total liabilities 608,742 161,906
----------- -----------
Commitments and contingencies (Note 5)
Shareholders' equity:
Common stock, $.001 par value, 50,000,000 shares
authorized; 30,599,888 and 29,914,140 shares issued
at July 31, 1999 and 1998, respectively; 30,599,888 and
28,751,945 shares outstanding at July 31, 1999 and
1998, respectively 30,600 29,914
Additional paid in capital 9,639,691 10,048,457
Accumulated deficit (8,335,828) (8,657,568)
Treasury stock, at cost, 0 and 1,162,195 shares
at July 31, 1999 and 1998, respectively -- (422,222)
----------- -----------
Total shareholders' equity 1,334,463 998,581
----------- -----------
Total liabilities and shareholders' equity $ 1,943,205 $ 1,160,487
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE> 30
INTERACTIVE TELESIS, INC.
STATEMENTS OF OPERATIONS
For the years ended July 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Revenues $ 3,022,290 $ 1,102,241
Costs and expenses:
Cost of revenues 221,506 98,055
Salaries and wages 1,184,523 822,035
General and administrative 742,801 627,831
Sales and marketing 266,626 141,432
Depreciation and amortization 177,067 64,615
----------- -----------
Total costs and expenses 2,592,523 1,753,968
----------- -----------
Operating income (loss) 429,767 (651,727)
Other expenses:
Interest expense 28,027 25,690
Litigation contingency 80,000 --
----------- -----------
Total other expenses 108,027 25,690
----------- -----------
Income (loss) before income taxes 321,740 (677,417)
Provision for income taxes -- --
----------- -----------
Net income (loss) $ 321,740 $ (677,417)
=========== ===========
Basic net income (loss) per share $ 0.01 $ (0.03)
=========== ===========
Shares used to compute basic net income (loss) per share 30,365,097 22,973,001
=========== ===========
Diluted net income (loss) per share $ 0.01 $ (0.03)
=========== ===========
Shares used to compute diluted net income (loss) per share 31,160,123 22,973,001
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 31
INTERACTIVE TELESIS, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the years ended July 31, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock Treasury Stock
------------------------ ----------------------------
Shares Amount Shares Amount
---------- ------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, July 31, 1997 16,658,610 $16,659 1,212,220 $(1,185,462)
Issue of common stock for cash,
net of issuance costs 14,352,204 14,352 -- --
Issue of common stock to
directors and employees 850,602 850 -- --
Issue of stock options to
directors and employees -- -- -- --
Purchase of treasury stock -- -- 1,897,251 (3,138,169)
Retirement of treasury stock (1,947,276) (1,947) (1,947,276) 3,901,409
Net loss -- -- -- --
---------- ------- ---------- -----------
Balance, July 31, 1998,
as restated (See Note 9) 29,914,140 29,914 1,162,195 (422,222)
Reissue of treasury stock -- -- (845,668) 421,906
Retirement of treasury stock (316,527) (316) (316,527) 316
Issue of common stock for cash,
net of issuance costs 1,002,275 1,002 -- --
Issue of stock options to
directors and employees -- -- -- --
Net income -- -- -- --
---------- ------- ---------- -----------
Balance, July 31, 1999 30,599,888 $30,600 -- $ --
========== ======= ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Additional Total
Paid In Accumulated Shareholders'
Capital Deficit Equity (Deficit)
----------- ----------- ----------------
<S> <C> <C> <C>
Balance, July 31, 1997 $ 6,307,636 $(5,344,472) $ (205,639)
Issue of common stock for cash,
net of issuance costs 4,572,315 -- 4,586,667
Issue of common stock to
directors and employees 398,350 -- 399,200
Issue of stock options to
directors and employees 33,939 -- 33,939
Purchase of treasury stock -- -- (3,138,169)
Retirement of treasury stock (1,263,783) (2,635,679) --
Net loss -- (677,417) (677,417)
----------- ----------- -----------
Balance, July 31, 1998,
as restated (See Note 9) 10,048,457 (8,657,568) 998,581
Reissue of treasury stock (630,847) -- (208,941)
Retirement of treasury stock -- -- --
Issue of common stock for cash,
net of issuance costs 214,414 -- 215,416
Issue of stock options to
directors and employees 7,667 -- 7,667
Net income -- 321,740 321,740
----------- ----------- -----------
Balance, July 31, 1999 $ 9,639,691 $(8,335,828) $ 1,334,463
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 32
INTERACTIVE TELESIS, INC.
STATEMENTS OF CASH FLOWS
For the years ended July 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 321,740 $ (677,417)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Bad debts 11,573 --
Depreciation and amortization 177,067 64,615
Interest on capital leases and long-term debt 28,027 25,690
Amount due from director forgiven 21,000 --
Issuance of common stock and stock options
to directors and employees 7,667 433,139
Litigation contingency 80,000 --
Changes in operating assets and liabilities:
Increase in accounts receivable (262,966) (385,359)
Decrease in prepaid expenses and deposits 475 1,022
Decrease in stock subscription receivable -- 78,200
Decrease in accounts payable and accrued liabilities (18,146) (84,032)
(Decrease) increase in deferred revenue (12,500) 437
--------- -----------
Net cash flows provided by (used in) operating activities 353,937 (543,705)
--------- -----------
Cash flows from investing activities:
Purchase of property and equipment (91,240) (104,955)
--------- -----------
Net cash flows used in investing activities (91,240) (104,955)
--------- -----------
Cash flows from financing activities:
Proceeds on issuance of common stock 215,416 4,586,667
Repayments on long-term debt -- (66,463)
Repayments on capital leases (185,110) (127,748)
Purchase of treasury stock and related costs (208,941) (3,138,169)
Decrease in stock subscriptions -- (735,384)
--------- -----------
Net cash flows (used in) provided by financing activities (178,635) 518,903
--------- -----------
Net increase (decrease) in cash 84,062 (129,757)
Cash at beginning of year 406,090 535,847
--------- -----------
Cash at end of year $ 490,152 $ 406,090
========= ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 33
INTERACTIVE TELESIS, INC.
STATEMENTS OF CASH FLOWS (Continued)
For the years ended July 31, 1999 and 1998
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
1999 1998
-------- ----------
<S> <C> <C>
Cash paid during the period for:
Interest $ 28,027 $ 25,690
======== ==========
Income taxes $ -- $ --
======== ==========
Supplemental disclosure of noncash investing and financing activities:
Treasury stock transactions $209,787 $2,635,679
======== ==========
Purchase of property and equipment on capital lease $554,565 $ 156,790
======== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 34
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Interactive Telesis, Inc. (the "Company") was incorporated under the laws of the
Province of British Columbia, Canada, on June 19, 1987, and on September 23,
1996, the Company's jurisdiction of incorporation was changed to the state of
Delaware. It is in the business of developing and marketing customized
interactive voice response services to customers primarily located in the United
States.
Financial Instruments
The carrying amounts reported in the balance sheets for cash, accounts
receivable, prepaid expenses and deposits, amount due from director, accounts
payable and accrued liabilities, and deferred revenue approximate fair value due
to the immediate short-term maturity of these financial instruments.
The fair value of the Company's capital lease obligations approximates the
carrying amount based on the current rates offered to the Company for debt of
the same remaining maturities with similar collateral requirements.
Cash and Cash Equivalents
The Company considers all cash accounts, which are not subject to withdrawal
restrictions or penalties, and certificates of deposit and money market funds
purchased with an original maturity of three months or less to be cash
equivalents.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is calculated on a
declining balance basis over the estimated useful lives of the depreciable
assets which range from three to five years.
Treasury Stock
The Company's repurchases of shares of common stock are recorded as treasury
stock, at cost, and result in a reduction of shareholders' equity. When treasury
shares are retired, the Company uses a first-in, first-out method and the excess
of repurchase cost over additional paid in capital is treated as an increase in
accumulated deficit. When treasury shares are reissued, the Company uses a
first-in, first-out method and the excess of repurchase cost over reissuance
price is treated as a reduction of additional paid in capital.
Revenue Recognition
Revenues are generated by the Company's interactive voice response services.
Revenue is recognized when these services are provided by the Company.
F-7
<PAGE> 35
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration Risk
A majority of the Company's revenues are generated by record and replay
services. If the demand for this service decreased or if the Company's ability
to continue to provide this service was impaired, the Company's revenue source
would be impacted.
78% and 68% of the Company's revenue was generated by three and one customer(s)
for the years ended July 31, 1999 and 1998, respectively.
The Company maintains its primary checking and savings accounts at one financial
institution located in California. Accounts at this bank are insured by the
Federal Deposit Insurance Corporation (FDIC) up to $100,000. At July 31, 1999
and 1998, the Company's uninsured cash balances totaled $390,152 and $306,090,
respectively. The Company has not experienced any losses in such accounts and
management believes it places its cash on deposit with financial institutions
which are financially stable.
Stock Based Compensation
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." This statement encourages, but does not require,
companies to recognize compensation expense for grants of stock, stock options,
and other equity instruments based on a fair-value method of accounting.
Companies that do not choose to adopt the expense recognition rules of SFAS No.
123 will continue to apply the existing accounting rules contained in Accounting
Principles Board Opinion (APB) No. 25, but are required to provide pro forma
disclosures of the compensation expense determined under the fair-value
provisions of SFAS No. 123. APB No. 25 requires no recognition of compensation
expense for most of the stock-based compensation arrangements provided by the
Company, namely, broad-based employee stock purchase plans and option grants
where the exercise price is equal to the market price at the date of the grant.
The Company has adopted the disclosure provisions of SFAS No. 123 effective
August 1, 1997. The Company has opted to follow the accounting provisions of APB
No. 25 for stock- based compensation and to furnish the pro forma disclosures
required under SFAS No. 123 (See Note 6).
Long-Lived Assets
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of the impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amount. SFAS No. 121 also addresses the accounting for long-lived assets that
are expected to be disposed of. The Company adopted SFAS No. 121 effective
August 1, 1997.
F-8
<PAGE> 36
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred income taxes are recognized for
the tax consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
Net Income (Loss) Per Share
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
per share for entities with publicly held common stock. SFAS No. 128 supercedes
the provisions of APB No. 15, and requires the presentation of basic earnings
per share and diluted earnings per share. The Company has adopted the provisions
of SFAS No. 128 effective August 1, 1997.
Basic net income (loss) per share excludes dilution and is computed by dividing
net income (loss) by the weighted average number of common shares outstanding
during the reported periods. Diluted net income (loss) per share reflects the
potential dilution that could occur if stock options and other commitments to
issue common stock were exercised. During the year ended July 31, 1999,
outstanding options and warrants to purchase 838,901 common shares were included
in the weighted average share computation. During the year ended July 31, 1998,
outstanding options and warrants to purchase 1,000,651 common shares were
anti-dilutive and have been excluded from the weighted average share
computation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - RELATED PARTY TRANSACTIONS
Amount due from director
Amount due from director consists of the following as of July 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- -------
<S> <C> <C>
Unsecured loan to the CEO, bearing interest at 8%,
for legal costs related to a legal action resulting from
his position as a director and officer of the Company.
In July 1999, the loan was forgiven via a bonus to the
CEO for achieving certain revenue targets for the
Company. $-- $21,000
==== =======
</TABLE>
F-9
<PAGE> 37
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following as of July 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------- ---------
<S> <C> <C>
Computer and related equipment $ 933,799 $ 357,730
Office furniture and fixtures 64,198 36,534
Motor vehicle 42,072 -
---------- ---------
1,040,069 394,264
Less: Accumulated depreciation (277,561) (100,494)
---------- ---------
Net property and equipment $ 762,508 $ 293,770
========== =========
</TABLE>
NOTE 4 - CAPITAL LEASE OBLIGATIONS
Capital lease obligations consist of the following as of July 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
--------- --------
<S> <C> <C>
Capital lease obligations, bearing interest at rates
of up to 28%, with interest and principal payable in
monthly instalments of approximately $21,400. The
capital lease obligations are secured by the computer
and related equipment, and by personal guarantees of
the CEO. The capital lease obligations are due at
various dates between July 2000 and June 2003. $ 497,273 $ 99,791
Less: Current portion (205,044) (24,000)
--------- --------
Capital lease obligation, long-term $ 292,229 $ 75,791
========= ========
</TABLE>
Aggregate maturities of capital lease obligations as of July 31, 1999, are as
follows:
<TABLE>
<CAPTION>
Year Ended July 31, Amount
------------------- ---------
<S> <C>
2000 $ 257,171
2001 228,465
2002 102,906
2003 13,299
---------
Total minimum lease payments 601,841
Less: Amount representing interest (104,568)
---------
$ 497,273
=========
</TABLE>
Capitalized leases included in property and equipment amounted to approximately
$712,000 and $157,000 before accumulated amortization of $165,000 and $45,000 as
of July 31, 1999 and 1998, respectively. Included in depreciation and
amortization expense is amortization of capital lease assets in the amounts of
approximately $120,000 and $34,000 for the years ended July 31, 1999 and 1998,
respectively.
F-10
<PAGE> 38
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Leases
The Company leases its facilities and other equipment under
non-cancelable operating leases that expire at various dates through
July 2002. Minimum future obligations under these leases as of July 31,
1999, are as follows:
<TABLE>
<CAPTION>
Year ended July 31, Amount
------------------- --------
<S> <C>
2000 $129,147
2001 104,202
2002 13,732
--------
Total minimum lease payments $247,081
========
</TABLE>
Rent expense under the non-cancelable operating leases was $103,185 and $62,589
for the years ended July 31, 1999 and 1998.
Litigation
The Company is a defendant in a lawsuit brought by an individual claiming that
the Company wrongfully terminated the plaintiff. The plaintiff alleges special,
general and punitive damages in excess of $400,000. At the present stage of
litigation, the probability that the Company will be required to pay damages
cannot be determined. Accordingly, no contingent liability has been provided for
in the accompanying financial statements.
The Company is a defendant in a lawsuit brought by an individual claiming that
the Company and other defendants made misrepresentations in the sale of shares
of the Company's common stock. The plaintiff alleges special, general and
punitive damages in excess of $1,000,000. Although the case has been vigorously
defended, it is probable that the Company will be required to pay damages. A
provision of $80,000 has been provided for in the accompanying financial
statements.
Other
No contingent liability has been provided for in the accompanying financial
statements that relates to the Company's 1997 stock repurchase program, as
discussed in Note 6.
F-11
<PAGE> 39
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 6 - SHAREHOLDERS' EQUITY
Stock repurchase program
In 1997, the Company authorized the repurchase of up to $2,000,000 worth of its
shares through open market transactions with the intention of retiring this
stock. For the years ended July 31, 1999 and 1998, the Company paid $208,941 and
$3,138,169 to five brokerage accounts of the Company and certain shareholders
(the "Brokerage Accounts") and purchased and resold shares at values varying
between $0.30 and $1.06. As of July 31, 1999, the Company did not hold any
treasury stock and had settled all the Brokerage Accounts. Certain aspects of
the stock repurchase program may not have been in strict compliance with
regulatory requirements, which could lead to certain liabilities, the nature and
outcome of which are uncertain.
Stock purchase warrants
In January 1997, the Company issued 407,401 share purchase warrants to the CEO
in connection with the settlement of a debt. The warrants entitle the director
to purchase 407,401 shares of common stock at $.40 per share, and expire in
November 2001. None of the warrants had been exercised as of July 31, 1999.
In January 1997, the Company issued 675,000 share purchase warrants to a
corporation in connection with the issue of shares of common stock. The warrants
entitled the corporation to purchase 337,500 shares of common stock at $.20 per
share, and expired unexercised in January 1999.
Stock option plans
In October 1996, the Company adopted a non-qualified stock option plan (the
"Plan") under which options to purchase up to 1,485,000 shares of common stock
may be granted to directors, officers or employees of the Company, as well as to
consultants and other service providers of the Company. The Plan provides for
grants of options with a term of up to 10 years.
Pursuant to the Plan, the Company granted options to purchase 132,000 and
205,000 shares of common stock for the years ended July 31, 1999 and 1998,
respectively.
The Company has elected to account for grants under its Plan following APB No.
25 and related interpretations. Accordingly, compensation costs of $7,667 and
$33,939 have been recognized for options granted during the years ended July 31,
1999 and 1998, respectively. Under SFAS No.123, the fair value of each option
granted during the years ended July 31, 1999 and 1998, was estimated on the
measurement date utilizing the then current fair value of the underlying shares,
as estimated by management, less the exercise price discounted over the average
expected life of the options, with an average risk free interest rate of between
4.9% and 6.7%, price volatility of between .53 and 1, and no dividends.
F-12
<PAGE> 40
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 6 - SHAREHOLDERS' EQUITY (Continued)
Stock option plans (Continued)
Had compensation cost for all awards been determined based on the fair value
method as prescribed by SFAS No.123, reported net income (loss) and net income
(loss) per share would have been as follows:
<TABLE>
<CAPTION>
July 31, 1999 July 31, 1998
------------- -------------
<S> <C> <C>
Net income (loss):
As reported $321,740 $(677,417)
Pro forma $261,659 $(779,733)
Basic net income (loss) per share:
As reported $ 0.01 $ (0.03)
Pro forma $ 0.01 $ (0.03)
Diluted net income (loss) per share:
As reported $ 0.01 $ (0.03)
Pro forma $ 0.01 $ (0.03)
</TABLE>
A summary of the activity of the stock options for the years ended July 31, 1999
and 1998 are as follows:
<TABLE>
<CAPTION>
Year ended Year ended
July 31, 1999 July 31, 1998
------------------------ -------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------- -------- --------- --------
<S> <C> <C> <C> <C>
Outstanding at beginning of period 808,000 $ 0.38 715,000 $ 0.40
Granted 132,000 0.40 205,000 0.33
Forfeited -- -- (112,000) 0.40
Expired -- -- -- --
------- -------- --------- -------
Outstanding at end of period 940,000 $ 0.38 808,000 $ 0.38
======= ======== ========= =======
Exercisable at end of period 431,500 $ 0.36 255,750 $ 0.34
======= ======== ========= =======
Weighted-average fair value
of options granted during the period $ 0.32 $ 0.39
========= =======
Weighted-average remaining contractual
life of options outstanding at end
of period 7 years 7 years
======== =======
</TABLE>
F-13
<PAGE> 41
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 7 - INCOME TAXES
Deferred income taxes reflect the net tax effects of the temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and the amounts used for income tax purposes. The tax effect of temporary
differences consisted of the following as of July 31:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 866,000 $ 900,000
Other 35,000 --
--------- ---------
Gross deferred tax assets 901,000 900,000
Less: Valuation allowance (614,000) (742,000)
--------- ---------
Net deferred tax assets 287,000 158,000
Deferred tax liabilities:
Property and equipment (28,000) (11,000)
Cash basis accounting for tax purposes (259,000) (147,000)
--------- ---------
$ -- $ --
========= =========
</TABLE>
Realization of deferred tax assets is dependant upon sufficient future taxable
income during the period that deductible temporary differences and carryforward
are expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance. The valuation allowance decreased by $128,000 from 1998 and increased
by $221,000 from 1997.
As of July 31, 1999, the Company has net operating loss carryforwards for both
federal and state income tax purposes. Federal and state net operating loss
carryforwards totaling approximately $2,255,000 and $1,703,000, respectively, as
of July 31, 1999, begin to expire in 2011. Under federal and state laws, the
availability of operating loss carryforwards are limited in the event of a
cumulative change in the Company's ownership resulting in a change in control.
The Company has not performed an analysis to determine if such a change has
taken place, however, management does not believe such a change has taken place.
A reconciliation of the effective tax rates with the federal statutory rate is
as follows as of July 31:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Income tax expense (benefit) at 35% statutory rate $ 113,000 $(237,000)
Change in valuation allowance (128,000) 221,000
Nondeductible expenses -- 14,000
State income taxes, net 19,000 (39,000)
Other (4,000) 41,000
--------- ---------
$ -- $ --
========= =========
</TABLE>
F-14
<PAGE> 42
INTERACTIVE TELESIS, INC.
NOTES TO FINANCIAL STATEMENTS
For the years ended July 31, 1999 and 1998
NOTE 8 - PROPOSED SALE OF PRODUCT SERVICE LINE
On June 25, 1999, the Company's Board of Directors authorized management to
negotiate the sale of the InvestorReach service ("InvestorReach"). Revenues and
net income (loss) from InvestorReach were $537,028 and $145,973 for the year
ended July 31, 1999, and $272,833 and $(16,781) for the year ended July 31,
1998, respectively. InvestorReach does not have any separately identifiable
assets and liabilities. Management is currently negotiating the sale of
InvestorReach.
NOTE 9 - RESTATEMENT AND RECLASSIFICATION
The July 31, 1998 financial statements were previously issued under Canadian
Generally Accepted Accounting Principles. As a result, no compensation expense
was recognized for the issue of stock options to directors and employees, and
the cost of treasury stock was allocated between common stock par value and
additional paid in capital. Accordingly, the additional paid in capital and net
loss as of and for the year ended July 31, 1998, have been restated to account
for the issue of such stock options in accordance with APB No. 25, and the cost
of treasury stock has been reclassified from common stock par value and
additional paid in capital to treasury stock, at cost.
As a result of the above, $33,939 has been recognized as compensation expense
for the year ended July 31, 1998, increasing the net loss from $(643,478) as
previously reported, to $(677,417). Also, $(1,162) and $(421,060) have been
reclassified from common stock par value and additional paid-in capital,
respectively, to treasury stock, at cost, as of July 31, 1998, to properly
reflect treasury stock, with no effect on total shareholders' equity.
F-15
<PAGE> 43
PART III
ITEM 1. Index of Exhibits
<TABLE>
<CAPTION>
Description
-----------
<S> <C>
3.1 Province of British Columbia, Company Act, Certificate of
Incorporation, Butter Rock Resources
3.2 Company Act, Memorandum, Butter Rock Resources
3.3. Articles of Incorporation, Interactive Telesis - 1992
3.4 Certificate of Incorporation of the Company - Delaware
3.5 Certificate of Amendment of Certificate of Incorporation of the
Company - Delaware
3.6 Bylaws of the Company
10.1 ITI Stock Option Plan (1996)
10.2 Lease Agreement between the Company and North Coast Business
Park, dated Feb. 15, 1995, with amendments dated April 30, 1999
10.3 Lease Agreement between the Company and U.S. Net Solutions, Inc.,
dated Feb. 22, 1999
10.4 Sublease Agreement between the Company and The Townsend Agency,
dated Aug. 13, 1999
10.5 Balboa Capital Corporate Equipment Lease Agreement
10.6 Balboa Capital Corporate Equipment Lease Agreement
10.7 Toshiba Corporate Equipment Lease Agreement
10.8 Westover Financial Corporate Equipment Lease Agreement
10.9 Westover Financial Corporate Equipment Lease Agreement
10.10 Ford Financial Services Corporate Equipment Lease Agreement
10.11 Ford Financial Services Corporate Equipment Lease Agreement
</TABLE>
27
<PAGE> 44
<TABLE>
<S> <C>
10.12 Imperial Business Credit Corporate Equipment Lease Agreement
10.13 Media Capital, LLC Corporate Equipment Lease Agreement
10.14 Dell Financial Services Corporate Equipment Lease Agreement
10.15 Imperial Business Credit Corporate Equipment Lease Agreement
10.16 First Sierra Financial Corporate Equipment Lease Agreement
10.17 United Capital Leasing Corporate Equipment Lease Agreement
10.18 ADVANTA Business Service Corporate Equipment Lease Agreement
10.19 Ford Financial Services Corporate Equipment Lease Agreement
10.20 ADVANTA Bank Corporation Corporate Equipment Lease Agreement
10.21 Financial Pacific Leasing Corporate Equipment Lease Agreement
16.1 Letter from Buckley Dodds and Associates, dated Oct. 29, 1999
27.1 Financial Data Schedule
</TABLE>
28
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
INTERACTIVE TELESIS INC.
(a Delaware corporation)
------------------------------------
(Registrant)
Dated: November 19, 1999 By: /s/ Donald E. Cameron
---------------------------------
Donald E. Cameron
President and CEO
29
<PAGE> 1
EXHIBIT 3.1
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 328785
[LOGO]
PROVINCE OF BRITISH COLUMBIA
Ministry of Finance and Corporate Relations
REGISTRAR OF COMPANIES
COMPANY ACT
CERTIFICATE OF INCORPORATION
I HEREBY CERTIFY THAT
BUTTER ROCK RESOURCES INC.
HAS THIS DAY BEEN INCORPORATED UNDER THE COMPANY ACT
GIVEN UNDER MY HAND AND SEAL OF OFFICE
AT VICTORIA, BRITISH COLUMBIA,
[SEAL]
THIS 19TH DAY OF JUNE, 1987
/s/ ROBERTA J. LOWDON
---------------------------------------
ROBERTA J. LOWDON
DEPUTY REGISTRAR OF COMPANIES
<PAGE> 1
EXHIBIT 3.2
I HEREBY CERTIFY THAT THESE ARE
COPIES OF DOCUMENTS FILED WITH THE
REGISTRAR OF COMPANIES ON
JUNE 19, 1987
/s/ [SIGNATURE ILLEGIBLE]
----------------------------------
ASSISTANT DEPUTY REGISTRAR OF
COMPANIES FOR THE PROVINCE OF
BRITISH COLUMBIA
COMPANY ACT
------
M E M O R A N D U M
------
BUTTER ROCK RESOURCES INC.
I wish to be formed into a Company with limited liability under the
Company Act in pursuance of this Memorandum.
1. The name of the Company is BUTTER ROCK RESOURCES INC.
2. The authorized capital of the Company consists of 100,000,000 Common
shares without par value.
3. I agree to take the number of shares in the Company set opposite my name
below.
- --------------------------------------------------------------------------------
FULL NAME, RESIDENT ADDRESS NUMBER OF SHARES
AND OCCUPATION OF SUBSCRIBER TAKEN BY SUBSCRIBER
- --------------------------------------------------------------------------------
/s/ JILL GAMLEY One Common Share
- ----------------------------- without par value
Jill Gamley
#9 - 2035 West 3rd Avenue
Vancouver, B.C.
V6J 1L4
Corporate Records Assistant
TOTAL SHARES TAKEN: One Common Share
without par value
- --------------------------------------------------------------------------------
DATED at Vancouver, British Columbia, this 17th day of June, 1987.
<PAGE> 2
NUMBER: 328785
[LOGO]
CERTIFICATE
OF
CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I HEREBY CERTIFY that
BUTTER ROCK RESOURCES INC.
has this day changed its name to
INN INVESTMENT NEWS NETWORK LTD.
ISSUED under my hand at Victoria, British Columbia
on September 25, 1992
[SEAL]
/s/ JOHN S. POWELL
------------------------
JOHN S. POWELL
A/Registrar of Companies
<PAGE> 3
FORM 21
(Section 371)
Certificate of
Incorporation No. 328785
COMPANY ACT
SPECIAL RESOLUTION
The following special resolution was passed by the undermentioned
company on the date stated:
Name of Company: INN INVESTMENT NEWS NETWORK LTD.
Date resolution passed: December 21, 1993
Resolution:
"NAME CHANGE
RESOLVED, AS A SPECIAL RESOLUTION, that the Memorandum of the Company be altered
by changing the name of the Company from "INN Investment News Network Ltd." to
"Interactive Telesis Inc." or such other name as the directors in their absolute
discretion may determine and is acceptable to the regulatory authorities."
(THE MEMORANDUM AS ALTERED IS ATTACHED HERETO AS SCHEDULE "A")
CERTIFIED a true copy the 11th day of February, 1994.
(Signature) /s/ J. HOGG
(Relationship to Company) Solicitor
<PAGE> 4
Schedule "A"
FORM 1 (Section 5)
COMPANY ACT
ALTERED MEMORANDUM
(as Altered by Special Resolution dated December 21, 1993)
1. The name of the Company is "Interactive Telesis Inc."
2. The authorized capital of the Company consists of 100,000,000 common
shares without par value.
<PAGE> 5
-1-
"COMPANY ACT"
ARTICLES
OF
BUTTER ROCK RESOURCES INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART ARTICLES PAGES
- ---- -------- -----
<S> <C> <C> <C>
1 DEFINITIONS AND CONSTRUCTION 1 - 3 2
2 SHARE CAPITAL 4 - 8 3
3 REGISTRATION OF MEMBERS AND
SHARE CERTIFICATES 9 - 13 3 - 4
4 TRANSFER AND TRANSMISSION OF
SHARES AND DEBENTURES 14 - 22 4 - 7
5 GENERAL MEETINGS 23 - 41 7 - 11
6 DIRECTORS 42 - 61 11 - 15
7 MANAGEMENT OF THE COMPANY 62 15
8 BORROWING AND MORTGAGING 63 - 65 15
9 SAFEGUARDING, INDEMNITY, ETC.
OF DIRECTORS 66 - 69 16
10 EXECUTION OF DOCUMENTS 70 - 73 17
11 DIVIDENDS 74 - 80 17
12 NOTICES 81 - 84 18 - 19
13 RESTRICTION OF SHARE TRANSFERS 85 19
</TABLE>
<PAGE> 6
-2-
"COMPANY ACT"
ARTICLES
OF
BUTTER ROCK RESOURCES INC.
PART I - DEFINITIONS AND CONSTRUCTION
1. In these Articles, except as the context otherwise requires:
(a) "board" means the board of directors for the time being of the
Company;
(b) "Company Act" means the Company Act (British Columbia) and
regulations thereunder from time to time in force;
(c) "registered address" of a member means the address of the member as
recorded in the Company's register of members;
(d) "registered address" of a director means the address of the director
as recorded in the Company's register of directors;
(e) words or expressions contained in these Articles bear the same
meaning as in the Company Act or any statutory modification thereof in
force on the date on which these Articles come into effect;
(f) expressions referring to writing include printing, typewriting,
lithography, photography and any other means of presenting language in
visible and lasting form; and
(g) words importing the singular include the plural and vice versa,
words importing a male person include a female, and words importing an
individual include a corporation.
2. If any provision of these Articles is in whole or in part void, illegal or
invalid, the remaining provisions will be construed and take effect as if every
provision or part thereof which so offends had been omitted.
3. If there is any conflict between the provisions of these Articles and the
Memorandum of the Company, the provisions of the Memorandum will govern.
<PAGE> 7
-3-
PART 2 - SHARE CAPITAL
4. The Company may allot and issue its shares at such times, in such manner and
to such persons, or class of persons, as the directors determine.
5. The board will determine the price or consideration at or for which the
shares are to be allotted and issued.
6. The Company may by resolution of the board purchase any of its issued shares.
7. The Company may by ordinary resolution alter its Memorandum to increase its
authorized capital by:
(a) creating shares with par value or shares without par value or both;
(b) increasing the number of shares of any class with par value or
shares of any class without par value or both; or
(c) increasing the par value of a class of shares with par value, if no
shares of that class are issued.
8. The Company may, to the extent permitted by law, pay a commission or allow a
discount to any person in consideration of his subscribing or agreeing to
subscribe, whether absolutely or conditionally, or procuring or agreeing to
procure subscriptions, whether absolute or conditional, for shares in the
capital of the Company.
PART 3 - REGISTRATION OF MEMBERS AND SHARE CERTIFICATES
9. Except as these Articles otherwise provide, the Company and its directors,
officers and agents may treat the registered holder of a share as the absolute
owner thereof, and will not, except as required by statute or as ordered by a
court of competent jurisdiction, be bound to recognize even when having notice
thereof, any claim to, interest in, or right in respect of such share on the
part of any other person.
10. A share held in the names of two or more persons will be deemed to be held
jointly.
11. Except in the case of the personal representatives of, or trustees of the
estate of, a deceased member, the Company may refuse to register more than three
persons as joint holders of a share.
<PAGE> 8
-4-
12. A share certificate may be delivered to a member entitled thereto by mailing
it by prepaid registered post in the manner provided in these Articles for the
giving of notices, or otherwise as directed by the member in writing, and
neither the Company nor its transfer agent will be liable for any loss
occasioned to a member or person claiming through a member by reason that a
share certificate so mailed or so otherwise sent is not received by the
addressee.
13. A certificate for a share registered in the names of two or more persons may
be delivered to or to the direction of any one of them.
PART 4 - TRANSFER AND TRANSMISSION OF SHARES AND DEBENTURES
14. For the purpose of countersigning, issuing, registering, transferring,
cancelling and certifying the shares and share certificates of the Company, the
Company may appoint:
(a) a registrar;
(b) one or more transfer agents, one of whom may be the registrar; and
(c) one or more branch transfer agencies and securities registrars both
in and outside British Columbia.
15. For the purpose of these Articles "instrument of transfer" means:
(a) such form of transfer as may appear on the back of the share
certificate representing the share proposed to be transferred; or
(b) such form of separate transfer document as may from time to time be
in general use.
16. (1) In order to effect a transfer of a share:
(a) an instrument of transfer must be executed by the registered holder
of the share, or his attorney duly authorized in writing;
(b) unless the proposed transferee has acquired the share through a
registrant, he will, if not a member, execute an acknowledgment that he
agrees to become a member;
(c) the execution of the instrument of transfer and any acknowledgment
must be attested and validated as in either case the board from time to
time reasonably requires; and
(d) the certificate representing the share to be transferred, the
instrument of transfer and the acknowledgment, if required, will be
delivered to the Company's transfer agent or, if the Company has no
transfer agent, to the records office of the Company.
<PAGE> 9
-5-
(2) There shall be a separate instrument of transfer for each class of
shares proposed to be transferred.
(3) When the transfer agent or the Company receives for the purpose of a
proposed share transfer a duly executed instrument of transfer, the Company and
its directors, officers and agents, will:
(a) where the instrument of transfer designates the transferee; or
(b) where the instrument of transfer was executed and is delivered in
blank, and the person by or on whose behalf the instrument of transfer
is delivered designates in writing a transferee;
be entitled to treat the person so designated as the beneficial owner of:
(c) if the instrument of transfer is endorsed on a share certificate,
the number of shares represented by the certificate or such lesser
number as may be specified in the instruments of transfer; or
(d) if the instrument of transfer is not so endorsed, such number of
shares registered in the name of the transferor as are represented
by every unendorsed certificate deposited with the Company or its
transfer agent for the purpose of the transfer, or such lesser
number as may be specified in the instrument of transfer;
and upon compliance with, and subject to all other provisions of these Articles,
the Company will cause the name of the proposed transferee to be entered in the
register of members of the Company as holder of each such share.
17. A share may be registered in the name of a person as executor,
administrator, guardian, committee, curator or trustee of, or otherwise as
fiduciary for, a named person, trust or estate, and
(a) where application is made to issue or transfer a share to a
fiduciary, the Company will not be obliged to enquire into the authority
of the fiduciary, who will be presumed, as against the Company, to be
acting in accordance with his authority unless, in the case of a
transfer of a share, the transfer proposed is from the person whose
estate or interest is sought to be represented;
(b) in the case of a transfer by a fiduciary, including a transfer by a
fiduciary to himself, the Company will not be obligated to enquire into
the authority of the fiduciary or the propriety of the transaction or to
ascertain whether the fiduciary continues to occupy his office at the
time of transfer;
<PAGE> 10
-6-
(c) in all cases the Company will be entitled to act on an order of a
court of record, wherever constituted or having jurisdiction in
proceedings to which the registered holder appears from the order to
have been subject, directing a vesting or declaring the ownership of
shares, as evidenced by a copy of the order of the court certified as
such in accordance with the practice of the court;
(d) any grant of letters probate or letters of administration or order
appointing a trustee, guardian, committee, curator or directing a
vesting or declaring the ownership of shares, dated not more than one
year before the date on which a copy of the grant or order, certified in
accordance with the practice of the authority issuing the grant or
order, received by the Company or its transfer agent, will be deemed to
be in full force and effect and not to have been amended, revoked or
reversed, unless and until there is delivered to the transfer agent of
the Company or, if the Company has no transfer agent, to the records
office of the Company
(i) a certificate of a court of record appearing to have the
required jurisdiction, certified in accordance with the
practice of such court, that proceedings have been
commenced by way of appeal or otherwise to amend, revoke or
reserve the grant or order, or
(ii) a copy of an order of a court of record appearing to have
the necessary jurisdiction certified as aforesaid, by which
the earlier grant or order is amended, revoked or reversed;
and
(e) any certificate or a court of record, certified as aforesaid, and
delivered to the transfer agent of the Company or, if the Company has no
transfer agent, to the records office of the Company, to the effect that
any grant or order of that court of the nature described in clause (d)
remains in full force and effect, and has not been amended, revoked or
reversed and that there is not outstanding with respect to the grant or
order any proceeding of the nature referred to in subclause (d)(i), will
create the same presumption as to the validity of the grant or order as
though the grant or order bore the same date as the certificate.
18. The Company or its registrar or transfer agent may refuse to recognize the
transfer of a share to an infant, bankrupt or person suffering mental infirmity.
<PAGE> 11
-7-
19. Where a transfer of a share is completed by registration in the register of
members of the Company, the instrument of transfer and any accompanying
acknowledgment will be retained by the Company or its transfer agent but where
the Company declines to complete a proposed transfer of a share the instrument
of transfer, share certificate and other documentation deposited for the purpose
of the transfer will, on demand, be returned to the person depositing the same,
or other person entitled thereto.
20. There must be paid to the Company or its transfer agent in respect of the
registration of any transfer or transmission such fee as the board determines.
21. (1) The personal representative of a deceased member (not being one of
several joint holders) will be the only person recognized by the Company as
having any title to a share registered in the name of the deceased.
(2) On the death of one of joint registered holders of a share, the
survivor or survivors will be the only person or persons recognized by the
Company as having any title to or interest in the share.
22. The Company may, if authorized by a debenture or any trust indenture
pursuant to which a registered debenture has been issued, cause to be kept one
or more branch registers of its debenture holders.
PART 5 - GENERAL MEETINGS
23. General meetings of the Company will be held at such time and place, in
accordance with the Company Act and these Articles as the board determines.
24. (1) Notice of a meeting is sufficient if it specifies the place, the day and
the hour of the meeting and the general nature of any business to be considered
at the meeting.
(2) Notice of a meeting will be deemed to be delivered on the next
business day following the day on which it was mailed or forwarded.
25. The accidental omission to give notice of a general meeting to, or the
non-receipt of such notice by, any of the persons entitled to receive the notice
will not invalidate any proceedings of that meeting or any meeting adjourned
therefrom.
26. The quorum for the transaction of business at a general meeting is two
members or proxy holders representing two members or one member and a proxy
holder representing another member present at the commencement of the meeting.
<PAGE> 12
-8-
27. Unless a quorum is present at the commencement of a general meeting, no
business may be transacted other than the selection of the chairman and the
adjournment or termination of the meeting.
28. If by half an hour after the time appointed for a general meeting a quorum
is not present, the meeting, if convened upon requisition, will be terminated,
and in any other case will stand adjourned to the same day in the next week at
the same time and place, or to such later date, other time or other place as the
chairman specifies on the adjournment, and if at the adjourned meeting a quorum
is not present by half an hour after the time appointed for the meeting, the
members present will be a quorum.
29. The chairman of a general meeting will be:
(a) the chairman of the board, if any; or
(b) if there is no such chairman or if he is absent or unwilling to act,
the president; or
(c) so failing the president, a director present chosen by the directors
present; or
(d) if no such director is chosen and willing to act, any individual
present as a member, proxyholder, or representative of a corporate
member or another person present who is duly chosen by the individuals
so present.
30. (1) The chairman may, with the consent of the meeting at which a quorum is
present, and will in pursuance of a resolution to that effect, adjourn the
meeting from time to time and from place to place, but no business will be
transacted at an adjourned meeting other than the business left unfinished at
the meeting from which the adjournment takes place.
(2) No notice need be given of an adjournment or of the business to be
conducted at an adjourned meeting unless the meeting is adjourned for more than
31 days, in which case not less than 10 days' notice of the adjourned meeting
must be given.
31. (1) All business at meetings will be conducted by poll unless a show of
hands is specified.
(2) A member entitled to vote at a general meeting may, by means of a proxy,
appoint a proxyholder and such proxyholder will be entitled to attend, speak,
act and vote on a show of hands and on a poll for the member and on his behalf
at the meeting subject only to any limitation imposed on the authority of the
proxyholder by the proxy.
<PAGE> 13
-9-
(3) A proxy must be in writing, dated the date on which it is executed, must
be executed by the member or his attorney authorized in writing or if the member
is a corporation, by a duly authorized officer or attorney of the corporation
and, if to apply to less than all the shares registered in the name of the
member, must specify the number of shares to which it is to apply.
(4) A proxyholder may be appointed to act for a member at every annual or
other general meeting, or at one or more annual or other general meetings that
may be held within such period of time from the date of the proxy, accordingly
as the proxy specifies.
(5) A proxy will, to the extent that it is inconsistent with another proxy
of an earlier date, be deemed to revoke such other proxy.
(6) A vote given in accordance with the terms of a proxy is not invalidated
by the previous death, bankruptcy or mental infirmity of the member giving the
proxy unless written notice of the death, bankruptcy or infirmity is received by
the chairman before the declaration of the result of the vote.
(7) The board may make regulations providing for the deposit of proxies at
specified places and at specified times before meetings and adjourned meetings
of the Company, and providing for particulars of such proxies to be cabled or
telegraphed or sent in writing before the meeting or adjourned meeting to the
Company or to any agent of the Company appointed for the purpose of receiving
such particulars, and providing that particulars so received will be as
effective as though the proxies themselves were deposited.
(8) Every proxy may be revoked by an instrument in writing executed by the
member or his attorney authorized in writing or, where the member is a
corporation, by a duly authorized officer or attorney of the corporation, and
delivered to the records office of the Company at any time up to and including
the last business day preceding the day of the meeting or any adjournment
thereof at which the proxy is to be used, or to the chairman of the meeting or
any adjournment thereof.
32. A proxy, other than one required by law to be in particular form, will be
substantially in the following form:
"The undersigned hereby appoints ___________________________________, of
________________________ (or failing him _________________________________, of
______________________) as proxyholder for the undersigned to attend, speak and
vote for and on behalf of the undersigned in respect of all (or _______________)
shares registered in the name of the undersigned
<PAGE> 14
-10-
at the general meeting of the Company to be held on the _________ day of
____________, 19___, and at any adjournment thereof.
Signed this ____________ day of ___________, 19___.
_______________________________________
(Signature of Member)
33. A corporation which is a member and is not a subsidiary of the Company may,
by instrument under the hand of its duly authorized officer or attorney, appoint
a representative who, until his appointment is in like manner terminated, will
be entitled to attend meetings, act and vote, both on a show of hands and on a
poll, either in person or by proxy, and other wise exercise the rights of
membership of the corporation appointing him and will, for all purposes in
connection with any meeting of the Company other than the giving of notice, be
reckoned as a member holding the shares registered in the name of such
corporation.
34. Any one of the joint holders of a share may vote in respect of the share at
a general meeting, either personally or by proxy holder, as if he were solely
entitled thereto, and if more than one of the joint holders is present or
represented by proxyholder or corporate representative that one of them whose
name appears first on the register of members in respect of the share, or his
proxyholder or representative, will alone be entitled to vote in respect
thereof.
35. A member for whom a committee has been duly appointed may vote, whether on a
show of hands or on a poll, by his committee and the committee may appoint a
proxyholder.
36. (1) A poll demanded on the election of a chairman or on a question of
adjournment will be taken forthwith and without an intervening adjournment.
(2) The demand for a poll and the carrying out of a poll will not, unless
the chairman so rules, prevent the continuance of a meeting for the transaction
of business other than that on which the poll is demanded.
37. On a poll a person entitled to more than one vote need not use all his votes
or cast all the votes he uses in the same way.
38. In the case of an equality of votes, whether on a show of hands or on a
poll, the chairman may exercise a casting vote in addition to any other vote
which he may have exercised.
39. The chairman may move, propose or second a resolution.
40. The chairman of a meeting of shareholders will have regard to accepted rules
of parliamentary procedure, except that
<PAGE> 15
(a) the chairman will have absolute authority over matters of procedure
and there will be no appeal from his ruling, but if the chairman deems it
advisable to dispense with the rules of parliamentary procedure at any
general meeting or part thereof, he must so state and must state clearly
the rules under which the meeting or the appropriate part thereof will be
conducted;
(b) any dispute as to the admission or rejection of a vote will be
determined by the chairman and his determination will be final and
conclusive;
(c) if disorder arises which prevents continuation of the business of the
meeting, the chairman may quit the chair and announce the adjournment of
the meeting, and upon his so doing, the general meeting is,
notwithstanding Article 30, immediately adjourned;
(d) the chairman may require anyone to leave the meeting who is not a
registered shareholder entitled to vote at the meeting or proxyholder for
or corporate representative of such a shareholder;
(e) a resolution or motion will be considered for vote only if proposed by
a shareholder, proxyholder or representative of a corporate shareholder
and (except for a nomination for election of directors or appointment of
auditors) seconded by a shareholder, proxyholder, or representative other
than the person who proposed the resolution or motion.
41. The Company by ordinary resolution may from time to time adopt any Rules of
Order which shall, insofar as not inconsistent with the Company Act or these
Articles, govern the conduct of general meetings.
PART 6 - DIRECTORS
42. The subscribers to the Memorandum shall be the first directors. The
directors to succeed the first directors and the number of directors may be
determined in writing by the subscribers to the Memorandum. The number of
directors may be changed from time to time by ordinary resolution, at an annual
general meeting, or by special resolution at any other meeting at which
directors are to be elected, but shall never be less than one while the Company
is not a reporting company and three if the Company is or becomes a reporting
company.
43. (1) At each annual general meeting of the Company directors will be elected
to hold office commencing at the termination, or earlier adjournment, of the
meeting at which they have been elected.
(2) If the number of eligible persons nominated for election as directors is
equal to or less than the number of directors to be elected, no vote will be
required and those nominated will be deemed elected by acclamation.
(3) A retiring director is eligible for re-election.
<PAGE> 16
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44. The office of a director will terminate:
(a) on his resignation;
(b) on his removal from office as provided in the Company Act;
(c) on his ceasing to be qualified as a director under the Company Act;
or
(d) on the adjournment or termination of the annual general meeting
which next follows his election or appointment and at which a director
is elected but he is not elected.
45. (1) The board may appoint any individual qualified to act as a director to
the board to fill any casual vacancy in the board.
(2) A vacancy resulting from an increase in the number of directors will be
deemed not to be a casual vacancy unless, and will be deemed to be a casual
vacancy if, the vacancy is not filled by the shareholders at the meeting at
which the increase is authorized.
(3) Any vacancy on the board that has not been filled by an appointment made
by the board may be filled by an appointment made by ordinary resolution.
(4) The board may appoint one or more additional directors of the Company
but the number of additional directors so appointed shall not exceed one-third
of the number of directors elected or appointed at the last general meeting.
46. A person who is not a member who becomes a director is deemed to have agreed
to be bound by the provisions of these Articles to the same extent as a member.
47. (1) A director will be paid such reasonable travelling, lodging, subsistence
and other expenses as he incurs in or about the business of the Company.
(2) The remuneration of the directors may from time to time be fixed by the
board subject to any limitations established by ordinary resolution, and may, in
the case of a director who is also an officer or employee of the Company, be in
addition to any remuneration to which he is entitled as such an officer or
employee.
(3) If a director performs any professional or other service for the Company
that, in the opinion of the board, is outside the ordinary duties of a director,
or if he is otherwise specially occupied in or about the Company's business, he
may be paid a special remuneration to be fixed by the board or, at the option of
the director, by the Company in general meeting.
(4) Remuneration of a director payable on a periodic basis will be deemed to
accrue from day to day.
<PAGE> 17
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(5) Except as restricted by ordinary resolution, the board may cause the
Company to pay a gratuity, pension or allowance on retirement to any director
who has held any salaried office or place of profit with the Company, or to his
widow or dependents and may make contributions to any fund for, and pay premiums
for the purchase or provision of, any such gratuity, pension or allowance.
48. (1) A director (in this Article called "appointor") may appoint another
director as his alternate director.
(2) An appointment of an alternate will not be effective until an instrument
in writing signed by the appointor, or a telegram, telecopy, telex or cable
dispatched by the appointor, declaring the appointment, is received by the
Company.
(3) An appointor may revoke an appointment of his alternate by notice in
writing, telegram, telecopy, telex or by cable delivered to the Company.
(4) The appointment of an alternate terminated if the appointor or the
alternate ceases to be a director.
(5) A director may act as alternate for more than one director and will be
entitled at a meeting of the board to cast one vote for each director for whom
he is the alternate in addition to the vote to which he is entitled as a
director in his own right.
(6) Unless otherwise determined by the board, an alternate will not be
counted as representing his appointor in determining whether a quorum is
present.
49. The directors may meet together at such places, or convene meetings by
telephone, and adjourn and otherwise regulate their meetings and proceedings as
they see fit.
50. A director may at any time, and the secretary upon the request of the
director will, convene a meeting of the board.
51. (1) Notice of a meeting of the board must be given to each director at least
three business days before the time fixed for the meeting unless a majority of
the directors reside outside of the municipality where the meeting is to be
held, in which case notice shall be given at least five business days before the
time fixed for the meeting.
(2) Notice may be given verbally, personally or by telephone, or in writing,
personally or by delivery through the post, or telegraph, or by any other means
of communication in common usage.
(3) When notice of a meeting is given to a director other than personally,
it will be addressed to him at his registered address as shown in the Company's
register of directors.
<PAGE> 18
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(4) Where the board has established a fixed time and place for holding
regular meetings of the board and holds such a meeting accordingly, no notice of
the next meeting to be so held need be given to any director.
(5) No notice need be given to a director of a meeting of the board at which
he is appointed or which immediately follows a general meeting at which he is
elected or appointed.
52. The board may act notwithstanding any vacancy in its body, so long as the
number of directors in office is not reduced below the number fixed as the
quorum of the board.
53. The board may from time to time fix the quorum necessary for the transaction
of business and until so fixed the quorum will be a majority of the number last
elected at the annual general meeting.
54. The chairman of the board, if any, or in his absence or if there is no
chairman of the board, the president, will be chairman of each meeting of the
board, but if at any meeting neither the chairman of the board nor the president
is, within fifteen minutes after the time appointed for holding the meeting,
present and willing to act, the directors present may choose one of their number
to be chairman of the meeting.
55. A meeting of directors at which a quorum is present is competent to exercise
all or any of the authorities, powers and discretions for the time being vested
in or exercisable by the board generally.
56. Questions arising at a meeting of the board will be decided by a majority of
votes.
57. In the case of an equality of votes, the chairman will have a second or
casting vote.
58. A director who is interested in a proposed contract or transaction or other
business to be considered or conducted at a meeting of the board and who has
disclosed his interest in accordance with the provisions of the Company Act will
be counted in the quorum at any meeting of the board at which the proposed
contract or transaction or such other business is considered, approved or
otherwise acted upon.
59. The board may on such terms as it sees fit, delegate any of its powers to
committees each consisting of one or more directors, which will function in such
manner as the board from time to time directs.
60. (1) The board will elect annually from among its number an audit committee
to be composed of not fewer than three directors of whom a majority shall not be
officers or employees of the Company or its affiliates.
<PAGE> 19
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(2) The audit committee will review the annual audited financial statements
of the Company before, and will comment thereon when, such statements are
submitted to the board for its approval.
61. (1) All appointments of officers will be made upon such terms and conditions
and at such remuneration, whether by way of salary, fee, commission,
participation in profits, or otherwise as the board determines, and every such
appointment will be subject to termination at the pleasure of the board, but
without prejudice to any right that may thereby arise under any contract.
(2) The appointment of an officer will not terminate merely by reason that
all or any of the members of the board by which he was appointed have ceased to
be directors at an annual general meeting or otherwise, unless he has thereby
ceased to hold the qualification for his office.
PART 7 - MANAGEMENT OF THE COMPANY
62. (1) The board may exercise all such powers and do all such acts and things
as the Company may exercise and do and which are not by these Articles or
otherwise lawfully directed or required to be exercised or done by the Company
in general meeting, but subject nevertheless to the provision of these Articles
and all laws affecting the Company and to any rules, not inconsistent with these
Articles, made from time to time by the Company in general meeting; but no such
rule will invalidate any prior act of the board that would have been valid if
the rule had not been made.
(2) The board may appoint a management committee from among its members to
conduct certain matters on its behalf.
PART 8 - BORROWING AND MORTGAGING
63. The board may from time to time at its discretion authorize the Company to
borrow any sum of money for the purposes of the Company and may raise or secure
the repayment of such sum or the performance of any other obligation of the
Company in such manner and upon such terms and conditions in all respects as the
board thinks fit, and without limiting the generality of the foregoing, by the
issue of bonds, debentures, or other instruments, or any mortgage or charge,
whether specific or floating, or other security on the undertaking of the whole
or any part of the property of the Company, both present and future.
64. The board may make any such bond, debenture, or other instrument, mortgage
or charge, or any other security by its terms assignable free from any equity
between the Company and the person to whom it is issued, or any other person who
lawfully acquires the same by assignment, purchase or otherwise.
<PAGE> 20
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65. The board may authorize the issue of any such bond, debenture, or other
instrument, or mortgage or charge or other security at a discount, premium or
otherwise, and with special or other rights or privileges as to redemption,
surrender, drawings, allotment of or conversion into or exchange for shares,
attendance at general meetings of the Company, and otherwise as the board
determines at or before the time of issue.
PART 9 - SAFEGUARDING, INDEMNITY, ETC, OF DIRECTORS
66. A director of the Company may be or become a director or officer of, or
otherwise interested in, any corporation promoted by the Company or in which the
Company is interested, as shareholder or otherwise, or any corporation which
owns or controls shares of the Company, and will not be liable to account to the
Company for any remuneration or other benefit received by him as a director or
officer of, or from his interest in, such other corporation.
67. A director may hold any office or place of profit under the Company in
conjunction with his directorship for such period and on such arrangement as to
remuneration and otherwise as the board determines, and no director or proposed
director is disqualified by that relationship from contracting with the Company
either with regard to his tenure of such other office or place of profit, or as
vendor, purchaser or otherwise, nor is a director so contracting or being so
interested liable to account to the Company for any profit realized by any such
arrangement or contract, by reason only that the director holds that office or
of the fiduciary relationship thereby established.
68. The board may cause the Company to provide indemnity by way of insurance or
otherwise to any director, officer, employee or other person who has undertaken
or is about to undertake any liability on behalf of the Company or any
corporation controlled by it and to secure such director, officer, employee or
other person against loss by mortgage and charge upon the whole or any part of
the real and personal property of the Company and any action taken by the board
under this paragraph will not require approval or confirmation by the members.
<PAGE> 21
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69. No director, officer or employee for the time being of the Company will be
liable for the acts, receipts, neglects or defaults of any other director,
officer or employee, or for joining in any receipt or act for the sake of
conformity, or for any loss, damage or expense happening to the Company through
the insufficiency or deficiency of title to any property acquired by order of
the board for or on behalf of the Company, or for the insufficiency or
deficiency of any security in or upon which any of the monies of or belonging to
the Company are placed out or invested or for any loss or damages arising from
the bankruptcy, insolvency or wrongful act of any person, firm or corporation
with whom or which any monies, securities or effects are lodged or deposited or
for any other loss, damage or misfortune whatever which may happen in the
execution of the duties of his respective office or trust or in relation thereto
unless the same happens by or through his own willful neglect or default.
PART 10 - EXECUTION OF DOCUMENTS
70. The board may adopt a common seal for the Company and may, from time to
time, adopt a new common seal and will provide for the safe custody of the
common seal.
71. The Company may have an official seal for use in any other province,
territory, state or country.
72. Neither the common seal nor an official seal will be impressed on any
document or instrument except
(a) pursuant to the authorization of a resolution of the board, which
authorization may extend to the sealing of a particular document or
instrument, one or more documents and instruments meeting a description, or
to all documents and instruments to be executed under seal, or
(b) by the secretary or an assistant secretary for the purpose of certifying
copies of or extracts from the Memorandum or Articles of the Company,
minutes of meetings or resolutions of the shareholders or board or
committees of the board or any instrument executed or issued by the Company.
73. The signature of any officer or director of the Company, that is, by
authority of the board, printed, lithographed, engraved or otherwise reproduced
upon any instrument or document (including any negotiable instrument) to be
signed, executed or issued by the Company or by any of its officers or
directors, and any instrument or document on which the signature of any such
person is so reproduced, will be as valid as if the signature had been affixed
manually by such person, and will be so valid notwithstanding that, at the time
of the issue or delivery of the instrument or document, the person whose
signature is so reproduced is deceased, has ceased to hold the office giving
rise to his authority or is otherwise incapacitated from personally signing such
instrument or document.
<PAGE> 22
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PART II - DIVIDENDS
74. Except as otherwise provided by special rights or restrictions attached to
any shares, all dividends will be declared according to the number of shares
held.
75. Dividends may be paid out of any of the surplus accounts of the Company.
76. No notice of the declaration of any dividend need be given to any member,
and no dividend will bear interest against the Company.
77. A resolution declaring a dividend may direct payment of the dividend wholly
or partly by the distribution of specific assets or of paid-up shares, bonds,
debentures or debenture stock of the Company, or in any one or more such ways,
and where any difficulty arises in regard to the distribution, the board may
settle the same as it thinks expedient, and in particular may fix the value for
distribution of specific assets, and may determine that cash, payments shall be
made to members upon the footing of the values so fixed or in lieu of fractional
shares, bonds, debentures or debenture stock, in order to adjust the rights of
all parties, and may vest any such specific assets in trustees upon such trusts
for the persons entitled as may seem expedient to the board.
78. The Company may retain the dividends payable on a share in respect of which
a fiduciary is entitled to become a member until the fiduciary becomes the
registered holder of such share.
79. Any dividend or other monies payable in cash in respect of a share may be
paid by cheque or warrant sent through the post to the registered holder of the
share in like manner as provided in these Articles for the giving of notices, or
to such person and to such address as the holder or joint holders, as the case
may be, in writing direct.
80. Any one of two or more joint holders may give effectual receipts for any
dividend or other monies payable or assets distributable in respect of a share
held by them as joint holders.
PART 12 - NOTICES
81. A notice may be given or a document delivered by the Company to a member or
director, either personally or by sending it through the post to him in a
prepaid letter, envelope or wrapper addressed to the member or director at his
registered address.
82. Notice may be given or a document delivered by the Company to the joint
holders of a share by giving the notice or delivering the document to the joint
holder first named in the register of members in respect of the share.
<PAGE> 23
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83. A notice may be given or a document delivered by the Company to a person
claiming entitlement to a share in consequence of the death, bankruptcy or
mental infirmity of a member, by sending it through the post in a prepaid
letter, envelope or wrapper addressed to such person by name, or by suitable
title as representing the deceased, bankrupt or mentally infirm member, at the
address, if any, supplied to the Company for the purpose by such person, or,
until an address has been so supplied, by giving the notice or delivering the
document in any manner in which the same might have been given or delivered if
the death, bankruptcy or mental infirmity had not occurred.
84. A notice or document sent through the post to or left at the registered
address of a member will, notwithstanding that the member is then deceased and
whether or not the Company or its agent has notice of his decease, be deemed to
have been duly given or delivered in respect of any share registered in the name
of the member and will for all purposes of these Articles be deemed sufficiently
given or delivered to his personal representatives and to any person jointly
interested with the member in any such share.
PART 13 - RESTRICTION ON SHARE TRANSFERS
85. So long as the Company is a non-reporting Company, no shares may be
transferred except with the consent of the directors who may in their absolute
discretion refuse to register the transfer of any share and no transfer shall be
entered in the register of members without the prior approval of the directors.
NAME, ADDRESS AND OCCUPATION OF SUBSCRIBER
/s/ JILL GAMLEY
- ----------------------------------
Jill Gamley
#9 - 2035 West 3rd Ave.
Vancouver, B.C.
V6J 1L4
Corporate Records Assistant
DATED the 17th day of June, 1987.
<PAGE> 1
EXHIBIT 3.3
INTERACTIVE TELESIS INC.
ARTICLES OF INCORPORATION
INTERACTIVE TELESIS INC., Incorporated _____________, 1992, as a Nevada
Corporation, hereby adopts the following Articles of Incorporation of such
Corporation:
ARTICLE I: NAME
The corporate name of the Corporation shall be INTERACTIVE TELESIS INC.
ARTICLE II: PURPOSE
The purposes for which the said Corporation is incorporated are as
follows, to-wit:
1. To transact all lawful business for which corporations may be
incorporated pursuant to the Nevada Corporation Code.
2. To render Marketing Services.
3. To do all and everything necessary, suitable, convenient or proper
for the accomplishment of any one or more of the objects herein enumerated or
incidental to the powers herein named, or which shall, at any time, appear
conducive to or expedient for the protection or benefit of the Corporation.
ARTICLE III: DURATION
The said Corporation shall have perpetual existence.
ARTICLE IV: CAPITAL STOCK
Section 1. Classes and share authorized. The authorized capital stock
of the Corporation shall be 20,000,000 shares of Common Stock, $.001 par value,
and 5,000,000 shares of Preferred Stock, $.001 par value.
Section 2. Preferred Stock. Shares of Preferred Stock may be divided
into such series as may be established from time to time by the Board of
Directors. The Board of Directors from time to time may fix and determine the
relative rights and preferences of the shares of any series so established.
Section 3. Common Stock.
(a) After the requirements with respect to preferential dividends on
the Preferred Stock, if any, shall have been met, and after the Corporation
shall have complied with all the requirements, if any, with respect to the
setting aside of sums as sinking funds or redemption or purchase accounts, and
subject further to any other conditions which may be fixed in accordance with
the provisions of Section 2 of this Article IV, then, and not otherwise, the
holders of the Common Stock shall be entitled to receive such dividends as may
be declared from time to time by the Board of Directors of the Corporation paid
out of funds legally available therefor.
<PAGE> 2
(b) After distribution in full of the preferential amount, if any, to be
distributed to the holders of the Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets, dissolution, or
winding-up of the Corporation, the holders of the Common Stock shall be entitled
to receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to stockholders, ratably
in proportion to the number of shares of the Common Stock held by them
respectively.
(c) Except as may otherwise be required by law, each holder of the
Common Stock shall have one vote in respect of each share of the Common Stock
held by him on all matters voted upon by the stockholders.
Section 4. General Provisions. The capital stock of the Corporation may
be issued for money, property, services rendered, labor done, cash advanced to
or on behalf of the Corporation, or for any other assets of value in accordance
with an action of the Board of Directors, whose judgment as to the value of the
assets received in return for said stock shall be conclusive, and said stock,
when issued, shall be fully paid and nonassessable.
ARTICLE V: NO PREFERENCES, PRIVILEGES,
RESTRICTIONS
No distinction shall exist between the shares of the corporation or the
holders thereof.
ARTICLE VI: VOTING
Cumulative voting shall not be permitted by this Corporation. Each
outstanding share, regardless of class, is entitled to one vote, and each
fractional share is entitled to a corresponding fractional vote on each matter
submitted to a vote at a meeting of shareholders.
ARTICLE VII: PREEMPTIVE RIGHTS
Shareholders of the Corporation shall not have preemptive rights to
acquire unissued or treasury shares of the Corporation or securities convertible
into such shares or carrying a right to subscribe to or acquire such shares.
ARTICLE IX: BOARD OF DIRECTORS
Section 1. Board of Directors. The affairs and management of the
Corporation shall be under the control of the Board of Directors consisting of
not less than three (3) nor more than nine (9) directors, provided that there
need be only as many directors as provided in the bylaws of the Corporation as
there are shareholders in the event that outstanding shares are held of record
by fewer than three shareholders.
Section 2. Classification of Directors. The Board of Directors shall be
divided into three classes, Class 1, Class 2, and Class 3, each class to be as
nearly equal in number as possible. The term of office of Class 1 directors
shall expire at the first annual meeting of shareholders following their
election, that of Class 2 directors shall expire at the second annual meeting
following their election, and that of Class 3 directors shall expire at the
third annual meeting following their election. At each annual meeting after such
classification, a number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the third succeeding annual meeting, No
2
<PAGE> 3
classification of directors shall be effective prior to the first annual meeting
of shareholders or at any time when the Board of Directors consist of less than
three members. Notwithstanding the foregoing, and except as otherwise required
by law, whenever the holders of any one or more series of Preferred Stock shall
have the right, voting separately as a class, to elect one or more directors of
the Company, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of shareholders.
Section 3. Initial Directors. The names and addresses of director(s)
who first served on the original Board of Directors are:
James E. Franklin Donald E. Cameron
2696 Hidden Valley Rd. Suite 100 - 200 Granville
San Diego, CA 92037 Vancouver, BC Canada
V6C1S4
Diane L. Sweet Glenn Collick
818 Stevens Ave 1006 - 750 W. Pender Street
Solana Beach, CA 92075 Vancouver, BC Canada V6C2T8
SECTION 4. Nomination of Directors.
(a) Nominations for the election of directors may be made by the Board
of Directors, by a committee of the Board of Directors, or by any shareholder
entitled to vote for the election of directors. Nominations by shareholders
shall be made by notice in writing, delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of the Corporation, not less than
14 days nor more than 50 days prior to any meeting of the shareholders called
for the election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to shareholders, such written notice shall be
delivered or mailed, as prescribed, to the Secretary of the Corporation, not
later than the close of the seventh day following the day on which notice of the
meeting was mailed to shareholders.
(b) Each notice under subsection (a) shall set for the (i) the name,
age, business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of each such
nominee, and (iii) the number of shares of stock of the Corporation which are
beneficially owned by each such nominee.
(c) The chairman of the shareholders' meeting may, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
Section 5. Certain Powers of the Board of Directors. In furtherance and
not in limitation of the powers conferred by statute, the Board of Directors is
expressly authorized:
(a) To manage and govern the Corporation by majority vote of members
present at any regular or special meeting at which a quorum shall be present, to
make, alter, or amend the bylaws of the Corporation at any regular or special
meeting, 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 the Corporation, and to designate one or
more committees, each committee to consist of two or more of the directors of
the Corporation, which, to the extent provided in the resolution or in the
Bylaws of the Corporation, shall have and may exercise the powers of the Board
of Director 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 Bylaws of the Corporation or as may be determined form
3
<PAGE> 4
time to time by resolution adopted by the Board of Directors);
(b) To sell, lease, exchange, or otherwise dispose of all or
substantially all of the property and assets of the Corporation in the ordinary
course of its business upon such terms and conditions as the Board of Directors
may determine without vote or consent of the shareholders;
(c) To sell, pledge, lease, exchange, liquidate, or otherwise dispose
of all or substantially all the property or assets of the Corporation, including
its goodwill, if not in the ordinary course of its business, upon such terms and
conditions as the Board of Directors may determine; provided, however, that such
transaction shall be authorized or ratified by the affirmative vote of the
holders of at least a majority of the shares entitled to vote thereon at a
shareholders' meeting duly called for such purpose, or authorized or ratified by
the written consent of the holders of all of the shares entitled to vote
thereon; and provided, further, that any such transaction with any substantial
shareholder or affiliate of the Corporation shall be authorized or ratified by
the affirmative vote of the holders of at least two-thirds of the shares
entitled to vote thereon at a shareholders' meeting duly called for that
purpose, unless such transaction is with any subsidiary of the Corporation or is
approved by the affirmative vote of a majority of the continuing directors of
the Corporation, or is authorized for ratified by the written consent of the
holders of all the shares entitled to vote thereon;
(d) To merge, consolidate, or exchange all of the issued or outstanding
shares of one or more classes of the Corporation upon such terms and conditions
as the Board of Directors may authorize; provided, however, that such merger,
consolidation, or exchange shall be approved or ratified by the affirmative vote
of the holders of at least a majority of the shares entitled to vote thereon at
a shareholders' meeting duly called for that purpose, or authorized or ratified
by the written consent of the holders of all of the shares entitled to vote
thereon; and provided, further, that any such merger, consolidation, or exchange
with any substantial shareholder or affiliate of the Corporation shall be
authorized or ratified by the affirmative vote of the holders of at least
two-thirds of the shares entitled to vote thereon at a shareholders' meeting
duly called for that purpose, unless such merger, consolidation, or exchange is
with any subsidiary of the Corporation or is approved by the affirmative vote of
a majority of the continuing directors of the Corporation, or is authorized or
ratified by the written consent of the holders of all the shares entitled to
vote thereon; and
(e) To distribute to the shareholders of the Corporation, without the
approval of the shareholders, in partial liquidation, out of stated capital or
capital surplus of the Corporation, a portion of the Corporation's assets, in
cash or in property, so long as the partial liquidation is in compliance with
the Nevada Corporation Code.
(f) As used in this Section 5, the following terms shall have the
following meaning:
(i) an "affiliate" shall mean any person or entity which is an
affiliate within the meaning of Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended;
(ii) a "continuing director" shall mean a director who was
elected before the substantial shareholder or affiliate of the
Corporation which is to be a party to a proposed transaction within the
scope of subsections (c) and (d) of this Section 5 became such a
substantial shareholder or affiliate of the Corporation, as the case
may be, or is designated at or prior to his first election or
appointment to the Board of Directors by the affirmative vote of a
majority of the Board of Directors who are continuing directors;
(iii) a "subsidiary" shall mean any Corporation in which the
Corporation owns the majority of each class of equity security; and
4
<PAGE> 5
(iv) a "substantial shareholder" shall mean any person or
entity which is the beneficial owner, within the meaning of Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended, of 10% or more of the outstanding capital stock of
the Corporation.
ARTICLE IX: INDEMNIFICATION
Section 1. Direct Actions. The Corporation shall indemnify any person
who was or is a party, or is threatened to be made a party, to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorney fees), judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by such person in connection with
the action, suit, or proceeding, if such person acted in good faith and in a
manner such person reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
does not of itself create a presumption that such person did not act in good
faith and in a manner such person reasonably believed to be in, or not opposed
to, the best interests of the Corporation and, with respect to any criminal
action or proceeding, had reasonably cause to believe that such person's conduct
was unlawful.
Section 2. Derivative Actions. The Corporation shall indemnify any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee, or agent of another Corporation, partnership, joint venture, trust, or
other enterprise against expenses (including amounts paid in settlement and
attorney's fees) actually and reasonably incurred by such person in connection
with the defense or settlement of the action or suit, if such person acted in
good faith and in a manner such person reasonably believed to be in, or not
opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of such person's duty to the Corporation.
Indemnification may not be made for any claim, issue, or matter as to which such
a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the Corporation or for
amounts paid in settlement to the Corporation unless and only to the extent that
the court which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
Section 3. Expenses. To the extent that a director, officer, employee,
or agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in Section 1 and 2 of
this Article VIII, or in defense of any claim, issue, or matter therein, such
person must be indemnified by the Corporation against expenses (including
attorney fees) actually and reasonably incurred by such person in connection
with the defense.
ARTICLE X: PLACE OF OPERATION
The operations of the said Corporation shall be carried on in the state
of Nevada and the Corporation shall also be permitted to conduct business in any
other state of the United States or
5
<PAGE> 6
elsewhere and to have one or more offices outside the State of Nevada. The Board
of Directors and stockholders of the Corporation shall have the right to hold
their meetings outside of the State of Nevada when deemed most convenient or in
the best interest of the Corporation.
ARTICLE XI: REGISTERED OFFICE AND AGENT
The address of the initial registered office of the Corporation is 1543
2nd Street, Minden, Nevada 89423, County of Douglas, and the name of the
Corporation's initial registered agent at such address is James E. Franklin.
ARTICLE XII: CONFLICTS OF INTEREST
Section 1. Related Party Transactions.
(a) No contract or transmission between the Corporation and one or more
of its directors, or officers, or between the Corporation and any other
corporation, firm, association, or other organization in which one or more of
its directors or officers are directors or officers or have a financial
interest, shall be void or voidable solely for that reasons or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes, approves, or ratifies
the contract or transaction or solely because his or their votes are counted for
such purpose if:
(i) the facts of the common directorship or financial interest
and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee in good faith authorizes, approves,
or ratifies the contract or transaction by the sufficient vote of the
majority of the disinterested directors;
(ii) the material facts of the common directorship or
financial interest and as to the contract or transaction are disclosed
or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically authorized, approved, or
ratified in good faith by a majority vote or written consent holding a
majority of the shares entitled to vote; the votes of the common or
interested directors or officers shall be counted in any such vote or
shareholders; or
(iii) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved, or ratified.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes, approves, or ratifies the contract or transaction, and if the
votes of the common or interested directors are not counted at such meeting than
a majority of the disinterested directors may authorize, approve, or ratify a
contract or transaction.
Section 2. Corporate Opportunities. The officers, directors, and other
members of management of the Corporation shall be subject to the doctrine of
corporate opportunities only insofar as it applies to business opportunities in
which the Corporation has expressed an interest as determined from time to time
by resolution of the Board of Directors. When such areas of interest are
delineated all such business opportunities within such areas of interest which
come to the attention of the officers, directors, and other members of
management of the Corporation shall be disclosed promptly to the Corporation and
made available to it. The Board of Directors may reject any business opportunity
presented to it, and thereafter any officer, director, or other member of
management may avail himself of such opportunity. Until such time as the
Corporation, through its Board of Directors, has designated an
6
<PAGE> 7
area of management of the Corporation shall be free to engage in such areas of
interest on their own. The provisions hereof shall not limit the rights of any
officer, director, or other member of management of the Corporation to continue
a business existing prior to the time that such area of interest is designated
by the Corporation, nor that such area of interest is designated by the
Corporation, nor shall they be construed to release any employee of the
Corporation (other than an officer, director, or member of management) from any
duties which such employee may have to the Corporation.
ARTICLE XIII: SHAREHOLDERS' RIGHT TO EXAMINE RECORDS
Shareholders of record of the Corporation shall at all times have the
right to examine the books of the Corporation except as limited to these
Articles of Incorporation:
(a) Such examinations as hereinafter provided shall be made only by the
Shareholders in person, and no extract from the books or records of the
Corporation shall be permitted to be made by any shareholder of the same.
(b) Such shareholder shall give assurance satisfactory to the Board of
Directors that he does not desire the information required or to be obtained
from such inspection for the purpose of communicating the same to others who are
not shareholders of the Corporation and, further, that he will not directly or
indirectly disclose the Corporation's business or affairs to any person or
persons whomsoever.
(c) No officer or director of the Corporation shall furnish either
information in regard to the business or operation of the Corporation or any
copies of, or extracts from, any of the books or records of the Corporation
except by the director of the Board of Directors.
(d) Shareholders desiring information in regard to the business or
operation of the Corporation, or desiring to make inspection of the books or
records, shall first make application, in writing, to the Board of Directors
stating the specific purpose for the application, the particular information
desired, and the books and records required for the purpose by such shareholder
before such examination and satisfy to the Board of Directors that said
application is made in good faith and that said examination will not be
detrimental to the interests of the Corporation.
ARTICLE XIV: BYLAWS
The Board of Directors, by majority vote, shall have the power to make
and amend such prudential bylaws as they deem proper and not inconsistent with
the Constitution or the laws of the United States or of this state for the
management of the property of the Corporation, the regulation and government of
its affairs and for the certification and transfer of its stock.
ARTICLE XV: ARRANGEMENTS WITH CREDITORS
Whenever a compromise or arrangement is proposed by the Corporation
between it or its creditors or any class of them, and/or between the Corporation
and its shareholders or any class of them, any court of equitable jurisdiction
may, on summary application by the Corporation, or by a majority of its
shareholders, or on the application of any receiver or receivers appointed for
the Corporation, or on the application of trustees in dissolution, order a
meeting of the creditors or class of creditors and/or of the shareholders or
class of shareholders of the Corporation, as the case may be, to be notified in
such manner as the court decides. If a majority in number representing at least
three-fourths in amount of the
7
<PAGE> 8
creditors or class of creditors and/or the holders of the majority of the stock
or class of stock of the Corporation, as the case may be, agree to any
compromise or arrangement and/or to any reorganization of the Corporation, as a
consequence of such compromise or arrangement, then said compromise or
arrangement and/or said reorganization shall, if sanctioned by the court to
which the application has been made, be binding upon all the creditors or class
of creditors and/or on all the shareholders or class of shareholders of the
Corporation, as the case may be, and also on the Corporation.
ARTICLE XVI: SHAREHOLDERS' MEETING
Shareholders' meetings may be held at such time and place as may be
stated or fixed in accordance with the Bylaws. At all shareholders' meetings,
one-third of all shares entitled to vote shall constitute a quorum.
ARTICLE XVII: AMENDMENT
Section 1. Amendment. These Articles of Incorporation may be amended by
resolution of the Board of Directors if no shares have been issued, and, if
shares have been issued, by the affirmative vote of the holders of at least a
majority of the shares entitled to vote thereon at a meeting duly called for
that purpose, or, when authorized, when such action is ratified by the written
consent of all of the directors and by stockholders holding at least voting
power entitled to vote thereon.
Section 2. Revocation. The Corporation shall revoke voluntary
dissolution proceedings upon the affirmative vote of the holders of at least a
majority of the shares entitled to vote at a meeting duly called for that
purpose, or when authorized or ratified by the written consent of the holders of
all of the shares entitled to vote thereon.
ARTICLE XVIII: INCORPORATORS
The incorporators, who have signed the original Articles of
Incorporation, are those persons whose names and office addresses are set forth
in Article IX, Section 3 above.
IN WITNESS WHEREOF, the undersigned has placed his hand and seal this
7th day of January, 1992.
/s/ JAMES E. FRANKLIN
-----------------------------------
James E. Franklin, President
8
<PAGE> 1
EXHIBIT 3.4
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
---------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "INTERACTIVE TELESIS INC." FILED IN THIS OFFICE ON THE
TWENTY-THIRD DAY OF SEPTEMBER, A.D. 1996, AT 9:40 O'CLOCK A.M.
[SEAL] /s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
2665616 8100D AUTHENTICATION: 8117289
960276899 DATE: 09-24-96
<PAGE> 2
CERTIFICATE OF DOMESTICATION
OR
INTERACTIVE TELESIS INC.
----------------------------------
Interactive Telesis Inc., a corporation organized and existing under
the laws of British Columbia (the "Corporation"), in order to become
domesticated under Delaware law pursuant to Section 388 of the Delaware General
Corporation Law, DOES HEREBY CERTIFY:
FIRST: The Corporation was formed on June 19, 1987, under the laws of
the Province of British Columbia, Canada.
SECOND: The name of the Corporation immediately prior to the filing of
this Certificate of Domestication was Interactive Telesis Inc.
THIRD: The name of the Corporation as set forth in the Certificate of
Incorporation being filed contemporaneously herewith is Interactive Telesis Inc.
FOURTH: The principal place of business of the Corporation immediately
prior to the filing of this Certificate of Domestication is San Diego,
California.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Donald E. Cameron, its President, who is authorized to sign this
Certificate of Domestication this 13 day of September, 1996.
/s/ Don Cameron
-----------------------------------
President
<PAGE> 3
CERTIFICATE OF INCORPORATION
OF
INTERACTIVE TELESIS INC.
FIRST: The name of the corporation is Interactive Telesis Inc. ("the
Corporation").
SECOND: The address of the Corporation's registered office in Delaware is
1300 Delaware Trust Building, 902 Market Street, Wilmington, New
Castle County, Delaware 19801. The Corporation's registered agent at
that address shall be The Delaware Corporation Agency, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The Corporation shall be authorized to issue only one class of
common stock. The total number of shares of capital stock which the
Corporation shall have authority to issue is 100,000,000 shares of
common stock, $0.01 par value.
FIFTH: The holders of 33 1/3% of the stock issued and outstanding and
entitled to vote thereat, present in person or by proxy shall
constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise required by statute.
SIXTH: The name and address of the incorporator is Marla H. Norton, 902
Market Street, 13th Floor, Wilmington, Delaware 19801. The initial
directors of the Corporation shall be Donald E. Cameron of 3201
Edgemont Blvd., North Vancouver, British Columbia, Canada V7R 2P1,
Robert Wilson of Suite 201, 1110 Hamilton Street, Vancouver,
British Columbia, Canada V6B 2S2, Howard Morry of 50 Park Place
East, Winnipeg, Manitoba, Canada R3P 1B7, Scott A. Cameron of 3201
Edgemont Blvd., North Vancouver, British Columbia V7R 2P1 and Bruce
Ransom of 1500 - 444 St. Mary Avenue; Winnipeg, Manitoba, Canada R3C
3TI.
<PAGE> 4
SEVENTH: In addition to the powers conferred under the General Corporation
Law, the board of directors shall have power to adopt, amend, or
repeal the by-laws of the Corporation and such by-laws will be
effective as adopted, amended or repealed immediately upon the board
of directors taking such action, subject only to ratification by the
shareholders at the next general or special meeting. In the event
that the shareholders fail to ratify the by-laws as adopted,
amended, or repealed in whole or in part, the by-laws will be
appropriately restored effective as of the date of the meeting.
EIGHTH: Subject to any contrary provision of the General Corporation Law,
the books of the Corporation may be kept at such place or places,
within or without the State of Delaware, as may be designated from
time to time by the board of directors or in the by-laws of the
Corporation.
NINTH: The election of directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.
TENTH: To the fullest extent permitted by Section 102(b)(7) of the General
Corporation Law of the State of Delaware, as amended from time to
time, or in analogous provisions of successor law, there shall be no
liability on any part of any director of the Corporation to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to or at the time of such repeal or modification.
ELEVENTH: Any amendment, alteration, change or repeal of any provision
contained in this Certificate of Incorporation shall require a
special resolution of the stockholders. A "special resolution" shall
mean a resolution adopted at a meeting of the shareholders by at
least 75% of the stockholders present thereat in person or by proxy
and entitled to vote.
TWELFTH: Notwithstanding Section 228 of the Delaware General Corporation Law,
whenever the vote of stockholders at a meeting thereof is required
or permitted to be taken for or in connection with any corporate
action, or by any provision of the statutes, a meeting and vote of
stockholders shall be required and no stockholders consent in
writing shall be effective to constitute action of the stockholders.
<PAGE> 5
I THE UNDERSIGNED, do make This Certificate for THE purpose of forming a
corporation pursuant to the General Corporation Law of the State of Delaware;
and intending that this be an acknowledgment within THE meaning of Section 103
of the General Corporation Law, have executed this document on September__,
1996.
/s/ MARLA H. NORTON
---------------------------------
Marla H. Norton, Incorporator
<PAGE> 1
EXHIBIT 3.5
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
---------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "INTERACTIVE TELESIS INC.", FILED IN THIS OFFICE ON THE SEVENTH DAY
OF OCTOBER, A.D. 1996, AT 2:07 O'CLOCK P.M.
[SEAL]
/s/ EDWARD J. FREEL
----------------------------------------
Edward J. Freel, Secretary of State
[SEAL]
2665616 8100 AUTHENTICATION: 8138173
960292695 DATE: 10-08-96
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INTERACTIVE TELESIS INC.
Interactive Telesis Inc., a Delaware corporation (the "Corporation"), DOES
HEREBY CERTIFY:
1. The Certificate of Incorporation of the Corporation is hereby
amended by striking the second sentence of Article FOURTH in its entirety and
replacing it with the following:
The total number of shares of capital stock which the
corporation shall have the authority to issue is
50,000,000 shares of common stock, $0.001 par value.
2. The foregoing amendment reflects a reverse split of the
Corporation's authorized common stock such that each seven (7) of the previously
authorized 100,000,000 shares of $.01 par value common stock shall be
consolidated into one (1) share of common stock having a par value of $.001,
with payment in cash to the registered holders of all resulting fractional
issued shares of the fair value of the shares as of October 7, 1996. Immediately
after such consolidation, the number of authorized shares of the Corporation's
$.001 par value common stock shall be increased by 35,714,286 to 50,000,000.
<PAGE> 3
3. The foregoing amendment and the recapitalization were duly adopted
in accordance with the provisions of Section 242 of the General Corporation Law
of the State of Delaware and the Certificate of Incorporation of the
Corporation.
IN WITNESS WHEREOF, the corporation has caused this certificate to be
signed by Donald E. Cameron, its president, this 4th day of October, 1996.
[Corporate Seal] INTERACTIVE TELESIS INC.
By: /s/ DONALD E. CAMERON
------------------------------
Donald E. Cameron,
President
2
<PAGE> 1
EXHIBIT 3.6
BY-LAWS
OF
INTERACTIVE TELESIS Inc.
ARTICLE I
OFFICES
1.1 Registered Office. The registered office shall be as set forth in the
Corporation's certificate of incorporation.
1.2 Other Offices. The corporation may also have offices at such other
places both within and without Delaware as the board of directors may
from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Location of Meetings. Meetings of stockholders for any purpose may be
held at such time and place, within or without Delaware, as shall be
stated in the notice of the meeting or in a duly executed waiver of
notice thereof
2.2 Time of All Meeting. Annual meetings of stockholders for the purpose of
electing directors, receiving the audited financial statements,
receiving the directors report on the operations of the Corporation for
the preceding year and to deal with any other business that is properly
brought before the meeting, commencing with the year 1996, shall be
held once in every calendar year (in accordance with Statute) at such
place, date and time as shall be designated from time to time by the
board of directors and stated in the notice of
<PAGE> 2
2
the meeting, at which they shall elect by a plurality vote a board of
directors, and transact such other business as may properly be brought
before the meeting.
2.3 Notice of Annual Meeting. Written notice of the annual meeting stating
the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more
than fifty days before the date of the meeting.
2.4 Stockholder List. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting,
or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
2.5 Special Meetings. Special meetings of the stockholders, for any purpose
or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall
be called by the president or secretary at the request in writing of a
majority of the board of directors, or at the request in writing of
stockholders owning not less than 20% of the entire capital stock of
the Corporation issued and outstanding and entitled to vote. Such
request shall state the purpose or purposes of the proposed meeting.
2.6 Notice of Special Meetings. Written notice of a special meeting stating
the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be
<PAGE> 3
3
given not less than ten nor more than fifty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
2.7 Business Transacted at Special Meetings. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated
in the notice.
2.8 Quorum. The holders of 33 1/3% of the stock issued and outstanding and
entitled to vote thereat, present in person or by proxy, shall
constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by
the certificate of incorporation. If, however, such quorum shall not be
present at any meeting of the stockholders, the stockholders entitled
to vote thereat, present in person, shall have the power to adjourn the
meeting from time to time, without notice other than the announcement
at the meeting, until a quorum shall be present. At such adjourned
meeting, at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
2.9 Majority Vote. When a quorum is present at any meeting, except where a
greater majority is specifically required by the Certificate of
Incorporation, these by-laws or applicable legislation, the vote of the
holders of a majority of the stock having voting power present in
person shall decide any question brought before such meeting, unless
the question is one upon which by express provision of the statutes,
the certificate of incorporation or these by-laws, a different vote is
required, in which case such express provision shall govern and control
the decision of such question.
2.10 Ordinary Resolution Required. Notwithstanding any provision in these
by-laws an ordinary resolution passed by at least 50% of the
stockholders entitled to vote present at a meeting in person or by
proxy shall be required (i) to approve a contract where there are
<PAGE> 4
4
no disinterested directors; or (ii) to approve a sale of all or
substantially all of the Corporation's assets; or (iii) to approve the
dissolution, winding up or liquidation of the Corporation in order to
dispose of the whole or in substantially the whole of the undertaking
of the Corporation.
2.11 One Vote Per Share. Each stockholder shall, at every meeting of the
stockholders, be entitled to one vote in person or by proxy for each
share of the common stock having voting power held by such stockholder.
2.12 No Action by Written Consent. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in
connection with any corporate action, by any provision of the statutes,
the meeting and vote of stockholders may not be dispensed with in
favour of stockholders consent in writing.
ARTICLE III
DIRECTORS
3.1 Number; Election; Qualifications. The number of directors which shall
constitute the whole board shall be such number as shall be determined
from time to time by resolution of the board of directors provided that
at no time will the number of directors be less than three.
The directors shall be nominated and elected at the annual meeting of
the stockholders, except as provided in Section 2 of this Article, and
each director elected shall hold office until his successor is elected
and qualified. Directors need not be stockholders.
A director may be removed by special resolution passed at a meeting of
the stockholders being a resolution passed by not less than 75% of the
stockholders present in person or by proxy and entitled to vote.
<PAGE> 5
5
3.2. Vacancies. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a
majority of the directors then in office, provided that the number of
additional directors shall not at any time exceed one-third of the
number of directors who held office at the expiration of the previous
annual general meeting of the Corporation, and the directors so chosen
shall hold office until the next annual election and until their
successors are duly elected and shall qualify, unless sooner displaced.
If there are no directors in office, then an election of directors may
be held in the manner provided by statute. If, at the time of filling
any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at the
time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly
created directorships or to replace the directors chosen by the
directors then in office.
3.3 Management of Business. The business of the Corporation shall be
managed by its board of directors which may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these by-laws
directed or required to be exercised or done by the stockholders.
DISCLOSURE OF INTEREST OF DIRECTORS
3.4 Disclosure of Interest. A director who is, in any way, directly or
indirectly interested in an existing or proposed contract or
transaction with the Corporation or who holds any office or possesses
any property whereby, directly or indirectly, a duty or interest might
be created to conflict with his duty or interest as a director shall
declare the nature and extent of his interest in such contract or
transaction or of the conflict or potential conflict with his duty and
interest as a director, as the case may be.
<PAGE> 6
6
3.5 Vote on Interested Matters. A director shall not vote in respect of any
such contract or transaction with the Corporation in which he is
interested and, if he shall do so, his vote shall not be counted, but
he shall be counted in the quorum present at the meeting at which such
vote is taken.
3.6 Offices of and Contracts with Directors. A director may hold any office
or place of profit with the Corporation (other than the office of
auditor of the Corporation) in conjunction with his office of director
for such period and on such terms (as to remuneration or otherwise) as
the directors may determine and no director or intended director shall
be disqualified by his office from contracting with the Corporation
either with regard to his tenure of any such other office or place of
profit or as vendor, purchaser or otherwise, and, no contract or
transaction entered into by or on behalf of the Corporation in which a
director is in any way interested shall be liable to be voided by
reason thereof
3.7 Professional Services. A director or his firm may act in a professional
capacity for the Corporation (except as auditor of the Corporation) and
he or his firm shall be entitled to remuneration for professional
services as if he were not a director.
3.8 Interlocking Directorships. A director may be or become a director or
other officer or employee of, or otherwise interested in, any
corporation or entity in which the Corporation may be interested as a
shareholder or otherwise, and, such director shall not be accountable
to the Corporation for any remuneration or other benefits received by
him as director, officer or employee of, or from his interest in, such
other corporation or firm, unless the stockholders of the Corporation
otherwise direct.
MEETINGS OF THE BOARD OF DIRECTORS
3.9 Location. The board of directors of the Corporation may hold meetings,
both regular and special, either within or without Delaware.
<PAGE> 7
7
3.10 Initial Meeting. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the
vote of the stockholders at the annual meeting and no notice of such
meeting shall be necessary to the newly elected directors in order
legally to constitute the meeting, provided a quorum shall be present.
In the event of the failure of the stockholders to fix the time or
place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by
the stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in
a written waiver signed by all of the directors.
3.11 Regular Meetings. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time
to time be determined by the board.
3.12 Special Meetings. Special meetings of the board may be called by the
president on two days' notice to each director, either personally
or by mail or by telegram; special meetings shall be called by the
president or secretary in like manner and on like notice on the written
request of two directors.
3.13 Quorum. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the
board of directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
3.14 Telephonic Meetings. Members of the board of directors, or any
committee designated by the Board, may participate in a meeting of such
Board or committee by means of conference telephone or similar
communications equipment by means of which all persons
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8
participating in the meeting can hear each other, and participation in
a meeting pursuant to these by-laws shall constitute presence in person
at such meeting.
3.15 Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the board of directors or of
any committee thereof may be taken without a meeting, if all members of
the board or committee, as the case may be, consent thereto in writing
and the writing or writings are filed with the minutes of proceedings
of the board or committee.
COMMITTEES OF DIRECTORS
3.16 Authority of Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more
committees. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified
member at any meeting of the committee.
Any such committee, to the extent provided in the resolution, shall
have and may exercise the powers of the board of directors in the
management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which
may require it; provided, however, that in the absence or
disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at
the meeting in the place of any such absent or disqualified member.
Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of
directors.
The board of directors shall, from among their number elect at their
first meeting following each annual general meeting, an audit
committee, composed of not fewer than three directors of whom a
majority shall not be officers or employees of the Corporation
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or an affiliate thereof, to hold office until the next annual general
meeting. At every meeting of the audit committee, a quorum consists of
a majority of the audit committee.
The annual audited financial statements of the Corporation shall be
submitted to the audit committee for review and thereafter a report of
the audit committee thereon shall be submitted to the Directors.
3.17 Committee Minutes. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
3.18 Compensation. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a
fixed sum for attendance at each meeting of the board of directors or a
stated salary as director. No such payment shall preclude any director
from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
ARTICLE IV
NOTICES
4.1 Method of Notice. Whenever under the provisions of the statutes or of
the certificate of incorporation or of these by-laws, notice is
required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in
writing, by mail, addressed to such director or stockholder, at the
stockholder's address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States
mail. Notice to directors may also be personally delivered, or given by
telegram or facsimile.
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4.2 Waiver. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing signed by the person or
persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
5.1 Offices Created. The officers of the Corporation shall be chosen by the
board of directors and shall be a president who will be a director, a
vice-president, a secretary who is not the president and a treasurer.
The board of directors may also choose additional vice-presidents or
assistant vice-presidents, and one or more assistant secretaries and
assistant treasurers. Any number of offices may be held by the same
person, unless the certificate of incorporation or these bylaws
otherwise provide.
5.2 Appointment of Officers. The board of directors at its first meeting
after each annual meeting of stockholders shall choose a president, a
secretary and a treasurer and such other officers as the board deems
appropriate.
5.3 Other Appointments. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.
5.4 Compensation. The salaries of all officers and agents of the
Corporation shall be fixed by the board of directors. Any payments made
to an officer of the Corporation such as salary, commission, bonus,
interest or rent or entertainment expenses incurred by him, which shall
be disallowed in whole or in part as a deductible expense by the
Internal Revenue Service, shall be reimbursed by such officer to the
Corporation to the full extent of such disallowance. It shall be the
duty of the directors, as a board, to enforce payment
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of each such amount disallowed. In lieu of payment by the officer,
subject to the determination of the directors, proportionate amounts
may be withheld from his future compensation payments until the amount
owed to the Corporation has been recovered.
5.5 Tenn. The officers of the Corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative
vote of a majority of the board of directors. Any vacancy occurring in
any office of the Corporation shall be filled by the board of
directors.
THE PRESIDENT
5.6 The president shall be the chief executive officer of the Corporation,
shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of
the Corporation and shall see that all orders and resolutions of the
board of directors are carried into effect.
5.7 Authority to Execute Contracts. The president shall execute bonds,
mortgages and other contracts requiting a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some other
officer or agent of the Corporation.
THE VICE-PRESIDENTS
5.8 Duties of Vice-President. In the absence of the president or in the
event of the president's inability or refusal to act, the
vice-president (or in the event there be more than one vice-president,
the vice-presidents in the order designated, or in the absence of any
designation then in the order of their election) shall perform the
duties of the president, and when so acting, shall have all the powers
of and be subject to all the restrictions upon the president.
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The vice-presidents shall perform such other duties and have such other
powers as the board of directors may from the to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
General Duties.
5.9 Duties of Secretary. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all
the proceedings of the meetings of the Corporation and of the board of
directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and
special meetings of the board of directors, and shall perform such
other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody
of the corporate seal of the Corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature
or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the
seal of the Corporation and to attest the affixing by his signature.
5.10 Duties of Assistant Secretaries. The assistant secretary, or if there
be more than one, the assistant secretaries in the order determined by
the board of directors (or if there be no such determination, then in
the order of their election) shall, in the absence of the secretary or
in the event of his inability or refusal to act, perform the duties and
exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from
time to time prescribe.
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THE TREASURER AND ASSISTANT TREASURERS
5.11 Duties of Treasurer. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the Corporation in such depositories as
may be designated by the board of directors.
5.12 Disbursement of Funds. The treasurer shall disburse the funds of the
Corporation as may be ordered by the board of directors, taking proper
vouchers for such disbursements, and shall render to the president and
the board of directors, at its regular meetings, or when the board of
directors so requires, an account of all his transactions as treasurer
and of the financial condition of the Corporation.
5.13 Bond. If required by the board of directors, the treasurer shall give
the Corporation a bond (which shall be renewed every six years) in such
sum and with such surety or sureties as shall be satisfactory to the
board of directors for the faithful performance of the duties of the
treasurer in office and for the restoration to the Corporation, in case
of the treasurer's death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of
whatever kind in his or her possession or under his or her control
belonging to the Corporation.
5.14 Assistant Treasurers. The assistant treasurer, or if there shall be
more than one, the assistant treasurers, in the order determined by the
board of directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the treasurer or in
the event of his inability or refusal to act, perform the duties and
exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from
time to time prescribe.
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ARTICLE VI
INDEMNIFICATION
6.1 Right to Indemnification. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is
made or is threatened to be made a party or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative
or investigative (a "proceeding") by reason of the fact that he or she,
or a person for whom he or she is the legal representative, is or was a
director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust, enterprise or nonprofit entity, including service with
respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The
Corporation shall be required to indemnify a person in connection with
a proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the Corporation.
6.2 Prepayment of Expenses. The Corporation shall pay the expenses incurred
in defending any proceeding in advance of its final disposition,
provided, however, that the payment of expenses incurred by a director
or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the director or officer
to repay all amounts advanced if it should be ultimately determined
that the director or officer is not entitled to be indemnified under
this Article or otherwise.
6.3 Claims. If a claim for indemnification or payment of expenses under
this Article is not paid in full within sixty days after a written
claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful
in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have
the burden of proving that the
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claimant was not entitled to the requested indemnification or payment
of expenses under applicable law.
6.4 Non-Exclusivity of Rights. The rights conferred on any person by this
Article VI shall not be exclusive of any other rights which such person
may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, these by-laws, agreement, vote of
stockholders or disinterested directors or otherwise.
6.5 Other Indemnification. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or non-profit entity
shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint
venture, trust, enterprise or non-profit enterprise.
6.6 Amendment or Renewal. Any repeal or modification of the foregoing
provisions of this Article VI shall not adversely affect any right or
protection hereunder of any person with respect to any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VII
ISSUE OF STOCK
7.1 Subject to the provisions of all applicable legislation, the
Certificate of Incorporation, these by-laws and any direction to the
contrary contained in a resolution passed at a general meeting
authorizing any increase or alteration of capital, the stock shall be
under the control of the Directors who may, subject to the rights of
the holders of the stock of the Corporation for the time being, issue,
allot, sell or otherwise dispose of, or grant options on, issue
warrants for or otherwise deal in, shares authorized but not
outstanding at such times, to such person (including Directors), in
such manner, upon such terms and conditions conferring such rights and
restrictions, and at such price or for such consideration as they, in
their absolute discretion, may decide.
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No stock may be issued until it is fully paid and the Corporation shall
have received the full consideration therefor in cash, property or past
services actually performed for the Corporation. The value of property
of services for the purpose of this by-law shall be the value
determined by the Directors by resolution to be, in all circumstances
of the transaction, the fair market value thereof.
7.2 Requirements. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the
Corporation by, the chairman or vice chairman of the board of directors
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the
Corporation, certifying the number of shares owned by him in the
Corporation.
7.3 Transfer Agents and Registrars. The board may from time to time appoint
one or more trust companies as its agent or agents to maintain the
central securities register or registers, and an agent or agents to
maintain branch securities registers. Such a person may be designated
as transfer agent or registrar according to his functions and one
person may be appointed both registrar and transfer agent. The board
may at any time terminate any such appointment.
7.4 Securities Register. The Corporation shall maintain a securities
register in which it records the securities issued by it in registered
form, showing with respect to each class or services of securities:
(a) the names, alphabetically arranged, and the latest known
address of each person who is or has been a security holder,
(b) the number of securities held by each security holder, and
(c) the date and particulars of the issue and transfer of each
security.
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7.5 Countersignature. Where a certificate is countersigned (1) by a
transfer agent other than the Corporation or its employee, or (2) by a
registrar other than the Corporation or its employee, any other
signature on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate before such certificate is issued,
it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
7.6 Lost Certificates. The board of directors may direct a new certificate
or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative to advertise the same in such manner as it shall be
required and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
7.7 Transfers of Stock. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority
to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate
and record the transaction upon its books.
FIXING RECORD DATE
7.8 Record date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive
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payment of any dividend or other distribution of allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date,
which shall be not more than sixty nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the board of directors may fix
a new record date for the adjourned meeting.
7.9 Registered Stockholders. The corporation shall be entitled to recognize
the exclusive right of a person registered in its books as the owner of
shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
GENERAL PROVISIONS - DIVIDENDS
8.1 Declaration of Dividends. Dividends upon the issued capital stock of
the Corporation, subject to the provisions of the certificate of
incorporation, if any, may be declared by the board of directors at any
regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock, subject to the
provisions of the certificate of incorporation.
8.2 Record Date for Dividends and Right. The board may fix in advance a
date, preceding by not more than 50 days the date for the payment of
any dividend or the date for the issue of any warrant or other evidence
of right to subscribe for securities of the Corporation, as a record
date for the determination of the persons entitled to receive payment
of such
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dividend or to receive the right to subscribe for such securities,
provided that if the Corporation is a distributing corporation, notice
of any such record date is given, not less than seven days before such
record date, in the manner provided in the Act. Where no record date is
fixed in advance as aforesaid, the record date for the determination of
the persons entitled to receive payment of any dividend or to receive
the right to subscribe for securities of the Corporation shall be at
the close of business on the day on which the resolution relating to
such dividend or right to subscribe is passed by the board.
8.3 Establishment of Reserve. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends
such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose
as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve
in the manner in which it was created.
8.4 Contracts. In addition to, and specifically not in limitation of, such
authority as may be granted to them under the General Corporation Law
of the State of Delaware, as amended from time to time, the Board of
Directors may authorize any officer or officers or any agent or agents
to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the Corporation and such authority may be
general or confined to specific instances.
8.5 Annual Statement. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for
by vote of the stockholders, a full and clear statement of the business
and condition of the Corporation.
8.6 Checks. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
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8.7 Fiscal Year. The fiscal year of the Corporation shall be fixed by
resolution of the majority of the board of directors.
SEAL
8.8 Seal. The corporate seal shall have inscribed thereon the words
"Corporate Seal, Delaware" and may include the name of the Corporation
and the year of its organization. The corporate seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced. The corporation may adopt for any transaction,
without the specific leave of the directors, a seal which is different
from its customary and usual seal; and it shall be sufficient in any
document requiring the seal of the Corporation if the officer executing
such document on behalf of the Corporation, being authorized to do so,
writes or prints the word "Seal" or makes some similar mark.
ARTICLE IX
AMENDMENTS
9.1 Procedure. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of
directors, when such power is conferred upon the board of directors by
the certificate of incorporation, at any regular meeting of the
stockholders or of the board of directors or at any meeting of the
stockholders or of the board of directors.
<PAGE> 1
Exhibit 10.1
INTERACTIVE TELESIS INC.
1996 STOCK PLAN
1. PREAMBLE
Interactive Telesis Inc., a Delaware corporation (the "Company") hereby
establishes the Interactive Telesis 1996 Stock Plan as a means whereby
the Company may, through awards of (i) incentive stock options ("ISOs")
within the meaning of Section 422 of the Code, (ii) stock appreciation
rights ("SARs"), (iii) nonqualified stock options ("NSOs"), (iv)
restricted stock ("Restricted Stock"), and (v) phantom stock ("Phantom
Stock"):
(a) provide key full-time employees, non-employee directors, consultants
or advisors, with additional incentive to promote the success of the
Company's business;
(b) encourage such persons to continue to promote the success of the
Company; and
(c) enable such person to acquire proprietary interests in the Company.
The provisions of this Plan do not apply to or affect any option, stock,
stock appreciation right, restricted stock or phantom stock heretofore
or hereafter granted under any other stock plan of the Company, and all
such options, stock, stock appreciation rights, restricted stock or
phantom stock continue to be governed by and subject to the applicable
provisions of the plan under which they were granted.
2. DEFINITIONS
2.1. "Award" means the grant of Options, SARs, Phantom Stock and/or
Restricted Stock to a Participant.
2.2. "Award Date" means the date upon which an Option, SAR, Restricted
Stock or Phantom Stock is awarded to a Participant under the Plan.
2.3. "Board" or "Board of Directors" means the board of directors of
the Company.
2.4. "Code" means the Internal Revenue Code of 1986, as it exists now
and as it may be amended from time to time.
2.5. "Committee" means two or more Non-Employee Directors selected by
the Board of Directors or any other composition of membership
required by a successor Rule to Rule 16b-3. Each member of the
Committee shall be a Non-Employee Director as defined in Rule
16b-3 or any successor Rule thereto. Once appointed, the Committee
shall continue to serve until otherwise directed by the Board of
Directors.
2.6. "Common Stock" mean the common stock of the Company.
<PAGE> 2
2.7. "Company" means Interactive Telesis Inc., a Delaware corporation,
and any successor thereto.
2.8. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
it exists now or from time to time may hereafter be amended.
2.9. "Fair Market Value" means the sale price of the Common Stock as
determined by the Board of Directors of the Company or the
Committee in its sole discretion, consistent with applicable laws.
2.10. "ISO" means incentive stock options within the meaning of Section
422 of the Code.
2.11. "Non-Employee Director" means a Director who:
2.11.1 is not currently the Company's president, principal
financial officer, principal accounting officer (or, if
there is no such accounting officer, the controller), and
the Vice President of the Company in charge of the principal
business unit, division, or function (such as sales,
administration or finance), any other officer who performs a
policy-making function, or any other person who performs
similar policy-making functions for the Company. Officers of
the Company's parent, or subsidiaries shall be deemed
Officers of the Company, if they perform such policy-making
functions of the Company; otherwise currently employed by
the Company or a parent or subsidiary of the Company;
2.11.2 does not receive compensation, either directly or
indirectly, from the Company, or a parent or subsidiary of
the Company, for services rendered as a consultant or in any
capacity other than as a Director, except for an amount
which does not exceed the dollar amount for which disclosure
would be required pursuant to Regulation S-K, Item 404(a);
2.11.3 does not possess an interest in any other transaction for
which disclosure would be required pursuant to Regulation
S-K, Item 404(a);
2.11.4 is not engaged in a business relationship for which
disclosure would be required pursuant to Regulation S-K,
Item 404(b);
2.12. "NSO" means nonqualified stock options, which are not intended to
qualify under Section 422 of the Code.
2.13. "Option" means the right of a Participant, whether granted as an
ISO or an NSO, to purchase a specified number of shares of Common
Stock, subject to the terms and conditions of the Plan.
2.14. "Option Price" means the price per share of Common Stock at which
an Option may be exercised.
2
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2.15. "Participant" means an individual to whom an Award has been
granted under the Plan.
2.16. "Phantom Stock" means hypothetical shares of Common Stock
issued as phantom stock under the Plan.
2.17. "Plan" means the Interactive Telesis 1996 Stock Plan, as set
forth herein and from time to time amended.
2.18. "Restricted Stock" means Common Stock awarded to a
participant pursuant to this Plan and subject to the
restrictions contained in Section 9 of the Plan.
2.19. "SAR" means a stock appreciation right issued pursuant to
Section 8 of the Plan.
2.20. Rules of Construction
2.20.1. Governing Law. The construction and operation of this Plan
are governed by the laws of the State of California.
2.20.2. Undefined Terms. Unless the context requires another
meaning, any term not specifically defined in the Plan is
used in the sense given to it by the Code.
2.20.3. Headings. All headings in this Plan are for reference only
and are not to be utilized in construing the Plan.
2.20.4. Conformity with Section 422. The ISOs issued under this
Plan are intended to qualify as incentive stock options
described in Section 422 of the Code and all provisions of
the Plan relating to the ISOs shall be construed in
conformity with this intention. The NSOs issued under this
Plan are not intended to qualify as incentive stock
options described in Section 422 of the Code and all
provisions of the Plan relating to the NSOs shall be
construed in conformity with this intention.
2.20.5. Gender. Unless clearly inappropriate, all nouns of
whatever gender refer indifferently to persons or objects
of any gender.
2.20.6. Singular and Plural. Unless clearly inappropriate,
singular terms refer also the plural and vice versa.
2.20.7. Severability. If any provision of this Plan is determined
to be illegal or invalid for any reason, the remaining
provisions are to continue in full force and effect and to
be construed and enforced as if the illegal or invalid
provisions did not exist, unless the continuance of the
Plan in such circumstances is not consistent with its
purposes.
3. STOCK SUBJECT TO THE PLAN
3
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Except as otherwise provided in Section 13, the aggregate number of
shares of Common Stock that may be issued under Options or as Restricted
Stock through this Plan may not exceed one million four hundred
eighty-five thousand (1,485,000) shares. Reserved shares may be either
authorized but unissued shares or treasury shares, in the Board's
discretion. If any Awards of Options and Restricted Stock hereunder
shall terminate or expire, as to any number of shares, new Options, and
Restricted Stock may thereafter be awarded with respect to such shares.
4. ADMINISTRATION
The Plan may be administered by the Committee or Board of Directors. In
addition to any other powers set forth in this Plan, the Committee or
the Board has the following power:
(a) to construe and interpret the Plan;
(b) to establish, amend and rescind appropriate rules and regulations
relating to the Plan;
(c) subject to the express provisions of the Plan, to select the
individuals who will receive Awards, the times when they will
receive them, the number of Options, Restricted Stock, Phantom Stock
and/or SARs to be subject to each Award, the vesting schedule and
the Option Price, payment terms, payment method, and expiration date
applicable to each Award;
(d) to contest on behalf of the Company or Participants, at the expense
of the Company, any ruling or decision on any matter relating to the
Plan or to any Awards;
(e) generally, to administer the Plan, and to take all such steps and
make all such determinations in connection with the Plan and the
Awards granted thereunder as it may deem necessary or advisable;
(f) to determine the form in which payment of a SAR or a Phantom Stock
Award granted hereunder will be made (i.e., cash, Common Stock, or a
combination thereof) or to approve a Participant's election to
receive cash in whole or in part in settlement of the SAR or Phantom
Stock Award; and
(g) to determine the form in which tax withholding under Section 16 of
this Plan will be made (i.e., cash, Common Stock, or a combination
thereof).
5. ELIGIBLE PERSONS
Subject to the provisions of the Plan, the Committee or Board shall, from
time to time, select those key employees, non-employee directors,
consultants or advisors, of the Company and any subsidiary or affiliate of
the Company, who shall be designated as
4
<PAGE> 5
Participants and the number, if any, of ISOs, SARs, Restricted Stock,
Phantom Stock, and NSOs, or any combination thereof, to be awarded to
each such Participant; provided, however, that no ISOs, or SARs granted
with respect to ISOs, shall be awarded under the Plan after the
expiration of the period of ten years from the date this Plan is adopted
by the Board.
6. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
Each ISO agreement, in such form as is approved by the Committee or
Board, shall be subject to the following express terms and conditions
and to such other terms and conditions, not inconsistent with the Plan,
as the Committee or Board may deem appropriate:
(a) Option Period. Each ISO will expire as of the earliest of:
(i) the date on which it is forfeited under the provisions of
Section 12;
(ii) ten years (or five years as specified in paragraph (d)
below) from the Award Date;
(iii) three months after the Participant's termination of
employment with the Company and its parent and
subsidiaries for any reason other than death;
(iv) twelve months after the Participant's death; or
(v) any other date (within the limits of the Code) specified
by the Committee when the ISO is granted.
(b) Option Price. Subject to the provisions of paragraph (d) below, the
Option Price shall be determined by the Committee or the Board of
Directors at the same time an ISO is granted, and shall not be less
than the Fair Market Value of the Common Stock on the Award Date.
(c) Other Option Provisions. The form of ISO authorized by the Plan may
contain such other provisions as the Committee or Board may, from
time to time, determine; provided, however, that such other
provisions may not be inconsistent with any requirements imposed on
incentive stock options under Code Section 422 and related U.S.
Department of Treasury regulations.
(d) Awards to Certain Stockholders. Notwithstanding paragraphs (a) and
(b) above, if an ISO is granted to a Participant who, immediately
before the grant of the ISO, owns stock representing more than ten
percent of the total combined voting power of all classes of stock
of the Company or its parent or subsidiary corporations, the
exercise period specified in the option agreement for which the ISO
thereunder is granted shall not exceed five years from the Award
Date, and the Option Price
5
<PAGE> 6
shall be at least one hundred and ten percent (110%) of the Fair Market
Value (as of the Award Date) of the stock subject to the ISO.
7. TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Each NSO agreement, in such form as is approved by the Committee, shall
be subject to the following express terms and conditions and to such
other terms and conditions, not inconsistent with the Plan, as the
Committee may deem appropriate:
(a) Option Period. Each NSO will expire as of the earliest of:
(i) the date on which it is forfeited under the provisions of
Section 12;
(ii) three months after the Participant's termination of
employment with the Company and its parent and
subsidiaries for any reason other than death;
(iii) twelve months after the Participant's death; or
(iv) any other date specified by the Committee when the NSO is
granted.
(b) Option Price. At the time granted, the Board of Directors will fix
the Option Price, which will be no less than eighty-five percent
(85%) of the Fair Market Value of the shares subject to the NSO on
the Award Date.
(c) Other Options Provisions. The form NSO authorized by the Plan may
contain such other provisions as the Committee may from time to time
determine.
8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
The Committee or Board may, in its discretion, grant a SAR to any
Participant under the Plan. Each SAR shall be evidenced in agreement
between the Company and the Participant, and may relate to and be
associated with all or any part of a specific ISO or NSO. A SAR shall
entitle the Participant to whom it is granted the right, so long as such
SAR is exercisable and subject to such limitations as the Committee or
Board shall have imposed, to surrender any then exercisable portion of
his SAR and, if applicable, the related ISO or NSO, in whole or in part,
and receive from the Company in exchange, without any payment of cash
(except for applicable employee withholding taxes), that number of
shares of Common Stock having an aggregate Fair Market Value on the date
of surrender equal to the product of (i) the excess of the Fair Market
Value of a share of Common Stock on the date the SARs were issued, or,
if the SARs are related to an ISO or an NSO, the per share Option Price
under such ISO or NSO on the Award Date, and (ii) the number of shares
of Common Stock subject to such SAR, and, if applicable, the related ISO
or NSO or portion thereof which is surrendered.
A SAR granted in conjunction with an ISO or NSO shall terminate on the
same date as the related ISO or NSO and shall be exercisable only if the
Fair Market Value of a share of Common Stock exceeds the Option Price
for the related ISO or NSO, and then shall
6
<PAGE> 7
be exercisable to the extent, and only to the extent, that the related
ISO and NSO is exercisable. The Committee or Board may at the time of
granting any SAR add such additional conditions and limitations to the
SAR as it shall deem advisable, including, but not limited to,
limitations on the period or periods within which the SAR shall be
exercisable and the maximum amount of appreciation to be recognized with
regard to such SAR. If a Participant is subject to Section 16(a) and
Section 16(b) of the Exchange Act, the Committee or Board of Directors
may at any time add such additional conditions and limitations to such
SAR which, in its discretion, the Committee or Board deems necessary or
desirable in order to comply with such Section 16(a) or Section 16(b)
and the rules and regulations issued thereunder, or in order to obtain
any exemption therefrom. Any ISO or NSO or portion thereof which is
surrendered with a SAR shall no longer be exercisable. The Committee or
Board of Directors, in its sole discretion, may allow the Company to
settle all or part of the Company's obligation arising out of the
exercise of a SAR by the payment of cash equal to the aggregate Fair
Market Value of the shares of Common Stock which the company would
otherwise be obligated to deliver.
9. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
All shares of Common Stock awarded to Participants under the Plan as
Restricted Stock shall be subject to the following express terms and
conditions and to such other terms and conditions, not inconsistent with
the Plan, as the Committee or Board shall deem appropriate:
(a) Restricted Period. Shares of Restricted Stock awarded to
Participants may not be sold, assigned, transferred, pledged or
otherwise encumbered before they vest. Subject to the provisions of
paragraphs (b) and (d) below and any other restrictions imposed by
law, any shares of Restricted Stock that vest will be transferred,
subject only to the restrictions set forth in Section 20, to the
Participant or, in the event of his death, to the beneficiary or
beneficiaries designated by writing filed by the Participant with
the Committee for such purpose or, if none, to his estate. Delivery
of shares in accordance with the preceding sentence shall be made
within the thirty-day period after they vest.
(b) Forfeitures. A Participant shall forfeit all unpaid accumulated
dividends and all shares of Restricted Stock which have not vested
prior to the date that his employment with the Company is terminated
for any reason.
(c) Certificates Deposited With Company. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall
be registered in the name of the Participant and deposited with the
Company. Each such certificate shall bear the following (or a
similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) relating to Restricted Stock contained in
the Interactive Telesis Inc. 1996 Stock Plan and an Agreement
entered into between the registered owner and Interactive
7
<PAGE> 8
Telesis Inc. Copies of such Plan and Agreement are on file at
the principal office of Interactive Telesis Inc."
(d) Stockholder Rights. Subject to the foregoing restrictions, each
Participant shall have all the rights of a stockholder with respect
to his shares of Restricted Stock including, but not limited to, the
right to vote and to receive dividends on such shares.
10. TERMS AND CONDITIONS OF PHANTOM STOCK
The Committee or Board may, in its discretion, award Phantom Stock to
any Participant under the Plan. Each Award of Phantom Stock shall be
evidenced by an agreement between the Company and the Participant. An
Award of Phantom Stock shall entitle the Participant to whom it is
awarded the right to elect, so long as such Phantom Stock is vested and
subject to such limitations as the Committee shall have imposed, to
surrender any then vested portion of the Phantom Stock, in whole or in
part, and receive from the Company in exchange for the Fair Market Value
of the Common Stock to which the surrendered Phantom Stock relates,
payable either in cash or in shares of Common Stock as the Committee or
Board may determine. The Committee or Board may at the time of awarding
any Phantom Stock add such additional conditions and limitations to the
Phantom Stock as it shall deem advisable, including, but not limited to,
limitations on the period or periods within which the Phantom Stock may
be surrendered, and the maximum amount of appreciation to be recognized
with regard to such Phantom Stock.
11. MANNER OF EXERCISE OF OPTIONS
To exercise an Option in whole or in part, a Participant (or, after his
death, his executor or administrator) must give written notice to the
Committee or Board, stating the number of shares with respect to which
he intends to exercise the Option. The Company will issue the shares
with respect to which the Option is exercised upon payment in full of
the Option Price. The Committee or Board may permit the Option Price to
be paid in cash or shares of Common Stock held by the Participant having
an aggregate Fair Market Value, as determined on the date of delivery,
equal to the Option Price. The Committee or Board may also permit the
Option Price to be paid by any other method permitted by law, including
by delivery to the Committee from the Participant of an election
directing the Company to withhold the number of shares of Common Stock
from the Common Stock otherwise due upon exercise of the Option having
an aggregate Fair Market Value on that date equal to the Option Price.
If a Participant pays the Option Price with shares of Common Stock which
were received by the Participant upon exercise of one or more ISOs, and
such Common Stock has not been held by the Participant for a least the
greater of:
(a) two years from the date the ISOs were granted, or
(b) one year after the transfer of the shares of Common Stock to the
Participant,
8
<PAGE> 9
the use of the shares shall constitute a disqualifying disposition
and the ISO underlying the shares used to pay the Option Price shall
no longer satisfy all of the requirements of Code Section 422.
12. VESTING
A Participant may not exercise an Option or surrender Phantom Stock or a
SAR until it has become vested. Similarly, no share of Restricted Stock
may be sold, transferred, reassigned, pledged or otherwise encumbered or
disposed of until it is vested. The portion of an Award of Options,
SARs, Restricted Stock and/or Phantom Stock that is vested depends upon
the period that has elapsed since the Award Date. The following schedule
applies to any Award of Options, SARs, Restricted Stock and Phantom
Stock under this Plan unless the Committee establishes a different
vesting schedule on the Award Date:
<TABLE>
<CAPTION>
Number of Years
Since Award Date Vested Percentage
------------------------- -----------------
<S> <C>
Fewer than one None
One but fewer than two 25%
Two but fewer than three 50%
Three but fewer than four 75%
Four or more 100%
</TABLE>
Notwithstanding anything herein to the contrary, however, all Awards
will become vested and exercisable upon the effective date of a "change
in control" and will remain exercisable during the thirty days following
the effective date of the change in control. As used in this paragraph,
the term "change in control" means the change in the legal or beneficial
ownership of fifty percent, plus one share, of the outstanding shares of
Common Stock of the Company with a six-month period, other than by death
or operation of law, or the sale of ninety percent or more of the assets
of the Company.
Regardless of the period elapsed since the Award Date, a Participant's
Awards become fully vested if his employment with the Company and its
parent and subsidiaries terminates for any of the following reasons:
(a) retirement on or after his sixty-fifth birthday;
(b) retirement on or after his fifty-fifth birthday with consent of the
Company;
(c) retirement at any age on account of total and permanent disability
as determined by the Company; or
(d) death.
If a Participant terminates employment with the Company for any reason,
he forfeits any Awards that are not yet vested. A transfer from the
Company to a subsidiary or affiliate, or vice versa, is not a
termination of employment for purposes of the Plan.
9
<PAGE> 10
13. ADJUSTMENT TO REFLECT CHANGES IN CAPITAL STRUCTURE
If there is any change in the corporate structure or shares of the
Company, the Committee or Board may make any adjustments necessary to
prevent accretion, or to protect against dilution, in the number and
kind of shares covered thereby and in the applicable Option Price. For
the purpose of this Section 13, a change in the corporate structure or
shares of the Company includes, without limitation, any change resulting
from a recapitalization, stock split, stock dividend, consolidation,
rights offering, separation, reorganization, or liquidation and any
transaction in which shares of Common Stock are changed into or
exchanged for a different number or kind of shares of stock or other
securities of the Company or another corporation.
14. NONTRANSFERABILITY OF AWARDS
Awards under the Plan are not transferable, voluntarily or
involuntarily, other than by will or by the laws of descent and
distribution. During a Participant's lifetime, his Options may be
exercised only by him.
15. RIGHTS AS STOCKHOLDER
No Common Stock may be delivered upon the exercise of any Option until
full payment has been made. A Participant has no rights whatsoever as a
stockholder with respect to any shares covered by an Option until the
date of the issuance of a stock certificate for shares.
16. WITHHOLDING TAX
The Company shall have the right to withhold in cash or shares of Common
Stock with respect to any payments made to Participants under the Plan
any taxes required by law to be withheld because of such payments.
17. NO RIGHT TO EMPLOYMENT
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company, or any right or claim to any
benefit under the Plan, unless the right or claim has specifically
accrued under the Plan.
18. AMENDMENT OF THE PLAN
The Board of Directors may from time to time amend or revise the terms
of the Plan in whole or in part and may, without limitation, adopt any
amendment deemed necessary; provided, however, that (a) no change in any
Award previously granted to a Participant may be made that would impair
the rights of the Participant with the Participant's consent, (b) no
amendment may extend the period in which a Participant may exercise an
ISO beyond the period set forth in Section 6(a)(ii), and (c) no
amendment may be adopted by the Board where any applicable laws require
shareholder approval unless shareholders approve such amendment.
10
<PAGE> 11
19. STOCKHOLDER APPROVAL
Operation of the Plan shall be subject to approval by the stockholders
of the Company within twelve months before or after the date the Plan is
adopted by the Board of Directors in accordance with Section 422 of the
Internal Revenue Code, or any successor statute or regulation. If such
stockholder approval is obtained at a duly held stockholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority
of the shares of the Company present at the meeting or represented and
entitled to vote thereon.
If such stockholder approval is obtained by written consent, it must be
obtained by the unanimous written consent of all stockholders of the
Company.
11
<PAGE> 1
EXHIBIT 10.2
AMENDMENT TO LEASE
This Amendment to Lease ("Amendment") is entered into this 19th day of
April, 1999, by and between NORTH COAST BUSINESS PARK, a California Limited
Partnership ("Landlord") and INTERACTIVE TELESIS, INC., a Delaware corporation
("Tenant") with reference to the following facts:
RECITALS
A. on or about February 13, 1995, Landlord and Tenant entered into that
certain Lease Agreement ("Original Lease"), pursuant to which Tenant leased from
Landlord certain premises commonly known as Building 4 ("Building 4") 535
Encinitas Boulevard, Suite 112, Encinitas, California, consisting of
approximately 888 rentable square feet. A true copy of said original Lease is
attached hereto as "Exhibit "A" and made a part hereof by this reference.
B. Thereafter, Tenant and Landlord have entered into the following lease
amendments under which Tenant has expanded its space, relocated its Premises and
extended the term of its Lease as set forth below:
<TABLE>
<CAPTION>
Date Effect of Lease Amendment
---- -------------------------
<S> <C>
August 20, 1995 Expanded space by adding
Suite 117 in Building 4 (899
rentable s/f) and extended the
term of lease.
July 30, 1996 Relocated from Suites 114 and
117 to Suites 113, 116, 118 in
Building 4 (the "Existing
Premises") consisting of
approximately 3,141 rentable
s/f and extended the term of
lease.
September 15, 1998 Expanded space by adding
Suites 119 and 121 in Building
4 totalling 1,034 rentable s/f.
</TABLE>
C. Tenant now desires to lease from Landlord certain additional space
commonly known as Building 4, Suite 114, 535 Encinitas Boulevard, Encinitas,
California, consisting of approximately 888 rentable square feet (the "Expansion
Premises") as is further described in Exhibit "B" attached hereto and made a
part hereof by this reference.
1
<PAGE> 2
NOW THEREFORE, the parties hereto agree that the Original Lease and the
existing Lease Amendments described above are hereby further amended as follows:
AGREEMENT
1. Leased Space. In addition to leasing the Existing Premises, Tenant
agrees to lease the Expansion Promises consisting of approximately 888 rentable
square feet for a total leased space of 5,063 rentable square feet (the "Leased
Space").
2. Term of Lease. The term of Lease for the Expansion Premises shall be
for a period of 28 months commence May 1, 1999 and shall terminate August 31,
2001.
3. Base Rent. The Base Rent Schedule shall be as follows:
05/01/99 to 04/30/00 - $1,465.00 per month ($1.65 s/f)
05/01/00 to 04/30/01 - $1,510.00 per month ($1.70 s/f)
05/01/01 to 08/31/01 - $1,555.00 per month ($1.75 s/f)
Utilities and janitorial expenses are not included in the above Base Rent
and are the sole responsibility of Tenant as set forth in paragraphs 4 & 5
below.
4. Utility Expense. Tenant to transfer SDG&E meter into Tenant's name and
pay all utilities related to the Expansion Premises directly to SDG&E. Landlord
shall not be responsible for the payment of utilities.
5. Janitorial Expenses. Tenant shall be solely responsible to provide and
pay for its own janitorial services. Landlord shall not be responsible for
janitorial service.
6. Security Deposit. Tenant's current security deposit of $6,265.00 shall
be increased to $7,730.00. Concurrently with the execution of this Amendment of
Lease, Tenant agrees to deposit with Landlord the additional security deposit in
the amount of $1,465.00 for a total security deposit held by Landlord of
$7,730.00.
7. Tenant Improvements. Landlord install new building standard carpet and
base cove consistent with Tenant's existing carpet. In addition, Landlord shall
provide a passage way and stairs between the Expansion Premises and Tenant's
existing Premises. Tenant shall pay for any up-grade in materials used over
Landlord's building standard materials, or any construction change orders
requested by Tenant that increases the scope of tenant improvement work outlined
above.
2
<PAGE> 3
8. Option to Extend Term of Lease.
8.1 Option to Extend. Landlord conditionally grants to Tenant the
option to extend the term of this Lease for one (1) period of three (3) years at
the end of the original term (the "Renewal Term").
8.2 Exercise of Option. To exercise such option, Tenant must deliver
written notice of the exercise thereof to Landlord no earlier than 360 days and
not later than 180 days before the expiration of the initial Term of this Lease.
8.3 Base Rent During Renewal Term. The monthly Base Rent during the
Renewal Term shall be as follows:
09/31/01 to 08/31/02 - $1,600.00 per month ($1.80 s/f)
09/01/02 to 08/31/03 - $1,645.00 per month ($1.85 s/f)
09/01/03 to 08/31/04 - $1,687.00 per month ($1.90 s/f)
The above rent schedule does not include utilities or janitorial service.
Tenant shall continue to be responsible for all utilities and janitorial
service.
8.4 Termination Of Option to Extend. The Option to Extend as set
forth in paragraph 8.1 is personal to Tenant and shall be exercisable by Tenant
(and not an assignee, sublessee, or other transferee of Tenant's interest in
this Lease) only if Tenant occupies the entire Premises. The Option to Extend
granted herein shall terminate upon (i) the default by Tenant of any term,,
covenant or condition of the Lease regardless if such default is cured, or (ii)
upon Tenant's failure to deliver such written notice as outlined in paragraph
8.2 above.
9. Guarantor. Donald E. Cameron, Guarantor of the Lease and each Amendment
pursuant to that Guarantee of Lease dated February 13, 1995, hereby consents to
this Amendment to Lease and acknowledges and agrees that the Guarantee of Lease
shall apply to this Amendment to Lease.
10. CONTINGENCY: Delivering possession of the Expansion Promises to Tenant
is subject to Landlord's successful negotiation of an early lease termination
agreement with the existing tenant. The Expansion Promises must be under the
exclusive control of Landlord and available to lease.
3
<PAGE> 4
11. Continuing Effect of Lease. All other terms and conditions of the
original Lease shall remain in full force and effect, and shall apply to all
space identified in each Amendment and the Expansion Premises except as
expressly modified by this Amendment. In the event any term or condition of the
original Lease is inconsistent with, or contrary to, any term or condition of
this Amendment, this Amendment shall prevail.
LANDLORD: NORTH COAST BUSINESS PARK,
a California Limited Partnership
Date: 4/30/99 By: /s/ MICHAEL I. CRAIN
----------------------------------------
Michael I. Crain for Crain, Ltd.,
General Partner of North Coast
Business Park Managers, a California
Limited Partnership
TENANT: INTERACTIVE TELESIS,, INC., a Delaware
Corporation
Date: 4/20/99 By: /s/ BILL ADAMS
----------------------------------------
Bill Adams, Controller
GUARANTOR: Donald E. Cameron, an Individual
Date: 4/20/99 By: /s/ DONALD E. CAMERON
----------------------------------------
Donald E. Cameron
4
<PAGE> 5
EXHIBIT "B"
Existing Premises - Suites 113, 116, 118, 119, 121
Expansion Premises - Suite 114
[Diagram of Premises]
<PAGE> 6
AMENDMENT TO LEASE
This Amendment to Lease ("Amendment") is entered into this 15th day of
September, 1998, by and between NORTH COAST BUSINESS PARK, a California Limited
Partnership ("Landlord") and INTERACTIVE TELESIS, INC., a Delaware Corporation
("Tenant") with reference to the following facts:
RECITALS
A. on or about February 13, 1995, Landlord and Tenant entered into that
certain Lease Agreement ("Original Lease"), pursuant to which Tenant leased from
Landlord certain premises commonly known as Building 4 ("Building 4") 535
Encinitas Boulevard, Suite 112, Encinitas, California, consisting of
approximately 888 rentable square feet. A true copy of said original Lease is
attached hereto as Exhibit "A" and made a part hereof by this reference.
B. Thereafter, Tenant and Landlord have entered into the following lease
amendments under which Tenant has expanded its space, relocated its Premises and
extended the term of its Lease as set forth below:
<TABLE>
<CAPTION>
Date Effect of Lease Amendment
---- -------------------------
<S> <C>
August 20, 1995 Expanded space by adding Suite 117 in Building 4
(899 rentable s/f) and extended the term of
lease.
July 30, 1996 Relocated from Suites 114 and 117 to Suites 113,
116, 118 in Building 4 (the "Existing
Premises") consisting of approximately 3,141
rentable s/f and extended the term of lease.
</TABLE>
C. Tenant now desires to lease from Landlord certain additional space
commonly known as Building 4, Suite's 119 and 121, 535 Encinitas Boulevard,
Encinitas, California, consisting of approximately 1,034 rentable square feet
(the "Expansion Premises") as is further described in Exhibit "B" attached
hereto and made a part hereof by this reference.
D. Tenant also desires to extend the term of Lease period of thirty six
(36) months under the terms and conditions set forth herein.
1
<PAGE> 7
NOW, THEREFORE, the parties hereto agree that the Original Lease and the
existing Lease Amendments described above are hereby further amended an follows:
AGREEMENT
1. Leased Space. In addition to leasing the Existing Premises, Tenant
agrees to lease the Expansion Premises consisting of approximately 1,034
rentable square feet for a total leased space of 4175 rentable square feet (the
"Leased Space").
2. Occupancy of Expansion Premises. Tenant's obligation to make payments
of Base Rent and other charges with respect to the Expansion Premises shall
commence upon the "Date of Occupancy" which shall be deemed to have occurred
upon substantial completion of tenant improvements. Landlord reasonably
estimates the Date of Occupancy shall occur on or about October 15, 1998.
However, in the event the Date of Occupancy is any date other than October 15,
1998, Landlord and Tenant shall execute a Commencement Letter setting forth the
actual Date of Occupancy for the Expansion Premises.
3. Term of Lease.
3.1 Existing Premises: The term of Lease for the Existing Premises
shall be extended for a period of three (3) years commencing September 1, 1998
and shall terminate August 31, 2001.
3.2 Expansion Premise: The term of Lease for the Expansion Premises
shall commence upon the Date of Occupancy and shall terminate August 31, 2001.
4. Base Rent. The Base Rent Schedule shall be as follows:
4.1 Existing Premises
09/01/98 to 08/31/99 - $4,710.00 per month ($1.50 s/f)
09/01/99 to 08/31/00 - $4,870.00 per month ($1.55 s/f)
09/01/00 to 08/31/01 - $5,025.00 per month ($1.60 s/f)
4.2 Expansion Premises
10/15/98 to 08/31/99 - $1,555.00 per month ($1.50 s/f)
09/01/99 to 08/31/00 - $1,600.00 per month ($1.55 s/f)
09/01/00 to 08/31/01 - $1,655.00 per month ($1.60 s/f)
Utilities and janitorial expenses are not included in the above Base Rent
and are the sole responsibility of Tenant as set forth in paragraphs 5 & 6
below.
2
<PAGE> 8
5. Utility Expenses.
5.1 Existing Premises. Tenant has transferred all utility meters
covering the Existing Premises into Tenant's name and pays all utility charges
for such space directly to SDG&E. Landlord shall not be responsible for the
payment of utilities.
5.2 Expansion Premises. Tenant to transfer SDG&E meter number 996489
into Tenant's name and pay all utilities related to the Expansion Premises
directly to SDG&E. Landlord shall not be responsible for the payment of
utilities.
6. Janitorial Expenses. Tenant shall be solely responsible to provide and
pay for its own janitorial services. Landlord shall not be responsible for
janitorial service.
7. Security Deposit. Tenant's current security deposit of $3,345.00 shall
be increased to $6,265.00. Concurrently with the execution and return of this
Amendment of Lease to Landlord Tenant agrees to deposit with Landlord the
additional security deposit in the amount of $2,920.00 for a total security
deposit held by Landlord of $6,265.00.
8. Tenant Improvements.
8.1 Landlord's Responsibility. Landlord shall, at Landlord's sole
cost and expense, paint, install vinyl tile in the bathroom, kitchen and
computer room, and install carpet and rubber base cove in all other areas of the
Leased Space identified in paragraph 1 above. In addition, Landlord shall be
responsible for completion and construction of tenant improvements as described
in Exhibit "C" attached hereto and made a part hereof by this reference. All
materials used shall be Landlord's building standard.
8.2 Tenant's Responsibility. Tenant shall pay for (i) any up-grade
in materials used over Landlord's building standard materials, (ii) any
construction change orders requested by Tenant that increases the scope of
tenant improvement work outlined in Exhibit "C" (iii) Tenant shall move all
equipment in the computer room to accommodate paint and vinyl tile installation,
and (iv) those improvements outlined in Exhibit "D" attached hereto and made a
part hereof by this reference. said improvements shall be constructed by
Landlord and reimbursed by Tenant at a cost not to exceed $750.00.
9. Option to Extend Term of Lease.
9.1 Option to Extend. Landlord conditionally grants to Tenant the
option to extend the term of this Lease for one (1) period of three (3) years at
the end of the original term (the "Renewal Term").
3
<PAGE> 9
9.2 Exercise of Option. To exercise such option, Tenant must
deliver written notice of the exercise thereof to Landlord no earlier than 360
days and not later than 180 days before the expiration of the initial Term of
this Lease.
9.3 Base Rent During Renewal Term. The monthly Base Rent during
the Renewal Term shall be as follows:
09/01/01 to 08/31/02 - $6,890.00 per month ($1.65 s/f)
09/01/02 to 08/31/03 - $7,100.00 per month ($1.70 s/f)
09/01/03 to 08/31/04 - $7,300.00 per month ($1.75 s/f)
The above rent schedule does not include utilities or janitorial service.
Tenant shall continue to be responsible for all utilities and janitorial
service.
9.4 Termination of Option to Extend. The Option to Extend as set
forth in paragraph 9.1 is personal to Tenant and shall be exercisable by Tenant
(and not an assignee, subleases, or other transferee of Tenant's interest in
this Lease) only if Tenant occupies the entire Premises. The Option to Extend
granted herein shall terminate upon (i) the default by Tenant of any term,
covenant or condition of the Lease regardless if such default is cured, or (ii)
upon Tenant's failure to deliver such written notice as outlined in paragraph
9.2 above.
10. First Right of offer to Expand.
10.1 Right of First Offer. Landlord hereby conditionally grants to
Tenant a right of first offer ("First Offer Right") with respect to Suite
120 located in Building 4 (the "First Offer Space"). Notwithstanding the
foregoing, such First Offer Right of Tenant shall commence only following
the expiration or earlier termination of the existing lease with Cal West
Management (the "Superior Lease") including any renewal or extension of
such superior Lease, whether or not such renewal or extension is pursuant
to an express written provision in such superior Lease, and regardless of
whether or not such renewal or extension is consummated pursuant to a
lease amendment or a new lease.
10.2 Procedure for Offer. Landlord shall notify Tenant (the "First
Offer Notice") when Landlord determines that the First Offer Space will become
available to lease to third parties. The First Offer Notice will describe the
First Offer Space and shall set forth the "First Offer Rent" as that term is
defined herein.
10.3 Procedure for Acceptance. If Tenant wishes to exercise Tenant's
First Offer Right with respect to the space described in the First Offer Notice,
then within three (3) business days after delivery of the First Offer Notice to
Tenant, Tenant shall deliver notice to Landlord of Tenant's intention to
exercise its First Offer Right with respect to the entire space described
4
<PAGE> 10
the First Offer Notice. If Tenant does not exercise its First Offer Right within
said three (3) business day period, then Landlord shall be free to lease the
space described in the First Offer Notice to anyone to whom Landlord desires on
any terms Landlord desires at any time during the Lease Term, without any
obligation to provide Tenant with a further right to lease such space.
10.4 First Offer Rent. If Tenant shall exercise its First Offer
Right the rent payable by Tenant for the First Offer Space (the "First Offer
Rent") shall be at the then existing rental rate for Tenant's existing space,
i.e., $1.50 s/f, or $1.55 s/f.
10.5 Landlord's Improvement of First Offer Space. If Tenant shall
exercise its First Offer Right during the first twelve month (12) period of the
initial term of this Lease, then Landlord shall paint and install new building
standard carpet in the First Offer Space. However, if Tenant shall exercise its
First Offer Right during the second twelve month period, then Landlord shall
paint and clean the existing carpet. All other improvements shall be at Tenant's
sole cost and expense.
10.6 Termination of First Offer Right. The First Offer Right set
forth in paragraph 10.1 above shall be personal to Tenant and shall be
exercisable by Tenant (and not an assignee, sublessee, or other transferee of
Tenant's interest in this Lease) only if Tenant occupies the entire existing
Leased Space as of the date of the First Offer Notice. The First Offer Right
granted herein shall automatically terminate upon (i) the default by Tenant of
any term, covenant or condition of the Lease regardless if such default is
cured, (ii) upon Tenant's failure to exercise its First Offer Right with respect
to such First Offer Space as offered by Landlord as outlined in paragraph 10.3,
or (iii) if the First Offer Right is not exercised within the first twenty four
(24) months of the initial term of this Lease.
11. Guarantor. Donald E. Cameron, Guarantor of the Lease and each
Amendment pursuant to that Guarantee of Lease dated February 13, 1995, hereby
consents to this Amendment to Lease and acknowledges and agrees that the
Guarantee of Lease shall apply to this Amendment to Lease.
12. Continuing Effect of Lease. All other terms and conditions of the
Original Lease shall remain in full force and effect, and shall apply to all
space identified in each Amendment and the Expansion Premises except as
expressly modified by this Amendment. In the event any term or condition of the
Original Lease is inconsistent with, or contrary to, any term or condition
Amendment, this Amendment shall prevail.
(SIGNATURES ON NEXT PAGE)
5
<PAGE> 11
LANDLORD: NORTH COAST BUSINESS PARK,
a California Limited Partnership
Date: 9/25/98 By: /s/ MICHAEL I. CRAIN
----------------------------------------
Michael I. Crain for Crain, Ltd.,
General Partner of North Coast
Business Park Managers, a California
Limited Partnership
TENANT: INTERACTIVE TELESIS, INC., a Delaware
Corporation
Date: 9/16/98 By: /s/ DONALD E. CAMERON
----------------------------------------
Donald E. Cameron, President
GUARANTOR: Donald E. Cameron, an Individual
Date: 9/16/98 By: /s/ Donald E. Cameron
----------------------------------------
Donald E. Cameron
6
<PAGE> 12
EXHIBIT "B"
Existing Premises - Suites 113, 116, 118
Expansion Premises - Suite 119, 121
First Offer Space - Suite 120
[FLOOR PLAN]
<PAGE> 13
EXHIBIT "C"
LANDLORD'S IMPROVEMENTS
Construct two new offices with a/c supply & return, two 2x4 light
fixtures, two duplex 110v outlets, two phone stubouts, two light
switches, relocate T-stat, two Timely frame windows, two doors, cut 5'
opening between 119 & 118.
NOTE: Offices will be approximately 10'1" x 11'9".
Location of lighting, a/c outlets/switches may vary.
Existing phone outlets to be reused where possible.
Reverse swing of two doors in Suite 113.
[FLOOR PLAN]
<PAGE> 14
EXHIBIT "D"
TENANT'S IMPROVEMENTS
Construct new wall to ceiling, re-use existing door, install light switch, a/c
supply, demo 8'10" wall & leave header, cut 5' opening between 119 and 118
[FLOOR PLAN]
<PAGE> 15
AMENDMENT TO LEASE
This Amendment to Lease is entered into as of this 30th day of July,
1996, by and between NORTH COAST BUSINESS PARK, a California Limited Partnership
("Lessor") and INTERACTIVE TELESIS, INC., a British Columbia Corporation
("Lessee") with reference to the following facts:
RECITALS:
A. On or about February 13, 1995, and by way of Amendments to Lease
dated August 20, 1995, and July 29, 1996, Lessor and Lessee entered into that
certain Lease Agreement, pursuant to which Lessee leased from Lessor certain
premises situated in Building 4, 535 Encinitas Blvd., Suites 112, 117, and 113,
Encinitas, California (the "Original Premises"), a true and correct copy of the
Lease and each Amendment thereto is attached hereto as Exhibit "A."
B. Lessee now desires to lease from Lessor certain alternative premises
in Building 4, 535 Encinitas Blvd., Suites 113, 116, and 118, consisting of
approximately 3,141 rentable square feet (the "New Premises") and is more
particularly described in Exhibit "B" attached hereto and made a part hereof by
this reference.
C. Lessee and Lessor also desire to terminate the Lease with respect to
the Original Premises in Building 4, Suites 112, and 117 concurrently with
completion of Lessor's tenant improvements for the New Premises and the date of
occupancy for the New Premises.
NOW, THEREFORE, the parties hereby agree as follows:
AGREEMENT
1. Leased Space: Lessee agrees to lease Suites 113, 116, and 118 in
Building 4 consisting of approximately 3,141 rentable square feet as described
in Exhibit B.
2. Date of Occupancy. Lessee's responsibility to make payments of rent
and other charges with respect to the New Premises shall commence on the "date
of occupancy" which shall be the actual date Lessor's improvements are
substantially completed. The parties reasonably anticipate that the tenant
improvements shall be completed within five (5) days after their initial
commencement.
3. Term: The term of Lease for all Leased Space shall be for a period
of twenty four (24) months commencing on the date of occupancy and ending twenty
four (24) months thereafter.
1
<PAGE> 16
4. Base Rent: The monthly Base Rent for the New Premises shall be as
follows:
First Twelve Month Period - $3,455.00 Per Month ($1.10 s/f)
Second Twelve Month Period - $3,612.00 Per Month ($1.15 s/f)
5. Utilities: Lessee shall transfer all utility meters into Lessee's
name and pay utility services directly to San Diego Gas and Electric. Lessor
shall not be required to pay for utility service.
6. Janitorial Service. Lessee shall provide janitorial service at
Lessee's expense. In the event Lessor shall provide monthly janitorial service'
Lessee agrees to reimburse Lessor's monthly janitorial expense which is
estimated to be $220.00 per month. Said estimated janitorial expense shall be
reconciled annually to the actual janitorial expense incurred by Lessor. In the
event the actual janitorial expense incurred by Lessor is less than the estimate
billed to Lessee, then Lessee shall receive a credit. In the event the estimated
janitorial expense exceeds Lessor's estimate, then Lessee agrees to pay its
pro-rata share of the excess.
7. Tenant Improvements. Lessor shall paint the New Premises using
Lessor's building standard color, clean all existing carpeting, demo and build
new walls and doors, and patch in the ceiling and carpet as shown on exhibit
"B." Any additional improvements deemed necessary by Lessee shall be at Lessee's
sole expense.
8. Security Deposit. The current security deposit of $2,499.70 held by
Lessor for Suites 112, 117, and 113, shall transfer to the New Premises, and
Lessee shall deposit with Lessor an additional $955.30 as additional security
deposit for the New Premises, for a total deposit of $3455.00.
9. Termination of Obligation - Original Premises. All obligations of
Lessee, with respect to the Lease, pertaining to the Original Premises,
including but not limited to the obligation to pay rent, utilities, or
janitorial expense, shall terminate on the Date of Occupancy for the New
Premises, as described in paragraph 2 above.
10. Continuing Effect of Lease. All terms and conditions of the
Original Lease, including the personal guarantee, shall remain in full force and
effect and shall apply to the New Premises except to the extent expressly
modified by this Amendment. In the event any term or condition of the Lease is
inconsistent with, or contrary to, any term or condition of this Amendment, this
Amendment shall prevail.
(SIGNATURES ARE ON NEXT PAGE)
2
<PAGE> 17
LESSOR:
NORTH COAST BUSINESS PARK, a
California Limited Partnership
DATE: 10/10/96 By: /s/ Michael I. Crain
------------ -----------------------------------------
Michael I. Crain, for Crain Ltd.,
General Partner for North Coast
Business Park Managers, a California
Limited Partnership
LESSEE:
INTERACTIVE TELESIS, INC., a
British Columbia Corporation
DATE: 10/16/96 BY: /s/ Don Cameron
------------ -----------------------------------------
Don Cameron, President
3
<PAGE> 18
EXHIBIT "B"
[FLOOR PLAN]
<PAGE> 19
AMENDMENT TO LEASE
This Amendment to Lease is entered into as of this 20th day of August,
1995, by and between NORTH COAST BUSINESS PARK., a California Limited
Partnership ("Lessor") and INTERACTIVE TELESIS, INC., a British Columbia
Corporation ("Lessee") with reference to the following facts:
RECITALS:
A. On or about February 13, 1995 Lessor and Lessee, entered into that
certain Lease Agreement, pursuant to which Lessee leased from Lessor certain
premises situated in Building 4, 535 Encinitas Blvd., Suite 112, Encinitas,
California ("Original Premises"), a true and correct copy of the Lease Agreement
is attached hereto as Exhibit "A", including each Amendment or Addendum,
Personal Guarantee and Exhibit thereto.
B. Lessee now desires to lease from Lessor certain additional premises
commonly known as Building 4, 535 Encinitas Blvd., Suite 117 and one office from
the adjacent suite 114, all of which consists of approximately 899 rentable
square feet ("Expansion Space"), which Expansion Space is more particularly
described in Exhibit "B" attached hereto and incorporated herein by this
reference.
NOW, THEREFORE, the parties hereby agree as follows:
AGREEMENT
1. LEASED SPACE: In addition to the 888 rentable square feet currently
leased by Lessee in suite 112, Lessee agrees to lease the Expansion Space in
Building 4 consisting of approximately 899 rentable square feet as described in
Exhibit B.
2. TERM:
Original Premises
The Lease expiration date for the Original Premises shall be extended to
February 28, 1997.
Expansion Space
The term of Lease for the Expansion Space shall commence on September 1,
1995 and shall terminate on February 28, 1997.
1
<PAGE> 20
3. RENT:
Original Premises
Rent for the original Premises shall be as follows:
09/01/95 to 02/28/96 - $ 977.00 per month
03/01/96 to 02/28/97 - $1,021.00 per month
Expansion Space
Rent for the Expansion Space shall be as follows:
09/01/95 to 02/28/96 - $ 989.00 per month
03/01/96 to 02/28/97 - $1,034.00 per month
The above rent schedule includes janitorial service at Lessor's
expense.
4. UTILITIES: Lessee shall pay for utility services at Lessee's expense.
Lessor shall not be required to pay for utilities. If the utility service is not
separately metered, then Lessee shall pay monthly utilities based on Lessor's
estimate. Said estimated utilities shall be adjusted to actual utility costs
annually. Said utilities are estimated at $170.00 per month.
5. TENANT IMPROVEMENTS: The adjacent tenant in Suite 114 has agreed to
give Suite 112 their storage room to allow Suite 112 access to the Expansion
Space as shown on Exhibit "B." Lessor shall build a new storage room in the
Expansion Space of approximately 9'11" x 11'2" to replace the storage room for
the tenant in Suite 114. The new storage room shall have one 2' x 4' light
fixture, one HVAC grill, two duplex outlets, one light switch, one telephone
jack and the shelving from the old storage room shall be relocated to the new
storage room. Lessor shall paint and clean the existing carpeting the Expansion
Space and the new storage room.
6. SECURITY DEPOSIT. In addition to the current security deposit of
$975.00 held by Lessor for Suite 112, Lessee shall deposit with Lessor an
additional $989.00 as a security deposit for Suite 117.
7. ABATED RENT - EXPANSION SPACE. Rent for months 2 and 3 of the Expansion
Space shall be $.70 per square foot or $629.00 per month. There shall be no
abated rent for the Original Premises.
(SIGNATURES ARE ON NEXT PAGE)
2
<PAGE> 21
8. CONTINUING EFFECT OF LEASE. All terms and conditions of the Original
Lease, including the personal guarantee, shall remain in full force and effect
and shall apply to the Expansion Space except to the extent expressly modified
by this Amendment. In the event any term or condition of the Lease is
inconsistent with, or contrary to, any term or condition of this Amendment, this
Amendment shall prevail.
LESSOR:
NORTH COAST BUSINESS PARK, a
California Limited Partnership
DATE: 8/20/95 By: /s/ RANDALL HALL
------------------------------------
Randall Hall, Property Manager
LESSEE:
INTERACTIVE TELESIS, INC., a
Columbia Corporation
DATE: 8/20/95 By: /s/ DON CAMERON
------------------------------------
Don Cameron, President
3
<PAGE> 22
EXHIBIT "B"
[FLOOR PLAN OF PREMISES]
<PAGE> 23
[CB COMMERCIAL LETTERHEAD]
OFFICE BUILDING LEASE
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
Article 1 LEASE OF PREMISES ............................................1
Article 2 DEFINITIONS ..................................................1
Article 3 EXHIBITS AND ADDENDA .........................................2
Article 4 DELIVERY OF POSSESSION .......................................2
Article 5 RENT .........................................................2
Article 6 INTEREST AND LATE CHARGES ....................................4
Article 7 SECURITY DEPOSIT .............................................4
Article 8 TENANT'S USE OF THE PREMISES .................................4
Article 9 SERVICES AND UTILITIES .......................................5
Article 10 CONDITION OF THE PREMISES ....................................5
Article 11 CONSTRUCTION, REPAIRS AND MAINTENANCE.........................5
Article 12 ALTERATIONS AND ADDITIONS.....................................6
Article 13 LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY.....................6
Article 14 RULES AND REGULATIONS.........................................7
Article 15 CERTAIN RIGHTS RESERVED BY LANDLORD...........................7
Article 16 ASSIGNMENT AND SUBLETTING.....................................7
Article 17 HOLDING OVER..................................................8
Article 18 SURRENDER OF PREMISES.........................................8
Article 19 DESTRUCTION OR DAMAGE.........................................8
Article 20 EMINENT DOMAIN................................................8
Article 21 INDEMNIFICATION...............................................9
Article 22 TENANT'S INSURANCE............................................9
Article 23 WAIVER OF SUBROGATION........................................10
Article 24 SUBORDINATION AND ATTORNMENT.................................10
Article 25 TENANT ESTOPPEL CERTIFICATES.................................10
Article 26 TRANSFER OF LANDLORD'S INTEREST..............................10
Article 27 DEFAULT......................................................10
Article 28 BROKERAGE FEES...............................................11
Article 29 NOTICES......................................................11
Article 30 GOVERNMENT ENERGY OR UTILITY CONTROLS........................11
Article 31 RELOCATION OF PREMISES.......................................11
Article 32 QUIET ENJOYMENT..............................................12
Article 33 OBSERVANCE OF LAW............................................12
Article 34 FORCE MAJEURE................................................12
Article 35 CURING TENANT'S DEFAULTS.....................................12
Article 36 SIGN CONTROL.................................................12
Article 37 MISCELLANEOUS................................................12
</TABLE>
<PAGE> 24
[CB COMMERCIAL REAL ESTATE GROUP, INC. LETTERHEAD]
This Lease between North Coast Business Park, a California Limited Partnership,
("Landlord"), and Interactive Telesis, Inc., a British Columbia Corporation,
("Tenant"), is dated February 13, 1995.
1. LEASE OF PREMISES.
In consideration of the Rent (as defined at Section 5.4) and the provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown by diagonal lines on the floor plan attached hereto as Exhibit
"A," and further described at Section 2l. The Premises are located within the
Building and Project described in Section 2m. Tenant shall have the
non-exclusive right (unless otherwise provided herein) in common with Landlord,
other tenants, subtenants and invitees, to use of the Common Areas (as defined
at Section 2e).
2. DEFINITIONS
As used in this Lease, the following terms shall have the following meanings:
a. Base Rent (initial): $11,721.60 per year.
b. Base Year: The calendar year of N/A.
c. Broker(s)
Landlord's: CB Commercial Real Estate Group, Inc.
Tenant's: Ken Gotthelf Real Estate Broker.
In the event that CB Commercial Real Estate Group, Inc. represents both
Landlord and Tenant, Landlord and Tenant hereby confirm that they were timely
advised of the dual representation and that they consent to the same, and that
they do not expect said broker to disclose to either of them the confidential
information of the other party.
d. Commencement Date: February 15, 1995.
e. Common Areas: the building lobbies, common corridors and hallways,
restrooms, garage and parking areas, stairways, elevators and other
generally understood public or common areas. Landlord shall have the right
to regulate or restrict the use of the Common Areas.
f. Expense Stop: (fill in if applicable): $ Not applicable
g. Expiration Date: February 28, 1996, unless otherwise sooner terminated in
accordance with the provisions of this Lease.
i. Landlord's Mailing Address: 531 Encinitas Blvd., Suite 113, Encinitas, CA
92024
Tenant's Mailing Address: 535 Encinitas Blvd., Suite 112, Encinitas, CA
92024
j. Monthly Installments of Base Rent (initial): $976.80 per month.
k. Parking: Tenant shall be permitted to park 3 cars on a non-exclusive basis
in the area(s) designated by Landlord for parking. Tenant shall abide by
any and all parking regulations and rules established from time to time by
Landlord or Landlord's parking operator. Landlord reserves the right to
separately charge Tenant's guests and visitors for parking.
l. Premises: that portion of the Building containing approximately 888 square
feet of Rentable Area, shown by diagonal lines on Exhibit "A," located on
the first floor of the Building and known as Suite 112.
m. Project: the building of which the Premises are a part (the "Building") and
any other buildings or improvements on the real property (the "Property")
located at 531 Encinitas Blvd., Encinitas, CA 92024 and further described
at Exhibit "B." The Project is known as North Coast Business Park.
n. Rentable Area: as to both the Premises and the Project, the respective
measurements of floor area as may from time to time be subject to lease by
Tenant and all tenants of the Project, respectively, as determined by
Landlord and applied on a consistent basis throughout the Project.
(1)
<PAGE> 25
o. Security Deposit (Section 7): $975.00.
p. State: the State of California.
q. Tenant's First Adjustment Date (Section 5.2): the first day of the
calendar month following the Commencement Date plus N/A months.
r. Tenant's Use Clause (Article 8): General Office.
s. Term: the period commencing on the Commencement Date and expiring at
midnight on the Expiration Date.
3. EXHIBITS AND ADDENDA.
The exhibits and addenda listed below (unless lined out) are incorporated by
reference in this Lease:
a. Exhibit "A" - Floor Plan showing the Premises.
b. Exhibit "B" - Site Plan of the Project.
c. Exhibit "D" - Rules and Regulations.
d. Exhibit "E" - Sign Criteria.
e. Addenda:
One
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. DELIVERY OF POSSESSION.
If for any reason Landlord does not deliver possession of the Premises to
Tenant on the Commencement Date, Landlord shall not be subject to any liability
for such failure, the Expiration Date shall not change and the validity of this
Lease shall not be impaired, but Rent shall be abated until delivery of
possession. "Delivery of possession" shall be deemed to occur on the date
Landlord completes Landlord's Work as defined in Exhibit "C." If Landlord
permits Tenant to enter into possession of the Premises before the Commencement
Date, such possession shall be subject to the provisions of this Lease,
including, without limitation, the payment of Rent.
5. RENT.
5.1. Payment of Base Rent. Tenant agrees to pay the Base Rent for the Premises.
Monthly Installments of Base Rent shall be payable in advance on the first day
of each calendar month of the Term. If the Term begins (or ends) on other than
the first (or last) day of a calendar month, the Base Rent for the partial
month shall be prorated on a per diem basis. Tenant shall pay Landlord the
first Monthly Installment of Base Rent when Tenant executes the Lease.
5.2 Adjusted Base Rent.
<PAGE> 26
5.4 Definition of Rent. All costs and expenses which Tenant assumes or agrees to
pay to Landlord under this Lease shall be deemed additional rent (which,
together with the Base Rent is sometimes referred to as the "Rent"). The Rent
shall be paid to the Building manager (or other person) and at such place, as
Landlord may from time to time designate in writing, without any prior demand
therefor and without deduction or offset, in lawful money of the United States
of America.
5.5 Rent Control. If the amount of Rent or any other payment due under this
Lease violates the terms of any governmental restrictions on such Rent or
payment, then the Rent or payment due during the period of such restrictions
shall be the maximum amount allowable under those restrictions. Upon termination
of the restrictions, Landlord shall, to the extent it is legally permitted,
recover from Tenant the difference between the amounts received during the
period of the restrictions and the amounts Landlord would have received had
there been no restrictions.
5.6 Taxes Payable by Tenant. In addition to the Rent and any other charges to be
paid by Tenant hereunder, Tenant shall reimburse Landlord upon demand for any
and all taxes payable by Landlord (other than net income taxes) which are not
otherwise reimbursable under this Lease, whether or not now customary or within
the contemplation of the parties, where such taxes are upon, measured by or
reasonably attributable to (a) the cost or value of Tenant's equipment,
furniture, fixtures and other personal property located in the Premises, or the
cost or value of any leasehold improvements made in or to the Premises by or for
Tenant, other than Building Standard Work made by Landlord, regardless of
whether title to such improvements is held by Tenant or Landlord; (b) the gross
or net Rent payable under this Lease, including, without limitation, any rental
or gross receipts tax levied by any taxing authority with respect to the receipt
of the Rent hereunder; (c) the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof; or (d) this transaction or any document to which Tenant is
a party creating or transferring an interest or an estate in the Premises: If it
becomes unlawful for Tenant to reimburse Landlord for any costs as required
under this Lease, the Base Rent shall be revised to net Landlord the same net
Rent after imposition of any tax or other charge upon Landlord as would have
been payable to Landlord but for the reimbursement being unlawful.
6. INTEREST AND LATE CHARGES.
If Tenant falls to pay when due any Rent or other amounts or charges which
Tenant is obligated to pay under the terms of this Lease, the unpaid amounts
shall bear interest at the maximum rate then allowed by law. Tenant acknowledges
that the late payment of any Monthly Installment of Base Rent will cause
Landlord to lose the use of that money and incur costs and expenses not
contemplated under this Lease, including without limitation, administrative and
collection costs and processing and accounting expenses, the exact amount of
which is extremely difficult to ascertain. Therefore, in addition to interest,
if any such installment is not received by Landlord within ten (10) days from
the date it is due, Tenant shall pay Landlord a late charge equal to ten percent
(10%) of such installment. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the loss suffered from such nonpayment by Tenant.
Acceptance of any interest or late charge shall not constitute a waiver of
Tenant's default with respect to such nonpayment by Tenant nor prevent Landlord
from exercising any other rights or remedies available to Landlord under this
Lease.
7. SECURITY DEPOSIT
Tenant agrees to deposit with Landlord the Security Deposit set forth at Section
2.0 upon execution of this Lease, as security for Tenant's faithful performance
of its obligations under this Lease. Landlord and Tenant agree that the Security
Deposit may be commingled with funds of Landlord and Landlord shall have no
obligation or liability for payment of interest on such deposit. Tenant shall
not mortgage, assign, transfer or encumber the Security Deposit without the
prior written consent of Landlord and any attempt by Tenant to do so shall be
void, without force or effect and shall not be binding upon Landlord.
If Tenant fails to pay any Rent or other amount when due and payable under this
Lease, or fails to perform any of the terms hereof, Landlord may appropriate and
apply or use all or any portion of the Security Deposit for Rent payments or any
other amount then due and unpaid, for payment of any amount for which Landlord
has become obligated as a result of Tenant's default or breach, and for any loss
or damage sustained by Landlord as a result of Tenant's default or breach, and
Landlord may so apply or use this deposit without prejudice to any other remedy
Landlord may have by reason of Tenant's default or breach. If Landlord so uses
any of the Security Deposit, Tenant shall, within ten (10) days after written
demand therefor, restore the Security Deposit to the full amount originally
deposited; Tenant's failure to do so shall constitute an act of default
hereunder and Landlord shall have the right to exercise any remedy provided for
at Article 27 hereof. Within fifteen (15) days after the Term (or any extension
thereof) has expired or Tenant has vacated the Premises, whichever shall last
occur, and provided Tenant is not then in default on any of its obligations
hereunder, Landlord shall return the Security Deposit to Tenant, or, if Tenant
has assigned its interest under this Lease, to the last assignee of Tenant. If
Landlord sells its interest in the Premises, Landlord may deliver this deposit
to the purchaser of Landlord's interest and thereupon be relieved of any further
liability or obligation with respect to the Security Deposit.
8. TENANT'S USE OF THE PREMISES.
Tenant shall use the Premises solely for the purposes set forth in Tenant's Use
Clause. Tenant shall not use or occupy the Premises in violation of law or any
covenant, condition or restriction affecting the Building or Project or the
certificate of occupancy issued for the Building or Project, and shall, upon
notice from Landlord, immediately discontinue any use of the Premises which is
declared by any governmental authority having jurisdiction to be a violation of
law or the certificate of occupancy. Tenant, at Tenant's own cost and expense,
shall comply with all laws, ordinances, regulations, rules and/or any directions
of any governmental agencies or authorities having jurisdiction which shall, by
reason of the nature of Tenant's use or occupancy of the Premises, impose any
duty upon Tenant or Landlord with respect to the Premises or its use or
occupation. A judgment of any court of competent jurisdiction or the admission
by Tenant In any action or proceeding against Tenant that Tenant has violated
any such laws, ordinances, regulations, rules and/or directions in the use of
the Premises shall be deemed to be a conclusive determination of that fact as
between Landlord and Tenant. Tenant shall not do or permit to be done anything
which will Invalidate or increase the cost of any fire, extended coverage or
other insurance policy covering the Building or Project and/or property located
therein, and shall comply with all rules, orders, regulations, requirements and
recommendations of the Insurance Services Office or any other organization
performing a similar function. Tenant shall
(4)
<PAGE> 27
promptly upon demand reimburse Landlord for any additional premium charged for
such policy by reason of Tenant's failure to comply with the provisions of this
Article. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or Project, or injure or annoy them, or use
or allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises. Tenant shall not commit or suffer to be committed
any waste in or upon the Premises.
9. SERVICES AND UTILITIES.
Provided that Tenant is not in default hereunder, Landlord agrees to furnish to
the Premises during generally recognized business days, and during hours
determined by Landlord in its sole discretion, and subject to the Rules and
Regulations of the Building or Project, electricity for normal desk top office
equipment and normal copying equipment, and heating, ventilation and air
conditioning ("HVAC") as required in Landlord's judgment for the comfortable use
and occupancy of the Premises. If Tenant desires HVAC at any other time,
Landlord shall use reasonable efforts to furnish such service upon reasonable
notice from Tenant and Tenant shall pay Landlord's charges therefor on demand.
Landlord shall also maintain and keep lighted the common stairs, common entries
and restrooms in the Building. Landlord shall not be in default hereunder or be
liable for any damages directly or indirectly resulting from, nor shall the Rent
be abated by reason of (i) the installation, use or interruption of use of any
equipment in connection with the furnishing of any of the foregoing services,
(ii) failure to furnish or delay in furnishing any such services where such
failure or delay is caused by accident or any condition or event beyond the
reasonable control of Landlord or by the making of necessary repairs or
improvements to the Premises, Building or Project, or (iii) the limitation,
curtailment or rationing of, or restrictions on, use of water, electricity, gas
or any other form of energy serving the Premises, Building or Project. Landlord
shall not be liable under any circumstances for a loss of or injury to property
or business, however occurring, through or in connection with or incidental to
failure to furnish any such services. If Tenant uses heat generating machines or
equipment in the Premises which affect the temperature otherwise maintained by
the HVAC system, Landlord reserves the right to install supplementary air
conditioning units in the Premises and the cost thereof, Including the cost of
installation, operation and maintenance thereof, shall be paid by Tenant to
Landlord upon demand by Landlord.
Tenant shall not, without the written consent of Landlord, use any apparatus or
device in the Premises, including without limitation, electronic data processing
machines, punch card machines or machines using in excess of 120 volts, which
consumes more electricity than is usually furnished or supplied for the use of
premises as general office space, as determined by Landlord. Tenant shall not
connect any apparatus with electric current except through existing electrical
outlet in the Premises. Tenant shall not consume water or electric current in
excess of that usually furnished or supplied for the use of premises as general
office space (as determined by Landlord), without first procuring the written
consent of Landlord, which Landlord may refuse, and in the event of consent,
Landlord may have installed a water meter or electrical current in the Premises
to measure the amount of water or electric current consumed.
Nothing contained in this Article shall restrict Landlord's right to require at
any time separate metering of utilities furnished to the Premises. In the event
utilities are separately metered, Tenant shall pay promptly upon demand for all
utilities consumed at utility rates charged by the local public utility plus any
additional expense incurred by Landlord in keeping account of the utilities so
consumed. Tenant shall be responsible for the maintenance and repair of any such
meters at its sole cost.
Landlord shall furnish lighting replacement for building standard lights,
restroom supplies, window washing and janitor services in a manner that such
services are customarily furnished to comparable office buildings in the area.
10. CONDITION OF THE PREMISES.
Tenant's taking possession of the Premises shall be deemed conclusive evidence
that as of the date of taking possession the Premises are in good order and
satisfactory condition, except for such matters as to which Tenant gave Landlord
notice on or before the Commencement Date. No promise of Landlord to alter,
remodel, repair or improve the Premises, the Building or the Project and no
representation, express or implied, respecting any matter or thing relating to
the Premises, Building, Project or this Lease (including, without limitation,
the condition of the Premises, the Building or the Project) have been made to
Tenant by Landlord or its Broker or Sales Agent, other than as may be contained
herein or in a separate exhibit or addendum signed by Landlord and Tenant.
11. CONSTRUCTION, REPAIRS AND MAINTENANCE.
a. Landlord's Obligations. Landlord shall perform Landlord's Work to the
Premises as described in Exhibit "C." Landlord shall maintain in good order,
condition and repair the Building and all other portions of the Premises not the
obligation of Tenant or of any other tenant in the Building.
b. Tenant's Obligations.
(1) Tenant shall perform Tenant's Work to the Premises as described in
Exhibit "C."
(2) Tenant at Tenant's sole expense shall, except for services furnished
by Landlord pursuant to Article 9 hereof, maintain the Premises in good
order, condition and repair, including the interior surfaces of the
ceilings, walls and floors, all doors, all interior windows, all
plumbing, pipes and fixtures, electrical wiring, switches and fixtures,
Building Standard furnishings and special items and equipment installed
by or at the expense of Tenant.
(3) Tenant shall be responsible for all repairs and alterations in and
to the Premises, Building and Project and the facilities and systems
thereof, the need for which arises out of (i) Tenant's use or occupancy
of the Premises, (ii) the installation, removal, use or operation of
Tenant's Property (as defined in Article 13) In the Premises, (iii) the
moving of Tenant's Property into or out of the Building, or iv) the act,
omission, misuse or negligence of Tenant, its agents, contractors,
employees or invitees.
(5)
<PAGE> 28
(4) If Tenant fails to maintain the Premises in good order, condition
and repair, Landlord shall give Tenant notice to do such acts as are
reasonably required to so maintain the Premises. If Tenant fails to
promptly commence such work and diligently prosecute it to completion,
then Landlord shall have the right to do such acts and expend such funds
at the expense of Tenant as are reasonably required to perform such
work. Any amount so expended by Landlord shall be paid by Tenant
promptly after demand with interest at the prime commercial rate then
being charged by Bank of America NT & SA plus two percent (2%) per
annum, from the date of such work, but not to exceed the maximum rate
then allowed by law. Landlord shall have no liability to Tenant for any
damage, inconvenience, or interference with the use of the Premises by
Tenant as a result of performing any such work.
c. Compliance with Law. Landlord and Tenant shall each do all acts required to
comply with all applicable laws, ordinances, and rules of any public authority
relating to their respective maintenance obligations as set forth herein.
d. Waiver by Tenant. Tenant expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford the Tenant the right to make
repairs at Landlord's expense or to terminate this Lease because of Landlord's
failure to keep the Premises In good order, condition and repair.
e. Load and Equipment Limits. Tenant shall not place a load upon any floor of
the Premises which exceeds the load per square foot which such floor was
designed to carry, as determined by Landlord or Landlord's structural engineer.
The cost of any such determination made by Landlord's structural engineer shall
be paid for by Tenant upon demand. Tenant shall not install business machines or
mechanical equipment which cause noise or vibration to such a degree as to be
objectionable to Landlord or other Building tenants.
f. Except as otherwise expressly provided in this Lease, Landlord shall have no
liability to Tenant nor shall Tenant's obligations under this Lease be reduced
or abated in any manner whatsoever by reason of any inconvenience, annoyance,
interruption or injury to business arising from Landlord's making any repairs or
changes which Landlord is required or permitted by this Lease or by any other
tenant's lease or required by law to make in or to any portion of the Project,
Building or the Premises. Landlord shall nevertheless use reasonable efforts to
minimize any interference with Tenant's business in the Premises.
g. Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part or appurtenance of the Building's mechanical, electrical,
plumbing, HVAC or other systems serving, located in, or passing through the
Premises.
h. Upon the expiration or earlier termination of this Lease, Tenant shall return
the Premises to Landlord clean and in the same condition as on the date Tenant
took possession, except for normal wear and tear. Any damage to the Premises,
including any structural damage, resulting from Tenant's use or from the removal
of Tenant's fixtures, furnishings and equipment pursuant to Section 13b shall be
repaired by Tenant at Tenant's expense.
12. ALTERATIONS AND ADDITIONS.
a. Tenant shall not make any additions, alterations or improvements to the
Premises without obtaining the prior written consent of Landlord. Landlord's
consent may be conditioned on Tenant's removing any such additions, alterations
or improvements upon the expiration of the Term and restoring the Premises to
the same condition as on the date Tenant took possession. All work with respect
to any addition, alteration or improvement shall be done in a good and
workmanlike manner by properly qualified and licensed personnel approved by
Landlord, and such work shall be diligently prosecuted to completion. Landlord
may, at Landlord's option, require that any such work be performed by Landlord's
contractor, in which case the cost of such work shall be paid for before
commencement of the work. Tenant shall pay to Landlord upon completion of any
such work by Landlord's contractor, an administrative fee of fifteen percent
(15%) of the cost of the work.
b. Tenant shall pay the costs of any work done on the Premises pursuant to
Section 12a, and shall keep the Premises, Building and Project free and clear of
liens of any kind. Tenant shall indemnify, defend against and keep Landlord free
and harmless from all liability, loss, damage, costs, attorneys' fees and any
other expense incurred on account of claims by any person performing work or
furnishing materials or supplies for Tenant or any person claiming under Tenant.
Tenant shall keep Tenant's leasehold interest, and any additions or improvements
which are or become the property of Landlord under this Lease, free and clear of
all attachment or judgment liens. Before the actual commencement of any work for
which a claim or lien may be filed, Tenant shall give Landlord notice of the
intended commencement date a sufficient time before that date to enable Landlord
to post notices of non-responsibility or any other notices which Landlord deems
necessary for the proper protection of Landlord's interest in the Premises,
Building or the Project, and Landlord shall have the right to enter the Premises
and post such notices at any reasonable time.
c. Landlord may require, at Landlord's sole option, that Tenant provide to
Landlord, at Tenant's expense, a lien and completion bond in an amount equal to
at least one and one-half (1 1/2) times the total estimated cost of any
additions, alterations or improvements to be made in or to the Premises, to
protect Landlord against any liability for mechanic's and materialmen's liens
and to insure timely completion of the work. Nothing contained in this Section
12c shall relieve Tenant of its obligation under Section 12b to keep the
Premises, Building and Project free of all liens.
d. Unless their removal is required by Landlord as provided In Section 12a, all
additions, alterations and improvements made to the Promises shall become the
property of Landlord and be surrendered with the Premises upon the expiration of
the Term; provided, however, Tenant's equipment, machinery and trade fixtures
which can be removed without damage to the Premises shall remain the property of
Tenant and may be removed, subject to the provisions of Section 13b.
13. LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY.
a. All fixtures, equipment, improvements and appurtenances attached to or built
into the Premises at the commencement of or during the Term, whether or not by
or at the expense of Tenant ("Leasehold Improvements") shall be and remain a
part of the Premises, shall be the property of Landlord and shall not be removed
by Tenant, except as expressly provided in Section 13b.
(6)
<PAGE> 29
b. All movable partitions, business and trade fixtures, machinery and
equipment, communications equipment and office equipment located in the
Premises and acquired by or for the account of Tenant, without expense to
Landlord, which can be removed without structural damage to the Building,
and all furniture, furnishings and other articles of movable personal
property owned by Tenant and located in the Premises (collectively,
"Tenant's Property") shall be and shall remain the property of Tenant and
may be removed by Tenant at any time during the Term; provided that if any
of Tenant's Property is removed, Tenant shall promptly repair any damage to
the Premises or to the Building resulting from such removal.
14. RULES AND REGULATIONS.
Tenant agrees to comply with (and cause its agents, contractors, employees and
invitees to comply with) the rules and regulations attached hereto as Exhibit
"D" and with such reasonable modifications thereof and additions thereto as
Landlord may from time to time make. Landlord shall not be responsible for any
violation of said rules and regulations by other tenants or occupants of the
Building or Project.
15. CERTAIN RIGHTS RESERVED BY LANDLORD.
Landlord reserves the following rights, exercisable without liability to Tenant
for (a) damage or injury to property, person or business, (b) causing an actual
or constructive eviction from the Premises, or (c) disturbing Tenant's use or
possession of the Premises:
a. To name the Building and Project and to change the name or street
address of the Building or Project;
b. To install and maintain all signs on the exterior and interior of the
Building and Project;
c. To have pass keys to the Premises and all doors within the Premises,
excluding Tenant's vaults and safes;
d. At any time during the term, and on reasonable prior notice to Tenant,
to inspect the Premises, and to show the Premises to any prospective
purchaser or mortgagee of the Project, or to any assignee of any mortgage
on the Project, or to others having an interest in the Project or Landlord,
and during the last six months of the Term, to show the Premises to
prospective tenants thereof; and
e. To enter the Premises for the purpose of making inspections, repairs,
alterations, additions or improvements to the Premises or the Building
(including, without limitation, checking, calibrating, adjusting or
balancing controls and other parts of the HVAC system), and to take all
steps as may be necessary or desirable for the safety, protection,
maintenance or preservation of the Premises or the Building or Landlord's
interest therein, or as may be necessary or desirable for the operation or
improvement of the Building or in order to comply with laws, orders or
requirements of governmental or other authority. Landlord agrees to use its
best efforts (except in an emergency) to minimize interference with
Tenant's business in the Premises in the course of any such entry.
16. ASSIGNMENT AND SUBLETTING.
No assignment of this Lease or sublease of all or any part of the Premises shall
be permitted, except as provided in this Article 16.
a. Tenant shall not, without the prior written consent of Landlord, assign
or hypothecate this Lease or any interest herein or sublet the Premises or
any part thereof, or permit the use of the Premises by any party other than
Tenant. Any of the foregoing acts without such consent shall be void and
shall, at the option of Landlord, terminate this Lease. This Lease shall
not, nor shall any interest of Tenant herein, be assignable by operation of
law without the written consent of Landlord.
b. If at any time or from time to time during the Term Tenant desires to
assign this Lease or sublet all or any part of the Premises, Tenant shall
give notice to Landlord setting forth the terms and provisions of the
proposed assignment or sublease, and the identity of the proposed assignee
or subtenant. Tenant shall promptly supply Landlord with such information
concerning the business background and financial condition of such proposed
assignee or subtenant as Landlord may reasonably request. Landlord shall
have the option, exercisable by notice given to Tenant within twenty (20)
days after Tenant's notice is given, either to sublet such space from
Tenant at the rental and on the other terms set forth in this Lease for the
term set forth in Tenant's notice, or, in the case of an assignment, to
terminate this Lease. If Landlord does not exercise such option, Tenant may
assign the Lease or sublet such space to such proposed assignee or
subtenant on the following further conditions:
(1) Landlord shall have the right to approve such proposed assignee or
subtenant, which approval shall not be unreasonably withheld;
(2) The assignment or sublease shall be on the same terms set forth in
the notice given to Landlord;
(3) No assignment or sublease shall be valid and no assignee or
sublessee shall take possession of the Premises until an executed
counterpart of such assignment or sublease has been delivered to
Landlord;
(4) No assignee or sublessee shall have a further right to assign or
sublet except on the terms herein contained; and
(5) Any sums or other economic consideration received by Tenant as a
result of such assignment or subletting, however denominated under the
assignment or sublease, which exceed, in the aggregate, (i) the total
sums which Tenant is obligated to pay Landlord under this Lease
(prorated to reflect obligations allocable to any portion of the
Premises subleased), plus (ii) any real estate brokerage commissions
or fees payable in connection with such assignment or subletting,
shall be paid to Landlord as additional rent under this Lease without
affecting or reducing any other obligations of Tenant hereunder.
c. Notwithstanding the provisions of paragraphs a and b above, Tenant may assign
this Lease or sublet the Premises or any portion thereof, without Landlord's
consent and without extending any recapture or termination option to Landlord,
to any corporation which controls, is controlled by or is under common control
with Tenant, or to any corporation resulting from a merger or consolidation with
Tenant, or to any person or entity which acquires all the assets of Tenant's
business as a going concern, provided that (i) the assignee or sublessee
assumes, in full, the obligations of Tenant under this Lease, (ii) Tenant
remains fully liable under this Lease, and (iii) the use of the Premises under
Article 8 remains unchanged.
(7)
<PAGE> 30
d. No subletting or assignment shall release Tenant of Tenant's obligations
under this Lease or alter the primary liability of Tenant to pay the Rent
and to perform all other obligations to be performed by Tenant hereunder.
The acceptance of Rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision hereof. Consent to one
assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting. In the event of default by an assignee or
subtenant of Tenant or any successor of Tenant in the performance of any of
the terms hereof, Landlord may proceed directly against Tenant without the
necessity of exhausting remedies against such assignee, subtenant or
successor. Landlord may consent to subsequent assignments of the Lease or
sublettings or amendments or modifications to the Lease with assignees of
Tenant, without notifying Tenant, or any successor of Tenant, and without
obtaining its or their consent thereto and any such actions shall not
relieve Tenant of liability under this Lease.
e. If Tenant assigns the Lease or sublets the Premises or requests the
consent of Landlord to any assignment or subletting or if Tenant requests
the consent of Landlord for any act that Tenant proposes to do, then Tenant
shall, upon demand, pay Landlord an administrative fee of One Hundred Fifty
and No/100ths Dollars ($150.00) plus any attorneys' fees reasonably
incurred by Landlord in connection with such act or request.
17. HOLDING OVER.
If after expiration of the Term, Tenant remains in possession of the Premises
with Landlord's permission (express or implied), Tenant shall become a tenant
from month to month only, upon all the provisions of this Lease (except as to
term and Base Rent), but the "Monthly Installments of Base Rent" payable by
Tenant shall be increased to one hundred fifty percent (150%) of the Monthly
Installments of Base Rent payable by Tenant at the expiration of the Term. Such
monthly rent shall be payable in advance on or before the first day of each
month. If either party desires to terminate such month to month tenancy, it
shall give the other party not less than thirty (30) days advance written notice
of the date of termination.
18. SURRENDER OF PREMISES.
a. Tenant shall peaceably surrender the Premises to Landlord on the
Expiration Date, in broom-clean condition and in as good condition as when
Tenant took possession, except for (i) reasonable wear and tear, (ii) loss
by fire or other casualty, and (iii) loss by condemnation. Tenant shall, on
Landlord's request, remove Tenant's Property on or before the Expiration
Date and promptly repair all damage to the Premises or Building caused by
such removal.
b. If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise, any of Tenant's Property left on the Premises
shall be deemed to be abandoned, and, at Landlord's option, title shall
pass to Landlord under this Lease as by a bill of sale. If Landlord elects
to remove all or any part of such Tenant's Property, the cost of removal,
including repairing any damage to the Premises or Building caused by such
removal, shall be paid by Tenant. On the Expiration Date Tenant shall
surrender all keys to the Premises.
19. DESTRUCTION OR DAMAGE.
a. If the Premises or the portion of the Building necessary for Tenant's
occupancy is damaged by fire, earthquake, act of God, the elements of other
casualty, Landlord shall, subject to the provisions of this Article,
promptly repair the damage, if such repairs can, in Landlord's opinion, be
completed within (90) ninety days. If Landlord determines that repairs can
be completed within ninety (90) days, this Lease shall remain in full force
and effect, except that if such damage is not the result of the negligence
or willful misconduct of Tenant or Tenant's agents, employees, contractors,
licensees or invitees, the Base Rent shall be abated to the extent Tenant's
use of the Premises is impaired, commencing with the date of damage and
continuing until completion of the repairs required of Landlord under
Section 19d.
b. If in Landlord's opinion, such repairs to the Premises or portion of the
Building necessary for Tenant's occupancy cannot be completed within
ninety(90) days, Landlord may elect, upon notice to Tenant given within
thirty (30) days after the date of such fire or other casualty, to repair
such damage, in which event this Lease shall continue in full force and
effect, but the Base Rent shall be partially abated as provided in Section
19a. If Landlord does not so elect to make such repairs, this Lease shall
terminate as of the date of such fire or other casualty.
c. If any other portion of the Building or Project is totally destroyed or
damaged to the extent that in Landlord's opinion repair thereof cannot be
completed within ninety (90) days, Landlord may elect upon notice to Tenant
given within thirty (30) days after the date of such fire or other
casualty, to repair such damage, in which event this Lease shall continue
in full force and effect, but the Base Rent shall be partially abated as
provided in Section 19a. If Landlord does not elect to make such repairs,
this Lease shall terminate as of the date of such fire or other casualty.
d. If the Premises are to be repaired under this Article, Landlord shall
repair at its cost any injury or damage to the Building and Building
Standard Work in the Premises. Tenant shall be responsible at its sole cost
and expense for the repair, restoration and replacement of any other
Leasehold improvements and Tenant's Property. Landlord shall not be liable
for any loss of business, inconvenience or annoyance arising from any
repair or restoration of any portion of the Premises, Building or Project
as a result of any damage from fire or other casualty.
e. This Lease shall be considered an express agreement governing any case
of damage to or destruction of the Premises, Building or Project by fire or
other casualty, and any present or future law which purports to govern the
rights of Landlord and Tenant in such circumstances in the absence of
express agreement, shall have no application.
20. EMINENT DOMAIN.
a. If the whole of the Building or Premises is lawfully taken by
condemnation or in any other manner for any public or quasi-public purpose,
this Lease shall terminate as of the date of such taking, and Rent shall be
prorated to such date. If less than the whole of the Building or Premises
is so taken, this Lease shall be unaffected by such taking, provided that
(i) Tenant shall have the right to terminate this Lease by notice to
Landlord given within ninety (90) days after the date of such taking if
twenty percent (20%) or more of the Premises is taken and the remaining
area of the Premises is not reasonably sufficient for Tenant to continue
operation of its business, and (ii) Landlord shall have the right to
terminate this Lease by notice to Tenant given within ninety (90) days
after the date of such taking. If either Landlord or Tenant so elects to
terminate this Lease, the Lease shall terminate on the thirtieth (30th) day
after either such notice. The Rent shall be prorated to the date of
termination. If this Lease continues in force upon such partial taking, the
Base Rent and Tenant's Proportionate Share shall be equitably adjusted
according to the remaining Rentable Area of the Premises and Project.
(8)
<PAGE> 31
b. In the event of any taking, partial or whole, all of the proceeds of any
award, judgment or settlement payable by the condemning authority shall be
the exclusive property of Landlord, and Tenant hereby assigns to Landlord
all of its right, title and interest in any award, judgment or settlement
from the condemning authority. Tenant, however, shall have the right, to
the extent that Landlord's award is not reduced or prejudiced, to claim
from the condemning authority (but not from Landlord) such compensation as
may be recoverable by Tenant in its own right for relocation expenses and
damage to Tenant's personal property.
c. In the event of a partial taking of the Premises which does not result
in a termination of this Lease, Landlord shall restore the remaining
portion of the Premises as nearly as practicable to its condition prior to
the condemnation or taking, but only to the extent of Building Standard
Work. Tenant shall be responsible at its sole cost and expense for the
repair, restoration and replacement of any other Leasehold Improvements and
Tenant's Property.
21. INDEMNIFICATION.
a. Tenant shall indemnify and hold Landlord harmless against and from
liability and claims of any kind for loss or damage to property of Tenant
or any other person, or for any injury to or death of any person, arising
out of: (1) Tenant's use and occupancy of the Premises, or any work,
activity or other things allowed or suffered by Tenant to be done in, on or
about the Premises; (2) any breach of default by Tenant of any of Tenant's
obligations under this Lease; or (3) any negligent or otherwise tortious
act or omission of Tenant, its agents, employees, invitees or contractors.
Tenant shall at Tenant's expense, and by counsel satisfactory to Landlord,
defend Landlord in any action or proceeding arising from any such claim and
shall indemnify Landlord against all costs, attorneys' fees, expert witness
fees and any other expenses incurred in such action or proceeding. As a
material part of the consideration for Landlord's execution of this Lease,
Tenant hereby assumes all risk of damage or injury to any person or
property in, on or about the Premises from any cause.
b. Landlord shall not be liable for injury or damage which may be sustained
by the person or property of Tenant, its employees, invitees or customers,
or any other person in or about the Premises, caused by or resulting from
fire, steam, electricity, gas, water or rain which may leak or flow from or
into any part of the Premises, or from the breakage, leakage, obstruction
or other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, whether such damage or injury results
from conditions arising upon the Premises or upon other portions of the
Building or Project or from other sources. Landlord shall not be liable for
any damages arising from any act or omission of any other tenant of the
Building or Project.
22. TENANT'S INSURANCE.
a. All insurance required to be carried by Tenant hereunder shall be issued
by responsible insurance companies acceptable to Landlord and Landlord's
lender and qualified to do business in the State. Each policy shall name
Landlord, and at Landlord's request any mortgagee of Landlord, as an
additional insured, as their respective interests may appear. Each policy
shall contain (i) a cross-liability endorsement, (ii) a provision that such
policy and the coverage evidenced thereby shall be primary and
non-contributing with respect to any policies carried by Landlord and that
any coverage carried by Landlord shall be excess insurance, and (iii) a
waiver by the insurer of any right of subrogation against Landlord, its
agents, employees and representatives, which arises or might arise by
reason of any payment under such policy or by reason of any act or omission
of Landlord, its agents, employees or representatives. A copy of each paid
up policy (authenticated by the insurer) or certificate of the insurer
evidencing the existence and amount of each insurance policy required
hereunder shall be delivered to Landlord before the date Tenant is first
given the right of possession of the Premises, and thereafter within thirty
(30) days after any demand by Landlord therefor. Landlord may, at any time
and from time to time, inspect and/or copy any insurance policies required
to be maintained by Tenant hereunder. No such policy shall be cancellable
except after twenty (20) days written notice to Landlord and Landlord's
lender. Tenant shall furnish Landlord with renewals or "binders" of any
such policy at least ten (10) days prior to the expiration thereof. Tenant
agrees that if Tenant does not take out and maintain such insurance,
Landlord may (but shall not be required to) procure said insurance on
Tenant's behalf and charge the Tenant the premiums together with a
twenty-five percent (25%) handling charge, payable upon demand. Tenant
shall have the right to provide such insurance coverage pursuant to blanket
policies obtained by the Tenant, provided such blanket policies expressly
afford coverage to the Premises, Landlord, Landlord's mortgagee and Tenant
as required by this Lease.
b. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall procure,
pay for and maintain in effect policies of casualty insurance covering (i)
all Leasehold Improvements (including any alterations, additions or
improvements as may be made by Tenant pursuant to the provisions of Article
12 hereof), and (ii) trade fixtures, merchandise and other personal
property from time to time in, on or about the Premises, in an amount not
less than one hundred percent (100%) of their actual replacement cost from
time to time, providing protection against any peril included within the
classification "Fire and Extended Coverage" together with insurance against
sprinkler damage, vandalism and malicious mischief. The proceeds of such
insurance shall be used for the repair or replacement of the property so
insured. Upon termination of this Lease following a casualty as set forth
herein, the proceeds under (i) shall be paid to Landlord, and the proceeds
under (ii) above shall be paid to Tenant.
c. Beginning on the date Tenant is give access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall procure,
pay for and maintain in effect workers' compensation insurance as required
by law and comprehensive public liability and property damage insurance
with respect to the construction of improvements on the Premises, the use,
operation or condition of the Premises and the operations of Tenant in, on
or about the Premises, providing personal injury and broad form property
damage coverage for not less than One Million Dollars ($1,000,000.00)
combined single limit for bodily injury, death and property damage
liability.
d. Not less than every three (3) years during the Term, Landlord and
Tenant shall mutually agree to increases in all of Tenant's insurance
policy limits for all insurance to be carried by Tenant as set forth in
this Article. In the event Landlord and Tenant cannot mutually agree upon
the amounts of said increases, then Tenant agrees that all insurance
policy limits as set forth in this Article shall be adjusted for increases
in the cost of living in the same manner as is set forth in Section 5.2
hereof for the adjustment of the Base Rent.
(9)
<PAGE> 32
23. WAIVER OF SUBROGATION.
Landlord and Tenant each hereby waive all rights of recovery against the other
and against the officers, employees, agents and representatives of the other,
on account of loss by or damage to the waiving party of its property or the
property of others under its control, to the extent that such loss or damage is
insured against under any fire and extended coverage insurance policy which
either may have in force at the time of the loss or damage. Tenant shall, upon
obtaining the policies of insurance required under this Lease, give notice to
its insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.
24. SUBORDINATION AND ATTORNMENT.
Upon written request of Landlord, or any first mortgagee or first deed of trust
beneficiary of Landlord, or ground lessor of Landlord, Tenant shall, in
writing, subordinate its rights under this Lease to the lien of any first
mortgage or first deed of trust, or to the interest of any lease in which
Landlord is lessee, and to all advances made or hereafter to be made
thereunder. However, before signing any subordination agreement, Tenant shall
have the right to obtain from any lender or lessor or Landlord requesting such
subordination, an agreement in writing providing that, as long as Tenant is not
in default hereunder, this Lease shall remain in effect for the full Term. The
holder of any security interest may, upon written notice to Tenant, elect to
have this Lease prior to its security interest regardless of the time of the
granting or recording of such security interest.
In the event of any foreclosure sale, transfer in lieu of foreclosure or
termination of the lease in which Landlord is lessee, Tenant shall attorn to
the purchaser, transferee or lessor as the case may be, and recognize that
party as Landlord under this Lease, provided such party acquires and accepts
the Premises subject to this Lease.
25. TENANT ESTOPPEL CERTIFICATES.
Within ten (10) days after written request from Landlord, Tenant shall execute
and deliver to Landlord or Landlord's designee, a written statement certifying
(a) that this Lease is unmodified and in full force and effect, or is in full
force and effect as modified and stating the modifications; (b) the amount of
Base Rent and the date to which Base Rent and additional rent have been paid in
advance; (c) the amount of any security deposited with Landlord; and (d) that
Landlord is not in default hereunder or, if Landlord is claimed to be in
default, stating the nature of any claimed default. Any such statement may be
relied upon by a purchaser, assignee or lender. Tenant's failure to execute and
deliver such statement within the time required shall at Landlord's election be
a default under this Lease and shall also be conclusive upon Tenant that: (1)
this Lease is in full force and effect and has not been modified except as
represented by Landlord; (2) there are no uncured defaults in Landlord's
performance and that Tenant has no right of offset, counter-claim or deduction
against Rent; and (3) not more than one month's Rent has been paid in advance.
26. TRANSFER OF LANDLORD'S INTEREST.
In the event of any sale or transfer by Landlord of the Premises, Building or
Project, and assignment of this Lease by Landlord, Landlord shall be and is
hereby entirely freed and relieved of any and all liability and obligations
contained in or derived from this Lease arising out of any act, occurrence or
omission relating to the Premises, Building, Project or Lease occurring after
the consummation of such sale or transfer, providing the purchaser shall
expressly assume all of the covenants and obligations of Landlord under this
Lease. If any security deposit or prepaid Rent has been paid by Tenant,
Landlord may transfer the security deposit or prepaid Rent to Landlord's
successor and upon such transfer, Landlord shall be relieved of any and all
further liability with respect thereto.
27. DEFAULT.
27.1. Tenant's Default. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:
a. If Tenant abandons or vacates the Premises; or
b. If Tenant fails to pay any Rent or any other charges required to be paid
by Tenant under this Lease and such failure continues for five (5) days
after such payment is due and payable; or
C. If tenant fails to promptly and fully perform any other covenant,
condition or agreement contained in this Lease and such failure continues
for thirty (30) days after written notice thereof from Landlord to Tenant;
or
d. If a writ of attachment or execution is levied on this Lease or on any
of Tenant's Property; or
e. If Tenant makes a general assignment for the benefit of creditors, or
provides for an arrangement, composition, extension or adjustment with its
creditors; or
f. If Tenant files a voluntary petition for relief or if a petition against
Tenant in a proceeding under the federal bankruptcy laws or other
insolvency laws is filed and not withdrawn or dismissed within forty-five
(45) days thereafter, of if under the provisions of any law providing for
reorganization or winding up of corporations, any court of competent
jurisdiction assumes jurisdiction, custody or control of Tenant or any
substantial part of its property and such jurisdiction, custody or control
remains in force unrelinquished, unstayed or unterminated for a period of
forty-five (45) days; or
g. If in any proceeding or action in which Tenant is a party, a trustee,
receiver, agent or custodian is appointed to take charge of the Premises or
Tenant's Property (or has the authority to do so) for the purpose of
enforcing a lien against the Premises or Tenant's Property; or
h. If Tenant is a partnership or consists of more than one(1) person or
entity, if any partner of the partnership or other person or entity is
involved in any of the acts or events described in subparagraphs d through
g above.
27.2. Remedies. In the event of Tenant's default hereunder, then in addition to
any other rights or remedies Landlord may have under any law, Landlord shall
have the right, at Landlord's option, without further notice or demand of any
kind to do the following:
a. Terminate this Lease and Tenant's right to possession of the Premises
and reenter the Premises and take possession thereof, and Tenant shall have
no further claim to the Premises or under this Lease; or
b. Continue this Lease in effect, reenter and occupy the Premises for the
account of Tenant, and collect any unpaid Rent or other charges which have
or thereafter become due and payable; or
c. Reenter the Premises under the provisions of subparagraph b, and
thereafter elect to terminate this Lease and Tenant's right to possession
of the Premises.
(10)
<PAGE> 33
If Landlord reenters the Premises under the provisions of subparagraphs b or c
above, Landlord shall not be deemed to have terminated this Lease or the
obligation of Tenant to pay any Rent or other charges thereafter accruing,
unless Landlord notifies Tenant in writing of Landlord's election to terminate
this Lease. In the event of any reentry or retaking of possession by Landlord,
Landlord shall have the right, but not the obligation, to remove all or any part
of Tenant's Property in the Premises and to place such property in storage at a
public warehouse at the expense and risk of Tenant. If Landlord elects to relet
the Premises for the account of Tenant, the rent received by Landlord from such
reletting shall be applied as follows: first, to the payment of any indebtedness
other than Rent due hereunder from Tenant to Landlord; second, to the payment of
any costs of such reletting; third, to the payment of the cost of any
alterations or repairs to the Premises; fourth to the payment of Rent due and
unpaid hereunder; and the balance, if any, shall be held by Landlord and applied
in payment of future Rent as it becomes due. If that portion of rent received
from the reletting which is applied against the Rent due hereunder is less than
the amount of the Rent due, Tenant shall pay the deficiency to Landlord promptly
upon demand by Landlord. Such deficiency shall be calculated and paid monthly.
Tenant shall also pay to Landlord, as soon as determined, any costs and expenses
incurred by Landlord in connection with such reletting or in making alterations
and repairs to the Premises, which are not covered by the rent received from the
reletting.
Should Landlord elect to terminate this Lease under the provisions of
subparagraph a or c above, Landlord may recover as damages from Tenant the
following:
1. Past Rent. The worth at the time of the award of any unpaid Rent which
had been earned at the time of termination; plus
2. Rent Prior to Award. The worth at the time of the award of the amount by
which the unpaid Rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
3. Rent After Award. The worth at the time of the award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of the rental loss that Tenant proves could be
reasonably avoided; plus
4. Proximately Caused Damages. Any other amount necessary to compensate
Landlord for all detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not limited to,
any costs or expenses (including attorneys' fees), incurred by Landlord in
(a) retaking possession of the Premises, (b) maintaining the Premises after
Tenant's default, (c) preparing the Premises for reletting to a new tenant,
including any repairs or alterations, and (d) reletting the Premises,
including broker's commissions.
"The worth at the time of the award" as used in subparagraphs 1 and 2 above, is
to be computed by allowing interest at the rate of ten percent (10%) per annum.
"The worth at the time of the award" as used in subparagraph 3 above, is to be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank situated nearest to the Premises at the time of the award plus one percent
(1%).
The waiver by Landlord of any breach of any term, covenant or condition of this
Lease shall not be deemed a waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or condition.
Acceptance of Rent by Landlord subsequent to any breach hereof shall not be
deemed a waiver of any preceding breach other than the failure to pay the
particular Rent so accepted, regardless of Landlord's knowledge of any breach at
the time of such acceptance of Rent. Landlord shall not be deemed to have waived
any term, covenant or condition unless Landlord gives Tenant written notice of
such waiver.
27.3 Landlord's Default. If Landlord fails to perform any covenant, condition or
agreement contained in this Lease within thirty (30) days after receipt of
written notice from Tenant specifying such default, or if such default cannot
reasonably be cured within thirty (30) days, if Landlord fails to commence to
cure within that thirty (30) day period, then Landlord shall be liable to Tenant
for any damages sustained by Tenant as a result of Landlord's breach; provided,
however, it is expressly understood and agreed that if Tenant obtains a money
judgment against Landlord resulting from any default or other claim arising
under this Lease, that judgment shall be satisfied only out of the rents,
issues, profits, and other income actually received on account of Landlord's
right, title and interest in the Premises, Building or Project, and no other
real, personal or mixed property of Landlord (or of any of the partners which
comprise Landlord, if any) wherever situated, shall be subject to levy to
satisfy such judgment. If, after notice to Landlord of default, Landlord (or any
first mortgagee or first deed of trust beneficiary of Landlord) fails to cure
the default as provided herein, then Tenant shall have the right to cure that
default at Landlord's expense. Tenant shall not have the right to terminate this
Lease or to withhold, reduce or offset any amount against any payments of Rent
or any other charges due and payable under this Lease except as otherwise
specifically provided herein.
28. BROKERAGE FEES.
Tenant warrants and represents that it has not dealt with any real estate broker
or agent in connection with this Lease or its negotiation except those noted in
Section 2.c. Tenant shall indemnify and hold Landlord harmless from any cost,
expense or liability (including costs of suit and reasonable attorneys' fees)
for any compensation, commission or fees claimed by any other real estate broker
or agent in connection with this Lease or its negotiation by reason of any act
of Tenant.
29. NOTICES.
All notices, approvals and demands permitted or required to be given under this
Lease shall be in writing and deemed duly served or given if personally
delivered or sent by certified or registered U.S. mail, postage prepaid, and
addressed as follows: (a) if to Landlord, to Landlord's Mailing Address and to
the Building manager, and (b) if to Tenant, to Tenant's Mailing Address;
provided, however, notices to Tenant shall be deemed duly served or given if
delivered or mailed to Tenant at the Premises. Landlord and Tenant may from time
to time by notice to the other designate another place for receipt of future
notices.
30. GOVERNMENT ENERGY OR UTILITY CONTROLS.
In the event of imposition of federal, state or local government controls,
rules, regulations, or restrictions on the use or consumption of energy or other
utilities during the Term, both Landlord and Tenant shall be bound thereby. In
the event of a difference in interpretation by Landlord and Tenant of any such
controls, the interpretation of Landlord shall prevail, and Landlord shall have
the right to enforce compliance therewith, including the right of entry into the
Premises to effect compliance.
31. RELOCATION OF PREMISES.
Landlord shall have the right to relocate the Premises to another part of the
Building in accordance with the following:
(11)
<PAGE> 34
a. The new premises shall be substantially the same in size, dimensions,
configuration, decor and nature as the Premises described in this Lease,
and if the relocation occurs after the Commencement Date, shall be placed
in that condition by Landlord at its cost.
b. Landlord shall give Tenant at least thirty (30) days written notice of
Landlord's intention to relocate the Premises.
c. As nearly as practicable, the physical relocation of the Premises shall
take place on a weekend and shall be completed before the following Monday.
If the physical relocation has not been completed in that time, Base Rent
shall abate in full from the time the physical relocation commences to the
time it is completed. Upon completion of such relocation, the new premises
shall become the "Premises" under this Lease.
d. All reasonable costs incurred by Tenant as a result of the relocation
shall be paid by Landlord.
e. If the new premises are smaller than the Premises as it existed before
the relocation, Base Rent shall be reduced proportionately.
f. The parties hereto shall immediately execute an amendment to this Lease
setting forth the relocation of the Premises and the reduction of Base
Rent, if any.
32. QUIET ENJOYMENT.
Tenant, upon paying the Rent and performing all of its obligations under this
Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of
this Lease and to any mortgage, lease, or other agreement to which this Lease
may be subordinate.
33. OBSERVANCE OF LAW.
Tenant shall not use the Premises or permit anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted
or promulgated. Tenant shall, at its sole cost and expense, promptly comply with
all laws, statutes, ordinances and governmental rules, regulations or
requirements now in force or which may hereafter be in force, and with the
requirements of any board of fire insurance underwriters or other similar bodies
now or hereafter constituted, relating to, or affecting the condition, use of
occupancy of the Premises, excluding structural changes not related to or
affected by Tenant's improvement or acts. The judgment of any court of competent
jurisdiction or the admission of Tenant in any action against Tenant, whether
Landlord is a party thereto or not, that Tenant has violated any law, ordinance
or governmental rule, regulation or requirement, shall be conclusive of that
fact as between Landlord and Tenant.
34. FORCE MAJEURE.
Any prevention, delay or stoppage of work to be performed by Landlord or Tenant
which is due to strikes, labor disputes, inability to obtain labor, materials,
equipment or reasonable substitutes therefor, acts of God, governmental
restrictions or regulations or controls, judicial orders, enemy or hostile
government actions, civil commotion, fire or other casualty, or other causes
beyond the reasonable control of the party obligated to perform hereunder, shall
excuse performance of the work by that party for a period equal to the duration
of that prevention, delay or stoppage. Nothing in this Article 34 shall excuse
or delay Tenant's obligation to pay Rent or other charges under this Lease.
35. CURING TENANT'S DEFAULTS.
If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to) without waiving such
default, perform the same for the account at the expense of Tenant. Tenant shall
pay Landlord all costs of such performance promptly upon receipt of a bill
therefor.
36. SIGN CONTROL.
Tenant shall not affix, paint, erect or inscribe any sign, projection, awning,
signal or advertisement of any kind to any part of the Premises, Building or
Project, including without limitation, the inside or outside of windows or
doors, without the written consent of Landlord. Landlord shall have the right to
remove any signs or other matter, installed without Landlord's permission,
without being liable to Tenant by reason of such removal, and to charge the cost
of removal to Tenant as additional rent hereunder, payable within ten (10) days
of written demand by Landlord.
37. MISCELLANEOUS.
a. Accord and Satisfaction; Allocation of Payments. No payment by Tenant or
receipt by Landlord of a lesser amount than the Rent provided for in this Lease
shall be deemed to be other than on account of the earliest due Rent, nor shall
any endorsement or statement on any check or letter accompanying any check or
payment as Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of the Rent or pursue any other remedy provided for in this Lease. In
connection with the foregoing, Landlord shall have the absolute right in its
sole discretion to apply any payment received from Tenant to any account or
other payment of Tenant then not current and due or delinquent.
b. Addenda. If any provision contained in an addendum to this Lease is
inconsistent with any other provision herein, the provision contained in the
addendum shall control, unless otherwise provided in the addendum.
c. Attorneys' Fees. If any action or proceeding is brought by either party
against the other pertaining to or arising out of this Lease, the finally
prevailing party shall be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred on account of such action or proceeding.
d. Captions, Articles and Section Numbers. The captions appearing within the
body of this Lease have been inserted as a matter of convenience and for
reference only and in no way define, limit or enlarge the scope or meaning of
this Lease. All references to Article and Section numbers refer to Articles and
Sections in this Lease.
e. Changes Requested by Lender. Neither Landlord or Tenant shall unreasonably
withhold its consent to changes or amendments to this Lease requested by the
lender on Landlord's interest, so long as these changes do not alter the basic
business terms of this Lease or otherwise materially diminish any rights or
materially increase any obligations of the party from whom consent to such
change or amendment is requested.
f. Choices of Law. This Lease shall be construed and enforced in accordance with
the laws of the State.
g. Consent. Notwithstanding anything contained in this Lease to the contrary,
Tenant shall have no claim, and hereby waives the right to any claim against
Landlord for money damages by reason of any refusal, withholding or delaying by
Landlord of any consent, approval or statement of satisfaction, and in such
event, Tenant's only remedies therefor shall be an action for specific
performance, injunction or declaratory judgment to enforce any right to such
consent, etc.
(12)
<PAGE> 35
h. Corporate Authority. If tenant is a corporation, each individual signing this
Lease on behalf of Tenant represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of the corporation, and that this Lease
is binding on Tenant in accordance with its terms. Tenant shall, at Landlord's
request, deliver a certified copy of a resolution of its board of directors
authorizing such execution.
i. Counterparts. This Lease may be executed in multiple counterparts, all of
which shall constitute one and the same Lease.
j. Execution of Lease; No Option. The submission of this Lease to Tenant shall
be for examination purposes only, and does not and shall not constitute a
reservation of or option for Tenant to lease, or otherwise create any interest
of Tenant in the Premises or any other premises within the Building or Project.
Execution of this Lease by Tenant and its return to Landlord shall not be
binding on Landlord notwithstanding any time interval, until Landlord has in
fact signed and delivered this Lease to Tenant.
k. Furnishing of Financial Statements; Tenant's Representations. In order to
induce Landlord to enter into this Lease Tenant agrees that it shall promptly
furnish Landlord, from time to time, upon Landlord's written request, with
financial statements reflecting Tenant's current financial condition. Tenant
represents and warrants that all financial statements, records and information
furnished by Tenant to Landlord in connection with this Lease are true, correct
and complete in all respects.
l. Further Assurances. The parties agree to promptly sign all documents
reasonably requested to give effect to the provisions of this Lease.
m. Mortgagee Protection. Tenant agrees to send by certified or registered mail
to any first mortgagee or first deed of trust beneficiary of Landlord whose
address has been furnished to Tenant, a copy of any notice of default served by
Tenant on Landlord. If Landlord fails to cure such default within the time
provided for in this Lease, such mortgagee or beneficiary shall have an
additional thirty (30) days to cure such default; provided that if such default
cannot reasonably be cured within that thirty (30) day period, then such
mortgagee or beneficiary shall have such additional time to cure the default as
is reasonably necessary under the circumstances.
n. Prior Agreements; Amendments. This Lease contains all of the agreements of
the parties with respect to any matter covered or mentioned in this Lease, and
no prior agreement or understanding pertaining to any such matter shall be
effective for any purpose. No provisions of this Lease may be amended or added
to except by an agreement in writing signed by the parties or their respective
successors in interest.
o. Recording. Tenant shall not record this Lease without the prior written
consent of Landlord. Tenant, upon the request of Landlord, shall execute and
acknowledge a "short form" memorandum of this Lease for recording purposes.
p. Severability. A final determination by a court of competent jurisdiction
that any provision of this Lease is invalid shall not affect the validity of
any other provision, and any provision so determined to be invalid shall, to
the extent possible, be construed to accomplish its intended effect.
q. Successors and Assigns. This Lease shall apply to and bind the heirs,
personal representatives, and permitted successors and assigns of the parties.
r. Time of the Essence. Time is of the essence of this Lease.
s. Waiver. No delay or omission in the exercise of any right or remedy of
Landlord upon any default by Tenant shall impair such right or remedy or be
construed as a waiver of such default.
t. Compliance. The parties hereto agree to comply with all applicable federal,
state and local laws, regulations, codes, ordinances and administrative orders
having jurisdiction over the parties, property or the subject matter of this
Agreement, including, but not limited to, the 1964 Civil Rights act and all
amendments thereto, the Foreign Investment In Real Property Tax Act, the
Comprehensive Environmental Response Compensation and Liability Act, and The
Americans With Disabilities Act.
The receipt and acceptance by Landlord of delinquent Rent shall not constitute
a waiver of any other default; it shall constitute only a waiver of timely
payment for the particular Rent payment involved.
No act or conduct of Landlord, including, without limitation, the acceptance of
keys to the Premises, shall constitute an acceptance of the surrender of the
Premises by Tenant before the expiration of the Term. Only a written notice
from Landlord to Tenant shall constitute acceptance of the surrender of the
Premises and accomplish a termination of the Lease.
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent to or approval of any subsequent act by Tenant.
Any waiver by Landlord of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of the
Lease.
The parties hereto have executed this Lease as of the dates set forth below.
Date: Date: Feb 13 1995
----------------------------
Landlord: North Coast Business Park, Tenant: Interactive Telesis, Inc.
a California Limited Partnership
By: /s/ DON CAMERON]
By: /s/ [Signature Illegible] ----------------------------
---------------------------- Don Cameron
Title: President
Title: ----------------------------
----------------------------
Title: Property Manager By:
----------------------------
Title:
----------------------------
===============================================================================
CONSULT YOUR ADVISORS -- This document has been prepared for approval by your
attorney. No representation or recommendation is made by CB Commercial as to
the legal sufficiency or tax consequences of this document or the transaction
to which it relates. These are questions for your attorney.
In any real estate transaction, it is recommended that you consult with a
professional, such as a civil engineer, industrial hygienist or other person,
with experience in evaluating the condition of the property, including the
possible presence of asbestos, hazardous materials and underground storage
tanks.
===============================================================================
(13)
<PAGE> 36
ADDENDUM NUMBER ONE TO LEASE DATED FEBRUARY 13,1995, BY AND BETWEEN THE NORTH
COAST BUSINESS PARK, A CALIFORNIA LIMITED PARTNERSHIP, AS LANDLORD AND
INTERNATIONAL TELESIS, A BRITISH COLUMBIA COMPANY, AS TENANT.
- --------------------------------------------------------------------------------
43. OPTIONS TO RENEW:
Provided that Tenant has not been in default of its Lease, Landlord
shall grant Tenant the option to renew the lease at the lease rate
outlined in the Base Rent Schedule below. Tenant shall give Landlord
three months prior written notice of his intention to exercise said
option.
44. BARE RENT SCHEDULE:
Tenant shall pay Landlord base rent according to the following schedule.
First Option: Months 13 - 24: $1,021.20 per month.
Base Rent includes all common area maintenance, insurance, management
fees, common area utilities and taxes. Utilities will be separately
metered and paid by Tenant. Janitorial services will be paid separately
by Tenant.
45. IMPROVEMENTS:
Tenant accepts the premises in an "as is" condition with the following
exceptions:
Suite to be painted, all carpets cleaned, ceiling tiles to be replaced,
leaks in roof/walls to be repaired.
46. ABATEMENT:
Rent for the months 2 and 3 of this Lease shall be $.70 per square foot
or $621.50 per month.
CONSULT YOUR ATTORNEY/ADVISOR - This document has been prepared for approval by
your attorney. No representation or recommendation is made by CB COMMERCIAL REAL
ESTATE GROUP, INC. or the agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this document or the transaction to which it
relates. These are questions for your attorney.
In any real estate transaction it is recommended that you consult with a
professional, such as a civil engineer, industrial hygienist or other person
with experience in evaluating the condition of the property, including the
possible presence of asbestos, hazardous materials and underground storage
tanks.
<PAGE> 37
EXHIBIT "A"
FLOOR PLAN
<PAGE> 38
EXHIBIT B
SITE PLAN
<PAGE> 39
EXHIBIT D
RULES AND REGULATIONS
GENERAL RULES
1. Lessee shall not suffer or permit the obstruction of any Common Areas,
including driveways, walkways and stairways.
2. Lessor reserves the right to refuse access to any persons Lessor in good
faith judges to be a threat to the safety, reputation, or property of the Office
Building Project and its occupants.
3. Lessee shall not make or permit any noise or odors that annoy or interfere
with other lessees or persons having business within the Office Building
Project.
4. Lessee 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. Lessee shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.
6. Lessee shall not alter any lock or install new or additional locks or bolts
without Lessor's prior written consent.
7. Lessee shall be responsible for the inappropriate use of any toilet rooms,
plumbing or other utilities. No foreign substance of any kind are to be inserted
therein.
8. Lessee shall not deface the walls, partitions or other surfaces of the
Premises or the Office Building Project.
9. Lessee shall not suffer or permit any thing in or around the Premises or
Building that causes excessive vibration or floor loading in any part of the
Office Building Project.
10. Furniture, freight and equipment shall be moved into or out of the building
only with Lessor's knowledge and consent, and subject to such reasonable
limitations, techniques and timing, as may be designated by Lessor. Lessee shall
be responsible for any damage to the Premises, Building and Office Building
Project arising from any such activity.
11. Lessee shall not employ any service or contractor for services or work to be
performed in the Building, except as approved by Lessor.
12. Lessor reserves the right to close and lock the Building on Saturdays,
Sundays, and legal holidays. If Lessee uses the Premises during such periods,
Lessee shall be responsible for securely locking any doors it may have opened
for entry.
13. Lessee 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 Lessee.
15. No Lessee, employee or invitee shall go upon the roof of the Building.
16. Lessee shall not suffer or permit smoking or carrying of lighted cigars in
areas reasonably designated by Lessor or by applicable governmental agencies as
non-smoking areas.
<PAGE> 40
EXHIBIT E
SIGN CRITERIA
NORTH COAST BUSINESS PARK
This criteria establish the uniform sign policies for North Coast Business Park.
This criteria has been established for the purpose of maintaining the overall
signage appearance of the project. Conformance to this sign criteria will be
strictly enforced by Lessor. Any sign installed that does not conform to this
sign criteria will be brought into conformity at the expense of Lessee or
removed.
A. GENERAL REQUIREMENTS
1. Sample drawings of the size and shape of approved signage is
shown on the attached sheet.
2. Lessor shall approve all signage prior to the fabrication of the
sign.
3. Lessor shall direct the placement of all Lessee signs and the
method of attachment to the building.
4. Lessee to be limited to identity of the company name (buildings
1, 3 & 7 if plexiglas can sign or channel letters are used) and
secondary description copy (Logos optional). Building 1
plexiglas can sign or channel letter signage is limited to area
over front entry facing parking lot.
5. Lessee shall be responsible for the fulfillment of all
requirements for this criteria.
B. GENERAL SPECIFICATIONS
1. Lessee Building Identification (Bldg. 1-3-7 Only)
A. Plexiglas Can Sign
1. Lessee is allowed one (1) square foot of signage
for each linear foot of suite frontage (sign
length limitations apply).
2. Signs shall conform to three sizes (3' x 8'),
(3' x 10') or (3' x 12'). Actual size to be
determined by front footage.
3. Can returns shall be dark grey in color. All
other colors shall be approved by Lessor.
4. All signs shall conform to City of Encinitas
specifications through a sign and building
permit.
5. Lessee must submit sign criteria for Lessor's
approval prior to fabrication of sign.
Non-conforming signage will be brought into
conformity at the expense of Lessee or removed.
6. Lessee shall be responsible to maintain signage
in a first class condition at Lessee's expense.
7. Plexiglas can signage shall be fabricated,
permitted and installed at Lessee's expense.
Installation shall be strictly supervised by
Lessor. Damage to building, premises or common
areas resulting from sign installation,
maintenance or removal shall be repaired by
Lessor at Lessee's expense.
<PAGE> 41
17. Lessee shall not use any method of heating or air conditioning other than as
provided by Lessor.
18. Lessee shall not install, maintain or operate any vending machines upon the
Premises without Lessor's written consent.
19. The Premises shall not be used for lodging or manufacturing, cooking or
commercial food preparation.
20. Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.
21. Lessor reserves the right to waive any one of these rules or regulations,
and/or as to any particular Lessee, and any such waiver shall not constitute a
waiver of any other rule or regulation or any subsequent application thereof to
such Lessee.
22. Lessee assumes all risks from a theft or vandalism and agrees to keep its
Premises locked as may be required.
23. Lessor 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. Lessee
agrees to abide by these and such rules and regulations.
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." Vehicles
other than Permitted Size Vehicles are referred to herein as "Oversized
Vehicles."
2. Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers, customers, or
invites to be loaded, unloaded, or parked in areas other than those designated
by Lessor for such activities.
3. Users of the parking area will obey all posted signs and park only in areas
designated for vehicle parking.
4. Unless otherwise instructed, every person using the parking area is required
to park and lock his own vehicle. Lessor will not be responsible for any damage
to vehicles, injury to persons or loss of property, all of which are risks
assumed by the party using the parking area.
5. The maintenance, washing, waxing or cleaning of vehicles in the parking lot
or Common Areas is prohibited.
6. Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers, customers, or
invites to remain parked in the parking lot or Common Area for more than 24
consecutive hours.
7. Lessee shall be responsible for seeing that all of its employees, agents and
invites comply with the applicable parking rules, regulations, laws and
agreements.
8. Lessor reserves the right to modify these rules and/or adopt such other
reasonable rules and regulations as it may deem necessary for the proper
operation of the parking area.
9. Such parking use as is herein provided in intended merely as a license only
and no bailment is intended or shall be created hereby.
<PAGE> 42
SIGN CRITERIA
NORTH COAST BUSINESS PARK
B. Internally Illuminated Channel Letter Bldg. 1-3-7 Only
1. Lessee is allowed one (1) square foot of signage for each linear
foot of suite frontage.
2. Lessee must submit sign criteria for Lessor's approval prior to
fabrication of sign. Non-conforming signage will be brought into
conformity at the expense of Lessee or removed.
3. Lessee shall be responsible to maintain signage in a first class
condition at Lessee's expense.
4. Channel letter signs shall be fabricated, permitted and
installed at Lessee's expense. Installation shall be strictly
supervised by Lessor. Damage to building, premises or common
areas resulting from sign installation, maintenance or removal
shall be repaired by Lessor at Lessee's expense.
2. Lessee Entry Identification
A. 2' X 4' Monolith Sign (Aluminum box).
B. All copy to be white optima bold on a green background to match
existing.
C. Installed at planter area in front of suite.
D. Monolith signage shall be installed by Lessor at Lessee's expense.
3. Lessee Window Identification
A. Type face to be Helvetica Style. 1/2" height - Upper and lower case.
B. All white in color.
C. Mounted flush R/L on either side of door.
D. No more than four (4) lines of copy.
E. Window signage shall be installed by Lessor at Lessee's expense.
Page 2 of 3
<PAGE> 43
GENERAL SIGN CRITERIA
TYPICAL WINDOW.
213 WHITE VINYL - UPPER/LOWER CASE
HELVETICA STYLE-1 1/2" HEIGHT.
MOUNTED JUSTIFIED (RIGHT OR LEFT)
NEXT TO FRONT ENTRY DOOR.
NORTH COAST
MANAGEMENT ALL BUILDINGS
NORHT COAST
MANAGEMENT
TYPICAL PLEXIGLAS SIGN
CAN WITH PLEX FACE [OR]
INDIVIDUAL CHANNEL LETTERS.
NOT TO EXCEED 36 SQ. FT
NORTH COAST MANAGEMENT
WILL APPROVE ALL COLORS
AND DESIGNS.
(LOGOS ARE OPTIONAL)
BLDGS 1, 3 & 7 ONLY
NORTH COAST
MANAGEMENT
213 TYPICAL MONOLITHE SIGN
2' X 4' ALUMINUM BOX
GREEN COPY AREA WITH
WHITE VINYL LETTERS
(OPTIMA BOLD STYLE)
ALL BLDGS
<PAGE> 44
EXHIBIT
GUARANTEE OF LEASE
WHEREAS, a certain Lease of even date herewith has been, or will be,
executed by and between NORTH COAST BUSINESS PARK (therein and herein referred
to as "Landlord"), and INTERACTIVE TELESIS, INC. (therein and herein referred to
as "Tenant"), covering certain premises in the City of Encinitas, County of San
Diego, State of California; and
WHEREAS, the Landlord under said Lease requires, as a condition to its
execution of said Lease, that the undersigned guarantee the full performance of
the obligations of Tenant under said Lease; and
WHEREAS, the undersigned is desirous that Landlord enter into said Lease
with Tenant,
NOW, THEREFORE, In consideration of the execution of said Lease by
Landlord, the undersigned hereby unconditionally guarantees the prompt and full
performance of each and all of the terms, covenants and conditions of said Lease
to be kept and performed by said Tenant, including the payment of all rentals
and other charges to accrue thereunder. The undersigned further agrees as
follows:
1. That this covenant and agreement on its part shall continue in favor
of the Landlord, notwithstanding any extension, modification or alteration of
said Lease entered into by and between the parties thereto, or their successors
or assigns, or notwithstanding any assignment of said Lease, with or without the
consent of the Landlord, or the release of the Tenant, or the forfeiture or
termination of the Lease by Landlord, as provided for therein, and no extension,
modification, alteration or assignment of the above-referred to Lease shall, in
any manner, release or discharge the undersigned, and it does hereby consent
thereto.
2. This Guarantee will continue unchanged by any bankruptcy,
reorganization or insolvency of the Tenant or any successor or assignee thereof,
or by any disaffirmance or abandonment by a trustee of Tenant.
3. Landlord may, without notice, assign this Guarantee of Lease in
whole or in part, and no assignment or transfer of the Lease shall operate to
extinguish or diminish the liability of the undersigned hereunder.
4. The liability of the undersigned under this Guarantee of Lease shall
be primary and that in any right of action which shall accrue to Landlord under
the Lease, the Landlord may, at its option, proceed against the undersigned
without having commenced any action, or having obtained any judgment against the
Tenant or any co-guarantor.
5. The undersigned waives the right to plead any and all statutes of
limitations as a defense to this guarantee and to any obligation or liability
hereby guaranteed, and agrees that any partial payments by or on behalf of the
Tenant on any obligation or liability hereby guaranteed shall, as of the time
each such payment is made, stop the running of the time within which an action
may be commenced upon this guarantee, and shall constitute a further waiver by
the undersigned of the right to plead any and all statutes of limitations as a
defense to this guarantee.
6. All debts and liabilities, present and future, of the Tenant to the
undersigned, or any of them, ire hereby postponed to the liabilities of the
Tenant to the Landlord, and all monies received by any of the undersigned or
their representatives, successors or assigns thereon, shall be received as
trustees for the Landlord and shall be paid over to the Landlord. The
undersigned, and each of them, further agree, upon any liquidation or
distribution of the assets of the Tenant, to assign to the Landlord, upon its
request, all claims on account of all such debts and liabilities to the end that
the Landlord shall receive all payments on such debts and liabilities until
payment in full of all liabilities and obligations of the Tenant to the
Landlord. This Agreement shall constitute such assignment in the event the
undersigned shall fall or refuse to execute and deliver such other and further
assignment of such claims as the Landlord may request.
Exhibit __, Page 1
<PAGE> 45
7. Where the Tenant is a corporation, partnership or other association,
or a receiver, trustee or other fiduciary, the Landlord is not to be concerned
to see or inquire into the powers of the Tenant or its directors, officers,
partners or associates, or other agents acting or purporting to act on its
behalf, the undersigned hereby representing that such powers exist and that the
representatives of the Tenant entering into the Lease in the professed exercise
of such power shall be deemed to form part of the obligations of the Tenant
guaranteed, even though the entering into of said Lease be in excess of the
powers of the Tenant or the directors, partners, officers, associates or other
agents thereof.
8. This Guarantee shall inure to the benefit of and bind the heirs,
administrators, executors, successors and assigns of the Landlord and each of
the undersigned, and shall be construed as the joint and several obligation of
each of the undersigned where there is more than one. This Guarantee shall be
construed in accordance with the laws of the State of California. Notice of
acceptance of this Guarantee is hereby waived. The use of the singular herein
shall include the plural.
9. To pay Landlord's reasonable attorneys' fees and all costs and other
expenses incurred in any collection or attempted collection or in any
negotiations relative to the obligations hereby guaranteed or enforcing this
Guarantee of Lease against the undersigned, individually and jointly.
10. That it does hereby waive notice of any demand by the Landlord, as
well as any notice of default in the payment of rent or any other amounts
contained or reserved in the Lease.
IN WITNESS WHEREOF, the undersigned has cause this Guarantee to be
executed on the date first above written.
/s/ DON CAMERON
----------------------------------------
Guarantor Don Cameron
1109 Sycamore View Dr.
----------------------------------------
Address
Encinitas CA 92024
----------------------------------------
----------------------------------------
Guarantor
----------------------------------------
Address
----------------------------------------
Exhibit __, Page 2
<PAGE> 1
EXHIBIT 10.3
[U.S. NET SOLUTIONS, INC. LETTERHEAD]
SERVICE AGREEMENT FOR U.S. NET SOLUTIONS SUPERSITE HOSTING SERVICES
<TABLE>
<CAPTION>
CLIENT INFORMATION
<S> <C>
Company Name: Interactive Telesis Order Contact - Name: David Webb
Service Address 1: 5754 Pacific Center Blvd. Order Contact - Title: I/S Director
Service Address 2: Suite 202 Order Contact - Phone: 760-632-1700
City/State/ZIP: San Diego, CA 92121 Order Contact - Fax: 760-632-1790
BILLING INFORMATION
Company Name: Interactive Telesis Billing Contact - Name: David Webb
Service Address 1: 535 Encinitas Blvd. Billing Contact - Title: I/S Director
Service Address 2: Suite 116 Billing Contact - Phone: 760-632-1700
City/State/ZIP: Encinitas, CA 92024 Tax Exempt? [ ] YES [X] NO
</TABLE>
SERVICE FEE STRUCTURE
SUPERSITE SERVICE PRICING INCLUDES FOUR KEY ELEMENTS. THESE ELEMENTS CAN BE
COMBINED AS REQUIRED TO BUILD THE CLIENT'S CUSTOMIZED SERVER CONFIGURATION:
R: Rack Space
<TABLE>
<CAPTION>
PRICING SCHEDULE
- -------------------------------------------------------------------------------
COMPONENT LIST COMMENTS
- -------------------------------------------------------------------------------
R $500/mo Full rack, including mountings.
- -------------------------------------------------------------------------------
<S> <C> <C>
Installation Fees:
1. Electrical Installation $1,248.00
- -------------------------------------------------------------------------------
CHARGES/TERM/PAYMENT SUMMARY
- -------------------------------------------------------------------------------
CHARGES:
- -------------------------------------------------------------------------------
1. Installation Fee $1,248.00 ** Client is responsible for content
installation and management.
2. Monthly Service Fee $2,000.00
MONTHLY TOTAL $2,000.00
- -------------------------------------------------------------------------------
</TABLE>
U.S. Net Solutions, Inc. Page 1 Of 16 Super Site Hosting Service
<PAGE> 2
MINIMUM COMMITMENT:
[X] One (1) Year
[ ] Two (2) Years
[ ] Three (3) Years
[ ] Other (approval required)_____________
Voluntary termination requires:
[X] Sixty (60) days
or greater term [ ] ___ days advance notice (via certified or registered mail).
FORM OF PAYMENT:
I authorize U.S. Net Solutions to charge my Visa / Master Card /account for
those charges for U.S. Net service that I may accrue from month to month. This
authorization is valid until revoked in writing.
[ ] Purchase Order Number ___________
(please include PO with check for installation and return with this form)
[ ] Credit Card - please provide the following information
[ ] VISA [ ] Master Card
Name as it appears on card:__________________________________
Card Number: __________________________ Exp. Date:___________
Authorized Signature: _______________________ Date: _________
U.S. Net Solutions, Inc. Page 2 Of 16 Super Site Hosting Service
<PAGE> 3
OTHER COMMENTS Account Executive Name / Identifier:
Bandwidth Requirements: 384 Kbps
Hardware Requirements: (Type, Model, Number of machines, Client provided):
CUSTOMER TO PROVIDE ALL SERVER HARDWARE.
Non-Standard Maintenance and Monitoring Requirements:
U.S. NET SOLUTIONS WILL PING ONE SERVER TO ASSURE THAT IT IS VISIBLE TO THE
WORLD WIDE WEB, IF NOT, U.S. NET SOLUTIONS WILL NOTIFY CUSTOMER IN A TIMELY
MANNER THAT SERVER IS NOT REPLYING TO THE PING. CLIENT WILL PAY U.S. NET
SOLUTIONS THE AMOUNT OF $150 PER HOUR, ONE-HOUR MINIMUM, IF U.S. NET SOLUTIONS
PERFORMS ANY OTHER TYPE OF MAINTENANCE/MONITORING FOR THE CLIENT. U.S. NET
SOLUTIONS WILL NOT PERFORM ANY TYPE OF MAINTENANCE THAT REQUIRES U.S. NET
SOLUTIONS PERSONNEL TO OPEN A SERVER.
"OTHER TYPE OF MAINTENANCE/MONITORING" INCLUDES BUT IS NOT LIMITED TO:
o Pushing a button
o Switching a toggle
o Setting a dip switch
o Power cycling (turning off and on) equipment
o Securing cabling to connections
o Observing, describing or reporting on indicator lights or display information
on machines or consoles
o Basic observation and reporting on local environment in U.S. Net Solutions
premises
Non-Standard Software Installation Requirements:
CLIENT IS PROVIDING ALL HARDWARE, SOFTWARE AND LICENSING. ANY INSTALLATIONS OF
ADDITIONAL SOFTWARE AND/OR HARDWARE PERFORMED BY U.S. NET SOLUTIONS PERSONNEL
WILL RESULT IN ADDITIONAL COST TO CLIENT ($250 PER HOUR, ONE-HOUR MINIMUM).
Rack Space Requirements:
4 RACKS IN SAN DIEGO FACILITY.
AUTHORIZATIONS
Please read attached Terms & Conditions. Sign below to indicate acceptance of
Order and Terms & Conditions.
CLIENT
Signature: /s/ DONALD E. CAMERON
--------------------------
Print Name: Donald E. Cameron
-------------------------
Print Title: CEO
------------------------
Date: 2-22-99
-------------------------------
U.S. NET SOLUTIONS, INC.
Signature:
--------------------------
Print Name:
-------------------------
Print Title:
------------------------
Date:
-------------------------------
U.S. Net Solutions, Inc. Page 3 Of 16 Super Site Hosting Service
<PAGE> 4
TERMS AND CONDITIONS SUPERSITE HOSTING SERVICE
These terms and conditions apply to all services involving the provision to
Client of collocated web services, which include a Provider or Client owned
server or other equipment that is to be collocated on Providers premises and
which may include use of third party software, hardware or other third party
services.
1. Payment and Installation. Any applicable non-recurring charges specified in
this Agreement, including deposits or advance payments, are due on sign up.
Monthly or quarterly service fees and collocation charges, together with
applicable taxes or charges (which will be stated separately on the invoice),
are due 30 days from date of invoice. Credit card payments will be assessed
monthly or quarterly. Late payments will be assessed a late charge of the lesser
of 1-1/2% per month or the maximum amount permitted by applicable law. Provider
will make reasonable efforts to install the Web Services by the estimated
service date specified in this Agreement but shall have no liability to Client
in event of delays, provided that Client may terminate its order if Collocated
Web Services are not installed within 30 days of the estimated service date and
Client has not caused or contributed to such delay. Term and billing will
commence when Client receives password and login information enabling Client to
use the Collocated Web Services.
2. Collocation Space. The collocation space (the Space) which is in premises
leased by Provider is described on Exhibit A. Provider agrees to allow Client to
place certain equipment (the "Equipment) as defined in Exhibit A, subject and
subordinate to the terms and provisions of the applicable lease or leases (the
Lease) between Provider or its affiliates and the landlord or landlords of the
Space. The Equipment shall be approved by Provider prior to installation in the
Space and shall not exceed the standard dimensions identified in the service fee
structure. Client hereby accepts the Space in its as is condition and
acknowledges that US Net Solutions has no obligation to make alterations,
improvements, additions, decorations or changes within the leased premises,
Space or any part thereof. In connection with the provision of the Space,
Provider shall provide to Client the installation services, remote hand services
and other space services set forth on Exhibit A hereto.
3. Term. At the expiration of the initial term stated on this Agreement or any
renewal term, unless either party has theretofore notified the other in writing
of its intention not to renew, this Agreement shall be deemed to have been
renewed for an additional term equal to the lesser of (i) the initial term
stated on this Agreement, or (ii) the longest renewal term permitted by
applicable law, provided, however, that this Agreement shall expire no later
than the date on which the Lease expires or is terminated, and provided further
that it is understood that Provider shall have no obligation to renew, extend or
keep in effect the Lease.
4. Internet Network. The Collocated Web Services offer Client access to the
international Internet network (the Network) which encompasses the facilities of
many other providers. In addition, Provider may elect to provide access to the
Network entirely or partly by resale of services of other providers. The
Collocated Web Services provided hereunder are subject to all applicable
tariffs, rules, regulations, use policies and other terms and conditions of such
other providers.
5 . Rates. Provider agrees to provide the Collocated Web Services at the rates
set forth in this Service Agreement, provided that by 60 days prior written
notice to Client, Provider may elect to change its rates after the expiration of
the initial term set forth on this Agreement. If such change in rates is an
U.S. Net Solutions, Inc. Page 4 Of 16 Super Site Hosting Service
<PAGE> 5
increase, Client may elect to terminate this Agreement by at least 30 days prior
written notice to Provider. In addition to all other charges, Client shall pay
for any electric or other utility charges attributable to the Equipment or
Clients use of the Space.
6. Content and Use. See Acceptable Use Policy, Appendix A.
7. Equipment. All right, title and interest in all facilities and associated
equipment provided by either party shall at all times remain exclusively with
such party. Neither party shall create any liens or encumbrances with respect to
such facilities or equipment of the other party. Upon termination of Collocated
Web Services, Client shall as promptly as possible and in any event within 60
days of termination, release to Provider all IP addresses provided by Provider
in connection with the Collocated Web Services. Upon termination of this
Agreement, Client shall leave the Space in as good condition (except for normal
wear and tear) as it was at the commencement of this Agreement, and shall remove
its Equipment and other property from the Space. Upon sixty (60) days' prior
written notice or, in the event of an emergency, with as much notice as may be
feasible, Provider may require Client at Clients expense to relocate the
Equipment within the leased premises, provided, however, that the site of
relocation shall afford comparable environmental conditions for the Equipment
and comparable accessibility to the Equipment. Provider shall use reasonable
efforts to maintain the Collocated Web Services in accordance with applicable
performance standards therefor and to obtain and keep in effect all rights of
way required to provide the Collocated Web Services. Provider shall have no
responsibility for the hardware maintenance and repair of, or any liability of
any kind with respect to, facilities and equipment which it does not furnish,
and may assess Client its standard charge for any false call outs.
8. Governmental Authorizations. Provider shall use reasonable efforts to obtain
and keep in effect all necessary governmental authorizations necessary to
provide the Collocated Web Services, and Provider may take all such actions as
may reasonably be required to maintain the Collocated Web Services in conformity
with governmental requirements.
9. Termination and Remedies. In the event Client shall fail to pay any amount
under this Agreement when due or violates any other provisions of this Agreement
including obligations relating to content and use, Provider may terminate the
Collocated Web Services hereunder without prior notice to Client and pursue any
and all other remedies provided for hereunder or at law or equity.
10. Limitations on Liability. Except for the credit allowances provided for in
Section 13, Provider shall have absolutely no liability of any kind whatsoever
to Client in connection with the Collocated Web Services, the Space or the
Network or the other matters covered by this Agreement. Without limitation,
Provider shall have no such liability with respect to any interruption or
degradation of the Collocated Web Services or the Network, any electrical or
other outages or lack of access with respect to the Space or the Equipment, any
use or content with respect to Client or any other user of the Network, force
major events, or any direct, special, punitive or exemplary damages of any kind.
11. Indemnification Client hereby agrees to indemnify and hold harmless Provider
against any and all liabilities, costs, expenses and claims relating to (i)
Clients unlawful or improper use of the Collocated Web Services, the Space or
leased premises or the Network, (ii) Clients failure to comply with the terms
and provisions of this Agreement, or (iii) property damage or personal injury
claims
U.S. Net Solutions, Inc. Page 5 Of 16 Super Site Hosting Service
<PAGE> 6
caused by Clients acts or omissions or arising from its operation of its
Equipment or its use of the Space or the leased premises.
12. Credit Allowances. A credit allowance will be given when Collocated Web
Service is interrupted, except as specified below. An interruption period begins
when Client reports an interruption in Web Service to Providers Network
Operations Center. Due to inherent design traits of the Network, and the
involvement of multiple providers in providing end-to-end connectivity, Provider
will not offer credits with respect to any interruptions or degradations of
access to the Network unless caused by access facilities specifically provided
or resold by Provider.
<TABLE>
<CAPTION>
b) INTERRUPTIONS OF 24 HOURS OR LESS
----------------------------------
INTERRUPTION LENGTH CREDIT INTERRUPTION LENGTH CREDIT
------------------- ------ -------------------- ------
<S> <C> <C> <C>
Less than 4 hr. None 4 hr. - 7 hr. 59 min. 1/3 day
8 hr. - 11 hr. 59 min. 1/2 day 12 hr. - 15 hr. 59 min. 2/3 day
16 hr. - 24 hr. One day
</TABLE>
c. INTERRUPTIONS OVER 24 HOURS - Interruptions over 24 hours will be
credited 1/6 day for each 4-hour period or fraction thereof. No more than
one full day's credit will be allowed for any period of 24 hours.
13. Data. Provider disclaims all responsibility for any encrypted data
transmitted through the Collocated Web Services, and Client expressly
acknowledges that such data may not be secure. Client also acknowledges that
Provider does not monitor or control the data residing in Web servers.
14. Insurance. Client agrees to provide before the commencement of this
Agreement, and to keep in force and effect during the term thereof, for the
benefit of Client and Provider, a policy of comprehensive liability insurance or
a certificate evidencing the existence thereof, conforming to the requirements
set forth on Exhibit A hereto.
18. Miscellaneous. This Agreement constitutes the entire agreement of the
parties regarding the subject matter hereof, shall be governed and construed in
accordance with the laws of the State of California, may not be assigned by
Client without Providers prior written consent, may not be amended or modified
except in writing signed by the party against which enforcement thereof is
sought, and may be signed in two or more counterparts each of which shall
constitute an original. THERE ARE NO AGREEMENTS, WARRANTIES OR REPRESENTATIONS,
EXPRESS OR IMPLIED EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR
OTHERWISE, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE OR USE WITH REGARD TO THE SERVICES OR THE NETWORK, EXCEPT THOSE
EXPRESSLY SET FORTH HEREIN. PROVIDER MAKES NO WARRANTIES, EXPRESS OR IMPLIED
WITH REGARD TO THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
REGARD TO ANY THIRD PARTY HARDWARE, SOFTWARE OR SERVICES THAT PROVIDER SUPPLIES
OR LICENSES TO CLIENT IN CONNECTION WITH THE WEB SERVICES AND PROVIDER DISCLAIMS
ANY AND ALL LIABILITY WITH RESPECT TO SUCH THIRD PARTY PRODUCTS. CLIENT AGREES
THAT ITS USE OF SUCH PRODUCTS IS SUBJECT TO ALL
U.S. Net Solutions, Inc. Page 6 Of 16 Super Site Hosting Service
<PAGE> 7
APPLICABLE TERMS, CONDITIONS AND REQUIREMENTS OF SUCH THIRD PARTIES. In the
event of any taking by eminent domain or damage by fire or other casualty to the
leased premises or the Space, Client shall acquiesce and be bound by any action
taken by or agreement entered into between Provider or its affiliates and the
landlord or landlords with respect thereto. Client represents to Provider that
it has not dealt with any broker in connection with the Space or the leased
premises and that Client shall hold Provider harmless from and against any and
all claims for brokerage commissions in connection therewith.
U.S. Net Solutions, Inc. Page 7 Of 16 Super Site Hosting Service
<PAGE> 8
APPENDIX A
U.S. NET SOLUTIONS, INC.
ACCEPTABLE USE POLICY
Client may only use the Network Services and the Network only for its lawful and
proper internal purposes. Resale of direct Network connectivity is prohibited.
Transmission of any material (i) which is legally obscene, violates proprietary
rights of third parties, impairs the privacy of communications or is otherwise
unlawful, or (ii) which causes technical disturbances to the Network, or
otherwise violates reasonable regulations of U.S. Net Solutions, Inc. (U.S. Net)
or other providers with respect to the Network, is prohibited. Failure to comply
with this Acceptable Use Policy and the following Unsolicited Commercial E-Mail
policy may be cause for the immediate disconnection of Client by U.S. Net.
Unsolicited Commercial E-Mail
It is contrary to the Acceptable Use Policy of U.S. Net for a direct
Client, or for an Internet Service Provider Client to permit any third party, to
use any U.S. Net service, directly or indirectly, for the purpose of unsolicited
mass transmissions or multiple or inappropriate postings in a manner which, in
U.S. Net's sole judgment and discretion, is abusive, offensive, inappropriate or
unacceptable. Without limitation, any of the following activities constitute a
prohibited use of U.S. Net's services:
1. Posting or transmitting one or more articles, advertisements or
other materials (i) to 25 or more Usenet or other newsgroups, forums including
Internet Relay Chat (IRC), electronic mail listings or other similar groups or
lists (collectively, Sites), or (ii) to any one or more Sites if the materials
are off -topic according to the charter or other owner published FAQ or
description of the Site.
2. Sending any unsolicited mass electronic mail message (i) to 25 or
more electronic mail users, or (ii) to multiple electronic mail users in a
manner which generates one or more complaints from such users.
3. Falsifying user information provided to U.S. Net or to other users in
connection with the use of a service provided by U.S. Net
4. To engage in any of the aforementioned activities using the service
of another Internet Service Provider, but relaying such activities through a
U.S. Net account, or using U.S. Net as a maildrop, for responses.
****
Upon detecting any activity which U.S. Net determines to be in violation of this
policy, U.S. Net may elect to take any one or more of the following steps:
(i) Suspend or terminate without notice all or any portion of a service
provided by it in the interest of preserving network integrity,
U.S. Net Solutions, Inc. Page 8 Of 16 Super Site Hosting Service
<PAGE> 9
(ii) Provide its direct Client with twenty-four (24) hours notice of an
activity, during which period the direct Client must explain, cease, remedy or
correct the activity, whether the activity is being conducted by itself, Ks
employees, its Clients or other third parties, to U.S. Net s satisfaction in its
sole discretion;
(ii) implement technical mechanisms where available to block or prevent
multiple transmissions or postings using a U.S. Net service;
(iv) Recover any and all costs incurred by U.S. Net in identifying,
correcting or terminating prohibited activities under this Policy including the
levying of cancellation or termination fees;
(v) Pursue any and all other remedies which may be available to U.S. Net
under law, equity, contract or tariff or under the customary practices and
procedures of the Internet community; or
(vi) Take any and all other actions which U.S. Net determines to be
necessary or appropriate in connection with such prohibited activities.
U.S. Net Solutions, Inc. Page 9 Of 16 Super Site Hosting Service
<PAGE> 10
EXHIBIT A
REMOTE HANDS - TERMS OF SERVICE
This addendum to the Web SuperSite Services Agreement ("Agreement") dated as of
the __ day of, 19_ and between U.S. Net Solutions and the Client (the
"Agreement"), when executed by the Client and U.S. Net Solutions for attachment
to the Agreement, shall be and become a part of the Agreement. By execution of
this Addendum the parties to the Agreement hereby acknowledge and agree to the
following with respect to certain services to be provided by U.S. Net Solutions
at the request of Client at the U.S. Net Solutions Premises:
1. Remote Hands - Services. Client has, pursuant to the Agreement located
certain equipment in the U.S. Net Solutions Premises, and may from time to time
request that U.S. Net Solutions perform certain basic services with respect to
such equipment. Such services (herein referred to as 'Remote Hands Services')
offer an opportunity for the Client to avoid dispatching field services
personnel for certain basic on-site activity.
2. Levels of Service. Remote Hands Services include 3 levels of service, as
follows:
Remote Hands Level 1, provided at no additional cost, involves the most
basic activities of an on-site technician, performed with 'eyes', 'ears" and
'fingers, but without involvement of tools, equipment, physical labor, keyboard
or other data input. Examples of Level 1 service would include:
- pushing a button
- switching a toggle
- setting a dip switch
- power cycling (turning off and on) equipment
- securing cabling to connections
- observing, describing or reporting on indicator lights or display
information on machines or consoles
- basic observation and reporting on local environment in U.S. Net
Solutions premises
Remote Hands Level 2, provided for the fee(s) set forth in Section 4
hereof, involves all the services of Level 1, plus some configuration or running
of certain basic operations pursuant to real-time instructions of Client. This
level of service does not involve opening or moving equipment or any direct
hardware or software interaction. Examples of Level 2 services would include:
- running single, built in diagnostic equipment
- typing commands on a keyboard console
- changing of pre-labeled tapes
- cable organization, ties or labeling
- modifying basic cable layout, such as Ethernet or FDDI connections
- re-labeling equipment
U.S. Net Solutions, Inc. Page 10 Of 16 Super Site Hosting Service
<PAGE> 11
Remote Hands Level 3, provided for the fee(s) set forth in Section 4
hereof, involves all the services of Level 2, plus direct contact with equipment
configuration, including hardware and software interaction, provided Client
provides accurate, understandable real-time instructions. Examples of Level 3
services would include:
- installation of previously received equipment in existing track space
- replacing hardware components with spares or upgrades adding memory
- upgrading drive capacity by installation of new or additional disk
drives
U.S. Net Solutions shall, in its own reasonable discretion, determine the
appropriate level of Remote Hands to which each service request falls.
3. Client's Direction.
4. Payment Options and Terms. Remote Hands Services may be purchased on
a per hour basis as needed (hereinafter "On Demand"), or on a monthly contract
basis.
(a) On Demand: As of the date hereof, the per hour charge for Remote
Hands Services On Demand are as follows:
<TABLE>
<S> <C>
Service Level I No additional charge
Service Level 2 $190/hour
Service Level 3 $250/hour
</TABLE>
For Level 2 and 3 charges there is a 1-hour minimum charge per request,
with 15-minute increments thereafter.
(b) Monthly Contract: Client may elect any of the following contract
pricing options by written notice of to U.S. Net Solutions no later than the
15th of each calendar month. Upon such notice, Client's elected contract options
will commence on the 1st of the immediately following month and shall
thereafter remain in effect so long as Client continues to prepay the contract
amount on a monthly basis:
<TABLE>
<CAPTION>
Hours per Month Service Level 2 Service Level 3
--------------- ---------------
Total per Month Total per Month
<S> <C> <C>
Up to 10 hrs/month $1,250 $1,500
Up to 25 hrs/month $2,750 3,375
Up to 50 hrs/month $4,000 $5,250
</TABLE>
The monthly contract amount shall be non-refundable whether or not Client
utilizes all of the contractual service hours during any month, and no service
hours may be carried over to a subsequent month. In the event a Client requests
service in excess of the monthly contract amount, Client will be billed for such
excess hours at the Client's current contract rate. If the level of service
(e.g. Levels 1, 2 or 3) requested by Client is higher than the level that Client
has contracted for, the service will be billed at the applicable 'On Demand"
rate.
U.S. Net Solutions, Inc. Page 11 Of 16 Super Site Hosting Service
<PAGE> 12
(c) Price Changes. The foregoing rates may be changed from time to time
by U.S. Net Solutions notifying Client of such rate change at least 60 days
prior to the effective date of the new rates.
(d) Billing. Client will be billed for services rendered along with
Client's monthly service invoice.
5. Request Procedure. Client shall initiate a Remote Hands Service
request by following the procedure set forth in the Configuration Review Form
(CRF) provided to Client, as such procedure may be modified by notice to Client
by U.S. Net Solutions from time to time. Each service request requires a
separate initiation by the Client, by fax, email or other writing if possible.
Each request from a Client which has not elected a contract option shall require
an original signed request from a previously authorized Client representative.
In cases of emergency, a signed facsimile transmission service request followed
by a signed original is acceptable. U.S. Net Solutions technicians will use
reasonable efforts to respond to a Client request for Remote Hands Service by
telephone or electronic communication within 30 minutes of receipt of the
initial Client request. Technician will assign a Trouble Ticket and will use
reasonable efforts to commence the rendering of the service within the time
window specified below from the assignment of the Trouble Ticket.
<TABLE>
<S> <C>
U.S. Net Solutions Premise: Service initiation within:
San Diego, 5754 Pacific Center Blvd. #202 1 hour
San Diego, 10225 Barnes Canyon A-204 1 hour
Brea, One Pointe Drive Suite 100 1 hour between 8:00 am - 5:00 pm
4 hours between 5:00 pm - 8:00 am
</TABLE>
6. No Warranty/Limitation on Damages. Licensee acknowledges that U.S.
Net Solutions will provide Remote Hands Services under Clients specific
direction. U.S. Net Solutions does not offer or provide (and hereby disclaims)
any warranty with respect to Remote Hands Services. U.S. Net Solutions shall in
no event be liable for any direct damages arising in connection with the
performance of such services (unless such direct damages are due to willful
misconduct on the part of U.S. Net Solutions or its employees or agents) nor for
any indirect, consequential, incidental or special damages arising in connection
with the performance of such services.
7. Indemnity: Licensee agrees to defend, indemnify and hold harmless
U.S. Net Solutions, its officers, directors, employees, agents, contractors,
guests and workers from and against any and all claims, causes of action,
damages, expenses and liability, including reasonable attorney's fees, sustained
or incurred by U.S. Net Solutions in undertaking and providing the Remote Hands
Services at the request of Client and pursuant to the Client's direction.
8. The Agreement is hereby ratified and confirmed, and shall continue in full
force and effect in accordance with its terms, except as specifically modified
herein.
The Addendum is hereby accepted, acknowledged, confirmed and agreed to as of
this 22 day of February, 1999 by the undersigned parties to the Agreement.
U.S. Net Solutions, Inc. Page 12 Of 16 Super Site Hosting Service
<PAGE> 13
U.S. Net Solutions
By:
-----------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
CLIENT
By: /s/ DONALD E. CAMERON
-----------------------------------
Printed Name: Donald E. Cameron
-------------------------
Title: CEO
--------------------------------
U.S. Net Solutions, Inc. Page 13 Of 16 Super Site Hosting Service
<PAGE> 14
U.S. NET CONFIGURATION REVIEW FORM (TO BE COMPLETED BY ACCOUNT EXECUTIVE)
- -------------------------------------------------------------------------------
Client: Interactive Telesis
U.S. Net Solutions Project Manager:
--------------------------------------------
DATE OF PROPOSED SERVICE INITIATION: Testing Production 12/1/98
--------------- ---------
Service Location: SAN DIEGO-MAIN
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SERVICE DESCRIPTION
(PLEASE USE THE FOLLOWING ELEMENTS TO DESCRIBE THE CONFIGURATION
BANDWIDTH REQUIREMENTS; 384 K
HARDWARE REQUIREMENTS: (Type, Model, Number of machines, Client provided, U.S.
Net Solutions provided):
MAINTENANCE AND MONITORING REQUIREMENTS:
4 RACKS
RACK SPACE REQUIREMENTS:
REMOTE HANDS SERVICES REQUIREMENTS (FROM EXHIBIT A):
LEVEL 1: included
LEVEL 2:
LEVEL 3:
OTHER REQUIREMENTS:
- --------------------------------------------------------------------------------
U.S. NET SOLUTIONS CONFIGURATION REVIEW FORM
CLIENT: /s/ DONALD E. CAMERON
------------------------------------------------------------------------
U.S. NET SOLUTIONS PROJECT MANAGER:
---------------------------------------------
U.S. Net Solutions, Inc. Page 14 Of 16 Super Site Hosting Service
<PAGE> 15
Diagram of Configuration:
N/A
U.S. Net Solutions, Inc. Page 15 Of 16 Super Site Hosting Service
<PAGE> 16
U.S. NET CONFIGURATION REVIEW FORM
N/A
Client:____________________
U.S. Net Solutions Project Manager:__________________
TO BE COMPLETED BY ENGINEERING ONLY:
Service order - labor instructions Hours
Part number and description Price per item
Service Order reviewed:
I HEREBY ACKNOWLEDGE THAT THE ABOVE SERVICE ORDER HAS BEEN REVIEWED BY
ENGINEERING, AND NO TECHNICAL ISSUES HAVE BEEN IDENTIFIED.
X _____________________________ Date:
U.S. Net Solutions Engineering Dept.
H:sales/misc/coloc.doc
U.S. Net Solutions, Inc. Page 16 Of 16 Super Site Hosting Service
<PAGE> 1
EXHIBIT 10.4
SUBLEASE AGREEMENT
This SUBLEASE AGREEMENT ("Sublease") is made as of August 13, 1999, by
and between THE TOWNSEND AGENCY, a California corporation ("Tenant") and
INTERACTIVE TELESIS, a California corporation ("Subtenant").
RECITALS:
WHEREAS, LNR Seaview, Inc., a California corporation ("Landlord"), as
landlord, and Tenant, as tenant, executed a lease dated May 26, 1999, as amended
by that certain First Amendment to Office Lease dated as of July 14, 1999
(collectively the "Master Lease"), with regard to certain premises (the
"Premises) consisting of approximately 19,132 rentable (16,995 usable) square
feet comprising the entire fifth (5th) floor of that certain office building
whose address is 10180 Telesis Court (also known as "Fraternal Court"), San
Diego, California. A copy of the Master Lease, including all amendments thereto,
is attached hereto as Exhibit "A".
WHEREAS, Tenant desires to sublease to and share with Subtenant a
portion of the Premises consisting of the computer server room and one (1)
interior, one (1) exterior (window) and two (2) cubicle offices as depicted on
Exhibit "B" attached hereto (the "Subleased Premises"), and Subtenant desires to
lease from and share with Tenant the Subleased Premises.
THEREFORE, Tenant and Subtenant agree as follows:
1. Assumption. Subtenant hereby expressly assumes and agrees to perform
and be bound by all covenants, conditions and obligations binding upon Tenant
and the Premises under the Master Lease with regard to the Subleased Premises,
including without limitation, the Rules and Regulations attached to the Master
Lease as Exhibit B. This Sublease is expressly subject and subordinate to the
Lease and all amendments thereto now or hereafter existing and any mortgages,
deeds of trust or other matters which encumber Landlord's interest in the
Premises.
2. Services in Lieu of Rent. In lieu and instead of paying rent to
Tenant for the Subleased Premises, Subtenant will provide computer and computer
related services to Tenant as more particularly described on Exhibit "C"
attached hereto and incorporated herein by this reference. Tenant will be
responsible for the payment to Landlord of all Base Rent, Additional Rent and
other amounts due or to become due under the Master Lease.
3. Extraordinary Services. In addition to providing computer and
computer related services as provided in Section 2 above, Subtenant shall pay
upon demand to Tenant, or at Landlord's election, directly to Landlord, (a) the
cost of providing additional heating, ventilation and air conditioning to the
Premises as a result of Subtenant's use of the computer server room, (b) any
other charges for which Tenant shall become responsible to Landlord under the
Master Lease arising by reason of Subtenant's request for extraordinary services
or utilities from Landlord.
4. Term. The term of this Sublease will commence on August 13, 1999 and
end on March 31, 2005 (but in no event later than the termination date of the
Master Lease).
<PAGE> 2
5. Use. Subtenant will use the Subleased Premises for general office
purposes which is the permitted use described in the Master Lease, and Subtenant
will otherwise use the Subleased Premises in compliance with all of the terms of
the Master Lease and for no other purpose.
6. No Release. This Sublease will in no way release Tenant from any
obligation or covenant of Tenant as tenant under the Master Lease.
7. Security Deposit. Subtenant will deposit no security deposit with
Tenant.
8. Condition of Premises. Subtenant accepts the Subleased Premises in
its condition existing as of the date of the execution of this Sublease, subject
to the Master Lease and all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises.
Subtenant acknowledges that neither Tenant nor Landlord nor any of their agents
or employees have made any representations or warranties as to the suitability
of the Subleased Premises for the conduct of Subtenant's business.
9. Construction. The terms, conditions and respective obligations of
Tenant and Subtenant to each other under this Sublease will be the terms,
conditions and obligations contained in the Master Lease, except for those
provisions of the Master Lease which are directly contradicted by the provisions
of this Sublease, in which event, the terms of this Sublease will control over
the terms of the Master Lease as between Tenant and Subtenant only. In all other
respects, the terms of the Master Lease will control. Accordingly, for the
purposes of this Sublease, wherever in the Master Lease the term "Landlord" is
used, it will be deemed to mean the Tenant herein, and wherever in the Master
Lease the term "Tenant" is used, it will be deemed to mean the Subtenant herein.
10. Attornment. If Tenant defaults in its obligations under the Master
Lease or the Master Lease terminates for any reason including, without
limitation, a voluntary surrender by Tenant or any reentry or repossession of
the Premises by Landlord, Landlord may terminate this Sublease or, at Landlord's
option and without being obligated to do so, Landlord may require Subtenant to
attorn to Landlord and, in the event Landlord exercises such option, Subtenant
does hereby attorn to Landlord and agrees to perform its obligations under this
Sublease directly to Landlord, in which event Landlord will take over all right,
title and interest of Tenant under this Sublease from the time of the exercise
of such option through the expiration or earlier termination of the term of this
Sublease. In the event of any such assumption of this Sublease by Landlord and
attornment by Subtenant, Landlord will not (i) be liable for any prepaid rents
or security deposit paid by Subtenant to Tenant, (ii) be liable for any previous
acts, omissions or defaults of Tenant under this Sublease; (iii) be subject to
any defense or offset previously accrued in favor of Subtenant against Tenant;
or (iv) be bound by any modification of this Sublease made without Landlord's
written consent.
11. Further Assignment. Subtenant will not further sublease the
Subleased Premises or any portion thereof or assign any of its rights or
delegate any of its duties under this Sublease, without first obtaining the
prior written consent of Tenant and Landlord.
-2-
<PAGE> 3
12. Insurance. Subtenant will, during the entire term of this Sublease,
carry all insurance policies required to be carried by Tenant under the Master
Lease in accordance with the terms of the Master Lease, but where Tenant is
required to be named as an additional insured, Landlord and its mortgagees will
also be named as additional insureds.
13. Attorneys' Fees and Costs. If Tenant or Subtenant shall commence an
action against the other arising out of or in connection with this Sublease, the
prevailing party shall be entitled to recover from the other any and all costs
of suit/arbitration, as well as any and all reasonable attorneys' fees incurred
in conjunction with such action.
IN WITNESS WHEREOF, Tenant and Subtenant have executed this Sublease as
of the date first written above.
Tenant: Subtenant:
THE TOWNSEND AGENCY, INTERACTIVE TELESIS,
a California corporation a California corporation
By: /s/ [Signature Illegible] By: /s/ DONALD E. CAMERON
---------------------------- -----------------------------
Its: Its: CEO
--------------------------- -----------------------------
By: By:
---------------------------- ------------------------------
Its: Its:
--------------------------- -----------------------------
-3-
<PAGE> 1
EXHIBIT 10.5
[LOGO] BALBOA CAPITAL CORPORATION
LEASE AGREEMENT
LA-NO. _____________
- --------------------------------------------------------------------------------
LESSEE SUPPLIER OF
EQUIPMENT
INTERACTIVE TELESIS, INC. PARAGON VOICE SYSTEMS
535 ENCINITAS BLVD., #112 1655 RANCHO SANTA FE ROAD
ENCINITAS, CA 92024 619-632-1700 SAN MARCOS, CA 92069 619-591-9070
JOINTLY AND SEVERALLY RESPONSIBLE
- --------------------------------------------------------------------------------
EQUIPMENT STREET ADDRESS___________________________________________________
LOCATION
IF DIFFERENT CITY ____________________COUNTY San Diego STATE_______ZIP_______
- --------------------------------------------------------------------------------
ITEM QUANTITY DESCRIPTION
- --------------------------------------------------------------------------------
"AS DELINEATED ON EXHIBIT 'A', ATTACHED HERETO AND MADE A PART HEREOF."
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
TERMS MONTHLY RENT BASE TERM IN MONTHS DEPOSIT DEPOSIT APPLIED TO
(plus sales/use tax, if applicable)
<S> <C> <C> <C> <C>
$1,798.48 48 STARTS 10/1/96 $3,596.96 FIRST AND LAST MONTHLY RENTALS
DOCUMENTATION FEE: $195.00
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
SECTION 1. LEASE: Lessee hereby leases from Lessor, and Lessor leases to
Lessee, the personal property described above, together with any replacement
parts, additions, repairs or accessories now or hereafter incorporated in or
affixed to it (hereafter referred to as "Equipment").
SECTION 2. ACCEPTANCE OF EQUIPMENT: Lessee agrees to inspect the Equipment and
to execute a Delivery and Acceptance Certificate, in form and substance
satisfactory to Lessor, after the Equipment has been delivered and after Lessee
is satisfied that the Equipment is satisfactory in every respect. With respect
to this Lease, if for any reason the Equipment has not been delivered,
installed and accepted by Lessee within sixty (60) days after it is ordered by
Lessor, or if Lessee fails to accept the Equipment and execute a Delivery and
Acceptance Certificate within ten (10) days following delivery of the
Equipment, Lessor may at Lessor's option, terminate Lessor's obligations under
this Lease and Lessee shall, on demand of Lessor, pay Lessor all amounts paid
or owing by Lessor with respect to the purchase of such Equipment and indemnify
and hold Lessor harmless from any and all liabilities, claims, costs and
expenses to the manufacturer or supplier/vendor of the Equipment or any other
party, arising out of or relating to the Equipment or the Lease. Upon payment of
such amounts, Lessor shall release, remise, and quit claim such Equipment to
Lessee, AS-IS, WHERE-IS, AND WITHOUT WARRANTY EXPRESSED OR IMPLIED BY LESSOR AS
TO ANY MATTER WHATSOEVER. Lessee shall upon such payment be subrogated to
Lessor's claim, if any, against the manufacturer or supplier/vendor of such
Equipment.
SECTION 3. TERM: This Lease shall become effective upon acceptance by Lessor by
signing and dating this Lease and the term for this Lease shall commence on the
day that the leased property has been delivered to and is usable by Lessee
("Commencement Date") 9/10/96 Lease Commencement Date. The base term of this
Lease shall commence on the first day of the month following the Commencement
Date and terminate upon the expiration of the number months specified in "Terms"
above. This Lease may be terminated by Lessee at the end of the base term if one
hundred eighty (180) days prior to the end of the base term, written notice of
such termination is delivered to Lessor (by certified mail). This Lease may be
terminated by Lessor at the end of the base term if at least thirty (30) days
prior to the end of the base term, written notice of such termination is
delivered to Lessee (by certified mail). Otherwise the term of this Lease
automatically shall be extended for a successive one-year period following the
end of the initial base term at the monthly rent stated in "Terms" above. During
this extension period, Lessor, at its sole option, may terminate this Lease upon
sixty (60) days prior written notice to Lessee (by certified mail). After the
extension period, this Lease may be terminated by either Lessor or Lessee at the
end of any calendar month, provided one hundred twenty (120) days prior written
notice of such termination is delivered to the other party (by certified mail).
Lessor and Lessee agree that the Lessee has no option to purchase the Equipment
at the end of the base term unless a purchase option agreement has been duly
executed by both parties.
- -------------------------------------------------------------------------------
SECTION 4. DISCLAIMER OF WARRANTIES AND CLAIMS: LIMITATION OF REMEDIES. THERE
ARE NO WARRANTIES BY OR ON BEHALF OF LESSOR: Lessee acknowledges and agrees by
his signature below as follows:
A. LESSOR MAKES NO WARRANTIES EITHER EXPRESS OR IMPLIED AS TO THE CONDITION OF
THE EQUIPMENT, ITS MERCHANTABILITY, ITS FITNESS OR SUITABILITY FOR ANY
PARTICULAR PURPOSE, ITS DESIGN, ITS CAPACITY, ITS QUALITY, OR WITH RESPECT TO
ANY CHARACTERISTICS OF THE EQUIPMENT;
B. Lessee has fully inspected the Equipment which it has requested Lessor to
acquire and Lease to Lessee, and the Equipment is in good condition and to
Lessee's complete satisfaction;
C. Lessee leases the Equipment "as is" and with all faults;
D. Lessee specifically acknowledges that the Equipment is leased to Lessee
solely for commercial or business purposes and is not for personal, family,
household, or agricultural purposes;
E. If the Equipment is not properly installed, does not operate as represented
or warranted by the supplier, vendor or manufacturer, or is unsatisfactory for
any reason, regardless of cause or consequence, Lessee's only remedy, if any,
shall be against the supplier/vendor or manufacturer of the Equipment and not
against Lessor;
F. Provided Lessee is not in default under this Lease, Lessor assigns to Lessee
any warranties made by the supplier/vendor or manufacturer of the Equipment;
G. LESSEE SHALL HAVE NO REMEDY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES AGAINST
LESSOR; and H. NO DEFECT, DAMAGE OR UNFITNESS OF THE EQUIPMENT FOR ANY PURPOSE
SHALL RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR RELIEVE LESSEE OF ANY
OTHER OBLIGATION UNDER THIS LEASE.
The parties have specifically negotiated and agreed to the foregoing paragraph
INITIALS /s/ [initial illegible]
- --------------------------------------------------------------------------------
SECTION 5. STATUTORY FINANCE LEASE: Lessee agrees and acknowledges that it is
the intent of both parties to this Lease that it qualify as a statutory finance
lease under Article 2A of the Uniform Commercial Code. Lessee acknowledges and
agrees that Lessee has selected both: (1) the Equipment; and (2) the
supplier/vendor or manufacturer from whom Lessor is to purchase the Equipment.
Lessee acknowledges that Lessor has not participated in any way in Lessee's
selection of the Equipment or of the supplier/vendor or manufacturer, and Lessor
has not selected, manufactured, or supplied the Equipment. LESSEE IS ADVISED
THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT EVIDENCING THE LESSOR'S PURCHASE OF
THE EQUIPMENT FROM THE SUPPLIER/VENDOR OR MANUFACTURER CHOSEN BY LESSEE AND THAT
LESSEE SHOULD CONTACT THE SUPPLIER/VENDOR OR MANUFACTURER OF THE EQUIPMENT FOR A
DESCRIPTION OF ANY SUCH RIGHTS.
SECTION 6. ASSIGNMENT BY LESSEE PROHIBITED: WITHOUT LESSOR'S PRIOR WRITTEN
CONSENT, LESSEE SHALL NOT ASSIGN THIS LEASE OR SUBLEASE THE EQUIPMENT OR ANY
INTEREST THEREIN, OR PLEDGE OR TRANSFER THIS LEASE, OR OTHERWISE DISPOSE OF THE
EQUIPMENT COVERED HEREBY.
SECTION 7. RENT: The monthly rent payable with respect to this lease shall be
the amount shown on this Lease in "Terms" above. Lessee shall pay to Lessor the
monthly rent, in advance, for each month or any part thereof the Lease is in
effect. The first such payment, with respect to this Lease shall be made on the
first day of the month following the Commencement Date. A prorata portion of the
rental charges based on a daily rental of one-thirtieth (1/30) of the monthly
rental calculated from the Commencement Date to the end of the month shall be
due and payable at the Commencement Date. Installments of rent or personal
property tax which are not paid within ten (10) days of their due date shall be
subject to a late charge equal to five percent (5%) of each delayed payment. The
late charge set forth in this contract shall apply only when permitted by law
and, if not permitted by law, the late charges shall be calculated at the
maximum rate permissible by such law. In the event that a check or other
instrument tendered for payment is dishonored, Lessor shall be entitled to a
fifteen dollar ($15.00) fee. All rent shall be paid at the place of business of
Lessor shown above or such other place as Lessor may designate by written notice
to Lessee. Lessee agrees to pay taxes and reasonable fees, including but not
limited to documentation fees, filing fees, credit fees, equipment inspection
fees, title fees, property taxes, sales taxes, use taxes, business taxes and
further agrees to pay twenty dollars ($20.00) per collection call and one
hundred dollars ($100.00) per collection visit. Lessor may apply remittances
received to unpaid rental installments and/or other charges on a due date basis,
remittance received being applied to the oldest unpaid rental or charge.
SECTION 8. NET LEASE: NO OFFSET: THIS IS A NET LEASE, AND ALL RENT AND ALL OTHER
SUMS PAYABLE BY LESSEE HEREUNDER SHALL BE PAID UNCONDITIONALLY WHEN DUE, WITHOUT
ABATEMENT, DEDUCTION, COUNTERCLAIM OR SETOFF OF ANY NATURE, INCLUDING WITHOUT
LIMITATION ANY COUNTERCLAIM OR SETOFF ARISING OUT OF ANY PRESENT OR FUTURE CLAIM
LESSEE MAY HAVE AGAINST LESSOR, OR ANY ASSIGNEE OF LESSOR OR THE MANUFACTURER OR
SUPPLIER OF THE EQUIPMENT, OR ANY OTHER PARTY. In no event, except as otherwise
expressly provided herein, shall this Lease terminate or shall any of the
Lessee's obligations be affected by reason of any defect in or damage to or loss
or destruction of all or any part of the Equipment, from any cause whatsoever,
or any interference with Lessee's use of the Equipment by any person or for any
other cause whatsoever.
SECTION 9. NO AGENCY: LESSEE ACKNOWLEDGES THAT NEITHER THE SUPPLIER NOR ANY
SALESPERSON, EMPLOYEE, REPRESENTATIVE OR AGENT OF THE SUPPLIER OR ANY FINDER,
BROKER, OR EMPLOYEE OR AGENT OF ANY FINDER OR BROKER IS AN AGENT OR
REPRESENTATIVE OF LESSOR, AND THAT NONE OF THE ABOVE IS AUTHORIZED TO WAIVE,
ALTER OR ADD TO ANY TERM, PROVISION OR CONDITION OF THIS LEASE, OR MAKE ANY
REPRESENTATION WITH RESPECT TO THIS LEASE. Lessee further acknowledges that
Lessee, in executing this Lease, has relied solely upon the terms, provisions
and conditions contained herein, and any other statements, warranties, or
representations, if any, by the supplier, or salesperson, employee,
representative or agent of the supplier or any finder, broker, or employee or
agent of any finder or broker have not been relied upon by Lessee and shall not
effect the Lessee's obligation to pay the rent and otherwise perform as set
forth in this Lease.
SECTION 10. CHOICE OF LAW: THIS LEASE IS SUBJECT TO APPROVAL AND ACCEPTANCE OF
BALBOA CAPITAL CORPORATION'S FINANCE COMMITTEE, AND SHALL NOT BECOME BINDING
UPON LESSOR UNTIL EXECUTED BY AN OFFICER OF LESSOR. Such officer shall be the
C.E.O., President, C.O.O., or Vice President. No other officer, employee or
agent of Lessor has the authority to waive, alter, or add to any term,
provision, or condition of this lease. Any action, proceeding, or appeal on any
matter related to or arising out of this Lease, Lessor, Lessee and any guarantor
or subscriber (i) SHALL BE SUBJECT TO THE JURISDICTION OF THE STATE OF
CALIFORNIA, AND CONCEDES THAT IT, AND EACH OF THEM, TRANSACTED BUSINESS IN THE
STATE OF CALIFORNIA BY ENTERING INTO THIS LEASE; (ii) SHALL ACCEPT VENUE IN THE
COUNTY OF ORANGE. LESSEE HEREBY WAIVES TRIAL BY JURY AND THE RIGHT TO INTERPOSE
ANY COUNTERCLAIM OR OFFSET OF ANY NATURE OR DESCRIPTION IN ANY LITIGATION
BETWEEN LESSEE AND LESSOR WITH RESPECT TO THIS LEASE, THE EQUIPMENT OR THE
REPOSSESSION THEREOF. SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS
WHICH ARE PART OF THIS LEASE.
LESSEE: INTERACTIVE TELESIS, INC. ACCEPTED BY:
LESSOR: BALBOA CAPITAL CORPORATION
BY: /s/ [signature illegible] BY: /s/ MELISSA FISHER
----------------------------- -----------------------------
TITLE: PRESIDENT DATE: 8-29-96 TITLE: Vice President DATE: 09/09/96
ADDRESS FOR NOTICE: 2010 MAIN STREET,
11TH FLOOR, IRVINE, CA 92614
<PAGE> 2
EXHIBIT 'A'
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ITEM QUANTITY DESCRIPTION
- -------------------------------------------------------------------------------
<S> <C> <C>
1. 01 IVR DEVELOPER SYST GXPRO 200/48
2. 01 IVR RUNTIME SYSTEM GXPRO 200/48
3. 01 FAX PROCESSING SYSTEM
4. 03 APC SMART UPS 420-V/S
5. 01 3COM OFFICE CONNECT HUB 8/TPO
6. 03 LEVEL 5 RJ45 PATCH CABLE 25 A
7. 02 CSU - D/240SC-T1 CABLE
</TABLE>
LESSEE: INTERACTIVE TELESIS, INC.
BY : /s/ DONALD E. CAMERON
----------------------------
Donald E. Cameron
TITLE: PRESIDENT
<PAGE> 1
EXHIBIT 10.6
BALBOA CAPITAL CORPORATION
[LOGO] LEASE AGREEMENT LA-NO.001-03864-01
- --------------------------------------------------------------------------------
LESSEE SUPPLIER OF EQUIPMENT
INTERACTIVE TELESIS, INC. PARAGON VOICE SYSTEMS
535 ENCINITAS BLVD. SUITE 116 1655 RANCHO SANTA FE ROAD
ENCINITAS, CA 92024 SAN MARCOS, CA 92069
JOINTLY AND SEVERALLY RESPONSIBLE
- --------------------------------------------------------------------------------
EQUIPMENT STREET ADDRESS __________________________________________________
LOCATION
IF DIFFERENT CITY ____________________ COUNTY SAN DIEGO STATE ___ ZIP _______
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
ITEM QUANTITY DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AS DELINEATED ON EXHIBIT "A", ATTACHED HERETO AND MADE A PART HEREOF.
11/1/96 Commencement date (5/28/97 No. Interim Billing Per Michael Lowcey of Balboa)
- ------------------------------------------------------------------------------------------------------------------
TERMS MONTHLY RENT BASE TERM IN MONTHS DEPOSIT DEPOSIT APPLIED TO
(plus sales/ Start 11/20/96 $887.72 FIRST AND LAST MONTHLY RENTALS
use tax, if 48 DOC FEE: $125.00
applicable
$443.86
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
SECTION 1. LEASE. Lessee hereby leases from Lessor, and Lessor leases to Lessee,
the personal property described above, together with any replacement parts,
additions, repairs or accessories now hereafter incorporated in or affixed to it
(hereafter referred to as "Equipment").
SECTION 2. ACCEPTANCE OF EQUIPMENT: Lessee agrees to inspect the Equipment and
to execute a Delivery and Acceptance Certificate, in form and substance
satisfactory to Lessor, after the Equipment has been delivered and after Lessee
is satisfied that the Equipment is satisfactory in every respect. With respect
to this Lease, if for any reason the Equipment has not been delivered,installed
and accepted by Lessee within sixty (60) days after it is ordered by Lessor, or
if Lessee fails to accept the Equipment and execute a Delivery and Acceptance
Certificate within ten (10) days following delivery of the Equipment, Lessor
may at Lessor's option, terminate Lessor's obligations under this Lease and
Lessee shall, on demand of Lessor, pay Lessor all amounts paid or owing by
Lessor with respect to the purchase of such Equipment and indemnity and hold
Lessor harmless from any and all liabilities, claims, costs and expenses to the
manufacturer or supplier/vendor of the Equipment or any other party, arising or
of or relating to the Equipment or the Lease. Upon payment of such amounts,
Lessor shall release, remise, and quit claim such Equipment to Lessee, AS-IS,
WHERE-IS, AND WITHOUT WARRANTY EXPRESSED OR IMPLIED BY LESSOR AS TO ANY MATTER
WHATSOEVER. Lessee shall upon such payment be subrogated to Lessor's claim, if
any, against the manufacturer or supplier/vendor of such Equipment.
SECTION 3. TERM: This Lease shall become effective upon acceptance by Lessor by
signing and dating this Lease and the term for this Lease shall commence on the
day that the leased property has been delivered to and is usable by Lessee
("Commencement Date"). The base term of this Lease shall commence on the first
day of the month following the Commencement Date and terminate upon the
expiration of the number months specified in "Terms" above. This Lease may be
terminated by Lessee at the end of the base term if one hundred eighty (180)
days prior to the end of the base term written notice of such termination is
delivered to Lessor (by certified mail). This Lease may be terminated by Lessor
at the end of the base term if at least thirty (30) days prior to the end of the
base term written notice of such termination is delivered to Lessee (by
certified mail). Otherwise the term of this Lease automatically shall be
extended for a successive one-year period following the end of the initial base
term at the monthly rent stated in "Terms" above. During this extension period,
Lessor, at its sole option, may terminate this Lease upon sixty (60) days prior
written notice to Lessee (by certified mail). After the extension period, this
Lease may be terminated by either Lessor or Lessee at the end of any calendar
month, provided one hundred twenty (120) days prior written notice of such
termination is delivered to the other party (by certified mail). Lessor and
Lessee agree that the Lessee has no option to purchase the Equipment at the end
of the base term unless a purchase option agreement has been duly executed by
both parties.
- --------------------------------------------------------------------------------
SECTION 4. DISCLAIMER OF WARRANTIES AND CLAIMS LIMITATION OF REMEDIES THERE ARE
NO WARRANTIES BY OR ON BEHALF OF LESSOR: Lessee acknowledges and agrees by his
signature below as follows:
A. LESSOR MAKES NO WARRANTIES EITHER EXPRESS OR IMPLIED AS TO THE CONDITION OF
THE EQUIPMENT, ITS MERCHANTABILITY, ITS FITNESS OR SUITABILITY FOR ANY
PARTICULAR PURPOSE, ITS DESIGN, ITS CAPACITY, ITS QUALITY, OR WITH RESPECT TO
ANY CHARACTERISTICS OF THE EQUIPMENT:
B. Lessee has fully inspected the Equipment which it has requested Lessor to
acquire and Lease to Lessee, and the Equipment is in good condition and to
Lessee's complete satisfaction;
C. Lessee leases the Equipment "as is" and with all faults;
D. Lessee specifically acknowledges that the Equipment is leased to Lessee
solely for commercial or business purposes and is not for personal, family,
household, or agricultural purposes;
E. If the Equipment is not properly installed, does not operate as represented
or warranted by the supplier/vendor or manufacturer, or is unsatisfactory for
any reason, regardless of abuse or consequence, Lessee's only remedy, if any,
shall be against the supplier/vendor or manufacturer of the Equipment and not
against Lessor;
F. Provided Lessee is not in default under this Lease, Lessor assigns to Lessee
any warranties made by supplier/vendor or manufacturer of the Equipment;
G. LESSEE SHALL HAVE NO REMEDY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES AGAINST
LESSOR; and
H. NO DEFECT, DAMAGE OR UNFITNESS OF THE EQUIPMENT FOR ANY PURPOSE SHALL RELIEVE
LESSEE OF THE OBLIGATION TO PAY RENT OR RELIEVE LESSEE OF ANY OTHER
OBLIGATION UNDER THIS LEASE
The parties have specifically negotiated and agreed
to the foregoing paragraph. INITIALS /s/ [Initials Illegible]
- --------------------------------------------------------------------------------
SECTION 5. STATUTORY FINANCE LEASE: Lessee agrees and acknowledges that it is
the intent of both parties to this Lease that it qualify as a statutory finance
lease under Article 2A of the Uniform Commercial Code. Lessee acknowledges and
agrees that Lessee has selected both: (1) the Equipment; and (2) the
supplier/vendor or manufacturer from whom the Lessor is to purchase the
Equipment. Lessee acknowledges that Lessor has not participated in any way in
Lessee's selection of the Equipment or of the supplier/vendor or manufacturer,
and Lessor has not selected, manufactured, or supplied the Equipment. LESSEE IS
ADVISED THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT EVIDENCING THE LESSOR'S
PURCHASE OF THE EQUIPMENT FROM THE SUPPLIER/VENDOR OR MANUFACTURER CHOSEN BY
LESSEE AND THAT LESSEE SHOULD CONTACT THE SUPPLIER/VENDOR OR MANUFACTURER OF
THE EQUIPMENT FOR A DESCRIPTION OF ANY SUCH RIGHTS.
SECTION 6. ASSIGNMENT BY LESSEE PROHIBITED: WITHOUT LESSOR'S PRIOR WRITTEN
CONSENT, LESSEE SHALL NOT ASSIGN THIS LEASE OR SUBLEASE THE EQUIPMENT OR ANY
INTEREST THEREIN, OR PLEDGE OR TRANSFER THIS LEASE, OR OTHERWISE DISPOSE OF THE
EQUIPMENT COVERED HEREBY.
SECTION 7. RENT: The monthly rent payable with respect to this lease shall be
the amount shown on this lease in "Terms" above. Lessee shall pay to Lessor the
monthly rent, in advance, for each month or as part thereof the Lease is in
effect. The first such payment, with respect to this Lease, shall be made on
the first day of the month following the Commencement Date. A prorata portion
of the rental charges based on a daily rental of one-thirtieth (1/30) of the
monthly rental calculated from the Commencement Date to the end of the month
shall be due and payable at the Commencement Date, installments of rent or
personal property tax which are not paid within ten (10) days of their due date
shall be subject to a late charge equal to five percent (5%) of each delayed
payment. The late charge set forth in this contract shall apply only when
permitted by law and, if not permitted by law, the late charges shall be
calculated at the maximum rate permissible by such law. In the event that a
check or other instrument tendered for payment is dishonored, Lessor shall be
entitled to a fifteen dollar ($15.00) fee. All rent shall be paid at the place
of business of Lessor shown above or such other place as Lessor may designate
by written notice to Lessee. Lessee agrees to pay taxes and reasonable fees,
including but not limited to documentation fees, filing fees, credit fees,
equipment inspection fees, title fees, property taxes, sales taxes, use taxes,
business taxes and further agrees to pay twenty dollars ($20.00) per collection
call and one hundred dollars ($100.00) per collection visit. Lessor may apply
remittances received to unpaid rental installments and/or other charges on a
due date basis, remittance received being applied to the oldest unpaid rental
or charge.
SECTION 8. NET LEASE: NO OFFSET: THIS IS A NET LEASE, AND ALL RENT AND ALL
OTHER SUMS PAYABLE BY LESSEE HEREUNDER SHALL BE PAID UNCONDITIONALLY WHEN DUE,
WITHOUT ABATEMENT, DEDUCTION COUNTERCLAIM OR SETOFF ANY NATURE, INCLUDING
WITHOUT LIMITATION ANY COUNTERCLAIM OR SETOFF ARISING OUT OF ANY PRESENT OR
FUTURE CLAIM LESSEE MAY HAVE AGAINST LESSOR, OR ANY ASSIGNEE OF LESSOR OR THE
MANUFACTURER OR SUPPLIER OF THE EQUIPMENT, OR ANY OTHER PARTY. In no event,
except as otherwise expressly provided herein, shall this Lease terminate or
shall any of the Lessee's obligations be affected by reason of any defect in or
damage to or loss or destruction of all or any part of the Equipment, from any
cause whatsoever, or any interference with Lessee's use of the Equipment
by any person or for any other cause whatsoever.
SECTION 9. NO AGENCY: LESSEE ACKNOWLEDGES THAT NEITHER THE SUPPLIER NOR ANY
SALESPERSON, EMPLOYEE, REPRESENTATIVE OR AGENT OF THE SUPPLIER OR ANY FINDER,
BROKER, OR EMPLOYEE AGENT OF ANY FINDER OR BROKER IS AN AGENT OR REPRESENTATIVE
OF LESSOR, AND THAT NONE OF THE ABOVE IS AUTHORIZED TO WAIVE, ALTER OR ADD TO
ANY TERM, PROVISION OR CONDITION OF THE LEASE, OR MAKE ANY REPRESENTATION WITH
RESPECT TO THIS LEASE. Lessee further acknowledges that Lessee, in executing
this Lease, has relied solely upon the terms, provisions and conditions
contained herein, and any other statements, warranties, or representations, if
any, by the supplier, or salesperson, employee, representative or agent of the
supplier or any finder, broker, or employee or agent or any finder or broker
have not been relied upon by Lessee and shall not effect the Lessee's
obligation to pay the rent and otherwise perform as set forth in this Lease.
SECTION 10. CHOICE OF LAW: THIS LEASE IS SUBJECT TO APPROVAL AND ACCEPTANCE OF
BALBOA CAPITAL CORPORATION'S FINANCE COMMITTEE, AND SHALL NOT BECOME BINDING
UPON LESSOR UNLESS EXECUTED BY AN OFFICER OF LESSOR. Such officer shall
be the C.E.O., President, C.O.O., or Vice President. No other officer, employee
or agent of Lessor has the authority to waive, alter, or add to any term,
provision, or condition of this lease. Any action, proceeding, or appeal on
any matter related to or arising out of this Lease, Lessor, Lessee and any
guarantor or subscriber (I) SHALL BE SUBJECT TO THE JURISDICTION OF THE STATE
OF CALIFORNIA, AND CONCEDES THAT IT, AND EACH OF THEM, TRANSACTED BUSINESS IN
THE STATE OF CALIFORNIA BY ENTERING INTO THIS LEASE; (II) SHALL ACCEPT VENUE IN
THE COUNTY OF ORANGE. LESSEE HEREBY WAIVES TRIAL BY JURY AND THE RIGHT TO
INTERPOSE ANY COUNTERCLAIM OR OFFSET OF ANY NATURE OR DESCRIPTION IN ANY
LITIGATION BETWEEN LESSEE AND LESSOR WITH RESPECT TO THIS LEASE. THE EQUIPMENT
OR THE REPOSSESSION THEREOF. SEE REVERSE SIDE FOR ADDITIONAL TERMS AND
CONDITIONS WHICH ARE PART OF THIS LEASE.
LESSEE: INTERACTIVE TELESIS, INC. ACCEPTED BY:
LESSOR: BALBOA CAPITAL CORPORATION
BY: /s/ [Signature Illegible] BY: /s/ MELISSA FISHER
------------------------------- -----------------------------------
TITLE: PRESIDENT DATE: 10-18-96 TITLE: VICE PRESIDENT DATE: 10-18-96
<PAGE> 2
EXHIBIT 'A'
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ITEM QUANTITY DESCRIPTION
- -------------------------------------------------------------------------------
<S> <C> <C>
1. 01 DELL POWEREDGE 2100 SERVER
INCLUDING: 180 MHZ PENTIUM PRO
PROCESSOR; KEYBOARD; MOUSE; 64MB
RAM; 8X SCSI CD-ROM DRIVE; 15" COLOR
MONITOR; 4GB SCSI HDD; 1.44MB FDD;
4/8 GB TAPE BACKUP; MICROSOFT
WINDOWS NT ADVANCED SERVER 3.51;
3COM 3C595-TX PCI NETWORK INTERFACE
CARD
2. 01 DIALOGIC D/160SC-LS VOICE
PROCESSING BOARD
3. 01 HP SCANJET 4P
4. 01 SKUTCH AS-6 TELEPHONE LINE
SIMULATOR
5. 01 HP JET DIRECT EX PLUS PRINT SERVER
6. 01 ONKYO AUDIO CASSETTE DECK
</TABLE>
LESSEE: INTERACTIVE TELESIS, INC.
BY: /S/ DONALD CAMERON
---------------------------
Donald Cameron
TITLE: PRESIDENT
<PAGE> 3
ADDENDUM "A"
TO
MASTER LEASE AGREEMENT NO. 001-03864-01
LEASE SCHEDULE NO. 01
Reference is made to the above-referenced Master Lease Agreement and Lease
Schedule ("Lease") dated the 8th day of November, 1996 by and between
INTERACTIVE TELESIS, INC. as Lessee, and BALBOA CAPITAL CORPORATION as Lessor.
Notwithstanding the terms and conditions contained in the Lease and to the
limited extent hereof, the parties hereto agree as follow:
"AFTER THE FINAL BASE LEASE PAYMENT HAS BEEN MADE, PLUS ALL ACCRUED BUT
UNPAID LATE CHARGES, INTEREST, TAXES, PENALTIES AND/OR ANY OTHER SUMS
DUE AND OWING UNDER THE LEASE, AND NO EVENT OF DEFAULT, AS THE SAME IS
MORE FULLY DESCRIBED IN SAID LEASE, HAS OCCURRED OR IS CONTINUING, AND
PROVIDED LESSEE NOTIFIES LESSOR (BY CERTIFIED MAIL) ONE HUNDRED EIGHTY
(180) DAYS PRIOR TO THE END OF THE BASE LEASE TERM OF LESSEE'S INTENT TO
EXERCISE THIS OPTION, AS THE SAME IS MORE FULLY DESCRIBED IN SAID LEASE,
(AS TO LEASE SCHEDULE __ TO SAID LEASE) ONE FINAL PAYMENT OF ONE HUNDRED
ONE U.S. DOLLAR ($101.00) SHALL BECOME DUE, OWING AND PAYABLE BY
INTERACTIVE TELESIS, INC. TO LESSOR FOR WHICH TITLE SHALL PASS FROM
LESSOR TO LESSEE 'AS-IS, WHERE IS' WITHOUT ANY WARRANTIES EXPRESS OR
IMPLIED, WHATSOEVER."
In all other respects, the terms and conditions of the Lease, as originally set
forth, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto, by their authorized signatories, have
executed this Addendum "A" at the date set forth below their respective
signatures.
LESSEE: LESSOR:
INTERACTIVE TELESIS, INC. BALBOA CAPITAL CORPORATION
BY: /s/ Donald Cameron BY: /s/ Melissa Fisher
------------------------------ ------------------------------
NAME: DONALD CAMERON NAME: MELISSA FISHER
TITLE: PRESIDENT TITLE: VICE PRESIDENT
DATE: 10-18-96 DATE: 11-8-96
<PAGE> 4
EQUIPMENT LEASE GUARANTY
BALBOA CAPITAL CORPORATION LEASE NO.: 001-03864-01 DATE OF LEASE: 11/8/96
This Guaranty Agreement made and entered into this 18th day of October, 1996 by
Donal Cameron (hereinafter referred to collectively as "Guarantor"), in favor of
Balboa Capital Corporation (hereinafter referred to as "Lessor").
WHEREAS, Guarantor has an interest, financial or otherwise, in Lessee, and it is
to the benefit of Guarantor that Lessor enter into the Lease with Lessee, and
Guarantor has reached the proposed Lease in full and finds the terms of said
Lease acceptable, and in recognition that Lessor would be unwilling to enter
into the Lease without the Guaranty hereinafter set forth, and in recognition of
Lessor's reliance upon the Guaranty in entering into the Lease:
NOW, THEREFORE, in order to induce Lessor to enter into the Lease, Guarantor,
jointly and severally, unconditionally guaranties the faithful and full
performance by Lessee of all terms and conditions of the Lease. In the event of
default by Lessee, or failure to perform any of the terms or conditions required
of Lessee under the Lease, or in the event of failure of Lessee to make any or
all payments of money required of it under the Lease, Guarantor unconditionally
promises to pay to Lessor, in lawful money of the United States, all sums at any
time due and unpaid under the Lease, plus costs of collection, including
reasonable attorney fees with or without trial, and upon appeal and review.
The obligations of Guarantor hereunder are joint and several and are independent
of the obligations of Lessee under the Lease, and a separate action or actions
may be brought against Guarantor, whether action is brought against Lessee or
whether Lessee be joined in any action or actions, the liability of Guarantor
hereunder being primary Guarantor hereby waives the benefit of any suretyship
defenses affecting its liability hereunder of the enforcement hereof.
Guarantor authorizes Lessor, without notice or demand, and without affecting
Guarantor's liability hereunder, from time to time to renew, extend, accelerate,
or otherwise change the payment terms or other terms of the Lease or any part
thereof. Lessor may, without notice, assign this Guaranty in whole or in part.
Guarantor hereby waives any right to require Lessor to: (a) proceed against
Lessee; (b) proceed against or exhaust any security held by Lessor; or (c)
pursue any other remedy in Lessor's power. Guarantor waives any defense arising
by reason of any defense of Lessee, including any defense relating to Statute of
Limitations, or by reason of the cessation, from any cause whatsoever, of the
liability of Lessee under the Lease. Guarantor waives any and all demands for
performance, notices of nonperformance of default, and notices of cancellation
or forfeiture. Lessor may apply all proceeds received from Lessee or others to
such part of Lessee's indebtedness as Lessor may deem appropriate without
consulting Guarantor and without prejudice to or in any way limiting or
lessening the liability of Guarantor under this Guaranty. GUARANTOR SHALL BE
SUBJECT TO THE JURISDICTION OF THE STATE OF CALIFORNIA AND SHALL ACCEPT VENUE IN
THE COUNTY OR ORANGE. GUARANTOR HEREBY WAIVES TRIAL BY JURY AND THE RIGHT TO
INTERPOSE ANY COUNTERCLAIM OR OFFSET OF ANY NATURE OR DESCRIPTION IN ANY
LITIGATION BETWEEN LESSEE, LESSOR, AND/OR GUARANTOR WITH RESPECT TO THIS
GUARANTEE AND/OR THE LEASE.
If Lessee is a corporation, the undersigned warrant and represent that they are
stockholders, directors or officers and/or are financially or otherwise
interested in Lessee, and if married, their marital communities are so
interested.
This Guaranty shall not be affected or discharged by the death of the
undersigned, but shall bind Guarantor's heirs and personal representatives, and
shall inure to the benefit of any successors or assigns of Lessor.
This instrument constitutes the entire agreement between Lessor and Guarantor.
No oral or written representation not contained herein shall in any way affect
this Guaranty which shall not be modified except by the parties in writing.
Waiver by Lessor of any provision hereof in one instance shall not constitute a
waiver as to any other instance.
IMPORTANT: THIS AGREEMENT CREATES SPECIFIC LEGAL OBLIGATIONS. DO NOT SIGN IT
UNTIL YOU HAVE FULLY READ IT. BY SIGNING YOU COMPLETELY AGREE TO ITS TERMS.
IN WITNESS WHEREOF, the undersigned Guarantor(s) has/have executed this
Guaranty this 18th day of October, 1996.
GUARANTOR DONALD CAMERON GUARANTOR
NAME /s/ Donald Cameron (NO TITLE) NAME (NO TITLE)
-------------------------------- ----------------------------------
HOME ADDRESS 1109 Sycamore View Dr. HOME ADDRESS
-------------------------
CITY Encinitas STATE CA ZIP 92024 CITY STATE ZIP
------------ ---- -----
<PAGE> 1
EXHIBIT 10.7
EQUIPMENT LEASE AGREEMENT
Agreement# 6601252002
TOSHIBA
EASY LEASE(TM)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------------------------------------------
SUPPLIER: Aztec Business Machines, Inc. LESSEE: Interactive Telesis, Inc.
---------------------------------------- ----------------------------------------------
(Full Legal Name) (Full Legal Name)
3663 Via Mercado 535 Encinitas Blvd. Ste. 116
- ------------------------------------------------- ----------------------------------------------
(Street Address) (Street Address)
La Mesa CA 91941 San Diego Encinitas CA 92024 San Diego
- ------------------------------------------------- ----------------------------------------------
(City) (State) (Zip Code) (County) (City) (State) (Zip Code) (County)
- -----------------------------------------------------------------------------------------------------
Quantity Equipment Model & Description Serial Number
-------- ----------------------------- -------------
1 Toshiba 4550 Business Copier YA728776
-------- --------------------------------------------- -------------
1 20 bin Stapling Sorter MG2001 LE753236
-------- --------------------------------------------- -------------
-------- --------------------------------------------- -------------
[ ] See attached schedule for additional Equipment
- -----------------------------------------------------------------------------------------------------
TRANSACTION TERMS: Purchase Price $11,715.00 [ ] ADVANCE RENT $
------------
RENT $ 325.42 (plus applicable taxes) LEASE TERM 36 months (plus applicable taxes)
------- [ ] SECURITY DEPOSIT $
PAYABLE: (check one) [X] Monthly [ ] Other ( ) -----------
------------
PURCHASE OPTION AT END OF LEASE TERM: [X] Fair Market Value
Equipment Location (if different from Lessee address above): Same
-----------------------------------------
Lessee Contact/Telephone: Susan Haynes 760/532-1700
----------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
WE HAVE WRITTEN THIS LEASE IN PLAIN LANGUAGE BECAUSE WE WANT YOU TO
UNDERSTAND ITS TERMS. PLEASE READ YOUR COPY OF THIS LEASE CAREFULLY AND FEEL
FREE TO ASK US ANY QUESTIONS YOU MAY HAVE. THE WORDS "YOU" AND "YOUR" MEAN THE
LESSEE NAMED ABOVE. THE WORDS "WE", "US", AND "OUR" REFER TO THE LESSOR NAMED
BELOW.
- --------------------------------------------------------------------------------
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS LEASE (INCLUDING THOSE ON THE
REVERSE SIDE) SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE
ENFORCEABLE. TERMS OR ORAL PROMISES WHICH ARE NOT CONTAINED IN THIS WRITTEN
LEASE MAY NOT BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS LEASE ONLY
BY ANOTHER WRITTEN AGREEMENT BETWEEN YOU AND US. YOU AGREE TO COMPLY WITH THE
TERMS AND CONDITIONS OF THIS LEASE. THIS LEASE IS NOT CANCELABLE. YOU AGREE
THAT THE EQUIPMENT WILL BE USED FOR BUSINESS PURPOSES ONLY AND NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES.
YOU CERTIFY THAT ALL THE INFORMATION GIVEN IN THIS LEASE AND YOUR APPLICATION
WAS CORRECT AND COMPLETE WHEN THIS LEASE WAS SIGNED. THIS LEASE IS NOT BINDING
UPON US OR EFFECTIVE UNTIL AND UNLESS WE EXECUTE THIS LEASE. THIS LEASE WILL
BE GOVERNED BY THE LAWS OF THE STATE OF MISSOURI. YOU AGREE TO THE JURISDICTION
AND VENUE OF FEDERAL COURTS IN MISSOURI AND STATE COURTS IN RANDOLPH COUNTY,
MISSOURI.
<TABLE>
<CAPTION>
<S> <C>
ACCEPTED BY: PROPOSED BY:
LESSOR: TOSHIBA AMERICA INFORMATION SYSTEMS, INC. LESSEE: Interactive Telesis, Inc.
----------------------------------
(Legal Name)
BY: BY: X /s/ DONALD E. CAMERON
------------------------------------------------ --------------------------------------
(Signature of Authorized Signer)
TITLE: DONALD E. CAMERON, PRESIDENT
--------------------------------------------- --------------------------------------
(Printed Name and Title)
DATE: DATE: 10/23/97 FED TAX ID#: 33-0649915
---------------------------------------------- ----------- -----------
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
TERMS AND CONDITIONS
1. LEASE. Subject to the terms of this Lease, you agree to lease from us the
Equipment described on the reverse side when we accept this Lease at our office
in Missouri. ONCE WE ACCEPT THIS LEASE, YOU MAY NOT CANCEL IT DURING THE FULL
LEASE TERM. You agree to be bound by all the terms of this Lease.
2. DELIVERY AND ACCEPTANCE OF EQUIPMENT. Acceptance of the Equipment occurs
upon delivery. When you receive the Equipment, you agree to inspect it and to
verify by telephone or in writing such information as we may require. Delivery
and installation costs are your responsibility. If you signed a purchase
contract for the Equipment, by signing this Lease you assign your rights, but
none of your obligations under it to us.
3. RENT. You agree to pay us Rent (plus applicable taxes) when each payment
is due. If your Rent payments are due in Advance, your first Rent payment is due
on the date you accept the Equipment. We will advise you as to (a) the due date
of each rent payment, and (b) the address to which you must send your payments.
Rent is due whether or not you receive an invoice from us. You will pay us any
required Advance Rent or Security Deposit when you sign this Lease. Security
Deposits or Advance Rents may be commingled and do not earn interest. Provided
you are not in default, we may apply your Security Deposit to the last Rent
payment or to your purchase option or we may refund the Security Deposit to you
when the Lease Term expires and the Equipment is returned in accordance with
Section 16. If we collect more than one payment as Advance Rent, we may apply
such Advance Rent to the last Rent payment. You authorize us to change the Rent
by not more than 15% due to changes in the Equipment configuration which may
occur prior to our acceptance of this Lease. Restrictive endorsements on checks
you send to us will not reduce your obligations to us. UNLESS A PROPER EXEMPTION
CERTIFICATE IS PROVIDED, APPLICABLE SALES AND USE TAXES WILL BE ADDED TO THE
RENT.
4. UNCONDITIONAL OBLIGATION. YOU AGREE THAT YOU ARE UNCONDITIONALLY
OBLIGATED TO PAY ALL RENT AND ANY OTHER AMOUNTS DUE UNDER THIS LEASE FOR THE
FULL LEASE TERM EVEN IF THE EQUIPMENT IS DAMAGED OR DESTROYED, IF IT IS
DEFECTIVE OR IF YOU HAVE TEMPORARY OR PERMANENT LOSS OF ITS USE. YOU ARE NOT
ENTITLED TO REDUCE OR SET-OFF AGAINST RENT OR OTHER AMOUNTS DUE UNDER THIS LEASE
FOR ANY REASON WHATSOEVER.
5. DISCLAIMER OF WARRANTIES. THIS EQUIPMENT IS BEING LEASED TO YOU IN AS-IS
CONDITION, NO INDIVIDUAL IS AUTHORIZED TO CHANGE ANY PROVISION OF THIS LEASE.
YOU AGREE THAT YOU HAVE SELECTED THE EQUIPMENT BASED UPON YOUR OWN JUDGMENT. YOU
HAVE NOT RELIED ON ANY STATEMENTS WE OR OUR EMPLOYEES HAVE MADE. EXCEPT AS
PROVIDED IN OUR WRITTEN PRODUCT WARRANTIES, WE HAVE NOT MADE AND DO NOT MAKE ANY
EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WHATSOEVER, INCLUDING WITHOUT
LIMITATION, THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
SUITABILITY, DESIGN, CONDITION, DURABILITY, OPERATION, QUALITY OF MATERIALS OR
WORKMANSHIP, OR COMPLIANCE WITH SPECIFICATIONS OR APPLICABLE LAW. You are aware
that we are the Equipment manufacturer and you will contact us for a description
of your warranty rights. You agree to settle any dispute you may have regarding
performance of the Equipment directly with us and not make any claim against any
new owner described in Section 19. You agree to continue to pay such new owner
all Rent and other payments even if you have a dispute with us regarding the
Equipment.
6. TITLE AND SECURITY INTEREST. The Equipment is and shall remain our sole
property during the Lease Term. Unless you are in default under this Lease, you
shall have the right to peacefully possess and use the Equipment during the
Lease Term. You hereby appoint us (or our agent) as your true and lawful
attorney-in-fact to affix your signature to UCC financing statements prepared
and filed on your behalf by us (or our agent) with the same force and effect as
if you had signed such financing statements. If we request, you agree to sign
financing statements in order for us to publicly record our security interest.
This Lease or a copy of this Lease shall be sufficient as a financing statement
and may be filed as such.
7. USE, MAINTENANCE AND REPAIR. You will not move the Equipment from the
Equipment Location without our advance written consent. You will give us
reasonable access to the Equipment Location so that we can check the Equipment's
existence, condition and proper maintenance. You will use the Equipment in the
manner for which it was intended, as required by all applicable manuals and
instructions and keep it eligible for any manufacturer's certification and/or
standard, full service maintenance contract. At your own cost and expense, you
will keep the Equipment in good repair, condition and working order, ordinary
wear and tear excepted. All replacement parts and repairs will become our
property. You will not make any permanent alterations to the Equipment.
8. TAXES. You agree that you will pay when due, either directly or by
reimbursing us, all taxes (including any sales, use and personal property
taxes), fines, interest and penalties relating to this Lease and the Equipment
(excluding taxes based on our net income) and, if we ask, you will provide us
with proof of payment. We do not have to contest any tax assessments. For Leases
with a Stated Purchase Option, (a) you agree to pay us for the loss of any
income tax benefits caused by your actions, and (b) should an increase in the
federal corporate income tax rate or a change in the "accelerated cost recovery
deductions" allowed by the Internal Revenue Code of 1986, as amended, adversely
affect our after-tax earnings or cash flows, you agree that we may increase the
Rent and other amounts due under this Lease to offset any such adverse effect.
9. INDEMNITY. We are not responsible for any injuries, damages, penalties,
claims or losses, including legal expenses, incurred by you or any other person
caused by the transportation, installation, selection, purchase, lease,
ownership, possession, modification, maintenance, condition, operation, use,
return or disposition of the Equipment. You agree to reimburse us for and defend
us against any claims for such losses, damages, penalties, claims, injuries, or
expenses. This indemnity continues even after this Lease has expired for acts or
omissions which occurred during the Lease Term.
10. IDENTIFICATION. You authorize us to insert or correct missing information
on this Lease, including your official name, serial numbers and any other
information describing the Equipment. We will send you copies of such changes.
You will attach to the Equipment any name plates or stickers we provide you.
11. LOSS OR DAMAGE. You are responsible for any loss of the Equipment from
any cause at all, whether or not insured, from the time the Equipment is shipped
to you until it is returned to us. If any item of Equipment is lost, stolen or
damaged, you will promptly notify us of such event. Then, at our option, you
will either (a) repair the Equipment so that it is in good condition and working
order, eligible for any manufacturer's certification, or (b) pay us an amount
equal to the Net Book Value (as defined in Section 14) of the lost, stolen or
damaged Equipment. If you have satisfied your obligations under this Section 11,
we will forward to you any insurance proceeds which we receive for lost,
damaged, or destroyed Equipment. If you are in default, we will apply any
insurance proceeds we receive to reduce your obligations under Section 14 of
this Lease.
12. INSURANCE. You agree to (a) keep the Equipment fully insured against
loss, naming us as loss payee, and (b) obtain a general public liability
insurance policy covering both personal injury and property damage in amounts
not less than we may tell you, naming us as additional insured, until you have
met all of your obligations under this Lease. We are under no duty to tell you
if your insurance coverage is adequate. The policies shall state that we are to
be notified of any proposed cancellation at least 15 days prior to the date of
cancellation. Upon our request you agree to provide us with certificates or
other evidence of insurance acceptable to us. If you do not provide us with
evidence of proper insurance within 10 days of our request or we receive
notification of policy cancellation, we may (but we are not obligated to) obtain
insurance on our interest in the Equipment at your expense. You will pay all
insurance premiums and related charges.
13. DEFAULT. You will be in default under this Lease if any of the following
happens: (a) we do not receive any Rent or other payment due hereunder within 10
days after its due date, or (b) you or any of your guarantors become insolvent,
are liquidated or dissolved, merge, transfer substantially all stock or assets,
stop doing business, or assign rights or property for the benefit of creditors,
or (c) a petition is filed by or against you or any of your guarantors under any
bankruptcy or insolvency law, or (d) (for individuals) you or any of your
guarantors die, or have a guardian appointed, or (e) any representation you have
made in this Lease shall prove to have been false or misleading in ay material
respect, or (f) you or any of your guarantors break any promise made to this
Lease or any guaranty and do not correct the default within 10 days after we
send you written notice of the default, or (g) you default on any other
agreement between you and us (or our affiliates).
14. REMEDIES. Upon the occurrence of a default, we may, in our sole
discretion, do any or all of the following (a) provide written notice to you of
default; (b) as liquidated damages for loss of a bargain and not as a penalty,
declare due and payable, the present value of (i) any and all amounts which may
be then due and payable by you to us under this Lease, plus (ii) all Rent
payments remaining through the end of the Lease Term, plus (iii) an amount equal
to our reasonable estimate of the fair market value of like equipment as of the
end of the Lease Term, all discounted at the higher of 6% or the lowest rate
allowed by law (collectively, the "Net Book Value"). We have the right to
require you to make the Equipment available to us for repossession during
reasonable business hours or we may repossess the Equipment, so long as we do
not breach the peace in doing so, or we may use legal process in compliance with
applicable law pursuant to court order to have the Equipment repossessed. You
will not make any claims against us or the Equipment for trespass, damage or any
other reason. If we take possession of the Equipment we may (a) sell or lease
the Equipment at public or private sale or lease and/or (b) exercise such other
rights as may be allowed by applicable law. Although you agree that we have no
obligation to sell the Equipment, if we do sell the Equipment, we will reduce
the Net Book Value by the amounts we receive. You will immediately pay us the
remaining Net Book Value. You agree (a) that we only need to give you 10 days
advance notice of any sale and no notice of advertising, (b) to pay all of the
costs we incur to enforce our rights against you, including attorney's fees, and
(c) that we will retain all of our rights against you even if we do not choose
to enforce them at the time of your default.
15. YOUR OPTIONS AT END OF LEASE. You shall have the option at the end of the
Lease Term to (a) return the Equipment in accordance with Section 16, or (b) on
60 days advance written notice to us, purchase all but not less than all of the
Equipment for the fair market value of the Equipment, as determined by us in our
reasonable judgment (plus any applicable taxes). If you elect to purchase the
Equipment, upon payment of the agreed upon price including all sales taxes and
other applicable taxes, we will transfer the Equipment to you AS IS--WHERE IS,
WITHOUT ANY REPRESENTATION OR WARRANTY. If you fail to exercise the purchase
option (a) you will continue to pay Rent until the Equipment is received and
accepted by us pursuant to Section 16, and (b) all of the terms of the Lease
shall continue to apply, including your obligation to pay Rent.
16. RETURN OF EQUIPMENT. If (a) a default occurs, (b) you do not purchase the
Equipment at the end of the Lease Term, or (c) you do not extend the Lease Term,
you will immediately return the Equipment to any location(s) and aboard any
carrier(s) we may designate in the continental United States. The Equipment must
be properly packed for shipment in accordance with the manufacturer's
recommendations or specifications, freight prepaid and insured, maintained in
accordance with Section 7, and in "Average Saleable Condition." "Average
Saleable Condition" means that all of the Equipment is immediately available for
use by a third party buyer, user or lessee, other than yourself, without the
need for any repair or refurbishment. All Equipment must be free of markings.
You will pay us for any missing or defective parts or accessories. You will
continue to pay Rent until the Equipment is received and accepted by us.
17. YOUR REPRESENTATIONS. You state for our benefit that as of the date of
this Lease (a) you have the lawful power and authority to enter into this Lease,
(b) the individuals signing this Lease have been duly authorized to do so on
your behalf, (c) by entering into this Lease you will not violate any law or
other agreement to which you are a party, (d) you are not aware of anything that
will have a material negative effect on your ability to satisfy your obligations
under this Lease, and (e) all financial information you have provided us is true
and accurate and provides a good representation of your financial condition.
18. YOUR PROMISES. In addition to the other provisions of this Lease, you
agree that during the term of this Lease (a) you will promptly notify us in
writing if you move your principal place of business, if you change the name of
your business, or if there is a change in your ownership, (b) you will provide
to us such financial information as we may reasonably request from time to time,
and (c) you will take any action we reasonably request to protect our rights in
the Equipment and to meet your obligations under this Lease.
19. ASSIGNMENT. YOU WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE, SUB-LEASE OR
PART WITH POSSESSION OF THE EQUIPMENT, OR FILE OR PERMIT A LIEN TO BE FILED
AGAINST THE EQUIPMENT. You will not attach any of the Equipment to any real
estate. Upon our reasonable request and at your cost, you will get each person
with an interest in the real estate where the Equipment is located to waive any
rights they may have in the Equipment. We may, without notifying you, sell,
assign, or transfer this Lease and our interests in the Equipment. You agree
that if we do so, the new owner (and any subsequent owners) will have the same
rights and benefits that we now have, but will not have to perform any of our
obligations. You agree that the rights of the new owner will not be subject to
any claims, defenses, or set-offs that you may have against us. However, any
such assignment, sale, or transfer of this Lease or the Equipment will not
relieve us of any obligations we may have to you under this Lease. If you are
given notice of a new owner of this Lease, you agree to respond to any requests
about this Lease and, if directed by us, to pay the new owner all Rent and other
amounts due under this Lease.
20. COLLECTION EXPENSES, OVERDUE PAYMENT, TERMINATION. You agree that we can,
but do not have to, take on your behalf any action which you fail to take as
required by this lease, and our expenses will be in addition to the Rent which
you owe us. we may charge you a late charge to cover our collection costs equal
to the higher of 10% of any late payment or $22, but not more than the highest
legal rate. To the extent allowed by law, any late payment or non-payment of any
past due amount will accrue interest at the lower of 18% per annum or the
highest legal rate from the due date until paid. If you so request and we permit
the early termination of this lease, you agree to pay a free for such privilege.
21. COMPLIANCE WITH LAWS. You understand that the Equipment may be purchased
for cash (the "Equipment Cost") or it may be leased. By signing this Lease, you
acknowledge that you have chosen to lease the Equipment from us for the Lease
Term and that you have agreed to pay Rent.
22. MISCELLANEOUS. This Lease contains our entire agreement and supersedes
any conflicting provision of any equipment purchase order or any other
agreement. TIME IS OF THE ESSENCE IN THIS LEASE. If a court finds any provision
of this Lease to be unenforceable, the remaining terms of this Lease shall
remain in effect. THIS LEASE IS A "FINANCE LEASE" AS DEFINED IN ARTICLE 2A OF
THE UNIFORM COMMERCIAL CODE. You authorize us (or our agent) to (a) obtain
credit reports, (b) make such other credit inquiries as we may deem necessary,
and (c) furnish payment history information to credit reporting agencies. To the
extent permitted by law, we may charge you a fee of $43.25 to cover our
documentation and investigation costs.
23. NOTICES. All of your written notices to us must be sent by certified mail
or recognized overnight delivery service, postage prepaid, to us at our address
stated in this Lease, or by facsimile transmission to our facsimile telephone
number, with oral confirmation of receipt. All of our notices to you may be sent
first class mail, postage prepaid, to your address stated in this Lease. At any
time after this Lease is signed, you or we may change an address or facsimile
telephone number by giving notice to the other of the change.
24. WAIVERS. WE AND YOU EACH AGREE TO WAIVE AND TO TAKE ALL REQUIRED STEPS TO
WAIVE ALL RIGHTS TO A JURY TRIAL. To the extent you are permitted by applicable
law, you waive all rights and remedies conferred upon a lessee by Article 2A
(Section 508-522) of the Uniform Commercial Code including but not limited to
your rights to (a) cancel or repudiate this Lease, (b) reject or revoke
acceptance of the Equipment, (c) recover damages from us for any breach of
warranty or for any other reason, and (d) grant a security interest on any
Equipment in your possession. To the extent you are permitted by applicable law,
you waive any rights you now or later may have under any statute or otherwise
which require us to sell or otherwise use any Equipment to reduce our damages,
which require us to provide you with notice of default, intent to accelerate
amounts becoming due or acceleration of amounts becoming due, or which may
otherwise limit or modify any of our rights or remedies.
ANY ACTION YOU TAKE AGAINST US FOR ANY DEFAULT, INCLUDING BREACH OF WARRANTY OR
INDEMNITY, MUST BE STARTED WITHIN ONE (1) YEAR AFTER THE EVENT WHICH CAUSED IT.
We will not be liable for specific performance of this Lease or for any losses,
damages, delay or failure to deliver Equipment.
<PAGE> 1
EXHIBIT 10.8
[WESTOVER FINANCIAL, INC. LETTERHEAD]
LEASE SCHEDULE
MASTER EQUIPMENT
LEASE AGREEMENT NO. INT00100
LEASE SCHEDULE NO. 2052
BETWEEN WESTOVER FINANCIAL, INC. (LESSOR)
and Interactive Telesis Inc. (LESSEE).
1. DESCRIPTION OF EQUIPMENT
<TABLE>
<CAPTION>
QUANTITY ITEM MODEL/SERIAL NO.
-------- ---- ----------------
<S> <C> <C>
</TABLE>
SEE SCHEDULE "A" ATTACHED HERETO AND MADE A PART HEREOF
=======================================================
2. EQUIPMENT LOCATION
The above Equipment is to be located and delivered to Lessee's premises at
535 Encinitas Blvd. Suite 116, Encinitas, CA 92024.
3. RENTAL TERM: 60 months.
4. RENTAL
The first payment in the amount of $732.85 is due 10-24-97. Subsequent
rental payments will be in the same amount and due on the same day
Monthly (monthly, quarterly, etc.) thereafter.
5. NUMBER AND AMOUNT OF ADVANCE RENTAL PAYMENTS:
NUMBER: 2 $1,465.70
6. SECURITY DEPOSIT: $ N/A.
----
7. THIS SCHEDULE AND ITS TERMS AND CONDITIONS ARE HEREBY INCORPORATED BY
REFERENCE IN THE ABOVE MASTER EQUIPMENT LEASE AGREEMENT. LESSEE PERMITS
LESSOR TO INSERT MODEL AND SERIAL NUMBERS OF EQUIPMENT WHEN DETERMINED BY
LESSOR.
- --------------------------------------------------------------------------------
LESSEE: Interactive Telesis Inc. LESSOR: Westover Financial, Inc.
- ------------------------------------- ----------------------------------------
(MUST BE SIGNED BY AUTHORIZED
CORPORATE OFFICER, PARTNER, OR
PROPRIETOR)
/s/ DONALD E. CAMERON /s/ STEVEN R. JONES
- ------------------------------------- ----------------------------------------
Donald E. Cameron, President (Title) Steven R. Jones, VP & Gen. Mgr. (Title)
- ------------------------------------- Accepted this 24 day of October 1997 at
(Title) Santa Ana, CA
- -------------------------------------
(Title)
- -------------------------------------
(Title)
<PAGE> 2
ASSIGNMENT OF LEASE AND SECURITY AGREEMENT
FOR VALUE RECEIVED, the undersigned ("Assignor") hereby assigns, transfers and
monies now due and that hereinafter come due to Assignor from Interactive
Telesis, Inc. ("Lessee") under or on account of that certain lease agreement
dated 10-15-97 having aggregate unpaid rentals of $42,505.30, and all of the
Assignor's rights and remedies thereunder to receive or collect such monies.
Assignor hereby grants a security interest, pursuant to the California Uniform
Commercial Code, to Assignee in the property described in said lease and in all
accessories parts, insurance policies, services or maintenance agreements, and
other property ("equipment") now or hereafter affixed thereto or used in
connection therewith and all proceeds of any of the foregoing. This security
interest shall secure (a) all obligations of Lessee(s) under the lease
including, but not limited to all rental payments, renewal rental payments,
claims and rights to monies due and to become due under the lease, (b) all
obligations of Assignor to Assignee, however created, direct or contingent,
whether arising in the past, present or hereafter including, but not limited
to, the right and duty to purchase the equipment and (c) all rights and
remedies under the lease and any guarantee thereof, including the right to
take, in Assignor's or Assignee's name, any and all proceedings, legal,
equitable or otherwise and all costs and expenses incurred in the collection or
enforcement of the foregoing.
Assignor warrants and agrees that:
1. The equipment will be kept at the address shown in the lease unless
Assignee otherwise consents in writing;
2. Assignor has full title to the equipment and will at all times keep the
equipment free of all liens, taxes, and claims whatsoever other than use
of the equipment by Lessee(s) in accordance with the lease and the
security interest hereunder;
3. The Lease is genuine and represents a valid obligation of a bonafide
Lessee for the amount stated therein; the Lease and other documents are
and will be legally enforceable by Assignee in accordance with its terms
except as enforceability may be limited by bankruptcy and other laws
affecting creditor's rights generally; the Lease and other documents
shall not be subject to any claims, offsets, defenses or counterclaims;
all statements contained therein are true;
4. Assignor will not sell, transfer, assign or otherwise dispose of any of
the equipment or any interest therein except with prior written consent
of Assignee;
5. Assignee may examine and inspect all the equipment wherever located at
any reasonable time or times. Assignee may from time to time, at its
option, perform any agreement of the Assignor hereunder which the
Assignor fails to perform and take any other action that the Assignee
deems necessary for the maintenance or preservation of any of the
equipment or its interest therein.
<PAGE> 3
Non-payment when due, whether by acceleration or otherwise, of any monies, sums
or amounts payable under or on account of the Lease, shall constitute a default
hereunder. Upon such default under any assigned lease, Assignee may exercise
from time to time any rights or remedies available to it under such lease, the
California Uniform Commercial Code, California Vehicle Code or other statue or
contractual agreement. Any proceeds of the equipment will be applied first to
the payment of costs and expenses incurred in connection with the taking,
storing, marketing and sale of the equipment, including reasonable attorney
fees, and then to the rental obligations owed to Assignee. Proceeds of any
collateral securing such assigned lease will be similarly applied first to the
costs and expenses incurred in enforcing the collateral agreement and then to
the rental obligations owed to Assignee.
In exercising its rights under the Lease, any guaranty thereof, collateral
assignments or pledges, or under any statutes or other agreements, Assignee
shall have sole discretion to choose which rights to exercise, in which order
and when, Assignor shall have no right to direct Assignee in this regard and
waives any claim or defense which it may have with regard to the manner of
timing. Including any claim that Assignee's acts or discharge of any obligor or
the release of property to which Assignor may have otherwise resorted.
Until all obligations secured hereby have been paid in full, Assignor shall
have no right of subrogation and Assignor further waives any right to enforce
any remedy which Assignor now has or later may have against Lessee(s) or any
other person(s), and security now or later held by Assignee.
Assignee may, without Assignor's consent, assign or transfer this agreement,
any rights granted hereunder, any equipment or any rent or other sums due or
other sums to become due.
Assignor warrants and agrees that each of the waivers set forth above are made
with Assignor's full knowledge of their significance and consequences with the
understanding that events giving rise to any defense waived may diminish,
destroy or otherwise adversely affect rights which Assignor otherwise may have
against Lessee(s), Assignee or others, or against the equipment or any
collateral, and that, under the circumstances, the waivers are reasonable and
not contrary to public policy or law. If any of the waivers are determined to
be contrary to any applicable law or public policy, such waivers shall be
effective to the maximum extent permitted by law.
The rights and liabilities of Assignee and Assignor under this agreement shall
be interpreted, enforced, and governed by the laws of the State of California,
County of Sacramento. Assignee consents and subjects itself to the jurisdiction
of State and Federal courts within the State of California, County of
Sacramento and Assignee shall not file or maintain any action or proceeding
regarding this agreement in a court outside of the jurisdiction of the State
of California, County of Sacramento.
The undersigned warrants he/she has full authority to execute this Assignment
on behalf of Assignor.
Dated: 10-24-97 Assignor: Westover Financial, Inc.
By: /s/ STEVEN R. JONES
----------------------------------
Steven R. Jones, VP & Gen. Mgr.
Title:
-------------------------------
Address: 400 N. Tustin Ave, Suite 140
Santa Ana, CA 92705
<PAGE> 4
CORPORATE LESSEE'S BOARD OF
DIRECTORS RESOLUTION AUTHORIZING
MASTER EQUIPMENT LEASE AGREEMENT
MASTER LEASE AGREEMENT NO. INT00100
The Undersigned hereby certifies that he is the Secretary of Interactive
Telesis Inc., a corporation validly existing and organized under the laws of the
State of CA, which Corporation is presently subsisting and in good standing
under the laws of such State and is duly qualified to conduct its business
within the state of California (WHERE EQUIPMENT LOCATED): that the following is
a true, accurate and compared transcript of resolutions duly adopted at a
meeting of the Board of Directors of said Corporation duly held on the 15 day of
October, 1997 at which meeting a quorum was present, and that the proceedings
were in accordance with the Articles and by-laws of said Corporation, and that
said resolutions have not been amended, rescinded, modified or revoked, and are
in full force and effect:
"RESOLVED, that each of the officers of this Corporation, whose name
appears below, or the duly elected or appointed successor in office of any or
all of them, be and is hereby authorized and empowered in the name and on
behalf of this Corporation to enter into, execute and deliver a Master Lease
Agreement between Westover Financial, Inc. (hereinafter called "Lessor") as
Lessor and this Corporation as lessee and providing for the leasing to this
Corporation of equipment and further providing for this Corporation to
indemnify said Lessor against certain occurrences, and to enter into, execute
and deliver any Lease Schedules which are now attached thereto as part thereof
and any Lease Schedules executed from time to time hereafter which may
hereafter become a part thereof; and
FURTHER RESOLVED, that each designated officer of this Corporation is
hereby authorized to do and perform all other acts and deeds that may be
requisite or necessary to carry fully into effect the foregoing resolution; and
FURTHER RESOLVED, that said Lessor is authorized to rely upon the
aforesaid resolutions until receipt by it of written notice of any change,
which changes of whatever nature shall not be effective as to said Lessor to
the extent that it has theretofore relied upon the aforesaid resolutions in the
above form."
/s/ DONALD E. CAMERON
- ---------------------------------- ----------------------------------
President Donald E. Cameron Treasurer
*
- ---------------------------------- ----------------------------------
Vice-President Secretary
I FURTHER CERTIFY that the duly elected officers of this Corporation named
in the foregoing resolution continue to hold their respective offices.
I FURTHER CERTIFY, I have set my hand and affixed the seal of said
Corporation this 15 day of October, 1997.
(CORPORATE SEAL)
*
----------------------------------
Secretary
FORM 905 4/90
<PAGE> 5
INTERACTIVE TELESIS
EQUIPMENT ITEMIZATION
SCHEDULE A
- --------------------------------------------------------------------------------
MITEL SX-2000 MICRO LIGHT
PURCHASE OPTION
<TABLE>
<CAPTION>
QTY DESCRIPTION
- --- -----------
<S> <C>
1 Mitel Micro Light Basic System (9400-200-133-NA) Serial # AAA2T3024
1 Mitel Basic System Software (MK070(LW27)
1 Mitel DNI Line Card (MC330)(16 cct each)
1 Mitel ONS Line Card (MC320)(16 cct each)
1 Mitel LS/GS Line Card (MC340)(8 cct each)
4 Mitel DSI Formatter (MC263)(48 cct each)
4 Mitel DSI I/F Assembly (MA218)
</TABLE>
Includes installation, training and 5 Year 5 Star Warranty
Total System Investment...............................................$28,248.59
Tax on Equipment $ 1,751,41
TOTAL WITH TAX $30,000.00
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 10.9
16105.1
---------------
LEASE NUMBER
LESSOR: WESTOVER FINANCIAL, INC.
1035 S. MILLIKEN AVE., SUITE B, ONTARIO, CA 91761
BUSINESS LEASE AGREEMENT
[ILLEGIBLE COPY]
Interactive Telesis Inc.
[ILLEGIBLE COPY]
535 Encinitas Blvd. Suite 116, Encinitas, San Diego, CA 92024
[ILLEGIBLE COPY]
I Net 5754 Pacific Center Blvd. #222 San Diego, CA 92121
QUANTITY DESCRIPTION: MODEL No., Serial No. or other identification COST
SEE SCHEDULE "A" ATTACHED HERETO AND MADE A PART HEREOF
[ILLEGIBLE COPY]
If Other Than
Billing address 535 Encinitas Blvd. Suite 116, Encinitas, San Diego, CA 92024
<TABLE>
<CAPTION>
PAYMENT AMOUNT ADVANCE
INCLUDING RENT # OF ADVANCE PAYMENTS DOCUMENT
APPLICABLE TAX PAYMENTS PAYMENTS (INCLUDE TAX) FEE LEASE TERM
- -------------- --------- ------------- ------------- -------- ----------
<S> <C> <C> <C> <C> <C>
__ Monthly __ Semi-monthly
$825.35 __ Quarterly __ Annual 1+1 $1650.70 $135.00 60
</TABLE>
1. LEASE. Lessor hereby leases to Lessee and Lessee hereby leases from Lessor
the personal property described above (herein called the "Equipment"). Upon
Lessor signing below, this Lease shall become NONCANCELLABLE DURING THE TERM
STATED ABOVE by Lessee for any reason whatsoever, and Lessee shall be obligated
to pay Lessor all sums called for in this Business Lease Agreement (herein
called the "Lease").
2. COMMENCEMENT AND TERMINATION. This Lease shall commence on the "Lease
Start Date" to be determined by Lessor and provided Lessee has successfully
performed all his duties and obligations under the Lease, shall terminate upon
expiration of the number of months (following the Lease Start Date) stated as
the Lease Term.
3. RENT AND OTHER PAYMENTS. Lessee shall pay the advance rentals due under
this Lease as stated above upon signing this Lease. All such amounts shall be
non-refundable. Monthly rent payments due after the first month's rent shall be
payable on the "Payment Due Date" to be determined by Lessor or on the first
business day thereafter if a Payment Due Date falls on a non-business day.
Lessee agrees to pay to Lessor a service charge of 5% per month, but not to
exceed the maximum amount permitted by law, on any payment due under this Lease
which is not paid within five days of the Payment Due Date. Lessee shall pay
all sales, use, excise, personal property, stamp, documentary, and ad valorem
taxes, licenses and registration fees, assessments, fines, penalties, and other
charges imposed on the ownership, possession, or use of the Equipment during the
term of this Lease, and Lessee shall pay all taxes (except income taxes imposed
on Lessor) with respect to the rental payment hereunder, and shall, with the
next scheduled payment reimburse Lessor for any taxes paid by advanced by
Lessor. Lessee's obligation to pay such taxes, fees, assessments, fines,
penalties, and other charges shall survive termination of the Lease. Lessee
agrees that Lessor may adjust the rent payment proportionally up or down if
the actual cost of the Equipment exceeds or is less than the amount stated in
the Lease. All payments under this Lease shall be made to Lessor at the address
set forth above or at any other address Lessor subsequently gives to Lessee for
purposes of making payment. In the event of default, payments made under the
Lease may be applied to Lessee's obligation to Lessor in any order Lessor
chooses.
4. SELECTION OF EQUIPMENT. Lessee acknowledges that Lessor did not
participate in the selection, manufacture or supply of the Equipment and that
Lessee has made the selection of the Equipment and the supplier of such
Equipment based upon its own judgment. Lessee agrees to inspect the Equipment
and to execute the "Certificate of Acceptance," which is attached hereto, only
after the Lessee is satisfied that the Equipment is satisfactory in every
respect. Lessee hereby authorizes Lessor to insert in the Lease any equipment
serial numbers and other identification data relating to the Equipment as
needed.
5. DISCLAIMER OF WARRANTIES. BY SIGNING BELOW, LESSEE ACKNOWLEDGES THAT
LESSOR IS LEASING THE EQUIPMENT TO LESSEE "AS IS" AND WITH ALL FAULTS. LESSOR
MAKES NO REPRESENTATIONS AND DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED,
CONCERNING THE EQUIPMENT, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY. LESSEE HEREBY WAIVES ANY
CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT) IT
MIGHT HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR
CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY THE EQUIPMENT. Provided Lessee is
not in default of this Lease, Lessor hereby assigns to Lessee and Lessee shall
have the benefit of, any and all manufacturer's warranties, service agreements
and patent indemnities, if any, with respect to the Equipment; provided,
however, that Lessee's sole remedy for breach of any such warranty,
indemnification or service agreement shall be against the manufacturer of such
Equipment and not against the Lessor, nor shall such breach have any effect
whatsoever on the rights and obligations of Lessor or Lessee hereunder. LESSEE
ACKNOWLEDGES THAT NEITHER THE SUPPLIER, BROKER NOR THEIR AGENTS OR EMPLOYEES ARE
AGENTS OF LESSOR NOR ARE THEY AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION
OF THIS LEASE WITHOUT THE WRITTEN CONSENT OF LESSOR. NO AGREEMENT, EITHER
WRITTEN OR VERBAL, BETWEEN SUPPLIER AND LESSEE OR BROKER AND LESSEE SHALL BIND
LESSOR UNLESS LESSOR SPECIFICALLY CONSENTS TO SUCH AGREEMENT IN WRITING.
6. AMENDMENTS; FACSIMILE COPIES. No term or provision of this Lease may be
amended, altered, waived, discharged or terminated except by written instrument
signed by the parties hereto. Lessee agrees and acknowledges that facsimile
copies of the Lease and all other agreements, instruments and documents
executed by Lessee in connection herewith (collectively, the "Documents") may
be admitted in any litigation or other proceeding concerning this Lease to the
same extent as the original thereof. Lessee waives any objection to the
admissibility of facsimile copies of this Lease or Documents.
SEE REVERSE FOR ADDITIONAL TERMS AND CONDITIONS WHICH ARE A PART OF THIS LEASE.
[ILLEGIBLE COPY]
BY /s/ STEVEN R. JONES LESSEE /s/ DONALD E. CAMERON
-------------------------------- ---------------------------------
Steven R. Jones, VP & Gen. Mgr. Donald E. Cameron, President
DATE 10-24-97 BY
------------------------------ -------------------------------------
TITLE
WITNESS /s/ [SIGNATURE ILLEGIBLE] 10/15/9
--------------------------------
DATE
PERSONAL GUARANTY
In consideration of Lessor entering into the above Business Lease Agreement
(the "Lease"), the undersigned ("Undersigned") jointly and severally,
personally and unconditionally guarantee to Lessor the prompt payment in full,
when due, of all of Lessee's obligations under the Lease including without
limitation, every rental payable and the accelerated balance of rentals if
demanded by Lessor. Lessor shall not be required to proceed against Lessee or
the Equipment or enforce any other remedy before proceeding against the
Undersigned. The Undersigned agrees to pay all attorneys fees and other
expenses incurred by Lessor by reason of any default of Lessee or in enforcing
the Lease or this Guaranty. The Undersigned waives notice of acceptance hereof
and all other notices or demands of any kind to which the Undersigned may be
entitled and consents to the granting of extensions of time of payment to Lessee
and other obligors and guarantors and to any other amendments or adjustments in
the terms of the Lease. This Personal Guaranty shall bind the heirs,
administrators, representatives, successors and assigns of guarantor and may be
enforced by or for the benefit of any assignee or successor of Lessor. This
Guaranty shall be governed by the laws of the State of Colorado. The
Undersigned acknowledges that, for purposes of enforcement of this Guaranty, he
is conducting business in the State of Colorado, and agrees that, in the event
of any litigation related to the Lease or this Guaranty, venue and jurisdiction
shall be proper in the Colorado District Court for City and County of Denver,
State of Colorado.
SIGNATURE X /s/ DONALD E. CAMERON SIGNATURE X
----------------------- ----------------------------
(INDIVIDUAL CAPACITY) DONALD E. CAMERON (INDIVIDUAL CAPACITY)
(PRINT NAME) (PRINT NAME)
----------------------- ---------------------------
HOME HOME
ADDRESS 1109 Sycamore View Dr. ADDRESS
Encinitas, CA 92024
--------------------------- -------------------------------
HOME HOME
PHONE NO. 760 633 1112 DATE 10-15-97 PHONE NO. DATE
-------------------------- ------------------------------
ACH AUTHORIZATION
The undersigned Lessee hereby authorizes Lessor and its assigns to
initiate debit entries and, if necessary, credit entries and adjustments for any
debit entries made in error, to Lessee's checking or other depository account
described below for all payments due under the above reference Lease. For each
payment due under the Lease, the debit entry for such payment may be made by
Lessor and its assigns at any time on or after the date such payment is due
under the Lease. The depository of the account described below is directed and
authorized to honor all entries initiated by Lessor and its assigns under this
Agreement.
Name of Depository: ___________________ Address of Depository: _________________
Transit/ABA Number: ___________________ Account Number: ________________________
Account Name: _____________________________________________
This Agreement and the authorizations contained herein shall remain in
full force and effect until the Lease has been paid in full or Lessor and its
assigns has received at least 30 days advance notice of termination of this
Agreement from [ILLEGIBLE COPY]. While this Agreement is in force, Lessee shall
maintain sufficient funds in the above account to fully cover all debit entries
initialed hereunder.
By: _________________________________ Title: _________________________________
<PAGE> 2
7. FINANCE LEASE STATUS. The parties agree that this Lease is intended to
qualify as a "Finance Lease" under Article 2 of the Uniform Commercial Code
(herein called the "UCC"). Lessee acknowledges that (a) Lessee has received a
copy of the contract [ILLEGIBLE] which Lessor acquired the Equipment (herein
called the "Supply Con[ILLEGIBLE]); or (b) Lessee has reviewed and approved the
Supply Contract or (c) Lessor has informed or advised Lessee in writing either
previously or by this Lease (i) of the identity of the supplier; (ii) that
Lessee may have rights under the Supply Contract and (iii) that the Lessee
should contact the supplier for a description of any such rights Lessee may have
under the Supply Contract.
8. LESSEE INDEMNIFICATION. Lessee hereby agrees to indemnify and hold Lessor and
Lessor's agents and employees harmless from any and all liability, damages or
loss, including attorney's fees and court costs, arising out of the purchase,
sale, ownership, selection, possession, operation, control, use, maintenance or
delivery of the Equipment.
9. POWER OF ATTORNEY/FINANCING STATEMENTS. Lessee hereby makes, constitutes and
appoints Lessor and his assigns its true and lawful attorney and agent for it
and in its name, place and stead to execute, deliver and file any UCC financing
statements and other documents that Lessor deems necessary or advisable in order
to protect Lessor's rights in the Equipment. This power being coupled with an
interest shall be irrevocable for the term of this Lease. Lessor and Lessee
agree that a carbon, photographic or other reproduction of this Lease may be
filed as a financing statement under the UCC.
10. LESSOR TERMINATION BEFORE EQUIPMENT ACCEPTANCE. If within 60 days from the
date Lessor orders the Equipment, same has not been delivered, installed and
accepted by Lessee (in form satisfactory to Lessor) Lessor may at Lessor's sole
discretion, on 10 days written notice to Lessee, terminate this Lease and its
obligation to Lessee.
11. LOCATION AND INSPECTION. Equipment shall be delivered and thereafter kept
at the location specified above, or, if none is specified, at Lessee's address
set forth above and Lessee shall not remove or allow to be removed therefrom
without Lessor's prior written consent. Any and all costs incurred by Lessor as
a result of such relocation shall be borne by Lessee. Any charges hereunder
shall not abate during the period the Equipment is out of service due to any
such relocation requested by Lessee. Lessee shall permit Lessor on its premises
to inspect the equipment and the business records of Lessee relating to it
during normal business hours.
12. USE OF EQUIPMENT. Lessee shall, at its expense, use, maintain and keep the
Equipment in good operating order in the manner for which it was designed and
intended, SOLELY FOR LESSEE'S BUSINESS PURPOSE, in accordance with
manufacturer's recommendations and in compliance with all applicable laws,
regulations and insurance requirements. Lessee shall not make any alterations
or additions to the Equipment without the prior written consent of Lessor. All
additions, attachments, or replacements made to the Equipment, unless otherwise
agreed to in writing by Lessor, shall become part of the Equipment. Lessee, at
its expense, shall maintain the Equipment in good operating order and repair in
accordance with the manufacturer's recommendations. Supplies required for use
of the Equipment are to be provided by Lessee at its expense and are to meet
with the Equipment manufacturer's specifications.
13. LESSEE REPRESENTATIONS. Lessee warrants and represents that (a) all legal
action has been taken to permit Lessee to execute and perform this Lease; (b)
its entering into and performance of this Lease will not violate any law or
regulation applicable to Lessee; (c) this Lease constitutes a legal, valid, and
binding obligation, enforceable against Lessee in accordance with its terms;
(d) all financial or other statements furnished or made to Lessor by Lessee are
true and correct in all material respects; and (e) Lessee is in good standing
in its state of incorporation and is in good standing and is entitled to own
properties and to carry on a business in the state where the Equipment is to be
located. Any person signing this Lease for Lessee warrants that he is duly
authorized and empowered to do so.
14. INSURANCE. Lessee shall at all times prior to return of the Equipment to
Lessor carry and maintain, at its expense, insurance covering (a) theft and all
risks of loss or damage from any cause whatsoever for an amount not less than
the replacement value of the Equipment or the unpaid amount of the Lease,
whichever amount is greater, and which names Lessor and its assigns as loss
payee; and (b) public liability, both personal injury and property damage,
covering the maintenance, use and operation of the Equipment and its use and
which names Lessor and its assigns as an additional insured. All such insurance
coverage shall be in form, amount, and with companies satisfactory to Lessor.
Lessee shall deliver certificates of insurance to Lessor. All such insurance
shall require 30 days written notice to Lessor and its assigns prior to
alteration or cancellation. Lessee hereby appoints Lessor and its assigns as
Lessee's attorney-in-fact with respect to endorsement of all documents, checks,
or drafts for loss or damage recoverable under all such insurance policies.
15. RISK OF LOSS. Upon delivery of the Equipment to Lessee, Lessee shall bear
the entire risk of loss, damage, theft or destruction to the Equipment or any
part thereof, from any and every cause whatsoever, which shall occur prior to
the Lessee's return of the Equipment as set forth in this Lease and no such
loss, damage, theft or destruction shall relieve Lessee of its obligation to
pay rent or to comply with any other obligation under this Lease. In the event
of such loss, damage, theft, or destruction, Lessee shall promptly notify
Lessor and Lessee shall within 30 days repair or replace such Equipment to its
original condition, and shall continue to make Lease payments as called for
under this Lease. Lessee agrees that if Lessee shall fail to procure, carry and
maintain insurance coverage as set forth in this Lease, Lessor shall have the
right, but not the obligation, to obtain such insurance on behalf of and at the
expense of Lessee. In the event Lessor does obtain such insurance, Lessee
agrees to pay all costs thereof with the next rental payment.
16. RETURN OF EQUIPMENT. Upon expiration or earlier termination of the Lease
with respect to the Equipment, or upon demand by Lessor pursuant to this Lease,
Lessee shall immediately, at [ILLEGIBLE] expense, return the Equipment in the
same condition as when Lessee received it, excepting only reasonable wear and
tear, to Lessor at a location in the continental United States specified by
Lessor. Lessee shall pay all costs and expenses to crate, insure and return the
Equipment to the designated location. After the expiration of the initial Lease
term and thereafter until Lessor actually receives the Equipment at the return
location, the Lease shall automatically renew from month to month for no more
than 12 (twelve) months after the expiration of the initial term, and Lessee
agrees to continue to make Lease payments at the last effective rate under the
Lease with the Lessor retaining all payments made up to the time the Equipment
is returned to the specific return location.
17. DEFAULT. The following events shall constitute an event of default by Lessee
under this Lease: (a) failing to pay when due any amount required to be paid to
Lessor under this Lease in a timely fashion or to timely perform any covenant,
condition, or obligation to be performed by Lessee under this Lease or under any
other agreement with Lessor; (b) selling, transferring, or disposing of the
Equipment or of substantially all of Lessee's assets or merging or reorganizing
without the prior written consent of Lessor; or (c) creating, incurring,
assuming or suffering to exist any mortgage, lien, pledge or other encumbrance
or attachment of any kind whatsoever upon, affecting or with respect to the
Equipment or this Lease or any of Lessor's interests thereunder; or (d)
providing financial statements or making representations to Lessor which are
incorrect or misleading or inaccurate in any respect; (e) becoming unable to pay
debts as they become due or otherwise becoming insolvent or suffering an adverse
change in its financial condition; or (f) Lessor reasonably deeming itself
insecure in its expectations that Lessee will fully perform all of Lessee's
obligations under this Lease.
18. REMEDIES OF LESSOR. Upon the occurrence of a default by Lessee hereunder and
at any time thereafter (subject to any applicable grace provisions), Lessor may
exercise any one or more of the following remedies, as Lessor, in its sole
discretion, shall elect: (a) declare all unpaid rentals under this Lease to be
immediately due and payable; the amount to be due to be computed as hereinafter
set forth; (b) terminate this Lease as to any or all items of Equipment, but no
such termination shall be deemed to occur unless written notice to that express
effect is given by Lessor to Lessee; (c) whether or not this Lease is
terminated, take immediate possession of any or all of the Equipment, without
notice or demand and without court order or process, and for such purpose, enter
upon any premises without liability for so doing; (d) sell, lease or otherwise
dispose of the Equipment, or any item thereof, at a public or private sale or
lease at such time or times and upon such terms as Lessor may determine, free
and clear of any rights of Lessee; (e) proceed by appropriate action either at
law or in equity to enforce performance by Lessee of the applicable covenants of
this Lease or recover damages for the breach thereof; and (f) exercise any and
all rights accruing to a Lessor or personal property under any applicable law
upon a default by Lessee. In furtherance of the foregoing, Lessor shall be
entitled to recover immediately as liquidated damages and not as a penalty, a
sum equal to the aggregate of the following: (i) all unpaid rentals and other
amounts or other sums which are due and payable for any item of Equipment up to
the date delivered to or repossessed by Lessor; (ii) any expenses paid or
incurred by Lessor in connection with the repossession, holding, repair,
appraisal, transportation and subsequent sale, lease or other disposition of the
Equipment, including attorneys' fees and court costs; and (iii) an amount equal
to the difference between (aa) all unpaid rentals and other amounts, due and to
become due under this Lease, each of which unpaid rentals and other amounts
shall be discounted to present value at an annual rate of 7% (collectively,
"Unpaid Rentals"), together with the amount or percentage of original cost for
which Lessee would have been permitted or required to purchase the Equipment at
the end of the Lease term hereof, which amount shall be discounted to present
value at an annual rate of 7% ("Purchase Amount") and (bb) the then fair market
value of any Equipment returned to or repossessed by Lessor ("Return Value");
provided, however, that the Return Value of each such item of Equipment shall be
deemed to be an amount equal to the proceeds, if any, of any sale or lease
thereof by Lessor, less any costs or expenses incurred by Lessor from such sale
or lease. If Lessor is unable, after the exercise of reasonable efforts to sell
or lease any such item of equipment, the Return Value of such item of equipment
shall be deemed to be zero. If the Return Value of the Equipment exceeds the sum
of the Unpaid Rentals plus the Purchase Amount, Lessor shall be entitled to the
excess.
No right or remedy conferred upon or reserved to Lessor by this Lease
shall be exclusive of any other right or remedy herein or by law provided; all
rights and remedies of Lessor conferred on Lessor by this Lease or by law shall
be cumulative and in addition to every other right and remedy available to
Lessor. Lessee shall pay all costs and reasonable attorney's fees incurred by
Lessor in collecting any sums owed under this Lease or in obtaining possession
of leased Equipment, including attorney's fees incurred in seeking relief from
stay in bankruptcy court together with interest at the rate of the lesser of
18% compounded annually, or the maximum amount permitted by law on each of the
foregoing and on all sums not paid when due under any provision of this Lease.
19. LESSEE'S WAIVERS. To the extent permitted by applicable law, Lessee hereby
waives any and all rights and remedies conferred upon a Lessee by Section 2A-508
through Section 2A-522 of the uCC, including, without limitation, Lessee's
rights to: (a) cancel this Lease; (b) repudiate this Lease; (c) reject the
Equipment; (d) revoke acceptance of the Equipment; (e) recover damages from
Lessor; (f) a security interest in the Equipment in Lessee's possession or
control for any reason; (g) deduct all or any part of claimed damages resulting
from Lessor's default, if any, under this Lease; (h) recover damages from Lessor
for any breaches of warranty or for any other reason; (i) accept partial
delivery of the Equipment; (j) "cover"; (k) recover any general, special,
incidental or consequential damages for any reason whatsoever; and (l) specific
performance, replevin, detinue, sequestration, claim or delivery of the like for
the Equipment.
20. ASSIGNMENT BY LESSOR. LESSOR MAY ASSIGN OR TRANSFER THE LEASE OR LESSOR'S
INTEREST IN THE EQUIPMENT WITHOUT NOTICE TO LESSEE. Any assignee of Lessor
shall have all of the rights, but none of the obligations, of Lessor under the
Lease and Lessee agrees that it will not assert against any assignee of Lessor
any defense, counterclaim or offset that Lessee may have against Lessor. Lessee
acknowledges that any assignment or transfer by Lessor shall not materially
change Lessee's duties or obligations under this Lease nor materially increase
the burdens or risk imposed on Lessee. Lessee agrees that Lessor may assign or
transfer this Lease or Lessor's interest in the Equipment even if said
assignment or transfer could be deemed to materially effect the interests of
Lessee.
21. NO LESSEE ASSIGNMENT OR SUBLEASE. LESSEE SHALL NOT ASSIGN, HYPOTHECATE OR
IN ANY WAY DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS
LEASE OR ENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT WITHOUT
THE PRIOR WRITTEN CONSENT OF LESSOR.
22. CONSENT TO COLORADO JURISDICTION AND VENUE AND CHOICE OF LAW. LESSEE AGREES
THAT BY ENTERING INTO THIS LEASE LESSEE HAS TRANSACTED BUSINESS IN THE STATE OF
COLORADO. IN THE EVENT OF LEGAL ACTION TO REFORM, ENFORCE, CONSTRUE OR
INTERPRET THIS LEASE, LESSEE CONSENTS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF COLORADO, AGREES THAT THE COLORADO COURTS HAVE JURISDICTION OVER
LESSEE, AND THAT VENUE AND JURISDICTION SHALL BE PROPER IN ANY STATE OR FEDERAL
COURT LOCATED IN THE STATE OF COLORADO. THIS LEASE SHALL IN ALL RESPECTS BE
INTERPRETED, AND ALL TRANSACTIONS HEREUNDER AND ALL RIGHTS AND LIABILITIES of
THE PARTIES HERETO SHALL BE GOVERNED AND DETERMINED AS TO VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT IN ACCORDANCE WITH THE LAWS OF THE STATE
OF COLORADO, EXCEPT FOR LOCAL RECORDING STATUTES.
23. OWNERSHIP/PERSONALITY. The Equipment is, and shall remain, the property of
Lessor, and Lessee shall have no right, title or interest therein or thereto
except as expressly set forth in this Lease. The Equipment shall remain
personal property regardless of whether affixed to real property, and Lessee
agrees to execute and obtain the execution of all agreements and documents in
recordable form by all parties having an interest in real property to which the
Equipment may be affixed, as Lessor may request, to protect Lessor's title to
the Equipment.
24. MISCELLANEOUS. (a) Lessor has entered into this Lease in reliance upon
Lessee's representations that this Lease is for commercial, or business
purposes and not for personal, family or household purposes of Lessee; (b) any
action by Lessee against Lessor for any default by Lessor under this Lease,
shall be commenced within one (1) year after any such cause of action accrues;
(c) if for any reason this transaction is deemed not to be a Lease, Lessee
hereby grants Lessor a security interest in the Equipment (d) all notices,
consents, instructions or requests desired or required to be given under this
Lease shall be in writing and shall become effective when delivered, or if
mailed, when deposited in the U.S. mail postage prepaid for certified or
registered mail return receipt requested, at the address set forth in this
Lease or at such other address as such party shall from time to time designate
by proper notice; (e) no failure on the part of Lessor to exercise, and no
delay in exercising, any rights or remedy under this Lease shall operate as a
waiver or modify the terms of this Lease, nor shall any single or partial
exercise by Lessor of any right or remedy preclude any other or further
exercise of the same or any other right or remedy; (f) Lessee shall promptly
provide such further documents and financial reports as Lessor may reasonably
require in its normal course of business including copies of annual financial
reports, Securities Exchange Commission reports, quarterly reports and any
other information as Lessor may reasonably require; (g) no provision of this
Lease which may be deemed unenforceable shall in any way invalidate any other
provision of this Lease; (h) if any of the provisions of this Lease or
documentation related thereto is declared to be invalid or unenforceable, such
provisions shall be severed from this Lease and the remaining provisions
thereof shall remain in full force and effect, (i) this Lease and all
documentation executed in connection therewith represents the entire agreement
between the parties hereto and automatically cancels and supersedes any and all
prior verbal or written understandings with respect thereto. The Lessor may in
its sole discretion accelerate the full payment of this Lease upon the death of
a natural Lessee or Guarantor.
25. UNIFORM COMMERCIAL CODE FINANCING STATEMENT: LESSEE AGREES AND ACKNOWLEDGES
THAT IT IS THE INTENT OF BOTH PARTIES TO THIS LEASE THAT IT QUALIFY AS A
STATUTORY FINANCE LEASE UNDER ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE.
THIS IS A NON-CANCELABLE LEASE
<PAGE> 3
LESSOR: WESTOVER FINANCIAL, INC. 1035 S. MILLIKEN AVE. SUITE B, ONTARIO,
CA 91761 10-15-97 161051
---------------------------------
DATE
CERTIFICATE OF ACCEPTANCE
The undersigned hereby acknowledges receipt, in good condition, of the
Equipment described in the Business Lease Agreement or on any schedule (the
"equipment") and unconditionally accepts the same in accordance with all of the
terms and conditions of that certain business lease agreement ("Lease") dated
10-15-97.
The undersigned Lessee has selected, and requested that Lessor purchase the
Equipment under the lease from one or more Vendor(s), if the equipment is not
properly installed, does not operate as represented or warranted by said
Vendor(s), or is unsatisfactory for any reason, Lessee shall make any claim on
account thereof solely against said Vendor(s) and shall, nevertheless pay Lessor
all rentals payable under the above-referenced Lease, and shall not set up
against Lessee's obligations any such claims as a Defense, counter-claim,
set-off, or otherwise.
Lessee represents and warrants that none of the Equipment was delivered
prior to the date the undersigned executed the Lease unless Lessor shall have
previously consented thereto, in writing. Lessee understands that the Lessor is
relying upon this certificate as a condition for making payment for the cost of
the equipment to the Vendor(s). Lessee is hereby notified that the Lessee may
have rights under the contract for purchase between the Vendor(s) and Lessor.
Lessee should contact the vendor(s) for a complete description of any such
rights.
LESSEE AGREES THAT THE EQUIPMENT IS LEASED "AS IS" AND THAT LESSOR HAS MADE
NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE SUITABILITY OR DURABILITY OF
THE EQUIPMENT FOR THE PURPOSES AND USES OF LESSEE, OR ANY OTHER REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT THERETO, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
DO NOT SIGN THIS ACCEPTANCE UNTIL YOU HAVE ACTUALLY RECEIVED ALL THE EQUIPMENT
SET FORTH IN THE ABOVE-REFERENCED LEASE.
DATE OF
LESSEE: Interactive Telesis Inc. ACCEPTANCE: 10-24-97
--------------------------- -------------------------------
BY: /s/ DONALD E. CAMERON TITLE: President
------------------------------- ------------------------------------
Donald E. Cameron
- --------------------------------------------------------------------------------
I hereby authorize
-------------------------------, ---------------------------
Title
to orally verify my/our acceptance of the above referenced equipment in my
absence.
BY: TITLE:
--------------------------------- -------------------------------
<PAGE> 4
INTERACTIVE TELESIS
EQUIPMENT ITEMIZATION
SCHEDULE A
- --------------------------------------------------------------------------------
MITEL SX-2000 MICRO LIGHT
PURCHASE OPTION
QTY DESCRIPTION
- --- -----------
1 Mitel General Business Software (MFRD-A-07)
1 Mitel Adv Analog Networking (MSA-A-11)
1 Mitel ANI/DNIS (MSA-A-36)
1 Mitel Traffic Reporting Software (MSA-A-08)
1 Mitel Superset 430
15 Mitel Superset 410
5 Premier CSU Serial #'s 0M0052830060
2 48V PS 0M0062830000
1 MDF Kit 0M0062890032
1 RMAT Kit 0M0062880081
1 Rack Kit 0M0062830069
6 Hour of Mitel Technical Training
Includes installation, training and 5 Year 5 Star Warranty
Total System Investment............................$29,718.46
Tax on Equipment $1,842.54
----------
TOTAL WITH TAX $31,561.00
<PAGE> 5
[WESTOVER FINANCIAL, INC. LETTERHEAD]
SCHEDULE "A"
THIS SCHEDULE IS TO BE ATTACHED TO AND BECOME PART OF LEASE # 16105.1
-------------------
DATED 10-15-97 , 19 BY AND BETWEEN THE UNDERSIGNED.
------------ ---
VENDOR:
1 MITEL GENERAL BUSINESS SOFTWARE (MFRD-A-07)
1 MITEL ADV ANALOG NETWORKING (MSA-A-11)
1 MITEL ANI/DNIS (MSA-A-36)
1 MITEL TRAFFIC REPORTING SOFTWARE (MSA-A-08)
1 MITEL SUPERSET 430
15 MITEL SUPERSET 410
5 PREMIER CSU SN: 0M0052830060, 0M0062830000, 0M0062890032, 0M0062880081,
0M0062830069
2 48V PS
1 MDF KIT
1 RMAT KIT
1 RACK KIT
THIS SCHEDULE IS HEREBY VERIFIED CORRECT AND UNDERSIGNED LESSEE ACKNOWLEDGES
RECEIPT OF SAME.
LESSEE: INTERACTIVE TELESIS INC.
BY: /s/ DONALD E. CAMERON
--------------------------------------
Donald E. Cameron, President
LESSOR: WESTOVER FINANCIAL, INC.
BY: /s/ STEVEN R. JONES
--------------------------------------
Steven R. Jones, VP & Gen. Mgr.
<PAGE> 1
EXHIBIT 10.10
[FFSI LOGO]
FORD FINANCIAL SERVICES, INC.
LEASE SCHEDULE NO. 001
to
MASTER LEASE AGREEMENT NO.: B01060898SD
(including all supplements and addenda the "Lease")
dated as of
the 13th day of August, 1998
between
FORD FINANCIAL SERVICES, INC. ("LESSOR")
and
INTERACTIVE TELESIS, INC. ("LESSEE")
***************************************************************
TERMS AND CONDITIONS
1. LEASE. All terms used herein shall have the same meaning as set forth
the Lease. The items of Equipment described on Exhibit "A", attached hereto and
incorporated herein by this reference, are hereby Leased on the terms specified
herein and in the Lease which by this reference are incorporated in this
Schedule.
2. TERM AND COMMENCEMENT DATE. The term of this Lease is for SIXTY (60)
MONTHS, is nonterminable and shall commence on the date Lessee signs the
Delivery and Acceptance Certificate relating to the Equipment ("Acceptance
Date").
3. RENT. Lessee shall pay Rent to Lessor for the Equipment as follows:
$909.59 PER MONTH FOR 60 MONTHS.
The payment of "Per Diem Rent" (calculated as one-thirtieth (1/30) of the
monthly Rent amount) hereunder shall begin on the Acceptance Date and shall
continue until the "Rent Commencement Date," which shall be a date chosen by the
Lessor that is within thirty (30) days following the Acceptance Date. The first
and last payment(s) of Rent shall be due and payable on the Rent Commencement
Date. All subsequent Rent payments shall be due and payable on the same day of
each succeeding calendar month thereafter until all obligations of Lessee under
the Lease have been paid in full.
Rental payments shall be paid to:
FORD FINANCIAL SERVICES, INC.
12520 HIGH BLUFF DR., STE. 120
SAN DIEGO, CALIFORNIA 92130
ATTN: LEASE DEPARTMENT
or such other addresses that may be designated by written notice given in the
manner prescribed in the Lease.
4. LOCATION OF EQUIPMENT:
INTERACTIVE TELESIS, INC.
535 ENCINITAS BLVD., #116
ENCINITAS, CALIFORNIA 92024
5. ADVANCE RENTAL. Upon the execution of this Schedule, Lessee shall
pay to Lessor as Advance Rental(s) and Deposit(s) in an amount equal to
$1,819.18. Upon Acceptance by Lessor of this Schedule, the Advance Rental(s)
and Deposit(s) shall become non-refundable. Upon execution of the Delivery and
Acceptance Certificate the Advanced Rental(s) and Deposit(s) shall be applied to
the First and Last month's Rent and any Deposit(s) required and any Per Diem
Rent due under this Schedule. After Acceptance of this Schedule by Lessor, if
Lessee does not consummate this transaction, including, but not limited to,
Lessee's rejection or refusal to Accept any item of Equipment pursuant to this
Schedule, Lessor may retain the Advance Rental(s) and Deposit(s) as liquidated
damages.
6. STIPULATED LOSS VALUE. If this Schedule contains a Stipulated Loss
Value of the Equipment, the Stipulated Loss Value of each item of Equipment as
of each rental payment date in respect thereto shall be that percentage of
Purchase Price of such item of Equipment as set forth in the Stipulated Loss
Value Rider (Exhibit " ") opposite the number of rental payments in respect of
such item of Equipment which would have become due and including such date. The
Purchase Price of the Equipment (including any applicable sales or use taxes and
charges for transportation, assembly and/or installation) is $42,071.80.
<PAGE> 2
7. COUNTERPARTS. Three (3) counterparts of this Schedule have been
executed by the parties hereto. One counterpart has been designated "Lessor's
Copy." One counterpart has been designated "Lessee's Copy." One counterpart has
been designated "File Copy." Only the counterpart marked "Lessor's Copy" along
with the original or a photocopy of the Lease evidence Lessee's monetary
obligations hereunder and therefore constitutes chattel paper under the Uniform
Commercial Code. Notwithstanding the foregoing, if Lessor's Copy of this Lease
shall become lost, mutilated or destroyed, Lessor may prove this Lease by
photocopies hereof, or by Lessor's Copy.
8. END OF TERM PROVISION. The Lessor, at its option, may grant to
Lessee the option to purchase all of the equipment set forth in said Lease
Schedule upon the termination of the initial Lease Schedule Term, provided,
however, that the Lessee has performed all conditions of said Lease and that an
"Event of Default" has not occurred. Not withstanding the foregoing, the Lessor
shall have the option to require the Lessee to purchase the equipment upon the
full expiration of the Lease Schedule Term for its then Fair Market Value
("FMV"). Lessee hereby agrees that the Fair Market Value shall be based upon an
appraisal provided by an appraiser of the Lessors selection. Should Lessor so
require, Lessee hereby guarantees a minimum payment of $4,207.18 plus
applicable taxes.
LESSOR: FORD FINANCIAL SERVICES, INC. LESSEE: INTERACTIVE TELESIS, INC.
By: /s/ [signature illegible] By: /s/ DONALD E. CAMERON
------------------------------------- --------------------------------
Donald E. Cameron
Title: President DATE 14-Aug, 1998 Title: President DATE 8-15-98
<PAGE> 3
[FFSI LOGO]
EXHIBIT A
Page 1 of 1
Attached to and forming a part of the following documents: LEASE SCHEDULE
NUMBER 001 under that certain MASTER LEASE AGREEMENT NUMBER: B01060898SD dated
the 13th day of August, 1998 Certificate of Acceptance and UCC-1 Financing
Statement to the referenced Lease Schedule, and any addenda thereto by and
between FORD FINANCIAL SERVICES, INC., as Lessor, and INTERACTIVE TELESIS,
INC., as Lessee.
The Lease Schedule referenced above is incorporated herein by this
reference. All terms used herein which are defined in the Lease shall have the
same meaning herein.
Lessee is hereby instructed to contact the Supplier referenced below for a
description of any rights Lessee may have under the Supply Contract covering
the Equipment.
<TABLE>
<CAPTION>
EQUIPMENT MODEL VEHICLE IDENTIFICATION PURCHASE
SUPPLIER QUANTITY DESCRIPTION NUMBER NUMBER PRICE
<S> <C> <C> <C> <C> <C>
CARLSBAD VOLVO 1 1998 VOLVO C70A YV1NK5374WJ002398 $39,045.75
</TABLE>
EQUIPMENT LOCATION:
535 ENCINITAS BLVD., #116
ENCINITAS, CA 92024
LESSEE /s/ [ILLEGIBLE] (Initial)
--------------------
LESSOR /s/ [ILLEGIBLE] (Initial)
--------------------
<PAGE> 4
FOR DEPARTMENT USE ONLY
-----------------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the Undersigned, Interactive Telesis, Inc. of the County of San Diego,
State of California, being the Registered and/or Legal owner of the following
described motor vehicle, 1998 MAKE Volvo VIN YV1NK5374WJ002398 LICENSE NO.
___________ does hereby make, constitute and appoint Ford Financial Services,
Inc. of the County of San Diego, State of California, true and lawful attorney
in fact to sign in the name, place and stead of the undersigned, any
Certificate of Ownership issued by the Department of Motor Vehicles and Public
Safety of the State, covering the motor vehicle described above, in whatever
manner necessary to transfer any registration of said motor vehicle. Granting
and giving unto said attorney in fact, full authority and power to do and
perform any and all other acts authorized hereby, as fully to all intents and
purposes as the grantor might, or could do if personally present, with full
power of substitution.
IN TESTIMONY WHEREOF, the undersigned has hereunto set __________________ hand
on this 13th day of August, 1998.
Signature /s/ DONALD E. CAMERON
--------------------------------
Donald E. Cameron
Authorized DMV&PS employee or
Notary Public in and for the County of ___________________, State of ___________
Signature
--------------------------------
<PAGE> 5
<TABLE>
<S><C>
SIMPLE INTEREST MOTOR VEHICLE CONTRACT AND SECURITY AGREEMENT LINE UP COMPUTER/PRINTER
SQUARELY WITH BRACKET BELOW
- --------------------------------------------------------------------------------
BUYER'S NAME DATE OF CONTRACT Stock No. 9468
INTERACTIVE TELESIS, INC 08/11/98 Source
- -------------------------------------------------------------------------------- Salesperson RUBEN IVANIER
BUYER'S RESIDENCE OR PLACE OF BUSINESS ZIP CODE AGREEMENT NO. Date 08/11/98
535 ENCINITAS BLVD ENCINITAS CA 92024 7507 Bus. Phone
- -------------------------------------------------------------------------------- Res. Phone 704-4349
CO-BUYER'S NAME AND ADDRESS
- --------------------------------------------------------------------------------
In this contract the words "we," "us" and "our refer to the creditor (seller) named below or, upon any assignment, its assignee.
The words "you" and "your" refer to the buyer and co-buyer if any named herein. We sell you the motor vehicle described below on
credit. The credit price is shown below as the "Total Sale Price." The "Cash Price" is also shown below. By signing this contract
you choose to buy the "vehicle" on credit and agree to pay the Total Sale Price, according to the schedules, terms and agreements
shown on the front and back of this contract. If this contract is signed by a buyer and co-buyer, each is individually and together
responsible for all agreements in the contract.
SEE OTHER SIDE FOR ADDITIONAL TERMS AND AGREEMENTS: SOLD AS EQUIPPED, SUBJECT TO LENDER'S CREDIT APPROVAL
- ------------------------------------------------------------------------------------------------------------------------------------
ODOMETER VEHICLE IDENTIFICATION
NEW/USED YEAR MAKE CYL. DIESEL GAS OTHER BODY STYLE MODEL READING NUMBER
NEW 98 VOLVO 5 XX COUPE C70A 120 YV1NK5374WJ002398
- ------------------------------------------------------------------------------------------------------------------------------------
COLOR TRIM TIRES TRAINS KEY NO. LIC. NO. R.O.S. NO.
CASSIS AUTO AUTO 4V9864 2212
- ------------------------------------------------------------------------------------------------------------------------------------
DISCLOSURES PURSUANT TO THE TRUTH-IN-LENDING ACT
====================================================================================================================================
ANNUAL PERCENTAGE RATE FINANCE CHARGE AMOUNT FINANCED TOTAL OF PAYMENTS TOTAL SALE PRICE
The cost of your credit The dollar amount the The amount of credit The amount you will have The total cost of your
as a yearly rate. credit will cost you. provided to you or on paid after you have made purchase on credit,
your behalf. all payments as scheduled. including your down payment
of $ N/A
N/A % $ N/A(e) $42,071.80 $42,071.88 $42,071.80(e)
- ------------------------------------------------------------------------------------------------------------------------------------
YOUR PAYMENT SCHEDULE WILL BE:
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Payments: Amount of Payments: When Payments Are Due:
- ------------------------------------------------------------------------------------------------------------------------------------
One Payment of: N/A
- ------------------------------------------------------------------------------------------------------------------------------------
One Payment of: N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Payments 4,2071.80 Monthly, beginning 09/10/98
- ------------------------------------------------------------------------------------------------------------------------------------
One Final Payment N/A
- ------------------------------------------------------------------------------------------------------------------------------------
SECURITY: You are giving a security interest in the goods or property being purchased. (e) means an estimate
LATE CHARGES: ( ) Applies only if checked. If any payment is more than 10 days late you will be charged 5% of the late amount.
( ) Applies only if checked. If any payment is not received by the first banking day which is at least 11 days after the due date,
you will be charged 5% of the delinquent installment or $25.00, whichever is less.
PREPAYMENT: If you pay your contract in full before its maturity, you may be charged a minimum finance charge. See your contract
documents for any additional information about nonpayment, default, any required prepayment in full before the scheduled date and
a minimum finance charge payable upon prepayment.
====================================================================================================================================
NOTICES: The names and addresses of all persons to whom the notices required or permitted by law to be sent are set forth at the top
of this form.
If you are buying a used vehicle with this contract, as indicated in the description of the vehicle above, federal regulation may
require a special buyers guide to be displayed on the window.
THE INFORMATION YOU SEE ON THE WINDOW FORM FOR THIS VEHICLE IS PART OF THIS CONTRACT. INFORMATION ON THE WINDOW FORM OVERRIDES ANY
CONTRARY PROVISIONS IN THE CONTRACT OF SALE.
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INSURANCE
NOTICE: No person is required as a condition of financing the purchase of a motor vehicle to purchase, or negotiate, any insurance
through a particular insurance company, agent or broker. You have requested Seller to include in the balance due under this
agreement the following insurance. Insurance is to expire WITH[ ] BEFORE[ ] AFTER[ ] the due date of the final installment.
Buyer requests seller to procure insurance upon the described property against fire, theft, and collision for the term of this
agreement. Any insurance will not be in force until accepted by the insurance carrier.
Premium
$ N/A DED., COMP., FIRE & THEFT _______ MOS. $ N/A
$ N/A DEDUCTIBLE COLLISION _______ MOS. $ N/A
BODILY INJURY $ N/A LIMITS _______ MOS. $ N/A
PROPERTY DAMAGE $ N/A LIMITS _______ MOS. $ N/A
MEDICAL _______ MOS. $ N/A
________________________________________________ _______ MOS. $ N/A
________________________________________________ _______ MOS. $ N/A
TOTAL VEHICLE INSURANCE PREMIUMS $ N/A
The foregoing declarations are hereby acknowledged.
08/11/98 CARLSBAD VOLVO X
- --------------------------------------------------------------------------------
DATE SELLER BUYER
================================================================================
CREDIT INSURANCE AUTHORIZATION AND APPLICATION
You voluntarily request the credit insurance checked below, if any, and understand that such insurance is not required. You
acknowledge disclosure of the cost of such insurance and authorize it to be included in the balance payable under the security
agreement. Any returned or refunded credit insurance premiums shall be applied to sums due under this contract. Only the persons
whose names are signed below are insured.
CREDIT LIFE _____________________________________ Mos. Premium $ N/A
JOINT LIFE ______________________________________ Mos. Premium $ N/A
CREDIT DISABILITY _______________________________ Mos. Premium $ N/A
TOTAL CREDIT INSURANCE PREMIUMS $ N/A
[ ] You want Credit Life Insurance [X] You do not want Credit Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
ITEMIZATION OF AMOUNT FINANCED
---- A. Cash Price Motor Vehicle and Accessories........... $39045.75(A)
1. Cash Price Vehicle.............................. $39045.75
2. Cash Price Accessories.......................... $ N/A
B. Document Preparation Charge........................ $ N/A(B)(not a governmental fee)
C. Smog Fee Paid to Seller............................ $ N/A(C)
1. [ D. Sales Tax (on A+B+C)............................... $ 3026.05(D)
E. Luxury Tax......................................... $ N/A(E)
F. Service Contract (optional)........................ $ N/A(F)
G. Other.............................................. $ N/A(G)
To whom paid ____________________________________________
---- TOTAL CASH PRICE (A to G)............................................. $42,071.80(1)
---- AMOUNTS PAID TO PUBLIC OFFICIALS
A. License............................................ $ N/A(A)
2. [ B. Registration....................................... $ INCL(B)
C. Smog Impact Fee.................................... $ N/A(C)
---- TOTAL OFFICIAL FEES (A+B+C)........................................... $ N/A(2)
3. AMOUNT PAID TO INSURANCE COMPANIES
(Total premiums per Statement of Insurance a + b)*.................... N/A(3)
4. SMOG CERTIFICATION FEE PAID TO STATE.................................. $ N/A(4)
5. TOTAL (1 TO 4)........................................................ $42,071.80(5)
---- A. Trade-in (Description)
Yr.___ Make _____________ Model _______________ $ N/A(A)
V.I.N. ____________________
Odometer __________________
6. [ B. Less Pay Off....................................... $ N/A(B)
C. TRADE-IN (A less B)................................ $ N/A(C)
D. Deferred downpayment due before
second installment payment......................... $ N/A(D)
----
I/WE, AS THE LESSEE, DO HEREBY RECOGNIZE AND ACCEPT THIS DOCUMENT TO BE A TRUE AND CORRECT COPY OF THE "ORIGINAL INVOICES(S)". THE
EQUIPMENT DESCRIPTION(S), SERIAL NUMBER(S), AND DOLLAR AMOUNT(S) IS/ARE CORRECT AND I/WE DO HEREBY ACCEPT THE TOTAL DOLLAR AMOUNT(S)
OF THE INVOICE(S) AS THE CORRECT AMOUNT TO BE FINANCED UNDER THE LEASE AND ANY APPLICABLE SCHEDULE(S).
SIGN
VERIFIED
LESSEE'S INITIALS: __________________
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
[ ] You want Credit Disability Insurance E. MFR'S Rebate.......................$ N/A(E)
(Primary Buyer Only) ---------
[ ] You do not want Credit Disability Insurance F. Remaining cash downpayment.........$ N/A (F)
[ ] You want Joint Credit Life Insurance ---------
TOTAL DOWNPAYMENT (6C+D+E+F)......................$ N/A(6)
You are applying for the credit insurance ---------
marked above. Your signature below means that 7. AMOUNT FINANCED (5 less 6)........................$ 42071.88(7)
you agree that: (1) You are not eligible for ---------
insurance if you have reached your 65th
birthday. (2) You are eligible for disability *We may retain, or receive, a portion of this amount
insurance only if you are working for wages
or profit 30 hours a week or more on the ------------------------------------------------------------------
Effective Date. (3) Only the Primary Buyer is
eligible for disability insurance. VEHICLE USE: [XX] Personal, Family or Household [ ]Commercial or
Agricultural
DISABILITY INSURANCE MAY NOT COVER CONDITIONS OFFICIAL FEES (Not Financed): The Buyer will pay the estimated
FOR WHICH YOU HAVE SEEN A DOCTOR OR fees of $ 14.00 to the appropriate public authority in order to
CHIROPRACTOR IN THE LAST 6 MONTHS (refer to transfer registration after payment in full.
"Total Disabilities Not Covered" in your
policy or certificate for details).
08/11/98 X
- ---------------------------------------------
DATE PRIMARY BUYER AGE
X
- --------------------------------------------- ID-1
DATE CO-BUYER AGE
- -------------------------------------------------- ------------------------------------------------------------
BROKER FEE DISCLOSURE SERVICE CONTRACT (Optional) You request a service contract
IF THIS CONTRACT REFLECTS THE RETAIL SALE OF A written with the following company for the term below. The
NEW MOTOR VEHICLE THE SALE IS NOT SUBJECT TO A cost is shown in Item (1F) above.
FEE RECEIVED BY AN AUTOBROKER UNLESS THE
FOLLOWING BOX IS CHECKED: Company N/A Term Months
[ ] NAME OF AUTOBROKER RECEIVING FEE, IF -------------------- -------------------
APPLICABLE: Buyer X X
-------------------- ------------------------------
- -------------------------------------------------- ------------------------------------------------------------
- -------------------------------------------------- SELLER ASSISTED LOAN: FOR THIS LOAN, BUYER MAY BE REQUIRED
NOTICE OF RESCISSION RIGHTS TO PLEDGE SECURITY AND WILL BE OBLIGATED FOR THE INSTALLMENT
If buyer signs here, the provisions of paragraph PAYMENTS ON BOTH THE SECURITY AGREEMENT AND THE LOAN.
"K" on the reverse side shall be applicable to
this contract. Proceeds of Loan - From
Buyer's ------------------------------------
Signature X Amount $ N/A Finance Charge $ N/A Total $ N/A
--------------------------------------- ------- --------- -----------
Co-Buyer's Payable N/A Installments of $ N/A
Signature X ------------ -----------------------
--------------------------------------- $ N/A from this loan is described in (6D) above.
----------------
</TABLE>
If you have a complaint concerning this sale, you should try to resolve it
with the seller.
Complaints concerning unfair or deceptive practices or methods by the
seller may be referred to the city attorney, the district attorney, or the
Department of Motor Vehicles, Division of Investigations and Occupational
Licensing, P.O. Box [ILLEGIBLE COPY], Sacramento, California 94232-[ILLEGIBLE
COPY], or any combination thereof.
After this contract is signed, the seller may not change the financing or
payment terms unless you agree in writing to the change. You do not have to
agree to any change, and it is an unfair or deceptive practice for the seller
to make a unilateral change.
Buyer's Signature X X
--------------------------- -----------------------------
THE MINIMUM PUBLIC LIABILITY INSURANCE LIMITS PROVIDED IN LAW MUST BE MET
BY EVERY PERSON WHO PURCHASES A VEHICLE. IF YOU ARE UNSURE WHETHER OR NOT YOUR
CURRENT INSURANCE POLICY WILL COVER YOUR NEWLY ACQUIRED VEHICLE IN THE EVENT OF
AN ACCIDENT, YOU SHOULD CONTACT YOUR INSURANCE AGENT.
WARNING:
YOUR PRESENT POLICY MAY NOT COVER COLLISION DAMAGE OR MAY NOT PROVIDE FOR
FULL REPLACEMENT COSTS FOR THE VEHICLE BEING PURCHASED. IF YOU DO NOT HAVE
FULL COVERAGE, SUPPLEMENTAL COVERAGE FOR COLLISION DAMAGE MAY BE AVAILABLE TO
YOU THROUGH YOUR INSURANCE AGENT OR THROUGH THE SELLING DEALER. HOWEVER, UNLESS
OTHERWISE SPECIFIED, THE COVERAGE YOU OBTAIN THROUGH THE DEALER PROTECTS ONLY
THE DEALER, USUALLY UP TO THE AMOUNT OF THE UNPAID BALANCE REMAINING AFTER THE
VEHICLE HAS BEEN REPOSSESSED AND SOLD.
FOR ADVICE ON FULL COVERAGE THAT WILL PROTECT YOU IN THE EVENT OF LOSS OR
DAMAGE TO YOUR VEHICLE, YOU SHOULD CONTACT YOUR INSURANCE AGENT.
THE BUYER SHALL SIGN TO ACKNOWLEDGE THAT HE/SHE UNDERSTANDS THESE PUBLIC
LIABILITY TERMS AND CONDITIONS.
S/S X X
--------------------------------------- -----------------------------------
THERE IS NO COOLING OFF PERIOD
California law does not provide for a "cooling off" or Buyer acknowledges
other cancellation period for vehicle sales. Therefore, that (1) before
you cannot later cancel this contract simply because signing this agreement
you change your mind, decide the vehicle costs too Buyer read both sides
much, or wish you had acquired a different vehicle. of this agreement and
After you sign below, you may only cancel this contract received a legible,
with the agreement of the seller or for legal cause, completely filled-in
such as fraud. copy of this
agreement; and (2)
Buyer has received a
copy of every other
document that Buyer
singed during the
contract negotiations.
Buyer's Signature X Co-Buyer's Signature X
------------------- -------------------
Seller CARLSBAD VOLVO Address 6830 AVENIDA ENCINAS CARLSBAD CA
-------------------------------- 9200[ILLEGIBLE NUMBER]
---------------------------------
By X Title MANAGER
------------------ -------------
ORIGINAL
LAW(R) FORM NO. 553 CALIF. [ILLEGIBLE COPY]
I/WE, AS THE LESSEE, DO HEREBY RECOGNIZE AND ACCEPT THIS DOCUMENT TO BE A TRUE
AND CORRECT COPY OF THE "ORIGINAL INVOICE(S)". THE EQUIPMENT DESCRIPTION(S),
SERIAL NUMBER(S), AND DOLLAR AMOUNT(S) IS/ARE CORRECT AND I/WE DO HEREBY ACCEPT
THE TOTAL DOLLAR AMOUNT(S) OF THE INVOICE(S) AS THE CORRECT AMOUNT TO BE
FINANCED UNDER THE LEASE AND ANY APPLICABLE SCHEDULE(S).
LESSEE'S INITIALS: /s/ [INITIALS ILLEGIBLE]
--------------------------
SIGN VERIFIED
<PAGE> 7
<TABLE>
<S> <C> <C>
[DMV LOGO] APPLICATION FOR
A PUBLIC SERVICE AGENCY REGISTRATION OF NEW VEHICLE 6635996
DATE FIRST SOLD AS A NEW VEHICLE (MO/DAY/YR) DATE FIRST OPERATED (MO/DAY/YR) [Illegible]
08/11/98 08/11/98
- -----------------------------------------------------------------------------------------------------------------------
MAKE YEAR MODEL BODY TYPE MOTIVE POWER NUMBER OF AXLES UNLADEN WEIGHT
VOLVO 98 C70A COUPE GAS 2
- -----------------------------------------------------------------------------------------------------------------------
VEHICLE IDENTIFICATION NUMBER M/C ENGINE NUMBER OR ADDITIONAL IDENTIFICATION NUMBER
YVINK5374WJ002398
- -----------------------------------------------------------------------------------------------------------------------
LENGTH IN INCHES WIDTH IN INCHES COUNTY OF RESIDENCE
SAN DIEGO
- -----------------------------------------------------------------------------------------------------------------------
SOLD TO: PRINT TRUE FULL NAME AS IT APPEARS EQUIPMENT NUMBER DRIVER LICENSE/ID CARD NO.
ON THE DRIVER LICENSE OR ID CARD
IN THE ORDER SHOWN BELOW
(1) INTERACTIVE TELESIS, INC
- -----------------------------------------------------------------------------------------------------------------------
LAST FIRST MIDDLE DRIVER LICENSE/ID CARD NO.
[ ] AND
[ ] OR (2)
- -----------------------------------------------------------------------------------------------------------------------
BUSINESS OR RESIDENCE ADDRESS APT. NUMBER CITY STATE ZIP CODE
535 ENCINITAS BLVD ENCINITAS CA 92024
- -----------------------------------------------------------------------------------------------------------------------
MAILING ADDRESS--IF DIFFERENT FROM ABOVE APT. NUMBER CITY STATE ZIP CODE
OR LOCATION (FOR TRAILER COACH/VESSEL)
- -----------------------------------------------------------------------------------------------------------------------
LIENHOLDER OR LEGAL OWNER--PRINT TRUE FULL NAME ELECTRONIC LIENHOLDER ID #
FORD FINANCIAL SERVICES INC. 12520 HIGH BLUFF DR. STE 120 ELT#
- -----------------------------------------------------------------------------------------------------------------------
BUSINESS OR RESIDENCE ADDRESS SAAP CITY STATE ZIP CODE
12520 HIGH BLUFF DR. STE 120 SAN DIEGO CA 92130
- -----------------------------------------------------------------------------------------------------------------------
LESSEE ADDRESS--REQUIRED WHEN DIFFERENT APT. NUMBER CITY STATE ZIP CODE
FROM REGISTERED OWNER ABOVE
- -----------------------------------------------------------------------------------------------------------------------
IF A PASSENGER VEHICLE, WILL IT BE USED FOR HIRE OR TO PROVIDE
A SERVICE OF TRANSPORTING PASSENGERS IN CONJUNCTION WITH A BUSINESS?
[ ] YES [X] NO
- -----------------------------------------------------------------------------------------------------------------------
APPLICANT'S CERTIFICATION: I CERTIFY UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE
FOREGOING INFORMATION IS TRUE AND CORRECT.
- -----------------------------------------------------------------------------------------------------------------------------------
DATE BUYER'S SIGNATURE(S)
08/11/98 (1) X (2) X
- -----------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF COST--THE DEALER SIGNING THE CERTIFICATION CERTIFIES UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE
STATE OF CALIFORNIA THAT THE COST OF THE VEHICLE ENTERED IN THE CERTIFICATE OF COST INCLUDES THE COST OF ANY EQUIPMENT
THAT IS PHYSICALLY ATTACHED TO THE VEHICLE, PLUS ANY TRADE-IN ALLOWANCES (EXCLUDE STATE OR LOCAL TAXES, INSURANCE AND
FINANCE CHARGES).
DATE PURCHASED/ACQUIRED COST
A -- COST OF VEHICLE PURCHASED AS A [ ] COMPLETE VEHICLE [ ] CHASSIS ONLY [ ] CAB AND CHASSIS 08/11/98 39045.75
B -- COST OF TRAILER COACH INCLUDING ALL PERMANENTLY ATTACHED ITEMS (WALL TO WALL CARPETING,
FACTORY AIR CONDITIONING, BUILT-IN APPLIANCES, ETC.).
- -----------------------------------------------------------------------------------------------------------------------------------
ODOMETER DISCLOSURE STATEMENT
FEDERAL AND STATE LAW REQUIRES THAT YOU STATE THE MILEAGE UPON TRANSFER OF OWNERSHIP. FAILURE TO COMPLETE OR MAKING A FALSE
STATEMENT MAY RESULT IN FINES AND/OR IMPRISONMENT.
THE ODOMETER READING IS [ ] [ ] [ ], [1] [2] [0] (NO TENTHS) MILES AND TO THE BEST OF MY KNOWLEDGE REFLECTS THE ACTUAL MILEAGE
UNLESS ONE OF THE FOLLOWING STATEMENTS IS CHECKED.
WARNING -- [ ] IS NOT THE ACTUAL MILEAGE. [ ] MILEAGE EXCEEDS THE ODOMETER MECHANICAL LIMITS.
I/WE CERTIFY UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE INFORMATION ENTERED ON THIS FORM IS TRUE
AND CORRECT.
- -----------------------------------------------------------------------------------------------------------------------------------
DATE SIGNATURE OF SELLER OR COMPANY AGENT PRINT SELLER'S TRUE FULL NAME/COMPANY AGENT ADDRESS
08/11/98 CARLSBAD VOLVO 6830 AVENIDA ENCINAS
CARLSBAD CA 92009
- -----------------------------------------------------------------------------------------------------------------------------------
DATE SIGNATURE OF BUYER OR COMPANY AGENT PRINT BUYER'S TRUE FULL NAME/COMPANY AGENT ADDRESS
08/11/98 /S/ [SIGNATURE ILLEGIBLE] 535 ENCINITAS BLVD
ENCINITAS CA 92024
- ----------------------------------------------------------------------------------------------------------------------------------
REG. (REV. )
--DMV COPY--
[DMV LOGO] NEW VEHICLE DEALER NOTICE TEMPORARY IDENTIFICATION
(MUST BE AFFIXED TO THE VEHICLE BEFORE DELIVERY TO THE PURCHASER) 6635996
- ----------------------------------------------------------------------------------------------------------------------------------
MAKE BODY TYPE VEHICLE IDENTIFICATION NUMBER
VOLVO COUPE YV1NK5374WJ002398
- ----------------------------------------------------------------------------------------------------------------------------------
DATE FIRST SOLD AS A NEW VEHICLE (MO/DAY/YR) DEALER'S NUMBER SALESPERSON'S NUMBER
08/11/98 25388 S522077
- ----------------------------------------------------------------------------------------------------------------------------------
SOLD TO: PRINT TRUE FULL NAME(S)
INTERACTIVE TELESIS, INC
- ----------------------------------------------------------------------------------------------------------------------------------
ADDRESS
535 ENCINITAS BLVD ENCINITAS CA 92024
- ----------------------------------------------------------------------------------------------------------------------------------
NOTE: UPON TRANSFER OR SALE, DEALER [ ] [ ] [ ], [1] [2] [0] IMPORTANT: ENTER BOTH DEALER'S AND SALESPERSON'S NUMBERS.
MUST ENTER ODOMETER READING HERE. THIS IS A NOTICE OF PURCHASE OF VEHICLE. DO NOT USE AS AN
APPLICATION FOR REGISTRATION OR TITLE.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
I/WE, AS THE LESSEE, DO HEREBY RECOGNIZE AND ACCEPT THIS DOCUMENT TO BE A TRUE
AND CORRECT COPY OF THE "ORIGINAL INVOICE(S)". THE EQUIPMENT DESCRIPTION(S),
SERIAL NUMBER(S), AND DOLLAR AMOUNT(S) IS/ARE CORRECT AND I/WE DO HEREBY ACCEPT
THE TOTAL DOLLAR AMOUNT(S) OF THE INVOICE(S) AS THE CORRECT AMOUNT TO BE
FINANCED UNDER THE LEASE AND ANY APPLICABLE SCHEDULE(S).
LESSEE'S INITALS:_________
<PAGE> 8
THIS SPACE FOR USE OF FILING OFFICER
FINANCING STATEMENT -- FOLLOW INSTRUCTIONS CAREFULLY
This Financing Statement is presented for filing pursuant
to the Uniform Commercial Code and will remain effective,
with certain exceptions, for 5 years from date of filing.
A. NAME & TEL. # OF CONTACT AT FILER (optional)
B. FILING OFFICE ACCT. # (optional)
C. RETURN COPY TO: (Name and Mailing Address)
FORD FINANCIAL SERVICES, INC.
12520 HIGH BLUFF DR., STE. 120
SAN DIEGO, CA 92130
D. OPTIONAL DESIGNATION (if applicable):
[ ] LESSOR/LESSEE [ ] CONSIGNOR/CONSIGNEE [ ] NON-UCC FILING
- --------------------------------------------------------------------------------
1. DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b)
1a. ENTITY'S NAME
INTERACTIVE TELESIS, INC.
OR
1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
1c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
535 ENCINITAS BLVD., STE. 116 ENCINITAS CA USA 92024
1d. S.S. OR TAX I.D. # OPTIONAL 1e. TYPE OF ENTITY 1f. ENTITY'S STATE OR
ADD'NL COUNTRY OF
INFO RE ORGANIZATION
33-0649915 ENTITY DEBTOR CORP. CA
1g. ENTITY'S ORGANIZATIONAL I.D. #, if any
[ ] NONE
- --------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name
(2a or 2b)
2a. ENTITY'S NAME
OR DONALD E.
2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
CAMERON DONALD E.
2c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
1109 SYCAMORE VIEW DRIVE ENCINITAS CA USA 92024
2d. S.S. OR TAX I.D. # OPTIONAL 2e. TYPE OF ENTITY 2f. ENTITY'S STATE OR
ADD'NL COUNTRY OF
INFO RE ORGANIZATION
###-##-#### ENTITY DEBTOR INDIVIDUAL
2g. ENTITY'S ORGANIZATIONAL I.D. #, if any
[ ] NONE
- --------------------------------------------------------------------------------
3. SECURED PARTY'S (ORIGINAL S/P or ITS TOTAL ASSIGNEE) EXACT FULL LEGAL NAME -
insert only one secured party name (3a or 3b)
3a. ENTITY'S NAME
OR FORD FINANCIAL SERVICES, INC.
3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
3c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
12520 HIGH BLUFF DR., STE. 120 SAN DIEGO CA USA 92130
4. This FINANCING STATEMENT covers the following types or items of property:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF FOR EQUIPMENT
DESCRIPTIONS AND LOCATIONS. IN ADDITION TO THE EQUIPMENT REFERENCED IN THE
EXHIBIT "A", THIS FILING SHALL ALSO INCLUDE, BUT NOT BE LIMITED TO, ALL
ATTACHMENTS, ADDITIONS, IMPROVEMENTS, CHANGES OR OTHER MODIFICATIONS MADE NOW OR
HEREAFTER TO THE EQUIPMENT.
FFSI LEASE # B01060898SD-001
5. CHECK BOX [ ] This FINANCING STATEMENT is signed by the Secured Party
(if applicable) instead of the Debtor to perfect a security interest
(a) in collateral already subject to a security interest in
another jurisdiction when it was brought into this state, or
when the debtor's location was changed to this state, or
(b) in accordance with other statutory provisions
(additional data may be required)
6. REQUIRED SIGNATURE(S)
/s/ DONALD E. CAMERON DATED: 8-13-98
----------------------------
DONALD E. CAMERON, PRESIDENT & INDIVIDUAL
INTERACTIVE TELESIS, INC.
7. If filed in Florida (check one)
[ ] Documentary stamp tax paid [ ] Documentary stamp tax not applicable
8. [ ] This FINANCING STATEMENT is to be filed (for record) (or recorded) in the
REAL ESTATE RECORDS
Attach Addendum (if applicable)
9. Check to REQUEST SEARCH CERTIFICATE(S) on Debtor(s) (ADDITIONAL FEE)
(optional) [ ] All Debtors [ ] Debtor 1 [ ] Debtor 2
(4) DEBTOR COPY -- NATIONAL FINANCING STATEMENT (FORM UCC1)
(TRANS) (REV. 12/18/95)
<PAGE> 9
FORD FINANCIAL SERVICES, INC.
BUSINESS EQUIPMENT
INSURANCE BINDER & POLICY REQUEST
APPROVAL NUMBER
B01060898SD SCH 001
- --------------------------------------------------------------------------------
LESSEE INFORMATION
Full Legal Name: Street Address:
INTERACTIVE TELESIS, INC. 535 ENCINITAS BLVD., #116
- --------------------------------------------------------------------------------
City: ENCINITAS County: SAN DIEGO State: CA Zip Code: 92024
- --------------------------------------------------------------------------------
Phone: (760) 704-4349 Contact: WILLIAM ADAMS Title: CONTROLLER
- --------------------------------------------------------------------------------
INSURING AGENCY
Name: HOBBS GROUP Street Address: 1 WORLD TRADE CENTER, SUITE 1500
- --------------------------------------------------------------------------------
City: LONG BEACH State: CA Zip Code: 90831
- --------------------------------------------------------------------------------
Phone: (619) 634-4050 Fax: Agent's Name: GARY PETERSON
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
DESCRIPTION OF LEASED EQUIPMENT
- ---------------------------------------------------------------------------------------------------------
QUANTITY NEW/USED EQUIPMENT DESCRIPTION (make, model, serial number) UNIT PRICE AMOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Equipment Location, if different than See attached Exhibit "A" for
Lessee's address as stated above: additional equipment.
Street Address: City: Total from attached
- --------------------------------------- Exhibit "A" $42,071.80
State: Zip:
- --------------------------------------- Insurable Value: $42,071.80
- --------------------------------------------------------------------------------
We have entered into a personal property lease agreement, referenced above, with
FORD FINANCIAL SERVICES, INC. for the equipment described above and in the
attached exhibit(s) (if applicable). We are responsible for the insurance. The
insurance must include the following:
1. All risk full replacement value coverage on the equipment in an amount not
less than the Insurable Value.
2. General Liability in amounts of $1,000,000 or ________________, whichever
is greater. Bodily injury and damage in the amount of $50,000 or
_____________, whichever is greater to fixed equipment with moving parts.
3. A provision for not less than 30 days notice of modification or
cancellation to be given to ourselves and FORD FINANCIAL SERVICES, INC. in
writing is to be named as ADDITIONAL INSURED AND FIRST LOSS PAYEE ON LEASED
EQUIPMENT.
We hereby authorize you to place this coverage in force no later than 13 Day of
August, 1998.
Please bind this insurance by return mail to: Ford Financial Services, Inc.,
12520 High Bluff Drive, Suite 120, San Diego, CA 92130
Please replace this binder within 30 days with an insurance policy or
certificate of insurance indicating each of the above requirements.
AGENT'S BINDER AS OF _______________, 19________ LESSEE:
This will bind insurance coverage as of the above INTERACTIVE TELESIS, INC.
date for the lease within the limits and with -----------------------------
the provisions detailed above for the described By: /s/ DONALD E. CAMERON
equipment. -----------------------------
DONALD E. CAMERON
Insuring Company: TITLE: President
--------------------------------- -----------------------
Policy Number: Dated: 13 Day of August, 1998
----------------------------------
Agent's Authorized
Insuring Agent: Signer:
---------------------------------- -----------------------
- --------------------------------------------------------------------------------
<PAGE> 10
[FORD LOGO]
FORD FINANCIAL SERVICES, INC.
PRE-DELIVERY AUTHORIZATION
In order to enable FORD FINANCIAL SERVICES, INC. ("FFSI") ("LESSOR") to make
prompt and expeditious payment(s) to the Supplier(s) of the Equipment covered
under the MASTER LEASE AGREEMENT NO.: B01060898SD ("LEASE") and LEASE SCHEDULE
NUMBER: 001 ("SCHEDULE(S)") between Lessor and INTERACTIVE TELESIS, INC.
("LESSEE"), the Lessee does hereby certify that it is able, willing and does
hereby authorize the Lessor to make the effective date of the Equipment
Acceptance the date upon which this document is signed and delivered to the
Lessor. Lessee understands that despite the fact that all, or part of, the
Equipment which is being leased in association with this Lease Schedule may not
have been received as of this date, this document authorizes the Lessor to start
the Lease, along with any applicable Schedule(s), and gives rise to the Lessee's
duty, commencing immediately, to make the full monthly rental payment(s) for the
full term as referenced in the Schedule(s).
Lessee understands that upon submission of this document to the Lessor, along
with the properly executed documentation pertaining to Lessor's Lease and
Schedule(s), the Lessor shall be authorized to pay, in full or in part, the
Invoice(s) for all of the Equipment, delivered or otherwise, which is covered
under the Lease and Schedule(s) even though some or all of the Equipment may
not have been received by the Lessee as of this date.
Lessee understands that its duty to make the full and complete rental
payment(s) associated with the Lease and Schedule(s) shall arise promptly upon
the Lessors receipt and acceptance of this Authorization, regardless of the
actual date upon which any and/or all of the Equipment shall finally be
delivered.
LESSEE: INTERACTIVE TELESIS, INC.
By: /s/ DONALD E. CAMERON
----------------------------------
DONALD E. CAMERON
Title: President
-------------------------------
Date: 13 Day of August, 1998
<PAGE> 11
[FORD LOGO]
FORD FINANCIAL SERVICES, INC.
DELIVERY AND ACCEPTANCE CERTIFICATE
TO
MASTER LEASE AGREEMENT & SCHEDULE(S)
TO: FORD FINANCIAL SERVICES, INC.
In accordance with and pursuant to the terms, conditions, and provisions of the
MASTER LEASE AGREEMENT NO.: B01060898SD, the ("Lease and/or Lease Agreement"),
dated as of the 13 day of August, 1998 between FORD FINANCIAL SERVICES, INC.,
("Lessor") and INTERACTIVE TELESIS, INC., ("Lessee"), Lessee hereby certifies
that the Equipment listed on LEASE SCHEDULE NO.: 001, the ("Schedule"), has
been delivered to Lessee at the address shown as the Location of Equipment on
the Schedule and, if required, installed by the supplier. Lessee hereby
UNCONDITIONALLY ACCEPTS the Equipment for all purposes of the Lease and/or
Lease Agreement, and hereby authorizes and directs Lessor to pay, in full, the
Supplier pursuant to such Supplier's invoice(s) or any purchase order(s) or
agreement(s) with Supplier and Lessee affirms that such Acceptance commences
Lessee's "Non-Cancelable Obligation" to pay rents due under the Lease and
perform all of its obligations under the Lease with respect to the Equipment.
LESSEE: INTERACTIVE TELESIS, INC.
By: /s/ DONALD E. CAMERON
----------------------------------
DONALD E. CAMERON
Title: President
-------------------------------
Date: 13 Day of August, 1998
NOTE TO LESSEE: This Delivery and Acceptance Certificate is to be signed, dated
and mailed/delivered to FORD FINANCIAL SERVICES, INC. upon satisfactory
delivery of all of the Equipment. Do not sign this document if ALL of the
Equipment is not acceptable for purposes of this Lease; but, rather, notify the
Lessor and the Supplier of unacceptable Equipment and/or terms.
<PAGE> 1
EXHIBIT 10.11
[FORD FINANCIAL SERVICES LOGO]
LEASE SCHEDULE NO. 002
TO
MASTER LEASE AGREEMENT NO.: B01060898SD
(including all supplements and addenda the "Lease")
dated as of
THE 13TH DAY OF AUGUST, 1998
between
FORD FINANCIAL SERVICES, INC. ("Lessor")
and
INTERACTIVE TELESIS, INC. ("Lessee")
************************************************************
TERMS AND CONDITIONS
1. Lease. All terms used herein shall have the same meaning as set forth
the Lease. The items of Equipment described on Exhibit "A", attached hereto and
incorporated herein by this reference, are hereby Leased on the terms specified
herein and in the Lease which by this reference are incorporated in this
Schedule.
2. Terms and Commencement Date. The term of this Lease is for THIRTY SIX
(36) MONTHS, is nonterminable and shall commence on the date Lessee signs the
Delivery and Acceptance Certificate relating to the Equipment ("Acceptance
Date").
3. Rent. Lessee shall pay Rent to Lessor for the Equipment as follows:
$3,235.61 PER MONTH FOR 36 MONTHS.
The payment of "Per Diem Rent" (calculated as one-thirtieth (1/30) of the
monthly Rent amount) hereunder shall begin on the Acceptance Date and shall
continue until the "Rent Commencement Date," which shall be a date chosen by
the Lessor that is within thirty (30) days following the Acceptance Date. The
first and last payment(s) of Rent shall be due and payable on the Rent
Commencement Date. All subsequent Rent payments shall be due and payable on the
same day of each succeeding calendar month thereafter until all obligations of
Lessee under the Lease have been paid in full.
Rental payments shall be paid to:
FORD FINANCIAL SERVICES, INC.
12520 HIGH BLUFF DR., STE. 120
SAN DIEGO, CALIFORNIA 92130
ATTN: LEASE DEPARTMENT
or such other addresses that may be designated by written notice given in the
manner prescribed in the Lease.
4. Location of Equipment:
INTERACTIVE TELESIS, INC.
535 ENCINITAS BLVD., STE. 116
ENCINITAS, CALIFORNIA 92024
5. Advance Rental. Upon the execution of this Schedule, Lessee shall pay
to Lessor as Advance Rental(s) and Deposit(s) in an amount equal to $16,426.95.
Upon Acceptance by Lessor of this Schedule, the Advance Rental(s) and Deposit(s)
shall become non-refundable. Upon execution of the Delivery and Acceptance
Certificate the Advance Rental(s) and Deposit(s) shall be applied to the First
and Last month's Rent and any transaction, including, but not limited to,
Lessee's rejection or refusal to Accept any item of Equipment pursuant to this
Schedule, Lessor may retain the Advance Rental(s) and Deposit(s) as liquidated
damages.
6. Stipulated Loss Value. If this Schedule contains a Stipulated Loss
Value of the Equipment, the Stipulated Loss Value of each item of Equipment as
of each rental payment date in respect thereto shall be that percentage of
Purchase Price of such item of Equipment as set forth in the Stipulated Loss
Value Rider (Exhibit " ") opposite the number of rental payments in respect of
such item of Equipment which would have become due and including such date. The
Purchase Price of the Equipment (including any applicable sales or use taxes
and charges for transportation, assembly and/or installation) is $99,557.28.
<PAGE> 2
7. Counterparts. Three (3) counterparts of this Schedule have been
executed by the parties hereto. One counterpart has been designated "Lessor's
Copy." One counterpart has been designated "Lessee's Copy." One counterpart has
been designated "File Copy." Only the counterpart marked "Lessor's Copy" along
with the original or a photocopy of the Lease evidence Lessee's monetary
obligations hereunder and therefore constitutes chattel paper under the Uniform
Commercial Code. Notwithstanding the foregoing, if Lessor's Copy of this Lease
shall become lost, mutilated or destroyed, Lessor may prove this Lease by
photocopies hereof, or by Lessee's Copy.
8. End of Term Provision. The Lessor, at its option, may grant to Lessee
the option to purchase all of the equipment set forth in said Lease Schedule
upon the termination of the initial Lease Schedule Term, provided, however,
that the Lessee has performed all conditions of said Lease and that an "Event
of Default" has not occurred. Not withstanding the foregoing, the Lessor shall
have the option to require the Lessee to purchase the equipment upon the full
expiration of the Lease Schedule Term for its then Fair Market Value ("FMV").
Lessee hereby agrees that the Fair Market Value shall be based upon an appraisal
provided by an appraiser of the Lessors selection. Should Lessor so require,
Lessee hereby guarantees a minimum payment of $9,955.73 plus applicable taxes.
LESSOR: FORD FINANCIAL SERVICES, INC. LESSEE: INTERACTIVE TELESIS, INC.
By: /s/ [Signature Illegible] By: /s/ DONALD E. CAMERON
---------------------------------- -----------------------------------
DONALD E. CAMERON
Title: President DATE: 25 Sept., 1998 Title: President DATE: 9-25, 1998
----------- --------- ----------- -----
<PAGE> 3
FFSI
Ford Financial Services, Inc.
EXHIBIT A
Page 1 of 4
Attached to and forming a part of the following documents: LEASE SCHEDULE
NUMBER 002 under that certain MASTER LEASE AGREEMENT NUMBER: B01060898SD DATED
THE 13TH DAY OF AUGUST, 1998 Certificate of Acceptance and UCC-1 Financing
Statement to the referenced Lease Schedule, and any addenda thereto by and
between FORD FINANCIAL SERVICES, INC., as Lessor, and INTERACTIVE TELESIS,
INC., as Lessee.
The Lease Schedule referenced above is incorporated herein by this
reference. All terms used herein which are defined in the Lease shall have the
same meaning herein.
Lessee is hereby instructed to contact the Supplier referenced below for a
description of any rights Lessee may have under the Supply Contract covering
the Equipment.
<TABLE>
<CAPTION>
EQUIPMENT MODEL SERIAL PURCHASE
SUPPLIER QUANTITY DESCRIPTION NUMBER NUMBER PRICE
- -------- -------- ----------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
DELL 220-0439 1 Dell Dimension XPS R350MHz 2,048.00 2,048.00
Pentium II Minitower Base
with MMX Technology and
512K Cache
310-0050 1 MS Intellimouse,
Factory Install
310-7002 1 Windows Spacesaver 104 Key
Keyboard, Factory Install
311-6377 1 256MB, SDRAM Memory,
Factory Install
313-1086 1 40X MAX Variable CD ROM,
Factory Install
313-3607 1 No modem requested for
Dell Dimension
313-4514 1 No Speaker Requested
313-4515 1 No Sound Requested
320-3000 1 Video ready option w/o monitor
320-3529 1 STB nVidia ZX 8MB 3D 2X AGP
Graphics Card,
Factory Install
340-2406 1 Iomega Zip 100MB Internal
Drive with Two Cartridges (NT)
Factory Install
340-4498 1 10GB 5400RPM Ultra ATA Hard
Drive, Factory Install
340-7016 1 3.5, 1.44MB Floppy Drive,
Factory Install
420-6111 1 Windows NT Workstation 4.0 CD,
Factory Installed,
CD Documentation
460-3300 1 No Microsoft Internet Explorer
v4.0, Installed
900-1600 1 SelectCare, Initial Year, Next .00 .00
Business Day On-Site Service
Contract, BSC*
900-5112 1 Next Business Day, Parts .00 .00
Delivery Service,
Years 2 & 3 Included
412-0071 1 MS Office Small Business
Edition 97.2
CD & No Printed Manual
US English, Factory Install
412-0078 1 MS Encarta '98, CD, No Manual
US English, Factory Installed
460-2101 1 The Customer agrees to
purchase the above product(s)
at the above price(s),
460-2102 1 Plus applicable taxes and
shipping & handling charges,
subject to the applicable Dell
terms and conditions.
This quote is subject to the terms of
the agreement signed by you and Dell, or
absent such agreement, is subject to the
applicable Dell standard terms of sale.
SUB TOTAL 2,048.00
TAX 165.75
SHIPPING & HANDLING 90.00
OTHER .00
Thank you for calling Dell TOTAL $2,303.75
</TABLE>
<PAGE> 4
EXHIBIT A (Cont.)
Page 2 of 4
<TABLE>
<CAPTION>
EQUIPMENT MODEL SERIAL PURCHASE
SUPPLIER QUANTITY DESCRIPTION NUMBER NUMBER PRICE
- -------- -------- ----------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
220-0439 12 Dell Dimension XPS R350MHz 2,098.00 2,098.00
Pentium II Minitower Base
with MMX Technology and
512K Cache
310-0050 12 MS Intellimouse,
Factory Install
310-7002 12 Windows Spacesaver 104 Key
Keyboard, Factory Install
311-6377 12 256MB, SDRAM Memory,
Factory Install
313-1086 12 40X MAX Variable CD ROM,
Factory Install
313-3607 12 No modem requested for
Dell Dimension
313-4514 12 No Speaker Requested
313-4515 12 No Sound Requested
320-3000 12 Video ready option w/o monitor
320-3529 12 STB nVidia ZX 8MB 3D 2X AGP
Graphics Card,
Factory Install
340-4498 12 10GB 5400RPM Ultra ATA Hard
Drive, Factory Install
340-7016 12 3.5, 1.44MB Floppy Drive,
Factory Install
420-6111 12 Windows NT Workstation 4.0 CD,
Factory Installed,
CD Documentation
430-3034 12 3COM 3C905B Fast Etherlink XL
10/100 PCI NIC,
Factory Install
460-3300 12 No Microsoft Internet Explorer
v4.0, Installed
900-1600 12 SelectCare, Initial Year, Next .00 .00
Business Day On-Site Service
Contract, BSC*
900-1602 12 SelectCare 2 Years Extended, .00 .00
Next Business Day On-Site
Service Contract, BSC
412-0071 12 MS Office Small Business
Edition 97.2
CD & No Printed Manual,
US English, Factory Install
412-0078 12 MS Encarta '98, CD, No Manual
US English, Factory Installed
460-2101 12 The Customer agrees to
purchase the above product(s)
at the above price(s),
460-2102 12 Plus applicable taxes and
shipping & handling charges,
subject to the applicable Dell
terms and conditions.
This quote is subject to the terms of
the agreement signed by you and Dell, or
absent such agreement, is subject to the
applicable Dell standard terms of sale.
SUB TOTAL 25,176.00
TAX 2,034.84
SHIPPING & HANDLING 1,080.00
OTHER .00
Thank you for calling Dell TOTAL $28,290.84
</TABLE>
<PAGE> 5
EXHIBIT A (Cont.)
Page 3 of 4
<TABLE>
<CAPTION>
EQUIPMENT MODEL SERIAL PURCHASE
SUPPLIER QUANTITY DESCRIPTION NUMBER NUMBER PRICE
- -------- -------- ----------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
220-0508 1 Dell PowerEdge 4200, 16,466.04 16,466.04
333MHx/512k, with
Redundant Power Supply
310-0017 1 Microsoft System Mouse with
Driver Disks
Factory Installed
310-7004 1 Windows Performance 104 Key
Keyboard, Factory Installed
311-0215 1 1024 MB RAM, 9 DIMMs
Factory Installed
311-0459 1 PowerEdge 4200, 333MHz/512K
Second Processor,
Factory Install
313-0155 1 12/24X SCSI CD ROM, for Dell
PowerEdge Servers,
1st CD Option, Factory Install
320-0051 1 Dell 800F Series, 15", Model
No. 828FI with 13.8" Viewable
Image Size, Color Monitor
340-0300 1 PowerEdge Expandable RAID
Controller (PERC), SCSI-3/UW,
16MB/ECC, Dual Channel,
Factory Install
340-0316 1 RAID 5, All Same Size Drives,
Single Volume
Factory Install
340-1288 1 9.1 GB LVD SCSI Hard Drive
For Dell PowerEdge 4200/6100
and SDS100,
Factory Install
340-1288 1 9.1 GB LVD SCSI Hard Drive
for Dell PowerEdge 4200/6100
and SDS100,
Factory Install
340-5891 1 1.44MB Floppy Drive,
Factory Installed
365-1234 1 ReadyWare Factory Installation
Service
430-0008 1 Intel EtherExpress PRO 100/B
PCI Ethernet Adapter,
Factory Install
430-2185 1 Microsoft NTS 4.0 on CD,
10 Client Access Licenses,
OEM Packaging, US Version,
Factory Install
900-2750 1 SelectCare, Next Business Day .00 .00
On-Site Service Contract,
Initial Year, Wang
900-2752 1 SelectCare, Next Business Day .00 .00
On-Site Service Contract,
2 Year Extended, Wang
</TABLE>
<PAGE> 6
EXHIBIT A (Cont.)
Page 4 of 4
<TABLE>
<CAPTION>
EQUIPMENT MODEL SERIAL PURCHASE
SUPPLIER QUANTITY DESCRIPTION NUMBER NUMBER PRICE
- -------- -------- ----------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
340-0464 1 12/192GB DDS-3 Autoloader,
Supports up to 8 Tapes
Internally, Factory Install
340-0477 1 Seagate Bup Exec v7.0 for NT &
v7.5 for NetWare-Sngl Server
Edition, CD ROM, Eng/Fr/Ger/Sp
/Japanese, Non-Factory Install
340-0478 1 Seagate Bup Exec v7.0 for NT &
v7.5 for NetWare-Auto Loader
Module, CD ROM, Eng/Fr/Ger/Sp/
Japanese, Non-Factory Install
340-1288 1 9.1GB LVD SCSI Hard Drive
for Dell PowerEdge 4200/6100
and SDS100,
Factory Install
340-1288 1 9.1GB LVD SCSI Hard Drive
for Dell PowerEdge 4200/6100
and SDS100,
Factory Install
340-1288 1 9.1GB LVD SCSI Hard Drive
for Dell PowerEdge 4200/6100
and SDS100,
Factory Install
340-1288 1 9.1GB LVD SCSI Hard Drive
for Dell PowerEdge 4200/6100
and SDS100,
This quote is subject to the terms of
the agreement signed by you and Dell, or
absent such agreement, is subject to the
applicable Dell standard terms of sale.
SUB TOTAL 16,466.04
TAX 1,283.15
SHIPPING & HANDLING 90.00
OTHER .00
TOTAL $17,839.19
Thank you for calling Dell
</TABLE>
PARAGON VOICE SYSTEMS
12 001-061 Dialogic D/240SC-T1 Voice 3,950.00 47,400.00T
Processing Board
F&H Freight & Handling 50.00 50.00
Sales Tax 7.75% 3,673.50
TOTAL $51,123.50
EQUIPMENT LOCATION:
Interactive Telesis, Inc.
535 Encinitas Blvd., Ste. 116
Encinitas, CA 92024
LESSEE ___ (Initial)
LESSOR ___ (Initial)
<PAGE> 1
[IMPERIAL BUSINESS CREDIT, INC. LOGO] EXHIBIT 10.12
One Park Central, Suite 520
1515 Arapahoe Street, Denver, Colorado 80202 241351
Telephone: (303) 534-1117 1-800-477-7339 LEASE NUMBER
- --------------------------------------------------------------------------------
BUSINESS EQUIPMENT LEASE
- --------------------------------------------------------------------------------
LESSEE NAME
Interactive Telesis, Inc.
- --------------------------------------------------------------------------------
LESSEE ADDRESS CITY COUNTY STATE ZIP
535 Encinitas Blvd. #116 Encinitas San Diego CA 92024
- --------------------------------------------------------------------------------
SUPPLIER/VENDOR NAME ADDRESS CITY STATE ZIP
See Attached Schedule "A"
- --------------------------------------------------------------------------------
QUANTITY DESCRIPTION: MODEL No., Serial No., or other Identification COST
See Attached Schedule "A" $30,212.12
- --------------------------------------------------------------------------------
EQUIPMENT LOCATION: STREET CITY COUNTY STATE ZIP
If Other Than
Billing Address
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAYMENT DUE DATE RENT PAYMENTS SECURITY DEPOSIT SALES/USE TAX TOTAL PAYMENT LEASE TERM
<S> <C> <C> <C> <C> <C>
OF EACH
MONTH $969.25 Monthly $ $ $969.25 36 Months
</TABLE>
Advance Payment of $1,938.50 which equals the first and last one payment(s), The
Security Deposit and a $100.00 documentation fee MUST ACCOMPANY LEASE.
- --------------------------------------------------------------------------------
1. LEASE. Lessee hereby agrees to lease from Lessor the personal property
described above (herein called the "Equipment"); and requests that Lessor
purchase the Equipment from the Supplier/Vendor named above. This Lease shall
become NONCANCELLABLE DURING THE TERM STATED ABOVE by Lessee for any reason
whatsoever, and Lessee shall be obligated to pay Lessor all sums called for in
the Business Equipment Lease (herein called the "Lease").
2. COMMENCEMENT AND TERMINATION. This Lease shall be binding on Lessor only
when accepted and signed by a duly authorized officer of Lessor. Lessor may
insert in the space appearing below the "Lease Start Date," which shall be the
earlier of the date the Equipment (or any portion of it) is delivered to Lessee
or the date Lessor disburses the purchase price (or any portion of it) to the
supplier. Provided Lessee has successfully performed all its duties and
obligations under the Lease, it shall terminate upon expiration of the number
of months (following the lease Start Date) stated as the Lease Term.
3. RENT AND OTHER PAYMENTS. Lessee shall pay the advance rentals due under the
Lease, as stated above, upon signing the Lease. All such amounts shall be
non-refundable. Monthly rent payments due after the first month's rent shall be
payable on the "Payment Due Date" indicated above or on the first business day
thereafter if a Payment Due Date falls on a non-business day. The Payment Due
Date shall be either the 1st or the 15th of each month, whichever is next
closer to the Lease Start Date, as determined by Lessor. In addition to regular
rentals, Lessee shall pay to Lessor interim rent for the use of the Equipment
prior to the due date of the first payment. Interim rent shall be in an amount
equal to 1/30th of the monthly rental, multiplied by the number of days
elapsing between the date on which the Equipment is accepted by Lessee and the
Lease Start Date of this Lease, together with the number of days elapsing
between the Lease Start Date and the due date of the first payment. The payment
of interim rent shall be due and payable upon Lessee's receipt of invoice from
Lessor. Lessee agrees to pay to Lessor a service charge of 5% per month, but
not to exceed the maximum amount permitted by law, on any payment due under
this Lease which is not paid within five days of the Payment Due Date. Lessee
shall pay all sales, use, excise, personal property, stamp, documentary, and ad
valorem taxes, licenses and registration fees, assessments, fines, penalties,
and other charges imposed on the ownership, possession, or use of the Equipment
during the term of this Lease, and Lessee shall pay all taxes (except income
taxes imposed on Lessor) with respect to the rental payments hereunder, and
shall, with the next scheduled payment reimburse Lessor for any taxes paid by
or advanced by Lessor. Lessee's obligation to pay such taxes, fees,
assessments, fines, penalties, and other charges shall survive termination of
the Lease. Lessee agrees that Lessor may adjust the rent payment proportionally
up or down if the actual cost of the Equipment exceeds or is less than the
amount stated in the Lease. All payments under this Lease shall be made to
Lessor at the address set forth above or at any other address Lessor
subsequently gives to Lessee for purposes of making payment. In the event of
default, payments made under the Lease may be applied to Lessee's obligation to
Lessor in any order Lessor chooses.
- --------------------------------------------------------------------------------
4. SELECTION OF EQUIPMENT. Lessee acknowledges that Lessor did not participate
in the selection, manufacture or supply of the Equipment and that Lessee has
made the selection of the Equipment and the supplier of such Equipment based
upon its own judgment. Lessee agrees to inspect the equipment and to execute the
"Certificate of Acceptance", which is attached hereto, only after the Lessee is
satisfied that the Equipment is satisfactory in every respect. Lessee hereby
authorizes Lessor to insert in the Lease any equipment serial numbers and other
identification data relating to the Equipment as needed. 5. DISCLAIMER OF
WARRANTIES. BY SIGNING BELOW, LESSEE ACKNOWLEDGES THAT LESSOR IS LEASING THE
EQUIPMENT TO LESSEE "AS IS" AND WITH ALL FAULTS. LESSOR SHALL NOT BE RESPONSIBLE
IF THE EQUIPMENT IS NOT PROPERLY INSTALLED, DOES NOT OPERATE AS REPRESENTED OR
GUARANTEED BY THE SUPPLIER, OR IS UNSATISFACTORY FOR ANY REASON. LESSOR MAKES NO
REPRESENTATIONS AND DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE
EQUIPMENT, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE OR OF MERCHANTABILITY, LESSEE HEREBY WAIVES ANY CLAIM
(INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT) IT MIGHT
HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR CONSEQUENTIAL
DAMAGE) OR EXPENSE CAUSED BY THE EQUIPMENT. Provided Lessee is not in default of
the Lease, Lessor hereby assigns to Lessee and Lessee shall have the benefit of,
any and all manufacturer's warranties, service agreements and patent
indemnities, if any, with respect to the Equipment; provided, however, that
Lessee's sole remedy for breach of any such warranty, indemnification or service
agreement shall be against the manufacturer of such Equipment and not against
the Lessor, nor shall such breach have any effect whatsoever on the rights and
obligations of Lessor or Lessee hereunder. LESSEE ACKNOWLEDGES THAT NEITHER THE
SUPPLIER, BROKER NOR THEIR AGENTS OR EMPLOYEES ARE AGENTS OF LESSOR NOR ARE THEY
AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE WITHOUT THE
WRITTEN CONSENT OF LESSOR. NO AGREEMENT, EITHER WRITTEN OR VERBAL, BETWEEN
SUPPLIER AND LESSEE OR BROKER AND LESSEE SHALL BIND LESSOR UNLESS LESSOR
SPECIFICALLY CONSENTS TO SUCH AGREEMENT IN WRITING.
6. AMENDMENTS. No term or provision of this Lease may be amended, altered,
waived, discharged or terminated except by a written instrument signed by the
parties hereto, and, in compliance with UCC Section 2A-208(2) requiring a
separate signature of this provision, Lessee has signed in the space provided
below.
Lessor and Lessee have specifically negotiated and
agreed to the preceding paragraphs 4, 5 and 6 ________________
LESSEE'S INITIALS
SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS WHICH ARE A PART OF THIS
LEASE.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ACCEPTED BY: Imperial Business Credit, Inc. (Lessor) This agreement shall not be effective until executed by the Lessee and
accepted by an authorized representative of Lessor at its principal
place of business.
LESSEE Interactive Telesis, Inc.
By [ILLEGIBLE} -----------------------------------
------------------------------------------
By /s/ DONALD CAMERON
12/11/98 12/1/98 -------------------------------------
- ---------------------------------------------- Donald Cameron Title Pres.
DATE (LEASE START DATE)
[ILLEGIBLE]
-------------------------------------
Witness Date 11/16/98
</TABLE>
- --------------------------------------------------------------------------------
PERSONAL GUARANTY
In consideration of Lessor entering into the above Business Equipment Lease
(the "Lease"), the undersigned ("Undersigned") jointly and severally,
personally and unconditionally guarantee to Lessor the prompt payment in full,
when due, of all of Lessee's obligations under the Lease including without
limitation, every rental payable and the accelerated balance of rentals if
demanded by Lessor. Lessor shall not be required to proceed against Lessee or
the Equipment or enforce any other remedy before proceeding against the
Undersigned. The Undersigned agrees to pay all attorneys fees and other
expenses incurred by Lessor by reason of any default of Lessee or in enforcing
the Lease or this Guaranty. The Undersigned waives notice of acceptance hereof
and all other notices or demands of any kind to which the Undersigned may be
entitled and consents to the granting of extensions of time of payment to
Lessee and other obligors and guarantors and to any other amendments or
adjustments in the terms of the lease. This Personal Guaranty shall bind the
heirs, administrators, representatives, successors and assigns of guarantor and
may be enforced by or for the benefit of any assignee or successor of Lessor.
The Undersigned agrees that all actions arising directly or indirectly from
this Guaranty shall only be litigated in the state and the jurisdiction where
Lessor is located or if this Lease has been assigned where Lessor's assignee
is located, which may include the States of Colorado and California. The
Undersigned hereby consents to the jurisdiction of any local, state or federal
court in any of such states. The Undersigned further waives personal service of
any and all process upon the Undersigned, and consents that service may be made
by certified mail directed to the Undersigned at the address shown below, and
that service shall be effective two (2) days after mailing.
<TABLE>
<S> <C>
SIGNATURE X /s/ DONALD CAMERON SIGNATURE X
-------------------------------- --------------------------------
(INDIVIDUAL CAPACITY) (INDIVIDUAL CAPACITY)
(PRINT NAME) Donald Cameron (PRINT NAME)
-------------------------------- --------------------------------
HOME 1109 Sycamore View Dr. HOME
ADDRESS Encinitas, CA 92024 ADDRESS
-------------------------------- --------------------------------
HOME HOME
PHONE NO. 760 632-1124 DATE 11/16/98 PHONE NO. DATE
-------------------------------- --------------------------------
</TABLE>
<PAGE> 2
7. FINANCE LEASE STATUS. The parties agree that this Lease is intended to
qualify as a "Finance Lease" under Article 2A of the Uniform Commercial Code
(herein called the "UCC"). Lessee acknowledges that (a) Lessee has received a
copy of the purchase order or contract by which Lessor acquired or will acquire
the Equipment (herein called the "Supply Contract"); or (b) Lessee has reviewed
and approved and agreed to be bound by the Supply Contract; or (c) Lessor has
informed or advised Lessee in writing either previously or by this lease (i) of
the identity of the supplier; (ii) that Lessee may have rights under the Supply
Contract; and (iii) that the Lessee should contact the supplier for a
description of any such rights Lessee may have under the Supply Contract.
8. LESSEE INDEMNIFICATION. Lessee hereby agrees to indemnify and hold Lessor
and Lessor's agents and employees, harmless from any and all liability, damage,
or loss, including attorney's fees and court costs, arising out of the
purchase, sale, ownership, selection, possession, operation, control, use,
maintenance, or delivery of the Equipment.
9. POWER OF ATTORNEY/FINANCING STATEMENTS. Lessee hereby makes, constitutes
and appoints Lessor and its assigns its true and lawful attorney and agent for
it and in its name, place and stead to execute, deliver and file any UCC
financing statements and other documents that Lessor deems necessary or
advisable in order to protect Lessor's rights in the Equipment. This power
being coupled with an interest shall be irrevocable for the term of this Lease.
Lessor and Lessee agree that a carbon, photographic or other reproduction of
this Lease may be filed as a financing statement under the UCC.
10. LESSOR TERMINATION BEFORE EQUIPMENT ACCEPTANCE. If within 60 days from the
date Lessor orders the Equipment, same has been delivered, installed and
accepted by Lessee (in form satisfactory to Lessor) Lessor may at Lessor's sole
discretion, on 10 days written notice to Lessee, terminate this Lease and its
obligation to Lessee.
11. LOCATION AND INSPECTION. Equipment shall be delivered and thereafter kept
at the location specified above, or, if none is specified, at Lessee's address
set forth above and Lessee shall not remove or allow to be removed therefrom
without Lessor's prior written consent. Any and all costs incurred by Lessor as
a result of such relocation shall be borne by Lessee. Any charges hereunder
shall not abate during the period the Equipment is out of service due to any
such relocation requested by Lessee. Lessee shall permit Lessor on its premises
to inspect the Equipment and the business records of Lessee relating to it
during normal business hours.
12. USE OF EQUIPMENT. Lessee shall, at its expense, use, maintain and keep the
Equipment in good operating order in the manner for which it was designed and
intended. SOLELY FOR LESSEE'S BUSINESS PURPOSE, in accordance with
manufacturer's recommendations and in compliance with all applicable laws,
regulations and insurance requirements. Lessee shall not make any alterations
or additions to the Equipment without the prior written consent of Lessor. All
additions, attachments, or replacements made to the Equipment, unless otherwise
agreed to in writing by Lessor, shall become part of the Equipment. Lessee, at
its expense, shall maintain the Equipment in good operating order and repair in
accordance with the manufacturer's recommendations. Supplies required for use
of the Equipment are to be provided by Lessee at its expense and are to meet
with the Equipment manufacturer's specifications.
13. LESSEE REPRESENTATIONS. Lessee warrants and represents that (a) all legal
action has been taken to permit Lessee to execute and perform this Lease; (b)
its entering into and performance of this Lease will not violate any law or
regulation applicable to Lessee; (c) this Lease constitutes a legal, valid, and
binding obligation, enforceable against Lessee in accordance with its terms;
(d) all financial or other statements furnished or made to Lessor by Lessee are
the true and correct in all material respects; and (e) Lessee is in good
standing in its state of incorporation and is in good standing and is entitled
to own properties and to carry on a business in the state where the Equipment
is to be located. Any person signing this Lease or Lessee warrants that he is
duly authorized and empowered to do so.
14. INSURANCE. Lessee shall at all times prior to return of the Equipment to
Lessor carry and maintain, at its expense, insurance covering (a) theft and all
risks of loss or damage from any cause whatsoever for an amount not less than
the replacement value of the Equipment or the unpaid amount of the Lease,
whichever amount is greater, and which names Lessor and its assigns as loss
payee; and (b) public liability, both personal injury and property damage,
covering the maintenance, use and operation of the Equipment and which names
Lessor and its assigns as an additional insured. All such insurance coverage
shall be in form, amount, and with companies satisfactory to Lessor, Lessee
shall deliver certificates of insurance to Lessor. All such insurance shall
require 30 days written notice to Lessor and its assigns prior to alteration or
cancellation. Lessee hereby appoints Lessor and its assigns as Lessee's
attorney-in-fact with respect to endorsement of all documents, checks, or
drafts for loss or damage recoverable under all such insurance policies.
15. RISK OF LOSS. Upon delivery of the Equipment to Lessee, Lessee shall bear
the entire risk of loss, damage, theft or destruction to the Equipment or any
part thereof, from any and every cause whatsoever, which shall occur prior to
the Lessee's return of the Equipment as set forth in this Lease and no such
loss, damage, theft or destruction shall relieve Lessee of its obligation to
pay rent or to comply with any other obligation under this Lease. In the event
of such loss, damage, theft, or destruction, Lessee shall promptly notify
Lessor and Lessee shall within 30 days repair or replace such Equipment to its
original condition, and shall continue to make lease payments as called for
under this Lease. Lessee agrees that if Lessee shall fail to procure, carry and
maintain insurance coverage as set forth in this Lease, Lessor shall have the
right, but not the obligation, to obtain such insurance on behalf of and at the
expense of Lessee. In the event Lessor does obtain such insurance, Lessee
agrees to pay all costs thereof with interest at the maximum lawful rate,
immediately upon demand.
16. RETURN OF EQUIPMENT. Unless Lessee exercises any purchase or renewal
option specifically provided for in this Lease, upon expiration or earlier
termination of the Lease with respect to the Equipment, or upon demand by
Lessor pursuant to this Lease, Lessee shall immediately, at its expense, return
the Equipment in the same condition as when Lessee received it, excepting only
reasonable wear and tear, to Lessor at a location in the continental United
States specified by Lessor. Lessee shall pay all costs and expenses to crate,
insure and return the Equipment to the designated location and Lessee shall pay
all then outstanding tax assessments and future tax liabilities resulting from
Lessee's possession of the Equipment prior to its return to Lessor. After the
expiration of the initial Lease term and thereafter until Lessor actually
receives the Equipment at the return location, the Lease shall automatically
renew from month to month, and Lessee agrees to continue to make Lease payments
at the last effective rate under the Lease with the Lessor retaining all
payments made up to the time the Equipment is returned to the specified return
location.
17. DEFAULT. The following events shall constitute an event of default by
Lessee under this Lease; (a) failing to pay when due any amount required to be
paid to Lessor under this Lease in a timely fashion or to timely perform any
covenant, condition, or obligation to be performed by lessee under this Lease
or under any other agreement with Lessor; (b) selling, transferring, or
disposing of the Equipment or of substantially all of the Lessee's assets or
merging or reorganizing without the prior written consent of Lessor; or (c)
creating, incurring, assuming or suffering to exist any mortgage, lien, pledge
or other encumbrance or attachment of any kind whatsoever upon, affecting or
with respect to the Equipment or this Lease or any of the Lessor's interest
thereunder; or (d) providing financial statements or making representations to
Lessor which are incorrect or misleading or inaccurate in any respect; (e)
becoming unable to pay debts as they become due or otherwise becoming insolvent
or suffering an adverse change in its financial condition; or (f) Lessor
reasonably deems itself insecure in its expectations that Lessee will fully
perform all of Lessee's obligations under this Lease.
18. REMEDIES OF LESSOR. Upon the occurrence of default by Lessee hereunder and
at any time thereafter (subject to any applicable grace provisions), Lessor may
exercise any one or more of the following remedies, as Lessor, in its sole
discretion, shall elect: (a) declare all unpaid rentals under this Lease to be
immediately due and payable, the amount to be due to be computed as hereinafter
set forth; (b) terminate this Lease as to any or all items of Equipment, but no
such termination shall be deemed to occur unless written notice to that express
effect is given by Lessor to Lessee; (c) whether or not this Lease is
terminated, take immediate possession of any or all of the Equipment, without
notice or demand and without court order or process, and for such purpose,
enter upon any premises without liability for so doing; (d) sell, lease or
otherwise dispose of the Equipment, or any item thereof, at a public or private
sale or lease at such time or times and upon such terms as Lessor may
determine, free and clear of any rights of Lessee; (e) proceed by appropriate
action either at law or in equity to enforce performance by Lessee of the
applicable covenants of this Lease or recover damages for the breach thereof;
and (f) exercise any and all rights accruing to a Lessor of personal property
under any applicable law upon a default by Lessee. In furtherance of the
foregoing, Lessor shall be entitled to recover immediately as liquidated
damages and not as a penalty, a sum equal to the aggregate of the following:
(i) all unpaid rentals and other amounts or other sums which are due and
payable for any item of Equipment up to the date delivered to or repossessed by
Lessor; (ii) any expenses paid or incurred by Lessor in connection with the
repossession, holding, repair, appraisal, transportation and subsequent sale,
lease or other disposition of the Equipment, including attorneys' fees and
court costs; and (iii) an amount equal to the difference between (aa) all
unpaid rentals and other amounts, due and to become due under this Lease, each
of which unpaid rentals and other amounts shall be discounted to present value
at an annual rate of 7% (collectively, "Unpaid Rentals"), together with the
amount or percentage of original cost for which Lessee would have been
permitted or required to purchase the Equipment at the end of the Lease term
hereof, which amount shall be discounted to present value at an annual rate of
7% ("Purchase Amount") and (bb) the then fair market value of any Equipment
returned to or repossessed by Lessor ("Return Value"); provided, however, that
the Return Value of each such item of Equipment shall be deemed to be an amount
equal to the proceeds, if any, of any sale or lease thereof by Lessor, less any
costs or expenses incurred by Lessor from such sale or lease. If Lessor is
unable, after the exercise of reasonable efforts to sell or lease any such item
of equipment, the Return Value of such item of equipment shall be deemed to be
zero. If the Return Value of the Equipment exceeds the sum of the Unpaid
Rentals plus the Purchase Amount, Lessor shall be entitled to the excess. No
right or remedy conferred upon or reserved to Lessor by the Lease shall be
exclusive of any other right or remedy herein or by law provided; all rights and
remedies of Lessor conferred on Lessor by this Lease or by law shall be
cumulative and in addition to every other right and remedy available to Lessor.
Lessee shall pay all costs and reasonable attorney's fees incurred by Lessor in
collecting any sums owed under this Lease or in obtaining possession of leased
Equipment, including attorney's fees incurred in seeking relief from stay in
bankruptcy court together with interest at the rate of the lesser of 18%
compounded annually, or the maximum amount permitted by law on each of the
foregoing and on all sums not paid when due under any provision of this Lease.
19. LESSEE'S WAIVERS. To the extent permitted by applicable law, Lessee hereby
waives any and all rights and remedies conferred upon a Lessee by Section
2A-508 through Section 2A-522 of the UCC, including, without limitation,
Lessee's rights to: (a) cancel this Lease; (b) repudiate this Lease; (c) reject
the Equipment; (d) revoke acceptance of the Equipment; (e) recover damages from
Lessor; (f) a security interest in the Equipment in Lessee's possession or
control for any reason; (g) deduct all or any part of claimed damages resulting
from Lessor's default, if any, under this Lease; (h) recover damages from
Lessor for any breaches of warranty or for any other reason; (i) accept
partial delivery of the Equipment; (j) "cover"; (k) recover any general,
special, incidental or consequential damages for any reason whatsoever; and (l)
specific performance, replevin, detinue, sequestration, claim or deliver of the
like for the Equipment.
20. ASSIGNMENT BY LESSOR. LESSOR MAY ASSIGN OR TRANSFER THE LEASE OR LESSOR'S
INTEREST IN THE EQUIPMENT WITHOUT NOTICE TO LESSEE. Any assignee of Lessor
shall have all of the rights, but none of the obligations, of Lessor under the
Lease and Lessee agrees that it will not assert against any assignee of Lessor
any defense, counterclaim or offset that Lessee may have against Lessor. Lessee
acknowledges that any assignment or transfer by Lessor shall not materially
change Lessee's duties or obligations under this Lease not materially increase
the burdens or risk imposed on Lessee. Lessee agrees that Lessor may assign or
transfer this Lease or Lessor's interest in the Equipment ever if said
assignment or transfer could be deemed to materially effect the interests of
Lessee.
21. NO LESSEE ASSIGNMENT OR SUBLEASE. LESSEE SHALL NOT ASSIGN, HYPOTHECATE OR
IN ANY WAY DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS
LEASE OR ENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT WITHOUT
THE PRIOR WRITTEN CONSENT OF LESSOR.
22. CONSENT TO JURISDICTION AND VENUE. THIS LEASE CALLS FOR PERFORMANCE BY
LESSEE AT THE LOCATION OF LESSOR OR LESSOR'S ASSIGNEE. AS PART OF THE
CONSIDERATION FOR LESSOR'S EXECUTING THIS LEASE, LESSEE AGREES THAT ALL
ACTIONS ARISING DIRECTLY OR INDIRECTLY FROM THIS LEASE SHALL ONLY BE LITIGATED
IN THE STATE AND THE JURISDICTION WHERE LESSOR IS LOCATED, OR IF THIS LEASE HAS
BEEN ASSIGNED WHERE LESSOR'S ASSIGNEE IS LOCATED WHICH MAY INCLUDE THE STATES
OF COLORADO AND CALIFORNIA. LESSEE HEREBY CONSENTS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT IN ANY OF SUCH STATES. LESSEE FURTHER WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON LESSEE, AND CONSENTS THAT SERVICE
MAY BE MADE BY CERTIFIED MAIL DIRECTED TO THE LESSEE AT THE ADDRESS SHOWN IN
THIS LEASE, AND THAT SERVICE SHALL BE EFFECTIVE TWO (2) DAYS AFTER MAILING.
23. OWNERSHIP/PERSONALTY. The Equipment is, and shall remain, the property of
Lessor, and Lessee shall have no right, title or interest therein or thereto
except as expressly set forth in this Lease. The Equipment shall remain
personal property regardless of whether affixed to real property, and Lessee
agrees to execute and obtain the execution of all agreements and documents in
recordable form by all parties having an interest in real property to which the
Equipment may be affixed, as Lessor may request, to protect Lessor's title to
the Equipment.
24. SECURITY DEPOSIT. Lessor shall retain the security deposit (if any)
specified as security for performance by Lessee of its obligations under this
Lease. The security deposit shall be non-interest bearing, and if Lessee shall
default in the performance of its obligations hereunder, Lessor, may at its
sole option, apply the security deposit to the curing of that default. This
application by Lessor shall not be a defense to any action by Lessee arising
out of the default, and upon demand, Lessee shall restore the security deposit
to its full amount. If Lessee is not in default of this Lease, the security
deposit will be returned to Lessee at the termination of the Lease, provided
Lessee, at its sole expense and cost, shall have returned the Equipment by
delivering it in the same condition as when delivered to Lessee, reasonable
wear and tear excepted, at such place or on board carrier, packed for shipping,
as Lessor may specify.
25. MISCELLANEOUS. (a) Lessor has entered into this Lease in reliance upon
Lessee's representations that this Lease is for commercial, or business
purposes and not for personal, family or household purposes of Lessee; (b) any
action by Lessee against Lessor for any default by Lessor under this Lease,
shall be commenced within one (1) year after any such cause of action accrues;
(c) if for any reason this transaction is deemed not to be a Lease, Lessee
hereby grants Lessor a security interest in the Equipment; (d) all notices,
consents, instructions or requests desired or required to be given under this
Lease shall be in writing and shall become effective when delivered, or if
mailed, when deposited in the U.S. mail postage prepaid for certified or
registered mail, return receipt requested, at the address set forth in this
Lease or at such other address as such part shall from time to time designate
by proper notice; (e) no failure on the part of Lessor to exercise, and no
delay in exercising, any rights or remedy under this Lease shall operate as a
waiver or modify the terms of this Lease, nor shall any single or partial
exercise by Lessor of any right or remedy preclude any other or further
exercise of the same or any other right or remedy; (f) Lessee shall promptly
provide such further documents and financial reports as Lessor may reasonably
require in its normal course of business including copies of annual financial
reports, Securities Exchange Commission reports, quarterly reports and any
other information as Lessor may reasonably require; (g) no provision of this
Lease which may be deemed unenforceable shall in any way invalidate any other
provision of this Lease; (h) if any of the provisions of this Lease or
documentation related thereto is declared to be invalid or unenforceable, such
provision shall be severed from this Lease and the remaining provisions thereof
shall remain in full force and effect; (i) this Lease and all documentation
executed in connection therewith represents the entire agreement between the
parties hereto and automatically cancels and supersedes any and all prior
verbal or written understandings with respect thereto. The Lessor may in its
sole discretion accelerate the full payment of this Lease upon the death of a
natural Lessee or Guarantor.
THIS IS A NON-CANCELLABLE LEASE
IBC-101(4-96)
<PAGE> 3
LESSOR: 241351
------------
LEASE NUMBER
EXHIBIT A
Inet
- ----
5754 Pacific Center
Blvd. #202
San Diego, CA 92121
(1) CSU Routing System to include the following:
(2) Chatsworth Rack Runwy MTG Plate
(1) Chatsworth Cable Rack End Caps
(8) Chats Comp WH 23" 2SD Hvyt Dty
(1) Chatsworth Runway Splice Kit
(1) Chatsworth J-Bolt BIT
(1) Fulldrop INS Plugin/TSU100/600
(4) Adtran T-1 ESF CSU ACE W/P.S.
(12) Adtran CSU ESF T1 Rack Mount
(1) Smart 16E Shelf AC w/SNMP
(2) 23" White Computer Rack
(1) 1000 Series IP Only SFTW Pack
(1) 1005 IP Router
(2) Powerstrip
(3) Extension Cords 6'
(2) 70" Rackmount Power Strip
(1) Chatsworth 23" Rack
(4) Newton 23" Shelves
(6) Adtran Drop Insert Ace CSU
(1) Adtran CSU Rack
LESSEE: Interactive Telesis, Inc. DATE: 11/16/98
------------------------------------------- ---------------
BY: /s/ DONALD CAMERON TITLE: President
----------------------------------------------- --------------
Donald Cameron
<PAGE> 1
EXHIBIT 10.13
LESSOR: Media Capital, LLC. 16105 2
------------
LEASE NUMBER
BUSINESS LEASE AGREEMENT
LESSEE NAME: VENDOR NAME:
Interactive Telesis, Inc. See Attached Schedule "A"
535 Encinitas Blvd. #116
Encinitas, CA 92024
<TABLE>
<CAPTION>
QUANTITY DESCRIPTION: MODEL NO., SERIAL NO., OR OTHER IDENTIFICATION
<S> <C>
See Attached Schedule "A"
</TABLE>
<TABLE>
LEASE TERMS RENTAL PAYMENT AMOUNT SECURITY DEPOSIT
<S> <C> <C>
36 Payments of $1,895.55 (Plus applicable taxes) $______________
36 Months __ Payments of $________ (Plus applicable taxes) ADVANCE PAYMENTS
__ Payments of $________ (Plus applicable taxes) 2 Payments for $3,791.10
__ Variable Payment - See Attached Payment Schedule "B" Documentation Fee $0
</TABLE>
1. LEASE. Lessor hereby leases to Lessee and Lessee hereby leases from Lessor
the personal property described above (herein called the "Equipment"). Upon
Lessor signing below, this Lease shall become NON-CANCELABLE DURING THE TERM
STATED ABOVE by Lessee for any reason whatsoever, and Lessee shall be obligated
to pay Lessor all sums called for in this Business Lease Agreement (herein
called the "Lease").
2. COMMENCEMENT AND TERMINATION. This Lease shall commence on the "Lease Start
Date" to be determined by Lessor and provided Lessee has successfully performed
all its duties and obligations under the Lease, shall terminate upon expiration
of the number of months (following the Lease Start Date) stated as the Lease
Term.
3. RENT AND OTHER PAYMENTS. Lessee shall pay the advance rentals due under this
Lease as stated above upon signing this Lease. All such amounts shall be
non-refundable. Monthly rent payments due after the first month's rent shall be
payable on the "Payment Due Date" to be determined by Lessor or on the first
business day thereafter if a Payment Due Date falls on a non-business day.
Lessee agrees to pay to Lessor a service charge of $10 or 10% of the amount that
is late, whichever is more, not to exceed the maximum amount permitted by law,
on any payment due under this Lease which is not paid within five days of the
Payment Due Date. Lessee shall pay all sales, use, excise, personal property,
stamp, documentary, and ad valorem taxes, licenses and registration fees,
assessments, fines, penalties, and other charges imposed on the ownership,
possession or use of the Equipment during the term of this Lease, and Lessee
shall pay all taxes (except income taxes imposed on Lessor) with respect to the
rental payment hereunder, and shall, with the next scheduled payment reimburse
Lessor for any taxes paid by advanced by Lessor. Lessee's obligation to pay such
taxes, fees, assessments, fines, penalties, and other charges shall survive
termination of the Lease. Lessee agrees that Lessor may adjust the rent payment
proportionally up or down if the actual cost of the Equipment exceeds or is less
than the amount stated in the Lease. All payments under this Lease shall be made
to Lessor at the address set forth above or at any other address Lessor
subsequently gives to Lessee for purposes of making payment. In the event of
default, payments made under the Lease may be applied to Lessee's obligation to
Lessor in any order Lessor chooses.
4. SELECTION OF EQUIPMENT. Lessee acknowledges that Lessor did not participate
in the selection, manufacture or supply of the Equipment and that Lessee has
made the selection of the Equipment and the supplier of such Equipment based
upon its own judgment. Lessee agrees to inspect the Equipment and to execute the
"Certificate of Acceptance," which is attached hereto, only after the Lessee is
satisfied that the Equipment is satisfactory in every respect. Lessee hereby
authorizes Lessor to insert in the Lease any equipment serial numbers and other
identification data relating to the Equipment as needed.
5. DISCLAIMER OF WARRANTIES. BY SIGNING BELOW LESSEE ACKNOWLEDGES THAT LESSOR
IS LEASING THE EQUIPMENT TO LESSEE "AS IS" AND WITH ALL FAULTS. LESSOR MAKES NO
REPRESENTATIONS AND DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE
EQUIPMENT, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE OR MERCHANTABILITY. LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING
ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT) IT MIGHT HAVE AGAINST
LESSOR FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR
EXPENSE CAUSED BY THE EQUIPMENT. Provided Lessee is not in default of this
Lease, Lessor hereby assigns to Lessee and Lessee shall have the benefit of, any
and all manufacturer's warranties, service agreements and patent indemnities,
if any, with respect to the Equipment; provided, however, that Lessee's sole
remedy for breach of any such warranty, indemnification or service agreement
shall be against the manufacturer of such Equipment and not against the Lessor,
nor shall such breach have any effect whatsoever on the rights and obligations
of Lessor or Lessee hereunder. LESSEE ACKNOWLEDGES THAT NEITHER THE SUPPLIER,
BROKER NOR THEIR AGENTS OR EMPLOYEES ARE AGENTS OF LESSOR NOR ARE THEY
AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE WITHOUT THE
WRITTEN CONSENT OF LESSOR. NO AGREEMENT, EITHER WRITTEN OR VERBAL, BETWEEN
SUPPLIER AND LESSEE OR BROKER AND LESSEE SHALL BIND LESSOR UNLESS LESSOR
SPECIFICALLY CONSENTS TO SUCH AGREEMENT IN WRITING.
6. AMENDMENTS; FACSIMILE COPIES. No term or provision of this Lease may be
amended, altered, waived, discharged or terminated except by written instrument
signed by the parties hereto. Lessee agrees and acknowledges that facsimile
copies of the Lease and all other agreements, instruments and documents executed
by Lessee in connection herewith (collectively, the "Documents") may be admitted
in any litigation or other proceeding concerning this Lease to the same extent
as the original thereof. Lease waives any objection to the admissibility of
facsimile copies of this Lease or Documents.
SEE REVERSE FOR ADDITIONAL TERMS AND CONDITIONS WHICH ARE PART OF THIS LEASE.
LESSEE ACKNOWLEDGEMENT
By Signing below, Lessee acknowledges reading and agreeing to all the terms and
conditions set forth on both sides of the lease. This agreement shall not be
effective until executed by the Lessee and accepted an authorized representative
of Lessor or its principal Place of business. THE EQUIPMENT IS FOR BUSINESS USE
ONLY. THIS LEASE IS NON-CANCELLABLE
BY: /s/ DONALD CAMERON DATE: 11-16-98
Print Name and Title: Donald Cameron, President
BY: DATE:
-------------------------------- ----------------
Print Name and Title:
-------------------------------------
Witness: /s/ [Initials Illegible] DATE: 11-16-98
Print Name: ERIC HECHT
-----------------------------------------------
CERTIFICATE OF ACCEPTANCE OF LEASED EQUIPMENT
The above named and undersigned Lessee hereby acknowledges complete and
satisfactory delivery, receipt and installation of the Equipment described in
this Lease. Lessee understands and agrees that the lack of failure of the
equipment or any misoperation thereof of any kind shall not be a basis for
nonfulfillment of any of Lessee's obligations under this Lease and that Lessee's
obligations to Lessor and Lessor's assigns as set forth in the Lease are not
subject to any claims, counterclaims, defenses or setoffs.
WE HEREBY AUTHORIZE YOU TO PAY FOR AND PURCHASE THE EQUIPMENT
BY: /s/ DONALD CAMERON DATE: 11-16-98
Donald Cameron, President
BY: DATE:
----------------------------------- -----------------
PERSONAL GUARANTY
In consideration of Lessor entering into the above Business Lease Agreement (the
"Lease"), the undersigned ("Undersigned") jointly and severally, personally and
unconditionally guarantee to Lessor the prompt payment in full, when due, of all
of Lessee's obligations under the Lease including without limitation, every
rental payable and the accelerated balance of rentals if demanded by Lessor,
Lessor shall not be required to proceed against Lessee or the Equipment of
enforce any other remedy before proceeding against the Undersigned. The
Undersigned agrees to pay all attorneys fees and other expenses incurred by
Lessor by reason of any default of Lessee or in enforcing the Lease or this
Guaranty. The Undersigned waives notice of acceptance hereof and all other
notices or demands of any kind to which the Undersigned may be entitled and
consents to the granting of extensions of time of payment to Lessee and other
obligors and guarantors and to any other amendments of adjustments in the terms
of the Lease. This Personal Guaranty shall bind the heirs, administrators,
representatives, successors and assigns of guarantor and may be enforced by or
for the benefit of any assignee or successor of Lessor. This Guaranty shall be
governed by the laws of the State of Colorado. The Undersigned acknowledges
that, for purposes of enforcement of this Guaranty, he is conducting business in
the State of Colorado, and agrees that, in the event of any litigation related
to the Lease or this Guaranty, venue and jurisdiction shall be proper in any
State or Federal Court located in the State of Colorado.
BY: /s/ DONALD CAMERON, INDIVIDUAL BY: , INDIVIDUAL
-------------------- -------------------------
PRINT NAME: DONALD CAMERON PRINT NAME:
----------------------------
ADDRESS: 1109 Sycamore View Dr. ADDRESS:
Encinitas, CA 92024
--------------------------------
PHONE NO.: PHONE NO.:
---------------------------- -----------------------------
ACCEPTED BY LESSOR: Media Capital, LLC.
Authorized Signor: /s/ [Signature Illegible] Title: President Date: 11/2
[Illegible
Copy]
<PAGE> 2
7. FINANCE LEASE STATUS. The parties agree that this Lease is intended to
qualify as a "Finance Lease" under Article 2A of the Uniform Commercial Code
(herein called the "UCC"). Lessee acknowledges that (a) Lessee has received a
copy of the contract by which Lessor acquired the Equipment (herein called the
"Supply Contract"); or (b) Lessee has reviewed and approved the Supply Contract
or (c) Lessor has informed or advised Lessee in writing either previously or by
this Lease (i) of the identity of the supplier; (2) that Lessee may have rights
under the Supply Contract and (iii) that the Lessee should contact the supplier
for a description of any such rights Lessee may have under the Supply Contract.
8. LESSEE INDEMNIFICATION. Lessee hereby agrees to indemnify and hold Lessor and
Lessor's agents and employees harmless from any and all liability, damage, or
loss, including attorney's fees and court costs, arising out of the purchase,
sale, ownership, selection, possession, operation, control, use, maintenance, or
delivery of the Equipment.
9. POWER OF ATTORNEY/FINANCING STATEMENTS. Lessee hereby makes, constitutes and
appoints Lessor and its assigns its true and lawful attorney and agent for it
and in the name, place and stead to execute, deliver and file any UCC financing
statements and other documents that Lessor deems necessary or advisable in order
to protect Lessor's rights in the Equipment. This power being coupled with an
interest shall be irrevocable for the term of this Lease. Lessor and Lessee
agree that a carbon, photographic or other reproduction of this Lease may be
filed as a financing statement under the UCC.
10. LESSOR TERMINATION BEFORE EQUIPMENT ACCEPTANCE. If within 60 days from the
date Lessor orders the Equipment, same has not been delivered, installed and
accepted by Lessee (in form satisfactory to Lessor) Lessor may at Lessor's sole
discretion, on 10 days written notice to Lessee, terminate this Lease and its
obligations to Lessor.
11. LOCATION AND INSPECTION. Equipment shall be delivered and thereafter kept
at the location specified above, or, if none is specified, at Lessee's address
set forth above and Lessee shall not remove or allow to be removed therefrom
without Lessor's prior written consent. Any and all costs incurred by Lessor as
a result of such relocation shall be borne by Lessee. Any charges hereunder
shall not abate during the period the Equipment is out of service due to any
such relocation requested by Lessee. Lessee shall permit Lessor on its premises
to inspect the equipment and the business records of Lessee relating to it
during normal business hours.
12. USE OF EQUIPMENT. Lessee shall, at its expense, use, maintain and keep the
Equipment in good operating order in the manner for which it was designed and
intended, SOLELY FOR LESSEE'S BUSINESS PURPOSE, in accordance with
manufacturer's recommendations and in compliance with all applicable laws,
regulations and insurance requirements. Lessee shall not make any alterations
or additions to the Equipment without the prior written consent of Lessor. All
additions, attachments, or replacements made to the Equipment, unless otherwise
agreed to in writing by Lessor, shall become part of the Equipment. Lessee, at
its expense, shall maintain the Equipment in good operating order and repair in
accordance with the manufacturer's recommendations. Supplies required for use
of the Equipment are to be provided by Lessee at its expense and are to meet
with the Equipment manufacturer's specifications.
13. LESSEE REPRESENTATIONS. Lessee warrants and represents that (a) all legal
action has been taken to permit Lessee to execute and perform this Lease; (b)
its entering into and performance of this Lease will not violate any law or
regulation applicable to Lessee; (c) this Lease constitutes a legal, valid, and
binding obligations, enforceable against Lessee in accordance with its terms;
(d) all financial or other statements furnished or made to Lessor by Lessee are
true and correct in all material respects; and (e) Lessee is in good standing
in its state of incorporation and is in good standing and is entitled to own
properties and to carry on a business in the state where the Equipment is to be
located. Any person signing this Lease for Lessee warrants that he is duly
authorized and empowered to do so.
14. INSURANCE. Lessee shall at all times prior to return of the Equipment to
Lessor carry and maintain, at its expense, insurance covering (a) theft and all
risks of loss or damage from any cause whatsoever for an amount not less than
the replacement value of the Equipment or the unpaid amount of the Lease,
whichever amount is greater, and which names Lessor and its assigns as loss
payee; and (b) public liability, both personal injury and property damage,
covering the maintenance, use and operation of the Equipment and its use and
which names Lessor and its assigns as an additional insured. All such insurance
coverage shall be in form, amount, and with companies satisfactory to Lessor.
Lessee shall deliver certificates of insurance to Lessor. All such insurance
shall require 30 days written notice to Lessor and its assigns prior to
alteration or cancellation. Lessee hereby appoints Lessor and its assigns as
Lessee's attorney-in-fact with respect to endorsement of all documents, checks,
or drafts for loss or damage recoverable under all such insurance policies.
15. RISK OF LOSS. Upon delivery of the Equipment to Lessee, Lessee shall bear
the entire risk of loss, damage, theft or destruction to the Equipment or any
part thereof, from any and every cause whatsoever, which shall occur prior to
the Lessee's return of the Equipment as set forth in this Lease and no such
loss, damage, theft or destruction shall relieve Lessee of its obligation to
pay rent or to comply with any other obligation under this Lease. In the event
of such loss, damage, theft, or destruction, Lessee shall promptly notify
Lessor and Lessee shall within 30 days repair or replace such Equipment to its
original condition, and shall continue to make Lease payments as called for
under this Lease. Lessee agrees that if Lessee shall fail to procure, carry and
maintain insurance coverage as set forth in this Lease, Lessor shall have the
right, but not the obligation, to obtain such insurance on behalf of and at the
expense of Lessee. In the event Lessor does obtain such insurance, Lessee
agrees to pay all costs thereof with the next rental payment.
16. RETURN OF EQUIPMENT. Upon expiration or earlier termination of the Lease
with respect to the Equipment, or upon demand by Lessor pursuant to this Lease,
Lessee shall immediately, at its expense, return the Equipment in the same
condition as when Lessee received it, excepting only reasonable wear and tear,
to Lessor at a location in the continental United States specified by Lessor.
Lessee shall pay all costs and expenses to crate, insure and return the
Equipment to the designated location. After the expiration of the initial Lease
term and thereafter until Lessor actually receives the Equipment at the return
location, the Lease shall automatically renew from month to month for no more
than 12 (twelve) months after the expiration of the initial term, and Lessee
agrees to continue to make Lease payments at the last effective rate under the
Lease with the Lessor retaining all payments made up to the time the Equipment
is returned to the specific return location.
17. DEFAULT. The following events shall constitute an event of default by Lessee
under this Lease: (a) failing to pay when due any amount required to be paid to
Lessor under this Lease in a timely fashion or to timely perform any covenant,
condition, or obligation to be performed by Lessee under this Lease or under any
other agreement with Lessor; (b) selling, transferring or disposing of the
Equipment or of substantially all of Lessee's assets or merging or reorganizing
without the prior written consent of Lessor; or (c) creating, incurring,
assuming or suffering to exist any mortgage, lien, pledge or other encumbrance
or attachment of any kind whatsoever upon, affecting or with respect to the
Equipment or this Lease or any of Lessor's interests thereunder; or (d)
providing financial statements or making representations to Lessor which are
incorrect or misleading or inaccurate in any respect; (e) becoming unable to pay
debts as they become due or otherwise becoming insolvent or suffering an adverse
change in its financial condition; or (f) Lessor reasonably deeming itself
insecure in its expectations that Lessee will fully perform all of Lessee's
obligations under this Lease.
18. REMEDIES OF LESSOR. Upon the occurrence of a default by Lessee hereunder and
at any time thereafter (subject to any applicable grace provisions), Lessor may
exercise any one or more of the following remedies, as Lessor, in its sole
discretion, shall elect: (a) declare all unpaid rentals under this Lease to be
immediately due and payable, the amount to be due to be computed as hereinafter
set forth; (b) terminate this Lease as to any or all items of Equipment, but no
such termination shall be deemed to occur unless written notice to that express
effect is given by Lessor to Lessee; (c) whether or not this Lease is
terminated, take immediate possession of any or all of the Equipment, without
notice or demand and without court order or process, and for such purpose, enter
upon any premiss without liability for so doing; (d) sell, lease or otherwise
dispose of the Equipment, or any item thereof, at a public or private sale or
lease at such time or times and upon such terms as Lessor may determine, free
and clear of any rights of Lessee; (e) proceed by appropriate action either at
law or in equity to enforce performance by Lessee of the applicable covenants of
this Lease or recover damages for the breach thereof; and (f) exercise any and
all rights accruing to a Lessor or personal property under any applicable law
upon a default by Lessee. In furtherance of the foregoing, Lessor shall be
entitled to recover immediately as liquidated damages and not as a penalty, a
sum equal to the aggregate of the following: (i) all unpaid rentals and other
amounts or other sums which are due and payable for any item of Equipment up to
the date delivered to or repossessed by Lessor; (ii) any expenses paid or
incurred by Lessor in connection with the repossession, holding, repair,
appraisal, transportation and subsequent sale, lease or other disposition of the
Equipment, including attorneys' fees and court costs; and (iii) an amount equal
to the difference between (aa) all unpaid rentals and other amounts, due and to
become due under this Lease, each of which have been permitted or required to
purchase the Equipment at the end of the Lease term hereof, which amount shall
be discounted to present value at an annual rate of 7% ("Purchase Amount") and
(bb) the then fair market value of any Equipment returned to or repossessed by
Lessor ("Return Value"); provided, however, that the Return Value of each such
item of Equipment shall be deemed to be an amount equal to the proceeds, if any,
of any sale or lease thereof by Lessor, less any costs or expenses incurred by
Lessor from such sale or lease. If Lessor is unable, after the exercise of
reasonable efforts to sell or lease any such item of equipment, the Return Value
of such item of equipment shall be deemed to be zero. If the Return Value of the
Equipment exceeds the sum of the Unpaid Rentals plus the Purchase Amount, Lessor
shall be entitled to the excess.
No right or remedy conferred upon or reserved to Lessor by this Lease
shall be exclusive of any other right or remedy herein or by law provided; all
rights and remedies of Lessor conferred on Lessor by this Lease or by law shall
be cumulative and in addition to every other right and remedy available to
Lessor. Lessee shall pay all costs and reasonable attorney's fees incurred by
Lessor in collecting any sums owed under this Lease or in obtaining possession
of leased Equipment, including attorney's fees incurred in seeking relief from
stay in bankruptcy court together with interest at the rate of the lesser of
18% compounded annually, or the maximum amount permitted by law on each of the
foregoing and on all sums not paid when due under any provision of this Lease.
19. LESSEE'S WAIVERS. To the extent permitted by applicable law, Lessee hereby
waives any and all rights and remedies conferred upon a Lessee by Section
2A-508 through Section 2A-522 of the UCC, including, without limitation,
Lessee's rights to: (a) cancel this Lease; (b) repudiate this Lease; (c) reject
the Equipment; (d) revoke acceptance of the Equipment, (e) recover damages from
Lessor; (f) a security interest in the Equipment in Lessee's possession or
control for any reason; (g) deduct all or any part of claimed damages resulting
from Lessor's fault, if any, under this Lease; (h) recover damages from Lessor
for any breaches of warranty or for any other reason; (i) accept partial
delivery of the Equipment; (j) "cover"; (k) recover any general, special,
incidental or consequential damages for any reason whatsoever and (l) specific
performance, replevin, detinue, sequestration, claim or delivery of the like
for the Equipment.
20. ASSIGNMENT BY LESSOR. LESSOR MAY ASSIGN OR TRANSFER THE LEASE OR LESSOR'S
INTEREST IN THE EQUIPMENT WITHOUT NOTICE TO LESSEE. Any assignee of Lessor
shall have all of the rights, but none of the obligations, of Lessor under the
Lease and Lessee agrees that it will not assert against any assignee of Lessor
any defense, counterclaim or offset that Lessee may have against Lessor. Lessee
acknowledges that any assignment or transfer by Lessor shall not materially
change Lessee's duties or obligations under this Lease nor materially increase
the burdens or risk imposed on Lessee. Lessee agrees that Lessor may assign or
transfer this Lease or Lessor's interest in the Equipment even if said
assignment or transfer could be deemed to materially affect the interests of
Lessee.
21. NO LESSEE ASSIGNMENT OR SUBLEASE. LESSEE SHALL NOT ASSIGN, HYPOTHECATE OR
IN ANY WAY DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS
LEASE OR ENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT WITHOUT
THE PRIOR WRITTEN CONSENT OF LESSOR.
22. CONSENT TO COLORADO JURISDICTION AND VENUE AND CHOICE OF LAW. LESSEE AGREES
THAT BY ENTERING INTO THIS LEASE LESSEE HAS TRANSACTED BUSINESS IN THE STATE OF
COLORADO. IN THE EVENT OF LEGAL ACTION TO REFORM, ENFORCE, CONSTRUE OR
INTERPRET THIS LEASE, LESSEE CONSENTS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF COLORADO, AGREES THAT THE COLORADO COURTS HAVE JURISDICTION OVER
LESSEE, AND THAT VENUE AND JURISDICTION SHALL BE PROPER IN ANY STATE OR FEDERAL
COURT LOCATED IN THE STATE OF COLORADO. THIS LEASE SHALL IN ALL RESPECTS BE
INTERPRETED, AND ALL TRANSACTIONS HEREUNDER AND ALL RIGHTS AND LIABILITIES of
THE PARTIES HERETO SHALL BE GOVERNED AND DETERMINED AS TO VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT IN ACCORDANCE WITH THE LAWS OF THE STATE
OF COLORADO, EXCEPT FOR LOCAL RECORDING STATUTES.
23. OWNERSHIP/PERSONALITY. The Equipment is, and shall remain, the property of
Lessor, and Lessee shall have no right, title or interest therein or thereto
except as expressly set forth in this Lease. The Equipment shall remain
personal property regardless of whether affixed to real property, and Lessee
agrees to execute and obtain the execution of all agreements and documents in
recordable form by all parties having an interest in real property to which the
Equipment may be affixed, as Lessor may request, to protect Lessor's title to
the Equipment.
24. MISCELLANEOUS. (a) Lessor has entered into this Lease in reliance upon
Lessee's representations that this Lease is for commercial, or business
purposes and not for personal, family or household purposes of Lessee; (b) any
action by Lessee against Lessor for any default by Lessor under this Lease,
shall be commenced within one (1) year after any such cause of action accrues;
(c) if for any reason this transaction is deemed not to be a Lease, Lessee
hereby grants Lessor a security interest in the Equipment; (d) all notices,
consents, instructions or requests desired or required to be given under this
Lease shall be in writing and shall become effective when delivered, or if
mailed, when deposited in the U.S. mail postage prepaid for certified or
registered mail return receipt requested, at the address set forth in this
Lease or at such other address as such party shall from time to time designate
by proper notice; (e) no failure on the part of Lessor to exercise, and no
delay in exercising, any rights or remedy under this Lease shall operate as a
waiver or modify the terms of this Lease, nor shall any single or partial
exercise by Lessor of any right or remedy preclude any other or further
exercise of the same or any other right or remedy; (f) Lessee shall promptly
provide such further documents and financial reports as Lessor may reasonably
require in its normal course of business including copies of annual financial
reports, Securities Exchange Commission reports, quarterly reports and any
other information as Lessor may reasonably require; (g) no provision of this
Lease which may be deemed unenforceable shall in any way invalidate any other
provision of this Lease; (h) if any of the provisions of this Lease or
documentation related thereto is declared to be invalid or unenforceable, such
provisions shall be severed from this Lease and the remaining provisions
thereof shall remain in full force and effect; (i) this Lease and all
documentation executed in connection therewith represents the entire agreement
between the parties hereto and automatically cancels and supersedes any and all
prior verbal or written understandings with respect thereto. The Lessor may in
its sole discretion accelerate the full payment of this Lease upon the death of
a natural Lessee or Guarantor.
25. UNIFORM COMMERCIAL CODE FINANCING STATEMENT: LESSEE AGREES AND ACKNOWLEDGES
THAT IT IS THE INTENT OF BOTH PARTIES TO THIS LEASE THAT IT QUALIFY AS A
STATUTORY FINANCE LEASE UNDER ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE.
THIS IS A NON-CANCELABLE LEASE
<PAGE> 3
SCHEDULE "A"
EQUIPMENT SCHEDULE FOR LEASE NO.
DELL
- ----
One Dell Way
Round Rock, TX 78682
(6) Dell Dimension XPS R350 Mhz Pentium II Minitower Base with MMX Technology
and 512k Cache to include:
MS Intellimouse
Keyboards
256 MB SDRAM Memory
40X Max Variable CD ROM
Video Ready Option w/o Monitor
STB nVidia 2X 8MB 3D 2X AGP Graphics Card
10GB 5400RPM Ultra ATA Hard Drive
3.5 1.44MB Floppy Drive
Microsoft Windows, NT, Workstation 4.0
3COM 3C905B Fast Ethernet XL 10/100 PCI NIC
SelectCare Service Contract
MS Office Small Business Edition
MS Encarta
PARAGON
- -------
12625 High Bluff Drive #302
San Diego, CA 92130
(6) Dialogic D/240SC-T1 Boards
(2) APC Matrix MX 5000 XR
(6) APC Smart Cell XR
Lessee hereby certifies that the description of personal property set forth
above constitutes an accurate account of the Equipment, as such is defined in
the Lease Agreement of which this Schedule is a part.
Lessee: Interactive Telesis, Inc.
By: /s/ DONALD CAMERON
------------------------
Donald Cameron
Title:
President
Date: 11/12/98
Page 1 of 1
<PAGE> 4
PURCHASE GUARANTEE
Date: ___________
Lease No: 16105-2
WHEREAS, Media Capital, L.L.C. ("Lessor"), and Interactive Telesis, Inc.
("Lessee") have executed an Equipment Lease Agreement ("Lease") dated Nov 16,
1998 covering certain Personal Property ("Equipment");
NOW THEREFORE, the parties hereto now agree that upon the expiration of the
original Lease term, or early termination, whichever occurs first, Lessee shall
purchase from Lessor and Lessor shall sell to Lessee the Equipment therein
described.
The purchase price to be paid by Lessee to Lessor for the Equipment shall be the
sum of Five Thousand Nine Hundred Eight Dollar and Fifty-Nine Cents ($5,908.59),
which represents 10% of the original cost of the Equipment, plus applicable
taxes.
Upon such payment, Lessor will deliver to Lessee a Bill Of Sale covering said
Equipment, said Bill Of Sale to warrant Equipment to be free and clear of all
encumbrances except those placed thereon by action or omission of Lessee.
Failure on the part of Lessee to make payment as required herein, and/or if said
failure shall continue for the (10) days after written notice to lessee, shall
constitute a default under the terms and conditions of said Lessee and shall be
subject to the remedies as set forth in the Equipment Lease Agreement.
Should Lessor, as a result of Lessee's default under the terms and conditions of
the Lease, exercise its option and remedy to declare the total amount of the
unpaid Lease Rental Payments due Lessor as provided for under the terms and
conditions of said Lease then Lessor may, at its sole option, declare the above
stated purchase price also due and payable, whereupon the same shall become
immediately due and payable. Title to the above referenced Equipment, therefore
shall be conveyed to the Lessee only after all of the Lessee's defaults under
the Lease have been cured.
LESSOR: Media Capital, L.L.C.
/s/ [Signature Illegible]
- --------------------------------------
LESSEE: Interactive Telesis, Inc.
/s/ DONALD CAMERON
- --------------------------------------
Donald Cameron, President
<PAGE> 5
CORPORATE RESOLUTION AUTHORIZING LEASE
I, Scott Cameron the duly elected Secretary of Interactive Telesis, Inc.
(Lessee), a California corporation, (the "Corporation") do hereby certify that
at a Special Meeting of the Board of Directors of said corporation held on the
16th day of November, 1998, the following resolution was adopted and remains in
full force and effect:
Resolved, that any President, Vice President, Treasurer or Secretary, or if not
such officer then the authorized signatory listed below, be and are hereby
authorized and directed to enter into, execute and deliver on behalf of the
Corporation a Lease Agreement with Media Capital, LLC. whereby the Corporation
will lease certain equipment on such terms and conditions as set forth in said
Lease, a copy of which Lease was exhibited to the Board of Directors, or such
other terms as such officers deem advisable."
Fill in the name of authorized signatory if an officer does not execute Lease:
- -------------------------------------
IN WITNESS WHEREOF, I have affixed my name as Secretary of the Corporation and
have caused the corporate seal of said Corporation to be hereunto affixed this
16 day of November, 1998.
/s/ SCOTT CAMERON
----------------------------
Scott Cameron, Secretary
If Secretary executes Lease, President or Vice President must execute
Certificate of Resolution.
(Corporate Seal)
<PAGE> 1
EXHIBIT 10.14
BILL ADAMS
INTERACTIVE TELESIS INC
535 ENCINITAS BLVD STE 116
ENCINITAS, CA 92024
29-DEC-98
Dear BILL ADAMS:
Dell Financial Services, L.P. ("DFS") is pleased to provide you with the
following documentation for your Dell equipment lease.
Lease Agreement #004295343
To expedite your order(s), PLEASE COMPLETE THE FOLLOWING THREE STEPS:
1. SIGN BOTH THE LEASE AGREEMENT AND ATTACHMENT A WHERE INDICATED. (If a
personal guarantee has been required, please sign the Guaranty Section
of the lease agreement accordingly. Please fill in your home address
where required.)
2. FAX ALL PAGES (LEASE AGREEMENT AND ATTACHMENT A) TO 512-723-6865. YOUR
ORDER CANNOT BE RELEASED TO MANUFACTURING UNTIL THIS STEP IS COMPLETE.
(Please make sure you receive confirmation that the fax transmittal
was successful. If you do not have facsimile access, please call our
Customer Service Department at 1-800-955-3355.)
3. AFTER FAXING, please forward all of the ORIGINAL DOCUMENTATION via
mail to:
DELL FINANCIAL SERVICES L.P.
LOCKBOX 99200
840 S. CANAL STREET, 3RD FLOOR
CHICAGO, IL 60693
The first invoice you receive once your lease commences will include your
monthly rent payment, any applicable taxes and a one time fee for shipment of
your product. Subsequent invoices will only include your monthly rent payments
and any applicable taxes and fees.
Thank you for choosing Dell Financial Services, L.P. and we look forward to
servicing your future leasing needs.
If we may be of further assistance, please call our toll free number
1-800-955-3355. Please have your Dell Order numbers(s) (located below "General
Equipment Description... " on your "Lease Agreement Attachment A") ready when
you call.
Sincerely,
DELL FINANCIAL SERVICES, L.P.
DOUG BREKKE
800-955-3355
<PAGE> 2
<TABLE>
<S><C>
[DELL FINANCIAL SERVICES LOGO]
LEASE NO: 004295343-002
- ------------------------------------------------------------------------------------------------------------------------------------
FULL LEGAL NAME OF LESSEE LEASE MONTHLY MONTHLY DOCUMENTATION
FED IS/SOC NUMBER TERM RENT PERSONAL FEE*
(MONTHS) PAYMENT* PROPERTY Included
INTERACTIVE TELESIS INC MGMT FEE*
36 $372.45 $7.20 $55.00
*Subject to *Subject to *Subject to
Applicable Applicable Applicable
Tax Tax Tax
- ------------------------------------------------------------------------------------------------------------------------------------
TYPE OF BUSINESS COMMITMENT FEE (MUST ACCOMPANY LEASE)
- ----------------------------------- [X] Corporation [ ] Advance Rent Payments* = $.00
BILLING ADDRESS, CITY, STATE, ZIP
CODE [ ] Proprietorship Applicable Taxes = $.00
[ ] Limited Liability TOTAL = $.00
535 ENCINITAS BLVD Company
STE 116 * Advance Rent Payments are applied in the
ENCINITAS [ ] General Partnership following order: first, last, and then in the
CA reverse order due.
92024 [ ] Limited Partnership
[ ] Limited Liability
Partnership
[ ] Not for Profit
[ ] Municipality
- ------------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT LOCATION GENERAL EQUIPMENT DESCRIPTION/SUPPLIER
SEE ATTACHMENT A SEE ATTACHMENT A
- ------------------------------------------------------------------------------------------------------------------------------------
GUARANTOR (IF ANY) FED ID/SOC SEC NUMBER GUARANTOR (IF ANY) END OF LEASE PURCHASE
FED OPTION
ID/SOC SEC NUMBER FMV
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TERMS AND CONDITIONS OF LEASE
The undersigned Lessee agrees to rent from Lessor and Lessor agrees to rent
the above-described equipment and/or computer software (the "Equipment") subject
to all of the terms and conditions herein (the "Lease"). Lessee hereby warrants
and represents that the Equipment will be used primarily for business purposes
and not for personal, family or household purposes.
LESSOR DISCLAIMS ANY WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE WITH RESPECT TO THE EQUIPMENT. LESSOR HEREBY ASSIGNS ALL
WARRANTIES MADE TO LESSOR BY SUPPLIER AND/OR MANUFACTURER TO LESSEE, AND LESSEE
AGREES THAT ALL CLAIMS OF ANY KIND RELATING TO THE EQUIPMENT SHALL BE MADE
AGAINST SUPPLIER AND/OR MANUFACTURER. THIS LEASE IS NON-CANCELABLE. THE
OBLIGATION TO PAY ALL RENT PAYMENTS AND OTHER AMOUNTS PAYABLE UNDER THIS LEASE
IS ABSOLUTE AND UNCONDITIONAL, DESPITE ANY DISSATISFACTION WITH THE EQUIPMENT
FOR ANY REASON, SHALL NOT BE AFFECTED BY ANY EVENT OR CIRCUMSTANCE, AND SHALL BE
PAID BY LESSEE IRRESPECTIVE OF ANY RIGHT OF OFF-SET, COUNTERCLAIM, RECOUPMENT,
DEFENSE OR OTHER RIGHT WHICH LESSEE MAY HAVE AGAINST LESSOR, THE MANUFACTURER OR
SUPPLIER OF THE EQUIPMENT OR ANY OTHER THIRD PARTY.
Equipment shall be deemed accepted for purposes of this Lease five (5) business
days after shipment.
1. TERM; RENT: The term of the Lease ("Lease Term") shall commence five (5)
business days after shipment (the "Commencement Date"). Lessee agrees to pay
Lessor or its assignees during the Lease Term, in U.S. Dollars, at an address to
be provided by Lessor, the total Rent Payments ("Rent Payments") as specified
herein. The first Rent Payment is due thirty (30) days after the Commencement
Date, and subsequent Rent Payments are due on the same date of each month
thereafter (or the last day of the month if there is no such date). Lessee
hereby authorizes Lessor to adjust the Rent Payment by not more than 15% if the
actual Acquisition Cost (which is all amounts Lessor has paid or will pay in
connection with the purchase, delivery, and installation of the Equipment,
including any trade-up and buyout amounts) differs from the estimated
Acquisition Cost. If any Rent Payment or other amount payable to Lessor is not
paid within five (5) days after the due date thereof, Lessee shall pay to Lessor
interest on any such late payment from the due date thereof until payment at a
rate of 18% per annum or, if less, the highest interest rate permitted by
applicable law. At the end of the Lease Term, this Lease will automatically
renew for additional three-month periods on the same terms and conditions
(including the same monthly Rent Payments) unless Lessee gives Lessor ninety
(90) days written notice prior to the expiration of the Lease Term or any
three-month renewal term and returns the equipment to the Lessor as provided
herein.
(continued on pages 2 & 3 hereto)
<PAGE> 3
<TABLE>
<S><C>
LEASE NO: 004295343-002
- ------------------------------------------------------------------------------------------------------------------------------------
GUARANTY
- ------------------------------------------------------------------------------------------------------------------------------------
In consideration of Lessor entering into the lease identified about ("Lease"), the undersigned (collectively, "Guarantor")
unconditionally and irrevocably guarantees to Lessor, its successors and assigns, the prompt payment and performance of all
obligations of Lessee under the Lease regardless of any circumstance which might otherwise be a defense available to, or a discharge
of, Lessee or Guarantor. Guarantor agrees that this is a guaranty of payment and not of collection, and that Lessor can proceed
directly against Guarantor without first proceeding against Lessee or the Equipment. Guarantor waives all defenses and notices,
including those of protest, presentment and demand, notice of acceptance hereof and all other notices of any kind. Guarantor agrees
that Lessor can renew, extend or otherwise modify the terms of the Lease without releasing Guarantor. Guarantor will pay to Lessor
all expenses including attorneys' fees incurred by Lessor in enforcing Lessor's rights against Guarantor. This is a continuing
guaranty that will not be discharged or affected by Guarantor's death and will bind Guarantor's heirs, administrators and personal
representatives. Lessor may, without affecting Guarantor's liability hereunder, compromise or release any rights against Lessee or
the Equipment or any Guarantor. Guarantor consents to the transfer, sale or any other disposition of the Equipment and the Lease. If
more than one Guarantor has signed this Guaranty each Guarantor agrees that its liability is joint and several. This Guaranty may be
enforced by any assignee or successor of Lessor to the same extent as Lessor itself may enforce it. Guarantor authorizes Lessor or
any of Lessor's affiliates to obtain credit bureau reports regarding Guarantor's personal credit and make other credit inquiries
that Lessor determines are necessary. THIS GUARANTY SHALL BE GOVERNED BY THE INTERNAL LAWS OF ILLINOIS. GUARANTOR EXPRESSLY AGREES
TO ARBITRATION AS PROVIDED IN PARAGRAPH 13.
- ------------------------------------------------------------------------------------------------------------------------------------
_________________________________________ ________________________________________
Date: ________________ (Individual Guarantor Name) (Guarantor Social Security Number)
-----------------------------------------------------------------------------------------
_________________________________________ ________________________________________
Signature Individual Guarantor - No Title (Home Address)
- ------------------------------------------------------------------------------------------------------------------------------------
BY SIGNING THIS LEASE, LESSEE ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE TERMS AND CONDITIONS ON THE FIRST, SECOND AND THIRD
PAGES OF THIS LEASE. LESSEE REPRESENTS AND WARRANTS THAT THE INFORMATION IN ANY APPLICATION, STATEMENT, TRADE REFERENCE OR FINANCIAL
REPORT SUBMITTED TO LESSOR IS TRUE AND CORRECT AND UNDERSTANDS THAT ANY MATERIAL MISREPRESENTATION SHALL CONSTITUTE A DEFAULT
HEREUNDER. LESSEE FURTHER REPRESENTS AND WARRANTS THAT LESSEE HAS FULL POWER AND AUTHORITY TO EXECUTE AND DELIVER THIS LEASE AND
PERFORM ITS OBLIGATIONS HEREUNDER, THAT THIS LEASE IS A VALID AND BINDING OBLIGATION OF LESSEE ENFORCEABLE AGAINST LESSEE IN
ACCORDANCE WITH ITS TERMS AND THAT THE PERSON EXECUTING THIS LEASE ON BEHALF OF LESSEE IS DULY AUTHORIZED TO DO SO BY ALL NECESSARY
ACTION ON THE PART OF LESSEE.
- ------------------------------------------------------------------------------------------------------------------------------------
LESSEE: LESSOR:
INTERACTIVE TELESIS INC DELL FINANCIAL SERVICES L.P. (800) 955-3355
P.O. BOX [ILLEGIBLE], CHICAGO, IL 60681-1650
FAX (512)671-8141
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE /s/ WILLIAM R. [ILLEGIBLE] SIGNATURE
- ------------------------------------------------------------------------------------------------------------------------------------
TITLE Controller DATE 12/29/98 TITLE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
LEASE NO: 004295343-002
2. SELECTION AND ORDERING OF EQUIPMENT: Lessee shall select the type and
quantity of the Equipment subject to this Lessee. If Lessee has entered into a
purchase agreement with any supplier, Lessee hereby assigns all right, title
and interest in such purchase agreement to Lessor effective prior to the
passages of title from supplier to Lessee.
3. LOCATION: USE: MAINTENANCE: Except for mobile Equipment (e.g. laptop
computers), Lessee shall use the Equipment solely at the location specified in
the Lease, or if none is specified, at Lessee's billing address set forth in
the Lease, and the Equipment shall not be moved without Lessor's prior written
consent. Lessee shall, at its expense, maintain the Equipment in good repair,
condition, and functional order, shall not use the Equipment unlawfully or
unsafely and shall not alter the Equipment without Lessor's prior written
consent. Lessor, its assignees and agents shall have the right to inspect the
Equipment at the premises where the Equipment is located. Lessee shall use the
computer software in accordance with the software license agreement.
4. TITLE; PERSONAL PROPERTY; FILING: The Equipment is, and shall at all times
remark, the property of Lessor, and Lessee shall have no right, title or
interest therein or thereto except as expressly set forth in this Lease. Lessee
grants Lessor a purchase money security interest in the Equipment and shall keep
the Equipment free from any and all liens, encumbrances and claims, except,
those created by Lessor, and shall not do or permit any act or [Copy Illegible]
whereby Lessor's title or rights may be encumbered or impaired. So long as
Lessee is not in Default hereunder, Lessor agrees not to interfere with Lessee's
quiet use and enjoyment of the Equipment during the Lease Term or any renewal
term. The Equipment is, and shall at all times remain, personal property
notwithstanding that the Equipment or any part thereof may now be or hereafter
become in any manner affixed or attached to real property or any improvements
thereof. All additions or improvements to the Equipment of any kind or nature
made by Lessee shall become component parts thereof, and title shall immediately
vest in Lessor and be governed by the terms of this Lease. Lessee will, if
required, at its expense, furnish a landlord or mortgagee waiver with respect to
the Equipment in form satisfactory to Lessor. Lessee hereby appoints Lessor to
attorney-in-fact to prepare, execute and sign any instrument or financing
statement necessary to protect Lessor's interest in the Equipment, to sign the
name of Lessee with the same force and effect as if signed by Lessee, and to
file same at the proper location or locations. Lessee further agrees if Lessor
so requests, to execute any instrument or financing statement necessary to
protect Lessor's interest in the Equipment and to pay a one-time Documentation
Fee to cover Lessor's costs for such filing and other documentation costs.
5. LOSS OR DAMAGE: Lessee assumes and shall bear the entire risk of loss,
theft, destruction or damage of or to the Equipment or any item thereof ("Loss
or Damage") from any cause whatsoever, whether or not covered by insurance,
from the time the Equipment is delivered to a carrier for shipment to Lessee
until its return to Lessor, and no such Loss or Damage shall result in a
termination of Lessee's obligations under this Lease. Lessee shall promptly
notify Lessor, and, at the option of Lessor, shall (1) at Lessee's expense,
repair the affected items of Equipment to the satisfaction of Lessor, or (2) at
Lessee's expense, and to the satisfaction of Lessor, replace the affected items
of Equipment with similar or like equipment in good condition and repair and of
similar manufacture and equal or greater capacity and capability, with clear
title thereto in Lessor, or (3) make payment to Lessor in an amount equal to
the sum of, (i) all Rent Payments on all the Equipment or other amounts past
due (plus interest thereon) or currently owed to Lessor under this Lease,
including unpaid taxes and (ii) all future Rent Payments that would accrue over
the remaining Lease Term plus the estimated fair market value of all of the
Equipment at the end of the Lease Term, such sum to be discounted to present
value at a discount rate equal to the lesser of six (6) percent or the latest 1
year Treasury Note rate, or if required under applicable law, the lowest
effective discount rate allowable under applicable law ("Discount Rate"). Upon
Lessor's receipt of such payment, Lessee shall be entitled to whatever interest
Lessor may have in the Equipment as-is-where-is, without any warranty, express
or implied including warranty of merchantability or fitness for any particular
purpose.
6. INSURANCE: Lessee shall provide, maintain and pay for (a) insurance against
the loss or theft of or damage to the Equipment, for the full replacement value
thereof, naming Lessor (and/or such other person designated by Lessor) as a loss
payee and (b) public liability and property damage insurance naming Lessor
(and/or such other person designated by Lessor) as an additional insured. All
insurance shall be in a form and amount and with companies satisfactory to
Lessor and shall contain the insurer's agreement to give thirty (30) days
written notice to Lessor before cancellation or material change of the policy.
Upon Lessor's request, Lessee shall deliver the policies or copies thereof of
certificates of insurance to Lessor (and/or such other person designated by
Lessor). If Lessee fails to provide or maintain such insurance, Lessor shall
have the right, but shall not be obligated, to obtain such insurance and in such
event, Lessee shall repay to Lessor the cost thereof with (the next Rent
Payment (not reduced by any amount paid to Lessor as refund of commission).
Lessor reserves the right to terminate any insurance coverage it may obtain and
Lessor may allow any such insurance coverage to lapse without liability to
Lessee. Lessee hereby appoints Lessor its attorney-in-fact to make claims for,
receive payment of, and execute and endorse all documents, checks, or drafts for
loss or damage under any insurance policies.
7. TAXES: Lessee shall pay or reimburse Lessor for all changes, taxes (local,
state and federal), fines or penalties which may now or hereafter be imposed or
levied upon the sale, purchase, ownership, leasing or use of the Equipment,
executing taxes on Lessor's net income. Lessor may, at its option, charge Lessee
a liquidated monthly personal property management fee, to be added to Rent
Payments owed under this Lease.
8. RETURN: Upon expiration of the Lease Term if not renewed or purchased, or
upon demand by Lessor pursuant to paragraph 11 hereof, Lessee, at its expense
shall return the Equipment (including, but not limited to, original software,
media, documentation, manuals, cables, power cords, keys, etc.) in good repair
and operable condition, ordinary wear and tear excepted to such place, or on
board such carrier, freight, prepaid, packed for shipping as Lessor may specify.
Lessee shall immediately pay to Lessor any cost of replacement or repair. Should
Lessee fail to comply with the provisions described above, the term of the
Lease shall be extended as outlined in paragraph 1.
9. PURCHASE OPTION: Unless otherwise provided for, if no Default shall have
occurred and be continuing and if this Lease shall not have been earlier
terminated, Lessee shall be entitled, at its option, upon written notice to
Lessor at least ninety (90) days prior to the end of the Lease Term or any
renewal term, to purchase from Lessor all, but not less than all, of the
Equipment at the end of such term for the amount of the purchase option set
forth above which, if it is the then fair market value of the Equipment shall
be as determined by Lessor, based on the value which would be obtained in an
arm's length transaction between an informed and willing buyer and an informed
and willing seller under no compulsion to sell. On the date of such purchase,
Lessee shall pay to Lessor the full purchase price for the Equipment in cash
(plus any taxes levied thereon) and Lessor shall sell the Equipment to Lessee
AS-IS-WHERE-IS, WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE.
10. ASSIGNABILITY: (a) Without Lessor's prior written consent, Lessee shall
not (1) assign, transfer, pledge, hypothecate or otherwise dispose of this
Lease, any of the Equipment, or any interest therein; or (2) sublet or lend
any of the Equipment or permit any of the Equipment to be used by anyone other
than Lessee or Lessee's employees. Any buyer of all of Lessee's assets shall,
without further action, assume the obligations under this Lease, (b) Lessor
may sell or assign this Lease of the Equipment or grant a security interest in
the Equipment in whole or part without notice to Lessee, and Lessor's
purchaser, assignee or secured party may then sell or assign this Lease of the
Equipment or the security interest without notice to Lessee. Each such
purchaser, assignee or secured party shall have all the rights but none of the
obligations of Lessor under this Lease. Lessee shall recognize such sales,
assignments and/or security agreements and shall not assert against the
purchasers, assignees and/or secured parties any defense, counter-claim or
offset Lessee may have against Lessor. Subject to the foregoing, this Lease
inures to the benefit of and is binding upon the heirs, legatees, personal
representatives, successors and assigns of the parties hereto.
11. DEFAULT AND REMEDIES: (a) Lessee shall be in Default ("Default") if (1)
Lessee fails to pay any Rent Payment or any other amount due under this Lease
within five (5) days after the same becomes due and payable; (2) Lessee fails
to make any payments on any lease or indebtedness of Lessee to Lessor arising
independently of this Lease, in each case within five (5) days after the same
becomes due and payable; (3) Lessee fails to perform or observe any term or
covenant contained in this Lease, or any other instrument or document executed
in connection with this Lease; (4) Lessee or any Guarantor becomes insolvent
(however defined), ceases business as a going concern, makes an assignment for
the benefit of creditors, causes a petition of receivership or in bankruptcy to
be filed or have the same filed against it (including a petition for
reorganization or an arrangement), dies or is judicially declared incompetent;
(5) Lessee or any Guarantor has made or furnished to Lessor any warranty,
representation or statement which is proven to have been false in any material
respect when made or furnished; (6) Lessee attempts to sell or encumber the
Equipment, or suffers any levy, seizure or attachment to be made thereof or
thereon; or (7) Lessee commits or fails to commit any act which results in
jeopardizing the rights of Lessor or causes Lessor to deem itself insecure as
to its rights, (b) if Lessee is in Default, Lessor, with or without notice to
Lessee, shall have the right to exercise concurrently or separately, and
without any election of remedies to be deemed made, the following remedies (1)
declares all Rent Payments due hereunder immediately due and payable; (2)
terminate this Lease; (3) without incurring any liability to Lessee, enter upon
Lessee's premises and without any court order or other process of law remove
the Equipment with or without notice to Lessee; (4) sell or lease the Equipment
at public auction or by private sale or lease; (5) bring an action for damages
or pursue any other remedy available at law or equity, (c) whether or not
Lessor exercises any of its rights described in the paragraph 11, Lessor may
recover from Lessee as liquidated damages, and not as a penalty, a sum equal
to: (1) all unpaid Rent Payments including unpaid taxes (together with interest
thereon) due up to the date of delivery of the Equipment to Lessor; plus (2)
all expenses of any kind incurred by Lessor as a result of Lessee's Default,
including costs of recovery, repair, storage, renting and sale, and attorneys'
fees and costs; plus (3) all unpaid Rent Payments due and to become due after
the date of surrender of the Equipment to Lessor, together with the estimated
fair market value of the Equipment, both discounted to present value at the
Discount Rate; minus (4) the proceeds (if any) received or to be received upon
re-lease (discounted to present value at the Discount Rate) or actual sale of
the Equipment or any item thereof as determined by Lessor which determination
shall be conclusive. Lessee understands that there can be no assurance that
Lessor will be able to re-lease or sell the Equipment or any item thereof in
such circumstances.
12. INDEMNITY: Lessee shall indemnity, protect and hold harmless Lessor and
its employees, agents and assigns from and against all liabilities (including
negligence, tort, and strict liability), claims, costs (including attorneys'
fees and expenses), actions, suits and proceedings of every kind, arising out of
or in connection with this Lease or the Equipment.
13. CHOICE OF LAW; ARBITRATION: THIS AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS OF ILLINOIS. Any claim or controversy, including any contract or
tort claim, between or among Lessor, Lessee or any Guarantor related to the
Lease, but excluding any claim or controversy related to the Equipment or
manufacturer warranties, shall be determined by binding arbitration in
accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of
the American Arbitration Association. All statutes otherwise applicable shall
apply. Judgment upon the arbitration award may be entered in any court having
jurisdiction. This paragraph shall not apply, in the event Lessee or Guarantor
Defaults, to Lessor's right to obtain possession of the Equipment and to bring
suit for any amounts due. This Lease is made in interstate commerce.
14. FINANCE LEASE: Lessee hereby agrees that this Lease is a "finance lease"
as defined by Article 2A of the Illinois Commercial Code, that is Lessee
acknowledges that (1) Lessor did not select, manufacture or supply the
Equipment, but did purchase the Equipment for lease to Lessee; and (2) Lessor
has given Lessee the name of the supplier of the Equipment. Lessee may have
rights and warranties under the supply contracts for the Equipment and Lessee
may contact the supplier of the Equipment for a description of those rights and
warranties. To the extent permitted by applicable law, Lessee hereby waives any
and all rights and remedies conferred upon Lessee by Article 2A.
15. MISCELLANEOUS: All of the covenants required of Lessee under this Lease
shall survive the expiration or termination of this Lease to the extent required
for their full observances and performance. This Lease constitutes the entire
agreement between Lessor and Lessee and is irrevocable for the Lease Term and
for the aggregate Rent Payments herein-above reserved, and it shall not be
amended, alleged or changed except by a written agreement signed by the parties
hereto. All notices under this Lease shall be in writing and shall be deemed to
have been duly given on the date of receipted delivery or four (4) business days
after they are mailed to the respective address herein set forth or to such
other address as the parties may hereafter substitute by written notice. Time is
of the essence in this Lease. Any failure of Lessor to require strict
performance by Lessee or any waiver by Lessor of any provision hereof shall not
be construed as a consent or waiver of any other breach of the same or any
provision. If any portion of this Lease is deemed invalid, it shall not affect
the balance of this Lease.
<PAGE> 5
[DELL FINANCIAL SERVICES LOGO]
LEASE NO: 004295343-002
LEASE AGREEMENT
ATTACHMENT A
Attached hereto and made apart hereof lease NO: 004295343-002 between DELL
Financial Services L.P. as Lessor and INTERACTIVE TELESIS INC. as Lessee
- -------------------------------------------------------------------------------
LESSEE: LESSOR:
INTERACTIVE TELESIS INC Dell Financial Services L.P. (800) 955-3355
P.O. Box 811550, Chicago, IL [ILLEGIBLE]:
FAX (512) 571-8141
- -------------------------------------------------------------------------------
SIGNATURE /s/ WILLIAM R. ADAMS SIGNATURE
- -------------------------------------------------------------------------------
TITLE Controller DATE 12/29/98 TITLE DATE
- -------------------------------------------------------------------------------
EQUIPMENT LOCATION GENERAL EQUIPMENT DESCRIPTION SUPPLIER
<TABLE>
<S> <C> <C>
535 ENCINITAS BLVD Dell Order #204228944
STE 116 DESCRIPTION QUANTITY
ENCINITAS INFO,QUOTE,AUTH TO PURCHASE 1
CA INFO,QUOTE,AUTH TO PURCHASE 1
92024 BASE,ESS, RDNT 1
PERC EXT CBL, SDS-100,FS,FACT 1
INFO,POWEREDGE 6100 1
INFO,HD INC ORDER, SDS 100 1
18GB,LVD,SCSI.HD,P4200/6100/SDS100,FACT 1
18GB,LVD,SCSI.HD,P4200/6100/SDS100,FACT 1
18GB,LVD,SCSI.HD,P4200/6100/SDS100,FACT 1
18GB,LVD,SCSI.HD,P4200/6100/SDS100,FACT 1
18GB,LVD,SCSI.HD,P4200/6100/SDS100,FACT 1
18GB,LVD,SCSI.HD,P4200/6100/SDS100,FACT 1
18GB,LVD,SCSI.HD,P4200/6100/SDS100,FACT 1
18GB,LVD,SCSI.HD,P4200/6100/SDS100,FACT 1
NO OS,US,PE SRVRS 1
SLCTCRE,SVR,NBD,WANG,INIT 1
SLCTCRE,SVR,NBD,WANG,2YR EXT 1
INFO,QUOTE,AUTH TO PURCHASE 1
INFO,AUTH/PURCH,NOT OPVERPCK ITEM 1
INFO,QUOTE,AUTH TO PURCHASE 1
INFO,AUTH/PURCH,NOT OVERPCK ITEM 1
</TABLE>
All other items and conditions of the lease shall remain unchanged
<PAGE> 1
[IMPERIAL BUSINESS CREDIT LOGO] EXHIBIT 10.15
One Park Central, Suite 520
1515 Arapahoe Street, Denver, Colorado 80202 241352
Telephone: (303) 534-1117 1-800-477-7339 LEASE NUMBER
- --------------------------------------------------------------------------------
BUSINESS EQUIPMENT LEASE
- --------------------------------------------------------------------------------
LESSEE NAME
Interactive Telesis, Inc.
- --------------------------------------------------------------------------------
LESSEE ADDRESS CITY COUNTY STATE ZIP
535 Encinitas Blvd. #116 Encinitas San Diego CA 92024
- --------------------------------------------------------------------------------
SUPPLIER/VENDOR NAME ADDRESS CITY STATE ZIP
See Attached Schedule "A"
- --------------------------------------------------------------------------------
QUANTITY DESCRIPTION: MODEL NO., Serial No., or other Identification COST
See Attached Schedule "A" $9,989.56
- --------------------------------------------------------------------------------
EQUIPMENT LOCATION: STREET CITY COUNTY STATE ZIP
If Other Than
Billing Address
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAYMENT DUE DATE RENT PAYMENTS SECURITY DEPOSIT SALES/USE TAX TOTAL PAYMENT LEASE TERM
<S> <C> <C> <C> <C> <C>
OF EACH
MONTH $342.91 Monthly $ $ $342.91 36 Months
</TABLE>
Advance Payment of $685.82 which equals the first and last one payment(s), The
Security Deposit and a $125.00 documentation fee MUST ACCOMPANY LEASE.
- --------------------------------------------------------------------------------
1. LEASE. Lessee hereby agrees to lease from Lessor the personal property
described above (herein called the "Equipment"); and requests that Lessor
purchase the Equipment from the Supplier/Vendor named above. This Lease shall
become NONCANCELLABLE DURING THE TERM STATED ABOVE by Lessee for any reason
whatsoever, and Lessee shall be obligated to pay Lessor all sums called for in
the Business Equipment Lease (herein called the "Lease").
2. COMMENCEMENT AND TERMINATION. This Lease shall be binding on Lessor only
when accepted and signed by a duly authorized officer of Lessor. Lessor may
insert in the space appearing below the "Lease Start Date," which shall be the
earlier of the date the Equipment (or any portion of it) is delivered to Lessee
or the date Lessor disburses the purchase price (or any portion of it) to the
supplier. Provided Lessee has successfully performed all its duties and
obligations under the Lease, it shall terminate upon expiration of the number
of months (following the lease Start Date) stated as the Lease Term.
3. RENT AND OTHER PAYMENTS. Lessee shall pay the advance rentals due under this
Lease, as stated above, upon signing this Lease. All such amounts shall be
non-refundable. Monthly rent payments due after the first month's rent shall be
payable on the "Payment Due Date" indicated above or on the first business day
thereafter if a Payment Due Date falls on a non-business day. The Payment Due
Date shall be either the 1st or the 15th of each month, whichever is next
closer to the Lease Start Date, as determined by Lessor. In addition to regular
rentals, Lessee shall pay to Lessor interim rent for the use of the Equipment
prior to the due date of the first payment. Interim rent shall be in an amount
equal to 1/30th of the monthly rental, multiplied by the number of days
elapsing between the date on which the Equipment is accepted by Lessee and the
Lease Start Date of this Lease, together with the number of days elapsing
between the Lease Start Date and the due date of the first payment. The payment
of interim rent shall be due and payable upon Lessee's receipt of invoice from
Lessor. Lessee agrees to pay to Lessor a service charge of 5% per month, but
not to exceed the maximum amount permitted by law, on any payment due under
this Lease which is not paid within five days of the Payment Due Date. Lessee
shall pay all sales, use, excise, personal property, stamp, documentary, and ad
valorem taxes, licenses and registration fees, assessments, fines, penalties,
and other charges imposed on the ownership, possession, or use of the Equipment
during the term of this Lease, and Lessee shall pay all taxes (except income
taxes imposed on Lessor) with respect to the rental payments hereunder, and
shall, with the next scheduled payment reimburse Lessor for any taxes paid by
or advanced by Lessor. Lessee's obligation to pay such taxes, fees,
assessments, fines, penalties, and other charges shall survive termination of
the Lease. Lessee agrees that Lessor may adjust the rent payment proportionally
up or down if the actual cost of the Equipment exceeds or is less than the
amount stated in the Lease. All payments under this Lease shall be made to
Lessor at the address set forth above or at any other address Lessor
subsequently gives to Lessee for purposes of making payment. In the event of
default, payments made under the Lease may be applied to Lessee's obligation to
Lessor in any order Lessor chooses.
- --------------------------------------------------------------------------------
4. SELECTION OF EQUIPMENT. Lessee acknowledges that Lessor did not participate
in the selection, manufacture or supply of the Equipment and that Lessee has
made the selection of the Equipment and the supplier of such Equipment based
upon its own judgment. Lessee agrees to inspect the equipment and to execute
the "Certificate of Acceptance", which is attached hereto, only after the
Lessee is satisfied that the Equipment is satisfactory in every respect. Lessee
hereby authorizes Lessor to insert in the Lease any equipment serial numbers
and other identification data relating to the Equipment as needed.
5. DISCLAIMER OF WARRANTIES. BY SIGNING BELOW, LESSEE ACKNOWLEDGES THAT LESSOR
IS LEASING THE EQUIPMENT TO LESSEE "AS IS" AND WITH ALL FAULTS. LESSOR SHALL
NOT BE RESPONSIBLE IF THE EQUIPMENT IS NOT PROPERLY INSTALLED, DOES NOT OPERATE
AS REPRESENTED OR GUARANTEED BY THE SUPPLIER, OR IS UNSATISFACTORY FOR ANY
REASON. LESSOR MAKES NO REPRESENTATIONS AND DISCLAIMS ALL WARRANTIES, EXPRESS
OR IMPLIED, CONCERNING THE EQUIPMENT, INCLUDING WITHOUT LIMITATION, ANY WARRANTY
OF FITNESS FOR A PARTICULAR PURPOSE OR OF MERCHANTABILITY, LESSEE HEREBY WAIVES
ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT)
IT MIGHT HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR
CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY THE EQUIPMENT. Provided Lessee is
not in default of this Lease, Lessor hereby assigns to Lessee and Lessee shall
have the benefit of, any and all manufacturer's warranties, service agreements
and patent indemnities, if any, with respect to the Equipment; provided,
however, that Lessee's sole remedy for breach of any such warranty,
indemnification or service agreement shall be against the manufacturer of such
Equipment and not against the Lessor, nor shall such breach have any effect
whatsoever on the rights and obligations of Lessor or Lessee hereunder. LESSEE
ACKNOWLEDGES THAT NEITHER THE SUPPLIER, BROKER NOR THEIR AGENTS OR EMPLOYEES
ARE AGENTS OF LESSOR NOR ARE THEY AUTHORIZED TO WAIVE OR ALTER ANY TERM OR
CONDITION OF THIS LEASE WITHOUT THE WRITTEN CONSENT OF LESSOR. NO AGREEMENT,
EITHER WRITTEN OR VERBAL, BETWEEN SUPPLIER AND LESSEE OR BROKER AND LESSEE
SHALL BIND LESSOR UNLESS LESSOR SPECIFICALLY CONSENTS TO SUCH AGREEMENT IN
WRITING.
6. AMENDMENTS. No term or provision of this Lease may be amended, altered,
waived discharged or terminated except by a written instrument signed by the
parties hereto, and, in compliance with UCC Section 2A-208(2) requiring a
separate signature of this provision, Lessee has signed in the space provided
below.
Lessor and Lessee have specifically negotiated and
agreed to the preceding paragraphs 4, 5 and 6 ________________
Lessee's initials
SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS WHICH ARE A PART OF THIS
LEASE.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ACCEPTED BY: Imperial Business Credit, Inc. (Lessor) This agreement shall not be effective until executed by he Lessee and
accepted by an authorized representative of Lessor at its principal
place of business.
LESSEE Interactive Telesis, Inc.
By [ILLEGIBLE} -----------------------------------
------------------------------------------
By /s/ DONALD CAMERON
1/15/99 1/15/99 -------------------------------------
- ---------------------------------------------- Donald Cameron TITLE President
DATE (LEASE START DATE)
-------------------------------------
WITNESS [Illegible] DATE 1/5/99
</TABLE>
- --------------------------------------------------------------------------------
PERSONAL GUARANTY
In consideration of Lessor entering into the above Business Equipment Lease
(the "Lease"), the undersigned ("Undersigned") jointly and severally,
personally and unconditionally guarantee to Lessor the prompt payment in full,
when due, of all of Lessee's obligations under the Lease including without
limitation, every rental payable and the accelerated balance of rentals if
demanded by Lessor. Lessor shall not be required to proceed against Lessee or
the Equipment or enforce any other remedy before proceeding against the
Undersigned. The Undersigned agrees to pay all attorneys fees and other
expenses incurred by Lessor by reason of any default of Lessee or in enforcing
the Lease or this Guaranty. The Undersigned waives notice of acceptance hereof
and all other notices or demands of any kind to which the Undersigned may be
entitled and consents to the granting of extensions of time of payment to
Lessee and other obligors and guarantors and to any other amendments or
adjustments in the terms of the lease. This Personal Guaranty shall bind the
heirs, administrators, representatives, successors and assigns of guarantor and
may be enforced by or for the benefit of any assignee or successor of Lessor.
The Undersigned agrees that all actions arising directly or indirectly from
this Guaranty shall only be litigated in the state and the jurisdiction where
Lessor is located or if this Lease has been assigned where Lessor's assignee
is located, which may include the States of Colorado and California. The
Undersigned hereby consents to the jurisdiction of any local, state or federal
court in any of such states. The Undersigned further waives personal service of
any and all process upon the Undersigned, and consents that service may be made
by certified mail directed to the Undersigned at the address shown below, and
that service shall be effective two (2) days after mailing.
<TABLE>
<S> <C>
SIGNATURE X /s/ DONALD CAMERON SIGNATURE X
-------------------------------- --------------------------------
(INDIVIDUAL CAPACITY) (INDIVIDUAL CAPACITY)
(PRINT NAME) Donald Cameron (PRINT NAME)
-------------------------------- --------------------------------
HOME 1109 Sycamore View Dr. HOME
ADDRESS Encinitas, CA 92024 ADDRESS
-------------------------------- --------------------------------
HOME HOME
PHONE NO. 760 632-1124 DATE 1/5/99 PHONE NO. DATE
-------------------------------- --------------------------------
</TABLE>
<PAGE> 2
7. FINANCE LEASE STATUS. The parties agree that this Lease is intended to
qualify as a "Finance Lease" under Article 2A of the Uniform Commercial Code
(herein called the "UCC"). Lessee acknowledges that (a) Lessee has received a
copy of the purchase order or contract by which Lessor acquired or will acquire
the Equipment (herein called the "Supply Contract"); or (b) Lessee has reviewed
and approved and agreed to be bound by the Supply Contract; or (c) Lessor has
informed or advised Lessee in writing either previously or by the lease (i) of
the identity of the supplier; (ii) that Lessee may have rights under the Supply
Contract; and (iii) that the Lessee should contact the supplier for a
description of any such rights Lessee may have under the Supply Contract.
8. LESSEE INDEMNIFICATION. Lessee hereby agrees to indemnify and hold Lessor
and Lessor's agents and employees, harmless from any and all liability, damage,
or loss, including attorney's fees and court costs, arising out of the
purchase, sale, ownership, selection, possession, operation, control, use,
maintenance, or delivery of the Equipment.
9. POWER OF ATTORNEY/FINANCING STATEMENTS. Lessee hereby makes, constitutes and
appoints Lessor and its assigns its true and lawful attorney and agent for it
and in its name, place and stead to execute, deliver and life any UCC financial
statements and other documents that Lessor deems necessary or advisable in
order to protect Lessor's rights in the Equipment. This power being coupled
with an interest shall be irrevocable for the term of this Lease. Lessor and
Lessee agree that a carbon, photographic or other reproduction of this Lease
may be filed as a financing statement under the UCC.
10. LESSOR TERMINATION BEFORE EQUIPMENT ACCEPTANCE. If within 60 days from the
date Lessor orders the Equipment, same has not been delivered, installed and
accepted by Lessee (in form satisfactory to Lessor) Lessor may at Lessor's sole
discretion, on 10 days written notice to Lessee, terminate this Lease and its
obligation to Lessee.
11. LOCATION AND INSPECTION. Equipment shall be delivered and thereafter kept
at the location specified above, or, if none is specified, at Lessee's address
set forth above and Lessee shall not remove or allow to be removed therefrom
without Lessor's prior written consent. Any and all costs incurred by Lessor as
a result of such relocation shall be borne by Lessee. Any charges hereunder
shall not abate during the period the Equipment is out of service due to any
such relocation requested by Lessee. Lessee shall permit Lessor on its premises
to inspect the Equipment and the business records of Lessee relating to it
during normal business hours.
12. USE OF EQUIPMENT. Lessee shall, at its expense, use, maintain and keep the
Equipment in good operating order in the manner for which it was designed and
intended, SOLELY FOR LESSEE'S BUSINESS PURPOSE, in accordance with
manufacturer's recommendations and in compliance with all applicable laws,
regulations and insurance requirements. Lessee shall not make any alterations
or additions to the Equipment without the prior written consent of Lessor. All
additions, attachments, or replacements made to the Equipment, unless otherwise
agreed to in writing by Lessor, shall become part of the Equipment. Lessee, at
its expense, shall maintain the Equipment in good operating order and repair
in accordance with the manufacturer's recommendations. Supplies required for
use of the Equipment are to be provided by Lessee at its expense and are to
meet with the Equipment manufacturer's specifications.
13. LESSEE REPRESENTATIONS. Lessee warrants and represents that (a) all legal
action has been taken to permit Lessee to execute and perform this Lease; (b)
its entering into and performance of this Lease will not violate any law or
regulation applicable to Lessee; (c) this Lease constitutes a legal, valid, and
binding obligation, enforceable against Lessee in accordance with its terms;
(d) all financial or other statements furnished or made to Lessor by Lessee are
true and correct in all material respects; and (e) Lessee is in good standing
in its state of incorporation and is in good standing and is entitled to own
properties and to carry on a business in the state where the Equipment is to be
located. Any person signing this Lease for Lessee warrants that he is duly
authorized and empowered to do so.
14. INSURANCE. Lessee shall at all times prior to return of the Equipment to
Lessor carry and maintain, at its expense, insurance covering (a) theft and all
risks of loss or damage from any cause whatsoever for an amount not less than
the replacement value of the Equipment or the unpaid amount of the Lease,
whichever amount is greater, and which names Lessor and its assigns as loss
payee; and (b) public liability, both personal injury and property damage,
covering the maintenance, use and operation of the Equipment and which names
Lessor and its assigns as an additional insured. All such insurance coverage
shall be in form, amount, and with companies satisfactory to Lessor. Lessee
shall deliver certificates of insurance to Lessor. All such insurance shall
require 30 days written notice to Lessor and its assigns prior to alteration or
cancellation. Lessee hereby appoints Lessor and its assigns as Lessee's
attorney-in-fact with respect to endorsement of all documents, checks, or
drafts for loss or damage recoverable under all such insurance policies.
15. RISK OF LOSS. Upon delivery of the Equipment to Lessee, Lessee shall bear
the entire risk of loss, damage, theft or destruction to the Equipment or any
part thereof, from any and every cause whatsoever, which shall occur prior to
the Lessee's return of the Equipment as set forth in this Lease and no such
loss, damage, theft or destruction shall relieve Lessee of its obligation to
pay rent or to comply with any other obligation under this Lease. In the event
of such loss, damage, theft, or destruction, Lessee shall promptly notify
Lessor and Lessee shall within 30 days repair or replace such Equipment to its
original condition, and shall continue to make lease payments as called for
under this Lease. Lessee agrees that if Lessee shall fail to procure, carry and
maintain insurance coverage as set forth in this Lease, Lessor shall have the
right, but not the obligation, to obtain such insurance on behalf of and at the
expense of Lessee. In the event Lessor does obtain such insurance, Lessee
agrees to pay all costs thereof with interest at the maximum lawful rate,
immediately upon demand.
16. RETURN OF EQUIPMENT. Unless Lessee exercises any purchase or renewal option
specifically provided for in this Lease, upon expiration or earlier termination
of the Lease, with respect to the Equipment, or upon demand by Lessor pursuant
to this Lease, Lessee shall immediately, at its expense, return the Equipment in
the same condition as when Lessee received it, excepting only reasonable wear
and tear, to Lessor at a location in the continental United States specified by
Lessor. Lessee shall pay all costs and expenses to crate, insure and return the
Equipment to the designated location and Lessee shall pay all then outstanding
tax assessments and future tax liabilities resulting from Lessee's possession of
the Equipment prior to its return to Lessor. After the expiration of the initial
Lease term and thereafter until Lessor actually receives the Equipment at the
return location, the Lease shall automatically renew from month to month, and
Lessee agrees to continue to make Lease payments at the last effective rate
under the Lease with the Lessor retaining all payments made up to the time the
Equipment is returned to the specified return location.
17. DEFAULT. The following events shall constitute an event of default by
Lessee under this Lease: (a) failing to pay when due any amount required to be
paid to Lessor under this Lease in a timely fashion or to timely perform any
covenant, condition, or obligation to be performed by Lessee under this Lease
or under any other agreement with Lessor; (b) selling, transferring, or
disposing of the Equipment or of substantially all of the Lessee's assets or
merging or reorganizing without the prior written consent of Lessor; or (c)
creating, incurring, assuming or suffering to exist any mortgage, lien, pledge
or other encumbrance or attachment of any kind whatsoever upon, affecting or
with respect to the Equipment or this Lease or any of the Lessor's interest
thereunder; or (d) providing financial statements or making representations to
Lessor which are incorrect or misleading or inaccurate in any respect; (e)
becoming unable to pay debts as they become due or otherwise becoming insolvent
or suffering an adverse change in its financial condition; or (f) Lessor
reasonably deems itself insecure in its expectations that Lessee will fully
perform all of Lessee's obligations under this Lease.
18. REMEDIES OF LESSOR. Upon the occurrence of default by Lessee hereunder and
at any time thereafter (subject to any applicable grace provisions), Lessor may
exercise any one or more of the following remedies, as Lessor, in its sole
discretion, shall elect: (a) declare all unpaid rentals under this Lease to be
immediately due and payable; the amount to be due to be computed as hereinafter
set forth; (b) terminate this Lease as to any or all items of Equipment, but no
such termination shall be deemed to occur unless written notice to that
express effect is given by Lessor to Lessee; (c) whether or not this Lease is
terminated, take immediate possession of any or all of the Equipment, without
notice or demand and without court order or process, and for such purpose,
enter upon any premises without liability for so doing; (d) sell, lease or
otherwise dispose of the Equipment, or any item thereof, at a public or private
sale or lease at such time or times and upon such terms as Lessor may
determine, free and clear of any rights of Lessee; (e) proceed by appropriate
action either at law or in equity to enforce performance by Lessee of the
applicable covenants of this Lease or recover damages for the breach thereof;
and (f) exercise any and all rights accruing to a Lessor of personal property
under any applicable law upon a default by Lessee. In furtherance of the
foregoing, Lessor shall be entitled to recover immediately as liquidated
damages and not as a penalty, a sum equal to the aggregate of the following:
(i) all unpaid rentals and other amounts or other sums which are due and
payable for any item of Equipment up to the date delivered to or repossessed by
Lessor; (ii) any expenses paid or incurred by Lessor in connection with the
repossession, holding, repair, appraisal, transportation and subsequent sale,
lease or other disposition of the Equipment, including attorneys' fees and
court costs; and (iii) an amount equal to the difference between (aa) all
unpaid rentals and other amounts, due and to become due under this Lease, each
of which unpaid rentals and other amounts shall be discounted to present value
at an annual rate of 7% (collectively, "Unpaid Rentals"), together with the
amount or percentage of original cost for which Lessee would have been
permitted or required to purchase the Equipment at the end of the Lease term
hereof, which amount shall be discounted to present value at an annual rate of
7% ("Purchase Amount") and (bb) the then fair market value of any Equipment
returned to or repossessed by Lessor ("Return Value"); provided, however, that
the Return Value of each such item of Equipment shall be deemed to be an amount
equal to the proceeds, if any, of any sale or lease thereof by Lessor, less any
costs or expenses incurred by Lessor from such sale or lease. If Lessor is
unable, after the exercise of reasonable efforts to sell or lease any such item
of equipment, the Return Value of such item of equipment shall be deemed to be
zero. If the Return Value of the Equipment exceeds the sum of the Unpaid
Rentals plus the Purchase Amount, Lessor shall be entitled to the excess. No
right or remedy conferred upon or reserved to Lessor by this Lease shall be
exclusive of any other right or remedy herein or by law provided; all rights
and remedies of Lessor conferred on Lessor by this Lease or by law shall be
cumulative and in addition to every other right and remedy available to Lessor.
Lessee shall pay all costs and reasonable attorney's fees incurred by Lessor in
collecting any sums owed under this Lease or in obtaining possession of leased
Equipment, including attorney's fees incurred in seeking relief from stay in
bankruptcy court together with interest at the rate of the lesser of 18%
compounded annually, or the maximum amount permitted by law on each of the
foregoing and on all sums not paid when due under any provision of this Lease.
19. LESSEE'S WAIVERS. To the extent permitted by applicable law, Lessee hereby
waives any and all rights and remedies conferred upon a Lessee by Section
2A-508 through Section 2A-522 of the UCC, including, without limitation,
Lessee's rights to: (a) cancel this Lease; (b) repudiate this Lease; (c) reject
the Equipment; (d) revoke acceptance of the Equipment; (e) recover damages from
Lessor; (f) a security interest in the Equipment in Lessee's possession or
control for any reason; (g) deduct all or any part of claimed damages resulting
from Lessor's default, if any, under this Lease; (h) recover damages from
Lessor for any breaches of warranty or for any other reason; (i) accept partial
delivery of the Equipment; (j) "cover"; (k) recover any general, special,
incidental or consequential damages for any reason whatsoever; and (l) specific
performance, replevin, detinue, sequestration, claim or deliver of the like for
the Equipment.
20. ASSIGNMENT BY LESSOR. LESSOR MAY ASSIGN OR TRANSFER THE LEASE OR LESSOR'S
INTEREST IN THE EQUIPMENT WITHOUT NOTICE TO LESSEE. Any assignee of Lessor
shall have all of the rights, but none of the obligations, of Lessor under the
Lease and Lessee agrees that it will not assert against any assignee of Lessor
any defense, counterclaim or offset that Lessee may have against Lessor. Lessee
acknowledges that any assignment or transfer by Lessor shall not materially
change Lessee's duties or obligations under this Lease nor materially increase
the burdens or risk imposed on Lessee. Lessee agrees that Lessor may assign or
transfer this Lease or Lessor's interest in the Equipment even if said
assignment or transfer could be deemed to materially effect the interests of
Lessee.
21. NO LESSEE ASSIGNMENT OR SUBLEASE. LESSEE SHALL NOT ASSIGN, HYPOTHECATE OR
IN ANY WAY DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS
LEASE OR ENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT WITHOUT
THE PRIOR WRITTEN CONSENT OF LESSOR.
22. CONSENT TO JURISDICTION AND VENUE. THIS LEASE CALLS FOR PERFORMANCE BY
LESSEE AT THE LOCATION OF LESSOR OR LESSOR'S ASSIGNEE. AS PART OF THE
CONSIDERATION FOR LESSOR'S EXECUTING THIS LEASE, LESSEE AGREES THAT ALL ACTIONS
ARISING DIRECTLY OR INDIRECTLY FROM THIS LEASE SHALL ONLY BE LITIGATED IN THE
STATE AND THE JURISDICTION WHERE LESSOR IS LOCATED, OR IF THIS LEASE HAS BEEN
ASSIGNED WHERE LESSOR'S ASSIGNEE IS LOCATED WHICH MAY INCLUDE THE STATES OF
COLORADO AND CALIFORNIA. LESSEE HEREBY CONSENTS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT IN ANY OF SUCH STATES. LESSEE FURTHER WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON LESSEE, AND CONSENTS THAT SERVICE
MAY BE MADE BY CERTIFIED MAIL DIRECTED TO THE LESSEE AT THE ADDRESS SHOWN IN
THIS LEASE, AND THAT SERVICE SHALL BE EFFECTIVE TWO (2) DAYS AFTER MAILING.
23. OWNERSHIP/PERSONALITY. The Equipment is, and shall remain, the property of
Lessor, and Lessee shall have no right, title or interest therein or thereto
except as expressly set forth in this Lease. The Equipment shall remain
personal property regardless of whether affixed to real property, and Lessee
agrees to execute and obtain the execution of all agreements and documents in
recordable form by all parties having an interest in real property to which the
Equipment may be affixed, as Lessor may request, to protect Lessor's title to
the Equipment.
24. SECURITY DEPOSIT. Lessor shall retain the security deposit (if any)
specified as security for performance by Lessee of its obligations under this
Lease. The security deposit shall be non-interest bearing, and if Lessee shall
default in the performance of its obligations hereunder, Lessor may at its
sole option, apply the security deposit to the curing of that default. This
application by Lessor shall not be a defense to any action by Lessee arising
out of the default, and upon demand, Lessee shall restore the security deposit
to its full amount. If Lessee is not in default of this Lease, the security
deposit will be returned to Lessee at the termination of the Lease, provided
Lessee, at its sole expense and cost, shall have returned the Equipment by
delivering it in the same condition as when delivered to Lessee, reasonable wear
and tear excepted, at such place or on board carrier, packed for shipping, as
Lessor may specify.
25. MISCELLANEOUS. (a) Lessor has entered into this Lease in reliance upon
Lessee's representations that this Lease is for commercial, or business
purposes and not for personal, family or household purposes of Lessee; (b) any
action by Lessee against Lessor for any default by Lessor under this Lease,
shall be commenced within one (1) year after any such cause of action accrues;
(c) if for any reason this transaction is deemed not to be a Lease, Lessee
hereby grants Lessor a security interest in the Equipment; (d) all notices,
consents, instructions or requests desired or required to be given under this
Lease shall be in writing and shall become effective when delivered, or if
mailed, when deposited in the U.S. mail postage prepaid for certified or
registered mail, return receipt requested, at the address set forth in this
Lease or at such other address as such part shall from time to time designate
by proper notice; (e) no failure on the part of Lessor to exercise, and no
delay in exercising, any rights or remedy under this Lease shall operate as a
waiver or modify the terms of this Lease, nor shall any single or partial
exercise by Lessor of any right or remedy preclude any other or further
exercise of the same or any other right or remedy; (f) Lessor shall promptly
provide such further documents and financial reports as Lessor may reasonably
require in its normal course of business including copies of annual financial
reports, Securities Exchange Commission reports, quarterly reports and any
other information as Lessor may reasonably require; (g) no provision of this
Lease which may be deemed unenforceable shall in any way invalidate any other
provision of this Lease; (h) if any of the provisions of this Lease or
documentation related thereto is declared to be invalid or unenforceable, such
provision shall be severed from this Lease and the remaining provisions thereof
shall remain in full force and effect; (i) this Lease and all documentation
executed in connection therewith represents the entire agreement between the
parties hereto and automatically cancels and supersedes any and all prior
verbal or written understandings with respect thereto. The Lessor may in its
sole discretion accelerate the full payment of this Lease upon the death of a
natural Lessee or Guarantor.
THIS IS A NON-CANCELLABLE LEASE
<PAGE> 3
241352
------------
LESSOR: LEASE NUMBER
EXHIBIT A
DELL
- ----
One Dell Way
Round Rock, TX 78682
(1) Dell Dimension XPS R450 MHz Pentium II Processor at 450 MHz Minitower
(1) MS Intellimouse
(1) Dell Mouse Pad
(1) Quietkey Keyboard
(1) 256MB, SDRAM Memory
(1) 32X Max Variable CD-ROM Drive
(1) Video Ready Option w/o monitor
(1) STB nVidia ZX 8MB 3D 2X AGP Graphics Card
(1) 8.4 GB Ultra ATA Hard Drive 5400 RPM
(1) 3.5 1.44 MB Floppy Drive
(1) Microsoft Internet Explorer v4.01
(1) Microsoft Windows, NT, Workstation 4.0
(1) Selectcare Initial Year
(1) MS Office Small Business Edition 97.2
(1) Dell PowerEdge 2300 Base, 450 MHz Processor with 512k Cache
(1) Dell PowerEdge Processor Terminator Card
(1) 512MB RAM, 4 DIMMS for Dell PowerEdge 2300
(1) 1x6 Hot Pluggable Backplane for Dell PowerEdge 2300
(1) 14/32x SCSI CD-ROM for Dell PowerEdge 2300
(1) Hard Drive Configuration #1, all On Board, Hard Drive
(1) 1.44 MB Floppy Drive for Dell PowerEdge 2300
(1) 12/24 GB DAT Tape Backup for Dell PowerEdge 2300
(1) 9.1GB LVD SCSI Hard Drive for Dell PowerEdge 2300
(1) 9.1GB LVD SCSI Hard Drive for Dell PowerEdge 2300
(1) ReadyWare Factory Installation Service
(1) Intel Pro 100 Plus Ethernet Network Card
(1) Microsoft NTS 4.0 on CD, 10 Client Access Licenses, OEM Packaging
(1) SelectCare Next Business Day On-Site Inspection, Initial Year
and 2 Year Extended
(1) Princeton Ultra 52B 15"-13.8"V
(1) Ultraboard Windows 95 104 Key
(1) 3 Button Ergonomic Mouse Black
(1) MS Encarta '98 CD
LESSEE: Interactive Telesis, Inc. DATE: 1-5-99
--------------------------------- ------------------
BY: /s/ DONALD CAMERON TITLE: President
--------------------------------- ------------------
Donald Cameron
<PAGE> 1
EXHIBIT 10.16
- --------------------------------------------------------------------------------
Lease Number/App Number
FIRST SIERRA FINANCIAL, INC. PHONE FAX
- --------------------------------------------------------------------------------
A. Lessee: Supplier:
Interactive Telesis, Inc. See Attached Schedule "A"
535 Encinitas Blvd. #116
Encinitas, CA 92024
- --------------------------------------------------------------------------------
B. Equipment (Quantity, Description & Serial No.)
See Attached Schedule "A"
Location:
- --------------------------------------------------------------------------------
C. Schedule of Payments:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Initial Total Number Amount of Each
Term Of Rent Rent Payment
(In Months) Payments (plus applicable taxes) Total Initial Payment $3,586.62
- ----------- ------------ ----------------------- -------------------------------
<S> <C> <C> <C>
36 36 $1,793.31 First $1,793.31 Doc Fee $125.00
Last $1,793.31 Deposit $
</TABLE>
- --------------------------------------------------------------------------------
D. DISCLAIMER OF WARRANTIES AND CLAIMS: LIMITATION OF REMEDIES. THERE ARE NO
WARRANTIES BY OR ON BEHALF OF LESSOR (AND NEITHER THE SUPPLIER NOR ANY OTHER
PARTY IS OUR AGENT). LESSEE ACKNOWLEDGES AND AGREES BY ITS SIGNATURE BELOW AS
FOLLOWS: (A) LESSOR MAKES NO WARRANTIES EITHER EXPRESS OR IMPLIED AS TO THE
CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY, ITS FITNESS OR SUITABILITY FOR
ANY PARTICULAR PURPOSE, ITS DESIGN, ITS CONDITION, ITS CAPACITY, ITS QUALITY,
OR WITH RESPECT TO ANY CHARACTERISTICS OF THE EQUIPMENT; (B) LESSEE LEASES THE
EQUIPMENT "AS IS" AND WITH ALL FAULTS; (C) LESSEE ACKNOWLEDGES THAT THE
EQUIPMENT IS LEASED TO LESSEE SOLELY FOR COMMERCIAL OR BUSINESS PURPOSES; (D)
IF THE EQUIPMENT IS NOT PROPERLY INSTALLED, DOES NOT OPERATE AS REPRESENTED OR
WARRANTED BY THE SUPPLIER OR MANUFACTURER, OR IS UNSATISFACTORY FOR ANY REASON,
REGARDLESS OF CAUSE OR CONSEQUENCE, LESSEE'S ONLY REMEDY, IF ANY, SHALL BE
AGAINST THE SUPPLIER OR MANUFACTURER OF THE EQUIPMENT AND NOT AGAINST LESSOR;
(E) LESSEE SHALL HAVE NO REMEDY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES AGAINST
LESSOR; AND (F) NO DEFECT, DAMAGE OR UNFITNESS OF THE EQUIPMENT FOR ANY PURPOSE
SHALL RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR RELIEVE LESSEE OF ANY
OTHER OBLIGATION UNDER THIS LEASE.
- --------------------------------------------------------------------------------
E. CHOICE OF LAW; CONSENT TO JURISDICTION; VENUE; THIS LEASE SHALL BE
INTERPRETED, AND ALL RIGHTS AND LIABILITIES OF THE PARTIES HERETO SHALL BE
DETERMINED AND GOVERNED AS TO VALIDITY, INTERPRETATION, ENFORCEMENT AND EFFECT,
BY THE LAWS OF THE STATE OF CALIFORNIA. WITHOUT LIMITING THE RIGHT OF LESSOR TO
BRING ANY ACTION OR PROCEEDING AGAINST LESSEE IN THE COURTS OF OTHER
JURISDICTIONS, LESSEE HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED IN CALIFORNIA OR IN ANY OTHER STATE WHERE LESSOR
HAS AN OFFICE. LESSOR AND LESSEE EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY.
- --------------------------------------------------------------------------------
F. STATUTORY FINANCE LEASE: Lessee agrees and acknowledges that it is the intent
of both parties to this Lease that it qualify as a statutory finance lease
under Article 2A of the Uniform Commercial Code. Lessee acknowledges and agrees
that Lessee has selected both: (1) the Equipment; and (2) the supplier from
whom Lessor is to purchase the Equipment. Lessee acknowledges that Lessor has
not participated in any way in Lessee's selection of the Equipment or of the
supplier, and Lessor has not selected, manufactured or supplied the Equipment.
LESSEE ACKNOWLEDGES THAT LESSOR HAS INFORMED OR ADVISED LESSEE, IN WRITING,
EITHER PREVIOUSLY OR BY THIS LEASE THAT LESSEE MAY HAVE RIGHTS UNDER THE SUPPLY
CONTRACT EVIDENCING LESSOR'S PURCHASE OF THE EQUIPMENT FROM THE SUPPLIER CHOSEN
BY LESSEE AND THAT LESSEE SHOULD CONTACT THE SUPPLIER OF THE EQUIPMENT FOR A
DESCRIPTION OF ANY SUCH RIGHTS AND ANY LIMITATION OF SUCH RIGHTS.
- --------------------------------------------------------------------------------
G. AMENDMENTS: No term or provision of this Lease may be amended, altered,
waived or discharged except by a written instrument signed by the party to be
bound.
LESSOR AND LESSEE HAVE SPECIFICALLY NEGOTIATED AND AGREED TO THE PRECEDING
PARAGRAPHS D, E, F AND G.
/s/ DC
- ------------------
(lessees initials)
- --------------------------------------------------------------------------------
THIS LEASE, THE TERMS OF WHICH HAVE BEEN FREELY NEGOTIATED BY EACH PARTY,
IS SUBJECT TO THE TERMS AND CONDITIONS ON THE REVERSE SIDE OR FOLLOWING
PAGE WHICH ARE MADE A PART HEREOF AND WHICH LESSEE AND
LESSOR ACKNOWLEDGE THEY HAVE READ AND ACCEPTED.
- --------------------------------------------------------------------------------
THIS IS A NON-CANCELABLE/IRREVOCABLE LEASE.
THIS LEASE CANNOT BE CANCELED OR TERMINATED
Accepted by Lessor in California: Lessee: Interactive Telesis, Inc.
--- --------------------------
By: Signature: /s/ DONALD CAMERON
-------------------------------- -----------------------
Title: Title: President
------------------------------- --------------------------
Accepted On:
- --------------------------------------------------------------------------------
GUARANTY: In consideration of the Lessor identified above entering into the
lease agreement identified above ("Lease"), the part(ies) or individual(s)
executing this Guaranty ("Guarantor," whether one or more) unconditionally and
irrevocably guarantee to Lessor, its successors and assigns, the prompt payment
and performance of all obligations of the Lessee identified above. Guarantor
agrees that this is a guaranty of payment and not of collection, and that
Lessor can proceed directly against Guarantor without first proceeding against
Lessee or against the equipment covered by the Lease. Guarantor waives all
defenses and notices, including those of protest, presentment and demand.
Guarantor agrees that Lessor can renew, extend or otherwise modify the terms of
the Lease and Guarantor will be bound by such changes. If Lessee defaults under
the Lease, Guarantor will immediately perform all obligations of Lessee under
the Lease, including, but not limited to, paying all amounts due under the
Lease. Guarantor will pay to Lessor all expenses (including attorneys' fees)
incurred by Lessor in enforcing Lessor's rights against Guarantor. This
Guaranty will not be discharged or affected by the death, dissolution,
termination, bankruptcy or insolvency of Lessee or Guarantor and will bind
Guarantor's heirs, personal representatives, successors and assigns. If more
than one Guarantor has signed this Guaranty, each Guarantor agrees that his/her
liability is joint and several. Guarantor authorizes Lessor or any of Lessor's
designees to obtain and share with others credit bureau reports regarding
Guarantor's personal credit, and make other credit inquiries that Lessor
determine are necessary. THIS GUARANTY IS GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA. GUARANTOR CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED IN CALIFORNIA OR IN ANY OTHER STATE WHERE LESSOR HAS AN OFFICE.
GUARANTOR EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY.
X /s/ DONALD CAMERON X
- -------------------------- --------------------------
Guarantor Signature Guarantor Signature
Donald Cameron
- -------------------------- --------------------------
Printed Name Printed Name
- --------------------------------------------------------------------------------
CERTIFICATE OF ACCEPTANCE: This will advise that Lessee is aware of its
obligations with respect to the lease agreement identified above and Lessee
agrees to enforce in its own name all warranties agreements or representations
if any which may be made by the supplier in respect of the equipment. All items
of equipment referred to above have been received and irrevocably accepted by
Lessee and were at the time of receipt in good order and condition and
acceptable to use. Lessee approves payment by Lessor to the supplier. Lessee
hereby certifies that Lessor has fully and satisfactorily performed all
covenants and conditions to be performed by it under such lease agreement.
Lessee authorizes Lessor to write in the acceptance date following telephone
confirmation by Lessee of its receipt of the equipment.
Donald Cameron, President
- ----------------------------------------
Printed Name
/s/ DONALD CAMERON 1-18-99
- ----------------------------------------
Signature Acceptance Date
- --------------------------------------------------------------------------------
Page 1 of 2
<PAGE> 2
CORPORATE RESOLUTION
At a duly constituted meeting of the Board of Directors of Interactive Telesis,
Inc. held on Jan. 15, 1999, the following resolution was unanimously passed:
RESOLVED, that Donald Cameron in his/her capacity as President is authorized
for, on behalf of and in the name of this Corporation, to negotiate, procure
and execute such Lease Agreements, with Lessor which in his opinion are
necessary or advisable to effectuate the most favorable interest of the
corporation, and the execution of such Lease Agreement by said officer shall be
conclusive evidence of his approval thereof.
IN WITNESS WHEREOF, I have affixed my name as Secretary of said Corporation and
have caused the corporate seal of the corporation to be hereunto affixed this
18th day of January, 1999.
/s/ SCOTT CAMERON
- -------------------------------- -----------------------------------
LESSOR: First Sierra Financial Scott Cameron / SECRETARY
<PAGE> 3
RE: Agreement No.
------------------------
Dear
--------------------------------:
Interactive Telesis, Inc. ("Lessee") shall purchase all (but not less than all)
of the equipment described in the above-referenced agreement upon the
expiration of the initial lease term for the agreed upon purchase price of
$5,589.89 plus applicable sales taxes and other charges, if any.
The purchase price shall be due and payable by Lessee to Lessor not less than
thirty (30) days prior to the expiration of the initial lease term.
Upon receipt by Lessor of the agreed upon purchase price from Lessee, Lessor
will furnish Lessee a bill of sale warranting title to the equipment, excepting
any impairment thereof by reason of any acts by the Lessee or those making
claim against the Lessee. The bill of sale will provide that the purchase shall
be "AS-IS, WHERE-IS AND WITH ALL FAULTS, WITHOUT ANY WARRANTIES, EXPRESS OR
IMPLIED".
Except as specifically provided for herein, all terms and conditions of the
above-referenced agreement shall remain in full force and effect as provided
therein.
LESSOR: LESSEE:
FIRST SIERRA FINANCIAL, INC. Interactive Telesis, Inc.
---------------------------------
By: By: /s/ DONALD CAMERON
----------------------------- ------------------------------
Title Donald Cameron, President
<PAGE> 4
INSURANCE AUTHORIZATION AND VERIFICATION
AGENT: X TELEPHONE: X
--------------------------- -----------------------------
AGENCY ADDRESS:
----------------------------------------------------------------
CITY: STATE: ZIP:
--------------------------------- ------------ -----------------
LESSEE: Interactive Telesis, Inc.
-----------------------------------------------------------------------
ADDRESS: 535 Encinitas Blvd. #116
----------------------------------------------------------------------
CITY: Encinitas STATE: CA ZIP: 92024
------------------------ ------------ -----------------
I, THE UNDERSIGNED, HAVE ENTERED INTO A LEASE AGREEMENT WITH FIRST SIERRA
FINANCIAL, INC. FOR EQUIPMENT MORE FULLY DESCRIBED ON THE ATTACHED SCHEDULE "A"
OR INVOICE. I AM RESPONSIBLE FOR PROVIDING FIRST SIERRA FINANCIAL INSURANCE
COVERAGE AS FOLLOWS:
ALL RISK COLLATERAL INSURANCE IN THE AMOUNT AT LEASE $55,898.91 AND LIABILITY
INSURANCE IN THE MINIMUM AMOUNT OF $500,000 NAMING:
FIRST SIERRA FINANCIAL, INC.
600 Travis Street, 47th Floor
Houston, TX 77002
AS LOSS PAYEE AND AS ADDITIONAL INSURED ON A LONG FORM LOSS PAYABLE CLAUSE
438BFU OR ITS EQUIVALENT.
IT IS IMPERATIVE THAT THIS REQUEST IS PROCESSED IMMEDIATELY AS FIRST SIERRA
FINANCIAL IS NOT OBLIGATED TO PAY FOR THE EQUIPMENT UNTIL PROOF OF INSURANCE
COVERAGE HAS BEEN RECEIVED.
FIRST SIERRA FINANCIAL IS ALSO TO RECEIVE COPIES OF ALL RENEWAL CERTIFICATES
AND REINSTATEMENT NOTICES. IN ADDITION, ALL NOTICES OF NONRENEWALS AND
CANCELLATION MUST BE RECEIVED 30 DAYS IN ADVANCE.
PLEASE SEE THAT WE HAVE IMMEDIATE COVERAGE, FAX AND MAIL THE EVIDENCE OF
INSURANCE INCLUDING ENDORSEMENTS TO FIRST SIERRA FINANCIAL, INC., 600 TRAVIS
STREET, 47TH FLOOR, HOUSTON, TX 77002, FAX 1-800-749-9594.
PLEASE REFER TO THE ABOVE-REFERENCED LESSEE ON YOUR FORM OF EVIDENCE OF
INSURANCE.
VERY TRULY YOURS,
/s/ DONALD CAMERON
- --------------------------------
Donald Cameron, President
<PAGE> 5
SCHEDULE "A"
EQUIPMENT SCHEDULE FOR LEASE NO.
DELL
ONE DELL WAY
ROUND ROCK, TX 78682
(1) Dell PowerEdge 4300 Redundant Base 450 MHz Processor with 512k Cache to
include:
Microsoft System Mouse with Driver Disks
Tower Option, Rubber Feet for Dell PowerEdge 4300/6300
Quietkey Keyboard
Dell PowerEdge Processor Terminator Card
6 Bay Hard Drive Backplane 1.6" or 1.0" for Dell PowerEdge 6300
1024MB RAM, DIMM for Dell PowerEdge 4300
14/32X SCSI CD ROM for Dell PowerEdge 6300
Seagate Bup Exec v7.0 for NT & v7.5 for NetWare-Sngl Server Edition, CD Rom
18 GB LVD SCSI Smart Hard Drive 7200RPM for Dell PowerEdge 6300
18 GB LVD SCSI Smart Hard Drive 7200RPM for Dell PowerEdge 6300
18 GB LVD SCSI Smart Hard Drive 7200RPM for Dell PowerEdge 6300
1.44 MB 3.5" Floppy Drive for Dell PowerEdge 6300
12/24GB DDS-3 Autoloader (192GB total capacity) Tape Backup for Dell PowerEdge
6300
3x 18GB LVD SCSI Smart Hard Drives, 7200RPM for Dell PowerEdge 6300
PowerEdge Expandable RAID Controller 2 (PERC2), 18MB PCI Single Channel for
Dell PowerEdge 4300
Config #4, RAID 5 Dell PowerEdge 4300
ReadyWare Factory Installation Service
Intel Pro 100 Plus Ethernet Network Card
Microsoft NTS 4.0 on CD 10 Client Access Licenses
SelectCare, Next Business Day On-Site Service 2 Year Extended, Wang
Install NT Server as Primary Domain Controller
(1) Dell Dimension XPS R400MHz Pentium II Minitower Base with MMX Technology
and 512k Cache to include:
MS Intellimouse
Quietkey Keyboard
256 MB SDRAM Memory
3 COM USRobotics V.90 Telephony Winmodem, Factory Install
32X Max Variable CD ROM
Dell 1000LS 17" Color Monitor with 15.9" Viewable Image Size Model #D102BL
ATI XPERT 98D 8MB 3D 2X AGP Graphics Card
8.4GB 5400RPM Ultra ATA Hard Drive
3.5 1.44MB Floppy Drive
Microsoft Internet Explorer
Microsoft Windows, NT, Workstation 4.0
3COM 3C905B Fast Ethernet XL 10/100 PCI NIC
SelectCare Service Contract
MS Office Small Business Edition
MS Encarta
MS Office 2000 Small Business Upgrade Flyer
(2) Dell Dimension XPS R400MHz Pentium II Minitower Base with MMX Technology
and 512k Cache to include:
MS Intellimouse
Page 1 of 1
<PAGE> 6
Quietkey Keyboard
256 MB SDRAM Memory
3 COM USRobotics V.90 PCI Telephony Winmodem, Factory Install
32X Max Variable CD ROM
Video Ready Option w/o monitor
ATI XPERT 98D 8MB 3D 2X AGP Graphics Card
8.4 GB Ultra ATA Hard Drive 5400 RPM Factory Install
3.5 1.44MB Floppy Drive
Microsoft Internet Explorer
Microsoft Windows, NT, Workstation 4.0
3COM 3C905B Fast Ethernet XL 10/100 PCI NIC
SelectCare Service Contract
MS Office Small Business Edition
MS Encarta
MS Office 2000 Small Business Upgrade Flyer
(1) Dell PowerEdge 4300 Redundant Base 350 MHz Processor with 512k Cache to
include:
Logitec System Mouse w/ Drive Disks, Factory Option
Tower Option, Rubber Feet for Dell PowerEdge 4300/6300
Windows Mechanical Keyboard
6 Bay Hard Drive Backplane 1.6" or 1.0" for Dell PowerEdge 6300
Dell PowerEdge 4300, 350 MHz, 512K Second Processor
1024MB RAM, DIMM for Dell PowerEdge 4300
14/32X SCSI CD ROM for Dell PowerEdge 6300
Seagate Bup Exec v7.0 for NT & v7.5 for NetWare-Sngl Server Edition, CD Rom
9 GB LVD SCSI Smart Hard Drive 7200RPM for Dell PowerEdge 6300
9 GB LVD SCSI Smart Hard Drive 7200RPM for Dell PowerEdge 6300
9 GB LVD SCSI Smart Hard Drive 7200RPM for Dell PowerEdge 6300
1.44 MB 3.5" Floppy Drive for Dell PowerEdge 6300
12/24GB DDS-3 Autoloader (192GB total capacity) Tape Backup for Dell PowerEdge
6300
PowerEdge Expandable RAID Controller (PERC), 16MB ECC 1 Internal / 1 External
Channel
3X9 GB LVD SCSI Smart Hard Drives, 7200 RPM for Dell PowerEdge 6300
Config #4, RAID 5 Dell PowerEdge 4300
ReadyWare Factory Installation Service
Intel Pro 100 Plus Ethernet Network Card
Microsoft NTS 4.0 on CD 10 Client Access Licenses
SelectCare, Next Business Day On-Site Service 2 Year Extended, Wang
DirectLine Advanced Network Operating System Phone Support
(1) Dell PowerEdge SDS Redundant Power Supply
(1) External Cable for PowerEdge RAID Controller, Floor Standing
(1) Hard Drive Configuration for Dell PowerEdge 6100
(1) Hard Drive Configuration, Increasing Order, Dell PowerEdge SDS 100
(8) 18GB LVD SCSI Hard Drive for Dell PowerEdge 4200/6100 and SDS100
(1) SelectCare Next Business Day On-Site Service Initial Year and 2nd Year.
Lessee hereby certifies that the description of personal property set forth
above constitutes an accurate account of the Equipment, as such is defined in
the Lease Agreement of which this Schedule is a part.
Lessee: Interactive Telesis, Inc.
By: /s/ Donald Cameron
--------------------------
DONALD CAMERON
Title: PRESIDENT
Date: 1-18-99
Page 2 of 2
<PAGE> 7
TERMS AND CONDITIONS OF LEASE
1. DEFINITIONS; REPORTS: The words "you" and "your" refer to the LESSEE as
shown on the reverse side or preceding page, as applicable (the "first page").
The words "we", "us" and "our" refer to the LESSOR as shown on the first page.
You authorize us and our designees to obtain investigative credit reports
regarding you and each guarantor from a credit bureau or a credit agency and to
investigate the references given on any statement or data obtained, and to share
such reports with others.
2. LEASE: We agree to lease to you, and you agree to lease from us, the
Equipment, products and/or services described or referenced on the first page
for the term shown on the first page ("Equipment"). We shall have no obligations
under this Lease until we accept and sign this Lease at our offices. Thereafter,
this Lease shall continue for the Initial Term. If this Lease is executed by
Lessee and thereafter sent to Lessor by facsimile transmission, then until such
time as Lessor has received the Lease with Lessee's manual signature thereon,
such facsimile transmission shall constitute, upon acceptance and execution by
Lessor in its offices, the original Lease and chattel paper and shall be
admissible for all purposes as the original Lease. Lessee agrees to promptly
forward to Lessor the Lease with Lessee's manual signature thereon and upon
receipt by Lessor the Lease with Lessee's manual thereon shall constitute the
chattel paper in lieu of such facsimile transmission.
3. RENTALS; AUTOMATIC RENEWAL; DEPOSIT: You promise to pay us the lease
payments according to the Schedule of Payments shown on the first page in
advance commencing as of the first day of the Initial Term and continuing on the
first day of each succeeding month without need of an invoice; provided, as
indicated in the Schedule of Payments, the lease payments included in Total
Initial Payment shall be paid upon your execution of this Lease. The monthly
rent payments indicated on the first page are based on the estimated cost to us
of the Equipment, and if the actual cost to us of the Equipment differs from
such estimated cost, then you agree to execute a document reflecting the actual
total cost and appropriate adjustments to the monthly rent payments. If the
contemplated lease transaction is not consummated, the Total Initial Payment may
be retained by us as partial compensation for costs and expenses incurred in
preparation for the transaction. If the date of delivery of the Equipment occurs
on other than the first day of a calendar month, then on the first day of the
Initial Term you agree to pay us an interim rent amount equal to 1/30th of the
monthly rental multiplied by the number of days elapsing between the date on
which the Equipment is delivered to you and the first day of the Initial Term.
Your obligation to pay the rentals and other amounts hereunder is absolute and
unconditional and not subject to abatement, reduction or set-off for any reason
whatsoever. Promptly following our request, you agree to take such action as is
necessary to authorize us (and to maintain such authorization) to effect all
payments, charges and fees hereunder by an electronic debit to your bank
account. If the date of the first certificate of acceptance for the Equipment is
the first day of a calendar, then the "Initial Term" shall commence on such
date; otherwise, the "Initial Term" shall commence on the first day of the
following calendar month; and in each case the Initial Term shall continue for
the number of months indicated on the first page. This Lease will automatically
renew for successive 90 day terms unless you send us written notice that you
don't want to renew at least 180 days before the end of any term. We may cancel
the automatic renewal terms by sending you written notice that we don't want
this Lease to renew, at least 15 days before the end of any term. The Deposit
shown on the first page will not bear interest and we may apply the Deposit to
cure any default, in which event you will promptly restore the Deposit to its
full amount. After all of the obligations under this Lease are fully paid and
performed, any remaining balance of the Deposit shall be refunded to you within
30 days after the return of the Equipment to us at the termination of the
original lease term or of any renewal term.
4. LIABILITY; LOCATION: We are not responsible for any losses or injuries
caused by the installation or use of the Equipment. You agree to reimburse us
for and to defend us against all claims for losses or injuries caused by the
Equipment. You will keep and use the Equipment only at your address shown on the
first page. You agree that the Equipment will not be removed from that address
unless you get our written permission in advance to move it. If the certificate
of acceptance for the Equipment is not signed at the time of Lease execution,
then you will sign and provide to us a certificate of acceptance for the
Equipment within 14 days after delivery, and if such certificate of acceptance
is not provided within such time period, then we may terminate this Lease (in
which case you shall assume, without the need of further action, all obligations
with respect to the Equipment and you shall reimburse us for all amounts
advanced with respect to the Equipment).
5. MAINTENANCE; INSTALLATION AND RETURN: You are responsible for installing and
keeping the Equipment in good working order. If the Equipment is damaged or
lost, you agree to continue to pay rent unless you pay the Casualty Value
pursuant to Section 1.2. At the end of the Lease term, you will immediately
return the Equipment to us in a condition as good as received less normal wear
and tear to any place in the United States we designate. You will prepay all
expenses of crating and shipping by means we designate and you will properly
insure the shipment. You also agree to pay us an administration fee of $100.00
for processing the return of the Equipment.
6. INSURANCE: You agree to keep the Equipment fully insured against loss until
this Lease is paid in full and to have us named as loss payee. You also agree to
obtain a general public liability insurance policy from anyone who is acceptable
to us and to include us as an additional insured on the policy. You agree to
provide us with certificates or other evidence of insurance acceptable to us,
before this Lease term begins, and during the term. If at any time you have
failed to deliver to us a valid certificate of insurance reflecting us as loss
payee with respect to the Equipment, then you will pay us an increased credit
risk fee of .250% of original Equipment cost for each month such failure
continues, or we will have the right, but no obligation, to have such insurance
protecting us placed at your expense; and if so placed, you will pay us on
demand all of our costs of obtaining such insurance and any customary charges or
fees of ours or our designee associated with such insurance.
7. TAXES AND FEES: You agree to pay when due or reimburse us for all taxes,
fees, fines and penalties relating to use or ownership of the Equipment or to
this Lease, (including stamp taxes) now or hereafter imposed, levied or assessed
by any federal, state or local government or agency. You also agree to pay us
upon demand an administration fee for the handling or collecting of any such tax
or related return of $50 per occurrence. Upon termination/expiration of this
Lease, you agree to promptly remit 90% of the previous year's personal property
tax due with respect to the Equipment (plus any applicable taxes and fees) as
specified in a written notice from us for application against the current year
personal property tax; provided, you will remain liable for any deficiency.
8. OWNERSHIP; PERSONAL PROPERTY: This is a lease and your rights to the
Equipment are those solely of a lessee. If, however, this Lease is construed to
be a financing, you grant us a security interest in the Equipment and all
proceeds thereof. The Equipment will be and remain personal property and, if
requested by us, you will obtain real property waivers satisfactory to us. You
shall keep the Equipment free from any and all liens and encumbrances. You shall
give us immediate notice of any attachment or other judicial process, liens or
encumbrances affecting the Equipment. You hereby authorize us to file this
Lease, any financing statements or security agreements with respect to the
Equipment or any other collateral you provide to us prior to or following our
acceptance of this Lease, in any state in the United States. You further
authorize us to file this Lease and such financing statements or security
agreements without your signature thereon. If your signature on any financing
statement is required by law, you shall execute such supplemental instruments
and financing statements we deem to be necessary and advisable and shall
otherwise cooperate to defend our title by filing or otherwise. You also agree
to pay us on demand filing and releasing fees prescribed by the Uniform
Commercial Code ("UCC") or other law and the registration fee or, at our option,
a reasonable non-filing protection fee. Any Equipment that is subject to title
registration laws shall be titled and registered as directed by us.
9. DEFAULT, REMEDIES: If you do not pay rent when due or if you breach or fail
to perform any of your other covenants and promises under this Lease or any
other agreement entered into by you and held or serviced by us, you will be in
default. If you are in default, at our election, we can require that you pay, as
reasonable, liquidated damages for loss of bargain, the Casualty Value (and upon
payment of such Casualty Value you shall be entitled to the Equipment as is,
where is, without warranty). We can also pursue any of the remedies available to
us under the Uniform Commercial Code or any other law. You agree to pay our
reasonable attorneys' fees and actual costs including repossession and
collection costs. To the extent permitted by law, you waive all rights and
remedies conferred upon a lessee under Article 2A of the UCC.
10. LATE CHARGE: If any part of a payment is late, you agree to pay a late
charge equal to the lesser of (a) the greater of 10% of the payment or $25.00 or
(b) the maximum amount permitted by applicable law. You agree to pay or
reimburse us for all costs of collections, including reasonable attorneys' fees,
incurred by us, in collecting amounts owed under this Lease and for all
non-sufficient funds charges and similar charges.
11. ASSIGNMENT; INSPECTION: YOU HAVE NO RIGHT TO SELL, TRANSFER, ASSIGN,
SUBLEASE OR ENCUMBER THE EQUIPMENT OR THIS LEASE. We may sell, assign, transfer
or encumber this Lease. You agree that if we sell, assign or transfer this
Lease, the assignee will have the rights and benefits that we assign to the
assignee and will not have to perform any of our obligations. You agree that the
rights of the assignee will not be subject to any claims, defenses or set offs
that you may have against us. We and our agents and representatives shall have
the right at any time during regular business hours to inspect the Equipment and
for that purpose to have access to the location of the Equipment.
12. RISK OF LOSS: You hereby assume and shall bear the entire risk of loss,
theft, damage and destruction of the Equipment from any cause whatsoever and no
loss, theft, damage or destruction of the Equipment shall relieve you of the
obligation to pay rent or any other obligation of this Lease, and this Lease
shall remain in full force and effect, except as provided below. You shall
promptly notify us in writing of such loss, theft, damage or destruction. If
damage of any kind occurs to any item of Equipment, you, at our option, shall at
your expense (a) place the item in good repair, condition or working order, or
(b) if the Equipment cannot be repaired or is lost, stolen or suffers a
constructive loss under an insurance policy covering the Equipment, pay to us
the "Casualty Value." The Casualty Value will be equal to the total of (i)
accrued and unpaid amounts, (ii) the remaining rental payments discounted to
present value using a 7% discount rate, and (iii) the actual cost to us of the
Equipment multiplied by 20% (similarly discounted to present value from the date
of expiration of the Initial Term).
13. MISCELLANEOUS: During the term of this Lease and any renewal hereof, you
agree to provide us with all financial statements and copies of federal or state
tax returns as we may reasonably request. If we supply you with labels, you
shall label any and all items of Equipment and shall keep the same affixed in a
prominent place. If any provision hereof or any remedy herein provided is found
to be invalid under any applicable law, such provision shall be inapplicable and
deemed omitted, but the remaining provisions hereof, including remaining default
remedies, shall be given effect in accordance with the manifest intent hereof.
You agree that any delay or failure to enforce our rights under this Lease does
not prevent us from enforcing any rights at a later time. You agree that the
terms and conditions indicated above an on the first page are a complete and
exclusive statement of our agreement and they may be modified only be written
agreement signed by all of the parties hereto and not by course of performance.
You agree that the original of this Lease may be microfilmed or electronically
duplicated and a photostatic copy of such microfilm or electronic duplication
may be introduced in lieu of the original thereof and without further
foundation. The parties hereto expressly waive the secondary evidence rule. You
acknowledge receipt of a copy of this Lease. You agree that this Lease will be
binding upon your heirs, successors and legal representatives. You agree that
our waiver of any provision hereunder shall not constitute a waiver of any other
matter. It is the express intent of the parties not to violate any applicable
usury laws or to exceed the maximum amount of time price differential or
interest, as applicable, permitted to be charged or collected by applicable law,
and any such excess payment will be applied to rental payments in inverse order
of maturity, and any remaining excess will be refunded to you.
- --------------------------------------------------------------------------------
REQUEST FOR ELECTRONIC PAYMENT
Please attach a voided check from the account to be debited
The undersigned hereby authorizes and requests _______________________________
("Lessor") and its successors and assigns to initiate electronic debit entries
or effect a charge by any other commercially accepted practice to the
undersigned's account indicated below in the financial institution named below
("Bank"), and the undersigned authorizes and requests Bank to honor the debit
entries initiated by Lessor and debit the same to such account. This authority
pertains to the lease of Equipment between the undersigned and the Lessor and
all payments due and to become due pursuant to such lease including rental
payments, tax amounts, late charges, fees and, in the case of default, the full
amount due and to become due under the lease. This authority is to remain in
force until all such payments are completed or until Lessor and Bank have
received written notification from the undersigned of its termination in such
time and such manner as to afford Lessor and Bank a reasonable opportunity to
act on it.
Customer Name Printed: _______________________ Lease Number: ________________
Bank Name and Branch: ________________________
Bank Address (city & state): _________________
Bank Telephone Number: _______________________ Account Number: ______________
Customer Signature: __________________________ Date: ________________________
- --------------------------------------------------------------------------------
Page 2 of 2
<PAGE> 1
EXHIBIT 10.17
[UNITED CAPITAL LETTERHEAD]
March 30, 1999
Interactive Telesis, Inc.
535 Encinitas Blvd., #116
Encinitas, CA 92024
Lease #13995
Dear Mr. Donald Cameron,
Congratulations on recently obtaining leased equipment to assist you in
your business needs. Enclosed are copies of your lease documents now assigned
to and serviced by United Capital Leasing Corporation, a national lease funding
organization.
Please send your payment directly to us when you receive your monthly
billing statement. Your bill is mailed approximately 10 days before the due
date. If you have any questions regarding your billing of payments, please do
not hesitate to contact us.
Your future equipment leasing needs can still be handled by your original
broker or lessor. If you are unable to locate your broker, please call us and
we will be glad to help you get in contact with them.
We look forward to servicing your lease as your business benefits from the
addition of this new equipment.
Very truly yours,
/s/ MELANIE R. LENARD
- --------------------------
Melanie R. Lenard
Sr. Lease Administrator
<PAGE> 2
<TABLE>
<S> <C>
- ------------------------------------------------------------------------ -------------------------------------------------------
LESSOR LEASE NUMBER
United Capital Leasing
1690 W. Shaw #103 13995
Fresno, CA 93711
- ------------------------------------------------------------------------------------------------------------------------------------
FULL LEGAL NAME AND ADDRESS OF LESSEE SUPPLIER OF EQUIPMENT (COMPLETE ADDRESS)
Interactive Telesis, Inc.
535 Encinitas Blvd. #116 See attached Schedule "A"
Encinitas, CA 92024
JOINTLY AND SEVERALLY RESPONSIBLE
- ------------------------------------------------------------------------------------------------------------------------------------
QUANTITY DESCRIPTION, MODEL #, CATALOG #, SERIAL # OR OTHER IDENTIFICATION
- ------------------------------------------------------------------------------------------------------------------------------------
E
Q L
U E See Attached Schedule "A"
I A
P S
M E
E D
N
T
- ------------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT STREET ADDRESS _________________________________________________________________________________________________
LOCATION IF
DIFFERENT CITY _______________________ COUNTY _____________________ STATE ______________________ ZIP _____________________
- ------------------------------------------------------------------------------------------------------------------------------------
AMOUNT OF EACH PAYMENT MONTHLY [X] TERM OF LEASE NO. OF PAYMENTS SECURITY
TERMS (PLUS SALES TAX, IF APPLICABLE) OTHER/SPECIFY [ ] (NO. OF MONTHS) DEPOSIT
$840.00 36 36 - 0 -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TERMS AND CONDITIONS OF LEASE
1. LEASE. Lessee hereby leases from Lessor, and Lessor leases to Lessee, the
personal property described above, together with any replacement parts,
additions, repairs or accessories now or hereafter incorporated in or affixed to
it (hereinafter referred to as the "Equipment").
2. ACCEPTANCE OF EQUIPMENT. Lessee agrees to inspect the Equipment and to
execute an Acknowledgement and Acceptance of Equipment by Lessee notice, as
provided by Lessor, after the Equipment has been delivered and after Lessee is
satisfied that the Equipment is satisfactory in every respect. Lessee hereby
authorizes Lessor to insert in this Lease serial numbers or other identifying
data with respect to the Equipment.
- --------------------------------------------------------------------------------
3. DISCLAIMER OF WARRANTIES AND CLAIMS; LIMITATION OF REMEDIES. THERE ARE NO
WARRANTIES BY OR ON BEHALF OF LESSOR. Lessee acknowledges and agrees by his
signature below as follows:
(a) LESSOR MAKES NO WARRANTIES EITHER EXPRESS OR IMPLIED AS TO THE CONDITION
OF THE EQUIPMENT, ITS MERCHANTABILITY, ITS FITNESS OR SUITABILITY FOR ANY
PARTICULAR PURPOSE, ITS DESIGN, ITS CAPACITY, ITS QUALITY, OR WITH RESPECT TO
ANY CHARACTERISTICS OF THE EQUIPMENT;
(b) Lessee has fully inspected the Equipment which it has requested Lessor to
acquire and lease to Lessee, and the Equipment is in good condition and to
Lessee's complete satisfaction;
(c) Lessee leases the Equipment "as is" and with all faults;
(d) Lessee specifically acknowledges that the Equipment is leased to Lessee
solely for commercial or business purposes and not for personal, family,
household, or agricultural purposes;
(e) If the Equipment is not properly installed, does not operate as
represented or warranted by the supplier or manufacturer, or is unsatisfactory
for any reason, regardless of cause or consequence, Lessee's only remedy, if
any, shall be against the supplier or manufacturer of the Equipment and not
against Lessor;
(f) Provided Lessee is not in default under this Lease, Lessor assigns to
Lessee any warranties made by the supplier or the manufacturer of the Equipment;
(g) LESSEE SHALL HAVE NO REMEDY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES
AGAINST LESSOR; and
(h) NO DEFECT, DAMAGE, OR UNFITNESS OF THE EQUIPMENT FOR ANY PURPOSE SHALL
RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR RELIEVE LESSEE OF ANY OTHER
OBLIGATION UNDER THIS LEASE.
INITIALS
The parties have specifically negotiated and
agreed to the foregoing paragraph. [ILLEGIBLE]
- --------------------------------------------------------------------------------
4. STATUTORY FINANCE LEASE. Lessee agrees and acknowledges that it is the intent
of both parties to this Lease that it qualify as a statutory finance lease under
Article 2A of the Uniform Commercial Code. Lessee acknowledges and agrees that
Lessee has selected both: (1) the Equipment; and (2) the supplier from whom
Lessor is to purchase the Equipment. Lessee acknowledges that Lessor has not
participated in any way in Lessee's selection of the Equipment or of the
supplier, and Lessor has not selected, manufactured, or supplied the Equipment.
LESSEE IS ADVISED THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT EVIDENCING THE
LESSOR'S PURCHASE OF THE EQUIPMENT FROM THE SUPPLIER CHOSEN BY LESSEE AND THAT
LESSEE SHOULD CONTACT THE SUPPLIER OF THE EQUIPMENT FOR A DESCRIPTION OF ANY
SUCH RIGHTS.
5. ASSIGNMENT BY LESSEE PROHIBITED. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT,
LESSEE SHALL NOT ASSIGN THIS LEASE OR SUBLEASE THE EQUIPMENT OR ANY INTEREST
THEREIN, OR PLEDGE OR TRANSFER THIS LEASE, OR OTHERWISE DISPOSE OF THE EQUIPMENT
COVERED HEREBY.
6. COMMENCEMENT; RENTAL PAYMENTS; INTERIM RENTALS. This Lease shall commence
upon the written acceptance hereof by Lessor and shall end upon full performance
and observance by Lessee of each and every term, condition and covenant set
forth in this Lease, any Schedules hereto and any extensions hereof. Rental
payments shall be in the amounts and frequency as set forth on the face of this
Lease or any Schedules hereto. In addition to regular rentals, Lessee shall pay
to Lessor interim rent for the use of the Equipment prior to the due date of the
first payment. Interim rent shall be in an amount equal to 1/30th of the monthly
rental, multiplied by the number of days elapsing between the date on which the
Equipment is accepted by Lessee and the commencement date of this Lease,
together with the number of days elapsing between commencement of the Lease and
the due date of the first payment. The payment of interim rent shall be due and
payable upon Lessee's receipt of invoice from Lessor. The rental period under
the Lease shall terminate following the last day of the terms stated on the face
hereof or in any Schedule hereto, unless such Lease or Schedule has been
extended or otherwise modified. Lessor shall have no obligation to Lessee under
this Lease if the Equipment, for whatever reason, is not delivered to Lessee
within ninety (90) days after Lessee signs this Lease. Lessor shall have no
obligation to Lessee under this Lease if Lessee fails to execute and deliver to
Lessor an Acknowledgement and Acceptance of Equipment by Lessee acknowledging
its acceptance of the Equipment within thirty (30) days after it is delivered to
Lessee, with respect to this Lease or any Schedule hereto.
THIS LEASE IS NOT CANCELABLE OR TERMINABLE BY LESSEE.
SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS WHICH ARE A PART OF THIS
LEASE.
LESSEE UNDERSTANDS AND ACKNOWLEDGES THAT NO BROKER OR SUPPLIER, NOR ANY
SALESMAN, BROKER, OR AGENT OF ANY BROKER OR SUPPLIER, IS AN AGENT OF LESSOR. NO
BROKER OR SUPPLIER, NOR ANY SALESMAN, BROKER OR AGENT OF ANY BROKER OR SUPPLIER,
IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE, AND NO
REPRESENTATION AS TO THE EQUIPMENT OR ANY OTHER MATTER BY THE BROKER OR
SUPPLIER, NOR ANY SALESMAN, BROKER, OR AGENT OF ANY BROKER OR SUPPLIER, SHALL IN
ANY WAY AFFECT LESSEE'S DUTY TO PAY THE RENTALS AND TO PERFORM LESSEE'S
OBLIGATIONS SET FORTH IN THIS LEASE.
7. CHOICE OF LAW. This Lease shall not be effective until signed by Lessor at
its principal office listed above. This Lease shall be considered to have been
made in the state of California and shall be interpreted in accordance with the
laws and regulations of the state of California.
Lessee agrees to jurisdiction in the state of California in any action, suit
or proceeding regarding this Lease and concedes that it, and each of them,
transacted business in the state of California by entering into this Lease. In
the event of any legal action with regard to this lease or the equipment covered
hereby, Lessee agrees that venue may be laid in the County of Fresno.
LESSEE: Interactive Telesis, Inc. LESSOR: United Capital Leasing
/s/ DONALD CAMERON DATE 2-5-99 /s/ KARYN REYNOLDS DATE 3/24/99
-------------------- -------- ------------------- --------
Donald Cameron, President
DATE
-------------------- --------
- --------------------------------------------------------------------------------
<PAGE> 3
[MISSING TEXT]
this Lease, and Lessee's complete performance of all of its obligations under
this Lease and any extension or renewal thereof. Lessee has deposited with
Lessor the security amount set forth in the section shown as "Security Deposit".
In the event any default shall be made in the performance of any of Lessee's
obligations under this Lease, Lessor shall have the right, but shall not be
obligated, to apply the security deposit to the curing of such default. Within
15 days after Lessor mails notice to Lessee that Lessor has applied any portion
of the security deposit to the curing of any default, Lessee shall restore said
security deposit to the full amount set forth above. On the expiration or
earlier termination or cancellation of this Lease, or any extension or renewal
hereof, provided Lessee has paid all of the rent called for and fully performed
all other provisions of this Lease, Lessor will return to the Lessee any then
remaining balance of said security deposit, without interest. Said security
deposit may be commingled with Lessor's other funds.
9. LIMITED PREARRANGED AMENDMENTS; SPECIFIC POWER OF ATTORNEY. In the event it
is necessary to amend the terms of this Lease to reflect a change in one or
more of the following conditions:
(a) Lessor's actual cost of procuring the Equipment, or
(b) Lessor's actual cost of providing the Equipment to Lessee, or
(c) A change in rental payments as a result of (1) or (2), above, or
(d) Description of the Equipment:
Lessee agrees that any such amendment shall be described in a letter from Lessor
to Lessee, and unless within 15 days after the date of such letter Lessee
objects in writing to Lessor, the Lease shall be deemed amended and such
amendments shall be incorporated in this Lease as if originally set forth.
Lessee grants to Lessor a specific power of attorney for Lessor to use as
follows: (1) Lessor may sign and file on Lessee's behalf any document Lessor
deems necessary to perfect or protect Lessor's interest in the Equipment or
pursuant to the Uniform Commercial Code, and (2) Lessor may sign, endorse or
negotiate for Lessor's benefit any instrument representing proceeds from any
policy of insurance covering the Equipment.
10. LOCATION. The Equipment shall be kept at the location specified above or,
if none is specified, at Lessee's address as set forth above and shall not be
moved without Lessor's prior written consent.
11. USE. Lessee shall use the Equipment in a careful manner, make all necessary
repairs at Lessee's expense, shall comply with all laws relating to its
possession, use, or maintenance, and shall not make any alterations, additions,
or improvements to the Equipment without Lessor's prior written consent. All
12. OWNERSHIP; PERSONALTY. The Equipment is, and shall remain, the property of
Lessor, and Lessee shall have no right, title, or interest in the Equipment
except as expressly set forth in this Lease. The Equipment shall remain personal
property even though installed in or attached to real property.
13. SURRENDER. By this Lease, Lessee acquires no ownership rights in the
Equipment, and has no option to purchase same. Upon the expiration, or earlier
termination or cancellation of this Lease, or in the event of a default under
Paragraph 21, hereof, Lessee, at its expense, shall return the Equipment in good
repair, ordinary wear and tear resulting from proper use thereof alone excepted,
by delivering it, packed and ready for shipment, to such place or carrier as
Lessor may specify.
14. RENEWAL. At the expiration of the Lease, Lessee shall return the Equipment
in accordance with Paragraph 13, hereof. At Lessor's option, this Lease may be
continued on a month-to-month basis until 30 days after Lessor returns the
Equipment to Lessor. In the event the Lease is so continued, Lessee shall pay
to Lessor rentals in the same periodic amounts indicated under "Amount of Each
Payment," above.
15. LOSS AND DAMAGE. Lessee shall at all times after signing this Lease bear
the entire risk of loss, theft, damage or destruction of the Equipment from any
cause whatsoever, and no loss, theft, damage or destruction of the Equipment
shall relieve Lessee of the obligation to pay rent or to comply with any other
obligation under this Lease. In the event of damage to any part of the
Equipment, Lessee shall immediately place the same in good repair at Lessee's
expense. If Lessor determines that any part of the Equipment is lost, stolen,
destroyed, or damaged beyond repair, Lessee shall, at Lessee's option, do one of
the following:
(a) Replace the same with like equipment in good repair, acceptable to
Lessor; or
(b) Pay Lessor in cash the following: (i) all amounts due by Lessee to
Lessor under this Lease up to the date of the loss; (ii) the accelerated balance
of the total amounts due for the remaining term of this Lease attributable to
said item, discounted to present value at a discount rate of 9% as of the date
of loss; and, (iii) the Lessor's estimate as of the time this Lease was entered
into of Lessor's residual interest in the Equipment discounted to present value
at a discount rate of 9%, as of the date of loss. Upon Lessor's receipt of
payment as set forth above, Lessee shall be entitled to title to the Equipment
without any warranties. If insurance proceeds are used to fully comply with this
subparagraph, the balance of any such proceeds shall go to Lessee to compensate
for loss of use of the Equipment for the remaining term of the Lease.
16. INSURANCE; LIENS; TAXES. Lessee shall provide and maintain insurance
against loss, theft, damage, or destruction of the Equipment in an amount not
less than the full replacement value of the Equipment, with loss payable to
Lessor. Lessee also shall provide and maintain comprehensive general all-risk
liability insurance including but not limited to product liability coverage,
insuring Lessor and Lessee, with a severability of interest endorsement, or its
equivalent, against any and all loss or liability for all damages, either to
persons or property or otherwise, which might result from or happen in
connection with the condition, use, or operation of the Equipment, with such
limits and with an insurer satisfactory to Lessor. Each policy shall expressly
provide that said insurance as to Lessor and its assigns shall not be
invalidated by any act, omission, or neglect of Lessee and cannot be cancelled
without 30 days prior written notice to Lessor. As to each policy Lessee shall
furnish to Lessor a certificate paragraph. Lessor shall have no obligation to
ascertain the existence of or provide any insurance coverage for the Equipment
or for Lessee's benefit. If Lessee fails to provide such insurance, Lessor will
have the right, but no obligation, to have such insurance protecting Lessor
placed at Lessee's expense. Such placement will result in an increase in
Lessee's periodic payments, such increase being attributed to Lessor's costs of
obtaining such insurance and any customary charges or fees of Lessor's or its
designee associated with such insurance.
Lessee shall keep the Equipment free and clear of all levies, liens, and
encumbrances. Lessee shall pay all charges and taxes (local, state, and federal)
which may now or hereafter be imposed upon the ownership, leasing, rental, sale,
purchase, possession, or use of the Equipment, excluding, however, all taxes on
or measured by Lessor's net income. If Lessee fails to pay said charges or
taxes, Lessor shall have the right, but shall not be obligated, to pay such
charges or taxes. In that event, Lessor shall notify Lessee of such payment and
Lessee shall repay to Lessor the cost thereof within 15 days after such notice
is mailed to Lessee.
[MISSING TEXT]
including all attorney fees, arising out of or connected with Equipment, without
limitation. Such indemnification shall survive the expiration, cancellation, or
termination of this Lease. Lessee waives any immunity Lessee may have under any
industrial insurance act, with regard to indemnification of Lessor.
18. ASSIGNMENT BY LESSOR. Any assignee of Lessor shall have all of the rights
but none of the obligations of Lessor under this Lease. Lessee shall recognize
and hereby consents to any assignment of this Lease by Lessor, and shall not
assert against the assignee any defense, counterclaim, or setoff that Lessee may
have against Lessor. Subject to the foregoing, this Lease inures to the benefit
of and is binding upon the heirs, devisees, personal representatives, survivors,
successors in interest, and assigns of the parties hereto.
19. SERVICE CHARGES; INTEREST. If Lessee shall fail to make any payment
required by this Lease within 10 days of the due date hereof, Lessee shall pay
to Lessor a service charge of up to 15% of the amount due; provided, however,
that not more than one such service charge shall be made on any delinquent
payment, regardless of the length of the delinquency. In addition to the
foregoing service charge, Lessee shall pay to Lessor a $100 default fee with
respect to any payment which becomes thirty (30) days past due. In addition,
Lessee shall pay to Lessor any actual additional expenses incurred by Lessor in
collection efforts, including but not limited to long-distance telephone charges
and travel expenses. Lessee shall pay to Lessor interest on any delinquent
payment or amount due under this Lease from the due date thereof until paid, at
the lesser of the maximum rate of interest allowed by law or 18% per annum.
20. TIME OF ESSENCE. Time is of the essence of this Lease, and this provision
shall not be impliedly waived by the acceptance on occasion of late or defective
performance.
21. DEFAULT. Lessee shall be in default if:
(a) Lessee shall fail to make any payment due under the terms of this
Lease for a period of 10 days from the due date thereof; or
(b) Lessee shall fail to observe, keep, or perform any provision of this
Lease, and such failure shall continue for a period of 10 days; or
(c) Lessee has made any misleading or false statement in connection with
application for or performance of this Lease; or
(d) The Equipment or any part thereof shall be subject to any lien, levy,
seizure, assignment, transfer, bulk transfer, encumbrance,
application, attachment, execution, sublease, or sale without prior
written consent of Lessor, or if Lessee shall abandon the Equipment or
permit any other entity or person to use the Equipment without the
prior written consent of Lessor; or
(e) Lessee dies or ceases to exist; or
(f) Lessee defaults on any other agreement it has with Lessor; or
[MISSING TEXT] of default occur with respect to any guarantor or any
such guarantor files or has filed against it a petition under the
bankruptcy laws.
22. REMEDIES. If Lessee is in default, Lessor, with or without notice to
Lessee, shall have the right to exercise any one or more of the following
remedies, concurrently or separately, and without any election of remedies being
deemed to have been made:
(a) Lessor may enter upon Lessee's premises and without any court order or
other process of law may repossess and remove the Equipment, or render the
Equipment unusable without removal, either with or without notice to Lessee.
Lessee hereby waives any trespass or right of action for damages by reason of
such entry, removal, or disabling. Any such possession shall not constitute a
termination of this Lease unless Lessor so notifies Lessee in writing;
(b) Lessor may require Lessee, at its expense, to return the Equipment in
good repair, ordinary wear and tear resulting from proper use thereof alone
excepted, by delivering it, packed and ready for shipment, to such place or
carrier as Lessor may specify;
(c) Lessor may cancel or terminate this Lease and may retain any and all
prior payments paid by Lessee;
(d) Lessor may declare all sums due and to become due under the Lease
immediately due and payable, including as to any or all items of Equipment,
without notice or demand to Lessee;
(e) Lessor may re-lease the Equipment, without notice to Lessee, to any
third party, upon such terms and conditions as Lessor alone shall determine, or
may sell the Equipment, without notice to Lessee, at private or public sale, at
which sale Lessor may be the purchaser.
(f) Lessor may sue for and recover from Lessee the sum of all unpaid rents
and other payments due under this Lease then accrued, all accelerated future
payments due under this Lease, discounted to their present value at a discount
rate of 9% as of the date of default, plus Lessor's estimate at the time this
Lease was entered into of Lessor's residual interest in the Equipment, reduced
to present value at a discount rate of 9% as of the date of default, less the
net proceeds of disposition, if any, of the Equipment.
(g) To pursue any other remedy available at law, by statute or in equity.
No right or remedy herein conferred upon or reserved to Lessor is exclusive of
any other right or remedy herein, or by law or by equity provided or permitted,
but each shall be cumulative of every other right or remedy given herein or now
or hereafter existing by law or equity or by statute or otherwise, and may be
enforced concurrently therewith or from time to time. No single or partial
exercise by Lessor of any right or remedy hereunder shall preclude any other or
further exercise of any other right or remedy.
23. MULTIPLE LESSEES. Lessor may, with the consent of any one of the Lessees
hereunder, modify, extend, or change any of the terms hereof without consent or
knowledge of the others, without in any way releasing, waiving, or impairing any
right granted to Lessor against the others. Lessees and each of them are jointly
and severally responsible and liable to Lessor under this Lease.
24. EXPENSE OF ENFORCEMENT. In the event of any legal action with respect to
this Lease, the prevailing party in any such action shall be entitled to
reasonable attorney fees, including attorney fees incurred at the trial level,
including action in bankruptcy court, on appeal or review, or incurred without
action, suits, or proceedings, together with all costs and expenses incurred in
pursuit thereof.
25. ENTIRE AGREEMENT; NO ORAL MODIFICATIONS; NO WAIVER. This instrument
constitutes the entire agreement between Lessor and Lessee. No provision of this
Lease shall provision hereof in one instance shall not constitute a waiver as to
any other instance.
26. SEVERABILITY. This Lease is intended to constitute a valid and enforceable
legal instrument, and no provision of this Lease that may be deemed
unenforceable shall in any way invalidate any other provision or provisions
hereof, all of which shall remain in full force and effect.
<PAGE> 4
SCHEDULE "A"
EQUIPMENT SCHEDULE FOR LEASE NO.
DELL
ONE DELL WAY
ROUND ROCK, TX 78682
(4) Dell Dimension XPS 400MHz Pentium II Minitower Base with MMX Technology
and 512k Cache each to include:
MS Intellimouse
Quietkey Keyboard
256 MB SDRAM Memory
32X Max Variable CD ROM
Video Ready Option
ATI XPERT 98D 8MB 3D 2X AGP Graphics Card
8.4GB 5400RPM Ultra ATA Hard Drive
3.5 1.44 MB Floppy Drive
Microsoft Internet Explorer
Microsoft Windows, NT, Workstation 4.0
3COM 3C905B Fast Ethernet XL 10/100 PCI NIC
SelectCare Service Contract years 2 and 3 included
MS Office Small Business Edition
MS Encarta
MS Office 2000 Small Business Upgrade Flyer
PARAGON VOICE SYSTEMS
12625 HIGH BLUFF DRIVE #302
SAN DIEGO, CA 92130
(4) DIALOGIC D/240SC-T1 Boards
Lessee hereby certifies that the description of personal property set forth
above constitutes an accurate account of the Equipment, as such is defined in
the Lease Agreement of which this Schedule is a part.
Lessee: Interactive Telesis, Inc.
By: /s/ Donald Cameron
-----------------------------
DONALD CAMERON
Title: President
Date: 2-5-99
Page 1 of 1
<PAGE> 5
Lessor: United Capital Leasing Lease# 13995
------------------------- -----------
1690 W. Shaw #103
-------------------------
Fresno, CA 93711
-------------------------
LEASE BUYOUT
"PUT LETTER"
Re: Equipment Lease Dated: 2-5-99
----------
THIS IS TO CONFIRM THAT UPON PERFORMANCE BY LESSEE OF ITS OBLIGATIONS
UNDER THE REFERENCED LEASE AGREEMENT, LESSOR AGREES TO SELL TO LESSEE AND
LESSEE AGREES TO PURCHASE ALL, BUT NOT LESS THAN ALL THE EQUIPMENT COVERED
UNDER THE LEASE ON AN "AS IS" BASIS, WITH NO WARRANTIES BY LESSOR AT A
PRICE OF $2,536.00. SAID PRICE SHALL BE EXCLUSIVE OF ANY AND ALL FEDERAL,
STATE, MUNICIPAL, USE, SALES, OR LEASE TAXES WHICH MAY BE ASSESSED OR
IMPOSED AT THE TIME OF SALE.
LESSOR: United Capital Leasing LESSEE: Interactive Telesis, Inc.
By: [Signature Illegible] By: /s/ DONALD CAMERON
--------------------------- ---------------------------
Donald Cameron, President
Date: 3/24/99 Date: 2/5/99
--------------------------- ---------------------------
<PAGE> 6
Lessor: United Capital Leasing Lease# 13995
------------------------- -----------
1690 W. Shaw, #103
-------------------------
Fresno, CA 93711
-------------------------
INSURANCE AUTHORIZATION
To: [Illegible]
-------------------------
-------------------------
-------------------------
Phone: ( ) [Illegible]
-------------------------
Contact:
-------------------------
We have entered into an equipment lease agreement for the equipment shown on the
attached Lease Copy. This equipment is located as stated on the Lease.
This is a net lease and we are responsible for the full equipment cost in the
amount of $ [illegible].
Please see that we immediately have ALL RISK coverage for liability and full
replacement cost of the equipment and that United Capital Leasing Corporation is
shown as LOSS PAYEE and ADDITIONAL INSURED on the policy. Please forward a
Certificate of Insurance and Loss Payable/Additional Insured Clause to:
UNITED CAPITAL LEASING CORPORATION
P.O. BOX 28490
FRESNO, CA 93729
Concurrent Certificates of Insurance, thirty (30) days notice in the event of
cancellation or alteration, and general correspondence should be sent to the
above addresses as well.
Very truly yours,
Lessee: Interactive Telesis, Inc.
-------------------------
X /s/ DONALD CAMERON
-------------------------
Donald Cameron President
DATED EXECUTED BY LESSEE 2/5, 1999
<PAGE> 7
Lessor: United Capital Leasing
-------------------------
1690 W. Shaw, #103
-------------------------
Fresno, CA 93711
-------------------------
INSURANCE AUTHORIZATION
Lessee: Interactive Telesis, Inc. Lease# 13995
------------------------- --------
535 Encinitas Blvd #116
-------------------------
Encinitas, CA 92024
-------------------------
LESSEE'S ACKNOWLEDGEMENT
&
DELIVERY ACCEPTANCE RECEIPT
"See Attached Schedule A"
The undersigned hereby acknowledged receipt in good condition of all the above
listed property and accepts the same in accordance with all the terms and
conditions of the lease agreement between Lessor and the undersigned Lessee.
The undersigned Lessee acknowledges with full understanding that the above
described equipment lease is NON-CANCELLABLE for any reason for the term
indicated and according to the terms and provisions thereof. Lessee recognizes
and agrees that the Lessor HAS NO RESPONSIBILITY AS TO SATISFACTION,
PERFORMANCE OR MAINTENANCE of the leased equipment covered therein. Further,
Lessee acknowledges that, after the execution to this Delivery Receipt and
Acceptance Certificate, it waives its rights to cover, reject or revoke
acceptance of the leased equipment. In reliance upon this representation,
Lessor will execute the necessary drafts in payment for the equipment.
Lessee states, warrants, and agrees that the equipment is to be used solely for
business or commercial purposes and is not for personal or consumer use in any
manner.
LESSEE: Interactive Telesis, Inc.
-------------------------
X /s/ DONALD CAMERON
-------------------------
Donald Cameron, President
DATED EXECUTED BY LESSEE 2/5, 1999
DELIVERY AND ACCEPTANCE
In my absence, I hereby authorize
W.R. Adams to do the verbal
acceptance.
Signature:
(Donald E. Cameron)
<PAGE> 8
Lessor: United Capital Leasing Lease # 13995
------------------------
1690 West Shaw, #103
------------------------
Fresno, CA 93711
------------------------
CORPORATE LEASING RESOLUTION
I, Scott Cameron, do hereby certify that I am the duly elected and qualified
Secretary of Interactive Telesis, Inc., a California Corporation; (State of
Incorporation)
that the following is a true and correct copy of resolutions duly adopted by
the board of Directors of said corporation;
"RESOLVED: That Donald Cameron, the President of this corporation, be and they
hereby are authorized and directed to negotiate, execute and deliver on behalf
of this corporation a lease agreement with LESSOR, whereby this corporation will
lease equipment on terms and conditions which shall be determined by said
officers to be advisable and in the best interests of this corporation and the
execution of such lase agreement by said officers shall be conclusive evidence
of their approval thereof.
BE IT FURTHER RESOLVED: That the Secretary be and hereby is authorized to
furnish to LESSOR, a certified copy these resolutions."
IN WITNESS WHEREOF, I have affixed my name as secretary of said corporation and
have caused the corporate seal of said corporation to hereunto affixed this 5th
day of Feb, 1999.
/s/ SCOTT CAMERON
-----------------------
SCOTT CAMERON/SECRETARY
AFFIX CORPORATE
SEAL HERE
<PAGE> 9
EQUIPMENT LEASE GUARANTY
LESSOR: United Capital Leasing
LEASE NO: 13995
DATE OF LEASE 2-5-99
This Guaranty Agreement made and entered into this 2nd day of February, 1999 by
Donald Cameron (hereinafter referred to collectively as "Guarantor"), in favor
of United Capital Leasing (hereinafter referred to as "Lessor").
WHEREAS, it is contemplated that Lessor may enter into a lease and/or other
related agreements (hereinafter collectively "Lease") with Interactive Telesis,
Inc. (hereinafter collectively "Lessee"); and,
WHEREAS, Guarantor has an interest, financial or otherwise, in Lessee, and it
is to the benefit of Guarantor that Lessor enter into the Lease with lessee,
and Guarantor has read the proposed Lease in full and finds the terms of said
Lease acceptable, and in recognition that Lessor would be unwilling to enter
into the Lease without the Guaranty hereinafter set forth, and in recognition
of Lessor's reliance upon the Guarantor in entering into the Lease;
NOW, THEREFORE, in order to induce Lessor to enter into the Lease,
Guarantor , jointly and severally, unconditionally guaranties the faithful and
full performance by Lessee of all terms and conditions of the Lease. In the
event of default by Lessee, or failure to faithfully perform any of the terms
or conditions required of Lessee under the Lease, or in the event of failure of
Lessee to make any or all payments of money required of it under the Lease,
Guarantor unconditionally promises to pay to Lessor, in lawful money of the
United States, all sums at any time due and unpaid under the Lease, plus costs
of collection, including reasonable attorney fees with or without trial, and
upon appeal and review.
The obligations of Guarantor hereunder are joint and several and are
independent of the obligations of Lessee under the Lease, and a separate action
or actions may be brought against Guarantor, whether action is brought against
lessee or whether Lessee be joined in any action or actions, the liability of
Guarantor hereunder being primary. Guarantor hereby waives the benefit of any
suretyship defenses affecting its liability hereunder or the enforcement hereof.
Guarantor authorizes Lessor, without notice or demand, and without
affecting Guarantor's liability hereunder, from time to time to renew, extend,
accelerate, or otherwise change the payment terms or other terms of the Lease
or any part thereof. Lessor may, without notice, assign this Guaranty in whole
or in part.
Guaranty hereby waives any right to require Lessor to: (a) proceed against
or exhaust any security held by Lessor: or (c) pursue any other remedy in
Lessor's power. Guarantor waives any defense arising by reason of any defense
of Lessee, or by reason of the cessation, from any cause whatsoever, of the
liability of Lessee under the Lease. Guarantor waives any and all demands for
performance, notices of nonperformance or default, and notices of cancellation
of forfeiture. Lessor may apply all proceeds received from Lessee or others to
such part of Lessee's indebtedness as Lessor may deem appropriate without
consulting Guarantor and without prejudice to or in any way limiting or
lessening the liability of Guarantor under this Guaranty.
If Lessee is a corporation, the undersigned warrant and represent that they
are stockholders, directors or officers and/or are financially or otherwise
interested in Lessee, and, if married, their marital communities are so
interested.
This Guaranty shall not be affected or discharged by the death of the
undersigned, but shall bind Guarantor's heirs and personal representatives, and
shall inure to the benefit of any successors or assigns of Lessor.
This instrument constitutes the entire agreement between Lessor and
Guarantor. No oral or written representation not contained herein shall in any
way affect this Guaranty, which shall not be modified except by the parties in
writing. Waiver by Lessor of any provision hereof in one instance shall not
constitute a waiver as to any other instance.
IMPORTANT: THIS AGREEMENT CREATES SPECIFIC LEGAL OBLIGATIONS. DO NOT SIGN
IT UNTIL YOU HAVE FULLY READ IT. BY SIGNING YOU COMPLETELY AGREE TO ITS TERMS.
IN WITNESS WHEREOF, the undersigned Guarantor(s) has/have executed this
Guaranty this 2nd day of February, 1999.
GUARANTOR: Donald Cameron GUARANTOR:
/s/ DONALD CAMERON
- ------------------------------ ------------------------------
NAME NAME
1109 Sycamore View Dr.
- ------------------------------ ------------------------------
Home Address Home Address
Encinitas, CA 92024
- ------------------------------ ------------------------------
City State Zip City State Zip
X [Illegible}
- ------------------------------ ------------------------------
WITNESS WITNESS
<PAGE> 1
EXHIBIT 10.18
Leasing Company (Lessor): PLAIN LANGUAGE EQUIPMENT LEASE (UNDER $25,000)
- -------------------------------
Advanta Business Services Corp.
1020 Laurel Oak Road
Voorhees, NJ 08043
- -------------------------------
NOTICE: THIS IS A NON-CANCELABLE, BINDING CONTRACT. THIS CONTRACT WAS WRITTEN
IN PLAIN LANGUAGE FOR YOUR BENEFIT. IT CONTAINS IMPORTANT TERMS AND CONDITIONS
AND HAS LEGAL AND FINANCIAL CONSEQUENCES TO YOU. PLEASE READ IT CAREFULLY: FEEL
FREE TO ASK QUESTIONS BEFORE SIGNING.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] (Attach separate Schedule "A" if necessary)
- ------------------------------------------------------------------------------------------------------------------------------------
See Attached Schedule "A"
VENDOR'S NAME
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] corporate name.)
- ------------------------------------------------------------------------------------------------------------------------------------
Company Name Telephone No.
Interactive Telesis, Inc. 760-704-4349
- ------------------------------------------------------------------------------------------------------------------------------------
Billing Address Equipment Location (if other than Billing Address)
535 Encinitas Blvd. #116
Encinitas, CA
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF TOTAL NUMBER OF AMOUNT OF EACH DUE AT SIGNING OF LEASE END OF LEASE PURCHASE OPTION
LEASE RENTAL PAYMENTS PAYMENT [ ] Advance Payment $ __________ [ ] Fair Market Value Purchase Option
[X] Security Deposit $ 1,589.86 [ ] Fixed Price Purchase Option of $1.00
36 36 $794.93 [ ] Other $ __________ [X] Fixed Price Purchase Option of 10% of
(IN MONTHS) (Plus Applicable [ ] Total Payment $ __________ Total Cash Price
Taxes)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TERMS AND CONDITIONS
1. LEASE CHARGES. You ("Lessee") agree to lease from us ("Lessor") the above
equipment for the periodic payment amount and for the full term stated above.
That amount is based on the estimated cost of all equipment and shipping
charges, and you agree that it may be adjusted upward if the actual cost
exceeds this estimate. We may charge you a partial payment for the time between
the delivery date and the due date for the first payment. If any payment is
late, we may charge you a late fee of $25.00 or 15% of the amount that is late,
whichever is greater. You agree to return the equipment to us at your cost at
the end of the lease unless we have given you a purchase option above and you
exercise the option at that time. If you don't exercise the option or return
the equipment, this lease will continue for the same terms on a monthly basis.
2. OTHER IMPORTANT TERMS. THIS LEASE IS AN UNCONDITIONAL OBLIGATION AND CANNOT
BE CANCELED BY YOU FOR ANY REASON, INCLUDING EQUIPMENT FAILURE, LOSS OR DAMAGE.
You may not revoke acceptance of the equipment. You, not we, selected the
equipment and the vendor. We are not responsible for equipment failure or the
vendor's acts. You are leasing the equipment "as is", and we disclaim all
warranties, express or implied, including compliance with all Year 2000 issues.
We are not responsible for service or repairs. Any warranties the vendor gave
to us, if any, we hereby assign (pass) to you. You may contact the vendor for a
statement of such warranties, if any. You certify to us that the equipment will
be used by you solely for business purposes and not for personal or household
purposes.
3. TITLE. We will have title to the equipment during this lease. You agree this
is a "true lease", not a sale or a loan. However, if this lease is determined
not to be a "true lease," you hereby grant us a security interest in the
equipment. You hereby give us power of attorney to sign and file financing
statements in order to perfect this security interest in our favor. You also
agree to pay our filing and other administrative and processing fees. You agree
this is a "finance lease" under Article 2A of the Uniform Commercial Code.
4. LOSS; DAMAGE; INSURANCE. You are responsible for and accept the risk of loss
or damage to the equipment. You agree to keep the equipment insured against all
risks of loss in an amount at least equal to the replacement cost, and you will
list us as loss payee and give us written proof of this insurance. If you do
not give us such proof, we may (but will not be obligated to) obtain other
insurance and charge you a fee for it, or we may charge you a monthly risk
charge equal to 0.25% of the original equipment cost.
5. TAXES AND OTHER FEES; INDEMNIFICATION. You agree to reimburse us for all
taxes (such as sales, use and property taxes) and charges in connection with
the ownership and use of the equipment. Unless we have given you a purchase
option for $1.00 at the end of the lease, you agree that we are entitled to any
and all tax benefits (such as depreciation and tax credits), and you will not
do anything inconsistent with this understanding. If you do, you will indemnify
(reimburse) us for our resulting losses. You also agree to indemnify us for all
losses and liabilities arising out of the ownership or your use of the
equipment. These promises will continue after this lease ends.
6. DEFAULT. If you fail to pay us as agreed, we will have the right to (i) sue
you for all past due payments and all payments to become due in the future for
the unexpired term, plus the residual value we have placed on the equipment and
other charges you owe us, and/or (ii) repossess the equipment. You will also
pay for our reasonable collection and legal costs. This lease is governed by
New Jersey law, and you agree to be subject to suit in New Jersey.
7. ASSIGNMENT. You may not assign this lease or sublease the equipment to
anyone else. You agree that we may sell or assign any of our interests without
notice to you. In that event, the assignee will have such rights as we assign
to them but none of our obligations (we will keep those obligations), and the
rights of the assignee will not be subject to any claims, defenses or set-offs
that you may have against us or another person.
8. MISCELLANEOUS. You authorize us to share credit and other information about
you and your company with our affiliates unless you write to us. For your
convenience, we may accept a facsimile copy of this lease with facsimile
signatures. You agree a facsimile copy will be treated as an original and will
be admissible as evidence of this lease.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
X AUTHORIZED SIGNATURE /s/ DONALD CAMERON Date 3-30-99 Witness /s/ [SIGNATURE ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
Print Name and Title Donald Cameron, President
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
I/WE INDIVIDUALLY, PERSONALLY, ABSOLUTELY AND UNCONDITIONALLY GUARANTY ALL PAYMENTS AND OTHER OBLIGATIONS OWED TO THE LEASING
COMPANY UNDER THIS LEASE AND THIS GUARANTY. I/WE AGREE THAT THE LEASING COMPANY MAY PROCEED DIRECTLY AGAINST ME/US WITHOUT FIRST
PROCEEDING AGAINST THE LEASING CUSTOMER OR THE EQUIPMENT. I/WE CONSENT TO PERSONAL JURISDICTION IN THE NEW JERSEY COURTS.
- ------------------------------------------------------------------------------------------------------------------------------------
X SIGNATURE (INDIVIDUALLY: NO TITLES) /s/ DONALD CAMERON Date 3-30-99 SIGNATURE (INDIVIDUALLY: NO TITLES) Date
- ------------------------------------------------------------------------------------------------------------------------------------
Donald Cameron
1109 Sycamore View, Encinitas, CA 92024
GUARANTOR #1 Name and Home Address (Please Print) GUARANTOR #2 Name and Home Address (Please Print)
- ------------------------------------------------------------------------------------------------------------------------------------
THE LESSEE HEREBY CERTIFIES THAT ALL EQUIPMENT REFERRED TO ABOVE HAS BEEN DELIVERED, IS FULLY INSTALLED AND IT IS IN GOOD OPERATING
ORDER. LESSEE UNCONDITIONALLY ACCEPTS THE EQUIPMENT AND REQUESTS THAT LEASING COMPANY SIGN THIS LEASE AND PAY THE EQUIPMENT VENDOR.
X 3/30/99 X /s/ DONALD CAMERON X 3-30-99
- --------------------- --------------------------------------- ------------------------
DATE OF DELIVERY AUTHORIZED SIGNATURE TITLE
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
By: Title: Date: Lease #:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
SCHEDULE "A"
EQUIPMENT SCHEDULE
DELL
ONE DELL WAY
ROUND ROCK, TX 78682
(1) Dell Dimension V350 Pentium II Processor
(1) Mouse
(1) Keyboard
(1) 128MB SDRAM
(1) 3 Com Us Robotics V.90 PCI Telephony Winmodem
(1) 40X Max Variable CD ROM
(1) Dell 800F Series 15" Model 828FI
(1) 8.4GB Ultra ATA Hard Drive 5400RPM
(1) 3.5 1.44 MB Floppy Drive
(1) ConnectDirect 3.0 CD
(1) McAfee Virus Scan
(1) Windows 98
(1) Intel 10/100 Integrated PCI Ethernet Controller
(1) Inspiron 3500 A266T Dixon 13.3" XGA Active Matrix Display
(1) Nylon Carrying Case
(1) Port Replicator Inspiron 3500
(1) Dell Inspiron 3500 Setup Video Packaged with System
(1) 32MB 1DIMM 64MB 1 Dimm 96 Total
(1) 10/24X Internal CD Rom Inspiron 3500
(1) 3.2GB Hard Drive 9.5MM
(1) Connect Direct 2.0
(1) Windows 98
(1) 56K Modem/Lan 10/100 Combo Card
(1) Office
(1) Dell Power Edge 2300 Base 350 Mhz Processor with 512 Cache
(1) Logitec System Mouse with Driver Disks
(1) External SCSI Device Cable/Port
(1) Keyboard
(1) Dell PowerEdge Processor Terminator Card
(1) 512MB RAM 4 Dimms
(1) 1/6 Hot Pluggable Backplane
(1) 14/32x SCSI CD-ROM
(1) Seagate Bup Exec v7.0
(1) Raid 5 Hard Drive Config
(1) 1.44MB Floppy Drive
(1) 12/192GB DDS-3 Auto Loader
(1) PERC2/SC Single Channel RAID Card16MB Cache
(6) 4.5 GB LVD SCSI Hard Drive
(1) Autoloader Software Option and Single Server Backup Exec
(1) Intel Pro 100 Plus Ethernet Network Card
(1) Microsoft NTS 4.0
Page 1 of 2
<PAGE> 3
Digitape Systems Inc.
19320 Londelius Street
Northridge, CA 91324
(1) ODI/T490E/103246-001/08/EXT SCSI Tape Drive
(1) Nova/Novaexchange 708013161014/Cable Tape Software
Lessee hereby certifies that the description of personal property set forth
above constitutes an accurate account of the Equipment, as such is defined
in the Lease Rental Agreement of which this Schedule is a part.
Lessee: Interactive Telesis, Inc. Lessor: Advanta Business Services Corp.
<TABLE>
<S> <C>
By: X /s/ DONALD CAMERON By:
---------------------------- -----------------------------
Donald Cameron
Title: President Title:
-----------------------------
Date: X 3/30/99 Date:
-----------------------------
</TABLE>
Page 2 of 2
<PAGE> 1
EXHIBIT 10.19
FFSI
FORD FINANCIAL SERVICES, INC.
LEASE SCHEDULE NO. 003
to
MASTER LEASE AGREEMENT NO.: B01060898SD
(including all supplements and addenda the "Lease")
dated as of
THE 13TH DAY OF AUGUST, 1998
between
FORD FINANCIAL SERVICES, INC. ("LESSOR")
and
INTERACTIVE TELESIS, INC. ("LESSEE")
***************************************************************
TERMS AND CONDITIONS
1. LEASE. All terms used herein shall have the same meaning as set forth
the Lease. The items of Equipment described on Exhibit "A", attached hereto and
incorporated herein by this reference, are hereby Leased on the terms specified
herein and in the Lease which by this reference are incorporated in this
Schedule.
2. TERM AND COMMENCEMENT DATE. The term of this Lease is for THIRTY-SIX
(36) MONTHS, is nonterminable and shall commence on the date Lessee signs the
Delivery and Acceptance Certificate relating to the Equipment ("Acceptance
Date").
3. RENT. Lessee shall pay Rent to Lessor for the Equipment as follows:
$3,065.64 PER MONTH FOR 36 MONTHS.
The payment of "Per Diem Rent" (calculated as one-thirtieth (1/30) of the
monthly Rent amount) hereunder shall begin on the Acceptance Date and shall
continue until the "Rent Commencement Date," which shall be a date chosen by the
Lessor that is within thirty (30) days following the Acceptance Date. The first
and last payment(s) of Rent shall be due and payable on the Rent Commencement
Date. All subsequent Rent payments shall be due and payable on the same day of
each succeeding calendar month thereafter until all obligations of Lessee under
the Lease have been paid in full.
Rental payments shall be paid to:
FORD FINANCIAL SERVICES, INC.
12520 HIGH BLUFF DR., STE. 120
SAN DIEGO, CALIFORNIA 92130
ATTN: LEASE DEPARTMENT
or such other addresses that may be designated by written notice given in the
manner prescribed in the Lease.
4. LOCATION OF EQUIPMENT:
INTERACTIVE TELESIS, INC.
535 ENCINITAS BLVD., SUITE 116
ENCINITAS, CALIFORNIA 92024
5. ADVANCE RENTAL. Upon the execution of this Schedule, Lessee shall
pay to Lessor as Advance Rental(s) and Deposit(s) in an amount equal to
$6,131.28. Upon Acceptance by Lessor of this Schedule, the Advance Rental(s) and
Deposit(s) shall become non-refundable. Upon execution of the Delivery and
Acceptance Certificate the Advance Rental(s) and Deposit(s) shall be applied to
the First and Last month's Rent and any Deposit(s) required and any Per Diem
Rent due under this Schedule. After Acceptance of this Schedule by Lessor, if
Lessee does not consummate this transaction, including, but not limited to,
Lessee's rejection or refusal to Accept any item of Equipment pursuant to this
Schedule, Lessor may retain the Advance Rental(s) and Deposit(s) as liquidated
damages.
6. STIPULATED LOSS VALUE. If this Schedule contains a Stipulated Loss
Value of the Equipment, the Stipulated Loss Value of each item of Equipment as
of each rental payment date in respect thereto shall be that percentage of
Purchase Price of such item of Equipment as set forth due and including such
date. The Purchase Price of the Equipment (including any applicable sales or
use taxes and charges for transportation, assembly and/or installation) is
$94,327.37.
<PAGE> 2
7. COUNTERPARTS. Three (3) counterparts of this Schedule have been
executed by the parties hereto. One counterpart has been designated "Lessor's
Copy." One counterpart has been designated "Lessee's Copy. One counterpart has
been designated "File Copy." Only the counterpart marked "Lessor's Copy" along
with the original or a photocopy of the Lease evidence Lessee's monetary
obligations hereunder and therefore constitutes chattel paper under the Uniform
Commercial Code. Notwithstanding the foregoing, if Lessor's Copy of this Lease
shall become lost, mutilated or destroyed, Lessor may prove this Lease by
photocopies hereof, or by Lessee's Copy.
8. END OF TERM PROVISION. The Lessor, at its option, may grant to
Lessee the option to purchase all of the equipment set forth in said Lease
Schedule upon the termination of the initial Lease Schedule Term, provided,
however, that the Lessee has performed all conditions of said Lease and that an
"Event of Default" has not occurred. Not withstanding the foregoing, the Lessor
shall have the option to require the Lessee to purchase the equipment upon the
full expiration of the Lease Schedule Term for its then Fair Market Value
("FMV"). Lessee hereby agrees that the Fair Market Value shall be based upon an
appraisal provided by an appraiser of the Lessors selection. Should Lessor so
require, Lessee hereby guarantees a minimum payment of $9,432.74 plus applicable
taxes.
LESSOR: FORD FINANCIAL SERVICES, INC. LESSEE: INTERACTIVE TELESIS, INC.
By: /s/ [signature illegible] By: /s/ DONALD E. CAMERON
------------------------------------- --------------------------------
Donald E. Cameron
Title: [Copy Illegible] DATE 19-April, 1999 Title: President DATE 4/19/99
<PAGE> 3
F F S I
FORD FINANCIAL SERVICES, INC.
EXHIBIT A
Page 1 of 5
Attached to and forming a part of the following documents: LEASE SCHEDULE
NUMBER 003 under that certain MASTER LEASE AGREEMENT NUMBER; B1060898SD dated
the 13TH day of AUGUST, 1998 Certificate of Acceptance and UCC-1 Financing
Statement to the referenced Lease Schedule, and any addenda thereto by and
between FORD FINANCIAL SERVICES, INC., as Lessor, and INTERACTIVE TELESIS, INC.,
as Lessee.
The Lease Schedule referenced above is incorporated herein by this
reference. All terms used herein which are defined in the Lease shall have the
same meaning herein.
Lessee is hereby instructed to contact the Supplier referenced below for
a description of any rights Lessee may have under the Supply Contract covering
the Equipment.
<TABLE>
<CAPTION>
SUPPLIER QUANTITY EQUIPMENT DESCRIPTION MODEL NUMBER SERIAL NUMBER PURCHASE PRICE
- -------- -------- --------------------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
PARAGON 8 001-061 D/240SC-T1 Voice Board 3,950.00 31,600.00T
DT082440
DT082441
DT082442
DT082443
DT082444
DT082445
DT082446
DT082447
F&H Freight & Handling 122.00 122.00
Sales Tax 7.75% 2,449.00
DELL
| US English, Factory Install 412-6890
1 | America Online, CD and
| Documentation, US English,
| Not Factory Installed 420-0162
1 | Windows 98' CD for Inspiron
| 7000, Factory Install 430-0901
1 | 3COM 10/100, Cardbus LAN Card,
| FOR Dell Inspiron Notebooks,
| Factory Install 900-5330
1 | Portable Rapid Response,
| Initial Year, PCSS 900-5332
1 | Portable Rapid Response,
| 2 Year Extended, PCSS 412-0072
1 | MS Office Small Business
| Edition 97.2,
| CD & No Printed Material,
| US English, Factory Install 412-0524
1 | MS Office 2000 Small Business
| Upgrade Flyer, US, English 412-1398
1 | MS Bookshelf 99, CD & Documents
| US English, Factory Install,
| OEM Product
|
1 | Inspiron P300LT, Pentium II, 200-0917 3,940.00 3,940.00
| 15" XGA Active Matrix
| Display, Floppy Drive Included
1 | Port Replicator for all 310-0155
| Inspiron 7000, Factory Install
1 | Nylon Carrying Case, 310-0219
| Universal, Non-US for Dell
| Inspiron Notebookds, Packaged
| with System
1 | Dell Inspiron 7000 Setup Video 310-1221
| Packaged with System, Factory
| Install
</TABLE>
<PAGE> 4
EXHIBIT A
Page 2 of 5
<TABLE>
<CAPTION>
EQUIPMENT MODEL SERIAL PURCHASE
SUPPLIER QUANTITY DESCRIPTION NUMBER NUMBER PRICE
- -------- -------- ----------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
1 160MB SDRAM, 3DIMMs, Memory 311V0589
for Inspiron 7000,
Factory Install
1 56K Internal Modem, for 313-0195
Inspiron 7000, Factory Install
1 4XDVD + Floppy Drive and 313-0482
Internal MPEG-2 Decoder Card,
Inspiron 7000, Factory Install
1 ATI 8MB Video Card for 320-0061
Inspiron 7000,
Factory Install
1 14GB Hard Drive 17MM, 340-1804
Inspiron 7000, Factory Install
1 ConnectDirect 3.0,CD, 412-0200
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1 1 Dell PowerEdge 4300 Redundant [Copy Illegible]. PIID. 220-3035 EX 20276.00 20276.00
400MHz Processor with 512K Cache
1 1 Logtec System Mouse w/ Driver Disks, Factory Install 310-0016
1 1 Rack Option, Rails for Dell PowerEdge 4300/6300, 310-0180
Factory Install
1 1 Keyboard, Factory Install 310-7002
1 1 8 Bay Hard Drive Backplane, 1.6" or 1.0", for Dell 311-0485
PowerEdge 6300, Factory Install
1 1 Dell PowerEdge 4300 400MHz, 512K Second Processor, 311-0605
Factory Install
1 1 1GB DRAM, 2 X 512MB DIMMs, Factory Install 311-0639
1 1 14/32X SCSI CD ROM, for Dell PowerEdge 4300/6300, 1st CD 313-0252
Option, Factory Install
1 1 Monitor Option - None 320-3316
1 1 1.44MB, 3.5" Floppy Drive, for Dell PowerEdge 4300/6300 340-0608
Factory Install
1 1 12/24GB DOS-3 Autoloader (192GB Total Capacity) Tape 340-0610
Backup for Dell PowerEdge 6300 Factory Install
1 1 PERC2 Four Channel RAID Card, 64MB Cache, One Channel to 340-1031
the Backplane, for Dell PowerEdge 4300/6300 Factory Install
1 1 18GB LVD SCSI Smart Hard Drive 10000RPM, for Dell 340-1113
PowerEdge 6300, Factory Install
1 1 18GB LVD SCSI Smart Hard Drive 10000RPM, for Dell 340-1113
PowerEdge 6300, Factory Install
1 1 18GB LVD SCSI Smart Hard Drive 10000RPM, for Dell 340-1113
PowerEdge 6300, Factory Install
1 1 18GB LVD SCSI Smart Hard Drive 10000RPM, for Dell 340-1113
PowerEdge 6300, Factory Install
1 1 Config #4, RAID 5, for Dell PowerEdge 4300 340-5948
Factory Install
1 1 READYWARE INSTALLATION FEE 365-1234
1 1 Backup Exec-Single Server Edition for NT (7.2) and 420-0184
Netware (8.0), Factory Install
1 1 Autoloader Software Option and Single Server Backup Exec 420-0187
7.2/8.0NW, for PowerEdge Servers, Factory Install
1 1 Intel Pro 100 Plus Ethernet Network Card. 430-0111
Factory Install
1 1 Intel Pro 100 Plus Ethernet Network Card. 430-0111
Factory Install
1 1 Microsoft NTS 4.0 on CD. 10 Client Access Licenses 430-2185
OEM Packaging, US Version, Factory Install
1 1 *SelectCare, Next Business Day On-Site Service, Initial 900-1300
Year, Wang
1 1 *SelectCare, Next Business Day On-Site Service, 2 Year 900-1302
Extended, Wang
1 1 Install NT Server as Primary Domain Controller 365-5615
1 1 *BusinessCare Initial Year, DirectLine - Advanced Network 900-4915
Operating System Phone Support Quantity 5 Resolutions
------SHIPPING/HANDLING CHARGE------
</TABLE>
<PAGE> 5
EXHIBIT A
Page 3 of 5
<TABLE>
<CAPTION>
EQUIPMENT MODEL SERIAL PURCHASE
SUPPLIER QUANTITY DESCRIPTION NUMBER NUMBER PRICE
- -------- -------- -------------------------------------------------------------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
8 8 Dell Dimension XP-3 F445OMHz Pentium II Processor at 450MHz 220-1480 EA 1827.00 14616.00
Minitower
8 8 Intelimouse. Factory install 310-0050
8 8 Thank you for choosing Dell. Included in your order is a 310-3180
Dell Mouse Pad.
8 8 Keyboard. Factory install 310-7002
8 8 256MB, 3DRAM Memory, Factory install 311-6377
8 8 No modem requested for Dell Dimension 313-3607
8 8 No Speaker Requested 313-4514
8 8 No Sound Requested 313-4515
8 8 32X Max. Variable CD-ROM Drive, Factory install 313-6500
8 8 Video ready option w/o monitor 320-5000
8 8 10MB 8TB nVideo TNT SD AGP Graphics Card Factory Install 320-3540
8 8 8.4GB Ultra ATA Hard Drive 5400RPM Factory Install 340-4882
8 8 3.5 144MB Floppy Drive, Factory Install 340-7016
8 8 Microsoft Internet Explorer v4.01., CD, English Factory Install 420-0155
8 8 Microsoft Windows NT, Workstation, 4.0, Factory Install 420-6111
8 8 3COM 3C905B Fast Etherlink XL 10/100 PCI NIC, Factory Install 430-3034
8 8 "SelectCare, [ILLegible copy], Next Business Day On-Site 900-1600
Service Contract, 83C"
8 8 "Next Business Day, Parts Delivery Service, Years 2 & 3 included 900-6112
8 8 MS Office Small Business Edition 97.2 412-0071
CD & No. Printed Manual, US English, Factory Install
8 8 MS Encarta Encyclopedia 99, CD & Doc. US English, Factory Install 412-0301
8 8 MS Office 2000 Small Business Upgrade Flyer, U.S. English 412-0524
********** SHIPPING/HANDLING CHARGE ********** 720.00
1 1 Inspiron P300LT, Pentium II 15"XGA Active Matrix Display, 220-0917 EA 3533.00 3533.00
Floppy Drive included
1 1 Part Replicator for all Inspiron 7000, Factory Install 310-0155
1 1 Nylon Carrying Case, Universal Non-US for Dell 310-0219
Inspiron Notebooks, Packaged with System
1 1 Dell Inspiron 7000 Setup Video Packaged with System Factory 310-1221
Install
1 1 1287MB SDRAM 2DiMMs, Memory for Inspiron 7000, Factory Install 310-1221
1 1 56K Internal Modem for Inspiron 7000. Factory Install 313-0195
1 1 2XDVD - Floppy Drive and Internal MPEG-2 Decoder Care, for 313-0381
Inspiron 7000. Factory Install
1 1 ATI 4MG Video Card for Inspiron 7000. Factory Install 320-0080
1 1 6.4GB Hard Drive 12.6MM, for Inspiron 7000, Factory Install 320-0060
1 1 ConnectDirect 3.0 CD. US English, Factory Install 412-0200
1 1 America Online, CD and Documentation, US English, 412-6890
Not Factory Installed
1 1 Windows '98 CD for Inspiron 7000, Factory Install 420-0182
1 1 3COM 10/100 Cardbus LAN Card. FOR Dell Inspiron Notebooks, 430-0901
Factory Install
1 1 "Portable Rapid Response" Initial Year PCSS 900-5330
1 1 "Portable Rapid Response" 2 Year Extended, PCSS 900-5332
1 1 MS Office Small Business Edition 97.2 412-0072
CD & No Printed Manual, US English, Factory Install
1 1 MS Office 2000 Small Business Upgrade Flyer, US English 412-0524
1 1 MS Bookshelf 99. CD & Documents US English. Factory Install, 412-1398
OEM Product
********** SHIPPING/HANDLING CHARGE ********** 35.00
1 1 Dell PowerEdge 2300 Base, PIID, 400MHz Processor with 512K 220-3172 EA 7697.00 7697.00
Cache
1 1 Logtec System Mouse w/Driver Disks, Factory Install 310-0016
1 1 Keyboard, Factory Install 310-7002
1 1 Dell Power Edge, Processor Terminator Card. Factory Install 311-0247
1 1 512MB RAM, 4 DIMMs, for Dell PowerEdge 2300, Factory Install 311-0440
1 1 1X6 Hot Pluggable Backplane for Dell PowerEdge 2300, 311-0446
Factory Install
</TABLE>
<PAGE> 6
EXHIBIT A
Page 4 of 5
<TABLE>
<CAPTION>
Equipment Model Serial Purchase
SUPPLIER Quantity Description Number Number Price
<S> <C> <C> <C> <C> <C> <C>
1 1 14/32X SCSI CD-ROM, for Dell PowerEdge 2300, Black, 313-0264
Factory Install
1 1 Monitor Option-None 320-0058
1 1 Hard Drive Configuration #1, all On Board, Hard Drive 340-0543
Increasing Order, for Dell PowerEdge 2300, Factory Install
1 1 1.44MB Floppy Drive for Dell PowerEdge 2300, 340-0551
Factory Install
1 1 12/192GB DDS-3 Auto Loader for Dell PowerEdge 2300, Black, 340-0785
Factory Install
1 1 9.1GB LVD SCSI Hard Drive for Dell PowerEdge 2300 340-0931
Server, Factory Install
1 1 9.1GB LVD SCSI Hard Drive for Dell PowerEdge 2300 340-0931
Server, Factory Install
1 1 ReadyWare Factory Installation Service 365-1234
1 1 Backup Exec-Single Server Edition for NT (7.2) and 420-0184
NetWare (8.0), Factory Install
1 1 Autoloader Software Option and Single Server Backup Exec 420-0187
7.2/8.0NW for PowerEdge Servers, Factory Install
1 1 Intel Pro 100 Plus Ethernet Network Card, 430-0111
Factory Install
1 1 Microsoft NTS 4.0 on CD, 10 Client Access Licenses, 430-2185
OEM Packaging, US Version, Factory Install
1 1 *SelectCare, Next Business Day On-Site Service, Initial 900-1300
Year, Wang
1 1 *SelectCare, Next Business Day On-Site Service, 2 Year 900-1302
Extended, Wang
******** SHIPPING/HANDLING CHARGE ******** 90.00
3 3 VIEWSONIC E651.15* (14"VIS) SHADOW MASK MONITOR E651.2 37498-43 EA 183.95 551.85
******** SHIPPING/HANDLING CHARGE ******** 39.37
1 Dell PowerEdge 1300 Base, 220-0650 4,116.00 4,116.00
350MHz/512K Cache
1 Logitec System Mouse 310-0016
w/Driver Disks, Factory Install
1 Documentation, English, for Dell PowerEdge 1300, 310-0326
Factory Install
1 Keyboard, Factory Install 310-7002
1 256MB RAM, 2 DIMMs, for Dell PowerEdge 2300, 311-0437
Factory Install
1 Terminator Card, 100MHz, for Dell PowerEdge 1300, 311-0655
Factory Install
1 14/32X, CD-ROM, Internal, Black, for Dell PowerEdge 1300, 313-0360
Factory Install
1 Monitor Option-None 320-0058
1 9.1GB LVD Hard Drive, First, for Dell PowerEdge 1300, 340-1466
Factory Install
1 9.1GB LVD SCSI Hard Drive, Additional, 340-1469
for Dell PowerEdge 1300, Factory Install
</TABLE>
<PAGE> 7
EXHIBIT A
Page 5 of 5
<TABLE>
<CAPTION>
Equipment Model Serial Purchase
SUPPLIER Quantity Description Number Number Price
<S> <C> <C> <C> <C> <C> <C>
1 9.1GB LVD SCSI Hard Drive, Additional, 340-1469
for Dell PowerEdge 1300, Factory Install
1 PERC2/SC Single Channel RAID Card, 16MB Cache, 340-1478
Cabled to the Backplane, for Dell PowerEdge 1300,
Factory Install
1 Hard Drive Configuration RAID 5, 340-1566
for Dell PowerEdge 1300, Factory Install
1 3.5", 1.44MB Floppy Drive, for Dell PowerEdge 1300, 340-1711
Factory Install
1 READYWARE INSTALLATION FEE 365-1234
1 No Operating System, Contains Utility Partition, 420-0136
1 Intel Pro 100 Plus Ethernet Network Card, 430-0111
Factory Install
1 SelectCare, Next Business Day On-Site Service, 900-1300
Initial Year, Wang
1 Next Business Day, Parts Delivery Service 900-5112
</TABLE>
EQUIPMENT LOCATION:
INTERACTIVE TELESIS, INC.
535 ENCINITAS BLVD., SUITE 116
ENCINITAS, CALIFORNIA 92024
LESSEE (Initial)
------------
LESSOR (Initial)
------------
<PAGE> 1
EXHIBIT 10.20
Lessor:
Advanta Bank Corp. NOTICE: THIS IS A NON-CANCELLABLE, BINDING CONTRACT
1020 Laurel Oak Road CONSISTING OF ALL TERMS ON BOTH SIDES. THIS CONTRACT
Voorhees, NJ 08043 WAS WRITTEN IN PLAIN LANGUAGE FOR YOUR BENEFIT. IT
CONTAINS IMPORTANT TERMS AND CONDITIONS AND HAS LEGAL
AND FINANCIAL CONSEQUENCES TO YOU. PLEASE READ IT
CAREFULLY; FEEL FREE TO ASK QUESTIONS BEFORE SIGNING.
- -------------------------------------------------------------------------------
EQUIPMENT LEASE AGREEMENT
- -------------------------------------------------------------------------------
DESCRIPTION OF LEASED EQUIPMENT (Include quantity, make, model, serial no. and
all attachments)
- -------------------------------------------------------------------------------
(1) ARC SERVE ENTERPRISE BACK-UP SYSTEM
- -------------------------------------------------------------------------------
VENDOR'S NAME
Zzyzx Peripherals, Inc.
- -------------------------------------------------------------------------------
Schedule Of Rental Payments
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TERM OF LEASE (IN MONTHS) TOTAL NUMBER OF RENTAL PAYMENTS AMOUNT OF EACH PAYMENT* SECURITY DEPOSIT*
<S> <C> <C> <C>
36 36 $912.40 $1,824.80
(Plus Applicable Taxes)
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
PAYMENT FREQUENCY [ ] Monthly [ ] Quarterly [ ] Other _________ *Make check payable to Lessor
</TABLE>
- -------------------------------------------------------------------------------
Leasing Customer (Lessee): (Complete Legal name. If a corporation, use EXACT
registered corporate name.)
- -------------------------------------------------------------------------------
COMPANY NAME & ADDRESS EQUIPMENT LOCATION (If other than Billing Address
Interactive Telesis, Inc.
535 Encinitas Blvd #116
Encinitas, CA 92024
- -------------------------------------------------------------------------------
YOU (THE LEASING CUSTOMER) ARE REQUESTING THE LEASING COMPANY ("WE," "US" OR
"OUR") TO PURCHASE THE ABOVE EQUIPMENT FOR YOUR USE. TO INDUCE US TO MAKE THIS
PURCHASE, YOU HAVE AGREED TO THE FOLLOWING IMPORTANT TERMS AND CONDITIONS.
1. LEASE. You agree to lease from us and we agree to lease to you the
equipment identified above together with any replacement part, additions or
repairs (the "Equipment") under the terms stated in this Equipment Lease
Agreement (the "Lease"). You authorize us to correct obvious errors in this
Lease and to insert the Lease number, the serial numbers and other data
identifying the Equipment, and other missing terms above (if any) following
your execution of this Lease.
LEASE AGREEMENT CONTINUES ON REVERSE SIDE
BY SIGNING THIS LEASE YOU ACKNOWLEDGE AND AGREE THAT: (i) YOU HAVE HAD AN
OPPORTUNITY TO DISCUSS THE TERMS AND CONDITIONS IN THIS LEASE WITH US BEFORE
SIGNING THIS DOCUMENT; (ii) YOU HAVE READ AND UNDERSTAND THE TERMS AND
CONDITIONS ON THE FRONT AND BACK OF THIS LEASE; (iii) THIS LEASE IS A NET LEASE
THAT CANNOT BE TERMINATED OR CANCELED; (iv) YOU HAVE AN UNCONDITIONAL
OBLIGATION TO MAKE ALL PAYMENTS DUE UNDER THIS LEASE AND YOU CANNOT WITHHOLD,
SET-OFF OR REDUCE SUCH PAYMENTS FOR ANY REASON; (v) THE PERSON SIGNING BELOW IS
A CORPORATE OFFICER, PARTNER, MEMBER OR PROPRIETOR OF YOURS AND IS AUTHORIZED
TO SIGN THIS LEASE AND BIND YOU; (iv) THIS LEASE CONTAINS THE ENTIRE AGREEMENT
BETWEEN THE PARTIES AND NO OTHER ORAL OR WRITTEN AGREEMENTS ARE IN EFFECT; AND
(vii) THIS LEASE MAY NOT BE AMENDED EXCEPT BY A WRITTEN AGREEMENT SIGNED BY
BOTH PARTIES AND WILL BE BINDING ON BOTH PARTIES, THEIR SUCCESSORS AND ASSIGNS.
- -------------------------------------------------------------------------------
Signature Date Telephone No. (Area Code)
X /s/ DONALD CAMERON, President 6/8/99 760-632-1700
- -------------------------------------------------------------------------------
Print Name & Title
Donald Cameron, President
- -------------------------------------------------------------------------------
Witness X [Illegible]
- -------------------------------------------------------------------------------
PERSONAL GUARANTY
- -------------------------------------------------------------------------------
To induce the above Leasing Company to enter into this Lease and purchase the
Equipment for the above Leasing Customer, knowing that the Leasing Company is
relying on this Guaranty as a precondition to entering into this Lease, I (or if
more than one, then all of us, jointly and severally) INDIVIDUALLY, PERSONALLY,
ABSOLUTELY AND UNCONDITIONALLY GUARANTY to the Leasing Company (and any person
or firm the Leasing Company may transfer its interests to) all payments and
other obligations owed by the Leasing Customer to the Leasing Company under the
Lease and any add-on leases and future leases between Leasing Company and
Leasing Customer, including but not limited to the Leasing Company's attorney's
fee and legal costs incurred in enforcing the Lease. I will also pay all
reasonable costs and fees incurred by the Leasing Company in enforcing this
Guaranty. Accounts settled between the Leasing Company and the Leasing Customer
will bind me. I waive notice of demand and notice of default, and I agree that
the Leasing Company may proceed directly against me without first proceeding
against the Leasing Customer or the security (including the Equipment). I
FREELY CONSENT TO PERSONAL JURISDICTION IN THE NEW JERSEY COURTS AND I WAIVE
TRIAL BY JURY. This Guaranty will bind my heirs, representatives and successors.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SIGNATURE (INDIVIDUALLY; NO TITLES) Date SIGNATURE (INDIVIDUALLY; NO TITLES) Date
X /s/ DONALD CAMERON 6-8-99 X
- -------------------------------------------------------------------------------
GUARANTOR #1 Name and Home Address (Please Print) GUARANTOR #2 Name and Home Address (Please Print)
Donald Cameron
1109 Sycamore View
Encinitas, CA 92024
</TABLE>
WITNESS: /s/ W.R. ADAMS 6-8-99 WITNESS:
- -------------------------------------------------------------------------------
DELIVERY AND ACCEPTANCE RECEIPT
- -------------------------------------------------------------------------------
WE (THE LEASING CUSTOMER) CERTIFY THAT ALL EQUIPMENT REFERRED TO ABOVE HAS BEEN
DELIVERED AND IS FULLY INSTALLED. WE ALSO CERTIFY THAT WE HAVE INSPECTED THE
EQUIPMENT AND THAT IT IS IN GOOD OPERATING ORDER AND FIT FOR OUR INTENDED USE.
WE CONDITIONALLY ACCEPT THE EQUIPMENT AND ACKNOWLEDGE THAT IT HAS NOT BEEN
ACCEPTED ON A "TRIAL" BASIS. WE NOW REQUEST THAT THE LEASING COMPANY SIGN THE
LEASE AND PAY THE EQUIPMENT VENDOR. WE UNDERSTAND THE IMPORTANCE OF THIS
CERTIFICATION TO THE LEASING COMPANY PRIOR TO PAYING THE VENDOR, AND WE
UNDERSTAND WE WILL BE PRECLUDED FROM DENYING THE TRUTH OF THIS CERTIFICATION IN
THE FUTURE.
- -------------------------------------------------------------------------------
Signature Date Name and Title (Please Print)
X /s/ DONALD CAMERON 6-8-99 Donald Cameron, President
- -------------------------------------------------------------------------------
<PAGE> 2
PUT Addendum to Equipment Lease Agreement
(End of Lease Purchase Agreement)
Reference:
Lessor: Advanta Bank Corp.
Lessee: Interactive Telesis, Inc.
App No. ______________ Lease No. _______________
Equipment: (1) ARC Serve Enterprise Back-Up System
Purchase Price: $2,561.76
This PUT Addendum to Equipment Lease Agreement ("Addendum") shall amend
the Equipment Lease Agreement by and between the above lessor ("Lessor") and
the above lessee ("Lessee") with reference to the above lease transaction
("Lease"). All terms and conditions of the Lease not inconsistent with this
Addendum shall be and remain in full force and effect.
1. PUT. Lessee hereby irrevocably and unconditionally agrees to purchase the
above leased equipment covered by the Lease (the "Equipment") for the above sum
(the "Purchase Price") plus all unpaid rentals and other sums due and owing by
the Lessee for the entire term of the Lease, plus any applicable sales tax,
which sum shall be payable on (a) the expiration date of the initial term of
the Lease, or (b) the earlier termination of the Lease, if allowed by Lessor.
Within fifteen (15) days after receipt of the Purchase Price and all other
sums mentioned above, Lessor shall execute and deliver to Lessee a bill of sale
for the Equipment, "AS IS" and "WHERE IS", in its then condition and its then
location, without any warranty or representation (other than as to title) by or
recourse against the Lessor.
The occurrence of an event of default under the Lease shall constitute a
default by Lessee under this Addendum, and Lessee irrevocably and
unconditionally agrees thereupon to immediately pay the Purchase Price to
Lessor, together with all sums due under the Lease.
This Addendum and all rights of Lessor hereunder may be assigned by Lessor
without notice to or consent by the Lessee. Lessee may not assign any of its
rights under this Addendum without the prior written consent of Lessor or its
assignee.
The parties intend and agree that a carbon copy, photocopy, or facsimile
of this document with their signature thereon shall be treated as an original,
and shall be deemed to be as binding, valid, genuine, and authentic as an
original-signature document and writing for all purposes, including all matters
of evidence and the "best evidence" rules.
IN WITNESS WHEREOF, the parties hereto have duly executed this Addendum as
of the date shown below.
<TABLE>
<S> <C>
Witness: LESSEE: Interactive Telesis, Inc.
----------------------------------
(Print name of company)
/s/ [Signature Illegible] 6/8/99 By: /s/ DONALD CAMERON
- --------------------------------- ----------------------------------
(SEAL) (Signature)
Donald Cameron, President
----------------------------------
(Print name and title) (Date)
ACCEPTED BY LESSOR
- ------------------------------
(Signature) (Date)
</TABLE>
<PAGE> 3
[MEDIA CAPITAL OF CALIFORNIA LOGO]
AUTHORIZATION FOR INSURANCE COVERAGE
INS. AGENT LYNN L. LAMBERT-HARTFORD INS CO.
----------------------------------------------------------------------
ADDRESS HOBBS GROUP, LLC
----------------------------------------------------------------------
ONE WORLD TRADE CENTER #1500
----------------------------------------------------------------------
LONG BEACH, CA 90831
----------------------------------------------------------------------
PHONE (562) 435-2259 POLICY # 729UCGK9308
--------------------------------- ---------------------------
RE: INTERACTIVE TELESIS, INC.
Gentlemen:
Media Capital, L.L.C. is about to enter into a Lease Agreement with the above
referenced lessee. In accordance with our Lease Agreement, the lessee is
responsible to provide insurance pertaining to the subject leased equipment, as
follows:
A) The Equipment must be insured against all risks of loss or damage from
every cause whatsoever for not less than the full replacement value of
$26,000 with a deductible not to exceed $500.00
B) Third Party liability and property damage insurance providing
$500,000.00 combined single limit, bodily injury and property damage
coverage relative to the leased equipment.
Media Capital, L.L.C. shall be named as the loss payee and additional insured
on the above described insurance.
As indicated by their signature below, the lessee has authorized Media Capital,
L.L.C. to:
1) Discuss the required insurance with your company; and,
2) Authorize and instruct you, or any other insurance company, to
provide such insurance as is required by our Lease Agreement, at our
sole discretion and without obligation on our part; and,
3) To debit lessee's account for any costs related thereto.
We respectfully request that you immediately provide the herein required
insurance and provide proof of coverage to us by forwarding a copy of a
Certificate of Insurance by fax to 310-823-6295, with the original being sent
by mail. Additionally, should the subject insurance be canceled or modified
before the expiration date, you must give us 30 days notice.
Media Capital, L.L.C. Acknowledged and Agreed to:
Lessee Interactive Telesis, Inc.
By By /s/ DONALD CAMERON
----------------------------- ------------------------------
Robert Skibinski Donald Camerona
Date 6-8-99
----------------------------
<PAGE> 4
INVOICE
PAGE 1
[Z LOGO] INVOICE NUMBER: 0991379-IN
Zzyzx Peripherals, Inc. INVOICE DATE: 06/09/99
Solutions by design
5893 Oberlin Drive ORDER NUMBER: S091224
Suite #102 ORDER DATE: 06/02/99
San Diego, CA 92121 SALESPERSON: 0204
Ph: 619-558-7800 CUSTOMER NO: 0900046
FAX: 619-558-0813
===============================================================================
SOLD TO SHIP TO
===============================================================================
INTERACTIVE TELESIS INTERACTIVE TELESIS
ATTN: ACCOUNTS PAYABLE *WILL CALL*
535 ENCINITAS BLVD, STE 116 SAN DIEGO, CA
ENCINITAS, CA 92024
CONFIRM TO:
DONALD CAMERON-760-632-1700
===============================================================================
<TABLE>
<CAPTION>
CUSTOMER P.O. SHIP VIA F.O.B. TERMS
==================================================================================================================================
<S> <C> <C> <C>
9996 CUST PICK UP SAN DIEGO NET 30 DAYS
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================================================
ITEM NO. UNIT ORDERED SHIPPED BACK ORDER PRICE AMOUNT
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
COA/MPL50LP0MEV EACH 1 1 0 .00 .00
CA Open License Prgm Sol. Kt
COA/ARB601661CC EACH 5 5 0 850.00 4,250.00
ArcserveIT V6.61 Adv Ed. NT, 0
COA/ARB601661C2 EACH 5 5 0 330.00 1,650.00
ArcserveIT V6.61 AE NT, UG 2yr
COA/ARB607661AC EACH 5 5 0 300.00 1,500.00
ArcserveIT WrkGp AE Disaster R
COA/ARB607661A2 EACH 5 5 0 115.00 575.00
ArcserveIT WrkGp AE Dis Rec UG
COA/ARB601661AC EACH 8 8 0 620.00 4,960.00
ArcserveIT V6.61 WkGp B/U Agnt
COA/ARB601661A2 EACH 8 8 0 235.00 1,880.00
ArcserveIT V6.61 WG B/U Agnt 2
COA/ARB613661AC EACH 10 10 0 500.00 5,000.00
ArcserveIT V6.61 WG B/U Agnt 2
CONTINUED
FEDERAL TAX IDENTIFICATION NUMBER 33-0753441
PLEASE VISIT US ON THE INTERNET: www.zzyzx.com INVOICE BALANCE
</TABLE>
<PAGE> 5
INVOICE
PAGE 2
[Z LOGO] INVOICE NUMBER: 0991379-IN
Zzyzx Peripherals, Inc. INVOICE DATE: 06/09/99
Solutions by design
5893 Oberlin Drive ORDER NUMBER: S091224
Suite #102 ORDER DATE: 06/02/99
San Diego, CA 92121 SALESPERSON: 0204
Ph: 619-558-7800 CUSTOMER NO: 0900046
FAX: 619-558-0813
===============================================================================
SOLD TO SHIP TO
===============================================================================
INTERACTIVE TELESIS INTERACTIVE TELESIS
ATTN: ACCOUNTS PAYABLE *WILL CALL*
535 ENCINITAS BLVD, STE 116 SAN DIEGO, CA
ENCINITAS, CA 92024
CONFIRM TO:
DONALD CAMERON-760-632-1700
===============================================================================
<TABLE>
<CAPTION>
CUSTOMER P.O. SHIP VIA F.O.B. TERMS
==================================================================================================================================
<S> <C> <C> <C>
9996 CUST PICK UP SAN DIEGO NET 30 DAYS
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================================================
ITEM NO. UNIT ORDERED SHIPPED BACK ORDER PRICE AMOUNT
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
COA/ARB613661A2 EACH 10 10 0 190.00 1,900.00
ArcserveIT V6.61 WG B/U Agnt 2
COA/ARB605661AC EACH 2 2 0 430.00 860.00
ArcserveIT WG/AE Tape Lib Opt
COA/ARB605661A2 EACH 2 2 0 170.00 340.00
ArcserveIT WG/AE TapeLibOpt 2y
COA/ARB608661AC EACH 1 1 0 620.00 620.00
ArcserveIT V6.61 WG/AE MS BU N
COA/ARB608661A2 EACH 1 1 0 240.00 240.00
ArcserveIT V6.61 WG/AE MS BU N
*H EACH 1 1 0 .00 .00
*F/H EACH 1 1 0 .00 .00
---------
23,775.00
LESS DISCOUNT: .00
FREIGHT CHARGE: .00
SALES/USE TAX: 1,842.57
---------
INVOICE TOTAL: 25,617.57
FEDERAL TAX IDENTIFICATION NUMBER 33-0753441
PLEASE VISIT US ON THE INTERNET: www.zzyzx.com INVOICE BALANCE
</TABLE>
<PAGE> 1
EXHIBIT 10.21
[FP LOGO] FINANCIAL PACIFIC
LEASING, LLC
3901 South Fife, Tacoma, WA 98409
Post Office Box 11309, Tacoma, WA 98411-0309
Phone 800-447-7107 Fax 800-447-7106
<PAGE> 2
[FINANCIAL PACIFIC LEASING LLC LETTERHEAD]
To Our Valued Customer:
Thank you for choosing Financial Pacific Leasing, LLC to assist you with the
financing of your recent equipment acquisition. We value your business and
trust your company will continue to find an added value with our equipment
financing services. If you are considering financing other types of equipment
now or in the future, please contact us. We will be happy to prearrange your
lease financing. The following is a brief explanation of questions often
raised on new lease accounts.
INVOICES
Approximately 18 days before your payment is due you will receive an invoice
from Financial Pacific Leasing, LLC. If for some reason you do not receive an
invoice, please give us a call so we can confirm the mailing information we
have. Should you need any special instructions or descriptions on your invoice,
we will attempt to accommodate your needs.
PERSONAL PROPERTY TAX
You will receive a Personal Property Tax Affidavit from your County Assessor
during the year. The affidavit will have a section where you report equipment
owned by you and also a section for equipment leased by you. To assure that the
County Assessor doesn't assess the leased equipment twice, please list your
leased equipment in the section for leased equipment only. When we receive the
tax statement, we will bill you for the property tax due on your leased
equipment. (Please reference item #23 & #25 of your lease agreement.)
LEASE DOCUMENTS
We have enclosed copies of your new lease documents for your records. Please
refer to these documents for the particulars regarding your leased equipment.
You may wish to keep them convenient for easy reference.
We Appreciate Your Business
<PAGE> 3
AFFINITYFUNDING.com
LEASE INSPECTION/VERIFICATION CERTIFICATE
Lease#: 19447801 Date: 7/8/99 Time: 3:45PM
Lessee Name: INTERACTIVE TELESIS, INC.
Billing Address: 535 ENCINITAS BLVD. #116, ENCINITAS, CA 92024
Equipment Address: SAME
Phone: 760-632-1700 Verification Contact: BILL ADAMS (CONTROLLER &
CORPORATE SECRETARY)
Fax: 760-632-1790 Social Security#: N/A D.O.B.
LESSEE HAS INSPECTED THEIR LEASED EQUIPMENT AND VERIFIED THE FOLLOWING BY
TELEPHONE:
X Lessee has verified the supplier (Vendor) of the leased equipment as ZZYZX
PERIPHERALS, INC. The supplier's (Vendor's) representative is ____.
X All of the equipment covered by the Lease Agreement has been received.
X All of the leased equipment has been installed and is operating
satisfactorily.
X Lessee has been informed that Lessor, AffinityFunding.com (here-in after
also referred to as AFc) is not affiliated with the Vendor, and that Lessor
(AFc) does not warrant the leased equipment in any way, expressed or
implied, and that all service requirements or problems are the
responsibility of the Lessor or Vendor.
X Lessee acknowledges that this is a non-cancelable lease.
X Lessee acknowledges that this lease has been assigned to Lessor (AFc) by
MEDIA CAPITAL ASSOCIATES.
X Lessee has acknowledged that there were no agreements made by the Vendor
to relive the Lessee of this lease obligation at any time for any reason
whatsoever.
X Lessee has been given the option of a payment due date of the 1st or the
15th, Lessee has chosen the 15th of each month. Lessee has been informed
that this lease commences on 7/15/99 and next payment is due 8/15/99.
X Lessee has been given an explanation of billing and interim rental
formula. Interim rental is $158.04. (Monthly payment divided by 30
days=$58.68 per day multiplied by 3 days).
X Lessee has been provided with an explanation of billing and informed that
invoices will be sent out 18 days prior to each due date.
N/A Lessee accepts a copy of this Lease Inspection/Verification Certificate as
notification of ammendment of lease payment to read as follows: Rental $6
_____ Tax $ _____ Total Payment $ _____.
X Lessee has authorized Lessor (AFc) to make payment to the Vendor upon
completion of this certificate.
Inspection/Verification completed by: PAUNIECE SHUCK Title: CONTRACT
ADMINISTRATOR
I had left a message for Donald Cameron on his voice mail to complete
confirmation call. Mr. Cameron forwarded the message to Bill Adams
(Controller & Corporate Secretary) to return my call.
Form # ABFSEINS 3/99 - DOC
<PAGE> 4
ASSIGNMENT
For value received, Media Capital Associates, LLC ("Assignor") hereby assigns
and transfers to Financial Pacific Leasing, LLC and its successors and assigns
("Assignee") all of its rights under and respecting that certain Lease
Agreement (the "Lease") dated July 7, 1999, between Assignor, as Lessor, and
Interactive Telesis, Inc. as Lessee (the "Lessee").
1. Scope of Assignment.
Assignor assigns to Assignee all of its right, title and interest in and to
the Lease and all addenda, including all rights to receive rental and other
payments due and to become due, and all of Assignor's rights and remedies,
thereunder. Assignor assigns all its rights and remedies under the lease
and agrees that Assignee may, in its own or in Assignor's name, undertake
any legal, equitable or other proceedings to enforce the Lessor's rights
under the Lease. Assignor further assigns and transfers to Assignee all of
its right, title and interest (a) with respect to the equipment described
in the Lease (the "Equipment"), including the right, if any, to purchase
the Equipment, and (b) any and all Guaranties of said Lease.
2. Assignor Representations and Warranties. Assignor hereby represents
and warrants to Assignee as follows:
a) The Lease constitutes the entire agreement between Assignor
and the Lessee concerning the subject matter thereof, has been
duly authorized, executed and delivered by Assignor and the
Lessee and is enforceable against each of them in accordance
with its terms, subject to bankruptcy and similar laws. All
signatures, names, addresses, amounts and other statements of
fact contained herein and in the Lease and accompanying
documents are true and correct.
b) Lessee's obligation to pay rentals is not subject to any known
dispute, set-off or counterclaim. Any Guaranty is enforceable
against all guarantors thereunder in accordance with its terms,
subject to bankruptcy and similar laws.
c) Assignor owns the Lease and any Guaranty free and clear of all
liens. Upon payment of the purchase price therefor to the
supplier of the Equipment, the Equipment will be owned by
Assignee free and clear of all liens other than those arising
through Assignee. All of the Equipment has been irrevocably
accepted by the Lessee in good condition.
d) Assignor will comply with any warranties or other obligations
extended by Assignor to Lessee.
e) Lessee's obligation to pay rentals is not subject to any
dispute, set-off or counterclaim. No default or event of default
exists under the Lease. Except as may be acknowledged by the
parties in writing, no rent or other amounts have been prepaid
under the Lease. Except as specified in the Lease, Assignee has
no collateral for Lessee's obligations thereunder.
f) This transaction has not been "rebrokered", as the term is
generally understood in the industry, unless Assignor has
identified the transaction as being rebrokered and has indicated
to Assignee the identity of any party from whom Assignor
received the transaction. The term "rebrokered" includes all
transactions with respect to which it is contemplated that any
remuneration will be paid by Assignor to parties other than
Assignor's employees.
All representations and warranties herein shall survive the consummation of the
transactions contemplated hereby. In the event that any such representations or
warranties are not true, Assignor agrees on demand to pay Assignee an amount
equal to the then-existing value of the remaining payments under the Lease,
plus an amount equal to the expected value of the Equipment at the end of the
Lease, less any unearned income, plus any then-outstanding unamortized
expenses, plus any applicable taxes. Assignor further agrees to indemnify
Assignee against and reimburse Assignee for any and all amounts, claims,
losses, liabilities, judgments, costs, damages or expenses, including
reasonable investigation and attorney fees, suffered, incurred or paid by
Assignee, resulting from the breach of any of Assignor's representations, or
warranties.
3. Assignor Obligations.
Assignee shall acquire none of the obligations of Assignor under the
Lease, it being expressly understood and warranted by Assignor that
all obligations on Lessor's part to be performed pursuant to the
terms of the Lease have been performed by Assignor as of the date of
this Agreement.
4. Scope of Assignor Liability.
Assignor shall not be liable to Assignee, except as provided above,
for any breach by Lessee of Lessee's obligations under the Lease,
including those for the payment of rent, and nothing contained in
this assignment shall be construed as an assumption by Assignor of
the indebtedness of Lessee under the Lease.
<PAGE> 5
5. Audit; Endorsement.
Assignor agrees that the Assignee may, upon reasonable notice, audit
Assignor's books and records relating to the Lease, and may sign and
endorser in Assignor's name any checks, drafts, money orders, notes, or
other remittances received on account of said Lease.
6. Assignor Authority.
Assignor shall have no authority to, and will not accept collections,
repossesses or consent to the return of the Equipment, or modify the terms
of the Lease or cancel or terminate same without Assignee's express
written consent.
7. Non-Waiver of Rights.
Assignee's knowledge now or hereafter of any breach or noncompliance with
any of Assignor's representations, warranties or obligations shall not
constitute a waiver by Assignee of any of its rights with respect to such
breach or noncompliance.
8. Choice of Law; Venues and Jurisdiction; Attorney Fees.
this Assignment shall not be binding until such time as Assignee has
executed the Assignment at its offices in the State of Washington. The
Assignment shall be deemed by the parties to have been consummated in the
State of Washington, and the Assignor consents and acknowledges that by
reason of entering into this Agreement, it has entered into and done
business in the State of Washington. In the event of legal action with
regard to the terms of this assignment, the parties hereto agree that any
court of general jurisdiction in the State of Washington shall have
jurisdiction over such controversy, and that venue in any such action may
be laid in Pierce County, Washington, in any court having subject matter
jurisdiction. In the event of litigation involving this Assignment, the
prevailing party in any such action shall be entitled to be awarded a
reasonable attorney fee, at trial, on appeal and review.
9. Successors and Assigns.
This Assignment shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, personal representatives,
successors and assigns.
10. The parties agree to execute such further documents as may be necessary
to comply with the terms of this agreement.
Dated this 7th day of July, 1999
ASSIGNOR: ASSIGNEE:
Media Capital Associates, LLC Financial Pacific Leasing LLC
6991 East Camelback D-202 PO Box 11309
Scottsdale, AZ 85251 Tacoma, WA 98411-0309
By: /s/ SAMANTHA BUSH By: /s/ KATHERINE J. GRAVES
------------------- --------------------------
Samantha Bush Authorized Representative
<PAGE> 6
ADDENDUM TO LEASE
PURCHASE AND JURISDICTION AGREEMENT
Lease No.: 194478.01
---------------------------------
Lease Date: 7/8/99
---------------------------------
1. PURCHASE AGREEMENT
Upon termination of the above referenced lease, and provided Lessee is not in
default under the terms of the lease:
Lessor agrees to sell, and Lessee hereby agrees to purchase the
equipment described in the above referenced lease for a purchase price
of $5,049.10 plus any applicable taxes and other sums due under the
lease. Lessor and Lessee agree to this modification to paragraph 17 of
the Lease Agreement and further agree to treat the lease as a
financing transaction.
2. JURISDICTION AGREEMENT
THIS LEASE IS MADE IN THE STATE OF WASHINGTON AND IS NOT VALID UNTIL ACCEPTED
BY LESSOR IN TACOMA, WASHINGTON. EXCEPT AS TO LOCAL RECORDING STATUTES, THE
PARTIES EXPRESSLY AGREE THAT THE LEASE, LEASE RATES, RENTAL RATES, FINANCE
CHARGES, EACH GUARANTY, ALL DOCUMENTS EXECUTED IN CONNECTION WITH SAME, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES, SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF WASHINGTON. FURTHER, THE LESSEE
AGREES THAT THE COURTS OF THE STATE OF WASHINGTON SHALL HAVE JURISDICTION OF
ALL SUITS AND ACTIONS ARISING OUT OF THE LEASE, AND ALL DOCUMENTS EXECUTED IN
CONNECTION THEREWITH, AND THAT VENUE OF ANY SUCH ACTION OR SUIT SHALL BE IN
PIERCE COUNTY, STATE OF WASHINGTON.
LESSOR SHALL HAVE THE OPTION OF COMMENCING AN ACTION IN ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND PARTIES TO THE TRANSACTION.
A FACSIMILE OF THIS AGREEMENT WITH SIGNATURE SHALL BE CONSIDERED TO BE AN
ORIGINAL.
LESSOR: LESSEE:
Media Capital Associates, LLC Interactive Telesis, Inc.
BY: /s/ [signature illegible] BY: /s/ DONALD CAMERON
-------------------------- ---------------------------
Donald Cameron
ITS: Operation Mgr ITS: President & Individually
-------------------------- ---------------------------
DATE: 7-7-99 DATE: 6-30-99
-------------------------- ---------------------------
<PAGE> 7
LEASE AGREEMENT LEASE #: 194478.01
- -------------------------------------------------------------------------------
LESSEE
Interactive Telesis, Inc.
Billing Address: 535 Encinitas #116 Encinitas CA 92024 County:
- -------------------------------------------------------------------------------
VENDOR/SUPPLIER
Zzyzx Peripherals Inc. 5893 Oberlin Drive #102 San Diego Ca 92121
- -------------------------------------------------------------------------------
EQUIPMENT DESCRIPTION. Attach separate Addendum if needed.
Quantity Type, Make, Mode & Serial Number
SEE ATTACHED EQUIPMENT LIST
- -------------------------------------------------------------------------------
EQUIPMENT LOCATION. Complete only if equipment will not be located at Lessee's
address above.
Address SAME AS ABOVE County:
- -------------------------------------------------------------------------------
SCHEDULE OF LEASE PAYMENTS
<TABLE>
<CAPTION>
Amount of Each Lease Payment
Lease Term Number of ----------------------------- x Number of Administrative + Security = Initial
(Months) Payments Rental Tax Total Payment Prepayment Fee Deposit Amount Due
- ---------- --------- ------ --- ------------- ---------- -------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36 36 $1,580.37 $0.00 $1,580.37 2 $150.00 $0.00 $3,310.74
</TABLE>
<TABLE>
<S> <C>
Payment Due Date Interim Rent will be billed and calculated as follows: (Monthly Rental Payment divided by 30 days =
[ ] 1st [X] 15th 7/15/99 Daily Rate) x (# of Days Between Acceptance Date
And First Payment Date) = Total Interim Rental
</TABLE>
THIS LEASE IS SUBJECT TO THE TERMS AND CONDITIONS PRINTED HEREON AND ON THE
FOLLOWING PAGES, ALL OF WHICH ARE MADE A PART HEREOF AND WHICH LESSEE
ACKNOWLEDGES HAVING READ. PLEASE READ CAREFULLY BEFORE SIGNING.
THIS LEASE AGREEMENT, WHICH CONSISTS OF 4 PAGES, IS NOT BINDING UNTIL ACCEPTED
BY LESSOR
<TABLE>
<CAPTION>
LESSEE: INTERACTIVE TELESIS, INC. LESSOR: MEDIA CAPITAL ASSOCIATES, LLC
<S> <C>
X /s/ DONALD CAMERON By [ILLEGIBLE]
- ---------------------------------- -----------------------------------
Donald Cameron (Signature Only)
President & Individually
X 6/30/99 Operation Manager
- ---------------------------------- -----------------------------------
(Date) (Title)
</TABLE>
THIS IS A NON-CANCELABLE LEASE FOR THE TERM INDICATED
Lessor, hereby Leases to the Lessee, and Lessee hereby hires and takes from
Lessor all property described in this agreement or hereafter and made a part
hereof.
1. ENTIRE AGREEMENT. This Lease constitutes the entire agreement between
Lessor and Lessee. No oral agreement, guaranty, promise, condition,
representation or warranty shall be binding on Lessor. All prior conversations,
agreements or representations related hereto and/or to said equipment are
integrated herein. No modification hereof shall be binding unless in writing
and signed by Lessor.
2. REPRESENTATIONS. Lessee acknowledges that no salesman or agent of the
supplier of the equipment is authorized to waive or alter any term or condition
of this Lease and no representation as to the equipment or any matter by the
supplier shall in any way effect the Lessee's duty to pay the Lease payments
and perform its other obligations as set forth in this Lease.
3. STATUTORY FINANCE LEASE. Lessee agrees and acknowledges that it is the
intent of both parties to this Lease that it qualify as a statutory finance
Lease under Article 2A of the Uniform Commercial Code. Lessee acknowledges and
agrees that Lessee has selected both: (1) the equipment; and (2) the supplier
from whom Lessor is to purchase the equipment. Lessee acknowledges that Lessor
has not participated in any way in Lessee's selection of the equipment or of
the supplier, and Lessor has not selected, manufactured, or supplied the
equipment.
LESSEE IS ADVISED THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT EVIDENCING THE
LESSOR'S PURCHASE OF THE EQUIPMENT FROM THE SUPPLIER CHOSEN BY LESSEE AND
THAT LESSEE SHOULD CONTACT THE EQUIPMENT SUPPLIER FOR A DESCRIPTION OF ANY
SUCH RIGHTS.
4. ASSIGNMENT BY LESSEE PROHIBITED WITHOUT LESSOR'S PRIOR WRITTEN CONSENT.
LESSEE SHALL NOT ASSIGN THIS LEASE OR ANY INTEREST THEREIN, OR SUBLEASE THE
EQUIPMENT, OR PLEDGE OR TRANSFER THIS LEASE, OR OTHERWISE DISPOSE OF THE
EQUIPMENT COVERED HEREBY.
5. APPLICABLE LAW AND VENUE. ALL MATTERS INVOLVING THE CONSTRUCTION, VALIDITY,
PERFORMANCE, OR ENFORCEMENT OF THIS LEASE SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF WASHINGTON, LESSEE CONSENTS TO THE PERSONAL JURISDICTION OF THE COURTS
OF THE STATE OF WASHINGTON AND AGREES THAT AT LESSOR'S SOLE OPTION,
JURISDICTION AND VENUE (LOCATION) FOR ANY DISPUTE, SUIT OR ACTION ARISING UNDER
OR IN RELATION TO THE LEASE, AND ALL DOCUMENTS EXECUTED IN CONNECTION
THEREWITH, SHALL BE IN PIERCE COUNTY, STATE OF WASHINGTON. LESSOR SHALL HAVE
THE OPTION OF COMMENCING AN ACTION IN ANY COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER AND PARTIES TO THE TRANSACTION.
CONTINUED ON FOLLOWING PAGES
Page 1 of 4 Page Lease Agreement
<PAGE> 8
6. NO WARRANTY. Lessee has selected both equipment and the supplier thereof.
Lessor, not being the manufacturer of the equipment, nor manufacturer's agent,
MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE
FITNESS FOR A PARTICULAR USE OF OTHERWISE, QUALITY, DESIGN, CONDITION, CAPACITY,
SUITABILITY, MERCHANTABILITY OR PERFORMANCE OF THE EQUIPMENT OR OF THE MATERIAL
OR WORKMANSHIP THEREOF, IT BEING AGREED THAT THE EQUIPMENT IS LEASED "AS IS" AND
THAT ALL SUCH RISKS, AS BETWEEN THE LESSOR AND THE LESSEE, ARE TO BE BORNE BY
THE LESSEE AT ITS SOLE RISK AND EXPENSE. Lessee accordingly agrees not to assert
any claim whatsoever against the Lessor based thereon. In addition, Lessee
waives any and all rights and remedies conferred by UCC 2A-508 through 2A-522,
including, but not limited to, the Lessee's right to (a) cancel or repudiate the
lease; (b) reject or revoke acceptance of the Leased property; (c) deduct from
rental payments all or any part of any claimed damages resulting from the
Lessor's default under the Lease; (d) recover from the Lessor any general,
special, incidental, or consequential damages, for any reason whatsoever. Lessee
further waives any and all rights, now or hereafter conferred by statute or
otherwise, that may require the Lessor to sell, re-lease, or otherwise use or
dispose of the Leased property in mitigation of the Lessor's damages or that may
otherwise limit or modify any of the Lessor's rights or remedies hereunder.
7. TERM. The initial term of this lease is set forth on the first page of
this lease agreement. The term begins upon which of the following dates is
earlier:
(a) the date Lessee requests Lessor to make payment to the Supplier; or (b)
the Acceptance Date as indicated on the Inspection/Verification Certificate.
8. LEASE PAYMENT-SECURITY DEPOSIT. The lease payments for the equipment leased
shall be in the amount designated in the schedule of payments and shall commence
on the indicated payment due date immediately following the equipment acceptance
date. Lessee shall pay Lessor said lease payments on or before the due date and
at the office of Lessor or to such other person or place as Lessor may designate
in writing. Lessee agrees to pay pro rata rental (based on the monthly lease
payments) for the period from the Acceptance Date, indicated on the
Inspection/Verification Certificate, to the due date of the first payment. Said
pro rata rental shall be in addition to the first payment and shall be made
simultaneously with the first payment. Prepayments are credited with one payment
being applied to the first month's rental and any other prepayment(s) are
applied to the last month('s) rental(s). The security deposit as designated in
the Lease shall remain as security for performance of the terms and conditions
of the Lease and shall remain with the Lessor until termination of the Lease,
absent breach of any terms of the Lease by Lessee unless otherwise agreed to in
writing by both parties.
9. LATE CHARGES AND COLLECTION CHARGES. A late charge of 10% of the total
monthly lease payment, or $10, whichever is greater, will be assessed when a
payment is not received within 10 days of the due date. An additional late
charge will be assessed for each month a payment remains unpaid. If Lessee's
delinquency requires additional collection efforts, a charge will be assessed
in accordance with Lessor's collection charge schedule.
10. LOCATION AND USE OF EQUIPMENT. Lessee shall keep the equipment at the
location designated in the Lease, unless Lessor in writing permits its removal.
Said equipment shall be used solely in the conduct of Lessee's business and
Lessee warrants that property leased is for commercial or business purposes and
not for consumer, personal, home or family purposes.
11. ARBITRATION. Any controversy or claim arising out of this lease or the
breach thereof may at the option of the Lessor be settled by arbitration in
accordance with the LAWS OF THE STATE OF WASHINGTON and judgment upon the award
rendered by the arbiter(s) may be entered in any court having jurisdiction
thereof. Arbitration shall be held in the City of Tacoma, State of Washington.
12. SURRENDER OF EQUIPMENT. At the expiration of this lease, or upon demand by
Lessor pursuant to Paragraph 19 of this lease, Lessee at its expense shall
return the equipment in proper working order, condition and repair by
delivering it packed and ready for shipment to such place or on board such
carrier as Lessor may specify. WARNING: FAILURE TO PROMPTLY RETURN THE LEASED
PROPERTY MAY RESULT IN CRIMINAL PROSECUTION AND/OR ADDITIONAL RENTAL CHARGES,
ON A MONTH TO MONTH BASIS, UNTIL THE EQUIPMENT IS RECOVERED BY THE LESSOR.
13. NOTICES. Services of all notices under this agreement shall be sufficient
if given personally or mailed to Lessor at 301 Plaza, 3901 S. Fife St., P.O.
Box 11309, Tacoma, Washington, 98411-0309, or to Lessee at Lessee's last known
address or at such other address as a party may provide in writing from time to
time. Any such notice mailed to such address shall be effective when deposited
in the United States mail duly addressed and postage prepaid.
14. LIABILITY AND INDEMNITY -- LOSS AND DAMAGE. Lessee shall indemnify and
hold Lessor harmless from any and all injury to or loss of the equipment from
whatever cause, and from all liability arising out of the manufacture,
selection, operation, use, maintenance, or delivery thereof, including
attorney's fees. In the event of loss or damage of any kind whatsoever to the
equipment, or to any part thereof, Lessee, at the option of the Lessor, shall
(a) Replace the same in good condition, repair and working order; or (b)
Replace the same, with like property of the same or greater value; provided,
however, at Lessee's option, the remaining obligation of the lease can be
satisfied by the payment of the remaining unpaid lease payments and the
estimated value of the equipment at the expiration of the lease, and other
amounts due under the lease, less the net amount of the recovery, if any,
actually received by the Lessor from insurance or otherwise for such loss or
damage. Lessor shall not be obligated to undertake by litigation or otherwise
the collection of any claim against any person for loss or damage of the
equipment. Except as expressly provided in this paragraph, total or partial
destruction of any equipment or total or partial loss of use or possession
thereof to Lessee shall not release or relieve Lessee from the duty to pay the
lease payments herein provided.
15. INSURANCE. Lessee, at its own expense, shall keep said equipment insured
for the full term of this lease and any renewals or extensions thereof, for the
full insurable value thereof against all risks of loss or damage, and against
such other risks in such amounts as Lessor may specify, including liability
insurance, with limits not less than $500,000 (bodily injury and property
damage) combined single limit. Provided, however, in those instances where
Lessee is leasing equipment defined by Lessor as "mobile equipment," Lessee
shall procure and maintain, for the full lease term, all risk physical damage
insurance as opposed to insurance against fire and theft, with extended or
combined coverage. All insurance policies must provide that no cancellation
shall be effective without thirty (30) days' prior written notice to Lessor.
Lessor shall deliver to Lessor the policies or evidence of insurance with a
standard form of endorsement attached thereto showing Lessor to be named as an
additional insured, together with receipts for the premiums thereunder. Lessee
shall, at the request of Lessor, name as Loss Payee such party who may have a
security interest in the equipment.
16. LESSEE'S FAILURE TO PAY TAXES, INSURANCE, ETC. Should Lessee fail to make
any payment or do any act as herein provided, then Lessor shall the right, but
not the obligation, without notice to or demand upon Lessee, and without
releasing Lessee from any obligation hereunder, to make or do the same and to
pay, purchase, contest, or compromise any encumbrance, charge or lien which in
the judgment of Lessor appears to affect the equipment, and in exercising such
rights, incur any liability and expand whatever amounts in its absolute
discretion it may deem necessary therefore. Should Lessee fail to provide
Lessor the policies or evidence of insurance described herein, Lessee shall be
assessed as to Lessor's purchase of insurance and also agrees that a charge
therefore will be paid by the Lessee. All sums so incurred or expended by
Lessor shall be without demand immediately due and payable by Lessee and shall
bear interest at eighteen Percent (18%) per annum if not prohibited by law,
otherwise at the highest lawful contract rate.
17. OWNERSHIP. The equipment is and shall be at all times the sole and
exclusive property of Lessor. This lease and the equipment described herein may
be subject to a preexisting security agreement in favor of a bank or another
financial institution.
18. AUTHORITY TO SIGN. If Lessee is a partnership or corporation, the person
signing the Lease on behalf of such partnership or corporation hereby
warrants that (s)he has full authority form the partnership or corporation to
sign this lease and obligate the partnership or corporation.
CONTINUED ON FOLLOWING PAGES PAGE 2 OF 4 PAGE LEASE AGREEMENT
<PAGE> 9
LSE#194478.01
GUARANTEE
To induce Lessor to enter into a Lease with Interactive Telesis, Inc.
("Lessee"), the undersigned Guarantor unconditionally guarantees to Lessor the
prompt payment when due of all Lessee's obligations to Lessor under the lease.
Lessor shall not be required to proceed against the Lessee or the equipment or
enforce any other remedy before proceeding against the undersigned. The
undersigned waives notice of acceptance hereof and all other notices or demand
of any kind to which the undersigned may be entitled. The undersigned consents
to any extensions or modifications granted to Lessee and the release and/or
compromise of any obligations of Lessee or any other obligors and guarantors
without notice and without in any way releasing the undersigned from his or her
obligations hereunder. Guarantor waives any right to require Lessor to apply
payments in a certain manner and acknowledges that Lessor may apply payments
received in the fashion most advantageous to the Lessor. Furthermore, Guarantor
waives any and all claims against the Lessee, by subrogation or otherwise, until
such time as Lessee's obligations to Lessor are fully and finally satisfied.
This is a continuing guarantee and shall not be discharged, impaired or affected
by death of the undersigned or the existence or nonexistence of the Lessee as a
legal entity. This continuing Guarantee shall bind the heirs, administrators,
representatives, successors, and assigns of undersigned and may be enforced by
or for the benefit of any assignee or successor of the Lessor.
The provisions of this Lease Guarantee shall extend to and apply to all the
obligations of the Lessee under all lease agreements executed by Lessee for the
benefit of Lessor, whether executed before or after the date of this guarantee,
and whether set forth in separate lease agreements, schedules, applications,
orders or collateral documents (all of which shall be referred to herein, both
individually and collectively, as the 'Lease Agreement'). The execution of this
Lease Guarantee shall not extinguish, release or waive any obligations,
promises, or guarantees contained in any Lease Guarantee previously executed by
Guarantor for the benefit of the Lessor. The undersigned agrees to pay a
reasonable attorney's fee, and all other costs and expenses incurred by the
Lessor or its successors or assigns in the enforcement of the Guarantee,
whether or not a lawsuit is started.
If Guarantor resides in a Community Property state, any married person signing
this Lease Guarantee warrants that he or she has the authority to bind and
obligate his or her marital community and that by signing, his or her marital
community is obligated hereunder. Further, by signing this Guarantee it is
agreed that recourse may be against both his or her separate property and the
property of his or her marital community on account of all of his or her
obligations hereunder.
LAW WHICH APPLIES
THIS AGREEMENT IS GOVERNED BY WASHINGTON LAW. GUARANTOR CONSENTS TO THE
PERSONAL JURISDICTION OF THE COURTS OF THE STATE OF WASHINGTON AND AGREES NOT
TO CLAIM THAT PIERCE COUNTY, WASHINGTON IS AN INCONVENIENT PLACE FOR TRIAL. AT
LESSOR'S SOLE OPTION, JURISDICTION AND VENUE (LOCATION) FOR ANY DISPUTE, SUIT
OR ACTION ARISING UNDER OR IN RELATION TO THIS AGREEMENT, AND ALL DOCUMENTS
EXECUTED IN CONNECTION THEREWITH, SHALL BE IN PIERCE COUNTY, STATE OF
WASHINGTON. GUARANTOR WAIVES THE RIGHT OF JURY TRIAL. LESSOR SHALL HAVE THE
OPTION OF COMMENCING AN ACTION IN ANY COURT HAVING JURISDICTION OVER THE SUBJECT
MATTER AND PARTIES TO THE TRANSACTION.
WHOLE AGREEMENT
This Guarantee contains the entire understanding between Lessor and Guarantor.
X /s/ DONALD CAMERON (No Title) X (No Title)
- ------------------------------------- --------------------------------------
Donald Cameron
Date 6-30-99 Date
- ------------------------------------- --------------------------------------
Home Phone # 760-633-1112 Home Phone #
- ------------------------------------- --------------------------------------
X (No Title) X (No Title)
- ------------------------------------- --------------------------------------
Date Date
- ------------------------------------- --------------------------------------
Home Phone # Home Phone #
- ------------------------------------- --------------------------------------
DELIVERY AND ACCEPTANCE AUTHORIZATION
Lessee's signature authorizes Lessor to verify by phone with a representative
of Lessee the date the Equipment was accepted by the Lessee; the Equipment
description, including the serial numbers; the schedule of lease payments; that
all necessary installation has been completed; that the Equipment has been
examined by Lessee and is in good operating order and condition and is in all
respects satisfactory to Lessee and that Equipment is accepted by Lessee for
all purposes under the Lease. This information will be recorded on an
Inspection/Verification Certificate, a copy of which will be forwarded to
Lessee upon completion by Lessor. Lessee hereby authorizes Lessor to either
insert or correct the Lessor and/or Vendor name(s), Equipment description,
Equipment location and schedule of Lease payments. Lessee hereby authorizes
Lessor to make payment to the Vendor upon completion of the
Inspection/Verification Certificate.
LESSEE INTERACTIVE TELESIS, INC.
X /s/ DONALD CAMERON President & Individually Date
- ----------------------------------------------- ------------------------------
Donald Cameron Title
FPG0016-02/98 PAGE 4 OF 4 PAGE LEASE AGREEMENT
<PAGE> 10
EQUIPMENT LIST
LEASE NO.: 194478.01
------------------
LEASE DATE: 7/8/99
------------------
<TABLE>
<CAPTION>
QUANTITY DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C>
1 QLS 8MM TLS4210 WITH 1-300 C SERIAL #906007
1 LABELS, 0-179 BARCODED, AIT
1 EXT. CABLE, 68 PIN, MLD WO/F, F20,3'
1 SCSI TERM, SWITCHABLE LVD/SE
1 QUALSTAR 8MM BAR CODE READER SERIAL #906007
1 QUALSTAR, TLS I/O PORT; 4210
1 QLS 8MM TLS4440 WITH 4-300 C SERIAL #906117
1 SCSI TERM, SWITCHABLE LVD/SE
1 QUALSTAR 8MM BAR CODE READER SERIAL #906055
1 QLS 8MM TLS4210A WITH 1-300C SERIAL #906056
1 LABELS, 0-179 BARCODED, AIT
1 EXT. CABL, 68PIN, MLD, WO/F, F20, 3'
1 SCSI TERM, SWITCHABLE LVD/SE
1 QUALSTAR 8MM BAR CODE READER SERIAL #906056
1 LABELS, 0-179 BARCODED, AIT
1 EXT. CBL, 68 PIN, MLD, WO/F, F20, 3'
1 SCSI TERM, SWITCHABLE LVD/SE
1 SPECIAL C-KIT, 68PN/2-DRIVES
</TABLE>
Lessor: Lessee:
MEDIA CAPITAL ASSOCIATES, LLC INTERACTIVE TELESIS, INC.
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ DONALD CAMERON
------------------------------ -------------------------------
Donald Cameron
Its: Operations Mgr. Its: President & Individually
----------------------------- ------------------------------
Date: 7-7-99 Date: 6-30-99
---------------------------- -----------------------------
FPEL002-299 Page 1 of 2
<PAGE> 11
EQUIPMENT LIST
LEASE NO.: 194478.01
----------------
LEASE DATE: 7/8/99
----------------
<TABLE>
<CAPTION>
QUANTITY DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C>
60 SONY 8MM 170M AME WITH 16KB CHIP
1 QLS 8MM TLS4210A WITH 2-300C SERIAL #906055
1 LABELS, 0-179 BARCODED, AIT
1 EXT CBL, 68PIN, MLD, WO/F, F20-3'
</TABLE>
Lessor: Lessee:
MEDIA CAPITAL ASSOCIATES, LLC INTERACTIVE TELESIS, INC.
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ DONALD CAMERON
------------------------------ -------------------------------
Donald Cameron
Its: Operations Mgr. Its: President & Individually
----------------------------- ------------------------------
Date: 7-7-99 Date: 6-30-99
---------------------------- -----------------------------
FPEL002-299 Page 2 of 2
<PAGE> 12
CORPORATE RESOLUTION FOR LEASING
AND OTHERWISE DEALING WITH
MEDIA CAPITAL ASSOCIATES, LLC
Resolution of Interactive Telesis, Inc.
-----------------------------------------------------------------
RESOLVED that any 1 of the officers, employees, and
------------------------------
(number of signatures required)
agents listed below are authorized to take the following actions in the name of
and on behalf of this corporation.
1. To lease from Media Capital Associates, LLC (Lessor) such equipment or other
personal property for such sum or sums said partner(s), employee(s), or
agent(s) deem necessary;
2. To sign and deliver all leases and related documents, including any notes or
other evidences of indebtedness as may be requested by the Lessor.
"RESOLVED further that, except as indicated above, each one of the partners,
employees, and agents of this corporation listed below is conferred with a
general authority to deal on behalf of and in the name of this corporation with
the Lessor, without specifically enumerating them herein."
"RESOLVED further that the following are the true and correct signatures and
designations of the officers, employees and agents referred to above":
<TABLE>
<CAPTION>
NAMES SIGNATURES TITLES
----- ------------------- -------------------
<S> <C> <C>
Donald Cameron /s/ DONALD CAMERON President
- --------------------- --------------------- ---------------------------
- --------------------- --------------------- ---------------------------
- --------------------- --------------------- ---------------------------
- --------------------- --------------------- ---------------------------
</TABLE>
"RESOLVED further that this resolution shall continue in force until notice in
writing of its revocation shall be given to and received by the Lessor at the
address indicated above."
We, Donald Cameron , the President,
------------------------- -----------------------
and /s/ WILLIAM R. ADAMS , the Secretary,
-------------------------- -----------------------
of the above named corporation do hereby certify that the foregoing is a full,
true, and correct copy of a resolution adopted by the Board of Directors of
said corporation.
(1) At a meeting duly and regularly called at which a quorum was present and
voted held on 6-29-99,
or
(2) By the undersigned Directors, constituting the entire Board of Directors of
the corporation, who by their signatures hereto adopt and consent to such
resolution and that if adopted without a meeting of the Board of Directors that
the Articles and Bylaws of the corporation do not prevent action by the Board
of Directors without a meeting; and that said resolution has not been altered,
amended or revoked.
6-29-99
-------------------------,------
Date
/s/ DONALD CAMERON
--------------------------------
President
/s/ WILLIAM R. ADAMS
--------------------------------
Secretary
Sign only if action is by director's consent.
Signed and sealed (if necessary) with seal of the corporation.
(Seal of Corporation not necessary for Washington Corporations.)
<PAGE> 1
EXHIBIT 16.1
[BUCKLEY DODDS LETTERHEAD]
October 29, 1999
U.S. Securities and Exchange Commission
Washington, D.C., 20549
Dear Sirs:
RE: INTERACTIVE TELESIS INC., FORM 10-SB, PART II, ITEM 3
We are the former accountants for Interactive Telesis Inc.
This response is in accordance with Form 304(a)(3) of Regulation S-B,
and concerns the statements made in Part II, Item 3, of Form 10-SB
titled "Changes in and Disagreements with Accountants".
We agree with the statements made in the above referenced section.
Please contact the undersigned If you have any Questions.
Yours truly,
Buckley Dodds
/s/ BUCKLEY DODDS
Geoffrey Dodds, C.A.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
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