As filed with the Securities and Exchange Commission on , 2000.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
Registration Statement
Under
THE SECURITIES ACT OF 1933
East Coast Beverage Corp.
(Exact name of registrant as specified in charter)
Colorado 2086 84-1039267
(State or other (Primary Standard Classi- (IRS Employer
jurisdiction of fication Code Number) I.D. Number)
incorporation)
1750 University Drive
Suite 117
Coral Springs, Florida 33071
(954) 796-8060
(Address and telephone number
of principal executive offices)
1750 University Drive
Suite 117
Coral Springs, Florida 33071
(Address of principal place of business or
intended principal place of business)
John Calebrese
1750 University Drive
Suite 117
Coral Springs, Florida 33071
(954) 796-8060
(Name, address and telephone number of agent for service)
Copies of all communications, including all communications sent
to the agent for service, should be sent to:
William T. Hart, Esq.
Hart & Trinen
1624 Washington Street
Denver, Colorado 80203
(303) 839-0061
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date
of this Registration Statement
Page 1 of Pages
Exhibit Index Begins on Page
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered (1) Unit (2) Price Fee
- ---------- -------------- --------- ----------- ----------------
Common stock 2,447,841 $2.75 $6,731,562 $1,788
(1) Shares are offered by certain selling shareholders
(2) Offering price computed in accordance with Rule 457 (c).
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS
EAST COAST BEVERAGE CORP.
Common Stock
This prospectus relates to the sale of 2,447,841 shares of the common
stock of East Coast Beverage Corp. ("ECBC") by certain owners of shares of
ECBC's common stock. The shares were issued by ECBC for cash, services rendered
and in settlement of amounts owed by ECBC to various third parties.
The owners of the common stock to be sold by means of this prospectus
are referred to as the "selling shareholders".
ECBC will not receive any proceeds from the resale of the shares by the
selling shareholders. The selling shareholders may resell the shares they
acquire by means of this prospectus from time to time in the public market. The
selling shareholders have advised ECBC that they will offer the shares through
broker/dealers at market prices with customary commissions being paid by the
selling shareholders. The costs of registering the shares offered by the selling
shareholders are being paid by ECBC. The selling shareholders will pay all other
costs of the sale of the shares offered by them. See "Dilution and Comparative
Share Data" and "Selling Shareholders".
These securities are speculative and involve a high degree of risk and
should be purchased only by persons who can afford to lose their entire
investment. For a description of certain important factors that should be
considered by prospective investors, see "Risk Factors" beginning on page of
this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
There is presently no market for ECBC's common stock.
The date of this prospectus is _______, 2000
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY .................................................
RISK FACTORS .......................................................
COMPARATIVE SHARE DATA .............................................
MARKET FOR ECBC'S COMMON STOCK......................................
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS .........
BUSINESS ...........................................................
MANAGEMENT .........................................................
PRINCIPAL SHAREHOLDERS .............................................
SELLING SHAREHOLDERS ...............................................
DESCRIPTION OF SECURITIES ..........................................
EXPERTS ............................................................
LITIGATION .........................................................
INDEMNIFICATION ....................................................
ADDITIONAL INFORMATION .............................................
FINANCIAL STATEMENTS ...............................................
<PAGE>
PROSPECTUS SUMMARY
Prior to September 1999 ECBC did business under the name USA Service
Systems, Inc. ("USA"). Between November 1998 and July 1999 USA provided retail
stores and manufacturers with product assembly, product demonstrations, point -
of - sale product displays, and inventory counts and audits. As of July 1999 USA
had entered into letters of intent for the acquisition of four companies engaged
in the same business as that conducted by USA. However, USA was unable to obtain
approximately $4,000,000 in additional equity capital which was needed to
finance these acquisitions. In July 1999 USA essentially discontinued its
business and made plans to distribute its remaining assets (having a minimal
value) to George Pursglove, a former officer and director of USA.
Effective August 31, 1999 ECBC acquired all of the issued and outstanding
shares of East Coast Beverage Corp., a Florida Corporation, in exchange for
5,040,000 shares of common stock. Following this transaction the former
shareholders of East Coast Beverage owned approximately 93% of USA's common
stock. In connection with this transaction the management of USA resigned and
was replaced by the management of East Coast Beverage.
ECBC's business involves the development, production and distribution of
Coffee House USA(TM), a proprietary line of all natural, ready to drink ("RTD")
bottled coffee drinks.
ECBC sells its products through distributors and wholesalers to
supermarkets, mass-marketers, convenience stores, drug store chains and oil
company convenience stores. As of January 15, 2000 ECBC's products were being
sold in 44 states.
ECBC's offices are located at 1750 University Drive, Suite 117, Coral
Springs, Florida 33071. ECBC's telephone number is (954) 796-8060 and its
facsimile number is (954) 796-0802.
All historical share data in this prospectus has been adjusted to
reflect a 8.194595-for-one reverse split of ECBC's common stock, which was
approved by ECBC's shareholders on February 22, 2000.
As of January 31, 2000, ECBC had 7,666,359 shares of common stock
outstanding. The number of outstanding shares does not give effect to shares
which may be issued upon the exercise and/or conversion of options, warrants or
other convertible securities previously issued by ECBC. See "Dilution and
Comparative Share Data", "selling shareholders" and "Description of Securities".
At the present time there is no public market for ECBC's common stock.
<PAGE>
RISK FACTORS
There are substantial risks associated with an investment in ECBC's
common stock including, among others, ECBC's need for additional capital,
intense competition and the absence of any public market for ECBC's common
stock.
SUMMARY FINANCIAL INFORMATION
The following sets forth certain financial data with respect to ECBC
and is qualified in its entirety by reference to the more detailed financial
statements and notes included elsewhere in this Prospectus.
Statement of Operations Data:
Period from Inception (March 25, 1998 Nine Months Ended
to December 31, 1998 September 30, 1999
--------------------------------------------------------
Revenues $478,066 $5,179,189
Cost of Sales (344,493) (3,681,520)
Selling, General and
Administrative Expenses (874,025) (1,427,926)
Stock Based Compensation -- (421,166)
Other Income (expense) 2,135 625
-------- --------
Net (Loss) $(738,317) $(350,798)
========== ==========
Balance Sheet Data:
December 31, September 30, September 30,
1998 1999 1999
--------------- ------------- --------------
(Pro Forma)
Current Assets $1,560,709 $3,387,339 $5,287,339
Total Assets 1,751,922 4,418,248 6,318,248
Current Liabilities 2,489,739 2,200,289 700,289
Total Liabilities 2,489,739 3,767,715 1,300,289
Working Capital (Deficit) (929,030) 1,187,050 4,587,050
Shareholders' Equity
(Deficit) (737,817) 650,533 5,017,959
Subsequent to September 30, 1999 ECBC sold 768,247 shares of its common
stock to private investors at a price of $2.75 per share. ECBC paid commissions
of $212,000 in connection with the sale of these shares.
In January 2000 ECBC issued 694,973 shares of its common stock to John
Calebrese, an officer, director and principal shareholder of ECBC, in settlement
of $1,817,426 owed to Mr. Calebrese by ECBC.
Also in January 2000 ECBC issued 316,192 shares of its common stock to
other creditors in settlement of $650,000 owed to these creditors by ECBC.
The pro forma balance sheet as of September 30, 1999 reflects these
transactions as if they had occurred on September 30, 1999.
<PAGE>
RISK FACTORS
The securities offered hereby are speculative and involve a high degree
of risk and should be purchased only by persons who can afford to lose their
entire investment. Therefore, prospective investors should read this entire
prospectus and carefully consider, among others, the following risk factors in
addition to the other information set forth in this prospectus prior to making
an investment.
History of Losses. ECBC has incurred losses since it was formed in
1998. From the date of its formation through September 30, 1999, ECBC incurred
net losses of approximately $(1,089,000). ECBC first began shipping product in
December 1998. There can be no assurance that ECBC will be profitable.
ECBC may need additional capital. This offering is being made on behalf
of certain selling shareholders. ECBC will not receive any proceeds from the
sale of the shares offered by the selling shareholders. ECBC may need to obtain
additional capital in order expand its business. There can be no assurance that
ECBC will be able to obtain any additional financing. The failure of ECBC to
obtain additional capital on terms acceptable to it, or at all, may
significantly restrict ECBC's proposed operations.
ECBC's future operations will be subject to all of the risks inherent
in the establishment of a new business enterprise, including limited capital and
possible delays in the expansion of ECBC's business. The likelihood that ECBC
will succeed must be considered in light of the problems, expenses, and delays
frequently encountered in connection with the development of new businesses.
ECBC's operations may place significant strains on future management, staff,
working capital, and financial control systems. The failure to maintain
financial control systems, to recruit qualified staff or to respond effectively
to difficulties encountered during expansion could have a material adverse
effect on ECBC's business, financial condition and results of operations. There
can be no assurance that ECBC's systems and controls or staff will be adequate.
ECBC will compete with numerous other businesses which are involved in
the sale of ready-to-drink beverages. Most of ECBC's competitors have greater
name recognition and greater financial, management and marketing resources than
those of ECBC.
There is no public market for the securities of ECBC, and there is no
assurance that such a market will ever develop. Notwithstanding the lack of a
public market ECBC plans to register approximately 1,200,000 additional shares
of common stock which were sold between September 1999 and February 15, 2000 to
a group of private investors at a price of $2.75 per share. ECBC plans to file a
separate registration statement with the Securities and Exchange Commission so
as to permit the public sale of these shares. Should a market ever develop for
ECBC's common stock, the public sale of these shares may depress the market
price of ECBC's common stock.
ECBC plans to register additional shares of its common stock. Between
September 1999 and February 15, 2000 ECBC sold 1,189,958 shares of its common
stock to a group of private investors at a price of $2.75 per share. ECBC plans
to file a separate registration statement with the Securities and Exchange
Commission so as to permit the public sale of these shares.
<PAGE>
COMPARATIVE SHARE DATA
As of January 31, 2000 ECBC had 7,666,359 outstanding shares of common
stock which had a net tangible book value (on a pro forma basis) of
approximately $0.60 per share.
Number of Shares
Shares outstanding as of January 31, 2000 (1) 7,666,359
Shares offered by selling shareholders 2,447,841
Percentage of ECBC's common stock represented
by shares offered by this prospectus 32%
Net tangible book value per share (on a pro forma
basis) as of January 31, 2000. $0.60
The purchasers of the securities offered by this prospectus will suffer an
immediate dilution if the price paid for the securities offered is greater than
the net tangible book value of ECBC's common stock.
"Net tangible book value" (on a pro forma basis) gives effect to the sale
of common stock and the conversion of loans subsequent to September 30, 1999 and
is the amount that results from subtracting the total liabilities and intangible
assets of ECBC from its total assets.
As of January 31, 2000 ECBC had 7,666,359 shares of common stock issued
and outstanding. The following table reflects the shares of common stock which
may be issued by ECBC as the result of the exercise of options to be issued by
ECBC.
Number of Note
Shares Reference
Shares Outstanding 7,666,359
Shares issuable upon exercise of options 500,000 A
held by officer and director
Shares issuable upon exercise of options 152,500 B
held by others
A. Options are held by John Calebrese, an officer, director and principal
shareholder of ECBC. Options may be exercised at a price of $2.75 per share at
any time prior to December 31, 2004. All options are currently exercisable.
B. Options are exercisable at prices between $2.00 and $3.50 per share and
expire between 10/30/2000 and 1/03/2002. See "Management - Other Options"
for further information concerning these options.
<PAGE>
MARKET FOR ECBC'S COMMON STOCK
As of January 31, 2000 there were approximately 400 owners of ECBC's
common stock. At the present time, there is no public market for ECBC's common
stock.
Holders of common stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally available and, in the
event of liquidation, to share pro rata in any distribution of ECBC's assets
after payment of liabilities. The Board of Directors is not obligated to declare
a dividend. ECBC has not paid any dividends on it's common stock and ECBC does
not have any current plans to pay any common stock dividends.
The provisions in ECBC's Articles of Incorporation relating to ECBC's
preferred stock would allow ECBC's directors to issue preferred stock with
rights to multiple votes per share and dividends rights which would have
priority over any dividends paid with respect to ECBC's common stock. The
issuance of preferred stock with such rights may make more difficult the removal
of management even if such removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following selected financial data should be read in conjunction
with the more detailed financial statements, related notes and other financial
information included in this prospectus.
Statement of Operations Data:
Period from Inception (March 25, Nine Months Ended
1998 to December 31, 1998 September 30, 1999
--------------------------------------------------------
Revenues $478,066 $5,179,189
Cost of Sales (344,493) (3,681,520)
Selling, General and
Administrative Expenses (874,025) (1,427,926)
Stock Based Compensation -- (421,166)
Other Income (expense) 2,135 625
------------ --------------
Net (Loss) $(738,317) $(350,798)
========== ==========
Balance Sheet Data:
December 31, 1998 September 30, 1999 September 30, 1999
----------------- ------------------ ------------------
(Pro Forma)
Current Assets $1,560,709 $3,387,339 $5,287,339
Total Assets 1,751,922 4,418,248 6,318,248
Current Liabilities 2,489,739 2,200,289 700,289
Total Liabilities 2,489,739 3,767,715 1,300,289
Working Capital (Deficit) (929,030) 1,187,050 4,587,050
Shareholders' Equity
(Deficit) (737,817) 650,533 5,017,959
<PAGE>
Subsequent to September 30, 1999 ECBC sold 768,247 shares of its common
stock to private investors at a price of $2.75 per share. ECBC paid commissions
of $212,000 in connection with the sale of these shares.
In January 2000 ECBC issued 694,973 shares of its common stock to John
Calebrese, an officer, director and principal shareholder of ECBC, in settlement
of $1,817,426 owed to Mr. Calebrese by ECBC.
Also in January 2000 ECBC issued 316,192 shares of its common stock to
other creditors in settlement of $650,000 owed to these creditors by ECBC.
The pro forma balance sheet as of September 30, 1999 reflects these
transactions as if they had occurred on September 30, 1999.
Period From Inception (March 25, 1998) to December 31, 1998
ECBC first began shipping product in December 1998. During this period,
ECBC's gross profit ratio was 28%, compared to a gross profit ratio of 29% for
the nine months ended September 30, 1999.
The primary components of selling, general and administrative expenses
during this period were:
Salaries and Contract Labor $432,997
Travel and Marketing $42,991
Organization Expenses $146,683
Nine Months Ending September 30, 1999
ECBC did not begin shipping product until December 1998. As a result,
comparisons cannot be made between operations for the nine months ending
September 30, 1999 and the nine months ending September 30, 1998.
During the nine months ended September 30, 1999 ECBC had income from
operations of $69,743. However, expenses of $421,166 (which did not require the
use of cash) associated with stock-based compensation and common stock issued on
consideration for the modification of loan terms resulted in a net loss for the
period of $350,798. ECBC believes that the expenses associated with the issuance
of the common stock for services and for the modification of loan terms will not
occur in future periods, or at least will not impact ECBC's operating results to
the same extent as during the period ending September 30, 1999.
Liquidity and Sources of Capital
ECBC's operations used $1,194,272 in cash during the period ended December
31, 1998. ECBC funded its operating losses during this period with loans from
John Calebrese, ECBC's Chief Executive Officer.
During the nine-months ended September 30, 1999 ECBC's operations used
approximately $1,836,168 in cash and ECBC spent approximately $1,006,000 on the
purchase of property and equipment. Cash required during the nine month period
was generated through sales of ECBC's common stock and borrowings from ECBC's
Chief Executive Officer and third parties.
<PAGE>
ECBC believes that additional capital will be needed to expand ECBC's
operations and to finance ECBC's growth. ECBC expects to obtain additional
capital through the private sale of ECBC's common stock or from borrowings from
private lenders and/or financial institutions. There can be no assurance that
ECBC will be successful in obtaining any additional capital which may be needed.
ECBC may suffer future losses, in which case ECBC will need to obtain
additional sources of capital in order to continue operations. There can be no
assurance, however, that ECBC will be successful in obtaining additional
funding.
BUSINESS
ECBC is a Colorado corporation which prior to September 1999 did business
under the name USA Service Systems, Inc. ("USA"). Between November 1998 and July
1999 USA provided retail stores and manufacturers with product assembly, product
demonstrations, point - of sale product displays, and inventory counts and
audits.
As of July 1999 USA had entered into letters of intent for the acquisition
of four companies engaged in the same business as that conducted by USA.
However, USA was unable to obtain approximately $4,000,000 in additional equity
capital which was needed to finance these acquisitions. In July 1999 USA
essentially discontinued its business and made plans to distribute its remaining
assets (having a minimal value) to certain officers and directors of USA.
Effective August 31, 1999 USA acquired all of the issued and outstanding
shares of East Coast Beverage Corp. in exchange for 5,040,000 shares of USA's
common stock. In connection with this transaction the management of USA resigned
and was replaced by the management of ECBC. ECBC's business now involves the
development, production and distribution of Coffee House USA(TM), a proprietary
line of all natural, ready to drink ("RTD") bottled coffee drinks.
Coffee is the number one drink in the world, with Americans alone
consuming over $5.8 billion in 1997. According to the National Coffee
Association in 1998 over 108 million Americans drank an espresso, cappuccino,
latte or iced coffee, a 35% increase over the previous year. Three years ago,
frozen coffee drinks came into the market and the consumption of frozen coffee
has doubled every year. However, the drawback with frozen coffees is they must
be consumed immediately and could not be sold to the mass market. From this
evolved the RTD (ready to drink) Iced Coffee category, which in a few years has
become the fastest growing segment in the New Age category with an increase of
153% in 1997 and 83% in 1998. The New Age category refers to premium-priced
beverages that were created to respond to emerging consumer trends and interest.
Sales by category of New Age Beverages are summarized below:
<PAGE>
Year Ending 1998
NEW AGE BEVERAGES (in millions)
RTD SS Fruit beverages (Tropicana, Very Fine) $2,125 27.5%
RTD PET bottled waters (Perrier Group, Geyser) 1,500 19.4%
Sports Beverages (Gatorade, Powerade, All Sport 1,510 19.5%
RTD Teas (Snapple, Arizona, Mystic, Lipton) 1,340 17.4%
Sparkling flavored waters (Talking Rain) 450 5.8%
Premium Soda 360 4.6%
RTD Coffee (Starbucks, regional brands) 200 2.6%
----- -----
SUBTOTAL NEW AGE $7,485
Nutrient Enhanced Drinks 100 1.3%
Fresh Packed Juices 55 .7%
Smoothies 45 .6%
Vegetable/Fruit Juice Blends 20 .3%
All Other 25 .3%
---- -----
TOTAL $7,730
Product
ECBC's product is more than just a cold coffee, tasting like a milkshake,
and is marketed as such. It can be substituted at any occasion where a milkshake
might be used with a hamburger at lunch, as a stand-alone snack, etc. ECBC's
iced coffee is naturally flavored and enhanced with whole milk and rich coffee
bean extract. ECBC's products are all natural, low in fat, visually exciting and
have a broad spectrum of flavors.
ECBC's product can be differentiated with those of competitors by its
taste, advanced technological Fuji wrap and ECBC's proprietary glass container.
Each of the flavors used by ECBC has gone through extensive consumer tasting and
approval. ECBC's iced coffee comes in the following flavors:
Cinnamon, Mocha, Vanilla Mousse, Regular, Hazelnut, Toasted Almond,
German Chocolate, and Banana's Foster
ECBC's proprietary formulas for its products are trade secrets and ECBC
requires its manufacturers, employees, brokers and consultants to sign
confidentiality agreements. ECBC's glass container is also proprietary and
design protected.
Production
ECBC does not own or operate any manufacturing facilities, but rather
outsources manufacturing and bottling to third party copackers. Outsourcing
provides ECBC production flexibility and capacity and allow management to focus
its energy and resources on marketing and sales while avoiding the costs and
risks associated with production .
<PAGE>
ECBC's products are manufactured using ECBC's proprietary formulas.
Copackers may not produce products for any other customer using these formulas.
Copackers supply ECBC's products at a fixed co-packing price per unit (case).
ECBC purchases flavor, nutrient, and packaging raw materials for delivery to the
copacker.
ECBC's copackers have the capacity to produce 70,000 cases a day and are
able to fulfill ECBC's planned production needs for at least the next three
years. If ECBC's growth exceeds the production capacity of its copackers, or
they were unable or unwilling to continue production, ECBC believes it could
locate other copackers to meet its production needs without any serious
disruption to ECBC's operations.
The copackers produce and package ECBC's products in accordance with
Standard Operating Procedures for Good Manufacturing Practice specified by the
FDA.
Since shipping its first product ECBC has been able to improve its
purchasing and production process thereby reducing product costs by over $1.00
per case. Additionally, improved cash flow has enabled ECBC, beginning in June
1999, to eliminate its factoring agreements resulting in significant savings .
ECBC does not have any credit line with any bank. Should ECBC's growth
exceed what is anticipated, a line of credit may be required to cover working
capital needs.
Distribution and Marketing
ECBC uses a network of distributors to market its iced coffee beverage.
Certain distributing companies used by ECBC have long term relationships with
major grocery chains and as a result, are capable of rapidly gaining access into
chain shelves at reduced rates.
Other distributors are dominant in the convenience/deli/single serve
business that is essential in building a brand from the ground up. The
distributors in each territory have been selected based on their impact in the
territory, financial strength, commitment to building the brand and expertise in
specific distribution venues. In many cases, ECBC will employ two distributors
to launch the product in a specific region, allowing each to focus on their
respective area of distribution expertise.
ECBC has recently engaged Super Value (Emerald and Portland Bottling) to
bring its products to Asia, South America and Europe.
During the nine months ended September 30,1999 mass and super markets
accounted for approximately 70% of total revenues, sales to convenience stores
represented 28% of revenues and foreign sales represented the remainder. It is
expected that foreign sales will account for 35% of total sales once ECBC's
international network is established.
ECBC sells its products through distributors and wholesalers to
supermarkets, convenience stores, drug store chains and oil company convenience
stores. As of December 31, 1999 ECBC was shipping an average of 3,000 cases per
day to customers in 44 states.
ECBC believes that there may be an opportunity to distribute its products
to a number of national food and beverage chains under private labeling
agreements.
<PAGE>
ECBC plans to use a combination of print billboards and radio advertising,
with emphasis on regional and special interest publications, such as those
targeted towards mainstream consumers, to increase consumer awareness and demand
for its products. The advertising selected will coincide with the established
channels and points of distribution.
Free samples will be distributed to consumers, store managers, store
employees and caterers to generate product awareness.
Paper point of sale items will be made available to enhance product
visibility and exposure. Other promotional items, such as drink coolers will be
made available on a co-op basis to enhance product visibility and exposure.
ECBC also plans to participate as an exhibitor at all major retail trade
and distributor shows.
Competition
ECBC's products compete with the following brands.
National Brands
Starbucks "Frappuccino" - Distributed exclusively by Pepsi-Cola. Three
flavors available in glass bottles. Sold in supermarkets in four packs only.
Shelf life is 3 months.
Regional Brands
"Ghirardelli Iced Coffees" - Limited nationwide - Only two flavors
available in cans.
"Havana Iced Cappuccino" - Scattered distribution in New England and
Mid-Atlantic- 3 flavors available in cans.
"Main Street Cafe' Iced Lattes" - Manufactured by GehI's Guernsey Farms -
5 flavors available in cans -scattered distribution.
"The Coffee" - by Pokka Beverages, Inc. California - Scattered
distribution - 3 flavors available in cans.
"America's Best" - Available in Northeast only - 5 flavors available
in both glass and cans.
"Jamaica Gold" - Distributed in Northwest -3 flavors available in cans
New Entries
Procter and Gamble is testing a new product called "Jakada" in
California. The results so far are extremely positive; rollout
information is not available.
Coca-Cola is attempting to trademark the name "Javalait", identified as a
frozen coffee drink. No other information is known at this time.
<PAGE>
Research and Development
A number of new products are undergoing laboratory tests and nearing
completion. These products include a dietary line and new flavors, as well as a
coffee based nutraceutical line. ECBC is also considering the development of a
Decaf product. Research and development costs are low because new products are
usually developed by the copacker or other third parties with associated costs
charged to production.
Employees and Offices
As of January 31, 2000, ECBC employed 17 persons on a full-time basis.
Seven employees serve in management or administrative capacities, and the
remainder are hourly workers in ECBC's operations. None of ECBC's employees are
covered by a collective bargaining agreement. ECBC has never experienced an
organized work stoppage, strike or labor dispute. Management considers ECBC's
relations with its employees to be good.
ECBC leases a 1,200 square foot production and office facility in Coral
Springs, Florida at an annual rent of $13,000. The lease on this facility
expires in May 2000.
MANAGEMENT
The following sets forth certain information concerning the management of
ECBC:
Name Age Position with Company
John Calebrese 47 Chief Executive Officer and a Director
Alex Garabedian 46 President
Edward Shanahan 47 Vice President - Eastern Division
John Daumeyer 59 Vice President - Central Division
William Perry Maxwell 59 Vice President - Western Division
Robert Gardener 52 Chief Financial Officer
Drew Carver 53 Vice President -Business Development
James J. Harford 61 Director
Edith G. Osman 50 Director
John Calebrese has been an officer and director of ECBC since March 1998.
From 1993 to 1995 Mr. Calebrese was a broker for Arizona Beverage Company
(Arizona Iced Tea) in the Florida market. From 1980 to 1992 Mr. Calebrese was an
officer of A & C Italian Bakery, a large Italian wholesale bakery which was sold
to Ferrara's of New York in 1990. From 1981 to 1984 Mr. Calebrese opened a
<PAGE>
number of deli/restaurants which were purchased by Subway in 1984. During this
period of time Mr. Calebrese also developed the concept for ECBC's
ready-to-drink iced coffee beverages. From 1990 to 1993 Mr. Calebrese developed
and marketed an iced coffee beverage which was acquired in 1993 by Lewis and
Clark Snake River.
Alex Garabedian has been the President of ECBC since October 1998. From
1968 to 1997 Mr. Garabedian was President and Chief Executive Officer of Fine
Distributing, a subsidiary of Hagameyer, a large multi-national food
distributor.
Edward Shanahan has been an officer and director of ECBC since October
1998. From 1993 to 1994 Mr. Shanahan served as Vice President of Sales and
Marketing for Westmark, Inc./Clearly Canadian where he was responsible for
product distribution in seven states. While at Westmark, Mr. Shanahan was
responsible for sales, pricing, packaging, distribution, brand management, media
advertising and key account development. From 1976 to 1993 Mr. Shanahan worked
for Coca-Cola Enterprises, Inc. in various capacities.
John Daumeyer has been an officer of ECBC since October 1998. From 1995 to
1997 Mr. Dauymeyer was Vice-President of Geyser Bottled Water Company. From 1993
to 1995 Mr. Dauymeyer was Vice President of Sales, Western Division for Arizona
Iced Tea. In the late 1960's Mr. Dauymeyer was a co-founder of Wendy's Old
Fashioned Hamburger Restaurants and served as President and General Manager of
Wendy's.
William Perry Maxwell has been an officer of ECBC since 1998. From 1991 to
1993 Mr. Maxwell was Vice President of Sales for the William Hoelskin company, a
food broker. From 1993 to 1998 Mr. Maxwell was Vice President for the Arizona
Beverage Company where he was responsible for developing Arizona's distributor
network.
Drew Carver has been an officer of ECBC since October 1998. From 1990 to
1993 Mr. Carver was National Sales Manager for Arizona Iced Tea. From 1993 to
1998 Mr. Carver was employed by the Geyser Bottled Water Company as Vice
President of Sales.
Robert Gardener has been an officer of ECBC since January 2000. From 1984
to 1999 Mr. Gardner operated his own Certified Public Accounting practice which
concentrated on food distributors servicing major chain stores, restaurants and
airlines. From 1976 to 1984 Mr. Gardner worked as a controller for Kenyon and
Eckhardt, a large advertising firm, and as a Vice President for SFWPRI, and
international magazine distribution company.
James J. Harford has been a director of ECBC since December 1999. Since
1998 Mr. Harford has been a consultant to corporations in the beverage industry.
Mr. Harford's consulting services include the evaluation of acquisitions and new
products. Since 1978 Mr. Harford served as an officer with various corporations
in the beverage industry, including Canada Dry Mid-South as President and Chief
Operating Officer (1978-1980), Mid-Atlantic Coca Cola Bottling Co., Inc. as
President and Chief Operating Officer (1980-1984), Joyce Seven Up Bottling
Companies as Chairman of the Board and Chief Executive Officer (1985-1987), and
the Seven Up Company as President and Chief Operating Officer (1987-1988). From
1967 through 1978 Mr. Harford has also held executive positions with Royal Crown
Cola Company and Canada Dry Corporation..
<PAGE>
Edith G. Osman has been a director of ECBC since January 2000. Ms. Osman
has been a practicing attorney since 1984. Ms. Osman is presently a shareholder
of the law firm of Carlton Fields in Miami, Florida. Ms. Osman is also the
current president of the Florida Bar Association (president-elect 1998-1999) and
was a member of the Florida Bar Association's Board of Governors between 1998
and 1998.
All of ECBC's officers devote substantially all of their time on ECBC's
business. Mr. Harford and Ms. Osman, as directors, devote only a minimal amount
of time to ECBC.
Change in Management
In September 1999, and in connection with the acquisition of East Coast
Beverage Corp., George Pursglove, Chet Howard, Douglas Maclellan and William
Solfisburg resigned as officers and directors and were replaced with the present
management of ECBC.
Executive Compensation
The following table sets forth in summary form the compensation
received by (i) the Chief Executive Officer of ECBC and (ii) by each other
executive officer of ECBC who received in excess of $100,000 during the fiscal
year ended December 31, 1999.
Other Re-
Annual stricted
Compen- Stock Options
Name and Fiscal Salary Bonus sation Awards Granted
Principal Position Year (1) (2) (3) (4) (5)
John Calebrese, 1999 $250,000 -- -- -- 500,000
Chief Executive 1998 $125,000 -- -- --
Officer
Alex Garabedian, 1999 $125,000 -- -- -- --
President 1998 $62,500 -- -- $3,250 --
Edward Shanahan 1999 $125,000 $13,000 $6,000 -- --
Vice President 1998 $ 25,000 -- -- $1,950 --
(1) The dollar value of base salary (cash and non-cash) received.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
Amounts in the table represent car allowances.
(4) During the year ending December 31, 1999, the value of the shares of ECBC's
common stock issued as compensation for services.
<PAGE>
The table below shows the number of shares of ECBC's common stock owned by
the officers listed above, and the value of such shares as of December 31, 1999.
Since there is presently no market for ECBC's common stock, the shares owned by
such persons at December 31, 1999 were valued at $2.75 per share, which is equal
to the price at which ECBC was selling shares of its common stock to private
investors during December 1999.
Name Shares Value
John Calebrese 1,832,972 $5,040,673
Alex Garabedian 325,000 893,750
Edward Shanahan 195,000 536,250
(5) The shares of common stock to be received upon the exercise of all stock
options granted during the. year ending December 31, 1999.
Employment Contracts
ECBC has employment agreements with the following officers:
Expiration of
Employment
Name Agreement Compensation
John Calebrese 1-27-02 Annual salary of $200,000, monthly car allowance
of $600, monthly medical insurance reimbursement of
$1,200, and options to purchase 500,000 shares of
ECBC's common stock at a price of $2.75 per share
at any time prior to December 31, 2004. Mr.
Calebrese will be entitled to a bonus equal to 35%
of his annual salary in the event ECBC has sales
(net of returns and allowances) of at least
$30,000,000 during 2000, $65,000,000 during 2001,
and $125,000,000 during 2002.
Alex Garabedian 1-27-02 Annual salary of $155,000, monthly car allowance
of $1,150, monthly medical insurance reimbursement
of $1,200 and 325,000 shares of ECBC's common stock.
Mr. Garabedin will be entitled to a bonus equal
to 35% of his annual salary in the event ECBC has
sales (net of returns and allowances) of at least
$30,000,000 during 2000, $65,000,000 during 2001,
and $125,000,000 during 2002.
Edward Shanahan 10-26-00 Annual salary of $125,000,
a monthly car allowance of $500, a one time
signing bonus of $10,000, and 195,000 shares
of ECBC's common stock.
John Daumeyer 10-19-00 Annual salary of $95,000,
a monthly car allowance of $500, a one time
signing bonus of $7,500, and 130,000 shares
of ECBC's common stock.
<PAGE>
William Perry 10-31-00 Annual salary of $85,000, a monthly car allowance
Maxwell of $500, a one time signing bonus of $7,500,
and 130,000 shares of ECBC's common stock.
Drew Carver 10-10-00 Annual salary of $95,000, a
monthly car allowance of $500, a one time
signing bonus of $10,000, and 130,000 shares
of ECBC's common stock.
Long Term Incentive Plans - Awards in Last Fiscal Year
None
Employee Pension, Profit Sharing or Other Retirement Plans
Except as provided in ECBC's employment agreements with its executive
officers, ECBC does not have a defined benefit, pension plan, profit sharing or
other retirement plan, although ECBC may adopt one or more of such plans in the
future.
Compensation of Directors
Standard Arrangements. At present ECBC does not pay its directors for
attending meetings of the Board of Directors, although ECBC expects to adopt a
director compensation policy in the future. ECBC has no standard arrangement
pursuant to which directors of ECBC are compensated for any services provided as
a director or for committee participation or special assignments.
Except as disclosed elsewhere in this prospectus no director of ECBC
received any form of compensation from ECBC during the year ended December 31,
1999.
Options Granted During Fiscal Year Ending December 31, 1999
The following tables set forth information concerning the options granted,
during the fiscal year ended December 31, 1999, to the persons named below, and
the fiscal year-end value of all unexercised options (regardless of when
granted) held by these persons. The options listed below were granted pursuant
to ECBC's Non-Qualified Stock Option Plan.
% of Total
Options
Granted to Exercise
Options Employees in Price Per Expiration
Name Granted (#) Fiscal Year Share Date
John Calebrese 500,000 100% $2.75 12-31-04
<PAGE>
Option Exercises in Last Fiscal Year and Fiscal Year-End Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares December 31, December 31,1999
Acquired Value 1999 Exercisable/ Exercisable/
Name on Exercise(1) Realized(2) Unexercisable(3) Unexercisable(4)
- ----- ------------- ---------- ---------------- ----------------
John Calebrese -- -- 500,000/-- --/--
(1) The number of shares received upon exercise of options during the fiscal
year ended December 31, 1999.
(2) With respect to options exercised during ECBC's fiscal year ended December
31, 1999, the dollar value of the difference between the option exercise
price and the market value of the option shares purchased on the date of the
exercise of the options.
(3) The total number of unexercised options held as of December 31, 1999,
separated between those options that were exercisable and those options that
were not exercisable. All options held at are presently exercisable.
(4) For all unexercised options held as of December 31, 1999, the excess of the
market value of the stock underlying those options (as of December 31, 1999)
and the exercise price of the option. All options held at December 31, 1999
are presently exercisable.
Stock Option and Bonus Plans
ECBC has an Incentive Stock Option Plan, a Non-Qualified Stock Option Plan
and a Stock Bonus Plan. A summary description of each Plan follows. In some
cases these three Plans are collectively referred to as the "Plans".
Incentive Stock Option Plan.
The Incentive Stock Option Plan authorizes the issuance of options to
purchase up to 500,000 shares of ECBC's common stock. The Incentive Stock Option
Plan will remain in effect until January 10, 2010 unless terminated earlier by
action of the Board. Only officers, directors and key employees of ECBC may be
granted options pursuant to the Incentive Stock Option Plan.
In order to qualify for incentive stock option treatment under the
Internal Revenue Code, the following requirements must be complied with:
1. Options granted pursuant to the Plan must be exercised no later than:
(a) The expiration of thirty (30) days after the date on which an option
holder's employment by ECBC is terminated.
<PAGE>
(b) The expiration of one year after the date on which an option holder's
employment by ECBC is terminated, if such termination is due to the Employee's
disability or death.
2. In the event of an option holder's death while in the employ of ECBC,
his legatees or distributees may exercise (prior to the option's expiration) the
option as to any of the shares not previously exercised.
3. The total fair market value of the shares of common stock(determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.
4. Options may not be exercised until one year following the date of
grant. Options granted to an employee then owning more than 10% of the of ECBC
may not be exercisable by its terms after five years from the date of grant.
5. The purchase price per share of common stock purchasable under an
option is determined by the Committee but cannot be less than the fair market
value of ECBC's common stock on the date of the grant of the option (or 110% of
the fair market value in the case of a person owning ECBC's stock which
represents more than 10% of the total combined voting power of all classes of
stock).
Non-Qualified Stock Option Plan.
The Non-Qualified Stock Option Plan authorizes the issuance of options to
purchase up to 1,500,000 shares of ECBC's common stock. The Non-Qualified Stock
Option Plan became effective on January 10, 2000. ECBC's employees, directors,
officers, consultants and advisors are eligible to be granted options pursuant
to the Plan, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by the Committee but cannot be less than the market
price of ECBC's common stock on the date the option is granted.
Options granted pursuant to the Plan not previously exercised terminate
upon the first to occur of the following dates:
(a) The expiration of one year after the date on which an option holder's
employment by ECBC is terminated (whether termination is by ECBC, disability or
death); or
(b) The expiration of the option which occurs five (5) years from the date
the option was granted.
In the event of an option holder's death while in the employ of ECBC, his
legatees or distributees may exercise the option as to any of the shares not
previously exercised prior to the option's expiration.
<PAGE>
Stock Bonus Plan.
Up to 250,000 shares of common stock may be granted under the Stock Bonus
Plan. Such shares may consist, in whole or in part, of authorized but unissued
shares, or treasury shares. Under the Stock Bonus Plan, ECBC's employees,
directors, officers, consultants and advisors are eligible to receive a grant of
ECBC's shares; provided, however, that bona fide services must be rendered by
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
Other Information Regarding the Plans.
The Plans are administered by ECBC's Board of Directors. The Board of
Directors has the authority to interpret the provisions of the Plans and
supervise the administration of the Plans. In addition, the Board of Directors
is empowered to select those persons to whom shares or options are to be
granted, to determine the number of shares subject to each grant of a stock
bonus or an option and to determine when, and upon what conditions, shares or
options granted under the Plans will vest or otherwise be subject to forfeiture
and cancellation.
In the discretion of the Board of Directors, any option granted pursuant
to the Plans may include installment exercise terms such that the option becomes
fully exercisable in a series of cumulating portions. The Board of Directors may
also accelerate the date upon which any option (or any part of any options) is
first exercisable. Any shares issued pursuant to the Stock Bonus Plan and any
options granted pursuant to the Incentive Stock Option Plan or the Non-Qualified
Stock Option Plan will be forfeited if the "vesting" schedule established by the
Board of Directors at the time of the grant is not met. For this purpose,
vesting means the period during which the employee must remain an employee of
ECBC or the period of time a non-employee must provide services to ECBC. At the
time an employee ceases working for ECBC (or at the time a non-employee ceases
to perform services for ECBC), any shares or options not fully vested will be
forfeited and cancelled. In the discretion of the Board of Directors payment for
the shares of underlying options may be paid through the delivery of shares of
ECBC's common stock having an aggregate fair market value equal to the option
price, provided such shares have been owned by the option holder for at least
one year prior to such exercise. A combination of cash and shares of common
stock may also be permitted at the discretion of the Board of Directors.
Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Board of Directors when the shares were issued.
The Board of Directors of ECBC may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner it deems
appropriate, provided that such amendment, termination or suspension cannot
adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; increase or decrease the total number of shares of
common stock which may be issued pursuant to the Plans except in the case of a
reclassification of ECBC's capital stock or a consolidation or merger of ECBC;
reduce the minimum option price per share; extend the period for granting
options; or materially increase in any other way the benefits accruing to
employees who are eligible to participate in the Plans.
<PAGE>
The Plans are not qualified under Section 401(a) of the Internal Revenue
Code, nor are they subject to any provisions of the Employee Retirement Income
Security Act of 1974.
Summary.
The following sets forth certain information as of January 15, 2000,
concerning the stock options and stock bonuses granted by ECBC. Each option
represents the right to purchase one share of ECBC's common stock.
Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued As Shares
Name of Plan Under Plan Options Stock Bonus Under
Plan
Incentive Stock Option Plan 500,000 -- N/A 500,000
Non-Qualified Stock Option
Plan 1,500,000 500,000 N/A 1,000,000
Stock Bonus Plan 250,000 N/A -- 250,000
Other Options
ECBC has granted options to purchase shares of ECBC's common stock to the
persons below. These options were not granted pursuant to ECBC's Incentive or
Non-Qualified stock option plans.
Shares Issuable Option
Upon Exercise Exercise Expiration
Name of Options Price of Option
Arnold Rosen 100,000 $2.00 10/30/2000
Arnold Rosen 12,500 $3.50 1/03/2002
Other third parties 40,000 $3.50 1/03/2002
Mr. Rosen received these options for extending loans of $200,000 to ECBC
and for converting a $250,000 loan into shares of ECBC's common stock. See
"Transactions with Affiliates and Recent Sales of Securities" below. Mr. Rosen
and persons affiliated with Mr. Rosen presently own approximately 11% of ECBC's
common stock. See "Principal Shareholders".
In the near future ECBC plans to grant other options for the purchase of not
less than 500,000 shares of common stock to certain executive officers, with the
exception of John Calebrese.
Transactions with Affiliates and Recent Sales of Securities
ECBC has issued shares of its to the persons, in the amounts, and for the
consideration set forth in the following table. The amounts have been adjusted
to reflect the shares issued to the former shareholders of East Coast Beverage
Corp. in connection with the August 1999 acquisition of East Coast Beverage
Corp. and the 8.194595 for - one reverse split approved by the shareholders of
ECBC on February 22, 2000:
<PAGE>
Number Note
Name Date of Shares Consideration Reference
John Calebrese 3/01/98 2,411,454 Services rendered A
Alex Garabedian 9/10/98 325,000 Services rendered B
Edward Shanahan 10/26/98 195,000 Services rendered B
John Daumeyer 10/19/98 130,000 Services rendered B
William Perry Maxwell 11/02/98 130,000 Services rendered B
Drew Carver 10/10/98 130,000 Services rendered B
FPI, Inc 1/29/99 700,000 Services rendered
Arnold Rosen 8/01/99 66,666 Services rendered C
Arnold Rosen 08/31/99 250,000 Modification of
loan terms C
Arnold Rosen 09/01/99 34,000 Consulting services C
Arnold Rosen 10/20/99 15,000 Extension of maturity
of loan C
John Calebrese 1/10/00 694,973 Payment of loan D
Raygard Enterprises 1/10/00 190,000 Conversion of loan E
Arnold Rosen 1/11/00 126,192 Conversion of loan C
Between September 1999 and February 15, 2000 ECBC sold 1,189,958 shares of its
common stock to a group of private investors at a price of $2.75 per share. ECBC
plans to file a separate registration statement with the Securities and Exchange
Commission so as to permit the public sale of these shares.
A. Subsequent to March 1, 1998 Mr. Calebrese sold 428,812 shares to Genco
Overseas Ventures Limited and 428,812 shares to Aicon Investments, Limited.
Subsequent to March 1, 1998 Mr. Calebrese also assigned shares of ECBC's common
stock to FPI, Inc., Arnold Rosen and other third parties. See "Principal
Shareholders".
B. Shares were issued as part of the compensation provided in the
employment agreement with this person.
C. Between March and May 1999 East Coast Beverage Corp. sold 1,000 shares
of its Series A preferred stock to a group of private investors for $1,000,000.
All Series A preferred shares were subsequently converted into shares of the
common stock of East Coast Beverage Corp. In connection with the acquisition of
East Coast Beverage Corp. the former Series A preferred shareholders received
751,879 shares of ECBC's common stock. Arnold Rosen, a principal shareholder and
a consultant to ECBC, together with his wife and their respective IRA accounts,
purchased 520 of the Series A preferred shares.
Between May and August 1999 ECBC borrowed $1,000,000 from to Mr. Rosen.
The loan from Mr. Rosen enabled ECBC to fund a level of operations associated
with increased orders. The loans are represented by a series of convertible
notes (the "Notes") which bear interest at 12% per annum and are due and payable
in April 2000. The Notes originally provided Mr. Rosen with certain rights (i)
with respect to payment if ECBC was sold, (ii) conversion of the notes into ECBC
stock, and (iii) under certain circumstances, to a percentage of ECBC's net
income.
<PAGE>
In exchange for 250,000 shares of ECBC's common stock, ECBC and Mr. Rosen
agreed to the following modifications to the terms of the Notes:
o ECBC would repay Mr. Rosen $400,000, plus accrued interest, prior to
September 30, 1999.
o An additional $300,000 plus accrued interest would be repaid to Mr. Rosen
prior to October 15, 1999.
o The remaining $300,000, plus accrued interest would be payable on or before
April 1, 2000.
o The rights (i) to receive, under certain circumstances, a percentage
interest in ECBC's net income; and (ii) to receive 150% of the unpaid
principal if ECBC was sold, were terminated.
o The right to convert up to $300,000 of the amount owed to Mr. Rosen into
such number of shares of ECBC's common stock as may be determined by
dividing the amount to be converted by $2.00. On January 11, 2000 Mr. Rosen
converted $250,000 owed to him by ECBC, plus $2,383 in accrued interest,
into 126,192 shares of ECBC's common stock.
On October 20, 1999 ECBC paid Mr. Rosen $50,000 toward a $300,000 loan
which was due to be paid by October 15, 1999 and issued Mr. Rosen 15,000 shares
of ECBC's common stock for extending the maturity of the remaining amount of
this loan until January 15, 2000.
In September 1999 ECBC issued Mr. Rosen 34,000 shares of common stock in
consideration for consulting services provided to ECBC.
D. On January 10, 2000 John Calebrese converted $1,818,632 of advances to
ECBC into 694,973 shares of ECBC's common stock. The advances were made between
March 1998 and October 1999, were unsecured and did not bear interest.
E. On January 10, 2000 ECBC issued 190,000 shares of common stock to
Raygard Enterprises of South Florida, Inc. in settlement of $400,000 loaned to
ECBC by Raygard. The amount owed to Raygard was due on July 1, 2000, was
unsecured and did not bear interest.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of January 15, 2000, information with
respect to the only persons owning beneficially 5% or more of the outstanding
common stock and the number and percentage of outstanding shares owned by each
director and officer and by the officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
shares of common stock.
Shares of
Name and Address Common Stock Percent of Class
John Calebrese 1,832,972 (1) 23.9%
1750 University Drive
Suite 117
Coral Springs, Florida 33071
<PAGE>
Shares of
Name and Address Common Stock Percent of Class
Alex Garabedian 325,000 4.2%
1750 University Drive
Suite 117
Coral Springs, FL 33071
Edward Shanahan 195,000 2.5%
78 Harrington Ridge Road
Sherborn, MA 01770
John Daumeyer 130,000 1.7%
8621 Brookridge Dr.
West Chester, OH 45069
William Perry Maxwell 130,000 1.7%
2679 Corey Place
San Ramon, CA 94583
Drew Carver 130,000 1.7%
3852 E. Keresan
Phoenix, AZ 85044
Robert Gardener -- --
1750 University Drive
Suite 117
Coral Springs, FL 33071
James J. Harford -- --
250 Cagle Road
Roswell, GA 30075
Edith G Osman -- --
808 Brickle Key Blvd., #2301
Miami, FL 33131
Arnold Rosen 1,080,940 (2) 14.1%
7138 Ayrshire Lane
Boca Raton, FL 33496
FPI, Inc. 816,941 10.7%
Mizner Park Corporate Center
433 Plaza Real, Suite 275
Boca Raton, FL 33445
Genco Overseas Ventures Limited 428,812 (3) 5.6%
1500 Northwest 65th Ave.
Plantation, FL 33313
<PAGE>
Shares of
Name and Address Common Stock Percent of Class
Acion Investments, Limited 428,812 (3) 5.6%
1500 Northwest 65th Ave.
Plantation, FL 33313
All Officers and Directors 2,742,972 35.8%
as a Group (8 persons)
(1) Excludes 500,000 shares issuable upon the exercise of options held by Mr.
Calebrese. The options are exercisable at a price of $2.75 per share at any
time prior to December 31, 2004.
(2) Includes shares held by Mr. Rosen, Mr. Rosen's wife, and their respective
IRA accounts.
(3) Jack Namer is the controlling person of this shareholder and is therefore
the beneficial owner of the shares held of record by this shareholder.
The percentage ownership for each shareholder in the foregoing table has
been computed without including any shares issuable upon the exercise of any
options.
SELLING SHAREHOLDERS
This prospectus relates the sale of shares of ECBC's common stock by
certain owners of such shares. The shares were issued by ECBC in various private
offerings for cash, services rendered, and in settlement of amounts owed by ECBC
to various third parties.
The owners of the common stock to be sold by means of this prospectus are
referred to as the "selling shareholders".
The following table identifies the selling shareholders and the shares which
are being offered for sale by the selling shareholders.
Shares to Be
Shares Sold in this Share Ownership
Name Presently Owned Offering After Offering
John Calebrese 1,832,972 325,000 1,507,972
FPI, Inc. 816,941 816,941 --
Raygard Enterprises of 190,000 190,000 --
South Florida, Inc.
W. R. Smith (IRA) 221,064 187,970 33,094
Sanford I. Litchman, Trust 22,720 15,093 7,627
Sayre Litchman 7,500 7,500 --
Michael J. Litchman 7,500 7,500 --
<PAGE>
Shares to Be
Shares Sold in this Share Ownership
Name Presently Owned Offering After Offering
Cindy Litchman 7,500 7,500 --
Arnold L. Rosen 852,553 396,994 455,559
Arnold L. Rosen (IRA) 109,022 109,022 --
Bonnie Rosen (IRA) 120,027 93,984 26,043
Sachiko Miwa 111,551 75,188 36,363
Steven R. Marks 37,593 37,593 --
Edith G. Osman 22,556 22,556 --
Liz Coppola 50,000 50,000 --
Ismael Llera 50,000 50,000 --
Sharon Marks 40,000 40,000 --
Rikki Bruinsma 15,000 15,000 --
-----------
2,447,841
If all shares offered by this prospectus are sold, John Calebrese will own
19.7% of ECBC's common stock and Arnold Rosen will own 5.9% of ECBC's common
stock. Each of the other selling shareholders will own less than 1% of ECBC's
common stock.
Manner of Sale. The shares of common stock owned, or which may be
acquired, by the selling shareholders may be offered and sold by means of this
Prospectus from time to time as market conditions permit in the over-the-counter
market, or otherwise, at prices and terms then prevailing or at prices related
to the then-current market price, or in negotiated transactions. These shares
may be sold by one or more of the following methods, without limitation:
o a block trade in which a broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker/dealer.
In effecting sales, brokers or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from selling
shareholders in amounts to be negotiated.
<PAGE>
The selling shareholders and any broker/dealers who act in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of ss.2(11) of the Securities Acts of 1933, and any commissions
received by them and profit on any resale of the Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
ECBC has agreed to indemnify the selling shareholders and any securities
broker/dealers who may be deemed to be underwriters against certain liabilities,
including liabilities under the Securities Act as underwriters or otherwise.
ECBC has advised the selling shareholders that they and any securities
broker/dealers or others who may be deemed to be statutory underwriters will be
subject to the Prospectus delivery requirements under the Securities Act of
1933. ECBC has also advised each Selling Shareholder that in the event of a
"distribution" of the shares owned by the Selling Shareholder, such Selling
Shareholder, any "affiliated purchasers", and any broker/dealer or other person
who participates in such distribution may be subject to Rule 102 under the
Securities Exchange Act of 1934 ("1934 Act") until their participation in that
distribution is completed. Rule 102 makes it unlawful for any person who is
participating in a distribution to bid for or purchase stock of the same class
as is the subject of the distribution. A "distribution" is defined in Rule 102
as an offering of securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of special
selling efforts and selling methods". ECBC has also advised the selling
shareholders that Rule 101 under the 1934 Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of the common stock in connection with this offering.
DESCRIPTION OF SECURITIES
Common Stock
ECBC is authorized to issue 100,000,000 shares of common stock. Holders
of common stock are each entitled to cast one vote for each share held of record
on all matters presented to shareholders. Cumulative voting is not allowed;
hence, the holders of a majority of the outstanding common stock can elect all
directors.
Holders of common stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally available therefor
and, in the event of liquidation, to share pro rata in any distribution of
ECBC's assets after payment of liabilities. The board is not obligated to
declare a dividend. It is not anticipated that dividends will be paid in the
foreseeable future.
Holders of common stock do not have preemptive rights to subscribe to
additional shares if issued by ECBC. There are no conversion, redemption,
sinking fund or similar provisions regarding the common stock. All of the
outstanding shares of common stock are fully paid and nonassessable and all of
the shares of common stock offered as a component of the Units will be, upon
issuance, fully paid and non-assessable.
<PAGE>
Preferred Stock
ECBC is authorized to issue up to 20,000,000 shares of preferred stock.
ECBC's Articles of Incorporation provide that the Board of Directors has the
authority to divide the preferred stock into series and, within the limitations
provided by Colorado statute, to fix by resolution the voting power,
designations, preferences, and relative participation, special rights, and the
qualifications, limitations or restrictions of the shares of any series so
established. As the Board of Directors has authority to establish the terms of,
and to issue, the preferred stock without shareholder approval, the preferred
stock could be issued to defend against any attempted takeover of ECBC.
Transfer Agent
Florida Atlantic Stock Transfer, Inc. is the transfer agent for ECBC's
common stock.
EXPERTS
The balance sheet of ECBC as of December 31, 1998 and the Statement of
Operations, Statement of Changes in Deficiency in Assets and Statement of Cash
Flows for the period from inception (March 25, 1998) to December 31, 1998 have
been included herein in reliance on the report of Kaufman Rossin & Co.,
Professional Association, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
LITIGATION
Genco Overseas Ventures Limited ("Genco") and Aicon Investments,
Limited ("Aicon") have claimed that John Calebrese, ECBC's Chief Executive
Officer, and ECBC's wholly owned subsidiary (which is also named East Coast
Beverage Corp.) misrepresented certain facts to Genco and Aicon in connection
with the purchase by Genco and Aicon of shares of the subsidiary's common stock
from Mr. Calebrese in March 1999. As a result of these claimed
misrepresentations Genco and Aicon have demanded the return of $2,000,000, which
is the price Genco and Aicon paid for the shares. ECBC, ECBC's subsidiary, and
Mr. Calebrese are of the opinion that the claims of Genco and Aicon are without
merit.
Other than the foregoing, there are no legal proceedings to which ECBC
is a party or to which its properties are subject, other than routine litigation
incident to ECBC's business which is covered by insurance or which would not
have a material adverse effect on ECBC.
INDEMNIFICATION
ECBC's Bylaws authorize indemnification of a director, officer,
employee or agent of ECBC against expenses incurred by him in connection with
any action, suit, or proceeding to which he is named a party by reason of his
having acted or served in such capacity, except for liabilities arising from his
own misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of ECBC who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or persons
controlling ECBC pursuant to the foregoing provisions, ECBC has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
<PAGE>
AVAILABLE INFORMATION
ECBC is subject to the informational requirements of the Securities
Exchange Act of l934 and in accordance therewith is required to file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Copies of any such reports, proxy statements and
other information filed by ECBC can be inspected and copied at the public
reference facility maintained by the Securities and Exchange Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. and at the Securities and
Exchange Commission's Regional offices in New York (7 World Trade Center, Suite
1300, New York, New York 10048) and Chicago (Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511). Copies of such
material can be obtained from the Public Reference Section of the Securities and
Exchange Commission at its office in Washington, D.C. 20549 at prescribed rates.
Certain information concerning ECBC is also available at the Internet Web Site
maintained by the Securities and Exchange Commission at www.sec.gov ECBC has
filed with the Securities and Exchange Commission a Registration Statement on
Form SB-2 (together with all amendments and exhibits) under the Securities Act
of 1933, as amended (the "Act"), with respect to the Securities offered by this
prospectus. This prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Securities and Exchange Commission. For
further information, reference is made to the Registration Statement.
<PAGE>
- ------------------------------------------------------------------------------
EAST COAST BEVERAGE CORP.
FINANCIAL STATEMENTS
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<PAGE>
C O N T E N T S
Page
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Deficiency in Assets 4
Statement of Cash Flows 5
Notes to Financial Statements 6 - 12
<PAGE>
INDEPENDENT AUDITORS' REPORT
- -------------------------------------------------------------------------------
Board of Directors
East Coast Beverage Corp.
Coral Springs, Florida
We have audited the accompanying balance sheet of East Coast Beverage Corp. as
of December 31, 1998, and the related statements of operations, changes in
deficiency in assets, and cash flows for the period from inception (March 25,
1998) to December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 East Coast Beverage Corp. as of
December 31, 1998, and the results of its operations and its cash flows for the
period from inception (March 25, 1998) to December 31, 1998 in conformity with
generally accepted accounting principles.
Miami, Florida Kaufman Rossin & Co.
October 22, 1999 Professional Association
<PAGE>
EAST COAST BEVERAGE CORP.
BALANCE SHEET
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------
CURRENT ASSETS
Cash and equivalents $ 2,485
Accounts receivable (Note 2) 337,138
Note receivable 10,000
Inventories (Note 3) 1,211,086
- -------------------------------------------------------------------------------
Total current assets
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $1,001 (Note 4) 23,618
PREPAID ASSETS (NOTE 5) 141,882
OTHER ASSETS (NOTE 6) 25,713
- -------------------------------------------------------------------------------
TOTAL ASSETS $ 1,751,922
- -------------------------------------------------------------------------------
LIABILITIES AND DEFICIENCY IN ASSETS
- -------------------------------------------------------------------------------
CURRENT LIABILITIES
Bank overdraft $ 55,913
Accounts payable and accrued expenses 1,202,950
Due to stockholder (Note 7) 1,230,876
- -------------------------------------------------------------------------------
Total current liabilities
DEFICIENCY IN ASSETS ( 737,817)
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS $ 1,751,922
- -------------------------------------------------------------------------------
<PAGE>
EAST COAST BEVERAGE CORP.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (MARCH 25, 1998) TO DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SALES $ 478,066
COST OF GOODS SOLD 344,493
- --------------------------------------------------------------------------------
GROSS PROFIT 133,573
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 874,025
- --------------------------------------------------------------------------------
LOSS FROM OPERATIONS (740,452)
OTHER INCOME 2,135
- --------------------------------------------------------------------------------
NET LOSS ($ 738,317)
- --------------------------------------------------------------------------------
<PAGE>
EAST COAST BEVERAGE CORP.
STATEMENT OF CHANGES IN DEFICIENCY IN ASSETS
FOR THE PERIOD FROM INCEPTION (MARCH 25, 1998) TO DECEMBER 31, 1998
Common Stock,
$1.00 par value;
1,000 shares authorized
---------------------------
Shares Par Value Deficit Total
- -------------------------------------------------------------------------------
Issuance of common stock 500 $ 500 $ - $ 500
Net loss - - ( 738,317) ( 738,317)
- -------------------------------------------------------------------------------
Balances as of December
31, 1998 500 $ 500 ($738,317) ($737,817)
- -------------------------------------------------------------------------------
<PAGE>
EAST COAST BEVERAGE CORP.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MARCH 25, 1998) TO DECEMBER 31, 1998
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 738,317)
- -------------------------------------------------------------------------------
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 1,001
Changes in operating assets and liabilities:
Accounts receivable ( 337,138)
Inventories ( 1,211,086)
Prepaid assets ( 141,882)
Other assets ( 25,713)
Bank overdraft 55,913
Accounts payable and accrued expenses 1,202,950
- -------------------------------------------------------------------------------
Total adjustments ( 455,955)
- --------------------------------------------------------------------------------
Net cash used in operating activities ( 1,194,272)
- -------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan to employee ( 10,000)
Purchases of property and equipment ( 24,619)
- --------------------------------------------------------------------------------
Net cash used in investing activities ( 34,619)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 500
Net borrowings from stockholder 1,230,876
- -------------------------------------------------------------------------------
Net cash provided by financing activities
- -------------------------------------------------------------------------------
NET INCREASE IN CASH AND EQUIVALENTS AND BALANCE AT DECEMBER
31, 1998 2,485
- ------------------------------------------------------------------------------
Supplemental Disclosures:
- -------------------------------------------------------------------------------
Interest paid to stockholder $ 18,416
- -------------------------------------------------------------------------------
<PAGE>
EAST COAST BEVERAGE CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Description and Activity
The Company was incorporated in March 25, 1998, under the laws of
the State of Florida for the purpose of developing, producing and
distributing Coffee House USA(TM), a proprietary line of all
natural, ready to drink, bottled coffee drinks.
Cash and Equivalents
During 1998 the Company maintained an account with a brokerage firm.
Cash and equivalents are comprised of cash and highly liquid
securities (consisting primarily of money-market investments) with
an original maturity or redemption option of three months or less.
Balances are insured up to $500,000 (with a limit of $100,000 for
cash) by the Securities Investor Protection Corporation.
Property and Equipment
Property and equipment is recorded at cost. Expenditures for major
betterments and additions are charged to the asset accounts while
replacements, maintenance and repairs which do not improve or extend
the lives of the respective assets are charged to expense currently.
Depreciation
Depreciation of property and equipment is determined utilizing
straight-line and accelerated methods at various rates based
generally on the estimated useful lives of the assets. The range of
estimated useful lives is as follows:
Office furniture and equipment 5 to 7 years
Machinery and equipment 5 to 7 years
Accounts Receivable
In the opinion of management, substantially all of the accounts
receivable are considered to be realizable at the amounts stated in
the accompanying balance sheet, and no allowance for doubtful
accounts is considered necessary.
Inventories
Inventories are stated at the lower of cost or market, using the
first-in, first-out method in determining cost and replacement cost
in determining market.
<PAGE>
- -------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
- ------------------------------------------------------------------------------
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.
Income Taxes
No provision for income taxes has been made in the accompanying
financial statements as the Company has elected, with the
stockholder's consent, to be taxed under S Corporation provisions of
the Internal Revenue Code. Under these provisions, the taxable
income of the Company is reflected by the stockholder on his
personal income tax return.
Revenue Recognition
Revenue from product sales is recognized by the Company when title
and risk of loss passes to the distributor, which generally occurs
upon shipment from the manufacturing facility.
Segment Reporting
During 1998, the Company adopted Financial Accounting Standards
Board ("FASB") statement No. 131, "Disclosure about Segments of an
Enterprise and Related Information". The Company has considered its
operations and has determined that it operates in a single operating
segment for purposes of presenting financial information and
evaluating performance. As such, the accompanying financial
statements present information in a format that is consistent with
the financial information used by management for internal use.
Impact of the "Year 2000" Computer Issue
Because computers frequently use only two digits to recognize years,
on January 1, 2000, many computer systems, as well as equipment that
uses embedded computer chips, may be unable to distinguish between
the years 1900 and 2000. If not remediated, this problem could
create system errors and failures resulting in the disruption of
normal business operations. In the event the Company fails to
identify or correct a material Year 2000 problem, there could be
disruptions in normal business operations, which could have a
material adverse effect on the Company's results of operations,
liquidity or financial condition. Further, there may be some third
parties, such as governmental agencies, utilities, telecommunication
<PAGE>
companies, vendors, suppliers and customers who may not be able to
continue business with the Company due to their own Year 2000
problems. Also, risks associated with some foreign third parties may
be greater since there is general concern that some entities
operating outside the United States are not addressing Year 2000
issues on a timely basis. There can be no assurance that any efforts
made will fully mitigate the effect of Year 2000 issues.
NOTE 2. ACCOUNTS RECEIVABLE
Accounts receivable at December 31, 1998 consisted of the following:
Trade accounts receivable $ 306,202
Accounts receivable from factor 30,936
----------------------------------------------------------------
$
----------------------------------------------------------------
During 1998, the Company entered into a factoring agreement,
providing for assignment of pre-approved trade receivables on a
non-recourse basis of up to $2,000,000 with advances based on 80% of
eligible receivables. Pursuant to this agreement, the Company is
charged fixed factoring fees of 2% of the gross receivables assigned
and a variable discount computed on the actual days elapsed from the
date of the initial payment until and including five days after
payment is received by the factor, based on the base rate plus 2%
per annum, with a minimum of 7% per annum. The agreement is
collateralized by substantially all of the assets of the Company and
personally guaranteed by the stockholder. Total finance changes
amounted to approximately $13,000 during 1998.
NOTE 3. INVENTORIES
Inventories at December 31, 1998 consisted of the following:
Finished goods $1,023,122
Raw materials 187,964
------------------------------------------------------------------
$1,211,086
------------------------------------------------------------------
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1998 consisted of the
following:
Office furniture and equipment $ 6,539
Machinery and equipment 18,080
----------------------------------------------------------------
24,619
Less: accumulated depreciation (1,001)
----------------------------------------------------------------
$23,618
----------------------------------------------------------------
Depreciation expense amounted to $1,001 in 1998.
<PAGE>
NOTE 5. PREPAID ASSETS
The Company entered into an agreement with a manufacturer, whereby a
$150,000 mold fee was required in order to set up for the
manufacture of bottles. The manufacturer will credit up to the full
amount of the fee at a rate of $0.40 per gross on all ware
manufactured for and accepted by the Company within a three year
period. During 1998 the Company received a $8,118 credit related to
this agreement.
NOTE 6. OTHER ASSETS
Other assets at December 31, 1998 consisted of the following:
Promotional items $14,487
Trademark 500
Deposits 10,726
----------------------------------------------------------------------
$25,713
----------------------------------------------------------------------
NOTE 7. DUE TO STOCKHOLDER
At December 31, 1998, the Company had an unsecured loan payable to
the sole stockholder in the amount of $1,230,876. The loan bears
interest payable monthly at 10% per annum, and is due on demand.
Interest expense in connection with this note amounted to $26,822
during 1998.
NOTE. 8. RISKS AND UNCERTAINTIES
The Company is substantially dependent on two unrelated parties as
manufacturers of their products. Management believes that the loss
of these manufacturers would not significantly disrupt operations
and that relationships with alternate manufacturers at similar costs
could be established within a few weeks.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Employment Agreements
Prior to commencement of operations, the Company entered into
employment agreements with certain key employees, which provide for,
among other things, minimum annual salaries and issuance of common
stock. In connection with these agreements, the Company agreed to
issue in the aggregate, 140 shares of common stock, representing
approximately 21% of total outstanding common stock of the Company.
As these shares are the equivalent of founder shares and the value
of the shares is nominal, no compensation was recorded by the
Company. On January 1, 1999, these shares were deemed to be issued.
<PAGE>
Leases
The Company leases its office facilities under a non-cancellable
operating lease agreement expiring in 2000.
Minimum annual rental commitments under this lease for the years
subsequent to December 31, 1998 are as follows:
1999 $ 14,284
2000 10,989
-----------------------------------------------------------------
$ 25,273
-----------------------------------------------------------------
Total rent expense amounted to $11,199 in 1998.
Commitments
The Company has entered into purchase agreements with two unrelated
entities to provide the Company with manufacturing of the products
to be used in its normal operations.
Under one of the purchase agreements, the Company is committed to
minimum purchases of approximately $940,000, representing 400,000
cases of coffee product per year. Management expects production to
surpass this minimum, however, there can be no assurance this
minimum will be met.
Contingencies
An individual that formerly acted as counsel to the Company has
notified the Company that he believes he is entitled to a five
percent ownership interest in the Company in connection with
services rendered. The Company disagrees with this individual's
representation and intends, if any claim is made for such ownership
interest to vigorously defend its position.
NOTE 10. SUBSEQUENT EVENTS
Stock Split
On March 24, 1999, the Company approved and effectuated a 25,000 for
1 forward stock split of its common stock resulting in an increase
in the number of shares of common stock effectively outstanding from
670 to 16,750,000.
Consulting Agreements
On January 25, 1999, the Company entered into an agreement
(Consulting Agreement) with an entity (Consultant) to act as its
agent and to perform consulting services with financial growth
strategies. Under the terms of the
<PAGE>
NOTE 10. SUBSEQUENT EVENTS (Continued)
Consulting Agreement, as amended on January 29, 1999 and April 4,
1999, the Company agreed to compensate the Consultant based upon
various formulas, including the following:
a) $20,000 paid on January 25, 1999;
b) $2,500 per month for 12 months;
c) 30 shares of the Company's common stock;
d) Fees for debt moneys raised due to the efforts of Consultant shall be
set at two percent (2%);
e) Finder's fees computed at a rate to be agreed by both parties;
f) Upon sale of the Company, additional equity in the Company of
five percent (5%), a proportionate amount of the cash, cash and
stock or cash and options received upon sale, plus a proportional
pro-rata share of the net profits.
Also under the Consultant Agreement, it is contemplated that the
Company will seek a private placement in an amount up to $4,000,000
and in connection therewith will pay Consultant $100,000 for each
one million dollars raised, or part thereof, through parties
introduced directly or indirectly by the Consultant.
Compensation in the form of the Company's common stock and cash
compensation paid to the Consultant aggregated 700,000 shares (after
giving effect to the March 24, 1999 forward stock split and a return
of certain shares by the Consultant in anticipation of a
recapitalization) and $322,535, respectively.
On August 1, 1999 in connection with the restructuring of the note
payable discussed below, the Company entered into a second
consulting agreement (Second Consulting Agreement) with an
individual (Individual Consultant) to provide services including
product market studies, customer relations and public relations
assistance for six months from the date of the agreement. Under the
terms of this agreement, the Company agreed to compensate the
Individual Consultant based upon various formulas, as follows:
a) 25,000 shares of the Company's common stock issuable 10 days after the
signing of this agreement.
b) 20,833 shares of common Company stock payable per month for a two month
period, commencing 30 days after the signing of this agreement.
As of October 22, 1999 compensation in the form of the Company's common
stock paid to the Individual Consultant aggregated 66,666 shares.
<PAGE>
Private Placement
During March and April 1999, pursuant to a Private Placement Memorandum,
the Company issued 1,000 shares of convertible preferred stock for $1,000 per
share. On August 25, 1999 each share of preferred stock was converted into
751,879 shares of common stock. Costs associated with this offering amounted to
approximately $87,500.
Common Stock
As of October 22, 1999, the Company had not issued certain stock
certificates issuable in connection with employment agreements, consulting
agreements, stock sales and founding stockholder shares due, however, as the
Company is obligated to issue these shares for financial reporting purposes, all
are deemed to be issued and outstanding.
Note Payable
Between May and August 1999, the Company borrowed funds aggregating
$1,000,000 from the Individual Consultant, with interest at 12%. Principal and
accrued interest is due at varying dates from September 1999 through April 2000.
As consideration to restructure this note, and in connection with the Second
Consulting Agreement discussed above, the Company agreed to issue the Individual
Consultant 250,000 shares of the Company's common stock.
Reverse Acquisition
Effective August 31, 1999, the Company entered into an agreement to
exchange common stock with USA Service Systems, Inc. (USA), a non-operating
company. The Agreement provided for the exchange of 41,300,758 restricted shares
of common stock of USA for all of the issued and outstanding shares of the
Company. This merger was treated for accounting purposes as a capital
transaction. As the Company is the accounting acquiror in this "reserve
acquisition," the financial statements of USA are considered to be a
continuation of the Company. Concurrent with this merger, USA changed its name
to East Coast Beverage Corp.
<PAGE>
USA SERVICE SYSTEMS, INC.
CONDENSED BALANCE SHEET
Unaudited
September 30,
ASSETS 1999 December 31, 1998
- --------------------------------------------------------------------------------
CURRENT ASSETS
Cash and equivalents $ 89,696 $ 2,485
Accounts receivable 1,523,928 337,138
Loans and exchange 29,800 10,000
Prepaid expenses 232,362 141,882
Subscriptions receivable 195,000 -
Inventories 1,316,553 1,211,086
- -------------------------------------------------------------------------------
Total current assets 3,387,339 1,560,709
Property and equipment, net of accumulated
depreciation of $24,357 and $1,001 1,007,120 23,618
Other assets 23,789 25,713
- -------------------------------------------------------------------------------
TOTAL ASSETS $ 4,418,248 $ 1,751,922
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY IN ASSETS)
- -------------------------------------------------------------------------------
CURRENT LIABILITIES
Bank Overdraft $ - $ 55,913
Accounts payable and accrued expenses 700,289 1,202,950
Loan payable, current portion 1,500,000 -
- -------------------------------------------------------------------------------
Total current liabilities 2,200,289 1,258,863
Due to stockholder 1,567,426 1,230,876
TOTAL LIABILIIES 3,767,715 2,489,739
- -------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS) 650,533 (737,817)
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,418,248 $1,751,922
- -------------------------------------------------------------------------------
See accompanying notes
<PAGE>
USA SERVICE SYSTEMS, INC.
CONDENSED STATEMENT OF OPERATIONS
Unaudited
Nine months ended September 30,
1999 1998
- -------------------------------------------------------------------------------
SALES $5,179,189 $ -
-
COST OF GOODS SOLD 3,681,520 -
- --------------------------------------------------------------------------------
GROSS PROFIT 1,497,669 -
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,427,926 334,551
- --------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS 69,743 (334,551)
STOCK BASED COMPENSATION AND FINANCING COSTS
(NOTE 7) 421,166 -
OTHER INCOME 625 1,483
- --------------------------------------------------------------------------------
NET INCOME (LOSS) $ (350,798) $ (333,068)
- --------------------------------------------------------------------------------
See accompanying notes
<PAGE>
USA SERVICE SYSTEMS, INC.
STATEMENT OF CASH FLOWS
Unaudited
Nine months ended September 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 350,798) ($ 333,068)
- ------------------------------------------------------------------------------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 23,356 -
Stock based compensation and financing costs 421,166
Stock issued for services 148,581 -
Changes in operating assets and liabilities:
Accounts receivable ( 1,186,790) -
Inventories ( 105,466) ( 44,534)
Prepaid assets ( 90,480) ( 150,000)
Subscriptions receivable ( 195,000) -
Other assets 1,924 ( 3,102)
Accounts payable and accrued expenses ( 502,662) 88,486
- -----------------------------------------------------------------------------
Total adjustments ( 1,485,371) ( 109,150)
- ------------------------------------------------------------------------------
Net cash used in operating activities ( 1,836,169) ( 442,218)
- ------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan to employee ( 19,800) ( 10,000)
Purchases of property and equipment ( 1,006,858) ( 1,575)
- ------------------------------------------------------------------------------
Net cash used in investing activities ( 1,026,658) ( 11,575)
- ------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 1,169,401 500
Net borrowings from stockholder 336,550 499,000
Net borrowings, other 1,500,000 -
Payments ( 55,913) -
- -----------------------------------------------------------------------------
Net cash provided by financing activities 2,950,038 499,500
- -----------------------------------------------------------------------------
NET INCREASE IN CASH AND EQUIVALENTS 87,211 45,707
- -----------------------------------------------------------------------------
CASH AND EQUIVALENTS - BEGINNING 2,485 -
CASH AND EQUIVALENTS - ENDING 89,696 $ 45,707
Supplemental Disclosures:
Interest paid to stockholder $ 6,856 -
- -----------------------------------------------------------------------------
See accompanying notes
<PAGE>
USA SERVICE SYSTEMS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
1. INTERIM REPORTING
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles and the
requirements of regulation S-X concerning Interim financial statements.
Accordingly, these financial statements do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
nine months ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999. For further
information, refer to the financial statements and related footnotes for the
year ended December 31, 1998 included elsewhere in this prospectus.
2. Acquisition of East Coast Beverage Corp.
Effective August 31, 1999 the Company acquired all of the issued and
outstanding shares of East Coast Beverage Corp. ("ECBC") in exchange for
41,300,758 shares of the Company's common stock. Immediately prior to this
transaction, certain officers and directors of the Company surrendered 2,734,202
shares of the Company's common stock. Following this transaction the Company had
44,354,058 issued and outstanding shares of common stock. The former
shareholders of ECBC now own approximately 93% of the Company's common stock. In
connection with this transaction the management of the Company resigned and was
replaced by the management of ECBC. The acquisition of ECBC was treated for
accounting purposes as a capital transaction and as a result the historical
financial statements of ECBC are those of the Company.
The business of the Company, which is conducted through ECBC, now involves
the development, production and distribution of Coffee House USA(TM), a
proprietary line of all natural, ready to drink ("RTD") bottled coffee drinks.
3. PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, East Coast Beverage Corp. All
significant inter company accounts and transactions have been eliminated.
4. 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.
<PAGE>
5. Revenue Recognition
Revenue from product sales is recognized by the Company when title and
risk of loss passes to the distributor, which generally occurs upon shipment
from the manufacturing facility.
6. LOAN FROM STOCKHOLDER
At September 30, 1999, the Company had an unsecured loan payable to an
officer, director and principal shareholder in the amount of $1,567,426. The
loan bears interest payable monthly at 10% per annum, and is due on demand.
7. STOCK BASED COMPENSATION AND FINANCING COSTS
In August 1999 ECBC issued 546,300 shares of its common stock (as adjusted
for the share-for-share exchange between the Company and ECBC) to a principal
shareholder and consultant for services provided to ECBC. The value of these
shares ($88,666) has been expensed as Stock Based Compensation during the
quarter ended September 30, 1999.
Between May and August 1999 ECBC borrowed $1,000,000 from the consultant.
In exchange for 2,048,648 shares of common stock (as adjusted for the
share-for-share exchange between the Company and ECBC), ECBC and the consultant
agreed to significant modifications to the terms of the Notes. The value of
these shares ($332,500) has been expensed as Financing Costs during the quarter
ended September 30, 1999.
8. Stock Split
On March 24, 1999, the Company's shareholders approved a 25,000 for 1
forward split of the Company's common stock.
9. Private SALES OF SECURITIES
During March and April 1999, ECBC sold 1,000 shares of convertible
preferred stock to certain private investors for $1,000 per share. On August 25,
1999 the shares of preferred stock were converted into 6,161,334 shares of the
Company's common stock (as adjusted for the share-for-share exchange between the
Company and ECBC).
During the three months ending September 30, 1999 the Company sold
3,485,541 shares of its common stock to private investors at a price of $0.34
per share. Subsequent to September 30, 1999 the Company sold an additional
2,993,871 shares of its common stock to private investors at the same price.
<PAGE>
PART II
Information Not Required in Prospectus
Item 24. Indemnification of Officers and Directors.
The Colorado Business Corporation Act and the Company's Bylaws provide that
the Company may indemnify any and all of its officers, directors, employees or
agents or former officers, directors, employees or agents, against expenses
actually and necessarily incurred by them, in connection with the defense of any
legal proceeding or threatened legal proceeding, except as to matters in which
such persons shall be determined to not have acted in good faith and in the best
interest of the Company.
Item 25. Other Expenses of Issuance and Distribution.
SEC Filing Fee $ 1,788
NASD Filing Fee --
Blue Sky Fees and Expenses 2,000
Printing and Engraving Expenses 500
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 5,000
Miscellaneous Expenses 5,712
--------
TOTAL $40,000
All expenses other than the S.E.C. and NASD filing fees are estimated.
Item 26. Recent Sales of Unregistered Securities.
The following information sets forth all securities of the Company
which have been sold during the past three years and which securities were not
registered under the Securities Act of 1933, as amended. All historical share
data has been adjusted to reflect a 8.194595-for-one reverse split of the
Company's common stock, which was approved by the Company's shareholders on
February 22, 2000.
A. In November 1998 the Company issued 706,258 shares of common stock to the
former shareholders of USA Service Systems, Inc. (28 in number) in exchange for
all of the issued and outstanding shares of USA Service Systems, Inc. A total of
333,659 shares were subsequently returned to the Company for cancellation.
B. In August 1999 the Company issued 5,040,000 shares of its common stock to
the former shareholders (fourteen in number) of East Coast Beverage Corp., a
Florida corporation in exchange for all of the issued and outstanding shares of
East Coast Beverage Corp.
C. Between September 1999 and February 10, 2000 the Company sold 1,189,958
shares of its common stock to 48 persons (38 of which are accredited investors)
at a price of $2.75 per share.
<PAGE>
D. The Company has also sold shares of common stock to the following persons:
Number
Name Date of Shares Consideration
Arnold Rosen 09/01/99 34,000 Consulting Services
Arnold Rosen 10/20/99 15,000 Extension of Maturity
of loan
John Calebrese 01/10/00 694,973 Payment of loan
Rayguard Enterprises 01/10/00 190,000 Conversion of loan
Arnold Rosen 01/11/00 126,192 Conversion of loan
The sales of the Company's common stock referred to in Sections A and D were
exempt from Registration pursuant to Section 4 (2) of the Securities Act of
1933. The shares of common stock were acquired for investment purposes only and
without a view to distribution. All of the persons who acquired these shares
were fully informed and advised about matters concerning the Company, including
its business, financial affairs and other matters. The purchasers of the
Company's common stock acquired the securities for their own accounts. The
certificates evidencing the shares of common stock will bear legends stating
that the shares represented by the certificates may not be offered, sold or
transferred other than pursuant to an effective registration statement under the
Securities Act of 1933, or pursuant to an applicable exemption from
registration. The shares of common stock referred to in Sections A and D are
"restricted" securities as defined in Rule 144 of the Securities and Exchange
Commission.
The sales of the Company's common stock referred to in Sections B and C were
exempt from registration pursuant to Rule 506 of the Securities and Exchange
Commission. The shares of the common stock were acquired for investment purposes
only and without a view to distribution. The persons who acquired these shares
were fully informed and advised about matters concerning the Company, including
its business, financial affairs and other matters. The purchasers of the
Company's common stock acquired the securities for their own accounts. The
certificates evidencing the common these shares will bear legends stating that
they may not be offered, sold or transferred other that pursuant to an effective
registration statement under the Securities Act of 1933, or pursuant to an
applicable exemption from registration. The shares of common stock referred to
in Sections B and C are "restricted" securities as defined in Rule 144 of the
Securities and Exchange Commission.
<PAGE>
Item 27. Exhibits
Exhibits Page Number
1 Underwriting Agreement N/A
2. Share Exchange Agreement between USA
Service Systems, Inc. and East Coast Beverage Corp.
3.1 Articles of Incorporation,
as restated and amended
3.2 Bylaws
4.1 Incentive Stock Option Plan
4.2 Non-Qualified Stock Option Plan
4.3 Stock Bonus Plan
5 Opinion of Counsel
10 Employment Agreements
23.1 Consent of Attorneys
23.2 Consent of Accountants
24. Power of Attorney Included as part of the
Signature Page
27. Financial Data Schedules
Item 28. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement.
(i) To include any Prospectus required by Section l0(a)(3) of the Securities
Act of l933;
(ii) To reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
<PAGE>
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement,
including (but not limited to) any addition or deletion of a managing
underwriter.
(2) That, for the purpose of determining any liability under the
Securities Act of l933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) To provide to the Underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of l933 may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
POWER OF ATTORNEY
The registrant and each person whose signature appears below hereby
authorizes the agent for service named in this Registration Statement, with full
power to act alone, to file one or more amendments (including post-effective
amendments) to this Registration Statement, which amendments may make such
changes in this Registration Statement as such agent for service deems
appropriate, and the Registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the Registrant and any such person, individually and in
each capacity stated below, any such amendments to this Registration Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Coral Springs, Florida,
on the 23rd day of February, 2000.
EAST COAST BEVERAGE CORP.
By: /s/ John Calebrese
John Calebrese, Chief Executive Officer
By:/s/ Robert Gardener
Robert Gardener, Principal Financial
Officer and Chief Accounting Officer
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ John Calebrese
John Calebrese Director February 23, 2000
/s/ James J. Harford
James J. Harford Director February 23, 2000
Edith G. Osman Director
ECBC SB-2 Jan 2000
EAST COAST BEVERAGE CORP.
REGISTRATION STATEMENT
ON
FORM SB-2
EXHIBITS
AGREEMENT TO EXCHANGE COMMON STOCK
BETWEEN
USA SERVICE SYSTEMS, INC.
AND
EAST COAST BEVERAGE CORP.
<PAGE>
INDEX Page
ARTICLE I - EXCHANGE OF SECURITIES ...................................... 4
ARTICLE II - REPRESENTATIONS AND WARRANTIES ......................... 4
2.0l - Organization ................................................ 4
2.02 - Capital ..................................................... 4
2.03 - Directors and Officers' Compensation; Banks ................. 4
2.04 - Financial Statements ........................................ 4
2.05 - Absence of Changes ......................................... 5
2.06 - Absence of Undisclosed Liabilities ......................... 5
2.07 - Tax Returns .................................................. 5
2.08 - Investigation of Financial Condition.......................... 5
2.09 - Trade Names and Rights ...................................... 5
2.l0 - Contracts and Leases ........................................ 5
2.ll - Insurance Policies ............................................5
2.l2 - Compliance with Laws ....................................... 5
2.l3 - Litigation ................................................ 6
2.l4 - Ability to Carry Out Obligations ........................... 6
2.l5 - Full Disclosure ............................................. 6
2.l6 - Assets ..................................................... 6
2A - Organization ................................................... 6
2B - Directors and Officers' Compensation; Banks .................... 6
2C - Capital ...................................................... 6
2D - Financial Statements .......................................... 7
2E - Absence of Changes ............................................ 7
2F - Absence of Undisclosed Liabilities ........................... 7
2G - Tax Returns .................................................... 7
2H - Investigation of Financial Condition of USA ................... 7
2I - Trade Names and Rights ......................................... 7
2J - Contracts and Leases ............................................8
2K - Insurance Policies ............................................. 8
2L - Compliance with Laws .......................................... 8
2M - Litigation ..................................................... 8
2N - Ability to Carry Out Obligations ............................... 8
2O - Full Disclosure .................................................9
2P - Assets ..........................................................9
ARTICLE III - SHAREHOLDER REPRESENTATIONS ............................. 9
ARTICLE IV - OBLIGATIONS BEFORE CLOSING ................................ 9
4.0l - Investigative Rights ......................................... 9
4.02 - Surrender of Shares.......................................... 9
4.03 - Conduct of Business ..........................................10
ARTICLE V - CONDITIONS PRECEDENT TO PERFORMANCE BY USA.................. 10
5.0l - Conditions ............................................... . 10
5.02 - Accuracy of Representations ................................. 10
5.03 - Performance...................................................10
5.04 - Absence of Litigation ........................................10
<PAGE>
ARTICLE VI - CONDITIONS PRECEDENT TO PERFORMANCE ................ 11
BY ECBC. ................................................... 11
6.0l - Conditions ................................................... 11
6.02 - Accuracy of Representations ................................. 11
6.03 - Performance ................................................ 11
6.04 - Absence of Litigation ..................................... 11
6.05 - Other ....................................................... 11
ARTICLE VII - CLOSING ................................................... 11
7.0l - Closing .......................................................11
7.02 - Exchange of Shares .......................................... 12
7.03 - No Fractional Shares ..........................................12
7.04 - Appointment of Directors ......................................12
ARTICLE VIII - REMEDIES ..................................................12
8.0l - Arbitration ...................................................12
8.02 - Costs .........................................................12
8.03 - Termination ................................................. 12
ARTICLE IX - MISCELLANEOUS ...............................................13
9.0l - Captions and Headings .........................................13
9.02 - No Oral Change ................................................13
9.03 - Non-Waiver ....................................................13
9.04 - Time of Essence .............................................. 13
9.05 - Entire Agreement ..............................................13
9.06 - State Law .....................................................13
9.07 - Counterparts ..................................................13
9.08 - Notices .......................................................13
9.09 - Binding Effect ................................................14
9.l0 - Effect of Closing .............................................14
9.ll - Mutual Cooperation ............................................14
9.12 - Expenses...................................................... 15
Exhibit A - Officers and Directors (ECBC) ............................
Exhibit B - Financial Statements (ECBC) ...............................
Exhibit C - Not Used....................................................
Exhibit D - Not Used....................................................
Exhibit E - Not Used ...................................................
Exhibit F - Not Used....................................................
Exhibit G - Officers, Directors, Bank Accounts, Safe Deposit
Boxes, Powers of Attorney (USA) ............................
Exhibit H - Financial Statements - Changes in Financial
Condition (USA) .........................................
Exhibit I - Trademarks, Trade Names and Copyrights (USA) ...........
Exhibit J - Material Contracts (USA) ..................................
Exhibit K - Insurance Policies (USA) ...................................
Ehibit L - Litigation (USA) ...........................................
<PAGE>
AGREEMENT TO EXCHANGE COMMON STOCK
This AGREEMENT, made this day of August, 1999, by and between USA Service
Systems Inc.("USA"), EAST COAST BEVERAGE CORP. ("ECBC") and the shareholders of
ECBC (as to Article I and Article III only) is made for the purpose of setting
forth the terms and conditions upon which USA will acquire all of the issued and
outstanding common stock of ECBC in exchange for shares of USA's common stock.
In consideration of the mutual promises, covenants, and representations
contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
EXCHANGE OF SECURITIES
Subject to the terms and conditions of this Agreement, USA agrees to
issue, and the shareholders of ECBC agree to accept 41,300,760 shares of the
common stock of USA in consideration for all of the issued and outstanding
common stock of ECBC. Immediately prior to the closing of this transaction, the
total issued capital of USA will not exceed 3,053,298 shares of Common Stock
ARTICLE II
REPRESENTATIONS AND WARRANTIES
ECBC represents and warrants to USA that:
2.0l Organization. ECBC is a corporation duly organized, validly existing,
and in good standing under the laws of Florida, has all necessary corporate
powers to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each of the states where its business requires qualification.
2.02 Capital. The authorized capital stock of ECBC consists of 25,000,000
shares of common stock, $0.001, of which 5,040,000 shares will be issued and
outstanding at closing. ECBC is authorized to issue 5,000,000 shares of
preferred stock. All outstanding shares of preferred stock will be converted
into shares of common stock prior to closing. At closing, there will be no
outstanding subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating ECBC to issue or to transfer from
treasury any additional shares of its capital stock of any class.
2.03 Directors and Officers' Compensation; Banks. Exhibit A to this
Agreement contains the names, and titles of all directors and officers of ECBC.
<PAGE>
2.04 Financial Statements. Exhibit B to this Agreement sets forth balance
sheets of ECBC as of December 31, 1998 and June 30, 1999, and the related
statements of income for the periods then ended. The financial statements have
been prepared in accordance with generally accepted accounting principles
consistently followed by ECBC throughout the periods indicated, and fairly
present the financial position of ECBC as of the dates of the balance sheets
included in the financial statements, and the results of its operations for the
periods indicated.
2.05 Absence of Changes. Since June 30,1999, there has not been any change
in the financial condition or operations of ECBC, except changes in the ordinary
course of business, which changes have not in the aggregate been materially
adverse.
2.06 Absence of Undisclosed Liabilities. ECBC did not as of June 30, 1999
have any debt, liability, or obligation of any nature, whether accrued,
absolute, contingent, or otherwise, and whether due or to become due, that is
not reflected on Exhibit B.
2.07 Tax Returns. Within the times and in the manner prescribed by law,
ECBC has filed all federal, state, and local tax returns required by law and has
paid all taxes, assessments, and penalties due and payable. No federal income
tax returns of ECBC have been audited by the Internal Revenue Service. The
provision for taxes, if any, reflected in ECBC's balance sheet as of June 30
1999, is adequate for any and all federal, state, county, and local taxes for
the period ending on the date of that balance sheet and for all prior periods,
whether or not disputed. There are no present disputes as to taxes of any nature
payable by ECBC.
2.08 Investigation of Financial Condition. Without in any manner reducing
or otherwise mitigating the representations contained herein, USA shall have the
opportunity to meet with ECBC's accountants and attorneys to discuss the
financial condition of ECBC. ECBC shall make available to USA the books and
records of ECBC. The minutes of ECBC are a complete and accurate record of all
meetings of the shareholders and directors of ECBC and accurately reflect all
actions taken at such meetings. The signatures of the directors and/or officers
on such minutes are the valid signatures of ECBC's directors and/or officers who
were duly elected or appointed on the dates that the minutes were signed by such
persons. The stock book of ECBC contains an accurate record of all transactions
with respect to the capital stock of ECBC.
2.09 Trade Names and Rights. No person other than ECBC owns any trademark,
trademark registration or application, service mark, trade name, copyright, or
copyright registration or application the use of which is necessary or
contemplated in connection with the operation of ECBC's business.
2.l0 Contracts and Leases. ECBC is not in default under any agreements or
lease to which it is a party.
2.ll Insurance Policies. ECBC's business and property are adequately
coverd by insurance policies that are in full force and effect.
<PAGE>
2.l2 Compliance with Laws. ECBC has complied with, and is not in violation
of, applicable federal, state, or local statutes, laws, and regulations
affecting its properties or the operation of its business, including but not
limited to applicable federal and state securities laws. ECBC does not have any
employee benefit plan which is subject to the provisions of the Employee
Retirement Income Security Act of 1974.
2.l3 Litigation. ECBC is not a party to any suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation
pending or, to the best knowledge of ECBC threatened, against or affecting ECBC
or its business, assets, or financial condition. ECBC is not in default with
respect to any order, writ, injunction, or decree of any federal, state, local,
or foreign court, department, agency, or instrumentality. ECBC is not engaged in
any legal action to recover moneys due to ECBC or damages sustained by ECBC.
2.14 Ability to Carry Out Obligations. ECBC has the right, power, and
authority to enter into, and perform its obligations under, this Agreement. The
execution and delivery of this Agreement by ECBC and the performance by ECBC of
its obligations hereunder will not cause, constitute, or conflict with or result
in (a) any breach or violation or any of the provisions of or constitute a
default under any license, indenture, mortgage, charter, instrument, articles of
incorporation, by-law, or other agreement or instrument to which ECBC is a
party, or by which it may be bound, nor will any consents or authorizations of
any party other than those hereto be required, (b) an event that would permit
any party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of ECBC, or (c) an event that
would result in the creation or imposition or any lien, charge, or encumbrance
on any asset of ECBC.
2.15 Full Disclosure. None of representations and warranties made by ECBC,
or in any certificate or memorandum furnished or to be furnished by ECBC, or on
its behalf, contains or will contain any untrue statement of material fact, or
omit any material fact the omission of which would be misleading. ECBC has
disclosed to USA all reasonably foreseeable contingencies which, if such
contingencies transpired, would have a material adverse effect on ECBC's
business.
2.l6 Assets. ECBC has good and marketable title to all of its property.
USA represents and warrants to ECBC that:
2A. Organization. USA is a corporation duly organized, validly existing,
and in good standing under the laws of Colorado, has all necessary corporate
powers to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each of the states where its business requires qualification.
2B. Directors and Officers' Compensation; Banks. Exhibit G to this
Agreement contains: (i) the names, addresses, and titles of all directors and
officers of USA and all persons whose compensation from USA as of the date of
this Agreement will equal or its expected to equal or exceed, at an annual rate,
the sum of $5,000; (ii) the name and address of each bank with which USA has an
account or safety deposit box, the identification number thereof, and the names
of all persons who are authorized to draw thereon or have access thereto; and
(iii) the names of all persons who have a power of attorney from USA and a
summary of the terms thereof.
<PAGE>
2C. Capital. The authorized capital stock of USA consists of 100,000,000
shares of common stock, $0.0001 par value, of which 3,053,298 shares will be
issued and outstanding immediately prior to closing. USA has not issued any
shares of preferred stock. All of the shares are validly issued, fully paid, and
non-assessable. At closing, there will be no outstanding subscriptions, options,
rights, warrants, convertible securities, or other agreements or commitments
obligating USA to issue or to transfer from treasury any additional shares of
its capital stock of any class.
2D. Financial Statements. Exhibit H to this Agreement sets forth balance
sheets of USA as of May 31,1999, and the related statements of income and
retained earnings for the period then ended. The financial statements have been
prepared in accordance with generally accepted accounting principles
consistently followed by USA throughout the periods indicated, and fairly
present the financial position of USA as of the dates of the balance sheets
included in the financial statements, and the results of its operations for the
periods indicated.
2E. Absence of Changes. Since May 31,1999, there has not been any change
in the financial condition or operations of USA, except (i) changes in the
ordinary course of business, which changes have not in the aggregate been
materially adverse, and (ii) changes disclosed on Exhibit H.
2F. Absence of Undisclosed Liabilities. USA did not as of May 31,1999 have
any debt, liability, or obligation of any nature, whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, that is not
reflected on Exhibit H.
2G. Tax Returns. Within the times and in the manner prescribed by law, USA
has filed all federal, state, and local tax returns required by law and has paid
all taxes, assessments, and penalties due and payable. No federal income tax
returns of USA have been audited by the Internal Revenue Service. The provision
for taxes, if any, reflected in USA's balance sheet as of May 31,1999, is
adequate for any and all federal, state, county, and local taxes for the period
ending on the date of that balance sheet and for all prior periods, whether or
not disputed. There are no present disputes as to taxes of any nature payable by
USA.
2H. Investigation of Financial Condition of USA. Without in any manner
reducing or otherwise mitigating the representations contained herein, ECBC
shall have the opportunity to meet with USA's accountants and attorneys to
discuss the financial condition of USA. USA shall make available to ECBC the
books and records of USA. The minutes of USA are a complete and accurate record
of all meetings of the shareholders and directors of USA and accurately reflect
all actions taken at such meetings. The signatures of the directors and/or
officers on such minutes are the valid signatures of USA's directors and/or
officers who were duly elected or appointed on the dates that the minutes were
signed by such persons.
2I. Trade Names and Rights. Exhibit I attached hereto and made a part
hereof lists all trademarks, trademark registrations or applications, trade
names, service marks, copyrights, copyright registrations or applications which
are owned by USA. No person, other than USA, will own any trademark, trademark
registration or application, service mark, trade name, copyright, or copyright
registration or application the use of which is necessary or contemplated in
connection with the operation of the business of USA, as such business is to be
conducted after the closing of this transaction.
<PAGE>
2J. Contracts and Leases. Exhibit J attached hereto and made a part hereof
contains a summary of provisions of all material contracts, leases, and other
agreements of USA presently in existence or which have been agreed to by USA.
USA is not in default under any of these agreements or leases.
2K. Insurance Policies. Exhibit K to this Agreement is a description of
all insurance policies held by USA concerning its business and properties. All
these policies are in the respective principal amounts set forth in Exhibit K.
2L. Compliance with Laws. USA has complied with, and is not in violation
of, applicable federal, state, or local statutes, laws, and regulations
affecting its properties or the operation of its business, including but not
limited to federal and state securities laws. USA does not have any employee
benefit plan which is subject to the provisions of the Employee Retirement
Income Security Act of 1974. USA has filed with the Securities and Exchange
Commission ("SEC") and any applicable state securities agency, all required
forms, reports, schedules, statements and other documents (collectively, the
"SEC Documents"). The SEC Documents filed by USA, including without limitation
any financial statements or schedules included therein, at the time filed, (a)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and (b) complied in all material respects with applicable
federal and state securities laws, as the case may be, and the rules and
regulations of the SEC and any applicable state securities agency. The financial
statements of USA included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the period involved (except as may be indicated in the notes
thereto) and fairly presented (subject, in the case of the unaudited statements,
to normal year-end audit adjustments) the consolidated financial position of USA
as of the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended.
2M. Litigation. Other than as disclosed on Exhibit L, USA is not a party
to any suit, action, arbitration, or legal, administrative, or other proceeding,
or governmental investigation pending or, to the best knowledge of USA
threatened, against or affecting USA or its business, assets, or financial
condition. USA is not in default with respect to any order, writ, injunction, or
decree of any federal, state, local, or foreign court, department, agency, or
instrumentality. USA is not engaged in any legal action to recover moneys due to
it or damages sustained by it other than as disclosed on Exhibit L.
<PAGE>
2N. Ability to Carry Out Obligations. Subject to the approval of this
Agreement by the shareholders of USA, USA has the right, power, and authority to
enter into, and perform its obligations under, this Agreement. The execution and
delivery of this Agreement by USA and the performance by USA of its obligations
hereunder will not cause, constitute, or conflict with or result in (a) any
breach or violation or any of the provisions of or constitute a default under
any license, indenture, mortgage, charter, instrument, articles of
incorporation, by-law, or other agreement or instrument to which USA is a party,
or by which it may be bound, nor will any consents or authorizations of any
party other than those hereto be required, (b) an event that would permit any
party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of USA, or (c) an event that
would result in the creation or imposition or any lien, charge, or encumbrance
on any asset of USA.
2O. Full Disclosure. None of representations and warranties made by USA,
or in any certificate or memorandum furnished or to be furnished by USA, or on
its behalf, contains or will contain any untrue statement of material fact, or
omit any material fact the omission of which would be misleading. USA has
disclosed to ECBC all reasonably foreseeable contingencies which, if such
contingencies transpired, would have a material adverse effect on USA.
2P. Assets. USA has good and marketable title to all of its property.
ARTICLE III
SHAREHOLDER REPRESENTATIONS
Each shareholder of ECBC represents to USA that he has the right, power,
and authority to enter into, and perform his obligations under this Agreement.
The execution and delivery of this Agreement by such shareholder and the
delivery by such shareholder of his shares in ECBC pursuant to Article I will
not cause, constitute, or conflict with or result in any breach or violation or
any of the provisions of or constitute a default under any license, indenture,
mortgage, charter, instrument, or agreement to which he is a party, or by which
he may be bound, nor will any consents or authorizations of any party be
required. Each shareholder of ECBC represents and warrants to USA that the
shares of ECBC that such shareholder will deliver at closing will be free of any
liens or encumbrances.
Each shareholder of ECBC understands that the shares being acquired from USA
represent restricted securities as that term is defined in Rule l44 of the
Securities and Exchange Commission.
ARTICLE IV
OBLIGATIONS BEFORE CLOSING
4.0l Investigative Rights. From the date of this Agreement until the date
of closing, each party shall provide to the other party, and such other party's
counsel, accountants, auditors, and other authorized representatives, full
access during normal business hours to all of each party's properties, books,
contracts, commitments, records and correspondence and communications with
regulatory agencies for the purpose of examining the same. Each party shall
furnish the other party with all information concerning each party's affairs as
the other party may reasonably request.
4.02 Surrender of Shares. Prior to the closing of this transaction, the
following shareholders of USA shall have surrendered for cancellation
certificates representing the following shares of USA's common stock.
<PAGE>
Name Shares to be Cancelled
George Pursglove 1,261,030
Chester Howard 1,312,458
Scott McCoy 107,143
Douglas MacLellan 53,571
4.03 Conduct of Business. Prior to the closing, and except as contemplated
by this Agreement, each party shall conduct its business in the normal course,
and shall not sell, pledge, or assign any assets, without the prior written
approval of the other party, except in the regular course of business. Except as
contemplated by this Agreement, neither party to this Agreement shall amend its
Articles of Incorporation or By-laws, declare dividends, redeem or sell stock or
other securities, incur additional or newly-funded material liabilities, acquire
or dispose of fixed assets, change senior management, change employment terms,
enter into any material or long-term contract, guarantee obligations of any
third party, settle or discharge any balance sheet receivable for less than its
stated amount, pay more on any liability than its stated amount, or enter into
any other transaction other than in the regular course of business.
Notwithstanding the above, ECBC, following the closing of this
transaction, plans to raise additional capital through the sale of approximately
12,000,000 shares of USA's common stock. Follwing the sale of these shares, USA
plans to request its shareholders to approve a 1 for 8.194595 reverse split of
its outstanding common stock.
ARTICLE V
CONDITIONS PRECEDENT TO PERFORMANCE BY USA
5.01 Conditions. USA's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article V. USA may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by USA of any other condition of or any of USA's other
rights or remedies, at law or in equity, if ECBC shall be in default of any of
its representations, warranties, or covenants under this agreement.
5.02 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by ECBC in this Agreement or in
any written statement that shall be delivered to USA by ECBC under this
Agreement shall be true on and as of the closing date as though made at those
times.
5.03 Performance. ECBC shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the closing. ECBC shall have
obtained all necessary consents and approvals necessary to consummate the
transactions contemplated hereby.
5.04 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this agreement or to its consummation, shall have been
instituted or threatened on or before the closing.
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT TO PERFORMANCE BY ECBC
6.01 Conditions. ECBC's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of the conditions set forth in this
Article VI. ECBC may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by ECBC of any other condition of or any of ECBC's
other rights or remedies, at law or in equity, if USA shall be in default of any
of its representations, warranties, or covenants under this agreement.
6.02 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by USA in this Agreement or in any
written statement that shall be delivered to ECBC by USA under this Agreement
shall be true on and as of the closing date as though made at those times.
6.03 Performance. USA shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the closing. USA shall have
obtained all necessary consents and approvals necessary to consummate the
transactions contemplated hereby, including those required by Section 4.02.
6.04 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this agreement or to its consummation, shall have been
instituted or threatened on or before the closing.
6.05 Other. At the time of closing, the liabilities and accrued expenses
of USA, and the future amounts payable pursuant to any agreement to which USA is
a party (and which has not been assumed by a third party which has indemnified
USA as to the assumed obligations of such agreement) will be fully satisfied by
payments of not more than $200,000 to the creditors of USA.
ARTICLE VI
CLOSING
7.0l Closing. The closing of this transaction shall be held at the offices
of ECBC. Unless the closing of this transaction takes place before September 6,
1999, then either party may terminate this Agreement without liability to the
other party, except as otherwise provided in Section 9.12. At the closing, the
following documents, in form reasonably acceptable to counsel to the parties or
as set forth herein, shall be delivered:
<PAGE>
By ECBC:
A. An officer's certificate, dated the closing date, that all
representations, warranties, covenants, and conditions set forth in this
Agreement on behalf of ECBC are true and correct as of, or have been fully
performed and complied with by, the closing date.
By USA:
A. An officer's certificate, dated the closing date, that all
representations, warranties, covenants, and conditions set forth in this
Agreement on behalf of USA are true and correct as of, or have been fully
performed and complied with by, the closing date.
7.02 Exchange of Shares. On the closing date, each share of common stock
of ECBC then issued and outstanding, will be exchanged, on a pro-rata basis, for
fully paid and nonassessable shares of USA in accordance with this Agreement.
7.03 No Fractional Shares. No certificates for fractional share interests
of common stock of USA will be issued, but, in lieu thereof, USA will issue one
share of its common stock for each fractional share held in ECBC.
7.04 Appointment of Directors. At the closing of this Agreement, USA will
cause John Calebrese to be appointed to USA's Board of Directors. Following such
appointment, all present officers and directors of USA will resign.
ARTICLE VIII
REMEDIES
8.01 Arbitration. Any controversy or claim arising out of, or relating to,
this Agreement, or the making, performance, or interpretation thereof, shall be
settled by arbitration in Miami, Florida in accordance with the Rules of the
American Arbitration Association then existing, and judgment on the arbitration
award may be entered in any court having jurisdiction over the subject matter of
the controversy.
8.02 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorney's fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may be
entitled.
8.03 Termination. In addition to the other remedies, USA or ECBC may on or
prior to the closing date terminate this Agreement, without liability to the
other party:
(i) If any bona fide action or proceeding shall be pending against USA
or ECBC on the closing date that could result in an unfavorable judgment,
decree, or order that would prevent or make unlawful the carrying out of this
Agreement or if any agency of the federal or of any state government shall have
objected at or before the closing date to this acquisition or to any other
action required by or in connection with this Agreement;
<PAGE>
(ii) If the legality and sufficiency of all steps taken and to be taken by
each party in carrying out this Agreement shall not have been approved by the
respective party's counsel, which approval shall not be unreasonably withheld.
(iii)If a party breaches any representation, warranty, covenant or obligation
of such party set forth herein and such breach is not corrected within ten
days of receiving written notice from the other party of such breach.
ARTICLE IX
MISCELLANEOUS
9.01 Captions and Headings. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
9.02 No Oral Change. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought.
9.03 Non-Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any one or
more cases upon the performance of any of the provisions, covenants, or
conditions of this Agreement or to exercise any option herein contained shall
not be construed as a waiver or relinquishment for the future of any such
provisions, convenants, or conditions, (ii) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of the breach
or failure of a covenant, condition, or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of one breach
by another party shall be construed as a waiver with respect to any other or
subsequent breach.
9.04 Time of Essence. Time is of the essence of this Agreement and of each
and every provision hereof.
9.05 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements,
understandings and the letters of intent between the parties.
9.06 State Law. This Agreement and its application shall be governed by the
laws of the State of Florida.
9.07 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
9.08 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
USA Service Systems Inc.
George Pursglove
USA Service Systems, Inc.
10770 Wiles Road
Coral Springs, Florida 33076
(954) 752-4289
With a copy to:
East Coast Beverage Corp.
East Coast Beverage
1750 University Drive
Suite 117
Coral Springs, Florida 33071
(954) 796-8060
(954) 796-0802 (fax)
With a copy to:
William T. Hart, Esq.
Hart & Trinen
1624 Washington Street
Denver, Colorado 80203
(303) 839-0061
(303) 839-5414 (fax)
9.09 Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
9.10 Effect of Closing. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall survive the
closing of this Agreement.
<PAGE>
9.ll Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein. Neither party will
intentionally take any action, or omit to take any action, which will cause a
breach of such party's obligations pursuant to this Agreement.
9.12 Expenses. Each of the parties hereto agrees to pay all of its own
expenses (including without limitation, attorneys' and accountants' fees)
incurred in connection with this Agreement, the transactions contemplated herein
and negotiations leading to the same and the preparations made for carrying the
same into effect. Each of the parties expressly represents and warrants that no
finder or broker has been involved in this transaction and each party agrees to
indemnify and hold the other party harmless from any commission, fee or claim of
any person, firm or corporation employed or retained by such party (or claiming
to be employed or retained by such party) to bring about or represent such party
in the transactions contemplated by this Agreement.
AGREED TO AND ACCEPTED as of the date first above written.
USA Service Systems Inc.
By
George Pursglove, President
East Coast Beverage Corp.
By
John Calabrese, Chief Executive Officer
AGREED TO AND ACCEPTED as to Articles I and III only:
John Calabrese
W.R. Smith
Arnold Rosen
Sachiko Miwa
Steven R. Marks
W.R. Smith Profit Trust
By __________________________________
Sanford I. Litchman Trust
By __________________________________
Bonnie Rosen I.R.A. Trust
By __________________________________
Edith G. Osmon
Arnold L. Rosen I.R.A. Trust
By __________________________________
<PAGE>
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Alex Garabedin
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Edward Shanahan
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John Daumeyer
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William Perry Maxwell
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Drew Carver
<PAGE>
Genco Overseas Ventures Limited
By __________________________________
Authorized Officer
Aicon Investments, Limited
By __________________________________
Authorized Officer
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PRINCETON OIL & GAS, INC.
The undersigned corporation1 pursuant to the provisions of the Colorado
Business Corporation Act, as amended, adopts the following Amended and Restated
Articles of Incorporation:
FIRST: The corporate name and style of this corporation shall be changed
from Princeton Oil & Gas, Inc. to Princeton Management Corporation.
SECOND: The purposes for which the corporation is organized and its powers
are as follows:
A. To engage in any lawful business or activity for which corporations may
be organized under the laws of the State of Colorado; and
B. To have, enjoy, and exercise all of the rights, powers, and privileges
conferred upon any corporation incorporated pursuant to Colorado law, whether
now or hereafter in effect, and whether or not herein specifically mentioned.
THIRD: The said Corporation is to have perpetual existence unless dissolved
according to law.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is 120,000,000, of which 20,000,000 shall be Preferred
Shares, $.01 par value per share, and 100,000,000 shall be Common Shares, $.0001
par value per share, and the designations, preferences, limitations and relative
rights of the shares of each such class are as follows:
A. Preferred Shares
The Corporation may divide and issue the Preferred Shares into
series. Preferred Shares of each series, when issued, shall be designated
to distinguish it from the shares of all other series of the class of
Preferred Shares. The Board of Directors is hereby expressly vested with
authority to fix and determine the relative rights and preferences of the
shares of any such series so established to the fullest extent permitted
by these Articles of Incorporation and the laws of the State of Colorado
in respect to the following:
(a) The number of shares to constitute such series, and the
distinctive designations thereof;
(b) The rate and preference of dividend, if any, the time of
payment of dividend, whether dividends are cumulative and the
date from which any dividend shall accrue;
(c) Whether the shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
<PAGE>
(d) The amount payable upon shares in the event of
involuntarily liquidation;
(e) The amount payable upon shares in the event of
voluntary liquidation;
(f) Sinking fund or other provisions if any, for the
redemption or purchase of shares;
(g) The terms and conditions on which shares may be converted,
if the shares of any series are issued with the privilege of
conversion;
(h) Voting powers if any; and
(i) Any other relative right and preferences of shares of such
series, including, without limitation, any restriction on an
increase in the number of shares of any series theretofore
authorized and any limitation or restriction of rights or
powers to which shares of any further series shall be subject.
B. Common Shares
(a) The rights of holders of the Common Shares to receive
dividends or share in the distribution of assets in the event
of liquidation, dissolution or winding up of the affairs of
the Corporation shall be subject to the preferences,
limitations and relative rights of the Preferred Shares fixed
in the resolution or resolutions which may be adopted from
time to time by the Board of Directors of the Corporation
providing for the issuance of one or more series of the
Preferred Shares.
(b) The holders of the Common Shares shall have unlimited
voting rights and shall constitute the sole voting group of
the Corporation, except to the extent any additional voting
groups or groups may hereafter be established in accordance
with the Colorado Business Corporation Act, and shall be
entitled to one vote for each share of Common Stock held by
them of record at the time for determining the holders thereof
entitled to vote.
FIFTH: Cumulative voting shall not be permitted in the election of
directors or otherwise.
SIXTH: A shareholder of the Corporation shall not be entitled to a
preemptive right to purchase, subscribe for, or otherwise acquire any
unissued or treasury shares of stock of the Corporation, or any options or
warrants to purchase, subscribe for or otherwise acquire any such unissued
or treasury shares or any shares, bonds, notes, debentures, or other
securities convertible into or carrying options or warrants to purchase,
subscribe for or otherwise acquire any such unissued or treasury shares.
<PAGE>
SEVENTH: The corporate powers shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be
managed under the direction of, a board of directors. The number of
directors of the corporation shall be fixed by the bylaws, or if the
bylaws fail to fix such a number, then by resolution adopted from time to
time by the board of directors, provided that the number of directors
shall conform to the applicable laws of the State of Colorado.
EIGHTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and the same are
in furtherance of and not in limitation or exclusion of the powers conferred by
law.
A. Conflicting interest Transactions. As used in this paragraph,
"conflicting interest transactions" means any of the following; (i) a loan
or other assistance by the corporation to a director of the corporation or
to an entity in which a director of the corporation is a director or
officer or has a financial interest; (ii) a guaranty by the corporation of
an obligation of a director of the corporation or of an obligation of an
entity in which a director of the corporation is a director or officer or
has a financial interest; or (iii) a contract or transaction between the
corporation and a director of the corporation or between the corporation
and an entity in which a director of the corporation is a director or
officer or has a financial interest. No conflicting interest transaction
shall be void or voidable, be enjoined, be set aside, or give rise to an
award of damages or other sanctions in a proceeding by a shareholder or by
or in the right of the corporation, solely because the conflicting
interest transaction involves a director of the corporation or an entity
in which a director of the corporation is a director or officer or has a
financial interest, or solely because the director is present at or
participates in the meeting of the corporation's board of directors or of
the committee of the board of directors which authorizes, approves or
ratifies a conflicting interest transaction, or solely because the
director's vote is counted for such purpose, if: (a) the material facts as
to the director's relationship or interest and as to the conflicting
interest transaction are disclosed or are known to the board of directors
or the committee, and the board of directors or committee in good faith
authorizes, approves or ratifies the conflicting interest transaction by
the affirmative vote of a majority of the disinterested directors, even
though the disinterested directors are less than quorum; or (b) the
material facts as to the director's relationship or interest and as to the
conflicting interest transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the conflicting interest
transaction is specifically authorized, approved or ratified in good faith
by a vote of the shareholders; or (c) a conflicting interest transaction
is fair as to the corporation as of the time it is authorized, approved or
ratified by the board of directors, a committee thereof, or the
shareholders. 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 conflicting interest
transaction.
B. Loans and Guarantees for the Benefit of Directors. Neither the board of
directors nor any committee thereof shall authorize a loan by the
Corporation to a director of the Corporation or to an entity in which a
director of the Corporation is a director or officer or has a financial
interest, or a guaranty by the Corporation of an obligation of a director
<PAGE>
of the Corporation or of an obligation of an entity in which a director of
the Corporation is a director or officer or has a financial interest until
at least ten days written notice of the proposed authorization of the loan
or guaranty has been given to the shareholders who would be entitled to
vote thereon if the issue of the loan or guarantee was submitted to a vote
of the shareholders. The requirements of this subparagraph B are in
addition to, and not in substitution for, the provisions of subparagraph A
of this Article.
NINTH: The following provisions are in furtherance of and not in limitation
or exclusion of the powers conferred by law for indemnification and limitation
on director's
liability.
A. Indemnification. The Corporation shall indemnity, to the maximum extent
permitted by law, any person who is or was a director, officer, agent
fiduciary or employee of the Corporation against any claim, liability or
expense arising against or incurred by such person made party to a
proceeding because he is or was a director, officer, agent, fiduciary or
employee of the Corporation or because he is or was serving another entity
or employee benefit plan as a director, officer, partner, trustee,
employee, fiduciary or agent at the Corporation's request. The Corporation
shall further have the authority to the maximum extent permitted by law to
purchase and maintain insurance providing such indemnification.
B. Limitation on Director's Liability. No director of this Corporation
shall have any personal liability for monetary damages to the Corporation
or its shareholders for beach of his fiduciary duty as a director, except
that this provision shall not eliminate or limit the personal liability of
a director to the Corporation or its shareholders for monetary damages
for: (i) any breach of the director's duty of loyalty to the Corporation
or its shareholders; (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) voting
for or assenting to a distribution in violation of Colorado Revised
Statutes ss. 7-106-401 or the Articles of Incorporation if it is
established that the director did not perform his duties in compliance
with Colorado Revised Statutes ss. 7-10-401, provided that the personal
liability of a director in this circumstances shall be limited to the
amount of the distribution which exceeds what could have been distributed
without violation of Colorado Revised Statutes ss. 7-l06-401 or the
Articles of Incorporation; or (iv) any transaction from which the director
directly or indirectly derives an improper personal benefit. Nothing
contained herein will be construed to deprive any director of his right to
all defenses ordinarily available to a director nor will anything herein
be construed to deprive any director of any right he may have for
contribution from any other director or other person.
C. Negotiation of Equitable Interests in Shares or Rights. Unless a person
is recognized as a shareholder through procedures established by the
Corporation pursuant to Colorado Revised Statutes ss. 7.107.204 or any
similar law, the Corporation shall be entitled to treat the registered
holder of any shares of the Corporation as the owner thereof for all
purposes permitted by the Colorado Business Corporation Act, including
without limitation all rights deriving from such shares and the
Corporation shall not be bound to recognize any equitable or other claim
to, or interest in, such shares or rights deriving from such shaves on the
part of any other person including without limitation, a purchaser,
assignee or transferee of such shares, unless and until such other person
becomes the registered holder of such shares or is recognized as such,
whether or not the Corporation shall have either actual or constructive
notice of the claimed interest of such other person. By way of example and
not of limitation, until such other person has become the registered
holder of such shares or is recognized pursuant to Colorado Revised
Statutes ss. 7-107.204 or any similar applicable law, he shall not be
entitled: (i) to receive notice or the meetings of the shareholders; (ii)
to vote at such meetings; (iii) to examine a list of the shareholders;
<PAGE>
(iv) to be paid dividends or other distributions payable to shareholders;
or (v) to own, enjoy and exercise any other rights deriving from such
shares against the corporation. Nothing contained herein will be construed
to deprive any beneficial shareholder, as defined in Colorado Revised
Statutes ss.7-113-101(1), of any right he may have pursuant to Article 113
of the Colorado Business Corporation Act or any subsequent law.
TENTH: The Board of Directors and stockholders of the Corporation shall
have the right to hold their meetings outside of the State of Colorado when
deemed most convenient or to the best interest of the Corporation.
ELEVENTH: The street address of the registered office of the Corporation
shall henceforth be 2851 South Parker Road, Suite 720, Aurora, Co1orado 80014,
and the name of the registered agent at such address shall be changed to Andrew
I. Te1sey.
TWELFTH: Except as the bylaws adopted by the shareholders may provide for
a greater quorum requirement, a majority of the votes entitled to be cast on any
matter by each voting group entitled to vote on a matter shall constitute a
quorum of that voting group for action on that matter at any meeting of
shareholders. Except as bylaws adopted by the shareholders may provide for a
greater voting requirement and except as is otherwise provided by the Colorado
Business Corporation Act, with respect to action on any amendment to these
Articles of Incorporation, on a plan of merger or share exchange, on the
disposition of substantially all of the property of the Corporation, on the
granting of consent to the disposition of property by an entity controlled by
the Corporation, on the dissolution of the Corporation, or on any matter other
than the election of directors such action is approved if a quorum exists and if
the votes cast favoring the action exceed the votes cast opposing the action.
Any bylaw adding, changing, or deleting a greater quorum or voting requirement
for shareholders shall meet the same quorum requirement and be adopted by the
same vote required to take action under the quorum and voting requirements then
in effect or proposed to be adopted, whichever are greater.
<PAGE>
THIRTEENTH: The address of the principal office of the corporation is 5650
Greenwood Plaza Blvd., Suite 216, Englewood, Colorado 80111.
DATED the 1st day of November, 1996.
/s/ Greg Simond
President
The undersigned hereby consents to his appointment as the registered agent
for the Corporation.
/s/ Andrew I. Telsey
<PAGE>
ARTICLES OF SHARE EXCHANGE
THIS IS TO CERTIFY:
1. Parties. Pursuant to the terms of that certain definitive Share
Exchange Agreement and Plan of Reorganization dated November 17, 1998 (the
"Agreement"), Princeton Management Corporation ("PMC"), a corporation formed
pursuant to the laws of the State of Colorado, has acquired all of the issued
and outstanding common voting stock of USA Service Systems, Inc. ("USA"), a
corporation formed pursuant to the laws of the State of Florida, effective
November 17, 1998 (the "Effective Date").
2. Approval. The terms of the Agreement were approved by the affirmative
vote of the Board of Directors of PMC by written consent pursuant to the laws of
the State of Colorado. The terms of the Agreement were approved by the
affirmative vote of the Board of Directors and Shareholders of USA by written
consent pursuant to the laws of the State of Florida, the holders of 3,500,000
shares of Common Stock being entitled to vote thereon and all of the issued and
outstanding common stock of USA sufficient for approval of the Agreement having
executed and approved such written consent.
3. Share Exchange. The Agreement provides that all of the shareholders of
USA, representing 3,500,000 issued and outstanding common shares, shall exchange
their respective shares for an aggregate of 3,750,000 shares of PMC common
stock, to be distributed to each USA shareholder pro rata to their respective
share ownership in USA at the Effective Date. Immediately prior to the Effective
Date, there were 1,250,000 common shares of PMC issued and outstanding.
4. Acquiring Entity. Pursuant to the terms of the Agreement, PMC shall
acquire all of the issued and outstanding common stock of USA and, upon the
Effective Date and issuance of an applicable Certificate of Share Exchange by
the Secretary of State for the State of Colorado, USA shall become a wholly
owned subsidiary of PMC.
5. Agreement and Plan of Share Exchange. A complete, executed copy of the
Agreement Plan of Share Exchange is on file at the registered office of the
Corporation, 5650 Greenwood Plaza Blvd., Suite 216, Englewood, Colorado 80111.
6. Name Change. Pursuant to the affirmative vote of the shareholders of
PMC, PMC's Articles of Incorporation shall be amended to reflect that the new
name of PMC shall be "USA Service Systems, Inc."
7. Counterparts. These Articles of Share Exchange may be executed in
counterparts, each of which shall be deemed an original document, but together
shall be deemed to constitute only one agreement.
<PAGE>
Executed this 17th day of November, 1998
PRINCETON MANAGEMENT CORPORATION
By: /s/ Gregory Simonds
Gregory Simonds, President
And /s/ Gilberta P. Gara
Gilberta P. Gara, Secretary
USA SERVICE SYSTEMS, INC.
By: /s/ George D. Pursglove
George D. Pursglove, President
And /s/ George D. Pursglove
Secretary
STATE OF COLORADO )
: ss
COUNTY OF ARAPAHOE )
This instrument was acknowledged before me on November 17, 1998, by Gregory
Simonds as President of Princeton Management Corporation.
My commission expires March 3, 2002
--------------------------------------
Notary Public
<PAGE>
USA SERVICE SYSTEMS, INC.
AMENDMENT
to the
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
following Amendments to the Articles of Incorporation were adopted on February
22, 2000 by the shareholders of USA Service Systems, Inc.
The number of shares voted in favor of the Amendments was sufficient
for approval. The number of votes cast for the Amendments by each voting group
entitled to vote separately on the Amendments was sufficient for approval by
that voting group.
TEXT OF AMENDMENTS:
1. The First Article of the Articles of Incorporation is amended to read
as follows:
The name of the Corporation is East Coast Beverage Corp.
2. The following paragraph is added to the Fourth Article of the Articles
of Incorporation.
C. Effective February 22, 2000 each 8.194595 shares of this
Corporation's issued and outstanding common stock shall
automatically convert into one share of this Corporation's common
stock.
Dated: February 22, 2000
USA SERVICE SYSTEMS, INC.
By: John Calebrese, Chief Executive Officer
BY-LAWS
OF
USA SERVICE SYSTEMS, INC.
d/b/a
EAST COAST BERVERAGE CORP.
ARTICLE I
OFFICES
Section l. Offices:
The principal office of the Corporation shall be at 1750 University
Drive, Suite 117, Coral Springs, Florida 33071, and the Corporation shall have
other offices at such places as the Board of Directors may from time to time
determine.
ARTICLE II
STOCKHOLDER'S MEETINGS
Section l. Place:
The place of stockholders' meetings shall be the principal office of
the Corporation unless some other place either within or without the State of
Florida shall be determined and designated from time to time by the Board of
Directors.
Section 2. Annual Meeting:
The annual meeting of the stockholders of the Corporation for the
election of directors to succeed those whose terms expire, and for the
transaction of such other business as may properly come before the meeting,
shall be held each year on a date to be determined by the Corporation's Board of
Directors. If the annual meeting of the stockholders be not held, or if held and
directors shall not have been elected for any reason, then the election of
directors may be held at any meeting of stockholders thereafter called pursuant
to these By-laws and the laws of Delaware.
Section 3. Special Meetings:
Special meetings of the stockholders for any purpose or purposes may be
called by the President, the Board of Directors, or the holders of ten percent
(l0%) or more of all the shares entitled to vote at such meeting, by the giving
of notice in writing as hereinafter described.
Section 4. Voting:
At all meetings of stockholders, voting may be viva voce; but any
qualified voter may demand a stock vote, whereupon such vote shall be taken by
ballot and the Secretary shall record the name of the stockholder voting, the
number of shares voted, and, if such vote shall be by proxy, the name of the
<PAGE>
proxy holder. Voting may be in person or by proxy appointed in writing, manually
signed by the stockholder or his duly authorized attorney-in-fact. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided therein.
Each stockholder shall have such rights to vote as the Articles of
Incorporation provide for each share of stock registered in his name on the
books of the Corporation, except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a record date, not to
exceed, in any case, fifty (50) days preceding the meeting, for the
determination of stockholders entitled to vote. The Secretary of the Corporation
shall make, at least ten (l0) days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten (l0) days prior
to such meeting, shall be kept on file at the principal office of the
Corporation and shall be subject to inspection by any stockholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting.
Section 5. Order of Business:
The order of business at any meeting of stockholders shall be as
follows:
l. Calling the meeting to order.
2. Calling of roll.
3. Proof of notice of meeting.
4. Report of the Secretary of the stock represented at the meeting and
the existence or lack of a quorum.
5. Reading of minutes of last previous meeting and disposal of any
unapproved minutes.
6. Reports of officers.
7. Reports of committees.
8. Election of directors, if appropriate.
9. Unfinished business.
10. New business.
11. Adjournment.
<PAGE>
12. To the extent that these By-laws do not apply, Roberts' Rules of
Order shall prevail.
Section 6. Notices:
Written or printed notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (l0) nor more than fifty
(50) days before the date of the meeting, either personally or by mail, by or at
the direction of the President, the Secretary, or the officer or persons calling
the meeting, to each stockholder of record entitled to vote at such meeting,
except that, if the authorized capital stock is to be increased, at least thirty
(30) days' notice shall be given. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the stock transfer books of the Corporation,
with postage thereon prepaid.
Section 7. Quorum:
A quorum at any annual or special meeting shall consist of the
representation in person or by proxy of not less than one-third of the shares of
the outstanding capital stock of the Corporation entitled to vote at such
meeting. In the event a quorum be not present, the meeting may be adjourned by
those present for a period not to exceed sixty (60) days at any one adjournment;
and no further notice of the meeting or its adjournment shall be required. The
stockholders entitled to vote, present either in person or by proxy at such
adjourned meeting, shall, if equal to a majority of the shares entitled to vote
at the meeting, constitute a quorum, and the votes of a majority of those
present in numbers of shares entitled to vote shall be deemed the act of the
shareholders at such adjourned meeting.
Section 8. Action by Shareholders Without a Meeting:
Any action required to be or which may be taken at a meeting of the
shareholders of the Corporation may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by a majority of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section l. Organization and Powers:
The Board of Directors shall constitute the policy-making or
legislative authority of the Corporation. Management of the affairs, property,
and business of the Corporation shall be vested in the Board of Directors, who
shall be elected at the annual meeting of stockholders by a plurality vote for a
term of one (l) year, and shall hold office until their successors are elected
and qualify. The number of Directors shall be determined from time-to-time by a
<PAGE>
resolution adopted by the existing Board of Directors. Directors need not be
stockholders. Directors shall have all powers with respect to the management,
control, and determination of policies of the Corporation that are not limited
by these By-laws, the Articles of Incorporation, or the statutes of the State of
Delaware, and the enumeration of any power shall not be considered a limitation
thereof.
Section 2. Vacancies:
Any vacancy in the Board of Directors, however caused or created, shall
be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board, or at a special meeting of the
stockholders called for that purpose. The directors elected to fill vacancies
shall hold office for the unexpired term and until their successors are elected
and qualify.
Section 3. Regular Meetings:
A regular meeting of the Board of Directors shall be held, without
other notice than this By-law, immediately after and at the same place as the
annual meeting of stockholders or any special meeting of stockholders at which a
director or directors shall have been elected. The Board of Directors may
provide by resolution the time and place, either within or without the State of
Colorado, for the holding of additional regular meetings without other notice
than such resolution.
Section 4. Special Meetings:
Special meetings of the Board of Directors may be held at the principal
office of the Corporation, or such other place as may be fixed by resolution of
the Board of Directors for such purpose, at any time on call of the President or
of any member of the Board, or may be held at any time and place without notice,
by unanimous written consent of all the members, or with the presence and
participation of all members at such meeting. A resolution in writing signed by
all the directors shall be as valid and effectual as if it had been passed at a
meeting of the directors duly called, constituted, and held.
Section 5. Notices:
Notices of both regular and special meetings, save when held by
unanimous consent or participation, shall be mailed by the Secretary to each
member of the Board not less than three days before any such meeting and notices
of special meetings may state the purposes thereof. No failure or irregularity
of notice of any regular meeting shall invalidate such meeting or any proceeding
thereat.
Section 6. Quorum and Manner of Acting:
A quorum for any meeting of the Board of Directors shall be a majority
of the Board of Directors as then constituted. Any act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Any action of such majority, although not at a regularly
called meeting, and the record thereof, if assented to in writing by all of the
other members of the Board, shall always be as valid and effective in all
respects as if otherwise duly taken by the Board of Directors.
<PAGE>
Section 7. Executive Committee:
The Board of Directors may by resolution of a majority of the Board
designate two (2) or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of the
Corporation; but the designation of such committee and the delegation of
authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed on it or him by law.
Section 8. Order of Business:
The order of business at any regular or special meeting of the Board of
Directors, unless otherwise prescribed for any meeting by the Board, shall be as
follows:
l. Reading and disposal of any unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
5. Adjournment.
6. To the extent that these By-laws do not apply, Roberts' Rules of
Order shall prevail.
ARTICLE IV
OFFICERS
Section l. Titles:
The officers of the Corporation shall consist of a President, one or
more Vice Presidents, a Secretary, and a Treasurer, any of which offices may be
combined and held by one person, and who shall be elected for by the directors
following the annual meeting of stockholders. Such officers shall hold office
until their successors are elected and qualify. The Board of Directors may
appoint from time to time other officers as it deems desirable who shall serve
during such terms as may be fixed by the Board. The Board, by resolution, shall
specify the titles, duties and responsibilities of such other officers.
Section 2. President:
The President shall preside at all meetings of stockholders and, in the
absence of a, or the, Chairman of the Board of Directors, at all meetings of the
directors. He shall be generally vested with the power of the chief executive
<PAGE>
officer of the Corporation and shall countersign all certificates, contracts,
and other instruments of the Corporation as authorized by the Board of Directors
or required by law. He shall make reports to the Board of Directors and
stockholders and shall perform such other duties and services as may be required
of him from time to time by the Board of Directors.
Section 3. Vice President:
The Vice President shall perform all the duties of the President if the
President is absent or for any other reason is unable to perform his duties and
shall have such other duties as the Board of Directors shall authorize or
direct.
Section 4. Secretary:
The Secretary shall issue notices of all meetings of stockholders and
directors, shall keep minutes of all such meetings, and shall record all
proceedings. He shall have custody and control of the corporate records and
books, excluding the books of account, together with the corporate seal. He
shall make such reports and perform such other duties as may be consistent with
his office or as may be required of him from time to time by the Board of
Directors.
Section 5. Treasurer:
The Treasurer shall have custody of all moneys and securities of the
Corporation and shall have supervision over the regular books of account. He
shall deposit all moneys, securities, and other valuable effects of the
Corporation in such banks and depositories as the Board of Directors may
designate and shall disburse the funds of the Corporation in payment of just
debts and demands against the Corporation, or as they may be ordered by the
Board of Directors, shall render such account of his transactions as may be
required of him by the President or the Board of Directors from time to time and
shall otherwise perform such duties as may be required of him by the Board of
Directors.
The Board of Directors may require the Treasurer to give a bond
indemnifying the Corporation against larceny, theft, embezzlement, forgery,
misappropriation, or any other act of fraud or dishonesty resulting from his
duties as Treasurer of the Corporation, which bond shall be in such amount as
appropriate resolution or resolutions of the Board of Directors may require.
ARTICLE V
STOCK
Section l. Certificates of Shares:
Each holder of stock of the Corporation shall be entitled to a stock
certificate signed by the President or Vice President and also by the Secretary
or an assistant secretary of the Corporation. The certificates of shares shall
be in such form, not inconsistent with the Certificate of Incorporation or
Articles of Incorporation, as shall be prepared or approved by the Board of
Directors. (All certificates shall be prepared or approved by the Board of
<PAGE>
Directors). All certificates shall be consecutively numbered. Each certificate
shall state upon its face that the Corporation is organized under the laws of
this state; the name of the person to whom issued; the number and class of
shares; and the designation of the series, if any, which such certificate
represents; the par value of each share represented by the certificate, or a
statement that the shares are without par value. The name of the person owning
the shares represented thereby, with the number of such shares and the date of
issue, shall be entered on the Corporation's books, and no certificate shall be
valid unless it be signed by the President or Vice President and by the
Secretary or an assistant secretary of the Corporation. The seal of the
Corporation affixed to stock certificates may be a facsimile. The signatures of
officers as above described on any such certificate may be a facsimile if the
certificate is countersigned by a transfer agent, or registered by a registrar,
other than the Corporation itself or an employee of the Corporation.
Section 2. New Certificates:
All certificates surrendered to the Corporation shall be canceled and
no new certificate shall be issued, except to evidence transfer of stock from
the unissued stock or treasury of the Corporation, or, in the case of a lost
certificate, except upon posting a bond of indemnity in such form and with such
surety or sureties and for such amount as shall be satisfactory to the directors
and upon producing by affidavit or otherwise such evidence of loss or
destruction as the Board may require, until the former certificates for the same
number of shares have been surrendered and canceled.
Section 3. Transfer of Shares:
Shares in the capital stock of the Corporation shall be transferred
only on the books of the Corporation by the holder thereof in person, or by his
attorney, upon surrender and cancellation of certificates for a like number of
shares. The delivery of a certificate of stock of this Corporation to a bona
fide purchaser or pledgee for value, together with a written transfer of the
same or a written power of attorney to sell, assign, and transfer the same,
signed by the owner of the certificate, shall be a sufficient delivery to
transfer the title against all persons except the Corporation. No transfer of
stock shall be valid against the Corporation until it shall have been registered
upon the books of the Corporation.
Section 4. Closing of Transfer Books or Provisions for Record Date:
The stock transfer books may be closed by the Board of Directors for a
period not exceeding fifty (50) days prior to any meeting of the stockholders or
prior to the payment of dividends; or the Board of Directors may fix in advance
a day not more than fifty (50) days prior to the holding of any such meeting of
stockholders or payment of dividends as the day as of which stockholders
entitled to notice of and to vote at such meeting or to payment of dividends, as
the case may be, shall be determined; and only stockholders of record on such
day shall be entitled to notice or to vote at such meeting, or to receive
dividends, as the case may be.
<PAGE>
Section 5. Regulations:
The Board of Directors shall have power and authority to take all such
rules and regulations as they deem expedient concerning the issue, transfer, and
registration of certificates for shares of the capital stock of the Corporation.
The Board of Directors may appoint a Transfer Agent and a Registrar and may
require all stock certificates to bear the signature of such Transfer Agent or
such Registrar.
Section 6. Restrictions on Stock:
The Board of Directors may restrict any stock issued by giving the
Corporation or any stockholder "first right of refusal to purchase" the stock,
by making the stock redeemable or by restricting the transfer of the stock,
under such terms and in such manner as the directors may deem necessary and as
are not inconsistent with the Articles of Incorporation or the laws of the State
of Colorado. Any stock so restricted must carry a stamped legend setting out the
restriction or conspicuously noting the restriction and stating where it may be
found in the records of the Corporation.
ARTICLE VIDIVIDENDS AND FINANCES
Section l. Dividends: Dividends may be declared by the directors and paid out of
any funds legally available therefor under the laws of Delaware, as may be
deemed advisable from time to time by the Board of Directors of the Corporation.
Before declaring any dividends, the Board of Directors may set aside out of net
profits or earned or other surplus such sums as the Board may think proper as a
reserve fund to meet contingencies or for other purposes deemed proper and to
the best interests of the Corporation.
Section 2. Moneys:
The moneys, securities, and other valuable effects of the Corporation
shall be deposited in the name of the Corporation in such banks or trust
companies as the Board of Directors shall designate and shall be drawn out or
removed only as may be authorized by the Board of Directors from time to time.
ARTICLE VII
SEAL
The Board of Directors may provide a corporate seal which shall be in
the form of a circle and shall have inscribed thereon the name of the
Corporation and shall be entrusted in the care of the Secretary or such other
officer of the Corporation as the Board of Directors shall designate.
<PAGE>
ARTICLE VIII
NOTICES
Section l. Requirements:
Whenever a notice shall be required by the statutes of the State of
Delaware or by these By-laws, such notice may be given in writing by depositing
the same in the United States mails in a postpaid, sealed envelope addressed to
the person for whom such notice is intended to his or her home or other address,
as the same shall appear on the stock transfer books of the Corporation. The
time of mailing shall be deemed to be the time of giving such notice. A waiver
of any notice in writing, signed by a stockholder, director, or officer, whether
before, at, or after the time stated in such waiver for holding a meeting, shall
be deemed the equivalent of duly giving such notice.
Section 2. Presence:
The presence of any officer at a meeting, or the presence of any
stockholder or director at a meeting, unless such presence is for the sole
purpose of objecting to the holding of such meeting on the ground that it is not
duly held or convened, shall in all events be considered a waiver of notice
thereof; and failure to vote thereat shall not defeat the effectiveness of such
waiver.
Section 3. Ratification:
The ratification or approval in writing of the minutes of any meeting
of officers, stockholders, or directors shall have the same force and effect as
if the ratifying or approving officer, director, or stockholder were present in
person at said meeting.
ARTICLE IX
AMENDMENTS
These By-laws may be altered, amended, or repealed by the Board of
Directors by resolution of a majority of the Board.
ARTICLE X
INDEMNIFICATION
The Corporation shall indemnify any and all of its directors or
officers, or former directors or officers, or any person who may have served at
its request as a director or officer of another corporation in which this
Corporation owns shares of capital stock or of which it is a creditor and the
personal representatives of all such persons, against expenses actually and
necessarily incurred in connection with the defense of any action, suit, or
proceeding in which they, or any of them, were made parties, or a party, by
reason of being or having been directors or officers or a director or officer of
the Corporation, or of such other corporation, except in relation to matters as
to which any such director or officer or person shall have been adjudged in such
action, suit, or proceeding to be liable for negligence or misconduct in the
performance of any duty owed to the Corporation. Such indemnification shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled, independently of this Article X, by law, under any By-law agreement,
vote of stockholders, or otherwise.
<PAGE>
ARTICLE XI
CONFLICTS OF INTEREST
No contract or other transaction of the Corporation with any other
persons, firms or corporations, or in which the Corporation is interested, shall
be affected or invalidated by the fact that any one or more of the directors or
officers of the Corporation is interested in or is a director or officer of such
other firm or corporation; or by the fact that any director or officer of the
Corporation, individually or jointly with others, may be a party to or may be
interested in any such contract or transaction; and relieves every person who
may become a director or officer of the Corporation from any liability that
might otherwise arise by reason of his contracting with the Corporation for the
benefit of himself or any firm or corporation in which he may in any way be
interested.
(SEAL)
EAST COAST BEVERAGE CORP.
INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the Incentive Stock Option Plan (the "Plan")
is to advance the interests of East Coast Beverage Corp. and any subsidiary
corporation (hereinafter referred to as the "Company") and all of its
shareholders, by strengthening the Company's ability to attract and retain in
its employ individuals of training, experience, and ability, and to furnish
additional incentive to officers and valued employees upon whose judgment,
initiative, and efforts the successful conduct and development of its business
largely depends, by encouraging such officers and employees to become owners of
capital stock of the Company.
This will be effected through the granting of stock options as
herein provided, which options are intended to qualify as "Incentive Stock
Options" within the meaning of Section 422 of the Internal Revenue Code, as
amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer
the Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted
under the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
<PAGE>
Plan; to determine the terms and provisions of the respective Option agreements,
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 500,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
The aggregate fair market value (determined as of the time any option
is granted) of the stock for which any employee may be granted options which are
first exercisable in any single calendar year under this Plan (and any other
plan of the Company meeting the requirements for Incentive Stock Option Plans)
shall not exceed $100,000.
5. Participants. Options will be granted only to persons who are
employees of the Company or subsidiaries of the Company and only in connection
with any such person's employment. The term "employees" shall include officers
as well as other employees, and the officers and other employees who are
directors of the Company. The Committee will determine the employees to be
granted options and the number of shares subject to each option.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The purchase price of each option shall not be
less than 100% of the fair market value of the Company's common stock at the
time of the granting of the option provided, however, if the optionee, at the
time the option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, the purchase price
of the option shall not be less than 110% of the fair market value of the stock
at the time of the granting of the option.
(b) Period of Option. The maximum period for exercising an option
shall be 10 years from the date upon which the option is granted, provided,
however, if the optionee, at the time the option is granted, owns stock
possessing more than l0% of the total combined voting power of all classes of
stock of the Company, the maximum period for exercising an option shall be five
years from the date upon which the option is granted and provided further,
however, that these periods may be shortened in accordance with the provisions
of Paragraph 7 below.
<PAGE>
Subject to the foregoing, the period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee.
If an optionee shall cease to be employed by the Company due to
disability, as defined in Section 22(e)(3) of the Code, he may, but only within
the one year next succeeding such cessation of employment, exercise his option
to the extent that he was entitled to exercise it on the date of such cessation.
The Plan will not confer upon any optionee any right with respect to continuance
of employment by the Company, nor will it interfere in any way with his right,
or his employer's right, to terminate his employment at any time.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable. An Option shall not be exercisable in whole or in part prior to
the date of shareholder approval of the Plan.
Options may be exercised in part from time to time during the
option period. The exercise of any option will be contingent upon compliance by
the Optionee (or purchaser acting pursuant to Section 6(b)) with the provisions
of Section 10 below and upon receipt by the Company of either (i) cash or
certified bank check payable to its order in the amount of the purchase price of
such shares (ii) shares of Company stock having a fair market value equal to the
purchase price of such shares, or (iii) a combination of (i) and (ii). If any
law or regulation requires the Company to take any action with respect to the
shares to be issued upon exercise of any option, then the date for delivery of
such stock shall be extended for the period necessary to take such action.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Optionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
<PAGE>
(f) Death of Optionee. In the event of the death of an optionee
while in the employ of the Company, the option theretofore granted to him shall
be exercisable only within the three months succeeding such death and then only
(i) by the person or persons to whom the optionee's rights under the option
shall pass by the optionee's will or by the laws of descent and distribution,
and (ii) if and to the extent that he was entitled to exercise the option at the
date of his death.
7. Assumed Options. In connection with any transaction to which Section
424(a) of the Code is applicable, options may be granted pursuant hereto in
substitution of existing options or existing options may be assumed as
prescribed by that Section and any regulations issued thereunder.
Notwithstanding anything to the contrary contained in this Plan, options granted
pursuant to this Paragraph shall be at prices and shall contain such terms,
provisions, and conditions as may be determined by the Committee and shall
include such provisions and conditions as may be necessary to meet the
requirements of Section 424(a) of the Code.
8. Certain Dispositions of Shares. Any options granted pursuant to this
Plan shall be conditioned such that if, within the earlier of (i) the two-year
period beginning on the date of grant of an option or (ii) the one-year period
beginning on the date after which any share of stock is transferred to an
individual pursuant to his exercise of an option, such an individual makes a
disposition of such share of stock by way of sale, exchange, gift, transfer of
legal title, or otherwise, such individual shall promptly report such
disposition to the Company in writing and shall furnish to the Company such
details concerning such disposition as the Company may reasonably request.
9. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
10. Restrictions on Issuing Shares. The exercise of each Option shall
be subject to the condition that if at any time the Company shall determine in
its discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
<PAGE>
Unless the shares of stock covered by the Plan have been registered
with the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of l933, each optionee shall, by accepting an option, represent
and agree, for himself and his transferees by will or the laws of descent and
distribution, that all shares of stock purchased upon the exercise of the option
will be acquired for investment and not for resale or distribution. Upon such
exercise of any portion of an option, the person entitled to exercise the same
shall, upon request of the Company, furnish evidence satisfactory to the Company
(including a written and signed representation) to the effect that the shares of
stock are being acquired in good faith for investment and not for resale or
distribution. Furthermore, the Company may, if it deems appropriate, affix a
legend to certificates representing shares of stock purchased upon exercise of
options indicating that such shares have not been registered with the Securities
and Exchange Commission and may so notify its transfer agent. Such shares may be
disposed of by an optionee in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer, (2) pursuant
to an applicable exemption from registration as indicated in a written opinion
of counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
11. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
l2. Amendment, Suspension, and Termination of Plan. The Board of
Directors may alter, suspend, or discontinue the Plan, but may not, without the
approval of a majority of those holders of the Company's Common Stock voting in
person or by proxy at any meeting of the Company's shareholders, make any
alteration or amendment thereof which operates to (a) make any material change
in the class of eligible employees as defined in Section 5, (b) extend the term
of the Plan or the maximum option periods provided in paragraph 6, (c) decrease
the minimum option price provided in paragraph 6, except as provided in
paragraph 9, or (d) materially increase the benefits accruing to employees
participating under this Plan.
Unless the Plan shall theretofore have been terminated by the Board,
the Plan shall terminate ten years after the effective date of the Plan. No
Option may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
<PAGE>
13. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
14. Governing Law. The Plan shall be governed by the laws of the State
of Colorado.
15. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the Company.
EAST COAST BEVERAGE CORP.
NON-QUALIFIED STOCK OPTION PLAN
l. Purpose. This Non-Qualified Stock Option Plan (the "Plan") is intended to
advance the interests of East Coast Beverage Corp. (the "Company") and its
shareholders, by encouraging and enabling selected officers, directors,
consultants and key employees upon whose judgment, initiative and effort
the Company is largely dependent for the successful conduct of its
business, to acquire and retain a proprietary interest in the Company by
ownership of its stock. Options granted under the Plan are intended to be
Options which do not meet the requirements of Section 422 of the Internal
Revenue Code of 1954, as amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer the
Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted under
the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not expired,
has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
Plan; to determine the terms and provisions of the respective Option agreements,
<PAGE>
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 1,500,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
5. Participants. Options may be granted under the Plan to employees,
directors and officers, and consultants or advisors to the Company (or the
Company's subsidiaries), provided however that bona fide services shall be
rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The Option Price per share with respect to each
Option shall be determined by the Committee but shall in no instance be less
than the par value of the Common Stock.
(b) Period of Option. The period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee, but, notwithstanding any provision of the Plan to the contrary, such
expiration date shall not be more than ten years from the date of Grant.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Optionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
<PAGE>
(f) Death of Optionee. If an Optionee dies while holding an Option
granted hereunder, his Option privileges shall be limited to the shares which
were immediately purchasable by him at the date of death and such Option
privileges shall expire unless exercised by his successor within four months
after the date of death.
7. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
8. Restrictions on Issuing Shares. The exercise of each Option shall be
subject to the condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each optionee shall, by accepting an option,
represent and agree, for himself and his transferrees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the option will be acquired for investment and not for resale or
distribution. Upon such exercise of any portion of an option, the person
entitled to exercise the same shall, upon request of the Company, furnish
evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares of stock are being acquired in
good faith for investment and not for resale or distribution. Furthermore, the
Company may, if it deems appropriate, affix a legend to certificates
<PAGE>
representing shares of stock purchased upon exercise of options indicating that
such shares have not been registered with the Securities and Exchange Commission
and may so notify the Company's transfer agent. Such shares may be disposed of
by an optionee in the following manner only: (l) pursuant to an effective
registration statement covering such resale or reoffer, (2) pursuant to an
applicable exemption from registration as indicated in a written opinion of
counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
9. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
l0. Amendment, Suspension, and Termination of Plan. The Board of Directors may
alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the
Board, the Plan shall terminate ten years after the effective date of the Plan.
No Option may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
11. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
l2. Governing Law. The Plan shall be governed by the laws of the State of
Colorado.
13. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the Company.
EAST COAST BEVERAGE CORP.
STOCK BONUS PLAN
l. Purpose. The purpose of this Stock Bonus Plan is to advance the
interests of East Coast Beverage Corp. (the "Company") and its shareholders, by
encouraging and enabling selected officers, directors, consultants and key
employees upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire and retain a
proprietary interest in the Company by ownership of its stock, to keep personnel
of experience and ability in the employ of the Company and to compensate them
for their contributions to the growth and profits of the Company and thereby
induce them to continue to make such contributions in the future.
2. Definitions.
A. "Board" shall mean the board of directors of the Company.
B. "Committee" means the directors duly appointed to administer
the Plan.
C. "Plan" shall mean this Stock Bonus Plan.
D. "Bonus Share" shall mean the shares of common stock of the
Company reserved pursuant to Section 4 hereof and any such shares issued to a
Recipient pursuant to this Plan.
E. "Recipient" shall mean any individual rendering services for
the Company to whom shares are granted pursuant to this Plan.
3. Administration of Plan. The Plan shall be administered by a
committee of two or more directors appointed by the Board (the "Committee"). The
Committee shall report all action taken by it to the Board. The Committee shall
have full and final authority in its discretion, subject to the provisions of
the Plan, to determine the individuals to whom and the time or times at which
Bonus Shares shall be granted and the number of Bonus Shares; to construe and
interpret the Plan; and to make all other determinations and take all other
actions deemed necessary or advisable for the proper administration of the Plan.
All such actions and determinations shall be conclusively binding for all
purposes and upon all persons.
<PAGE>
4. Bonus Share Reserve. There shall be established a Bonus Share
Reserve to which shall be credited 250,000 shares of the Company's common stock.
In the event that the shares of common stock of the Company should, as a result
of a stock split or stock dividend or combination of shares or any other change,
or exchange for other securities by reclassification, reorganization, merger,
consolidation, recapitalization or otherwise, be increased or decreased or
<PAGE>
changed into or exchanged for, a different number or kind of shares of stock or
other securities of the Company or of another corporation, the number of shares
then remaining in the Bonus Share Reserve shall be appropriately adjusted to
reflect such action. Upon the grant of shares hereunder, this reserve shall be
reduced by the number of shares so granted. Distributions of Bonus Shares may,
as the Committee shall in its sole discretion determine, be made from authorized
but unissued shares or from treasury shares. All authorized and unissued shares
issued as Bonus Shares in accordance with the Plan shall be fully paid and
non-assessable and free from preemptive rights.
5. Eligibility, and Granting and Vesting of Bonus Shares. Bonus Shares
may be granted under the Plan to the Company's (or the Company's subsidiaries)
employees, directors and officers, and consultants or advisors to the Company
(or its subsidiaries), provided however that bona fide services shall be
rendered by such consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
The Committee, in its sole discretion, is empowered to grant to an
eligible Participant a number of Bonus Shares as it shall determine from time to
time. Each grant of these Bonus Shares shall become vested according to a
schedule to be established by the Committee directors at the time of the grant.
For purposes of this plan, vesting shall mean the period during which the
recipient must remain an employee or provide services for the Company. At such
time as the employment of the Recipient ceases, any shares not fully vested
shall be forfeited by the Recipient and shall be returned to the Bonus Share
Reserve. The Committee, in its sole discretion, may also impose restrictions on
the future transferability of the bonus shares, which restrictions shall be set
forth on the notification to the Recipient of the grant.
The aggregate number of Bonus Shares which may be granted pursuant
to this Plan shall not exceed the amount available therefore in the Bonus Share
Reserve.
6. Form of Grants. Each grant shall specify the number of Bonus Shares
subject thereto, subject to the provisions of Section 5 hereof.
At the time of making any grant, the Committee shall advise the
Recipient by delivery of written notice, in the form of Exhibit A hereto
annexed.
7. Recipients' Representations.
A. The Committee may require that, in acquiring any Bonus Shares,
the Recipient agree with, and represent to, the Company that the Recipient is
acquiring such Bonus Shares for the purpose of investment and with no present
intention to transfer, sell or otherwise dispose of shares except such
distribution by a legal representative as shall be required by will or the laws
of any jurisdiction in winding-up the estate of any Recipient. Such shares shall
be transferable thereafter only if the proposed transfer shall be permissible
pursuant to the Plan and if, in the opinion of counsel (who shall be
satisfactory to the Committee), such transfer shall at such time be in
compliance with applicable securities laws.
<PAGE>
B. To effectuate Paragraph A above, the Recipient shall deliver to
the Committee, in duplicate, an agreement in writing, signed by the Recipient,
in form and substance as set forth in Exhibit B hereto annexed, and the
Committee shall forthwith acknowledge its receipt thereof.
8. Restrictions Upon Issuance. A. Bonus Shares shall forthwith after
the making of any representations required by Section 6 hereof, or if no
representations are required then within thirty (30) days of the date of grant,
be duly issued and transferred and a certificate or certificates for such shares
shall be issued in the Recipient's name. The Recipient shall thereupon be a
shareholder with respect to all the shares represented by such certificate or
certificates, shall have all the rights of a shareholder with respect to all
such shares, including the right to vote such shares and to receive all
dividends and other distributions (subject to the provisions of Section 7(B)
hereof) paid with respect to such shares. Certificates of stock representing
Bonus Shares shall be imprinted with a legend to the effect that the shares
represented thereby are subject to the provisions of this Agreement, and to the
vesting and transfer limitations established by the Committee, and each transfer
agent for the common stock shall be instructed to like effect with respect of
such shares.
B. In the event that, as the result of a stock split or stock
dividend or combination of shares or any other change, or exchange for other
securities, by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, the Recipient shall, as owner of the Bonus Shares
subject to restrictions hereunder, be entitled to new or additional or different
shares of stock or securities, the certificate or certificates for, or other
evidences of, such new or additional or different shares or securities, together
with a stock power or other instrument of transfer appropriately endorsed, shall
also be imprinted with a legend as provided in Section 7(A), and all provisions
of the Plan relating to restrictions herein set forth shall thereupon be
applicable to such new or additional or different shares or securities to the
extent applicable to the shares with respect to which they were distributed.
C. The grant of any Bonus Shares shall be subject to the condition
that if at any time the Company shall determine in its discretion that the
satisfaction of withholding tax or other withholding liabilities, or that the
listing, registration, or qualification of any Bonus Shares upon such exercise
upon any securities exchange or under any state or federal law, or that the
consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, the issuance of any Bonus Shares, then in
any such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
<PAGE>
D. Unless the Bonus Shares covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each Recipient shall, by accepting a Bonus Share,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all Bonus Shares were acquired for investment and
not for resale or distribution. The person entitled to receive Bonus Shares
shall, upon request of the Committee, furnish evidence satisfactory to the
Committee (including a written and signed representation) to the effect that the
shares of stock are being acquired in good faith for investment and not for
resale or distribution. Furthermore, the Committee may, if it deems appropriate,
affix a legend to certificates representing Bonus Shares indicating that such
Bonus Shares have not been registered with the Securities and Exchange
Commission and may so notify the Company's transfer agent. Such shares may be
disposed of by a Recipient in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer, (2) pursuant
to an applicable exemption from registration as indicated in a written opinion
of counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If Bonus
Shares covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
Recipients who are directors, officers, or principal shareholders of the
Company. Such persons may dispose of shares only by one of the three aforesaid
methods.
9. Limitations. Neither the action of the Company in establishing the
Plan, nor any action taken by it nor by the Committee under the Plan, nor any
provision of the Plan, shall be construed as giving to any person the right to
be retained in the employ of the Company.
Every right of action by any person receiving shares of common
stock pursuant to this Plan against any past, present or future member of the
Board, or any officer or employee of the Company arising out of or in connection
with this Plan shall, irrespective of the place where action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
10. Amendment, Suspension or Termination of the Plan. The Board of
Directors may alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the Board,
the Plan shall terminate ten years after the effective date of the Plan. No
Bonus Share may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without a
recipient's consent, alter or impair any of the rights or obligations under any
Bonus Share theretofore granted to such recipient under the Plan.
<PAGE>
11. Governing Law. The Plan shall be governed by the laws of the State
of Colorado.
12. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the Company.
<PAGE>
- EXHIBIT A -
EAST COAST BEVERAGE CORP.
STOCK BONUS PLAN
TO: Recipient:
PLEASE BE ADVISED that East Coast Beverage Corp. has on the date hereof
granted to the Recipient the number of Bonus Shares as set forth under and
pursuant to the Stock Bonus Plan. Before these shares are to be issued, the
Recipient must deliver to the Committee that administers the Stock Bonus Plan an
agreement in duplicate, in the form as Exhibit B hereto. The Bonus Shares are
issued subject to the following vesting and transfer limitations.
Vesting:
Number of Shares Date of Vesting
Transfer Limitations:
EAST COAST BEVERAGE CORP.
By________________________
____________________
Date
<PAGE>
- EXHIBIT B -
East Coast Beverage Corp.
1750 University Drive
Suite 117
Coral Springs, Florida 33071
Gentlemen:
I represent and agree that said Bonus Shares are being acquired by me for
investment and that I have no present intention to transfer, sell or otherwise
dispose of such shares, except as permitted pursuant to the Plan and in
compliance with applicable securities laws, and agree further that said shares
are being acquired by me in accordance with and subject to the terms, provisions
and conditions of said Plan, to all of which I hereby expressly assent. These
agreements shall bind and inure to the benefit of my heirs, legal
representatives, successors and assigns.
My address of record is:
and my social security number: .
Very truly yours,
Receipt of the above is hereby acknowledged.
East Coast Beverage Corp
By _______________________
Date _______ its ______________________
February 22, 2000
EAST COAST BEVERAGE CORP.
1750 University Drive
Suite 117
Coral Springs, Florida 33071
This letter will constitute an opinion upon the legality of the sale by certain
selling shareholders of East Coast Beverage Corp. (the "Company") of up to
2,447,841 shares of common stock, all as referred to in the Registration
Statement on Form SB-2 filed by the Company with the Securities and Exchange
Commission.
We have examined the Articles of Incorporation, the Bylaws and the minutes of
the Board of Directors of the Company and the applicable laws of the State of
Colorado, and a copy of the Registration Statement. In our opinion, the shares
of common stock to be sold by the selling shareholders have been lawfully issued
and such shares are fully paid and non-assessable shares of the Company's common
stock.
Very truly yours,
HART & TRINEN
William T. Hart
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT("Agreement") is made this 27th day of December,
1999, and shall be in full force and effect upon execution by and between EAST
COAST BEVERAGE CORP., a Florida corporation (hereinafter "Company"), on the one
hand, and JOHN CALEBRESE (hereinafter "Employee"), on the other.
WHEREAS, Company is a Florida corporation duly organized under the law of
the State of Florida and is presently in existence and in good standing; and
WHEREAS, Company, through its employees, officers and directors, is in the
business of manufacturing, marketing and selling various flavored beverages and
related products and supplies both nationally and internationally, in food and
other related industries; and
WHEREAS, Employee has considerable experience and expertise in the
management and marketing of products similar to those marketed by Company to
businesses and customers in the industry and Company seeks to benefit from the
experience and expertise of Employee; and
WHEREAS, Company and Employee desire to set forth the terms and conditions
of their employment relationship.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties intending to be legally bound, do agree as follows:
1. Employment. In exchange for the consideration and other benefits described
herein, and subject to the other terms and conditions set forth herein, Company
hereby employs Employee as Chief Executive Officer and its Secretary and
Treasurer (hereinafter referred to collectively as "CEO" or "Chief Executive
Officer", unless specifically designated otherwise) and Employee accepts such
employment upon the terms and conditions so set forth. In rendering such
services as CEO, Employee shall perform such duties and exercise such powers as
are customarily performed and exercised by persons holding such office
including, without limitation, overall supervision and oversight of the Company
and its officers, managers and employees, control of assets of the Company and
responsibility for its financial operations and records, responsibility and
authority to preside at all meetings of the shareholders and the Board of
Directors of the Company and such other duties as may be vested in him by the
Board of Directors of Company. As needed, Employee may also retain the services
of other professionals and consultants to provide specialized experience and
skills.
2. Devotion of Skills and Effort. Employee shall devote his entire
professional (as opposed to personal) time, energy and skill to the service of
Company and the promotion of Company's interests, and to use his best efforts in
the performance of his services hereunder. The parties agree that Employee may
not, during the employment period, be engaged in any other business activity
<PAGE>
which would interfere with or constitute a conflict of interest with Employee's
ability to perform his duties as CEO provided, however, Employee may invest his
personal assets in businesses in which his investment is of a passive nature and
may undertake and perform such other services as would be customary and
befitting the CEO of a company such as service on boards of directors, honorary
and civic associations, and participation in industry and business groups and
organizations on a local, state or national level.
3. Authority to Contract. Employee shall have the authority to enter into
contracts binding upon Company and to create obligations on the part of Company,
subject to the Bylaws or directives and resolutions of the Board of Directors.
4. Term. The term of employment under this Agreement shall be three (3) years,
unless an event of termination occurs and this Agreement is terminated as
provided in Section 10 of this Agreement.
5. Salary and Benefits. Employee shall receive the following salary, benefits
and other compensation during the term of his employment:
a. Base Salary of $200,000.00, per annum, payable monthly or
otherwise in accordance with the regular payroll policies of
Company, which policies may change from time to time, at
Company's discretion, and subject to any appropriate state or
federal taxes or withholding. Company shall from time to time,
but no less than annually, review Employee's Base Salary and
may, based on performance and merit considerations, increase,
but not decrease, Employee's Base Salary below the amount set
forth herein.
b. In addition to Base Salary, Employee shall be entitled to receive a
Performance Bonus equal to thirty-five percent (35%) of his Base Salary in
the event Company achieves its annual projected target sales. Any
Performance Bonus shall be paid by Company on an annual basis, within sixty
(60) days of the close of the annual sales period, whether such sales
period is calculated on a fiscal or calendar year and further subject to
any appropriate state or federal taxes. If at any time during the term of
employment Company revises or otherwise terminates such a Performance Bonus
program based on the Company's achievement of targeted sale figures,
Employee shall be entitled to a minimum bonus of twenty-five percent (25%)
of his Base Salary, so long as annual sales meet or exceed the sales
figures for the twelve-month period immediately preceding the time such
Performance Bonus Program was revised or terminated.
<PAGE>
c. Employee is entitled to four (4) weeks paid vacation per
calendar year of service. Any unused vacation may be accrued
to the next year of service or, at Employee's option, Employee
may elect to receive a lump sum cash benefit for the unused
vacation days calculated at Employee's Base Salary rate.
d. Employee shall receive a $600.00 monthly payment for
automobile and automobile insurance expenses. In addition,
Employee shall be reimbursed for all costs of maintenance,
repair, gas and tolls incurred by Employee in the performance
of his duties.
e. In recognition of Company's present size and other business considerations
warranting against the establishment of group insurance benefits, Employee
shall receive a monthly lump sum payment in the amount of $1,200.00 for
health, dental family plan and life insurance benefits Company agrees to
provide as part of Employee's compensation package under this Agreement. In
the event Company initiates a "group" insurance benefits plan or otherwise
elects to provide such insurance benefits directly, Company agrees to
provide comparable and equivalent insurance benefits or, alternatively, to
continue to compensate Employee for the cost of obtaining such comparable
insurance benefits.
f. Employee shall be entitled to such other benefits, or their monetary
equivalent, including a cellular business phone and service and
reimbursement for all reasonable business expenses incurred by Employee in
the performance of his duties, including all reasonable travel, business
entertainment and client development expenses. Employee agrees to provide
documentation of such expenses as may be required for substantiation of
such expenses as deductible business expenses of Company.
g. Company shall procure and maintain "Directors and Officers" professional
liability insurance providing "Errors and Omissions" coverage for Employee
in the performance of his duties for Company in an amount of no less than
One Million ($1,000,000.00) Dollars of coverage per incident.
6. Grant of Fully Vested Stock Option to Employee. In recognition of Employee's
key role in the initial development and success of Company and as further
inducement for Employee to enter into this Agreement, Company grants Employee
the option to purchase 4,097,298 shares of Company's common stock. The options
will be exercisable at a price of $0.3355 per share and will be granted pursuant
to the provisions of Company's Non-Qualified Stock Option Plan. The options will
have a cashless exercise feature and will expire on December 31, 2004. The
option exercise price and the shares issuable upon the exercise of the option
will be subject to adjustment in the event of stock splits, recapitalizations,
reorganizations, or similar events. The Company agrees to register the shares
issuable upon the exercise of the options by means of a registration statement
on Form S-8.
<PAGE>
7. Confidentiality. During the term of this Agreement and hereafter as provided
below, all information related to the business, operations, finances and
strategies of Company, including without limitation, existing sales and customer
information, is and shall remain the exclusive property of Company
("Confidential Information"). Employee agrees that, except for information that
is generally available to the public, that is disclosed to any person or entity
through no fault of Employee, or as compelled to be disclosed by court process,
Employee will not at any time, directly or indirectly, use for his own benefit
of for the benefit of any third party person or entity, or disclose to any
person or entity, any Confidential Information. Employee acknowledges that all
materials relating to such Confidential Information, as well as the Confidential
Information, are the property of Company. Employee's obligations under this
Agreement shall survive termination, for whatsoever reason, of this Agreement.
8. Covenant Not to Compete. During the term of this Agreement and continuing
thereafter, upon termination of this Agreement as authorized in Section 10 of
this Agreement, or upon Employee's voluntary resignation, for a period of one
(1) year ("No Compete Period"), Employee shall not, for compensation or
otherwise, acting alone or in conjunction with others, directly or indirectly,
as an employee, consultant or in any legal or equitable ownership capacity,
participate or engage in a company or business engaged in the manufacture of
potable beverage products operating within the State of Florida or any other
territory in which Company conducted business during the term of this Agreement.
In the event that any court of competent jurisdiction shall finally hold
that this provision constitutes an unreasonable restriction upon Employee,
Employee hereby expressly agrees that the provisions of this Agreement shall not
be rendered void, but shall apply as to time and territory or to such extent as
the court may judicially determine or indicate constitutes a reasonable and
valid restriction based upon the circumstances involved. Notwithstanding any
provision in this Agreement to the contrary, in the event Company terminates
Employee in violation of this Agreement, the parties expressly recognize and
agree that Employee is not bound by the Covenant Not to Compete set forth in
this Section.
9. Surrender of Records. Upon the termination of Employee's employment, or upon
the voluntary resignation by Employee of his employment, and in addition to such
other action as may be reasonably and ordinarily required by Company, Employee
agrees to surrender to Company all materials, computers, writings or other
physical manifestations of Confidential Information, as defined herein, and all
writings and material describing, promoting or containing any Confidential
Information which Employee obtained directly or indirectly from Company.
10. Termination. As stated above, the term of this Agreement is for three (3)
years, unless otherwise terminated by occasion of the following events of
termination:
<PAGE>
a. In the event of death or disability of such severity that the parties reach
agreement, not to be unreasonably withheld, that Employee can no longer
perform his duties, Company may immediately terminate this Agreement and
shall have no further obligation under this Agreement except with respect
to salary and benefits earned prior to termination and, as provided herein,
payment of the Lump Sum Disability Benefit or as otherwise provided
pursuant to the insurance and other benefits provided by Company.
Disability, as used herein, shall mean a physical or mental condition which
prevents Employee from performing his duties under this Agreement in a
reasonable and professional manner and in the manner previously performed
by him, for a period of at least three (3) consecutive months. In the event
of Disability, as contemplated herein, Employee shall continue to receive
his salary and other benefits during the initial three (3) consecutive
month period. At the conclusion of the three (3) consecutive month period,
in the event Employee has not resumed his duties, the parties shall
diligently and promptly endeavor to determine if Employee is suffering from
a Disability and, upon such determination that Employee is suffering from a
Disability, Employee shall receive a lump sum payment equal to double the
total annual value of Employee's Salary and Benefits compensation, as set
forth in Paragraph 5 of this Agreement, calculated at the then current
value, as a Lump Sum Disability Benefit. In the event Employee dies during
the term of his active employment or within the initial consecutive three
(3) month period while Employee is Disabled and otherwise unable to perform
his duties, Employee's Estate shall be paid said Lump Sum Disability
Benefit as a Lump Sum Death Benefit, to be paid to the Employee's Estate
within sixty (60) days of death.
b. This Agreement may be terminated by either party in the event that Company
is sold or, alternatively, substantially all of its assets are sold to a
non-related third party. In the event that Company, or its
successor-in-interest to this Agreement, elects to terminate this Agreement
as provided in this sub-section, and upon fifteen (15) days' notice in
writing to Employee, this Agreement shall terminate and Employee shall
receive from Company a lump sum amount equal to treble the total annual
value of Employee's Salary and Benefits compensation, as set forth in
Paragraph 5 of this Agreement, calculated at the then current value as of
the date Notice is given.
In the event that Employee elects to terminate this Agreement, upon fifteen
(15) day's notice in writing to Company, Employee shall receive from Company a
lump sum amount equal to the total annual value of Employee's Salary and
Benefits compensation, as set forth in Paragraph 5 of this Agreement, calculated
at the then current value as of the date Notice is given. In the event of
termination under this subparagraph of the Agreement, Employee shall receive
such Lump Sum Termination Payment within sixty (60) days of receipt of Notice of
termination by the non-terminating party.
<PAGE>
c. Company may otherwise terminate Employee only for "good cause" shown. Good
cause shall consist of misconduct or dishonesty which has a material
adverse effect on Company or its business or a material breach of
Employee's obligations as CEO, as determined and specifically documented by
the Board of Directors.
It is the parties express intent and understanding that the above-outlined
events of termination, to the extent such events of termination are exercised,
shall not constitute a breach of this Agreement by either party.
11. Employee Representations, Warranties, and Acknowledgments. Employee
represents and warrants to Company that he is fully empowered to enter into and
perform his obligations under this Agreement and, without limitation, that he is
under no restrictive covenants to any person or entity that will be violated by
his entering into and performing this Agreement, and that this Agreement
constitutes the valid and legally binding obligation of Employee enforceable in
accordance with its terms. The execution and delivery of this Agreement by
Employee has been duly authorized by all necessary action. Employee shall
indemnify Company upon demand for and against any and all judgments, losses,
claims, damages, costs (including without limitation all legal fees and costs,
even if incident to appeals) incurred or suffered by any of them as a result of
the breach of the representations and warranties made in this Section, or as a
result of the failure of the acknowledgment made in this Section to be true and
correct at all times.
12. No Waiver. The failure or delay of Company at any time to require
performance by Employee of any provision of this Agreement, even if known, shall
not affect the right of Company to require performance of that provision or to
exercise any right, power or remedy hereunder, and any waiver by Company of any
breach of any provision of this Agreement should not be construed as a waiver of
any continuing or succeeding breach of such provision, a waiver of the provision
itself, or a waiver of any right, power or remedy under this Agreement. No
notice to or demand on Employee in any case shall, of itself, entitle such party
to any other or further notice or demand in similar or other circumstances.
13. Benefits of Agreement; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Neither this Agreement nor the rights of Employee hereunder
shall be assignable by Employee without the prior written consent of Company and
any purported assignment by Employee of this Agreement or such rights without
such consent, whether voluntarily or involuntarily, shall not vest in the
purported assignee or transferee any interest or right herein whatsoever.
14. Amendment. This Agreement may be amended only by an agreement in writing
signed by the parties hereto. A term of this Agreement may be waived only by a
written instrument signed by the party entitled to the benefits thereof. No such
agreement or instrument in writing shall extend to or affect any provision of
this Agreement not expressly amended or waived, or impair any right consequent
on any such provision. The waiver of any breach of, or the failure to enforce
any provision of, this Agreement shall not be deemed to be a waiver or
acquiescence in any other breach thereof or a waiver of any such provision.
<PAGE>
15. Notice. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or sent by telex or facsimile
(and promptly confirmed by certified mail, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice which shall be deemed effective when
received):
a. If to Company:
Alexander Garabedian, Jr., President
East Coast Beverage Corp.
1750 University Drive
Coral Springs, Florida 33071
b. If to Employee:
John Calebrese
6238 N.W. 120 Drive
Coral Springs, Florida 33076
16. Guaranty. The full and punctual payment by Company of all fees payable to
Employee hereunder is unconditionally guaranteed by Company.
17. Miscellaneous provisions. If any part of this Agreement or any other
Agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible.
Employee acknowledges that the services to be rendered by Employee
hereunder are extraordinary and unique and are vital to the success of Company,
and that damages at law would be an inadequate remedy for any breach or
threatened breach of this Agreement with respect to those provisions providing
for the Confidentiality of Confidential Information and Employee's Covenant Not
to Compete. Therefore, in the event of a breach or threatened breach by Employee
of the provisions set forth in Sections 7 and 8 of this Agreement, then Company
shall be entitled, in addition to all other rights or remedies, to any
injunctive relief authorized by law, without being required to show any actual
damage.
This Agreement and all transactions contemplated by this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Florida without regard to principles of conflicts of laws and proper
venue for any litigation arising out of this Agreement shall be Broward County,
Florida.
The parties acknowledge that this is a negotiated Agreement, and that in
no event shall the terms hereof be construed against either party on the basis
that such party, or its counsel, drafted this Agreement.
<PAGE>
At all times during the term of this Agreement and thereafter for those
events and conduct carried out by Employee in the performance of his duties,
Company agrees to indemnify and save Employee harmless from and against any and
all liability for damages, losses, costs, charges and expenses of whatever kind
and nature, including attorney's fees and costs, which Employee shall or may
incur arising from the performance of his duties as Employee, provided that, as
determined by final judicial decree, the events or conduct giving rise to
Company's obligation to indemnify were not caused or occasioned by Employee's
fraudulent or criminal conduct.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as set
forth below.
EAST COAST BEVERAGE CORP.
Attest:
By
Secretary Title:
Date:
Witness JOHN CALEBRESE
Date:
Witness
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT("Agreement") is made this 27th day of December,
1999, and shall be in full force and effect upon execution by and between EAST
COAST BEVERAGE CORP., a Florida corporation (hereinafter "Company"), on the one
hand, and ALEXANDER GARABEDIAN, JR. (hereinafter "Employee"), on the other.
WHEREAS, Company is a Florida corporation duly organized under the law of
the State of Florida and is presently in existence and in good standing; and
WHEREAS, Company, through its employees, officers and directors, is in the
business of manufacturing, marketing and selling various flavored beverages and
related products and supplies both nationally and internationally, in food and
other related industries; and
WHEREAS, Employee has considerable experience and expertise in the
management and marketing of products similar to those marketed by Company to
businesses and customers in the industry and Company seeks to benefit from the
experience and expertise of Employee; and
WHEREAS, Company and Employee desire to set forth the terms and conditions
of their employment relationship.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties intending to be legally bound, do agree as follows:
1. Employment. In exchange for the consideration and other benefits described
herein, and subject to the other terms and conditions set forth herein, Company
hereby employs Employee as President and Employee accepts such employment upon
the terms and conditions so set forth. In rendering such services as President,
Employee shall perform such duties and exercise such powers as are customarily
performed and exercised by persons holding such office including, without
limitation, overall management responsibilities for the operational, financial
and administrative operations of Company and such other duties as may be vested
in him by the Board of Directors of Company. As needed, Employee may also retain
the services of other professionals and consultants to provide specialized
experience and skills.
2. Devotion of Skills and Effort. Employee shall devote his entire professional
(as opposed to personal) time, energy and skill to the service of Company and
the promotion of Company's interests, and to use his best efforts in the
performance of his services hereunder. The parties agree that Employee may not,
during the employment period, be engaged in any other
<PAGE>
business activity which would interfere with or constitute a conflict of
interest with Employee's ability to perform his duties as President provided,
however, Employee may invest his personal assets in businesses in which his
investment is of a passive nature and may undertake and perform such other
services as would be customary and befitting the President of a company such as
service on boards of directors, honorary and civic associations, and
participation in industry and business groups and organizations on a local,
state or national level.
3. Authority to Contract. Employee shall have the authority to enter into
contracts binding upon Company and to create obligations on the part of Company,
subject to the Bylaws or directives and resolutions of the Board of Directors.
4. Term. The term of employment under this Agreement shall be three (3) years,
unless an event of termination occurs and this Agreement is terminated as
provided in Section 9 of this Agreement.
5. Salary and Benefits. Employee shall receive the following salary, benefits
and other compensation during the term of his employment:
a. Base Salary of $155,000.00, per annum, payable monthly or
otherwise in accordance with the regular payroll policies of
Company, which policies may change from time to time, at
Company's discretion, and subject to any appropriate state or
federal taxes or withholding. Company shall from time to time,
but no less than annually, review Employee's Base Salary and
may, based on performance and merit considerations, increase,
but not decrease, Employee's Base Salary below the amount set
forth herein.
b. In addition to Base Salary, Employee shall be entitled to receive a
Performance Bonus equal to thirty-five percent (35%) of his Base Salary in
the event Company achieves its annual projected target sales. Any
Performance Bonus shall be paid by Company on an annual basis, within sixty
(60) days of the close of the annual sales period, whether such sales
period is calculated on a fiscal or calendar year and further subject to
any appropriate state or federal taxes. If at any time during the term of
employment Company revises or otherwise terminates such a Performance Bonus
program based on the Company's achievement of targeted sale figures,
Employee shall be entitled to a minimum bonus of twenty-five percent (25%)
of his Base Salary, so long as annual sales meet or exceed the sales
figures for the twelve-month period immediately preceding the time such
Performance Bonus Program was revised or terminated.
<PAGE>
c. Employee is entitled to four (4) weeks paid vacation per
calendar year of service. Any unused vacation may be accrued
to the next year of service or, at Employee's option, Employee
may elect to receive a lump sum cash benefit for the unused
vacation days calculated at Employee's Base Salary rate.
d. Employee shall receive a $1,150.00 monthly payment for
automobile and automobile insurance expenses. In addition,
Employee shall be reimbursed for all costs of maintenance,
repair, gas and tolls incurred by Employee in the performance
of his duties.
e. In recognition of Company's present size and other business considerations
warranting against the establishment of group insurance benefits, Employee
shall receive a monthly lump sum payment in the amount of $1,200.00 for
health, dental family plan and life insurance benefits Company agrees to
provide as part of Employee's compensation package under this Agreement. In
the event Company initiates a "group" insurance benefits plan or otherwise
elects to provide such insurance benefits directly, Company agrees to
provide comparable and equivalent insurance benefits or, alternatively, to
continue to compensate Employee for the cost of obtaining such comparable
insurance benefits.
f. Employee shall be entitled to such other benefits, or their
monetary equivalent, including a cellular business phone and
service and reimbursement for all reasonable business expenses
incurred by Employee in the performance of his duties,
including all reasonable travel, business entertainment and
client development expenses. Employee agrees to provide
documentation of such expenses as may be required for
substantiation of such expenses as deductible business
expenses of Company.
g. Company shall procure and maintain "Directors and Officers"
professional liability insurance providing "Errors and
Omissions" coverage for Employee in the performance of his
duties for Company in an amount of no less than One Million
($1,000,000.00) Dollars of coverage per incident.
6. Confidentiality. During the term of this Agreement and hereafter as provided
below, all information related to the business, operations, finances and
strategies of Company, including without limitation, existing sales and customer
information, is and shall remain the exclusive property of Company
("Confidential Information"). Employee agrees that, except for information that
is generally available to the public, that is disclosed to any person or entity
through no fault of Employee, or as compelled to be disclosed by court process,
Employee will not at any time, directly or indirectly, use for his own benefit
of for the benefit of any third party person or entity, or disclose to any
person or entity, any Confidential Information. Employee acknowledges that all
materials relating to such Confidential Information, as well as the Confidential
Information, are the property of Company. Employee's obligations under this
Agreement shall survive termination, for whatsoever reason, of this Agreement.
<PAGE>
7. Covenant Not to Compete. During the term of this Agreement and continuing
thereafter, upon termination of this Agreement as authorized in Section 9 of
this Agreement, or upon Employee's voluntary resignation, for a period of one
(1) year ("No Compete Period"), Employee shall not, for compensation or
otherwise, acting alone or in conjunction with others, directly or indirectly,
as an employee, consultant or in any legal or equitable ownership capacity,
participate or engage in a company or business engaged in the manufacture of
potable beverage products operating within the State of Florida or any other
territory in which Company conducted business during the term of this Agreement.
In the event that any court of competent jurisdiction shall finally hold
that this provision constitutes an unreasonable restriction upon Employee,
Employee hereby expressly agrees that the provisions of this Agreement shall not
be rendered void, but shall apply as to time and territory or to such extent as
the court may judicially determine or indicate constitutes a reasonable and
valid restriction based upon the circumstances involved. Notwithstanding any
provision in this Agreement to the contrary, in the event Company terminates
Employee in violation of this Agreement, the parties expressly recognize and
agree that Employee is not bound by the Covenant Not to Compete set forth in
this Section.
8. Surrender of Records. Upon the termination of Employee's employment, or upon
the voluntary resignation by Employee of his employment, and in addition to such
other action as may be reasonably and ordinarily required by Company, Employee
agrees to surrender to Company all materials, computers, writings or other
physical manifestations of Confidential Information, as defined herein, and all
writings and material describing, promoting or containing any Confidential
Information which Employee obtained directly or indirectly from Company.
9. Termination. As stated above, the term of this Agreement is for three (3)
years, unless otherwise terminated by occasion of the following events of
termination:
a. In the event of death or disability of such severity that the
parties reach agreement, not to be unreasonably withheld, that Employee
can no longer perform his duties, Company may immediately terminate
this Agreement and shall have no further obligation under this
Agreement except with respect to salary and benefits earned prior to
termination and, as provided herein, payment of the Lump Sum Disability
Benefit or as otherwise provided pursuant to the insurance and other
benefits provided by Company. Disability, as used herein, shall mean a
physical or mental condition which prevents Employee from performing
his duties under this Agreement in a reasonable and professional manner
and in the manner previously performed by him, for a period of at least
<PAGE>
three (3) consecutive months. In the event of Disability, as
contemplated herein, Employee shall continue to receive his salary and
other benefits during the initial three (3) consecutive month period.
At the conclusion of the three (3) consecutive month period, in the
event Employee has not resumed his duties, the parties shall diligently
and promptly endeavor to determine if Employee is suffering from a
Disability and, upon such determination that Employee is suffering from
a Disability, Employee shall receive a lump sum payment equal to double
the total annual value of Employee's Salary and Benefits compensation,
as set forth in Paragraph 5 of this Agreement, calculated at the then
current value, as a Lump Sum Disability Benefit. In the event Employee
dies during the term of his active employment or within the initial
consecutive three (3) month period while Employee is Disabled and
otherwise unable to perform his duties, Employee's Estate shall be paid
said Lump Sum Disability Benefit as a Lump Sum Death Benefit, to be
paid to the Employee's Estate within sixty (60) days of death.
b. This Agreement may be terminated by either party in the event that
Company is sold or, alternatively, substantially all of its assets are
sold to a non-related third party. In the event that Company, or its
successor-in-interest to this Agreement, elects to terminate this
Agreement as provided in this sub-section, and upon fifteen (15) days'
notice in writing to Employee, this Agreement shall terminate and
Employee shall receive from Company a lump sum amount equal to treble
the total annual value of Employee's Salary and Benefits compensation,
as set forth in Paragraph 5 of this Agreement, calculated at the then
current value as of the date Notice is given.
In the event that Employee elects to terminate this Agreement, upon fifteen (15)
day's notice in writing to Company, Employee shall receive from Company a
lump sum amount equal to the total annual value of Employee's Salary and
Benefits compensation, as set forth in Paragraph 5 of this Agreement,
calculated to the then current value as of the date Notice is given. In the
event of termination under this subparagraph of the Agreement, Employee shall
receive such Lump Sum Termination Payment within sixty (60) days of receipt
of Notice of termination by the non-terminating party.
c. Company may otherwise terminate Employee only for "good cause"
shown. Good cause shall consist of misconduct or dishonesty which has a
material adverse effect on Company or its business or a material breach
of Employee's obligations as President, as determined and specifically
documented by the Board of Directors.
It is the parties express intent and understanding that the above-outlined
events of termination, to the extent such events of termination are exercised,
shall not constitute a breach of this Agreement by either party.
<PAGE>
10. Employee Representations, Warranties, and Acknowledgments. Employee
represents and warrants to Company that he is fully empowered to enter into and
perform his obligations under this Agreement and, without limitation, that he is
under no restrictive covenants to any person or entity that will be violated by
his entering into and performing this Agreement, and that this Agreement
constitutes the valid and legally binding obligation of Employee enforceable in
accordance with its terms. The execution and delivery of this Agreement by
Employee has been duly authorized by all necessary action. Employee shall
indemnify Company upon demand for and against any and all judgments, losses,
claims, damages, costs (including without limitation all legal fees and costs,
even if incident to appeals) incurred or suffered by any of them as a result of
the breach of the representations and warranties made in this Section, or as a
result of the failure of the acknowledgment made in this Section to be true and
correct at all times.
11. No Waiver. The failure or delay of Company at any time to require
performance by Employee of any provision of this Agreement, even if known, shall
not affect the right of Company to require performance of that provision or to
exercise any right, power or remedy hereunder, and any waiver by Company of any
breach of any provision of this Agreement should not be construed as a waiver of
any continuing or succeeding breach of such provision, a waiver of the provision
itself, or a waiver of any right, power or remedy under this Agreement. No
notice to or demand on Employee in any case shall, of itself, entitle such party
to any other or further notice or demand in similar or other circumstances.
12. Benefits of Agreement; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Neither this Agreement nor the rights of Employee hereunder
shall be assignable by Employee without the prior written consent of Company and
any purported assignment by Employee of this Agreement or such rights without
such consent, whether voluntarily or involuntarily, shall not vest in the
purported assignee or transferee any interest or right herein whatsoever.
13. Amendment. This Agreement may be amended only by an agreement in writing
signed by the parties hereto. A term of this Agreement may be waived only by a
written instrument signed by the party entitled to the benefits thereof. No such
agreement or instrument in writing shall extend to or affect any provision of
this Agreement not expressly amended or waived, or impair any right consequent
on any such provision. The waiver of any breach of, or the failure to enforce
any provision of, this Agreement shall not be deemed to be a waiver or
acquiescence in any other breach thereof or a waiver of any such provision.
14. Notice. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or sent by telex or facsimile
(and promptly confirmed by certified mail, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice which shall be deemed effective when
received):
<PAGE>
a. If to Company:
John Calabrese, Chief Executive Officer
East Coast Beverage Corp.
1750 University Drive
Coral Springs, Florida 33071
b. If to Employee:
Alexander Garabedian, Jr.
15. Guaranty. The full and punctual payment by Company of all fees payable to
Employee hereunder is unconditionally guaranteed by Company.
16. Miscellaneous provisions. If any part of this Agreement or any other
Agreement entered into pursuant hereto is contrary to, prohibited by or deemed
invalid under applicable law or regulation, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given full force
and effect so far as possible.
Employee acknowledges that the services to be rendered by Employee
hereunder are extraordinary and unique and are vital to the success of Company,
and that damages at law would be an inadequate remedy for any breach or
threatened breach of this Agreement with respect to those provisions providing
for the Confidentiality of Confidential Information and Employee's Covenant Not
to Compete. Therefore, in the event of a breach or threatened breach by Employee
of the provisions set forth in Sections 6 and 7 of this Agreement, then Company
shall be entitled, in addition to all other rights or remedies, to any
injunctive relief authorized by law, without being required to show any actual
damage.
This Agreement and all transactions contemplated by this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Florida without regard to principles of conflicts of laws and proper
venue for any litigation arising out of this Agreement shall be Broward County,
Florida.
The parties acknowledge that this is a negotiated Agreement, and that in
no event shall the terms hereof be construed against either party on the basis
that such party, or its counsel, drafted this Agreement.
<PAGE>
At all times during the term of this Agreement and thereafter for those
events and conduct carried out by Employee in the performance of his duties,
company agrees to indemnify and save Employee harmless from and against any and
all liability for damages, losses, costs, charges and expenses of whatever kind
and nature, including attorney's fees and costs, which Employee shall or may
incur arising from the performance of his duties as Employee, provided that, as
determined by final judicial decree, the events or conduct giving rise to
Company's obligation to indemnify were not caused or occasioned by Employee's
fraudulent or criminal conduct.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as set
forth below.
EAST COAST BEVERAGE CORP.
Attest:
By
Secretary Title:
Date:
Witness ALEXANDER GARABEDIAN, JR.
Date:
Witness
<PAGE>
EMPLOYMENT AGREEMENT
This agreement ("Agreement") is entered into on the date last set forth
below by and between EAST COAST BEVERAGE CORPORATION, a Florida corporation
("Company") on the one hand, and Edward Shanahan, ("Employee") on the other, and
is made with reference to the following facts.
A.The Company is in the business of manufacturing, marketing and
selling various flavored beverages and related products and supplies
both nationally and internationally, in food and other related
industries.
B.The Employee has experience and expertise in the marketing and sales
of such, or similar, products of the Company to businesses and
customers in the industry. In particular, the Company is seeking to
benefit from the experience and expertise of the Employee.
C.This Agreement is intended to reflect the agreement between the
parties.
Now, therefore, the parties agree as follows:
Article 1.
DEFINITIONS
The terms set forth below shall be defined as herein for purposes of this
Agreement.
1.1 "Annual salary"
This shall mean the guaranteed Annual Salary that has been referred to in
section 3.2 of this Agreement.
1.2 "Agreement"
This shall mean this Employment Agreement.
1.3 "Company Confidentiality Agreement"
This shall mean the Confidentiality Agreement signed by the parties in
connection with this Agreement
1.4 "Company Customers"
This shall mean all the existing customers and future customers of the
Company from time to time.
<PAGE>
1.5 "Cause"
Cause shall exist if the Employee commits any act of dishonesty,
punishable under California or Federal law as a felony, discloses
Confidential Information other than with the approval of the Company;
consistently materially neglects his duties with respect to his
assignments after the Company has given written notice and an opportunity
to improve his performance hereunder; commits a material breach of this
agreement; or in the event of death or disability.
1.6 "Commence Date"
This shall mean October 26, 1998.
1.7 "Confidential Information"
This shall have the meaning as defined in the Company Confidentiality
Agreement.
1.8 "Disability"
This shall mean any physical or mental incapacity which results in the
Employee being unable to materially perform his regular full time duties
for 30 (thirty) days out of any 90 (ninety) day period.
1.9 "Signing Bonus"
This shall mean the sum of $10,000.00 (ten thousand dollars) payable to
Employee upon the Commencement Date.
1.10 "Term"
This shall mean the period of 2 years commencing on the Commencement Date
(the initial term), or such further period as may be agreed between the
parties in writing. The Company shall have the option to extend this
Agreement for an additional two years, provided it has given 90 days
written notice prior to the end of the initial term.
1.11 "Termination Date"
This shall mean either the date upon which the term ends or, if this
Agreement is terminated with notice, the last day of that notice. If the
Agreement is terminated without notice, the date of notification of the
termination.
Article 2.
OBLIGATIONS OF EMPLOYEE
2.1 Services
Employee shall hold the position and title as Director of the Marketing
and Sales and will be based in New England at a location chosen by employee but
will have territorial responsibilities primarily throughout the Northeast and
<PAGE>
Southeastern United States. Employee shall perform the assignments and duties
pursuant to the terms and conditions of this Agreement.
2.2 Exclusivity
For the Term, Employee shall work only for the Company and shall not
perform services of any kind for any person or entity other than the Company. He
agrees to devote full time, ability, attention, energy, knowledge and skills
solely and exclusively to performing the duties relating to the Company
business. However, the employee will be permitted to be involved in
father-in-law's business, also will be involved in nut business providing the
Company name is changed and the business does not involve beverages.
2.3 Confidentiality
Employee shall comply with the Company Confidentiality Agreement.
Article 3.
COMPENSATION AND BENEFITS
3.1 Compensation
Subject to the terms and conditions of this Agreement, Employee shall
receive the compensation as set out herein.
3.2 Annual Salary
Employee shall receive a salary of $125,000.00 (One Hundred Twenty Five
Thousand Dollars) per year. Said salary shall be paid in equal bi-weekly
installments.
3.3 Signing Bonus
Employee shall receive a one time $10,000.00 signing bonus when this
Agreement is signed. Said bonus shall be fully earned upon the signing of this
Agreement.
3.4 Company Stock
A sufficient number of the Company's shares of common stock shall be
issued and delivered to the Employee, upon execution of this Agreement, such
that the Employee will then own 6% of its issued and outstanding common shares.
Said stock shall be restricted and contain in its legend, certain limitations
which will provide that said stock shall not be assigned, liquidated,
transferred, sold or negotiated for a period of two years from issuance.
Further, said stock shall be a non-voting and may at any time be sold,
transferred, assigned, liquidated, or otherwise negotiated, in the event of a
sale of more than fifty (50%) percent of the outstanding shares of the Company
or after a period of two years. In the event that over 50% of the outstanding
shares of the Company are sold or transferred, Company agrees to re-purchase or
sell Employee's shares in that transaction.
<PAGE>
It is further agreed that said six (6%) percent stock ownership in the
Company shall not be diluted or increased as a result of any action of the
Company. Employee shall be entitled to maintain the equivalent percentage of
ownership interest by the addition or deletion in outstanding issued shares in
the Company, equivalent to six (6%) percent.
If Employee voluntarily terminates his employment with the Company during
the restricted period for any reason other than Employee's death or disability
or the Company's breach of this Agreement, all restricted stock subject to
restriction at the date of such termination shall automatically be forfeited and
returned to the Company.
In the event of Employee's demise or disability during the period of the
two year restriction on said stock, the stock shall inure to the benefit of
Employee's heirs, subject to all terms and conditions set forth herein. Upon
expiration of the term, or upon the Company's breach of this agreement, the
Employee may require the Company to re-purchase for cash within 120 days, the
Employee's stock for fair market value as determined by a mutually agreed to
third party. In the event that third party cannot be agreed to, both parties
will choose one and those two will choose a third and the opinion of the
majority will be binding.
3.5 Other Payments
In addition to the Salary payable hereunder, Company shall pay to Employee
the following:
(a) Company credit card will be made available to the Employee with a
pre-determined limit, set by the Company, to be used exclusively for
Company business, and will be subject to satisfactory expense reports
and receipts submitted to the Company on a monthly basis;
(b) reimbursement for reasonable and necessary telephone and postage
expenses, payable in arrears, subject to satisfactory expense reports
and receipts submitted to the Company on a monthly basis;
(c) a two week vacation after each year of service; to be taken at a time
subject to prior approval of the Company, but in no event, shall
vacation be scheduled in the summer months;
(d) a $500.00 (five hundred dollar) car allowance, payable monthly in
equal installments.
Employee shall be solely responsible for medical, dental and/or life
insurance during the term of this agreement.
3.6 Indemnification
The Company shall indemnify the Employee to the fullest extent permitted
by law for all acts taken or required within the scope of his employment.
Article 4.
TERMINATION
4.1 Termination by Company
This Agreement may be terminated by the Company without notice for Cause.
This Agreement may also terminate automatically without notice on the occurrence
of the Employee failing to comply with his obligations under section 2.2 above
either as a result of death or disability.
<PAGE>
4.2 Obligations upon termination
Upon termination of this Agreement, with or without cause, Employee shall
immediately return to the Company all files, records, documents, specifications,
equipment, and similar items relating to the business of the Company, whether
prepared by the Employee or otherwise coming into his possession.
Article 5.
GENERAL
5.1 Entire Agreement
This Agreement is the final and exclusive statement of all agreements and
understandings between the parties with respect to the subject matter described
herein. There are no other agreements, representations, warrants or conditions
other than those contained hereunder.
5.2 Changes, modifications or alterations
No change, modification or alteration of this Agreement shall be effective
unless in writing and signed by all parties.
5.3 No Waiver
No waiver of any provision of this Agreement or of the rights and
obligations of the parties shall be effective unless in writing and signed by
the party waiving compliance. Any such waiver shall be effective only in the
specific instance and for the specific purpose stated in such writing.
5.4 Severability
If all or any part of this Agreement is found invalid or unenforceable
pursuant to judicial decree, the remainder of this Agreement shall remain valid
and enforceable.
5.5 Governing law
Governing law of this Agreement shall be the law of the state of
California. This Agreement is deemed to have been entered into in California and
both parties agree to submit to personal jurisdiction of California state and
federal courts. Any suit brought to enforce this Agreement shall be brought only
in the state or Federal courts of California and each party agrees to service of
process by certified U.S. Mail sent by a registered process server.
<PAGE>
5.6 Notices
Any notice required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been given on the date of service, or on
the 3rd day after mailing by registered or certified mail, postage pre-paid and
properly addressed, at the following addresses:
The Company
East Coast Beverage Corporation
1750 University Drive, Suite 117
Coral Springs, FL 33071
Attn: JohnCalebrese
The Employee
Edward Shanahan
78 Harrington Ridge Road
Sherborn, MA 01770
Courtesy copies of any notices to the Company shall also be sent to:
John M. Downer, Esquire
3080 Bristol Street, Suite 630
Costa Mesa, CA 92626
The Law Offices of Steven A. Scott
728 N.W. 8th Avenue
P.O. Box 2212
Gainesville, FL 32601
5.7 Assignment
This Agreement is a personal one, being entered into in reliance upon and
in consideration of the singular personal skill and qualifications of the
Employee. Employee shall therefore not voluntarily or by operation of law
assign, subcontract any portion of, or otherwise transfer the obligations
incurred on his part pursuant to the terms of this Agreement without the prior
written consent of the Company. Any attempted assignment or transfer by Employee
shall be wholly void. Company shall have the right to assign this Agreement to
any affiliated entity or by operation of law.
5.8 Subject Headings
Subject headings of the articles and sections of this Agreement are
included for convenience only, and shall not affect the construction or
interpretation of its provisions.
5.9 Preamble; Exhibits
The preamble to this Agreement and the Exhibits hereto are hereby
incorporated herein by reference.
<PAGE>
5.10 Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one agreement.
5.11 Joint Drafting
This agreement shall be deemed to have been drafted by the parties
jointly.
5.12 Advice of Counsel
Employee has been given an opportunity to consult with independent counsel
of its choice prior to executing this Agreement. Employee has been advised and
encouraged not to execute this Agreement without first consulting with counsel.
5.13 Reservation of Management Rights
Except as expressly provided herein, the Company exclusively reserves all
inherent rights and responsibilities including, but not limited to, the right to
promulgate rules and regulations necessary for the management, operation and
supervision of the Company and its business.
5.14 Legal Fees
If any litigation results from this Agreement, the non-prevailing party in
such litigation shall pay all of the prevailing party's attorney fees and costs
actually incurred, regardless of any applicable determination of any court
concerning the reasonableness of the amount thereof. It is the express intent of
the parties that, under all circumstances, the prevailing party shall recover
all attorney's fees actually incurred in bringing or defending such action and
in enforcing any judgement or award granted therein.
EAST COAST BEVERAGE CORPORATION
By: /s/ John Calebrese
Name. John Calebrese
Title: President
Date: 10-10-98
EMPLOYEE
/s/ Edward Shanahan
Name: Edward Shanahan
Date: 10-22-98
<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT
Addendum to Employment Agreement by and between East Coast Beverage Corp.
(the "Company") and Edward Shanahan (the "Employee") dated October 22, 1998
Whereas, the Company plans a reverse merger with a public entity;
Whereas, the Company is seeking to raise additional capital through the
private placement of its common stock;
Whereas, the Company and the Employee agree to modify the Employment
Agreement as follows:
Article 3.4 Company Stock
Change 6% of the Company's restricted and non-voting common stock to
195,0000 shares of the Company's restricted and non-voting common stock.
AGREED AND ACCEPTED THIS 26 day of August, 1999 by and between
East Coast Beverage Corp. Employee
/s/ John Calebrese /s/ Edward Shanahan
John Calebrese, CEO Edward Shanahan
<PAGE>
EMPLOYMENT AGREEMENT
This agreement ("Agreement") is entered into on the date last set forth
below by and between EAST COAST BEVERAGE CORPORATION, a Florida corporation
("Company") on the one hand, and John Daumeyer, ("Employee") on the other, and
is made with reference to the following facts.
A.The Company is in the business of manufacturing, marketing and
selling various flavored beverages and related products and supplies
both nationally and internationally, in food and other related
industries.
B.The Employee has experience and expertise in the marketing and sales
of such, or similar, products of the Company to businesses and
customers in the industry. In particular, the Company is seeking to
benefit from the experience and expertise of the Employee.
C.This Agreement is intended to reflect the agreement between the
parties.
Now, therefore, the parties agree as follows:
Article 1.
DEFINITIONS
For convenience, certain terms are defined in Article 1 of this Agreement.
Where any terms so defined are also defined in any state or federal
legislation, the term as used herein shall have the meaning stated in
Article 1.
1.1 "Annual salary"
This shall mean the guaranteed Annual Salary that has been referred to in
section 3.2 of this Agreement.
1.2 "Agreement"
This shall mean this Employment Agreement.
1.3 "East Coast Beverage Corp. Company Confidentiality Agreement"
This shall mean the Company's most current Confidentiality Agreement that
all of its employees and consultants are required to sign.
1.4 "Company Customers"
This shall mean all the existing customers and prospective customers of
the Company.
<PAGE>
1.5 "Cause"
Cause shall exist if the Employee commits any act of dishonesty, discloses
Confidential Information other than with the approval of the Company; is
guilty of misconduct; consistently neglects his duties with respect to his
assignments after the Company has given written notice and an opportunity
to improve his performance hereunder, commits a breach of this agreement;
or in the event of death or disability.
1.6 "Commence Date"
This shall mean November 2, 1998.
1.7 "Confidential Information"
This shall have the meaning as defined in the Company Confidentiality
Agreement.
1.8 "Disability"
This shall mean any physical or mental incapacity which results in the
Employee being unable to satisfactorily perform his regular full time
duties for 30 (thirty) days out of any 90 (ninety) day period.
1.9 "Term"
This shall mean the period of 2 years commencing on the Commencement Date,
or such further period as may be agreed between the parties in writing.
1.10 "Termination Date"
This shall mean either the date upon which the term ends or, if this
Agreement is terminated with notice, the last day of that notice. If the
Agreement is terminated without notice, the date of notification of the
termination.
Article 2.
OBLIGATIONS OF EMPLOYEE
2.1 Services
Employee shall perform the assignments and duties pursuant to the terms
and conditions of this Agreement. These duties shall include, but shall not be
limited to, those items listed in Exhibit A, which is attached hereto.
2.2 Exclusivity
For the Term, Employee shall work only for the Company and shall not
perform services of any kind for any person or entity other than the Company. He
agrees to devote full time, ability, attention, energy, knowledge and skills
solely and exclusively to performing the duties relating to the Company
business.
<PAGE>
2.3 Confidentiality
Employee shall execute the Company Confidentiality Agreement presently in
effect and any subsequent, and similar Agreement of the Company.
Article 3.
COMPENSATION AND BENEFITS
3.1 Compensation
Subject to the terms and conditions of this Agreement, Employee shall
receive the compensation as set out herein.
3.2 Annual Salary
Employee shall receive a salary of $95,000.00 (Ninety Five Thousand
Dollars) per year. Said salary shall be paid in equal installments, as
determined by the Company, but no less than monthly.
3.3 Company Stock
The Company shall issue to the Employee, the equivalent of a four (4)
percent interest of common stock. Said stock shall be restricted and contain in
its legend, certain limitations which will provide that said stock shall not be
assigned, liquidated, transferred, sold or negotiated for a period of three
years from issuance. Further, said stock shall be non-voting and shall be sold,
transferred, assigned, liquidated or otherwise negotiated, in the event of a
sale of more than seventy-five (75%) percent of the outstanding shares of the
Company or after a period of two years. Further said stock shall be issued
thirty (30) days after execution of contract.
3.4 Other Payments
In addition to the Salary payable hereunder, Company shall pay to Employee
the following:
(a) Company credit card will be made available to the Employee with a
pre-determined limit, set by the Company, to be used exclusively for
Company business, and will be subject to satisfactory expense reports
and receipts submitted to the Company on a monthly basis;
(b) reimbursement for reasonable and necessary telephone and postage
expenses, payable in arrears, subject to satisfactory expense reports
and receipts submitted to the Company on a monthly basis;
(c) a two week vacation after each year of service; to be taken at a time
subject to prior approval of the Company, but in no event, shall
vacation be scheduled in the summer months;
(d) a $500.00 (five hundred dollar) monthly automobile allowance, with
the Employee responsible for any and all cost in excess of that
amount.
<PAGE>
(e) performance clause to earn twenty ($.20) cents per case per quarter;
(f) a one time signing bonus of seven thousand five hundred ($7,500.00)
dollars at the commencement of the agreement.
Employee shall be solely responsible for medical, dental and/or life
insurance during the term of this agreement.
Article 4.
TERMINATION
4.1 Termination by Company
This Agreement may be terminated by the Company without notice for Cause.
This Agreement may also terminate automatically without notice on the occurrence
of the Employee failing to comply with his obligations under section 2.2 above
either as a result of death or disability or other incapacity or reason.
4.2 Obligations upon termination
Upon termination of this Agreement, with or without cause, Employee shall
immediately return to the Company all files, records, documents, specifications,
equipment, and similar items relating to the business of the Company, whether
prepared by the Employee or otherwise coming into his possession.
Article 5.
GENERAL
5.1 Entire Agreement
This Agreement is the final and exclusive statement of all agreements and
understandings between the parties with respect to the subject matter described
herein. There are no other agreements, representations, warrants or conditions
other than those contained hereunder.
5.2 Changes, modifications or alterations
No change, modification or alteration of this Agreement shall be effective
unless in writing and signed by all parties.
5.3 No Waiver
No waiver of any provision of this Agreement or of the rights and
obligations of the parties shall be effective unless in writing and signed by
the party waiving compliance. Any such waiver shall be effective only in the
specific instance and for the specific purpose stated in such writing.
5.4 Severability
If all or any part of this Agreement is found invalid or unenforceable
pursuant to judicial decree, the remainder of this Agreement shall remain valid
and enforceable.
<PAGE>
5.5 Governing law
Governing law of this Agreement shall be the law of the state of
California. This Agreement is deemed to have been entered into in California and
both parties agree to submit to personal jurisdiction of California state and
federal courts. Any suit brought to enforce this Agreement shall be brought only
in the state or Federal courts of California and each party agrees to service of
process by certified U.S. Mail sent by a registered process server.
5.6 Notices
Any notice required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been given on the date of service, or on
the 3rd day after mailing by registered or certified mail, postage pre-paid and
properly addressed, at the following addresses:
The Company
East Coast Beverage Corporation
1750 University Drive, Suite 117
Coral Springs, FL 33071
Attn: JohnCalebrese
The Employee
John Daumeyer
8621 Brookridge Drive
West Chester, OH 45069
Courtesy copies of any notices to the Company shall also be sent to:
John M. Downer, Esquire
3080 Bristol Street, Suite 630
Costa Mesa, CA 92626
5.7 Assignment
This Agreement is a personal one, being entered into in reliance upon and
in consideration of the singular personal skill and qualifications of the
Employee. Employee shall therefore not voluntarily or by operation of law
assign, subcontract any portion of, or otherwise transfer the obligations
incurred on his part pursuant to the terms of this Agreement without the prior
written consent of the Company. Any attempted assignment or transfer by Employee
shall be wholly void. Company shall have the right to assign this Agreement to
any affiliated entity or by operation of law.
5.8 Subject Headings
Subject headings of the articles and sections of this Agreement are
included for convenience only, and shall not affect the construction or
interpretation of its provisions.
<PAGE>
5.9 Preamble; Exhibits
The preamble to this Agreement and the Exhibits hereto are hereby
incorporated herein by reference.
5.10 Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one agreement.
5.11 Joint Drafting
This agreement shall be deemed to have been drafted by the parties
jointly.
5.12 Advice of Counsel
Employee has been given an opportunity to consult with independent counsel
of its choice prior to executing this Agreement. Employee has been advised and
encouraged not to execute this Agreement without first consulting with counsel.
5.13 Reservation of Management Rights
Except as expressly provided herein, the Company exclusively reserves all
inherent rights and responsibilities including, but not limited to, the right to
promulgate rules and regulations necessary for the management, operation and
supervision of the Company and its business.
EAST COAST BEVERAGE CORPORATION
By: /s/ John Calebrese
Name. John Calebrese
Title: President
Date: 10-10-98
EMPLOYEE
/s/ John Daumeyer
Name: John Daumeyer
Date: 10-7-98
ECBC Employ Agree John Daumeyer 2-00
<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT
Addendum to Employment Agreement by and between East Coast Beverage Corp.
(the "Company") and John Daumeyer (the "Employee") dated October 7, 1998
Whereas, the Company plans a reverse merger with a public entity;
Whereas, the Company is seeking to raise additional capital through the
private placement of its common stock;
Whereas, the Company and the Employee agree to modify the Employment
Agreement as follows:
Article 3.3 Company Stock
Change 4% of the Company's restricted and non-voting common stock to
130,0000 shares of the Company's restricted and non-voting common stock.
AGREED AND ACCEPTED THIS 26 day of August, 1999 by and between
East Coast Beverage Corp. Employee
/s/ John Calebrese /s/ John Daumeyer
John Calebrese, CEO John Daumeyer
<PAGE>
EMPLOYMENT AGREEMENT
This agreement ("Agreement") is entered into on the date last set forth
below by and between EAST COAST BEVERAGE CORPORATION, a Florida corporation
("Company") on the one hand, and Perry Maxwell, ("Employee") on the other, and
is made with reference to the following facts.
A.The Company is in the business of manufacturing, marketing and
selling various flavored beverages and related products and supplies
both nationally and internationally, in food and other related
industries.
B.The Employee has experience and expertise in the marketing and sales
of such, or similar, products of the Company to businesses and
customers in the industry. In particular, the Company is seeking to
benefit from the experience and expertise of the Employee.
C.This Agreement is intended to reflect the agreement between the
parties.
Now, therefore, the parties agree as follows:
Article 1.
DEFINITIONS
For convenience, certain terms are defined in Article 1 of this Agreement.
Where any terms so defined are also defined in any state or federal
legislation, the term as used herein shall have the meaning stated in
Article 1.
1.1 "Annual salary"
This shall mean the guaranteed Annual Salary that has been referred to in
section 3.2 of this Agreement.
1.2 "Agreement"
This shall mean this Employment Agreement.
1.3 "East Coast Beverage Corp. Company Confidentiality Agreement"
This shall mean the Company's most current Confidentiality Agreement that
all of its employees and consultants are required to sign (attached to
this Agreement).
1.4 "Company Customers"
This shall mean all the existing customers and prospective customers with
whom the Company has established a relationship.
<PAGE>
1.5 "Cause"
Cause shall exist if the Employee commits any act of dishonesty, discloses
Confidential Information other than with the approval of the Company; is
guilty of misconduct; consistently neglects his duties with respect to his
assignments after the Company has given written notice and an opportunity
to improve his performance hereunder, commits a breach of this agreement;
or in the event of death or disability.
1.6 "Commence Date"
This shall mean November 2, 1998.
1.7 "Confidential Information"
This shall have the meaning as defined in the Company Confidentiality
Agreement.
1.8 "Disability"
This shall mean any physical or mental incapacity which results in the
Employee being unable to satisfactorily perform his regular full time
duties for 30 (thirty) days out of any 90 (ninety) day period.
1.9 "Term"
This shall mean the period of 2 years commencing on the Commencement Date,
or such further period as may be agreed between the parties in writing.
1.10 "Termination Date"
This shall mean either the date upon which the term ends or, if this
Agreement is terminated with notice, the last day of that notice. If the
Agreement is terminated without notice, the date of notification of the
termination.
Article 2.
OBLIGATIONS OF EMPLOYEE
2.1 Services
Employee shall perform the assignments and duties pursuant to the terms
and conditions of this Agreement. These duties shall include, but shall not be
limited to, those items listed in Exhibit A, which is attached hereto.
Additional duties may be added by mutual consent.
2.2 Exclusivity
For the Term, Employee shall work only for the Company and shall not
perform services of any kind for any person or entity other than the Company. He
agrees to devote full time, ability, attention, energy, knowledge and skills
solely and exclusively to performing the duties relating to the Company
business.
<PAGE>
2.3 Confidentiality
Employee shall execute the Company Confidentiality Agreement presently in
effect and any subsequent, and similar Agreement of the Company.
Article 3.
COMPENSATION AND BENEFITS
3.1 Compensation
Subject to the terms and conditions of this Agreement, Employee shall
receive the compensation as set out herein.
3.2 Annual Salary
Employee shall receive a salary of $85,000.00 (Eighty Five Thousand
Dollars) per year. Said salary shall be paid in equal installments, bi-weekly,
as determined by the Company, but no less than monthly.
3.3 Company Stock
The Company shall issue to the Employee, the equivalent of a four (4)
percent interest of common stock. Said stock shall be restricted and contain in
its legend, certain limitations which will provide that said stock shall not be
assigned, liquidated, transferred, sold or negotiated for a period of three
years from issuance. Further, said stock shall be non-voting and shall be sold,
transferred, assigned, liquidated or otherwise negotiated, in the event of a
sale of more than seventy-five (75%) percent of the outstanding shares of the
Company or after a period of two years. Further said stock shall be issued
thirty (30) days after execution of contract.
3.4 Other Payments
In addition to the Salary payable hereunder, Company shall pay to Employee
the following:
(a) Company credit card will be made available to the Employee with a
pre-determined limit, set by the Company, to be used exclusively for
Company business, and will be subject to satisfactory expense reports
and receipts submitted to the Company on a monthly basis;
(b) reimbursement for reasonable and necessary telephone and postage
expenses, payable in arrears, subject to satisfactory expense reports
and receipts submitted to the Company on a monthly basis;
(c) a two week vacation after each year of service; to be taken at a time
subject to prior approval of the Company, but in no event, shall
vacation be scheduled in the summer months;
(d) a $500.00 (five hundred dollar) monthly automobile allowance, with
the Employee responsible for any and all cost in excess of that
amount.
<PAGE>
(e) performance clause to earn twenty ($.20) cents per case per quarter;
(f) a one time signing bonus of seven thousand five hundred ($7,500.00)
dollars at
the commencement of the agreement.
Employee shall be solely responsible for medical, dental and/or life
insurance during the term of this agreement.
Article 4.
TERMINATION
4.1 Termination by Company
This Agreement may be terminated by the Company without notice for Cause.
This Agreement may also terminate automatically without notice on the occurrence
of the Employee failing to comply with his obligations under section 2.2 above
either as a result of death or disability or other incapacity or reason.
4.2 Obligations upon termination
Upon termination of this Agreement, with or without cause, Employee shall
immediately return to the Company all files, records, documents, specifications,
equipment, and similar items relating to the business of the Company, whether
prepared by the Employee or otherwise coming into his possession.
Article 5.
GENERAL
5.1 Entire Agreement
This Agreement including the confidentiality agreement and Exhibit "A", is
the final and exclusive statement of all agreements and understandings between
the parties with respect to the subject matter described herein. There are no
other agreements, representations, warrants or conditions other than those
contained hereunder.
5.2 Changes, modifications or alterations
No change, modification or alteration of this Agreement shall be effective
unless in writing and signed by all parties.
5.3 No Waiver
No waiver of any provision of this Agreement or of the rights and
obligations of the parties shall be effective unless in writing and signed by
the party waiving compliance. Any such waiver shall be effective only in the
specific instance and for the specific purpose stated in such writing.
<PAGE>
5.4 Severability
If all or any part of this Agreement is found invalid or unenforceable
pursuant to judicial decree, the remainder of this Agreement shall remain valid
and enforceable.
5.5 Governing law
Governing law of this Agreement shall be the law of the state of
California. This Agreement is deemed to have been entered into in California and
both parties agree to submit to personal jurisdiction of California state and
federal courts. Any suit brought to enforce this Agreement shall be brought only
in the state or Federal courts of California and each party agrees to service of
process by certified U.S. Mail sent by a registered process server.
5.6 Notices
Any notice required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been given on the date of service, or on
the 3rd day after mailing by registered or certified mail, postage pre-paid and
properly addressed, at the following addresses:
The Company
East Coast Beverage Corporation
1750 University Drive, Suite 117
Coral Springs, FL 33071
Attn: John Calebrese
The Employee
Perry Maxwell
2679 Corey Place
San Ramon, CA 94583
Courtesy copies of any notices to the Company shall also be sent to:
John M. Downer, Esquire
3080 Bristol Street, Suite 630
Costa Mesa, CA 92626
5.7 Assignment
This Agreement is a personal one, being entered into in reliance upon and
in consideration of the singular personal skill and qualifications of the
Employee. Employee shall therefore not voluntarily or by operation of law
assign, subcontract any portion of, or otherwise transfer the obligations
incurred on his part pursuant to the terms of this Agreement without the prior
written consent of the Company. Any attempted assignment or transfer by Employee
shall be wholly void. Company shall have the right to assign this Agreement to
any affiliated entity or by operation of law.
5.8 Subject Headings
Subject headings of the articles and sections of this Agreement are
included for convenience only, and shall not affect the construction or
interpretation of its provisions.
<PAGE>
5.9 Preamble; Exhibits
The preamble to this Agreement and the Exhibits hereto are hereby
incorporated herein by reference.
5.10 Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one agreement.
5.11 Joint Drafting
This agreement shall be deemed to have been drafted by the parties
jointly.
5.12 Advice of Counsel
Employee has been given an opportunity to consult with independent counsel
of its choice prior to executing this Agreement. Employee has been advised and
encouraged not to execute this Agreement without first consulting with counsel.
5.13 Reservation of Management Rights
Except as expressly provided herein, the Company exclusively reserves all
inherent rights and responsibilities including, but not limited to, the right to
promulgate rules and regulations necessary for the management, operation and
supervision of the Company and its business.
EAST COAST BEVERAGE CORPORATION
By: /s/ John Calebrese
Name. John Calebrese
Title: President
Date: 10-10-98
EMPLOYEE
/s/ Perry Maxwell
Name: Perry Maxwell
Date: 10-13-98
<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT
Addendum to Employment Agreement by and between East Coast Beverage Corp.
(the "Company") and Perry Maxwell (the "Employee") dated October 13, 1998
Whereas, the Company plans a reverse merger with a public entity;
Whereas, the Company is seeking to raise additional capital through the
private placement of its common stock;
Whereas, the Company and the Employee agree to modify the Employment
Agreement as follows:
Article 3.3 Company Stock
Change 4% of the Company's restricted and non-voting common stock to
130,0000 shares of the Company's restricted and non-voting common stock.
AGREED AND ACCEPTED THIS 26 day of August, 1999 by and between
East Coast Beverage Corp. Employee
/s/ John Calebrese /s/ Perry Maxwell
John Calebrese, CEO Perry Maxwell
<PAGE>
EMPLOYMENT AGREEMENT
This agreement (the "Agreement") is entered into on the date set forth
below by and between EAST COAST BEVERAGE CORPORATION, a corporation (the
"Company") on the one hand, and Drew Carver (the "Employee") on the other, and
is made with reference to the following facts.
A. The Company is in the business of manufacturing, marketing and selling
various flavored beverages and related products and supplies both nationally and
internationally, in food and other related industries.
B. The Employee has experience and expertise in the marketing and sales of such,
or similar, products of the Company to businesses and customers in the industry.
In particular, the Company is seeking to benefit from the experience and
expertise of the Employee.
C. This Agreement is intended to reflect the agreement between the parties.
Now, therefore, the parties agree as follows:
Article 1.
DEFINITIONS
For convenience, certain terms are defined in Article 1 of this Agreement.
Where any terms so defined are also defined in any state or federal legislation,
the terms as used herein shall have the meaning stated in Article 1.
1.1 "Annual salary"
This shall mean the guaranteed Annual Salary that has been referred to in
section 3.2 of this Agreement.
1.2 "Agreement"
This shall mean this Employment Agreement.
Article 2.
OBLIGATIONS OF EMPLOYEE
2.1 Services
Employee shall perform the assignments and duties pursuant to the terms
and conditions of this Agreement. These duties shall include, but shall not be
limited to, those items listed in Exhibit A, which is attached hereto.
<PAGE>
2.2 Exclusivity
For the Term, Employee shall work only for the Company and shall not
perform services of any kind for any person or entity other than the Company. He
agrees to devote full time, ability, attention, energy, knowledge and skills
solely and exclusively to performing the duties relating to the Company
business.
2.3 Confidentiality
Employee shall execute the Company Confidentiality Agreement presently in
effect and any subsequent, and similar Agreement of the Company.
Article 3.
COMPENSATION AND BENEFITS
3.1 Compensation
Subject to the terms and conditions of this Agreement, Employee shall
receive the compensation as set out herein.
3.2 Annual Salary
Employee shall receive a salary of $95,000.00 (Ninety-Five Thousand
Dollars) per year. Said salary shall be divided in equal installments, as
determined by the Company, but no less than monthly.
3.3 Company Stock
The Company shall issue to the Employee the equivalent of a four (4%)
percent interest of common stock. Said stock shall be restricted and contain in
its legend, certain limitations which will provide that said stock shall not be
assigned, liquidated, transferred, sold or negotiated for a period of three
years from issuance. Further, said stock shall be a non-voting stock and shall
only be sold, transferred, assigned, liquidated or otherwise negotiated, in the
event of a sale of more than seventy-five (75%) percent of the outstanding
shares of the Company or after a period of two years. Further said stock shall
be issued thirty (30) days after execution of contract
3.4 Other Payments
In addition to the Salary payable hereunder, Company shall pay to Employee
the following:
(a) Company credit card will be made available to the Employee with a
pre-determined limit, set by the Company, to be used exclusively for
Company business, and will be subject to satisfactory expense reports
and receipts submitted to the Company on a monthly basis;
(b) reimbursement for reasonable and necessary telephone and postage
expenses, payable in arrears, subject to satisfactory expense reports
and receipts submitted to the Company on a monthly basis;
<PAGE>
(c) a two week vacation after each year of service; to be taken at a time
subject to prior approval of the Company, but in no event, shall
vacation be scheduled in the summer months;
(d) a $500.00 (five hundred dollar) monthly automobile allowance, with
the Employee responsible for any and all costs in excess of that
amount;
(e) performance clause to earn twenty ($.20) cents per case per quarter;
(f) a one time signing bonus often thousand ($10,000) dollars at the
commencement of
the agreement.
Employee shall be solely responsible for medical, dental and/or life
insurance during the term of this agreement.
Article 4.
TERMINATION
4.1 Termination by Company
This Agreement may be terminated by the Company without notice for Cause.
This Agreement may also terminate automatically without notice on the occurrence
of the Employee failing to comply with his obligations under section 2.2 above
either as a result of death, Disability, or other incapacity or reason.
4.2 Obligations upon termination
Upon termination of this Agreement, with or without cause, Employee shall
immediately return to the Company all files, records, documents, specifications
equipment, and similar items relating to the business of the Company, whether
prepared by the Employee or otherwise coming into his possession.
Article 5.
GENERAL
5.1 Entire Agreement
This Agreement is the final and exclusive statement of all agreements and
understandings between the parties with respect to the subject matter described
herein. There are no other agreements, representations, warrants or conditions
other than those contained hereunder.
5.2 Changes, modifications or alterations
No Change, modification or alteration of this Agreement shall be effective
unless in writing and signed by all parties.
5.3 No Waiver
No waiver of any provision of this Agreement or of the rights and
obligations of the parties shall be effective unless in writing and signed by
the party waiving compliance. Any such waiver shall be effective only in the
specific instance and for the specific purpose stated in such writing.
<PAGE>
5.4 Severability
If all or any part of this Agreement is found invalid or unenforceable
pursuant to judicial decree, the remainder of this Agreement shall remain valid
and enforceable.
5.5 Governing law
Governing law of this Agreement shall be the law of the state of
California. This Agreement is deemed to have been entered into in California and
both parties agree to submit to personal jurisdiction of California state and
federal courts. Any suit brought to enforce this Agreement shall be brought only
in the state or Federal courts of California and each party agrees to service of
process by certified U.S. Mail sent by a registered process server.
5.6 Notices
Any notice required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been given on the date of service, or on
the 3rd day after mailing by registered or certified mail, postage pre-paid and
properly addressed, at the following addresses:
The Company
East Coast Beverage Corporation
1750 University Drive, Suite 117
Coral Springs, FL 33071
Attn: JohnCalebrese
The Employee
Drew Carver
3852 E. Kersan
Phoenix, AZ 85044
Courtesy copies of any notices to the Company shall also be sent to:
John M. Downer, Esquire
3080 Bristol Street, Suite 630
Costa Mesa, CA 92626
5.7 Assignment
This Agreement is a personal one, being entered into in reliance upon and
in consideration of the singular personal skill and qualifications of the
Employee. Employee shall therefore not voluntarily or by operation of law
assign, subcontract any portion of, or otherwise transfer the obligations
incurred on his part pursuant to the terms of this Agreement without the prior
written consent of the Company. Any attempted assignment or transfer by Employee
shall be wholly void. Company shall have the right to assign this Agreement to
any affiliated entity or by operation of law.
<PAGE>
5.8 Subject Headings
Subject headings of the articles and sections of this Agreement are
included for convenience only, and shall not affect the construction or
interpretation of its provisions.
5.9 Preamble; Exhibits
The preamble to this Agreement and the Exhibits hereto are hereby
incorporated herein by reference.
5.10 Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one agreement.
5.11 Joint Drafting
This agreement shall be deemed to have been drafted by the parties
jointly.
5.12 Advice of Counsel
Employee has been given an opportunity to consult with independent counsel
of its choice prior to executing this Agreement. Employee has been advised and
encouraged not to execute this Agreement without first consulting with counsel.
5.13 Reservation of Management Rights
Except as expressly provided herein, the Company exclusively reserves all
inherent rights and responsibilities including, but not limited to, the right to
promulgate rules and regulations necessary for the management, operation and
supervision of the Company and its business.
EAST COAST BEVERAGE CORPORATION
By: /s/ John Calebrese
Name. John Calebrese
Title: President
Date: 10-10-98
EMPLOYEE
/s/ Drew Carver
Name: Drew Carver
Date: 10-8-98
<PAGE>
EXHIBIT "A"
(EMPLOYEE JOB DESCRIPTION)
VICE PRESIDENT - BUSINESS DEVELOPMENT
<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT
Addendum to Employment Agreement by and between East Coast Beverage Corp.
(the
"Company"), and Drew Carver (the "Employee") dated October 8, 1998.
Whereas, the Company plans a reverse merger with a public entity;
Whereas, the Company is seeking to raise additional capital through the
private placement of its common stock;
Whereas, the Company and Employee agree to modify the Employment
Agreement as follows:
Article 3.3 Company Stock
Change 4% of the Company's restricted and non-voting common stock to
130,000 shares of the Company's restricted and non-voting common stock.
AGREED AND ACCEPTED THIS 26 day of August, 1999 by and between:
East Coast Beverage Corp. Employee:
/s/ John Calebrese /s/ Drew Carver
John Calebrese, CEO Drew Carver
CONSENT OF ATTORNEYS
Reference is made to the Registration Statement of East Coast Beverage Corp.
(the "Company"), whereby certain selling shareholders propose to sell up to
2,447,841 shares of the Company's common stock. Reference is also made to
Exhibit 5 included in the Registration Statement relating to the validity of the
securities proposed to be sold.
We hereby consent to the use of our opinion concerning the validity of the
securities proposed to be sold.
Very truly yours,
HART & TRINEN
William T. Hart
Denver, Colorado
February 22, 2000
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT
We consent to the use in this Registration Statement on Form SB-2 of our report
dated October 22, 1999, relating to the financial statements of East Coast
Beverage Corporation, and to the reference to our Firm under the caption
"Experts" in such Registration Statement.
KAUFMAN, ROSSIN & CO., P.A.
Miami, Florida
February 16, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001031425
<NAME> East Coast Beverage Corp.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Dec-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,485
<SECURITIES> 0
<RECEIVABLES> 337,138
<ALLOWANCES> 0
<INVENTORY> 1,211,086
<CURRENT-ASSETS> 1,560,709
<PP&E> 24,619
<DEPRECIATION> 1,001
<TOTAL-ASSETS> 1,751,922
<CURRENT-LIABILITIES> 2,489,739
<BONDS> 0
0
0
<COMMON> 500
<OTHER-SE> (738,317)
<TOTAL-LIABILITY-AND-EQUITY> 1,751,922
<SALES> 478,066
<TOTAL-REVENUES> 478,066
<CGS> 344,493
<TOTAL-COSTS> 871,890
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (738,317)
<INCOME-TAX> 0
<INCOME-CONTINUING> (738,317)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (738,317)
<EPS-BASIC> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001031425
<NAME> East Coast Beverage Corp.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-1-1999
<PERIOD-END> Dec-31-1999
<EXCHANGE-RATE> 1
<CASH> 89,696
<SECURITIES> 0
<RECEIVABLES> 1,523,928
<ALLOWANCES> 0
<INVENTORY> 1,316,553
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<PP&E> 1,031,477
<DEPRECIATION> 24,357
<TOTAL-ASSETS> 4,418,248
<CURRENT-LIABILITIES> 2,200,289
<BONDS> 0
0
0
<COMMON> 500
<OTHER-SE> 650,033
<TOTAL-LIABILITY-AND-EQUITY> 4,418,248
<SALES> 5,179,189
<TOTAL-REVENUES> 5,179,189
<CGS> 3,681,520
<TOTAL-COSTS> 1,427,926
<OTHER-EXPENSES> 420,541
<LOSS-PROVISION> 0
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<INCOME-PRETAX> (350,798)
<INCOME-TAX> 0
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<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
