SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER
Section 12(b) or 12(g) of the
Securities Exchange Act of 1934
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
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(Exact name of Registrant as specified in its charter)
Florida 65-0805935
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
7563 Philips Highway, Suite 110
Jacksonville, FL 32256
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(Address of Principal Executive Officer) Zip Code
(904) 296-7500
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Registrant's Telephone Number and Area Code
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title Of Each Class Name Of Each Exchange on Which
To Be So Registered Each Class Is To Be Registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act: e
Common Stock, .001 par value per share
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(Title of Class)
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TABLE OF CONTENTS
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ITEM 1. DESCRIPTION OF BUSINESS.................................................... 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION......................................................... 10
ITEM 3. DESCRIPTION OF PROPERTIES................................................. 17
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT..................................................... 17
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS............................................. 18
ITEM 6. EXECUTIVE COMPENSATION.................................................... 20
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.............................................................. 22
ITEM 8. DESCRIPTION OF SECURITIES TO BE REGISTERED................................ 23
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS............................................. 28
ITEM 2. LEGAL PROCEEDINGS........................................................ 29
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS.............................................................. 29
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.................................. 29
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS................................ 31
FINANCIAL STATEMENTS AND EXHIBITS........................................ 32
PART III
ITEM 1. INDEX TO EXHIBITS........................................................ 32
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ITEM 1. DESCRIPTION OF BUSINESS
Overview
Universal Beverages Holdings Corporation, a Florida corporation ("we,"
"us" or the "Company") is in the business of producing and selling bottled
water, and other beverages. We conduct business through our own wholly-owned
subsidiary, Universal Beverages, Inc. ("UBI"), which has had active operations
since March 1996. The principal source of revenues for our Company comes from
the production and distribution of the Syfo(R) brand of bottled waters. Bottled
water has been sold under the Syfo(R) brand since 1949 and is reputed to be one
of the original brands of bottled water in the chain store market place. We
acquired the exclusive distribution rights to the Syfo(R) brand in July 1998 and
acquired full trademark rights to Syfo(R) in February 1999.
We also manufacture beverages for other companies under contract at our
production plant located in Leesburg, Florida. We have manufactured Mistic (R)
and Snapple (R) products for Triarc Corporation, Bawls (R) Guarana for Hobarama
and will manufacture products for Publix Supermarkets and other retailers
beginning this year.
We primarily distribute our products throughout the largest regional
grocery chain stores located in the Southeastern United States, such as Publix
Super Markets, Winn-Dixie Stores and Albertson's, Inc. The principal area
of distribution of Syfo(R) bottled waters is Florida and Georgia.
The Bottled Water Market
The bottled water market nationally is estimated to be greater than
$5.1 billion and is one of the fastest growing segments of the beverage market,
exceeding 8% annually. See "Bottled Water in the United States, May 1999, a
study published by the Beverage Marketing Corporation of New York. ("Beverage
Marketing Survey"). Unless otherwise noted, all statistics in this Registration
Statement on Form 10-SB have been obtained from the Beverage Marking Survey.
Florida is one of the largest bottled water markets, after California and Texas.
Our Company's immediate market area, including Florida, is considered the South,
which includes Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi,
North Carolina, South Carolina, Tennessee and Virginia. This area has
approximately 22% of the U.S. population. The wholesale dollar value of bottled
water in this area was approximately $637,800,000 during 1998, with the Florida
market area comprising the bulk of sales and population for this area.
The bottled water market is composed of two segments - carbonated and
non-carbonated. The carbonated segment of the market is composed of seltzers and
sparkling waters, both flavored and non-flavored. Statistically, this segment
also includes tonic waters and club sodas. The non- sparkling or non-carbonated
segment of the market refers to the market of commercial and home delivery
drinking water in bulk and in consumer size containers sold at retail chains,
convenience stores and in the mass market club stores and super centers. Except
for the year 1991, the rate of growth in the consumer size bottled water has
been double-digit since 1984 and in 1998, it approached 30%. It is this growth
in this market that has attracted Pepsi and Coke to introduce their
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own national brands of bottled water, Aqua Fina and Dasani. Coke and Pepsi have
recently entered the bottled water market on a national scale with "purified"
bottled waters. The Universal Beverages brand, Syfo(R), is a purified bottled
water.
The non-carbonated water has predominantly been "spring water", bottled
and sold as "pure" bottled water. The spring water moniker has prevented the
establishment of a national brand since most of these brands identify with the
source of the spring. The Perrier Group (Nestle S.A. Europe) has come the
closest with the purchase of a series of regional brands such as Arrowhead in
California, Poland Springs in New York, Zephyrhills and Deer Park in the South
and Callistoga in the Texas region. These brands, along with Great Brands of
Europe/Danone Group, a group that owns the Evian Brand, have achieved
consolidated sales exceeding $1.3 billion.
The expectation is that the overall category "Bottled Water" will
continue to grow at rates above the industry averages, and that the consumer
size bottled water market will continue to grow at a double-digit rate as
bottled water is recognized as a "mainstream" beverage and continues as a
leading alternative to tap water.
Key Driver: Non-Sparkling Segment
Throughout the 1990's, non-sparkling waters have been the key driver
for the industry. By the end of 1999 this segment was responsible for 90% of
total industry volume. By the end of the year, it should approach the 3.7
billion gallon mark, advancing at an exceptional 11.8% growth rate for 1999.
Non-sparkling water is expected to grow at a rate of 10.1% per year through the
year 2003.
The non-sparkling water segment can be broken into three sub-segments:
(1) retail premium PET (polyethylene terephthalate plastic) waters, that is
1.5-liters and smaller sizes, (2) retail bulk waters, that is the 1 and 2.5
gallon jugs, and (3) direct-delivered waters. The single most important growth
driver for the entire bottled water category has been the retail premium PET
waters. No category or subcategory in any beverage segment has had the
consistent long-term growth of retail premium bottled waters. Over the last
seven years, retail premium PET waters have advanced at an exceptional 27%
compounded annual growth rate. In 1999, it is expected that this segment will
continue this high rate of growth, surging ahead nearly 30%. Retail bulk waters,
the 1 and 2.5 gallon jugs, are expected to end 1999 ahead about 3.9% and direct
delivered home and commercial waters are expected to increase by approximately
5.5%, reaching a new high of more than 1.4 billion gallons. We participate in
the retail PET and retail bulk segment of the industry.
Sparkling Waters and Imports
Sparkling waters have had a particularly difficult time in the 1990's
and 1999 was no exception. Sparkling waters are expected to end the year at
approximately the 300 million gallon mark, down slightly more than 4% from 1998.
This category continues to be affected by the success of the non-carbonated New
Age beverages, including the non-sparkling PET segment of the industry. Imported
waters have doubled their volume in the 1990's. After a slow start at the
beginning of the
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decade, they have grown at a compounded annual rate of about 12% since 1994.
Despite this growth rate, imported waters are likely to decline by almost 7% in
1999. According to industry experts, almost all of this decline is attributable
to Canadian imports. We participate in this segment of the industry and most of
our current revenues are generated from our seltzers and sparkling waters.
History
We were originally incorporated in the State of Florida on July 18,
1989 under the name International Bon Voyage, Inc. On March 6, 1998, we acquired
through an exchange of shares 100% of the outstanding shares of Universal
Beverages, Inc. Our acquisition of UBI was accounted for as a pooling and a
reverse merger. The name of our Company was changed from International Bon
Voyage, Inc. to Universal Beverages Holdings Corporation. As a result of these
transactions, UBI is now a wholly owned subsidiary of our Company.
Syfo(R) Brand
The principal source of revenues for our Company comes from the
production and distribution of the Syfo(R) brand of bottled waters. Bottled
water has been sold under the Syfo(R) brand since 1949 and is reputed to be one
of the original brands of bottled water in the chain store market place. We
acquired the rights to the Syfo(R) brand in July 1998 and acquired full
trademark rights to Syfo(R) in February 1999. In fiscal 1999 and 1998, we spent
approximately $738,000 for the acquisition, rehabilitation, redesign and
development of the Syfo(R) brand mark. Much of these costs have been capitalized
on our balance sheet reflecting the inherent value of the brand mark. Our
Company has also made significant expenditures in expanding the product line.
Initial marketing costs were generally expensed. We believe we can effectively
compete in the bottled water market with this brand because:
1. The Syfo(R)brand has brand equity with a long-standing and loyal
customer base;
2. The Syfo(R)brand of seltzers and sparkling waters has premium shelf
space in the principal chain stores for this type of product;
3. The Syfo(R)brand mark and image was completely redesigned within the
last twenty-four months and has been positively received by its
customers;
4. The Syfo(R)brand has never had the benefit of advertising and
promotion, these resources have not been expended on the Syfo(R)brand;
5. The sparkling water category exhibits a significant absence of
innovative promotion and advertising; and
6. The non-carbonated drinking water category shows no signs slowing
growth and will continue to be one of the fastest segments of the
beverage market.
Sparkling Waters
The Syfo(R) brand has principally been known for its sparkling waters,
which has generated most of the Company's current revenues. The Syfo(R) brand is
distributed throughout the major chain
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stores in the Florida and Georgia market area, Publix Super Markets, Albertson's
and Winn-Dixie Stores. We believe that we can double our current revenues in our
core business of seltzer and naturally-flavored sparkling waters within our
market area. The change in our brand presentation, improved shelf space as well
as aggressive pricing and marketing efforts have enabled us to regain some of
the market share lost prior to the acquisition of the Syfo(R) brand. By gaining
competitive shelf space and creating new customers, we expect to increase our
market share in the carbonated water market.
In 1998, the Southeastern bottled water market was estimated to be
approximately $637 million in wholesale dollar volume. This is for both
categories of bottled water - carbonated and non- carbonated. The sales of the
domestic sparkling water market are flat, with most companies demonstrating
declines. In a flat sparkling water market, the Syfo(R) brand continues to
thrive growing at an overall 13.7% rate in retail dollar sales for the current
52-week period ending June 20, 1999 exceeding the industry average for the
category. This percent growth is based on scan data for chain stores and does
not include convenience, club store/mass market or food service channels. Publix
Super Markets is our largest customer and Publix controls 58% of the bottled
water market in the Florida and Georgia market area.
Dollar Sales % Change - 52 Week Period ended
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June 20, 1999 Compared with Period ended June 20, 1998
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Publix Remaining Market
Syfo(R)Brand 11.7% 18.01%
The Overall Category .88% (1.75%)
Share of Market
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Publix Total Market
Syfo(R) Brand
Share of Market 7.19% 6.17%
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*Scan data for the 52-week period ending June 20, 1999.
The redesign of the Syfo(R) brand mark and revamping of the packaging,
including new graphics, has been positively received by the public. Little if
any marketing activity besides price pointing is occurring among the major
brands. The Company believes that it can continue to increase sales in the
sparkling water market as marketing efforts are increased. The Syfo(R) brand has
a loyal customer base and strong brand equity in the Florida market. Sales can
be generated from not only competitive shelf space but by creating new
customers.
Although the seltzer and sparkling water market is thought to have a
definite upper limit, it serves as a base from which to launch and promote other
product lines. Every dollar spent on advertising and promotion spills over to
other products of the Company.
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Non-Carbonated Waters
We developed and introduced a new non-carbonated version of our bottled
water in late 1997. By the end of 1998, the new product line could be found at
Publix Super Markets on a system-wide basis and Winn-Dixie Stores in the Miami
and Jacksonville areas. In early 1999, Albertson's introduced the Syfo(R) brand
of "Purified Water" products into its Southern Division. The South region market
area for non-carbonated drinking water products in which these products will
compete is over a half billion in wholesale dollars. We believe that we can
achieve a share of this market that will significantly increase our sales as a
consequence of our brand equity, recognition, placement and distribution in the
store, as well as advertising, sales and promotional efforts.
We intend to continue the development and introduction of our
non-carbonated line of purified waters. The non-carbonated spring water market
dominates the bottled water market in the southeastern United States. This
market is dominated by spring water sold through commercial and home delivery
and in small plastic recyclable PET (polyethylene terephthalate plastic)
containers. The total retail sales in this category of retail PET and bulk 1 and
2.5 gallons are estimated to be in excess of $600 million wholesale dollars in
our market area, with the majority of brands owned by large European companies,
such as The Perrier Group and Danone International that have wholesale dollar
sales of nearly $1.3 billion dollars. Zephyrhills and Deer Park are two such
brands in our market area that are owned by the Perrier Group; both brands are
produced at the same plant located in central Florida. Zephyrhills reported
wholesale dollar sales in 1997 of $90 million and Deer Park reported sales of
$70 million in 1997.
Most non-carbonated waters have been marketed from the spring water
perspective, promoting water from special pure locations. Recent studies
indicate that consumers are becoming better educated about the purity of water
and the amount of total dissolved solids that are found in spring waters.
Syfo(R) is a purified water and therein lies its point-of-differentiation among
a market filled with spring waters. Most spring and mineral waters have between
90 and 300 parts-per-million of total dissolved solids. Syfo's(R) purified water
is less than 10 parts-per-million of total dissolved solids. We have been able
to enter into the market niche for purified water with a non-carbonated version
of our well-known sparkling water. We were able to use our existing relationship
and the Syfo(R) brand-equity in the market with Publix Super Markets, Winn-Dixie
Stores and Albertson's to launch our non-carbonated line. We will need
additional capital to aggressively market these products and retain and secure
additional shelf space.
The potential for growth in this category is tremendous. We expect the
non-carbonated line to produce substantial growth as the distribution channels
are filled and the marketing and advertising begin to have an impact on revenue
growth. Scan data for the current 52-week period ending December 5, 1999 shows
our share of the Florida and Georgia market area at less than half of a percent.
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Since our initial introduction of our non-carbonated Syfo(R), we have
lost market share and shelf space as a direct consequence of our inability to
commit marketing resources and efforts into creating consumer pull. We have not
been able to make a significant impact in this segment of the bottled water
market. The negative percent reflects lost shelf space at Publix Super Markets
and Winn-Dixie Stores on two items. The positive percent in the remaining market
reflects the growth of our brand at Albertson's.
Dollar Sales % Change for 52 Week Period Ended
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December 5, 1999 Compared with December 5, 1998
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Publix Remaining Market
Syfo(R)Brand -23.6% 159.8%
The Overall Category 14.0% 9.6%
Share of Market
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Publix Total Market
Syfo(R) Brand
Share of Market .318% .446%
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*Scan data for the current 52-week period ending
December 5, 1999.
We plan to obtain additional distribution of our Syfo(R) brand by
expanding the non- carbonated line into other chain stores in our market area
and the Southeast, such as Kroger's, Harris Teeter's, and Winn-Dixie Stores in
Orlando, Tampa, and Alabama. We also plan to re-present three items that have
been deleted from Publix Super Markets and Winn-Dixie Stores. We will also begin
to fill the single-serve distribution channel in convenience stores and other
outlets where the product will likely be sold by the bottle. These stores are
generally reached by intermediate distributors, delivering to individual stores
directly.
Private Label and other Contract Packing
The total market for private label contract manufacturing is estimated
to be in excess of $500,000,000 within the general geographic area in which our
Company will participate. Most of this is in the form of large contracts with
organizations such as Wal-Mart Stores, Publix Super Markets and others. Since
our manufacturing plant in Leesburg, Florida is fully operational, we expect to
increase our participation in the private label contracting business. We have
been approached by several large companies with proposals for private labeling
manufacturing and we anticipate entering into definitive agreements with some of
these companies.
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Manufacturing Facilities and Suppliers
We manufacture Syfo(R) brand products and other products are our
production plant in Leesburg Florida. The plant is an 89,900 square foot metal
building, located on 7.5 landscaped acres and contains production equipment used
to produce our products. The Leesburg operations center will provide the
warehouse space for both finished goods and raw materials for all products
manufactured by us.
We rely upon suppliers located in the general region in which our
products are produced and sold. Some of the materials used in the production of
our products are imported; however, suppliers do exist within the continental
U.S. for similar materials. None of the materials or suppliers is in short
supply.
Environmental
We currently do not have any material capital expenditure commitments
for environmental remediation of any of our properties.
Sales and Marketing
We primarily sell our products to the largest regional grocery chain
stores located in the Southeastern United States, such as Publix Super Markets,
Winn-Dixie Food Stores and Albertson's. We also distribute products through
local distributors and some of our sales are exported to the Caribbean and
Central America.
We have done limited advertising and have relied mostly on the 50 years
of brand equity and recognition that the Syfo(R) trademark has in the Southern
market area. We plan to begin advertising our products through a media program
that will include local television and radio placement in targeted markets,
magazines and trade publications. In addition to our media program we have plans
for an aggressive public relations program that will include sponsorships of a
major NFL football team based in our market area, a national health organization
with chapters throughout the Southeast and various smaller regional
organizations where our visibility will directly impact the market area we
serve.
In March 2000, we were selected by the Jacksonville Jaguars National
Football League Franchise to retain the "pouring rights" to its stadium in
Jacksonville, Florida. These rights were held by Coca-Cola before the Jaguars
selected Syfo(R) brand bottled water. We expect to receive direct revenues from
this contract in the amount of approximately $150,000 to $250,000 annually. The
marketing exposure will result in substantial but not a predictable increase in
product demand at the local chain stores.
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Major Customers
We have three customers which represented a significant portion of our
sales in fiscal 1999 and 1998. In fiscal 1999 and 1998, Publix Super Markets
represented 48.1% and 61.7% of our total sales, Albertson's represented 10.1%
and 10.0% of our total sales and Winn-Dixie Food Stores represented 7.5% and
11.6% of our total sales. Loss of any of these customers will seriously affect
our business. We are constantly seeking new customers to lower the dependence of
our Company on these customers and are in discussions with several new
customers, which could dramatically reduce such dependence. We have been
appointed a vendor number and executed a vendor agreement with Wal-Mart Stores,
Inc. ("Wal-Mart") for our 1 liter seltzer and naturally-flavored sparkling
water. Supplying Wal-Mart may reduce our dependence on these customers, however
there can be no assurance any new customer or customers would reduce this
dominance or will continue ordering our products. Further, there are no
assurances that our contract with Wal-Mart will be profitable, or will be a
long-term contract.
Competition
We have significant competition for all of our products. Many of our
competitors are nationally recognized and possess substantially greater
marketing and financial resources than our Company. We compete with other brands
of similar products by price, shelf space and product positioning within the
designated shelf-space area of the chain store. Products with national brand
recognition generally have higher prices, while our Syfo(R) products are
generally priced lower than those of our national competitors. We market against
our competitors by aggressively managing our shelf space with our own
merchandising force, store level promotions (including some display activity)
consumer tasting programs and price specials.
Our principal competitors in the sparkling water segment are Canada
Dry, private label store brands, Ritz, Seagram's, Perrier, Clearly Canadian,
Crystal Bay, New York Seltzer, San Pelligrino, and LaCroix. Our principal
competitors in the non-carbonated bottle water market are Zephyrhills, Deer
Park, Crystal Springs and private label store brands. Our products, especially
the Syfo(R) products, are subject to intense competition from companies that
have significantly greater market share, shelf space, financial resources and
distribution. These companies have the resources to either lower the price of
their products in a predatory manner or secure the prime space in the outlets in
which these products are sold. These companies have relationships with stores
such as Publix Super Markets, which enable them to continuously promote their
products. Publix, on the other hand, enjoys significantly greater profits from
selling these brands as a consequence of the established consumer response.
We cannot be assured that the Syfo(R) brand will ultimately be
successful, or that outlets such as Publix Super Markets, Albertson's or
Winn-Dixie Stores will continue to carry our products. The shelf space is
reviewed every six months to a year. Slow selling products are eliminated and
replaced with new products or products that have a higher profit potential or
greater sales. Last year five new entrants entered the spring water market, each
of which paid substantial slotting fees. New
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entrants appear continuously and can be eliminated within six months if there is
no consumer response. Consumer response is created through marketing and sales
promotion.
Trademarks
The Company has registered its Syfo(R)trademark with the United States
Patent & Trademark Office. The Company also has registered trademarks for the
following products: Tropical Kraze(R), Rain Sweet(R)and Harvest(R).
Government Regulations
The Company employs a broad spectrum of treatment technologies for its
various bottled waters, ranging from minimum treatment of its natural spring
waters to extensive treatment of public water sources for its distilled and
drinking waters. Manufacturing practices, quality standards and labeling of the
Company's bottled water products are regulated by the Federal Food and Drug
Administration ("FDA") as well as the states and some localities in which the
water is distributed.
The FDA regulates our products as a "food." Accordingly, our products
must meet FDA requirements of safety for human consumption, of processing and
distribution under sanitary conditions and of production in accordance with the
FDA "good manufacturing practices." To assure the safety of our products, the
FDA has established quality standards that address the substances that may be
present in water which may be harmful to human health as well as substances that
affect the smell, color and taste of water. These quality standards also require
public notification whenever the microbiological, physical, chemical or
radiological quality of our products falls below standard. The labels affixed to
bottles and other packaging of our products are subject to FDA restrictions on
health and nutritional claims for foods under the Fair Packaging and Labeling
Act. In addition all drinking water must meet Environmental Protection Agency
standards established under the Safe Drinking Water Act for mineral and chemical
concentration and drinking water quality and treatment which are enforced by the
FDA.
Product Liability and Insurance
We are engaged in a business which could expose us to possible claims
for personal injury resulting from contamination of water produced by our
manufacturing plant or dispensing equipment. While the Company believes that
through regular testing it carefully monitors the quality of water produced by
its plants, it may be subject to exposure in the case of customer misuse of a
cooler or bottle storage. The Company maintains blanket "claims made" product
liability insurance against liability resulting from certain types of injuries
in amounts that it believes to be adequate. Additionally, the Company maintains
an umbrella policy that it believes to be adequate to cover claims above the
limits of the product liability insurance. Although no claims have been made
against the Company or any of its customers to date and the Company believes
that its current level of insurance is adequate for its present business
operations, there can be no assurance that such claims will not arise in the
future or that the proceeds of the Company's policy will be sufficient to
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pay such claims.
Employees
We have seventeen employees, none of whom are subject to a collective
bargaining agreement. Of this number, four are executive staff members, two are
clerical, one is quality control and nine constitute our production staff,
including two mechanics and two sales representatives.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following analysis of the Company's results of operation and
financial condition should be read in conjunction with the Company's financial
statements and notes thereto included elsewhere in this Form 10-SB. Because we
had not significant assets, liabilities or business activities prior to our
purchase of UBI in March 1996, the discussion below will be focused on the
business and operations of UBI, which continues to be in business and has been
in business since March 7, 1996.
Overview
We conduct business through our wholly owned subsidiary, UBI. We are in
the business of developing, manufacturing and marketing various beverage
products, particularly bottled water under our proprietary Syfo(R) brand. The
Company has significant sales to major chain stores located in the Southern U.S.
such as Publix Super Markets, Winn-Dixie Stores, Albertson's and minor sales to
local distributors and export customers.
Prior to July 1, 1998, we conducted business primarily as a
manufacturer of beverages for other beverage companies at our manufacturing
plant in Orlando, Florida. We acquired the exclusive distribution rights to the
Syfo(R) brand in July 1998 and acquired full trademark rights to Syfo(R) brand
in February 1999. After July 1998, our Company's recorded revenues are sales of
Syfo(R) brand products to customers such as grocery chain stores and others.
Prior to July 1998, our Company's revenues were not sales of beverages but sales
from the contract manufacturing conducted by the Company up to that time.
Accordingly, the results between the periods are not directly comparable.
On June 11, 1998, the Company moved its manufacturing operations from
Orlando, Florida to its new facility located in Leesburg, Florida. The Leesburg
facility did not become operational until March 1999, over nine months after the
Company left its manufacturing plant in Orlando, Florida. During this time
period, the Company outsourced the manufacture of a substantial amount of its
Syfo(R) products, which increased the cost of these products from 45% to 80% of
total revenues. While the Leesburg plant was under construction, it was decided
that maintaining current customers was important and the cost of the outsourcing
was acceptable. Although these costs were to be short term in nature, the
negative impact on the Company's profitability and liquidity were
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severe. The extra costs due to outsourcing reduced the gross profit by $417,384
for the twelve months between June 30, 1998 and June 30, 1999.
The Company also experienced significant losses in fiscal 1998 and 1999
as a result of protracted litigation with Triarc Company, the owners of the
Snapple and Mistic beverages, relating to Triarc's alleged breach of an
agreement with the Company. In August 1999, the Company entered into a
settlement agreement which resulted in total payments to Triarc of $102,500. The
litigation was finally resolved on November 15, 1999, when Triarc filed a
satisfaction of judgement. The costs associated with the Company performing
under the agreement and the Triarc litigation totaled $1,461,105, which caused a
significant drain on the Company's cash resources.
We reported net operating losses of $2,182,344 for December 31, 1999
and $1,101,442 for fiscal 1998. The auditor's opinion issued in connection with
our financial statements for fiscal 1999 contained a qualification expressing
substantial doubt regarding the Company's ability to continue as a "going
concern." Despite the forgoing, we believe that the prospects for the future are
significantly better than the results of the last twelve months would
demonstrate. We have taken several steps to keep our Company viable and in
existence as a going concern. As of March 31, 2000, we completed a restructuring
plan and converted approximately $3,200,000 of outstanding debt and interest
into equity. Additionally as of March 31, 2000, we raised approximately $2
million from private sources. We have also entered into agreements with several
retailers that will increase our revenues in fiscal 2000. See "Plan of
Operations."
Results of Operations
Fiscal Year ended December 31, 1999 ("fiscal 1998") Compared to Fiscal Year
Ended December 31, 1998("fiscal 1997")
We had total revenues of $2,774,153 in fiscal 1999 compared with
$2,082,923 in fiscal 1998, an increase of 33.2%. This increase in revenue is
attributable to our main production facility becoming operational in March 1999
and our Company being able to meet the demand. Almost all of these revenues
resulted from the sale of Syfo(R) products. During this period, we elected not
to aggressively market or promote our business until our financial base and
operations were secure. Since our Company did not own the Syfo(R) brand until
the third quarter of 1998, revenues from fiscal 1999 and fiscal 1998 are not
directly comparable. During the first two quarters of fiscal 1998, we
manufactured products for others.
Cost of sales was $1,514,101 in fiscal 1999 or approximately 54.6% of
net revenues. This is a dramatic decline from fiscal 1998, in which costs of
sales came to $1,310,033 or approximately 62.9% of net revenues. The lower cost
of goods reflects the positive results from the transition from outsourcing the
manufacturing of the Syfo(R) waters to our internal manufacturing of the Syfo(R)
products at our Leesburg plant. As of June 30, 1999, all of our products were
being manufactured in the Leesburg plant with the resultant decrease in the
manufacturing costs and increased utilization of the overhead associated with
the Leesburg plant. We believe that we will further
11
<PAGE>
reduce the cost of goods to approximately 40% of net revenues if we internally
manufacture our own PET containers and we are in the process of developing this
capacity.
The Company experienced an operating margin of $1,260,052 or 45.4% of
total revenues for fiscal 1999 up from $772,890 or 34.7% of total revenues in
fiscal 1998. The higher operating profit reflects increased sales and a lower
cost of goods to manufacture the Company's Syfo(R) products as the Leesburg
plant came on line.
General and administrative expenses were $1,995,324 or 71.9% of total
revenues in fiscal 1999 compared with $929,711 in fiscal 1998 or 44.6 % of total
revenues. These costs reflect the administrative cost, including rents of the
Jacksonville office, executive, administrative and other costs associated with
managing and operating the Company.
Depreciation and amortization expenses increased to $272,875 in fiscal
1999 compared with $20,087 in fiscal 1998. Depreciation expenses increased in
fiscal 1999 because we acquired the Leesburg plant in March 1999 and began to
depreciate the assets acquired and placed into service on the Leesburg plant in
fiscal 1999.
Interest expenses were $460,999 in fiscal 1999 compared with $121,017
in fiscal 1998. Interest expense increased because we borrowed additional high
interest rate debt in fiscal 1999. Most of this debt was acquired after an
offering of preferred stock in 1998 failed. We then turned to high interest rate
debt to complete the Leesburg operations. Litigation expenses were $713,198 in
fiscal 1999 compared with $803,532 in fiscal 1998.
As a result of the forgoing, the Company's net loss was $2,182,344 in
fiscal 1999 compared with $1,101,457 in fiscal 1998. These losses includes the
write-down of the litigation receivable, interest costs and extraordinary
litigation costs.
Seasonal Aspects
Our business experiences some seasonality. The lowest season is during
January and February of each year. We experience substantial growth in revenues
in March and April of our sparkling bottled waters. The summer seasons have
shown an increase in non-carbonated bottled water for sales related to national
emergencies, such as floods and hurricanes.
Liquidity and Capital Resources
On December 31, 1999 and December 31, 1998, we had negative working
capital of ($3,317,798) and ($667,996) respectively. Our working capital deficit
increased during fiscal 1999 due to an increase in notes payable, accounts
payable and accrued interest from 1998. During fiscal 1999 and 1998, the Company
financed its working capital requirements primarily with high interest rate
debt.
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<PAGE>
Net cash used in operating activities was ($861,261) in fiscal 1999
compared with ($891,695) in fiscal 1998. Net cash used in investing activities
was ($467,745) in fiscal 1999 compared with ($1,668,849) in fiscal 1998. In both
fiscal 1999 and 1998, the Company made investments in its plant and equipment
and in its Syfo(R) brand and trademark.
Net cash provided by financing activities was $1,207,255 in fiscal 1999
and $2,640,533 in fiscal 1998. In fiscal 1999 and 1998, the Company obtained
notes payable in the amount of $1,205,500 and $1,767,500, respectively.
Material Capital Commitments
On March 31, 2000, we entered into a contract to purchase the Leesburg
property for $1,400,000. We delivered a $100,000 escrow deposit to the seller
and intend to close on the contract by delivering $1,300,00 in cash on or before
July 1, 2000. We intend to expand the manufacturing capability of the Leesburg
plant to include PET manufacturing capability, including high-capacity injection
molding and blow molding equipment. The plant will also be expanded to include
an independent bottling line for large capacity containers such as gallon
containers and expansion of the existing bottling line to accommodate newer
packaging options. The total cost of these improvements is expected to exceed
$3,535,000. We expect to make these expenditures over the next year
Plan of Operations
During the next twelve months, we intend to increase our sales of our
Syfo(R) products. We will focus on sales and marketing efforts with a planned
expenditure for advertising that could reach $2,000,000. We intend to
reintroduce an updated version of Syfo(R) mixers (i.e. ginger ale, club sold,
and tonic waters) for the regional and international direct store delivery
markets. We will also introduce two PET versions of our sparking waters in 16
and 20 ounce containers for our local chain store sales and for more portable
versions of Syfo(R) when the glass version is not suitable. We will also
introduce a 12-ounce PET carbonated version of our sparking waters and an
8-ounce and 12- ounce version of our non-sparking waters for the school and
airline markets.
We have received a vendor agreement and have been assigned a vendor
number from Wal- Mart who has requested that our sparking water line be
distributed in all Wal-Mart or Super Centers along the entire east coast of the
United States. We are expecting the first of these shipments to occur during the
first quarter of 20000. We have no way of estimating the increase in revenues
from the Wal-Mart vendor agreements, however we believe that these revenues
could easily fall within a $1,000,000 to $4,000,000 annual increase. However,
there can be no assurances that these revenues will be achieved.
We also intend to further develop our private label contracting
business. We have been approached by several large companies with proposals for
private labeling manufacturing and we anticipate entering into definitive
agreements with some of these companies during the next year.
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<PAGE>
Factors That May Affect Our Future Results and Market Price of Stock
We operate in a rapidly changing environment that involves numerous
risks, some of which are beyond the Company's control. The following discussion
highlights some of these risks.
Limited Operating History. We have been in the beverage business since
March 7, 1996 and we have a limited operating history. Our operations consist of
manufacturing and distributing the Syfo(R) brand of bottled water as well as
other products. We have lost money in all periods since 1996. Although the
Syfo(R) brand has 50 years of history and is distributed throughout the South,
there is no assurance that we will be able to sell enough of the products to
ensure a profit. Our business is subject to all the risks inherent in any newly
formed business including the absence of a profitable operating history, lack of
market recognition and limited banking and financial relationships.
History of Operating Losses and Going Concern Qualification. We have
incurred losses since inception of our operations in 1996, and may continue to
incur substantial losses in the future. In particular, the Company incurred
losses of $2,182,334 for fiscal 1999 and $1,101,442 for fiscal 1998. The
footnotes to our financial statements for the fiscal 1999 and fiscal 1998,
include an explanatory paragraph relating to the uncertainty of the Company's
ability to continue as a going concern. We have developed a business strategy,
which we hope will enable us to be profitable. There can be no assurance,
however, that such revenue will materialize or to what extent, if any, our
Company will generate profitable operations. Our operating expenses will likely
fluctuate substantially from quarter to quarter. There can be no assurance that
we can achieve profitable operations on a consistent basis. It is possible that
our Company may experience further net losses.
Quarterly Dividend Payments. As of March 31, 2000, we have issued and
outstanding 200,000 shares of Series B Preferred Stock, 130,600 shares of Series
C Preferred Stock, 31,500 shares of Series D Preferred Stock, 57,500 shares of
Series E Preferred Stock and 35,000 shares of Series F Preferred Stock. We are
required to make quarterly dividend payments to these shareholders in the amount
of $55,902.50 and our annual dividend payments to these preferred shareholders
equals $223,610. If we issue more shares of preferred stock, our annual and
quarterly dividend payments will increase. Our obligation to make these dividend
payments will decrease our operating cash flow and our ability to make
expenditures to benefit our business. If we fail to make dividend payments for
three consecutive quarters, the preferred shareholders can send us a notice
stating that we are in default under the terms of the preferred stock. If we are
in default, each share of preferred stock will have 10 votes per share toward
the election of directors of the Company. Accordingly, if we are in default
under the terms of the preferred stock, the preferred shareholders will probably
be in a position to control our board of directors.
Additional Financing Required; Lack of Traditional Financing Sources.
We are pursuing an aggressive growth strategy that will require substantially
more funding than we have
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<PAGE>
on hand. We may seek additional financing through the sale of additional debt or
equity securities (or a combination thereof) in future public or private
offerings. However, there can be no assurance that any such financing will in
fact be available to us when needed or upon terms acceptable to us.
Consequently, should we be unable to secure needed additional financing in the
future on a reasonable basis, it is possible that our business plan won't be
executable and profitable operations will not be obtainable. There can be no
assurances that any such additional financing will be available on terms
satisfactory to us, if at all, since conventional financing may not be available
to us.
Dominant Customers. We have three customers which represented a
significant portion of our sales in fiscal 1999. Publix Super Markets
represented 48.1% of our sales, Albertson's represented 10.1% of our sales and
Winn-Dixie Food Stores represented 7.5% of our total sales. Loss of any of these
customers would seriously affect our business. We are constantly seeking new
customers to lower the dependence of our Company on Publix Super Markets,
Albertson's and Winn-Dixie Food Stores and are in discussions with several new
customers, which could dramatically reduce such dependence. We have been
appointed a vendor number and executed a vendor agreement with Wal-Mart Stores,
Inc. for our 1 liter seltzer and naturally-flavored sparkling water. Supplying
Wal-Mart may reduce our dependence on any our dominant customers, however there
can be no assurance any new customer or customers will reduce this dominance or
will continue ordering our products. Further, there are no assurances that our
contract with Wal-Mart will be profitable, or will be a long-term contract.
Uncertain Ability to Manage Growth. As part of our business strategy,
we intend to pursue rapid growth. Our ability to achieve our planned growth
depends upon a number of factors, including our ability to hire and train
management and other employees, the adequacy of our financial resources, our
ability to identify new markets in which we can successfully compete and our
ability to adapt our purchasing and other systems to accommodate our expanded
operations. In addition, there can be no assurance that we will be able to
achieve our planned expansion or that we will be able to manage successfully the
expanded operations. Failure to manage growth effectively could adversely affect
our financial condition, results of operations and prospects.
Competition. Our products, especially the Syfo(R) products, are subject
to intense competition from companies that have significantly greater market
share, shelf space, financial resources and distribution. Our principal
competitors in the sparkling water segment are Canada Dry, private label store
brands, Ritz, Seagram's, Perrier, Clearly Canadian, Crystal Bay, New York
Seltzer, San Pelligrino, and LaCroix. Our principal competitors in the
non-carbonated bottle water market are Zephyrhills, Deer Park, Crystal Springs
and private label store brands. These companies have the resources to either
lower the price of their products in a predatory manner or secure the prime
space in the outlets in which these products are sold. If these companies are
successful in their efforts to obtain greater market share, shelf space and/or
distribution, this could affect our Company's ability to sell its Syfo(R)
products and could result in lower total revenues.
Dependence on Senior Management. Our future performance depends
substantially upon
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the continued services of our senior management, particularly Mr. Moore and Ms.
Mendius, and other key personnel. We have entered into employment agreements
with Mr. Moore and Ms. Mendius. See "Management - Employment Agreements." The
loss of services of Mr. Moore or Ms. Mendius could have a material adverse
effect on the Company's marketing strategy, business operations, financial
condition and results of operations. If our operations expand, we will also be
dependent upon our ability to attract and retain additional qualified employees
and consultants. There is significant competition for qualified personnel, and
there can be no assurance that the Company will be successful in recruitng,
retaining or training the management personnel it requires.
Government Regulations. The Federal Food and Drug Administration
("FDA") regulates our products as a "food." Accordingly, our products must meet
FDA requirements of safety for human consumption, of processing and distribution
under sanitary conditions and of production in accordance with the FDA "good
manufacturing practices." In the event that we do not continue to meet these
required standards, our manufacturing facilities may be shut down and our
business will be seriously affected.
Penny Stock Trading Rules. The Securities Exchange Act of 1934 as
amended and regulations promulgated thereunder place restrictions on trading
activities in "penny stocks." Penny stocks are defined as equity securities
priced under $5.00 which are not listed for trading on a national exchange or
NASDAQ, subject to certain exceptions. Under this definition, the Company's
common stock is a penny stock. Brokers dealing in penny stocks are subject to
special disclosure rules, are required to determine the suitability of penny
stock transactions for their clients, and are required to obtain and maintain
written consents of their clients to such transactions. These regulatory burdens
discourage a number of brokers from becoming involved in a security until it is
no longer a penny stock, which may adversely affect the depth and liquidity of
any market in the Company's common stock.
Lack of Liquidity for the Company's Common Stock. The Company's common
stock currently trades on the OTC Bulletin Board under the symbol, "UVBV" and
will be delisted to the National Quotation Bureau Pink Sheets ("Pink Sheets") if
we do not clear all SEC comments on this Form 10-SB by May 3, 2000. Stocks
trading on the Bulletin Board and Pink Sheets generally attract a smaller number
of market makers and a less active public market and may be subject to
significant volatility. Sales of substantial amounts of shares of the Company's
common stock in the public market (pursuant to exercise of warrants and
additional capital financing transactions which may be undertaken by the Company
in the future) could adversely affect the market price of the Company's common
stock and the Company's ability to raise equity capital in the future and may
make it more difficult for an investor to liquidate his investment in the
Company. The trading market for the Company's common stock is currently limited
to relatively low volume. There can be no assurance that a trading market will
be sustained in the future.
Issuance of Additional Shares. Our Articles of Incorporation authorize
the issuance of 30 million shares of common stock and 20 million shares of
preferred stock. As of March 31, 2000,
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we had 6,028,704 shares of common stock issued and outstanding and an aggregate
of 454,600 shares of preferred stock of various classes. Our Board of Directors
has the power, without shareholder approval, to issue up to 23,971,296 shares of
common stock and 19,545,400 shares of preferred stock, with preferences
designated by the Board of Directors. Any such issuance might result in a
reduction of the book value or market price of the outstanding common stock and
preferred shares. Issuance of additional shares will reduce the proportionate
ownership and voting power of our then existing shareholders.
ITEM 3. DESCRIPTION OF PROPERTY
Our corporate offices are located in Jacksonville, Florida. We have a
one-year lease which expires on May 31, 2000. Our monthly rental payment is
approximately $2,573.75 per month.
We entered into a contract to purchase a production plant in Leesburg,
Florida and 7.5 acres of land underlying the production plant for $1,400,000 on
March 31, 2000. We delivered a $100,000 escrow deposit to the seller, BNS of
Central Florida, Ltd., and intend to close on the contract by delivering
$1,300,000 in cash on or before July 1, 2000.
If we do not close on the contract by the required date, we still have
a lease for the production plant and 7.5 acres of land. The lease expires on
August 31, 2004 and the monthly payments are approximately $18,758.96 per month.
The rent will be increased in 4% increments each year thereafter. Real estate
taxes are approximately $20,000 per annum.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of March 31, 2000, the beneficial
ownership of the Company's common stock (1) by each director of the Company (2)
by all directors and officers as a group and (3) by persons who are known by the
Company to own beneficially more than 5% of the Company's common stock. At March
31, 2000, we had 6,028,704 shares of our common stock issued and outstanding.
Unless otherwise indicate, the address for each person is c/o Universal
Beverages Holdings, Inc., 7563 Philips Highway, Suite 110, Jacksonville, Florida
32256.
<TABLE>
<CAPTION>
Amount of Common
Name and Address Stock Owned Percent of Class
- ---------------- ----------- ----------------
<S> <C> <C> <C>
Earl T. Smith(1) 559,000 9.30%
Cydelle Mendius 503,500 8.40%
Jonathon O. Moore 502,996 8.3%
Bridge Bank Ltd.(2) 350,000 17.4%
Jay D. Marsh 427,996 7.1%
All Officers and Directors
as a Group ( 5 persons) 2,143,496 35.2.1%
- -----------------------
</TABLE>
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(1) Includes 400,0000 shares owned by ETS Enterprises, Inc., a company
controlled by Mr. Smith.
(2) The address for Bridge Bank LTD. is N-778 West Bay Street, Nassau, Bahamas
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Directors and Executive Officers
The following table sets forth the names, ages and current positions
with our Company held by Directors, Executive Officers and Significant
Employees.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Jonathon O. Moore 49 Chairman, CEO, Director
Cydelle Mendius 42 President: Director
Jay D. Marsh 57 Treasurer, Director
Earl T. Smith 79 Director
Marsha Flaige 49 Vice President - Finance
Jerry Gaines 61 Vice President - Operations
Jose Matos PHD 37 Director of Quality Control
</TABLE>
Jonathon O. Moore has served as the Chairman and CEO of the Company
since March 6, 1998. From April 1996 through May 1998, Mr. Moore was the sole
shareholder of Syfo Beverage Company of Florida. From January 1992 through April
1996, Mr. Moore was engaged as an independent consultant in several insurance
company ventures, including General Insurance Company and Peninsula Life. In the
1980's, he served as the Chairman of the Board and a major shareholder of Air
U.S. Mr. Moore has over 25 years of experience at all levels of management,
which includes a wide spectrum of challenges from new venture start-ups to
turning around entire organizations, including Air U.S., a Part 121- FAA
certified airline operation in the United States in the early 1980's. Mr. Moore
attended the University of Wyoming where he majored in Physics and Mathematics.
Cydelle Mendius has served as President and Director of the Company
since May 5, 1997. From April 1996 through May 1997, Ms. Mendius served as the
President of Syfo Beverage Company of Florida. From March 1993 through March
1996, Ms. Mendius worked as a business development specialist providing
consulting services in a variety of different industries, including the beverage
and agribusiness industries. Within the beverage industry she specialized in the
bottled water segment of the industry. In addition to her consulting experience,
Ms. Mendius has owned and operated two successful businesses, one of which was
sold and the other merged into a large entity. She has held the executive-level
positions of President, Vice President and General Manager during the past
sixteen years of her business career. She received her BA in Modern languages
and Latin American Studies, holds a Master's Degree in Business Administration
and has completed
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certificate programs in Small Company Management. She has been named one of the
Outstanding Young Women of America and is an alumna of the University of Denver
and Harvard University Graduate School of Business.
Earl T. Smith has served as a Director of the Company since March 6,
1998. Mr. Smith served as a Lieutenant Colonel in the United States Air Force.
After retiring from the Air Force, he was General Manager of Two States Drilling
Company in Dallas, Texas after which he formed his own independent oil and gas
company, Earl T. Smith and Associates, Inc., Amarillo, Texas, which he has owned
and operated since 1955 through the present date.
Jay Marsh has served as a Director and Treasurer of the Company since
March 6, 1998. Since 1991 through the present date, Mr. Marsh has worked as a
consultant and been involved with the successful restructuring and refinancing
of several companies. From June 1970 through June 1973, Mr. Marsh served as a
consultant with Arthur Young and Company. Mr. Marsh has had significant
corporate finance experience as an investment banker in a wide variety of
mergers and acquisitions, restructuring, and lending transactions, as a
principal in leveraged buy-out transactions, and as a consultant to financially
troubled companies, specializing in the implementation of restructuring action
plans. His experience as chief executive of an investment banking firm includes:
completing 40 debt financing for clients totaling over $100 million and
arranging a $10 million equity investment in a home health care venture in 1988.
His experience as a principal includes chairman and CEO of a $20 million
leveraged buy-out of a seven jet commercial airline in 1984. Mr. Marsh has a
Bachelor of Science degree in Physics and a Masters of Business Administration
degree from Ohio State University. He is a Certified Public Accountant, member
of the AICPA and Illinois Society of CPA's.
Marsha Flaige has served as the Vice President and Secretary of the
Company since March 6, 1998. From October 1993 through the present date, Ms.
Flaige has served as the Vice President of Speciality Business Services, an
independent business consulting company. From September 1983 through April 1992,
she was an Assistant Vice President- Financial Analyst with Voyager Group (an
insurance subsidiary of Primerica), which required preparation of monthly,
quarterly, and year-end GAAP financial statement packages and line-of-business
reporting to the corporate parent. Upon the consolidation of Voyager with its
affiliated companies in April 1992, she opened a small business consulting firm
called Owner Executive Support Services. Ms. Flaige graduated from the
University of North Florida with a Bachelor of Business Administration with
emphasis in Finance and Corporate Planning and is currently a CPA candidate.
Jerry Gaines has served as Director of Operations since August, 1999.
During the five year period before he joined the Company, Mr. Gaines was the
Product Manager at American Can. Mr. Gaines has over thirty years of experience
in general manufacturing, production and quality programs. Mr. Gaines is an
active member of the International Beverage and Water Association and the South
East Water Association.
Jose Matos, Ph.D. has served as Director of Quality Assurance since
August, 1999. From
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July 1998 to August 1999, Mr. Matos was the Laboratory Manager at Lesco, Inc.
From October 1997 to March 1998, he was the product development management at
SunPure, Ltd. From February 1990 to October 1997, he was the Corporate Director
of Research and Development and Quality Assurance at Indian River Foods. Mr.
Matos graduated from the University of Michigan with a PhD in Chemistry. He has
over seventeen years of experience at all levels of quality control in the
beverage industry, which includes flavors development, citrus and other juices
and water. He is an active member of the Institute of Food and Technology (IFT),
and American Chemical Society (ACS).
Designees
In connection with a capital investment, we gave an investor group the
right to appoint two persons to the Company's Board of Directors. Additionally,
in connection with our restructuring plan, we also gave one of our former
creditors the right to appoint one person to our Board of Directors. As of this
date, these groups have not named any nominees to our Board.
General Information about Directors
Each Director holds office until the next annual meeting of
shareholders of our Company and until his successor has been elected and
qualified. Officers of our Company are elected by the Board of Directors and
serve at the discretion of the Board. There is no immediate family relationship
between or among any of the directors, executive officers or significant
employees. The Company is not aware of any arrangement or understanding between
any director or executive officer and any other person pursuant to which he was
elected to his current position.
Directors who are full time employees of the Company receive no
additional compensation for services rendered as directors of the Company.
Directors who are not full time employees of the Company do not receive any
compensation for their services as directors.
NASDAQ Requirements and Committees
We intend to comply with the corporate governance standards established
by the NASDAQ Stock Market. In the near future, we intend to have two
independent directors on our Board of Directors and will establish an audit
committee, with a majority of independent directors.
ITEM 6. EXECUTIVE COMPENSATION
This Summary Compensation Table sets forth compensation earned by
Jonathon O. Moore, the Company's Chief Executive Officer and Chairman (the
"Named Executive Officer") for services rendered in all capacities to the
Company during its fiscal year ended December 31, 1999 and December 31, 1998. No
other principal executive officer received a total annual salary and bonus from
the Company which exceeded $100,000 during fiscal 1998 or 1999.
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<TABLE>
Name and Position Year Salary Bonus Other Compensation
- ----------------- ---- ------ ----- ------------------
<S> <C> <C> <C> <C>
Jonathon O. Moore, 1999 $40,660 - $28,500
1998 $33,631 - -
</TABLE>
(1) Includes stock awarded to Moore for his service as Chief Executive Officer
of the Company during fiscal 1999. Mr. Moore received 150,000 shares of the
Company's common stock on December 13, 1999 and the fair market value of the
Company's stock on such date was $.19 per share.
Option Grants in Fiscal 1999
We did not make any option grants to Mr. Moore during fiscal 1999.
Aggregate Option/SAR Exercises in Last Fiscal year and FY-End Option/SAR Values
Mr. Moore did not exercise any options during the last fiscal year.
Employment Agreements
We have entered into employment agreements with Jonathon Moore, Cydelle
Mendius and Marsha Flaige. Jonathon Moore is employed as the Company's Chief
Executive Officer and Chairman and his annual salary is $60,000, effective as of
March 6, 1998. Cydelle Mendius is employed as the Company's President and her
annual salary is $80,000 effective as of March 6, 1998. Marsha Flaige is
employed as the Company's Vice President and her annual salary is $60,000
effective as of March 6, 1998. Mr. Moore, Ms. Mendius and Ms. Flaige's
employment agreements are for three year terms from their effective dates and
all agreements expired on March 5, 2001.
The employment agreements provide that the executive's employment will
be terminated upon (1) the executive's death, (2) for cause and/or (3) if the
executive has a complete disability. For cause is defined as (1) the executive's
substance abuse, alcoholism, or conviction of a crime involving moral turpitude,
acts of fraud by the executive against the Company or its affiliates in
connection with their business or (3) if the executive resigns or abandons his
employment. Complete disability means the inability of the executive due to
illness, accident or any other physical or mental incapacity (other than
incapacity or illness resulting from the executive's performance of his duties
under the employment agreement) to perform the services provided for in his/her
employment agreement for a period of 120 consecutive days within any twelve (12)
consecutive month period.
If the executive's employment is terminated because of his death or
complete disability, the executive is entitled to receive his salary for a one
year period following the date of such
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<PAGE>
termination, provided that any such payments shall not extend beyond the term of
the employment agreement, which expires on March 5, 2001.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 15, 1997, Cydelle Mendius advanced $90,000 to UBI at an
interest rate of 15%, evidenced by a demand promissory note callable at any
time, and secured by the assets of our Company. Since that time, Ms. Mendius has
advanced additional funds to our Company bringing the total loan in excess of
$200,000 plus accrued interest.
Between June 6, 1997 and September 19, 1997, Bridge Bank, Ltd. advanced
$541,500 to UBI at an annual interest rate of 15% and the loan was secured by
common stock of Mr. Moore and Ms. Mendius. Bridge Bank also received 350,0000
shares of the Company's common stock as consideration for extending the loan at
a price of $.001 per share. On February 1, 2000, Bridge Bank entered into a debt
forgiveness and exchange agreement in which it agreed to forgive all of the
Company's outstanding indebtedness in the amount of $541,500 under the note in
exchange for 700,000 shares of the Company's Common Stock. On the date of the
exchange, the fair market value of our common stock was approximately $.78 per
share.
In June 1996, the Company's subsidiary, Orlando Bottling & Production,
Inc. ("Orlando Bottling"), entered into a manufacturing agreement with Syfo
Beverage Company of Florida, Inc. ("Syfo Beverage"). At that time, Jonathon
Moore and Cydelle Mendius were both officers, directors and shareholders of the
Company and Syfo Beverage. Syfo Beverage had obtained an exclusive franchise
agreement to distribute and sell Syfo(R) products from the Best Day Company
f/k/a Syfo Water Co., Inc. (the "Best Day Company"), the previous owner of the
Syfo trademark and an unrelated party, and needed to retain a company to
manufacture, bottle and distribute the Syfo products.
Prior to entering into the manufacturing contract, the Company and
Orlando Bottling had obtained quotations on the cost of providing these services
to Syfo Beverage and priced the manufacturing contract on terms that were the
same as the outside quotations. Under the terms of the manufacturing agreement,
Orlando Bottling would manufacture the products, maintain adequate inventory and
distribute the products and Syfo Beverage would pay Orlando Bottling a set fee
for those services on a monthly basis.
In July 1998, the Company acquired rights to the Syfo(R) trademark by
purchasing a promissory note, secured by the Syfo trademark, from Union Planters
Bank and also succeeded to the bank's position in the lawsuit to foreclose on
the Syfo(R) trademark against the Best Day Company. In conjunction with this
transaction, the Company terminated its manufacturing contract with Syfo
Beverage Company in consideration for the net monies due the Company from Syfo
Beverage in the amount of $660,000.
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<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
We are authorized to issue up to 30,000,000 shares of Common Stock and
20,000,000 shares of Preferred Stock. As of March 31, 1999, there were 6,028,704
shares of common stock outstanding.
Common Stock
The holders of our Common Stock are entitled to one vote per each share
held and have the sole right and power to vote on all matters on which a vote of
stockholders is taken. Voting rights are non-cumulative. The holders of shares
of Common Stock are entitled to receive dividends when, as and if declared by
the Board of Directors, out of funds legally available therefore and to share
pro- rata in any distribution to stockholders. Upon liquidation, dissolution, or
winding up of the Company, the holders of our common stock are entitled to
receive the net assets held by the Company after distributions to the creditors.
The holders of Common Stock do not have any preemptive right to subscribe for or
purchase any shares of any class of stock. The outstanding shares of Common
Stock and the shares offered hereby will not be subject to further call or
redemption and will be fully paid and non-assessable.
Preferred Stock
Within the limits and restrictions contained in our Articles of
Incorporation, the Board of Directors has the authority, without further action
by the stockholders, to issued up to 20,000,000 shares of preferred stock, $.01
par value per share (the "Preferred Stock"), in one or more series, and to fix,
as to any such series, the dividend rate, redemption prices, preferences on
liquidation or dissolution, sinking fund terms, if any, conversion rights,
voting rights and any other preference or special rights and qualifications.
We have authorized the issuance of Series A, Series B, Series C, Series
D, Series E and Series F Preferred Stock. As of March 31, 2000, there were
issued and outstanding: 0 shares of Series A Preferred Stock, 200,000 shares of
Series B Preferred Stock, 130,600 shares of Series C Preferred Stock, 31,500
shares of Series D Preferred Stock, 57,500 shares of Series E Preferred Stock,
and 35,000 shares of Series F Preferred Stock.
Shares of Preferred Stock issued by the Company could be utilized,
under certain circumstances, to make an attempt to gain control of the Company
more difficult or time-consuming. For example, shares of Preferred Stock could
be issued with certain rights which might have the effect of diluting the
percentage of our common stock owned by a significant shareholder, or issued to
purchasers who might side with management in opposing a takeover bid. A takeover
transaction frequently affords shareholders the opportunity to sell their shares
at a premium over current market prices.
23
<PAGE>
Series A Preferred Stock
Our Articles of Incorporation authorize 600,000 shares of Series A
Preferred Stock. As of the date of this Memorandum, we do not have any shares of
our Series A Preferred Stock issued and outstanding. On January 31, 2000, we
issued a total of 42,500 shares of our common stock in exchange for all 8,500
shares of the Series A Preferred Stock which were issued and outstanding. We
also issued 1,700 shares of our common stock as a preferred stock dividend for
1999, which dividend was effective as of January 1, 2000.
Series B Preferred Stock
Our Board of Directors has authorized the issuance of up to 450,000
shares of Series B Preferred Stock. Each share of Series B Preferred Stock has a
stated value equal to $10.00 per share. Holders of Series B Preferred Stock are
entitled to cumulative dividends at a rate per share (as a percentage of stated
value per share) equal to 10% per annum or $1 per share. Dividend payments will
be made on a quarterly basis. Each dividend is cumulative, in the event payments
are not made in any specific quarter, the dividend will cumulate and payments
will first be applied to those payments that are past due and then to dividends
currently due.
Dividends must be paid in cash if the Company's common stock is trading
at or below an average price of $4.50 per share during the thirty (30) calendar
day period prior to the record date for the dividend payment. The Board of
Directors may elect to pay the dividends in shares of our common stock if the
common stock is quoted at a price of above $4.50 per share during the thirty
(30) calendar day period before the record date for the dividend.
At any time after issuance, each shares of Series B Preferred Stock can
be converted into 2.5 shares of the Company's common stock. At any time, the
Company can redeem shares of Series B Preferred Stock by giving the preferred
shareholders 30 days written notice of such intention to redeem at the purchase
price of $12 per share. Series B Preferred Shareholders will have the right to
appoint two directors of the Board of Directors of the Company. The Series B
Directors can only serve while a majority of the originally issued Series B
Preferred Shares remain outstanding, unconverted and unredeemed.
The shares of Series B Preferred Stock do not have voting rights,
unless there is an Event of Default (as defined herein). If the Company fails to
make dividend payments for three quarters, the holders of 60% of the issued and
outstanding Series B Preferred Stock can declare an event of default by
providing the Company with 60 days notice of such event of default by certified
mail. If there is an Event of Default, each shares of Series B Preferred Stock
shall have 10 votes which may be counted toward the election of the Company's
Board of Directors. Except for the forgoing voting rights for directors in the
Event of Default, the Series B Preferred Stock will not have voting rights or
any other corporate matters.
In the event of the liquidation, dissolution or winding up of the
Company, holders of the
24
<PAGE>
Series B Preferred Stock will be entitled to receive a liquidating distribution
before any distribution or payment may be made to holders of common stock or any
other class of stock ranking junior to the shares of the Series B Stock. The
liquidating distribution will be $12.00 per share. However, the holders of the
shares of Series B Preferred Stock will not be entitled to receive the
liquidation price of such shares until the liquidation price of any other series
or class of the Company's stock hereafter issued which ranks senior as to
liquidation rights ("Senior Liquidation Stock") of the Series B Preferred Stock
has been paid in full. In the event the assets of the Company available for
distribution to the holders of the shares of all Series of the Company's
preferred stock, upon any such liquidation or winding up of the Company, shall
be insufficient to pay in full the preferential amounts to which such holders
are entitled, the holders of the Series B Stock shall share ratably in any
distribution of assets in proportion to the full amounts to which such holder
would otherwise be respectively entitled.
As long as shares of Series B Preferred Stock are outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of the Series B Preferred Stock
voting as a class (1) create, authorize or issue any shares of any other class
of Senior Dividend Stock or Senior Liquidation Stock or (2) amend, alter or
repeal, whether by merger, consolidation or otherwise, the Company's Articles of
Incorporation, if such changes would materially and adversely affect the powers,
preference or special rights of the Series B Preferred Stock. The Company is
further prohibited from encumbering the underlying assets of the Company, other
than cash, accounts receivable, and inventories for the purposes of pledging,
securing or otherwise encumbering these assets for any reason, including further
borrowing or other purposes without the unanimous approval of the Board of
Directors of the Company, including the directors so appointed by the majority
of the Series B Preferred Shares.
Series C Preferred Stock
Our Board of Directors has authorized the issuance of up to 200,000
shares of Series C Preferred Stock. Each share of Series C Preferred Stock has a
stated value equal to $10.00 per share. Holders of Series C Preferred Stock are
entitled to cumulative dividends at a rate per share (as a percentage of stated
value per share) equal to 10% per annum or $1 per share. Dividend payments will
be made on a quarterly basis. Each dividend is cumulative, in the event payments
are not made in any specific quarter, the dividend will cumulate and payments
will first be applied to those payments that are past due and then to dividends
currently due.
All dividend payments must be made in cash. At any time after issuance,
each shares of Series C Preferred Stock can be converted into 2.5 shares of the
Company's common stock. At any time, the Company can redeem shares of Series C
Preferred Stock by giving the preferred shareholders 30 days written notice of
such intention to redeem at the purchase price of $10 per share.
The shares of Series C Preferred Stock do not have voting rights,
unless there is an Event of Default (as defined herein). If the Company fails to
make dividend payments for three quarters, the
25
<PAGE>
holders of 60% of the issued and outstanding Series B Preferred Stock can
declare an event of default by providing the Company with 60 days notice of such
event of default by certified mail. If there is an Event of Default, each shares
of Series C Preferred Stock shall have 10 votes which may be counted toward the
election of the Company's Board of Directors. Except for the forgoing voting
rights for directors in the Event of Default, the Series C Preferred Stock will
not have voting rights or any other corporate matters.
In the event of the liquidation, dissolution or winding up of the
Company, holders of the Series C Preferred Stock will be entitled to receive a
liquidating distribution before any distribution or payment may be made to
holders of common stock or any other class of stock ranking junior to the shares
of the Series B Stock. The liquidating distribution will be $10.00 per share.
However, the holders of the shares of Series B Preferred Stock will not be
entitled to receive the liquidation price of such shares until the liquidation
price of any other series or class of the Company's stock hereafter issued which
ranks senior as to liquidation rights ("Senior Liquidation Stock") of the Series
C Preferred Stock has been paid in full (such as the Series B Preferred Stock).
The Series C, Series D, Series E and Series F Preferred Shares are in pari passu
with respect to liquidation rights.
Series D, E and F Preferred Stock
Our Board of Directors has authorized the issuance of up to 200,000
shares of Series C , Series D and Series Preferred Stock, respectively. Except
for dividend rights, the Series D, E and F Preferred Stock have the same terms
and preferences. Each share of Series D, E and F Preferred Stock has a stated
value equal to $10.00 per share.
Holders of Series D Preferred Stock are entitled to cumulative
dividends at a rate per share (as a percentage of stated value per share) equal
to 10% per annum or $1 per share. Dividend payments on the Series D Preferred
Stock are subordinate to the dividend payments on the Series B and Series C
Preferred Stock. Dividend payments will be made on a quarterly basis. Each
dividend is cumulative, in the event payments are not made in any specific
quarter, the dividend will cumulate and payments will first be applied to those
payments that are past due and then to dividends currently due.
Holders of Series E and F Preferred Stock are entitled to cumulative
dividends at a rate per share (as a percentage of stated value per share) equal
to 8% per annum. Dividend payments on the Series E Preferred Stock are
subordinate to the dividend payments on the Series B, C and D Preferred Stock
and dividend payments on the Series F Preferred Stock are subordinate to the
dividend payments on the Series B, C, D and E Preferred Stock.
.
Dividend payments can be made in cash or common stock. At any time
after issuance, each share of Series D, E and F Preferred Stock can be converted
into shares of the Company's common stock at a price equal to 80% of the average
of the "bid" and "ask" price of the Company's common stock during the 30 day
trading period preceding the conversion date. At any time, the Company can
redeem shares of Series D, E or F Preferred Stock by giving the preferred
shareholders 30 days
26
<PAGE>
written notice of such intention to redeem at the purchase price of $10 per
share.
The shares of Series D, E and F Preferred Stock do not have voting
rights, unless there is an Event of Default (as defined herein). If the Company
fails to make dividend payments for three quarters, the holders of 60% of the
issued and outstanding Series D, E and F Preferred Stock, respectively, can
declare an event of default by providing the Company with 60 days notice of such
event of default by certified mail. If there is an Event of Default, each share
of Series D, E and F Preferred Stock, respectively, shall have 10 votes which
may be counted toward the election of the Company's Board of Directors. Except
for the forgoing voting rights for directors in the Event of Default, the Series
D, E and F Preferred Stock will not have voting rights or any other corporate
matters.
In the event of the liquidation, dissolution or winding up of the
Company, holders of the Series D, E and F Preferred Stock will be entitled to
receive a liquidating distribution before any distribution or payment may be
made to holders of common stock or any other class of stock ranking junior to
the shares of the Series D Stock. The liquidating distribution will be $10.00
per share. However, the holders of the shares of Series D, E and F Preferred
Stock will not be entitled to receive the liquidation price of such shares until
the liquidation price of any other series or class of the Company's stock
hereafter issued which ranks senior as to liquidation rights ("Senior
Liquidation Stock") of the Series D Preferred Stock has been paid in full (such
as the Series B Preferred Stock.) The Series C, Series D, Series E and Series F
Preferred Shares are in pari passu with respect to liquidation rights.
Stock Options
As of March 31, 2000, we do not have outstanding any options to
purchase shares of our common stock. However, we intend to adopt a stock option
plan for our officers, directors and employees.
Warrants
As of March 31, 2000, we had granted 5,000,000 warrants to certain
investors, at exercise prices ranging from $1.00 per share to $10.00 per share.
Certain Florida Legislation
Florida has enacted legislation that may deter or frustrate takeovers
of Florida corporations. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless such voting rights are approved by a majority or a
corporations disinterested shareholders. The Florida Affiliated Transactions Act
generally requires supermajority approval by disinterested shareholders of
certain specified transactions between a public corporation and holders of more
than 10% of outstanding voting shares of corporation (or their affiliates).
27
<PAGE>
The Company's Articles of Incorporation do not provide for any
additional anti-takeover provisions other than those set forth in the Florida
Business Corporation Act and the ability of the Board of Directors of the
Company to issue, from time to time, one or more series of Preferred stock
without shareholder approval.
Transfer Agent
The Transfer Agent is Interwest Transfer Co., Inc., 1981 East 4800
South, Suite 100, Salt Lake City, Utah 84117. Its telephone number is (801)
272-9294.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRATION'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
Our common stock is traded in the Over-the-Counter Bulletin Board under
the symbol "UVBV." The following table sets forth the high and low bids, as
reported by the National Quotation Bureau, Inc., for our common stock for the
calendar periods indicated. These quotations reflect intermediate prices,
without retail mark-ups, mark-downs or commissions, and may not represent actual
transactions.
<TABLE>
<CAPTION>
High Low
Quarter Ended Bid Bid
------------- --- ---
<S> <C> <C>
June 30,1998 $6.12 $2.50
September 30, 1998 $8.50 $4.75
December 31, 1998 $8.50 $7.37
March 31, 1999 $8.62 $7.50
June 30, 1999 $7.50 $7.50
September 30, 1999 $6.50 $0.50
December 30, 1999 $0.93 $0.12
March 31, 2000 $5.00 $0.19
</TABLE>
As of March 31, 2000, there were approximately 75 holders of record of the
Company's common stock.
Dividend Policy
We have never paid cash dividends on our common stock. We will not be
able to make any dividend payments to our common shareholders unless we have
made dividend payments to our
28
<PAGE>
Series B, Series C, Series D, Series E and Series F Preferred Shareholders. As
of March 31, 2000, we are required to make quarterly dividend payments to these
preferred shareholders in the amount of $55,902.50 and our annual dividend
payments to these preferred shareholders will equal $223,610. At the present
time given our required dividend payments to our preferred shareholders and our
anticipated financial capital requirements for working capital, we do not
anticipate paying any dividends on our common stock.
ITEM 2. LEGAL PROCEEDINGS
The Company is involved from time to time in routine litigation arising
out of the ordinary course of its business, some of which is covered by
insurance. In management's opinion, none of the litigation in which the Company
is currently involved is material to its financial condition or results of
operation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
During the last two fiscal years, the Company has not had any changes
in or disagreements with its accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth the Company's sale of securities during the
last three years, which securities were not registered under the Securities Act
of 1933, as amended (the "Securities Act"). No underwriters were employed with
respect to the sale of any of the securities listed below. All shares were
issued in reliance on Section 4(2) and/or Section 3(b) of the Securities Act.
1. On March 6, 1998, the Company issued 1,724,999 shares in connection
with the acquisition of 1,724,999 shares of Universal Beverages, Inc. The
Company issued the shares to eight former UBI shareholders in reliance upon
Section 4(2) of the Securities Act, because the shareholders were knowledgeable,
sophisticated and had access to comprehensive information about the Company. The
Company placed legends on the certificates stating that the securities were not
registered under the Securities Act and set forth the restrictions on their
transferability and sale.
2. On May 22, 1998, the Company completed the private placement of
490,000 shares of its common stock to five investors at an offering price of
$2.00 per share. The offering and sale of the shares was made in reliance upon
Rule 504 of Regulation D promulgated under the Securities Act of 1933, as
amended. The common stock was only offered and sold to accredited investors or
persons who represented that they had no need for liquidity in their investment
and had adequate financial resources to withstand a total loss of their
investment.
3. On December 3, 1999, the Company issued 35,000 shares of its common
stock in
29
<PAGE>
exchange for consulting services at a price of $.001 per share. The Company
issued the shares to the consultant in reliance upon Section 4(2) of the
Securities Act, because the consultant was knowledgeable, sophisticated and had
access to comprehensive information about the Company. The Company placed
legends on the certificates stating that the securities were not registered
under the Securities Act and set forth the restrictions on their transferability
and sale.
4. On December 3, 1999, the Company issued 770,000 shares of its common
stock to fifteen of its employees for compensation in lieu of cash payments. The
Company issued the shares to its employees in reliance upon Section 4(2) of the
Securities Act, because the employees were knowledgeable, sophisticated and had
access to comprehensive information about the Company. The Company placed
legends on the certificates stating that the securities were not registered
under the Securities Act and set forth the restrictions on their transferability
and sale.
5. On December 3, 1999, the Company issued 750,000 shares of its common
stock to Robert Dolan as part of a loan agreement at a price of $.001 per share.
The Company issued the shares to Mr. Dolan in reliance upon Section 4(2) of the
Securities Act, because Mr. Dolan was knowledgeable, sophisticated and had
access to comprehensive information about the Company. The Company placed
legends on the certificates stating that the securities were not registered
under the Securities Act and set forth the restrictions on their transferability
and sale.
6. On December 3, 1999, the Company issued 750,000 shares of its common
stock as an adjustment to the Stock Purchase Agreement with UBI. The Stock
Purchase Agreement provided that the Company issue options to five shareholders
of UBI. The options were never issued or exercised. To comply with the original
Stock Purchase Agreement these shares have been subsequently issued and the
parties have agreed that the Company is no longer in breach of the original
Stock Purchase Agreement. The Company issued the shares to these persons in
reliance upon Section 4(2) of the Securities Act, because the five shareholders
were knowledgeable, sophisticated and had access to comprehensive information
about the Company. The Company placed legends on the certificates stating that
the securities were not registered under the Securities Act and set forth the
restrictions on their transferability and sale.
7. On February 1, 2000, the Company entered into debt restructuring
agreement with Bridge Bank, Ltd. The Company issued 700,000 shares of its
common stock to Bridge Bank, Ltd. in exchange for the forgiveness of debt in the
amount of $541,000. On the date of the exchange, the fair market value of our
common stock was approximately $.78 per share. The Company issued the shares to
Bridge Bank, Ltd. in reliance upon Section 4(2) of the Securities Act, because
Bridge Bank was knowledgeable, sophisticated and had access to comprehensive
information about the Company. The Company placed legends on the certificates
stating that the securities were not registered under the Securities Act and set
forth the restrictions on their transferability and sale.
8. On March 31, 2000, the Company entered into debt restructuring
agreements with four of its creditors. The Company issued 130,6000 shares of its
Series C Preferred Stock to Capital International, SBIC in exchange for
forgiveness of debt in the amount of $1,306,000 and all accrued interest on the
debt. The Company issued 27,500 shares of its Series D Preferred Stock to Eva
and
30
<PAGE>
Lasse Moe and Roberto and Barbara Rial in exchange for forgiveness of
outstanding debt in the amount of $500,000 plus all accrued interest on the
debt. The Company issued 57,500 shares of its Series E Preferred Stock to
McClean Ventures, Inc. in exchange for forgiveness of $500,000 of debt and
$6,250 in accrued interest. The Company issued 35,000 shares of its Series F
Preferred Stock to Altamonte Capital, Inc. in exchange for forgiveness of debt
in the amount of $300,000.
The Company issued the shares to these four creditors in reliance upon
Section 4(2) of the Securities Act, because these creditors were knowledgeable,
sophisticated and had access to comprehensive information about the Company. The
Company placed legends on the certificates stating that the securities were not
registered under the Securities Act and set forth the restrictions on their
transferability and sale.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation limit, to the maximum extent permitted by
the Florida Business Corporation Act, the personal liability of directors and
officers for monetary damages for breach of their fiduciary duties as directors
and officers (other than liabilities arising from acts or omissions that involve
intentional misconduct, fraud or knowing violations of law or the payment of
distributions in violation of the Florida Business Corporation Act). Our
Articles of Incorporation provide further that our Company shall indemnify, to
the fullest extent permitted by the Florida Business Corporation Act, any person
made a party to an action or proceeding by reason of the fact that such person
was a director, officer, employee or agent of our Company. Subject to our
Articles of Incorporation, the By-laws provide that our Company shall indemnify
directors and officers for all costs reasonably incurred in connection with any
action, suit or proceeding in which such director or officer is finally adjudged
to have been derelict in the performance of his duties as such director or
officer.
Our Company intends to enter into separate indemnification agreements
with its directors and officers containing provisions that provide for the
maximum indemnity allowed to directors and officers under the Florida Business
Corporation Act and our Company, among other obligations, to indemnify such
directors and officers against certain liabilities that may arise by reason of
their status as directors and officers, other than liabilities arising from
willful misconduct of a culpable nature, provided that such person acted in good
faith and in a manner that he or she reasonably believed to be in or not opposed
to the best interest of our Company and, in the case of a criminal proceeding,
had no reasonable cause to believe that his or her conduct was unlawful. In
addition, the indemnification agreements provide generally that our Company
will, subject to certain exceptions, advance the expenses incurred by directors
and officers as result of any proceeding against them as to which they may be
entitled to indemnification. We believe these arrangements are necessary to
attract and retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of our
Company pursuant to the foregoing provisions or otherwise, our Company has been
advised that in the opinion of the Securities and Exchange
31
<PAGE>
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
FINANCIAL STATEMENTS AND EXHIBITS
AUDITED FINANCIAL STATEMENTS FOR December 31, 1999 and 1998
Independent Auditors' Report F-2
Balance Sheet F-3
Statement of Operations F-5
Statements of Change in Stockholders' Equity F-6
Statements of Cash Flows F-7
Notes to Financial Statements F-8
<TABLE>
<CAPTION>
PART III
ITEM 1. INDEX TO EXHIBITS
<S> <C> <C>
2.1 Stock Purchase Agreement between the Company and Universal Beverages, Inc. dated March 6, 1998.
3.1 Articles of Incorporation of the Company filed with the Florida Secretary of State on July 18, 1989
3.2 Amendment to Articles of Incorporation of the Company filed
with the Florida Secretary of State on January 22, 1998.
3.3 Amendment to Articles of Incorporation of the Company filed
with the Florida Secretary of State on February 24, 1998.
3.4 Amended and Restated Articles of Incorporation of the Company
filed with the Florida Secretary of State on March 12, 1998.
3.5 Certificate of Designation, Articles of Amendment of the
Company filed with the Florida Secretary of State on January 6, 1999.
3.6 Articles of Amendment of the Company filed with the Florida Secretary of State on March 31, 2000.
3.7 Bylaws, as amended
10.1 Employment Agreement dated March 6, 1998 between the Company and Jonathon Moore.
10.2 Employment Agreement dated March 6, 1998 between the Company and Cydelle Mendius.
10.3 Employment Agreement dated March 6, 1998 between the Company and Marsha Flaige.
10.4 Lease for the office space in Jacksonville, Florida.
10.5 Deposit Receipt & Purchase and Sale Agreement dated March 30, 2000, by and
between BNS of Central Florida, Ltd. and the Company.
32
<PAGE>
10.6 Addendum to Agreement dated as of March 30, 2000 by and between BNS of
Central, Florida, Ltd. and the Company.
10.7 Lease Agreement dated as of May 1, 1998 between BNS of Central Florida, Ltd. and
the Company relating to the lease of the production plant in Leesburg, Florida
10.8 Lease Extension Agreement dated as of October 8, 2000 between BNS of Central
Florida, Ltd. and the Company.
27.1 Financial Data Schedule for the fiscal year ended December 31, 1999
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Company caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized on this 14th day of April, 2000.
UNIVERSAL BEVERAGES HOLDINGS
CORPORATION
/s/ Jonathon Moore
------------------
Jonathon Moore, Chief Executive Officer
33
<PAGE>
UNIVERSAL BEVERAGES
HOLDINGS CORPORATION
AND SUBSIDIARY
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE NO.
--------
<S> <C>
Independent Auditors' Report F-2
Balance Sheets F-3
Statements of Income F-5
Statements of Changes in Stockholders' Deficit F-6
Statements of Cash Flows F-7
Notes to Financial Statements F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Stockholders
Universal Beverages Holdings Corporation
and Subsidiary
Jacksonville, Florida
We have audited the accompanying balance sheets of Universal Beverages Holdings
Corporation and subsidiary, formerly known as International Bon Voyage, Inc. (a
Florida corporation) as of December 31, 1999 and December 31, 1998 and the
related statements of income, changes in stockholders' deficit, and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our 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 consolidated financial position of Universal
Beverages Holdings Corporation and subsidiary as of December 31, 1999 and
December 31, 1998, and the consolidated results of its operations and its cash
flows for the years then ended in conformity in accordance with generally
accepted accounting principles.
The Company's financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 15 to the financial
statements, the Company's recurring losses from operations, negative working
capital, stockholders' capital deficiency, and defaults under the Company's debt
agreement raise substantial doubt about its ability to continue as a going
concern. Management's plan concerning these matters is also discussed in Note
15.
The financial statements do not include adjustments that might result from the
outcome of this uncertainty; however, if losses from operations continue without
an additional infusion of capital, it would raise substantial doubt about the
Company's ability to continue as a going concern.
/s/ SEWELL AND COMPANY, P.A.
- --------------------------
SEWELL AND COMPANY, P.A.
Hollywood, Florida
January 21, 2000
F-2
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
BALANCE SHEET
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
------------- ---------
<S> <C> <C>
Current Assets:
Cash $ (37,885) $ 83,866
Accounts receivable 169,097 95,673
Inventories 358,159 201,948
Prepaid expenses 70,838 73,827
----------- -----------
Total Current Assets 560,209 455,314
----------- -----------
Property and Equipment 1,849,825 1,394,549
Less Accumulated Depreciation (250,938) (38,438)
----------- -----------
1,598,887 1,356,111
----------- -----------
Other Assets:
Brand name and trademark 708,274 756,196
Deposits 6,000 319,601
Prepaid marketing 0 70,992
Other 846 1,691
----------- -----------
715,120 1,148,480
----------- -----------
$ 2,874,216 $ 2,959,905
=========== ===========
</TABLE>
See auditors' report and notes to financial statements.
F-3
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
BALANCE SHEET
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
1999 1998
------------- ---------
<S> <C> <C>
Current Liabilities:
Notes payable $ 2,276,500 $ 1,312,000
Accounts payable 988,094 387,218
Accrued expenses 145,949 175,722
Accrued interest 436,964 139,167
Deferred compensation 30,500 10,000
----------- -----------
Total Current Liabilities 3,878,007 2,024,107
----------- -----------
Long Term Liabilities:
Notes payable 1,306,000 1,065,000
----------- -----------
Stockholders' Deficit:
Common stock, par value $.001
30,000,000 common shares authorized
4,363,454 and 2,608,454 shares issued
and outstanding 4,363 2,608
Preferred stock, par value $.01; 20,000,000
preferred shares authorized; 85,000 shares
issued and outstanding 85 85
Additional paid-in capital 1,052,557 1,052,557
Retained Deficit (3,366,796) (1,184,452)
----------- -----------
(2,309,791) (129,202)
----------- -----------
$ 2,874,216 $ 2,959,905
=========== ===========
</TABLE>
See auditors' report and notes to financial statements.
F-4
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Sales - Net of Returns $ 2,774,153 $ 2,082,923
Cost of Sales 1,514,101 1,310,033
----------- -----------
Gross Profit 1,260,052 772,890
----------- -----------
Expenses:
General and administrative expenses 1,995,324 929,711
Depreciation and amortization 272,875 20,087
Interest 460,999 121,017
Litigation expenses 713,198 803,532
----------- -----------
3,442,396 1,874,347
----------- -----------
Net Loss $(2,182,344) $(1,101,457)
=========== ===========
Earnings Per Share
Net Loss $ (0.792) $ (0.522)
=========== ===========
</TABLE>
See auditors' report and notes to financial statements.
F-5
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Cash flow from operating activities: 1999 1998
---- ----
<S> <C> <C>
Net Loss ($2,182,344) ($1,101,457)
---------- ----------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 272,875 20,087
(Increase) decrease in accounts receivable (73,424) (95,673)
(Increase) decrease in inventory (156,211) (10,277)
(Increase) decrease in receivable in litigation 358,104
(Increase) decrease in prepaid expenses 2,989 (16,714)
(Increase) decrease in other assets 845 10,406
Increase (decrease) in accounts payable 600,877 122,627
Increase (decrease) in accrued liabilities (9,258) 116,018
Increase (decrease) in accrued interest 297,797 95,777
(Increase) decrease in deposits 313,601 (319,601)
(Increase) decrease in prepaid marketing 70,992 (70,992)
------------ ------------
Total adjustments 1,321,083 209,762
------------ ------------
Net cash used for operating activities (861,261) (891,695)
------------ ------------
Cash flows from investing activities:
Purchase of plant and equipment (455,276) (1,273,360)
Investment in brand and trademark (12,469) (395,489)
------------ ------------
Net cash used for investing activities (467,745) (1,668,849)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 1,755 800,783
Proceeds from issuance of preferred stock 0 72,250
Proceeds from notes payable 1,205,500 1,767,500
------------ ------------
Net cash provided by financing activities 1,207,255 2,640,533
------------ ------------
Net increase (decrease) in cash and cash equivalents (121,751) 79,989
Cash and cash equivalents - Beginning of year 83,866 3,877
------------ -------------
Cash and cash equivalents - End of year $ (37,885) $ 83,866
============ =============
</TABLE>
See auditors' report and notes to financial statements.
F-6
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
Supplemental Disclosures of Cash Flow Information
Shareholders' Equity Note
- -------------------------
On March 6, 1998, the Company issued 1,724,999 share of its common stock in
connection with the acquisition of all the shares of common stock of Universal
Beverages, Inc. for $109,460. The Company acquired assets with a fair market
value of $1,093,642 and assumed liabilities of $984,182.
See auditors' report and notes to financial statements.
F-7
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Universal Beverages Holdings Corporation and subsidiary, (the Company)
formerly known as International Bon Voyage, Inc. is in the business of
manufacturing and distributing the SYFO(R) brand of bottled water as
well as other beverage products under contract. The Company was
incorporated in the State of Florida on July 18, 1989 under the name
International Bon Voyage, Inc. On March 6, 1998 the Company acquired
100% of Universal Beverages, Inc., a Florida corporation (see Note
12), and changed its name to Universal Beverages Holdings Corporation
and subsidiary.
Accounting 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.
Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation of depreciable
assets is computed using the Modified Accelerated Recovery System
(MACRS) for federal and state tax purposes. Major expenditures for
property acquisitions and those expenditures, which substantially
increase the estimated useful lives of the property, are capitalized.
Expenditures for maintenance, repairs, and minor replacements are
charged to expense as incurred. During 1999 and 1998 significant
expenditures were made for improvements to the leased building. These
amounts are being amortized over the life of the lease agreement that
expires in August 2004.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid debt instruments purchased
with an original maturity of three months or less to be cash
equivalents.
Inventories
-----------
Inventories consisting of raw materials, work in process, pallets and
furnished goods are valued at the lower of cost or market. Cost is
determined by the first-in, first-out method (FIFO).
F-8
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Revenue Recognition
-------------------
Revenues are recognized when the products are shipped. Revenue is
reduced for estimated customer returns and allowances.
Accounts Receivable
-------------------
Accounts receivable are stated at the face amount with no allowance
for doubtful accounts. Generally accepted accounting principles
require that the allowance method be used to reflect bad debts. No
provision for doubtful accounts has been made since all receivables
were considered collectible.
Income Taxes
------------
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income
Taxes, which requires companies to use the asset and liability method
of accounting for income taxes.
Concentration of Risk
---------------------
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of balances at
financial institutions.
The Company had deposits with one financial institution amounting to
$(37,885) and $83,866 at December 31, 1999 and 1998, respectively,
which was insured for up to $100,000 by the U.S. Federal Deposit
Insurance Corporation. The Company believes that risks relating to
cash balances are minimized as a result of the size and stature of the
financial institutions in which the Company maintains its account.
Advertising
-----------
Advertising costs are charged to operations when incurred. Advertising
costs during 1999 and 1998 amounted to $32,319 and $1,169,
respectively.
Amortization
------------
Amortization of trademarks, brand names, copyrights and goodwill is
determined utilizing the straight line method based generally on the
estimated useful lives of the intangibles as follows:
Organization expense 5 years
Trademark and brand name 15 years
F-9
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Accounting Pronouncements
-------------------------
In June 1997, the Financial Accounting Standards Board issued
Statement of Accounting Standards No. 131, Disclosures about Segments
of an Enterprise and Related Information (SFAS No. 131) which
established presentation of financial data based on the "management
approach". SFAS No. 131 is applicable for years beginning after
December 15, 1997. For the current fiscal year we are not going to
present segment reporting because it is immaterial.
Basic Loss per Share and Diluted Loss per Share
-----------------------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per
Share (SFAS No. 128), which specifies the computation, presentation
and disclosure requirements for earnings per share. SFAS No. 128
supercedes Accounting Principle Board Opinion No. 15 entitled Earnings
Per Share. Basic earnings per share are computed by dividing income
available to common stockholders (the numerator) by the
weighted-average number of common shares (the denominator) for the
period. The computation of diluted earnings per share is similar to
basic earnings per share, except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potentially dilutive common shares had been issued.
The numerator in calculating basic earnings per share is reported net
loss. The denominator is based on the following weighted-average
number of common shares:
1999 1998
------------ ----------
Basic 2,754,704 2,088,073
The 1,250,000 shares of common stock reserved for the exercise of
warrants are not included in the diluted earnings per share because
the exercise price is above the average market price per share.
Principles of Consolidation
---------------------------
The consolidated financial statements of the Company include those
accounts of Universal Beverages, Inc. All significant intercompany
transactions and balances have been eliminated in the consolidation.
F-10
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 2 CAPITAL STOCK TRANSACTIONS
The Articles of Incorporation provide for the authorization of
30,000,000 shares of common stock at $0.001 par value; and 20,000,000
shares of preferred stock at $0.01.
Common Stock
------------
On March 6, 1998 the Company issued 1,724,999 shares with the
acquisition of Universal Beverages, Inc.
On May 11, 1998, the Company, according to a private placement
offering, completed a sale of 485,000 shares of common stock at a
price of $2.00 per share.
Dividends for preferred stock were declared for the year ended
December 31, 1998 in the amount of 1,516 shares of common stock, and
$15 cash payments. No dividends were declared in 1999.
On December 3, 1999 the Company issued 35,000 shares of common stock
in exchange for consulting services at a price of $.001 per share.
On December 3, 1999 the Company issued 770,000 shares of common stock
to employees for compensation in lieu of cash payments.
On December 3, 1999 the Company issued 200,000 shares of common stock
to Robert Dolan as part of the loan agreement at a price of $.001 per
share.
On December 3, 1999 the Company issued 750,000 shares of common stock
as an adjustment to the acquisition agreement with Universal
Beverages, Inc. at a price of $.001 per share.
Preferred Stock
---------------
On October 31, 1998 the Company, according to a private placement
offering, completed a sale of 8,500 shares of preferred stock at a
price of $10 per share. The shares of preferred stock offered were of
Series A Convertible 10% Preferred Stock.
F-11
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 2 CAPITAL STOCK TRANSACTIONS - continued
The total shares at December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Common stock - issued &
outstanding ($.001 par value) 4,363,454 2,608,454
Preferred stock - issued &
outstanding ($.01 par value) 8,500 8,500
</TABLE>
NOTE 3 INVENTORY
At December 31, 1999 and 1998, inventory consisted of the
following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Finished goods $ 104,969 $ 55,619
Raw materials 167,624 116,463
Pallets 19,409 12,866
Work in Process 66,157 17,000
---------- ------------
$ 358,159 $ 201,948
========== ============
</TABLE>
NOTE 4 PROPERTY AND EQUIPMENT DEPRECIATION
Property and equipment at December 31, 1999 and 1998 consisted of
the following:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Production equipment $1,233,003 $ 964,881
Plant improvements 595,870 415,021
Office equipment 20,952 14,647
------------ ------------
1,849,825 1,394,549
Less accumulated depreciation (250,938) (38,438)
------------ ------------
$1,598,887 $1,356,111
============ ============
</TABLE>
F-12
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 4 PROPERTY AND EQUIPMENT DEPRECIATION - continued
Depreciation expense for the years ended December 31, 1999 and
1998 was $212,500 and $19,524, respectively.
NOTE 5 INTANGIBLE ASSETS
At December 31, 1999 and 1998, intangible assets were:
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Brand name and trademark $758,804 $756,196
Organization cost 2,817 2,817
Deferred loan cost 65,000 65,000
---------- ----------
826,621 824,013
Less accumulated amortization (61,502) (1,127)
---------- ----------
$765,119 $822,886
========== ==========
</TABLE>
Amortization expenses for the years ended December 31, 1999 and
1998 was $60,375 and $563, respectively.
NOTE 6 INCOME TAXES
The Company has a federal net operating loss carryforward for the
years ended December 31, 1999 and 1998 of $2,182,344 and $1,101,457,
respectively, of which $2,182,344 expires in 2019, and $1,101,457
expires in 2018.
F-13
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 7 LEASES
The Company rents office space in Jacksonville, Florida for $2,417
plus tax per month, which expires on May 31, 2000. The Company also
leases the manufacturing plant in Leesburg, Florida for $16,133 per
month plus tax. The revised lease agreement expires on August 31,
2004, and reflects a new monthly payment amount of $18,758.96 for the
year 2000 and increases in 4% increments each year thereafter. Real
estate taxes are approximately $20,000 per annum.
Rental expense for the years ended December 31, 1999 and 1998 was
$238,204 and $136,252, respectively. Future anticipated minimum annual
rental expenses for subsequent years are as follows:
Years Ended Amount
----------- ------
2000 $ 252,610
2001 249,329
2002 259,302
2003 269,674
2004 186,974
-----------
$1,217,889
===========
NOTE 8 EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with its top
three officers, commencing on May 6, 1998 and expiring on May 5,
2001.
<TABLE>
<CAPTION>
<S> <C>
Chairman, Chief Executive Officer $ 60,000 per annum
President, Chief Operating Officer $ 80,000 per annum
Vice President Finance $ 60,000 per annum
</TABLE>
F-14
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 9 NOTES PAYABLE
The Company has outstanding notes payable at December 31, 1999 and
1998 as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Note payable to Bridge Bank with an
interest rate of 15% per year; unsecured,
due on demand. $ 541,500 $ 134,000
Note payable to American Access with
an interest rate of 15% per year; unsecured,
due on demand 500,000 500,000
Note payable to Rial/Moe with an interest
rate of 15% per annum; secured by
production equipment; due on demand 500,000 500,000
Note payable to various shareholders at a
15% interest rate per year; due on demand;
secured by all assets of Company. 185,000 140,000
Note payable to Altamonte Capital with a
15% interest rate; due on demand; secured 300,000 0
Note payable to Telcoa with a 15% interest
rate per year; due on August 31, 2000 250,000 0
Note payable to American Container; due on
demand; unsecured; no interest 0 38,000
14% note payable to an investment company; secured by a
blanket lien on assets; payable interest only through
11/4/03,and 36 equal payments of principal plus interest
beginning 11/5/03. The note also includes a prepayment
penalty clause. 1,306,000 1,065,000
----------- -----------
3,582,500 2,377,000
Less current portion (2,276,500) (1,312,000)
----------- -----------
$1,306,000 $1,065,000
=========== ===========
</TABLE>
F-15
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 9 NOTES PAYABLE - continued
The amount of interest accrued but unpaid as of December 31, 1999 and
1998 was $436,964 and $139,167, respectively.
NOTE 10 RELATED PARTY TRANSACTIONS
On July 2, 1998, the Company purchased a Promissory note dated January
15, 1996 in the original amount of $112,086 made by Best Day Company,
fka Syfo Water Company, Inc., an unrelated third party. As part of
that transaction, Union Planters Bank assigned all of its rights under
a security agreement and guarantee securing the indebtedness. Pursuant
to the agreement Best Day Co. granted a security interest in its
inventory, accounts receivable, contract rights, general intangibles,
furniture, fixtures, and equipment. The purchase price was $90,000.
Syfo Beverage Company of Florida, Inc. had an exclusive franchise and
bottling contract for the Syfo brand of products with Best Day
Company.
The officers and directors of Syfo Beverage Company of Florida, Inc.
own 14.6% of the outstanding common stock of the Company at December
31, 1998. In conjunction with the above transaction the Company
exchanged the $660,000 unsecured debt owed by Syfo Beverage Company of
Florida, Inc. in consideration of the termination of its exclusive
franchise and bottling contract for the Syfo brand of products.
An independent appraiser has valued the Brand Name and Trademark at a
minimum of $540,000.
Sales of Syfo products amounted to approximately $2,204,514 during
1998. Note the first six months the Company was contract packing for
Syfo Beverage Company of Florida.
NOTE 11 UNCERTAINTY DUE TO YEAR 2000 ISSUE
The Year 2000 issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 and 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in some systems, which use
certain dates in 1999 to represent something other than a date.
F-16
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 11 UNCERTAINTY DUE TO YEAR 2000 ISSUE - continued
The effects of the Year 2000 issue may be experienced before, on, or
after January 1, 2000, and if not addressed, the impact on operations
and financial reporting may range from minor errors in significant
systems failure, which could affect an entity's ability to conduct
normal business operations. It is not possible to be certain that all
aspects of the Year 2000 issues affecting the entity, including those
related to the efforts of customers, suppliers, or third parties will
be fully resolved.
NOTE 12 MERGER
On March 6, 1998, Universal Beverage Holdings Corporation merged with
Universal Beverage, Inc., a Florida corporation. The combination was
accounted for as a pooling of interest under which net assets of both
foundations were combined at book value and neither recognized a gain
or loss. The merger shall qualify as a tax-free reorganization under
Section 386(a)(1)(B) of the Internal Revenue Code of 1986, as amended
("The Code").
NOTE 13 LITIGATION
The Company was involved in several lawsuits at December 31, 1999. The
ultimate outcome of this litigation is unknown at this time and
attorneys for the Company could not determine liability. However,
$107,375 has been accrued by the Company for litigation and
contingencies.
NOTE 14 SUBSEQUENT EVENTS
On January 11, 2000 the Company obtained a loan for working capital
from Telcoa International, Corp. for $100,000 with an interest rate of
10% for 90 days, renewable up to 3 times.
F-17
<PAGE>
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 15 GOING CONCERN
These financial statements are presented on the basis that the Company
is a going concern. For the years ended December 31, 1999 and 1998,
the Company showed operating losses of $2,182,344 and $1,101,457,
respectively. The accompanying financial statements indicate that
current liabilities exceed current assets by $3,317,798 and $1,568,792
for the years ended December 31, 1999 and 1998.
The Company is in default for payments on short-term loans in the
amount of $2,026,500 and $1,185,000, respectively. The accrued
interest on these loans amounted to $436,964 for 1999 and $139,167 for
1998. Currently, the Company is involved in a lawsuit relating to this
matter which includes two loans of $250,000 each. The outcome is still
pending.
Management's plan concerning this matter includes debt conversion to
common stock and/or preferred stock in the amounts of $2,847,500 at
December 31, 1999. At the date of this report, the conversion is still
in the negotiation stage. The Company also entered into a distribution
agreement with Wal-Mart. At the date of this report, a vendor number
has been assigned. Management also plans a private offering to raise
working capital (See Note 15). In addition, Management has secured a
long-term contract to provide bottled water for FEMA (Federal
Emergency Management Association) to be distributed for any and all
disasters, in which this agency is involved. The Company has also been
selected by the National Football League Franchise, Jacksonville
Jaguars, to retain the "pouring rights" to their stadium in
Jacksonville, Florida.
F-18
<TABLE>
<CAPTION>
<PAGE>
INDEX TO EXHIBITS
-----------------
<S> <C> <C>
2.1 Stock Purchase Agreement between the Company and Universal Beverages, Inc. dated March 6, 1998.
3.1 Articles of Incorporation of the Company filed with the Florida Secretary of State on July 18, 1989
3.2 Amendment to Articles of Incorporation of the Company filed
with the Florida Secretary of State on January 22, 1998.
3.3 Amendment to Articles of Incorporation of the Company filed
with the Florida Secretary of State on February 24, 1998.
3.4 Amended and Restated Articles of Incorporation of the Company
filed with the Florida Secretary of State on March 12, 1998.
3.5 Certificate of Designation, Articles of Amendment of the
Company filed with the Florida Secretary of State on January 6, 1999.
3.6 Articles of Amendment of the Company filed with the Florida Secretary of State on March 31, 2000.
3.7 Bylaws, as amended
10.1 Employment Agreement dated March 6, 1998 between the Company and Jonathon Moore.
10.2 Employment Agreement dated March 6, 1998 between the Company and Cydelle Mendius.
10.3 Employment Agreement dated March 6, 1998 between the Company and Marsha Flaige.
10.4 Lease for the office space in Jacksonville, Florida.
10.5 Deposit Receipt & Purchase and Sale Agreement dated March 30, 2000, by and
between BNS of Central Florida, Ltd. and the Company.
10.6 Addendum to Agreement dated as of March 30, 2000 by and between BNS of
Central, Florida, Ltd. and the Company.
10.7 Lease Agreement dated as of May 1, 1998 between BNS of Central Florida, Ltd. and
the Company relating to the lease of the production plant in Leesburg, Florida
10.8 Lease Extension Agreement dated as of October 8, 2000 between BNS of Central
Florida, Ltd. and the Company.
27.1 Financial Data Schedule for the fiscal year ended December 31, 1999
</TABLE>
INTERNATIONAL BON VOYAGE, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of this 6th day of March, 1998, by and among the shareholders of
UNIVERSAL BEVERAGES, INC., a Florida corporation, listed on the signature pages
hereto ("Sellers"), and INTERNATIONAL BON VOYAGE, INC., a Florida corporation,
t/b/k/a UNIVERSAL BEVERAGES HOLDINGS CORP. ("Purchaser").
RECITALS:
The Purchaser wishes to buy, and the Sellers wish to sell, subject to
the provisions of this Agreement, 1,724,999 shares of common stock of Universal
Beverages, Inc. (the "Company"), which represents all of the outstanding capital
stock of the Company.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained herein, the parties agree as follows:
1. Sales of Share . The Purchaser agrees to acquire from the Sellers
and the Sellers agree io sell to the Purchaser, on the date hereof, an aggregate
of 1,724,999 shares of common stock of the Company (the "Company Shares") in
exchange for an aggregate of 1,724,999 shares of newly issued common stock of
the Purchaser (the "UBH Shares"), representing 83.94% of the outstanding common
stock of the Purchaser.
2. Closing. The closing of the sale of the Company Shares shall be held
on the date hereof (the "Closing").
2.1 Deliveries by the Sellers. At the Closing, the Sellers
shall deliver or cause to be delivered to the Purchaser:
(a) certificates representing the Company Shares duly
endorsed for transfer and conveyance to the Purchaser;
(b) the corporate records, including the charter
documents, minutes of meetings and actions of the board of directors and minutes
of meetings and actions of the stockholders, the corporate seal and all books of
accounts of the Company.
2.2 Deliveries by the Purchaser. At the Closing, the Purchaser
shall deliver or cause to be delivered to the Company:
(a) certificates representing the UBH Shares in such
names and denominations as requested by the Sellers;
1
<PAGE>
(b) a corporate resolution of the Board of Directors
of the Purchaser approving the transactions contemplated by this Agreement;
(c) employment agreements, executed by the Purchaser,
between the Purchaser and each of Cydelle Mendius, Marsha Flaige and Jonathon 0.
Moore, for three-year terms;
(d) stock option agreements between the Company and
each of the following persons granting them stock options in the amounts and in
the years noted below:
(i) Cydelle Mendius to be granted options
for 200,000 shares of common stock of UBH Shares, of which options for 100,000
shares vest immediately and expire not earlier than 5 years from the date
hereof, at an exercise price per share not to exceed fair market value on the
date of vesting, and 100,000 shares vest January 1, 1999 and expire not earlier
than 5 years from the date of vesting, at an exercise price per share not to
exceed fair market value on the date of vesting.
(ii) Jonathon 0. Moore to be granted options
for 200,000 shares of common stock of UBH Shares, of which options for 100,000
shares vest immediately and expire not earlier than 5 years from the date
hereof, at an exercise price per share not to exceed fair market value, and
100,000 shares vest on January 1, 1999 and expire not earlier than 5 years from
date of vesting, at an exercise price per share not to exceed fair market value.
(iii) Jay D. Marsh to be granted options for
50,000 shares of common stock of UBH Shares, vesting immediately and expiring
not earlier than 5 years from the date hereof, at an exercise price per share
not to exceed fair market value.
(iv) Jack Cooney to be granted options for
50,000 shares of common stock of UBH Shares, vesting immediately and expiring
not earlier than 5 years from the date hereof, at an exercise price per share
not to exceed fair market value.
(v) Marsha Flaige to be granted options for
50,000 shares of common stock of UBH Shares, vesting immediately and expiring
not earlier than 5 years from the date hereof, at an exercise price per share
not to exceed fair market value.
(e) appropriate executed documents to be filed with
the Florida Department of State changing the name of the Purchaser to Universal
Beverages Holdings Corp.; and
(f) an agreement executed by the principal
shareholder of Purchaser agreeing to vote his shares in favor of the election of
Sellers' four nominees to the Purchaser's board of directors and an agreement
not to increase the size of Purchaser's board of directors without the consent
of the holders of a majority of the Purchaser's shares held by Sellers.
3. Representations and Warranties of the Seller. The Sellers hereby
represent and warrant to the Purchaser as follows:
2
<PAGE>
3.1 Organization, Qualification.
---------------------------
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
The Company has all requisite corporate power and authority to carry on business
as now being conducted. The Company has no assets, offices or operations located
in any place other than within the State of Florida.
(b) The Sellers have delivered to the Purchaser
complete and accurate copies of the Company's Articles of Incorporation and
Bylaws, each as amended to date, minutes of all its directors' and shareholders'
meetings, and a shareholder list correctly setting forth the record ownership as
of the date of this Agreement of all outstanding shares and all outstanding
rights to purchase or convert into shares of the stock of the Company.
3.2 Capitalization. As of the Closing date, the Company shall
have authorized capital stock of 100,000,000 shares of common stock, $0.01 par
value, of which shares will be issued and outstanding. All such outstanding
shares of capital stock have been duly authorized, and such outstanding shares
are validly issued, fully paid and nonassessable and are not subject to
preemptive rights created by statute, the Articles of Incorporation or Bylaws of
the Company or any agreement to which the Company is a party or by which it is
bound. As of the Closing date, there will be no outstanding rights, war-rants,
options, agreements or commitments giving anyone any right to require the
Company to sell or issue any capital stock or other securities.
3.3 Authority to Enter into Agreement. The Sellers have full
power to execute and deliver this Agreement and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
executed and delivered by the Sellers. This Agreement constitutes the valid and
binding agreement of the Sellers, enforceable against the Sellers in accordance
with its terms except to the extent such enforceability may be limited by
applicable bankruptcy, creditors' rights or similar laws.
3.4 Approvals; No Violation. There is no requirement
applicable to the Sellers to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
as a condition to the lawful consummation by the Sellers of the transactions
contemplated by this Agreement, Neither the execution and delivery of this
Agreement by the Sellers nor the consummation by the Sellers of the transactions
contemplated by this Agreement will conflict with or result in any breach of any
provision of the Articles of Incorporation or Bylaws of the Sellers or any
contact, instrument or obligation to which any of the Sellers is a party or by
which the Sellers or any of their respective assets are bound.
3.5 Ownership of Company Shares. The Sellers own the Company
Shares beneficially and of record free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, liabilities, debts or other defects
in title of any kind or nature.
4. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Sellers as follows:
3
<PAGE>
4.1 Organization, Qualification.
---------------------------
(a) The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
the Purchaser has all requisite corporate power and authority to carry on its
business as now being conducted. The Purchaser has no assets, offices or
operations located in any place other than within the State of Florida.
(b) The Purchaser has delivered to the Sellers
complete and accurate copies of its Articles of Incorporation and Bylaws, each
as amended to date, minutes of all its directors' and shareholders' meetings,
and a shareholder list correctly setting forth the record ownership as of the
date of this Agreement of all outstanding shares and all outstanding rights to
purchase or convert into shares of the stock of the Company.
4.2 Capitalization. As of the Closing date, the Purchaser
shall have authorized capital stock of 30,000,000 shares of common stock, $.01
par value, of which 1,724,999 shares will be issued and outstanding as of such
date. All such outstanding shares and the UBH Shares of capital stock to be
issued at Closing, have been duly authorized, and such outstanding shares are
and, upon issuance, the UBH Shares will be, validly issued, fully paid and
nonassessable and are not and will not be subject to preemptive rights created
by statute, the Articles of Incorporation or Bylaws of the Purchaser or any
agreement to which the Purchaser is a party or by which it is bound. Except as
set forth in Section 2, as of the Closing date, there will be no outstanding
rights, warrants, options, agreements or commitments giving anyone any right to
require the Purchaser to sell or issue any capital stock or other securities.
4.3 Authority to Enter into Agreement. The Purchaser has full
corporate power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of
Purchaser, and no other corporate proceedings on the part of the Purchaser are
necessary for the Purchaser to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Purchaser. This Agreement constitutes the valid
and binding agreement of the Purchaser, enforceable against the Purchaser in
accordance with its terms except to the extent such enforceability may be
limited by applicable bankruptcy, creditors' rights or similar laws.
4.4 Approvals: No Violation. There is no requirement
applicable to the Purchaser to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
as a condition to the lawful consummation by the Purchaser of the transactions
contemplated by this Agreement. Neither the execution and delivery of this
Agreement by the Purchaser nor the consummation by the Purchaser of the
transactions contemplated by this Agreement will conflict with or result in any
breach of any provision of the Articles of Incorporation or Bylaws of the
Purchaser or any contract, instrument or obligation to which the Purchaser is a
party or by which the Purchaser or any of its assets are bound.
5. Opinions of Counsel. At or before the Closing:
-------------------
4
<PAGE>
5.1 Purchasers shall have received an opinion of counsel for
the Company, dated as of the Closing, to the effect that:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
and has the corporate power and authority to own its properties and to carry on
its business as now being conducted. To the knowledge of such counsel, the
Company is duly qualified and in good standing as a foreign corporation in each
state in which it does business, except where the failure to so qualify would
not have a materially adverse effect on its business or assets, and
(b) No consents, authorizations or approvals, whether
of the Company (other than the approvals provided for herein), governmental
agencies or instrumentalities or otherwise, are necessary in order to enable the
Company to enter into and perform this Agreement. This Agreement constitutes
legal, valid and binding obligations of the Company and is enforceable against
the Company in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting enforcement of creditors' rights generally or by principles
governing the availability of equitable remedies; and
(c) 50,000 shares of the common stock of the Company
held by unaffiliated shareholders are freely tradable under Section 4 and under
Rule 144 of the Securities Act of 1933.
6. Brokers and Finders. Neither the Sellers nor the Purchaser has
employed any broker or finder in connection with the transactions contemplated
hereby, nor has incurred any liability for any brokerage or finders' fees or
commissions in connection with the transactions contemplated hereby Both the
Purchaser and the Sellers each hold the other harmless from any obligation for
the payment of any finders fees or commissions in connection with the
transactions contemplated by this Agreement as a result of any action of the
other party.
7. Disclosure. Neither this Agreement nor any certificate, schedule,
exhibit or document furnished to the Sellers by or on behalf of the Purchaser or
furnished to the Purchaser by or on behalf of the Sellers in connection with
this Agreement and the transactions contemplated hereby contains any material
untrue statement of fact or omits any material required to be stated in order to
make the statements contained herein and therein not misleading.
8. Survival of Representations and Warranties. All representations and
warranties made by either the Sellers or the Purchaser herein or contained in
any certificate, schedule or exhibit furnished pursuant hereto shall survive the
Closing hereunder.
9. Publicity. Except as required by law, by the regulations of the
Securities Exchange Commission, the National Association of Securities Dealers,
Inc., or order of court, none of the parties hereto shall issue any press
release or make any other public statement or disclosure, relating to or
connected with this Agreement or the matters contemplated herein without
obtaining the prior approval of Purchaser to the contents and manner of
presentation and publication thereof.
5
<PAGE>
10. Notices. All notices, requests, demands, and other communications
required hereunder shall be in writing and shall be deemed to have been duly
given if delivered in person, by reliable overnight courier, or by registered or
certified mail, postage prepaid as follows:
(a) If to the Purchaser: Isabel J. Cantera
International Bon Voyage, Inc.
7695 S.W. 104th Street, Suite 210
Miami, Florida 33156
With a copy to: Eric P. Littman, Esq,
7695 S.W. 104th Street, Suite 210
Miami, Florida 33156
(b) If to the Sellers: Mr. Jonathan Moore
Universal Beverages, Inc.
7563 Philips Highway, Suite 110
Jacksonville, Florida 32256
With a copy to: Stewart A. Merkin, Esq.
Merkin & Iglesas, P.A.
444 Brickell Avenue, Suite 300
Miami, Florida 33131
Notice given by mail as set forth above shall be deemed
delivered at the time and on the date the same is postmarked.
11. Miscellaneous.
-------------
11.1 Other Documents. The Sellers and the Purchaser shall, at
any time after the Closing upon the request of the other party, execute and
deliver to the other party such documents or instruments of conveyance, license
or assignment or take such other action as is reasonably necessary to complete
the transfer of the Company Shares or the UBH Shares, as the case may be, or
ocher transactions contemplated by this Agreement or to perfect the interest of
the Sellers or the Purchaser therein. Further, the parties agree to take all
actions and file such documents required to comply with Florida law, including
the filing of any notices.
11.2 Costs. Each party hereto shall bear the costs of their
respective counsel and all other legal fees and costs related thereto.
11.3 Invalidity, Modification and Waiver. If any provision of
this Agreement shall be held to be invalid or void, the remaining provisions
shall nevertheless remain in effect. No provision of this Agreement may be
modified and the performance or observance thereof may not be waived except by
written agreement of the parties affected thereby. No waiver of any violation
6
<PAGE>
or nonperformance of any provision of this Agreement shall be deemed to be a
waiver of any subsequent violation or nonperformance of the same or any other
provision of this Agreement.
11.4 Disputes, Choice of Law. This Agreement, the performance
of the parties hereunder and any disputes related hereto shall be governed by
the laws of the state of Florida and subject to the exclusive jurisdiction of
the state and federal courts located in Miami-Dade County, Florida. If either
party shall initiate a legal proceeding to enforce its fights hereunder, the
prevailing party in such legal proceedings shall be entitled to recover from the
other party all costs, expenses arid reasonable attorney's fees incurred in
connection with such proceedings.
11.5 Entire Agreement. This Agreement is and represents the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes any prior or contemporaneous discussions or agreements
related thereto.
11.6 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be originals and together shall constitute
a single agreement,
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized representative as of the date first
written above.
PURCHASER:
INTERNATIONAL BON VOYAGE, INC.,
t/b/k/a UNIVERSAL BEVERAGES
HOLDINGS CORP.
By: /s/ Isabula J. Lantera
----------------------------
Isabula J. Lantera, President
By: /s/ Isabula J. Lantera
----------------------------
Isabula J. Lantera, Secretary
SELLERS:
/s/ Lydelle Mendias
--------------------------
Cydelle Mendius
/s/ Jay D. Marsh
--------------------------
Jay D. Marsh
/s/ Earl T. Smith
--------------------------
Earl T. Smith
/s/ Gary L. Pridgen
--------------------------
Gary L. Pridgen
7
<PAGE>
/s/ Jack Cooney
--------------------------
Jack Cooney
Bridge Bank Ltd.
By: /s/ Victor Klingelhofer
--------------------------
Name:
8
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
INTERNATIONAL BON VOYAGE, INC.
The undersigned subscriber to these Articles of Incorporation, a
natural person competent to contract, hereby forms a corporation under the laws
of the State of Florida.
ARTICLE I
NAME
The name of this corporation is INTERNATIONAL BON VOYAGE, INC.
ARTICLE II
NATURE OF THE BUSINESS
This corporation shall have the power to train act or engage in any
business permitted under the laws of the United States and of the State of
Florida.
ARTICLE III
AUTHORIZED SHARES
The capital stock of this corporation shall consist of 1,000,000 shares
of common stock having a par value of $.01 per share and 500,000 shares of
Preferred Stock, $.01 par value per share.
The Preferred Stock may be issued from time to time, with such
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, qualifications, limitations,
restrictions thereof as shall be stated and expressed in the resolution or
resolutions provided for the issuance of such Preferred Stock adopted by the
Board of Directors pursuant to the authority in this paragraph given.
<PAGE>
ARTICLE IV
INITIAL CAPITAL
The amount of capital with which this corporation shall commence
business shall be not less than One Hundred ($100.00) Dollars.
ARTICLE V
TERM OF EXISTENCE
This corporation shall have perpetual existence.
ARTICLE VI
INITIAL ADDRESS
The initial address of the principal place of business of this
corporation in the State of Florida shall be 4815 N.W. 79th Avenue, Miami, FL
33166. The Board of Directors may at any time and from time to time move the
principal office of this corporation to any location within or without the State
of Florida.
ARTICLE VII
DIRECTORS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By Laws. The number of persons constituting the initial
Board of Directors shall be 1.
ARTICLE VIII
INITIAL DIRECTORS
The names and addresses of the initial Board of Directors are as
follows:
Bob Collin
4815-2 N.W. 79th Avenue
2
<PAGE>
Miami, FL 33166
ARTICLE IX
SUBSCRIBER
The name and address of the person signing these Articles of
Incorporation as subscriber is:
Eric P. Littman
1428 Brickell Avenue
Suite 202
Miami, FL 33131
ARTICLE X
VOTING FOR DIRECTORS
The Board of Directors shall be elected by the Stockholders of the
corporation at such time and in such manner as provided in the By Laws.
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any
person, firm or corporation shall be affected by the fact that any officer or
director of this corporation is such other party or is, or at some time in the
future becomes, an officer, director or partner of such other contracting party,
or has now or hereafter a director or indirect interest in such contract.
ARTICLE XII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
This corporation shall have the power, in its By Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
3
<PAGE>
ARTICLE XIII
RESIDENT AGENT
The name and address of the initial resident of this corporation is:
Eric P. Littman
1428 Brickell Avenue
Suite 202
Miami, FL 33131
IN WITNESS WHEREOF, I have hereunto subscribed to and executed these
Articles of Incorporation this 12th day July, 1989.
/s/ Eric P. Littman
-------------------
Eric P. Littman
Subscribed and Sworn this
12 day of July, 1989
Before me:
/s/ Isabel J. Cantira
- ---------------------
Notary Public
4
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR
DOMICILE FOR SERVICE OF PROCESS WITHIN THIS STATE
NAMING THE AGENT UPON WHOM PROCESS MAY BE SERVED
In pursuance of Chapter 48.091 of the Florida Statutes, the following
is submitted:
INTERNATIONAL BON VOYAGE, INC. desiring to organize a corporation under
the laws of the State of Florida with its principal place of business as stated
in its Articles of Incorporation has named Eric P. Littman located at Suite 202,
1428 Brickell Avenue, Miami, FL 33131 as its agent upon whom process may be
served within this state.
Having been named to accept service of process for the above stated
corporation, I hereby accept to act in this capacity and to comply with the
provisions of the Act relative to keeping open said office.
/s/ Eric P. Littman
-------------------
Eric P. Littman
5
ARTICLES OF AMENDMENT TO
INTERNATIONAL BON VOYAGE, INC.
THE UNDERSIGNED, being the sole director and president of INTERNATIONAL
BON VOYAGE, INC., does hereby amend the Articles of Incorporation of
INTERNATIONAL BON VOYAGE, INC. as follows:
ARTICLE I
CORPORATE NAME
The name of the Corporation is INTERNATIONAL BON VOYAGE, INC.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the state of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000
shares of common stock, $.001 par value.
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this corporation in
the State of Florida shall be 7695 S.W. 104th Street, Suite 210, Miami, FL
33156. The Board of Directors may at any time and from time to time move the
principal office of this corporation.
1
<PAGE>
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other
securities of the Corporation except to the extent such right may be granted by
an amendment to these Articles of Incorporation or by a resolution of the board
of Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repealed by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1. Inspection of Books. The board of directors shall make reasonable
rules to determine at what times and places and under what conditions the books
of the Corporation shall be open to inspection by shareholders or a duly
appointed representative of a shareholder.
9.2. Control Share Acquisition. The provisions relating to any control
share acquisition as contained in Florida Statutes now, or hereinafter amended,
and any successor provision shall not apply to the Corporation.
9.3. Quorum. The holders of shares entitled to one-third of the votes
at a meeting of shareholder's shall constitute a quorum.
9.4. Required Vote. Acts of shareholders shall require the approval of
holders of 50.01% of the outstanding votes of shareholders.
2
<PAGE>
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any
person, firm or corporation shall be affected by the fact that any officer or
director of this corporation is such other party or is, or at some time in the
future becomes, an officer, director or partner of such other contracting party,
or has now or hereafter a direct or indirect interest in such contract.
I hereby certify that the following was adopted by a majority vote of
the shareholders and directors of the corporation on January 13,1998 and that
the number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation this on 13th day of January, 1998.
/s/ Robert Collins
- ------------------
Bob Collins, Sole Director
The foregoing instrument was acknowledged before me on January 13,
1998, by Bob Collins, who is personally known to me.
/s/ Vivian Rodriguez
--------------------
Notary Public
My commission expires: 10/3/98
3
AMENDMENT TO
ARTICLES OF INCORPORATION
OF
INTERNATIONAL BON VOYAGE, INC.
THE UNDERSIGNED, being the sole director of INTERNATIONAL BON VOYAGE,
INC., does hereby amend the Articles of Incorporation of the Company as follows:
ARTICLE I
NAME
The name of this corporation shall be INTERNATIONAL BON VOYAGE, INC.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the state of Florida.
ARTICLE III
EFFECTIVE DATE AND PERIOD OF EXISTENCE
This amendment shall be effective as of February 16,1998 period during
which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000
shares of common stock, $.001 par value.
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this corporation in
the State of Florida shall be 7695 S.W. 104th Street, Suite 210, Miami, FL
33156. The Board of Directors may at any time and from time to time move the
principal office of this corporation.
1
<PAGE>
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other
securities of the Corporation except to the extent such right may be granted by
an amendment to these Articles of Incorporation or by a resolution of the board
of Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repealed by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1 Inspection of Books. The board of directors -shall make reasonable
rules to determine at what times and places and under what conditions the books
of the Corporation shall be open to inspection by shareholders or a duly
appointed representative of a shareholder.
9.2 Control Share Acquisition. The provisions relating to any control
share acquisition as contained in Florida Statutes now, or hereinafter amended,
and any successor provision shall not apply to the Corporation.
9.3 Quorum. The holders of shares entitled to one-third of the votes at
a meeting of shareholder's shall constitute a quorum.
9.4 Required Vote. Acts of shareholders shall require the approval of
holders of 50.01 % of the outstanding votes of shareholders.
2
<PAGE>
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any
person, firm or corporation shall be affected by the fact that any officer or
director of this corporation is such other party or is, or at some time in the
future becomes, an officer, director or partner of such other contracting party,
or has now or hereafter a direct or indirect interest in such contract.
I hereby certify that the following was adopted by a majority vote of
the shareholders and directors of the corporation on October 14, 1997 and that
the number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation on February 23, 1998.
/s/ Isabel J. Cantera
Isabel J. Cantera, President
The foregoing instrument was acknowledged before me on February 23,
1998 by Isabel J. Cantera, who is personally known to me, or who has produced as
identification.
/s/ Eric P. Littman
-------------------
Notary Public
My commission expires: March 29, 2000
3
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
INTERNATIONAL BON VOYAGE, INC.
Pursuant to the provisions of Section 607.1006 of the Florida Business
Corporation Act (the "Act"), the undersigned corporation hereby amends and
restates its Articles of Incorporation.
ARTICLE I
The name of this corporation shall be:
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
The principal office of the corporation is located at:
7563 Philips Highway, Suite 110
Jacksonville, Florida 32256
ARTICLE II
This corporation may engage in any activity or business permitted under
the laws of the State of Florida, and shall enjoy all the rights and privileges
of a corporation granted by the laws of the State of Florida.
ARTICLE III
The aggregate number of shares of all classes of capital stock which
this corporation shall have authority to issue is Fifty Million (50,000,000),
consisting of (i) Thirty Million (30,000,000) shares of common stock, par value
$.001 per share (the "Common Stock"), and (ii) Twenty Million (20,000,000)
shares of preferred stock, par value $.01 per share (the "Preferred Stock").
The designations and the preferences, limitations and relative rights
of the Preferred Stock and the Common Stock of the corporation are as follows:
A. Provisions Relating to the Preferred Stock.
------------------------------------------
1. The Preferred Stock may be issued from time to time in one
or more classes or series, the shares of each class or series to have such
designations and powers, preferences and
1
<PAGE>
rights, and qualifications, limitations and restrictions thereof as are stated
and expressed herein and in the resolution or resolutions providing for the
issuance of such class or series adopted by the Board of Directors as
hereinafter prescribed.
2. Authority is hereby expressly granted to and vested in the
Board of Directors to authorize the issuance of the Preferred Stock from time to
time in one or more classes or series, to determine and take necessary
proceedings fully to effect the issuance and redemption of any such Preferred
Stock, and, with respect to each class or series of Preferred Stock, to fix and
state by the resolution or resolutions from time to time adopted providing for
the issuance thereof the following:
a. whether or not the class or series is to have
voting rights, fall or limited, or is to be without voting rights;
b. the number of shares to constitute the class or
series and the designations thereof;
c. the preferences and relative, participating,
optional or other special rights, if any, and the qualifications, limitations or
restrictions thereof, if any, with respect to any class or series;
d. whether or not the shares of any class or series
shall be redeemable and if redeemable the redemption price or prices, and the
time or times at which and the terms and conditions upon which, such shares
shall be redeemable and the manner of redemption;
e. whether or not the shares of a class or series
shall be subject to the operation of retirement or sinking funds to be applied
to the purchase or redemption of such shares for retirement, and if such
retirement or sinking fund or funds shall be established, the annual amount
thereof and the terms and provisions relative to the operation thereof;
f. the dividend rate, if any, whether any such
dividends are payable in cash, stock of the corporation or other property, the
conditions upon which and the times when any such dividends are payable, the
preference to or the relation to the payment of the dividends payable on any
other class or classes or series of stock, whether or not such dividend shall be
cumulative or noncumulative, and if cumulative, the date or dates from which
such dividends shall accumulate;
g. the preferences, if any, and the amounts thereof
which the holders of any class or series thereof shall be entitled to receive
upon the voluntary or involuntary dissolution of, or upon any distribution of
the assets of, the corporation;
h. whether or not the shares of any class or series
shall be convertible into, or exchangeable for, the shares of any other class or
classes or of any other series of the same or any other class or classes of
stock of the corporation and the conversion price, ratio or rate at
2
<PAGE>
which such conversion or exchange may be made, with such adjustments, if any, as
shall be stated and expressed or provided for in such resolution or resolutions;
and
i. such other special rights and protective
provisions with respect to any class or series as the Board of Directors may
deem advisable and in the best interests of the corporation.
The shares of each class or series of Preferred Stock may vary
from the shares of any other series thereof in any or all of the foregoing
respects. The Board of Directors may increase the number of shares of Preferred
Stock designated for any existing class or series by a resolution adding to such
class or series authorized and unissued shares of Preferred Stock not designated
for any other class or series. The Board of Directors may decrease the number of
shares of Preferred Stock designated for any existing class or series by a
resolution, subtracting from such series unissued shares of Preferred Stock
designated for such class or series, and the shares so subtracted shall become
authorized, unissued and undesignated shares of Preferred Stock.
B. Provisions Relating to the Common Stock.
---------------------------------------
1. Except as otherwise required by law or as may be provided
by the resolutions of the Board of Directors authorizing the issuance of any
class or series of Preferred Stock, as herein above provided, all rights to vote
and all voting power shall be vested exclusively in the holders of Common Stock.
2. Subject to the rights of the holders of the Preferred
Stock, the holders of Common Stock shall be entitled to receive when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends payable in cash, stock or otherwise.
3. Upon any liquidation, dissolution or winding-up of the
corporation, whether voluntary or involuntary, and after the holders of the
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled (if any) or a sum sufficient for such payment in full shall have been
set aside, the remaining net assets of the corporation shall be distributed pro
rata to the holders of the Common Stock in accordance with their respective
rights and interests to the exclusion of the holders of the Preferred Stock.
C. General Provisions.
------------------
1. Except as may be provided by the resolutions of the Board
of Directors authorizing the issuance of any class or series of Preferred Stock,
as hereinabove provided, cumulative voting by any shareholder is hereby
expressly denied.
2. No shareholder of this corporation shall have, by reason of
its holding shares of any class or series of stock of the corporation, any
preemptive or preferential rights to purchase or subscribe for any other shares
of any class or series of this corporation now or hereafter
3
<PAGE>
authorized, and any other equity securities, or any notes, debentures, warrants,
bonds, or other securities convertible into or carrying options or warrants to
purchase shares of any class, now or hereafter authorized, whether or not the
issuance of any such shares, or such notes, debentures, bonds or other
securities, would adversely affect the dividend or voting rights of such
shareholder.
ARTICLE IV
The corporation is to have perpetual existence.
ARTICLE V
The corporation shall hold a special meeting of shareholders only:
(1) On call of the board of directors or persons authorized to
do so by the corporation's bylaws; or
(2) If the holders of not less than 50 percent of all votes
entitled to be cast on any issue proposed to be considered at the
proposed special meeting sign, date, and deliver to the corporation's
secretary one or more written demands for the meeting describing the
purpose or purposes for which it is to be held.
ARTICLE VI
The Board of Directors of the corporation shall consist of at least one
director, with the exact number to be fixed from time to time in the manner
provided in the corporation's bylaws. The number of directors constituting the
initial Board of Directors is four (4), and the names and addresses of the
members of the Board of Directors, who are to serve as the corporation's
directors until their successors are duly elected and qualified are:
Jonathan O. Moore
52 Fisherman's Cove
Ponte Vedra Beach, FL 32082
Cydelle Mendius
533 Quail Point Lane
Ponte Vedra Beach, FL 32082
Jay D. Marsh
5509 Acacia Court
Crystal Lake, IL 60012-1899
Earl T. Smith
700 Plaza One
4
<PAGE>
Box 9600
Amarillo, TX 79105
ARTICLE VII
The corporation hereby designates, as its Registered Agent, and as its
Resident Agent to accept service of process within the State:
Stewart A. Merkin
444 Brickell Avenue, Suite 300
Miami, Florida 33131
ARTICLE VIII
The following indemnification provisions shall be deemed to be
contractual in nature and not subject to retroactive removal or reduction by
amendment.
A. This corporation shall indemnify any director who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil or criminal, judicial, administrative
or investigative, by reason of the fact that he/she is or was serving at the
request of this corporation as a director or officer or member of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by him/her in connection with such
action, suit or proceeding, including any appeal thereof, if he/she acted in
good faith or in a manner he/she reasonably believed to be in, or not opposed
to, the best interests of this corporation, and with respect to any criminal
action or proceeding, if he/she had no reasonable cause to believe his/her
conduct was unlawful. However, with respect to any action by or in the right of
this corporation to procure a judgment in its favor, no indemnification shall be
made in respect of any claim, issue, or matter as to which such person is
adjudged liable for negligence or misconduct in the performance of his/her duty
to the corporation unless, and only to the extent that, the court in which such
action or suit was brought determines, on application, that despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity in view of all the circumstances of the case. Termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or in a
plea of nolo contenders or its equivalent, shall not, of itself, create a
presumption that the party did not meet the applicable standard of conduct.
Indemnification hereunder may be paid by the corporation in advance of the final
disposition of any action, suit or proceeding, of a preliminary determination
that the director, officer, employee or agent met the applicable standard of
conduct.
B. The corporation shall also indemnify any director or officer who has
been successful on the merits or otherwise, in defense of any action, suit, or
proceeding, or in defense of any claim, issue, or matter therein, against all
expenses, including attorneys' fees, actually and reasonably incurred by him/her
in connection therewith, without the necessity of an independent determination
that such director or officer met any appropriate standard of conduct.
5
<PAGE>
C. The indemnification provided for herein shall continue as to any
person who has ceased to be a director or officer, and shall inure to the
benefit of the heirs, executors, and administrators of such persons.
D. In addition to the indemnification provided for herein, the
corporation shall have power to make any other or further indemnification,
except an indemnification against gross negligence or willful misconduct, under
any resolution or agreement duly adopted by the Board of Directors, or duly
authorized by a majority of the shareholders.
ARTICLE IX
In furtherance, and not in limitation, of the powers conferred by the
laws of the State of Florida, the Board of Directors is expressly authorized:
A. To make, alter, amend, and repeal the By-laws of the corporation,
subject to the power of the holders of stock having voting power to alter,
amend, or repeal the By-Laws made by the Board of Directors.
B. To determine and fix the value of any property to be acquired by the
corporation and to issue and pay in exchange therefore, stock of the
corporation; and the judgment of the directors in determining such value shall
be conclusive.
IN WITNESS WHEREOF, the undersigned, being the President of the
corporation, has executed these Amended and Restated Articles of Incorporation
of International Bon Voyage, Inc. this 9th day of March, 1998.
/s/ Isabel J. Cantera
---------------------
Isabel J. Cantera, President
The foregoing Amended and Restated Articles of Incorporation were
adopted by all of the Directors of the corporation on February 27, 1998 and by
the Shareholders of the corporation, on February 27, 1998 and the number of
votes cast being sufficient for approval, and in the manner prescribed by
Section 607.1003 of the Act.
ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT
Having been named to accept service of process for the above-stated
corporation, at the place designated, I hereby accept to act ' in this capacity,
and agree to comply with the provisions of Section 48.091, Florida Statutes,
relative to keeping open said office.
/s/ Steward A. Merkin
---------------------
Stewart A. Merkin
6
CERTIFICATE OF DESIGNATION
ARTICLES OF AMENDMENT
Pursuant to Sections 607.1006 and 607.0602 of the Florida Business Corporation
Act, Universal Beverages Holdings Corporation (the "Company") hereby amends its
Amended Articles of Incorporation filed on March 12, 1999 as follows:
Article III of the Company's Articles of Incorporation shall be amended by
adding the following after the existing provisions of such articles:
D. Provisions Relating to Series A 10% Convertible Preferred
Stock.
1. Designation, Amount, Par Value, and Rank. A series of Preferred
Stock shall be designated as Series A 10% Convertible Preferred Stock (the
"Series A Preferred Stock"), and the number of shares so designated shall be
600,000. Each share cf Series A Preferred Stock shall have a par value of $.01
per share. The Series A Preferred Stock shall rank prior to all classes or
series of equity securities of the Company, including the Common Stock.
2. Dividends. Subject to the limitations described below, holders of
the Series A Preferred Stock will be entitled to receive, when, as, and if
declared by the Board of Directors out of funds of the Company legally available
for payment, cash dividends or at the option of the Board of Directors, Common
Stock of the Company pursuant to a formula as hereinafter described, at an
annual rate of $ 1.00 per share, payable on December 31 in each year, except
that if such date is a Saturday, Sunday or legal holiday, then such dividend
shall be payable on the next day that is not a Saturday, Sunday or legal
holiday. Dividends will be cumulative from the date of original issuance of the
Series A Preferred Stock and will be payable to holders of record as they appear
on the stock books of the Company on such record dates as are fixed by the Board
of directors. No senior dividend stock may be issued without the approval of
holders of a majority of the Series A Preferred Stock.
Holders of record of our Series A Convertible Preferred Stock of record
prior to October 15, 1998, shall be paid a prorated dividend of not less the
$1.00 per share for 1999. Holder of record of our Series A Convertible Preferred
Stock, of record prior to November 15, 1998, shall receive a prorated dividend
of not less that $50 per share for 1998. Holders of our Series A Convertible
Preferred Stock of record after November 15, 1998, shall receive a prorated
dividend for year 1998 such prorate based on 365 day year.
In the event that the Board of Directors determines that the dividends
shall be paid in Common Stock of the Company, the number of shares shall be
determined by dividing the aggregate cash value cf such dividends payable by 70%
of the average of the closing bid and asked price per share of Common Stock as
reported by the National Association of Securities Dealers Automated Quotation
System (NASDAQ) or a similar source selected from time to time by the Company
for
<PAGE>
such purpose during the thirty (30) consecutive business days preceding the date
that the Board of Directors makes the election to pay the stock dividend.
The Series A Preferred Stock will have the priority as to dividends
over the Common Stock and any other series or class of the Company's stock
hereafter issued which ranks junior as to dividends to the Series A Preferred
Stock ("Junior Dividend Stock"), and no dividend (other than dividends payable
solely in Junior Dividend Stock) may be paid on, and (with certain limited
exceptions) no purchases, redemption or other acquisition may be made by the
Company of any Junior Dividend Stock unless all accrued and unpaid dividends on
the Series A Preferred Stock for all prior periods and the current period have
been paid or declared and set aside for payment. The Company also may not pay
dividends on any class or series of the Company's stock having parity with the
Series A Preferred Stock as to dividends ("Parity Dividend Stock"), unless it
has paid or declared and set aside for payment or contemporaneously pays or
declares and sets aside for payment all accrued and unpaid dividends for all
prior periods on the Series A Preferred Stock and may not pay dividends on the
Series A Preferred Stock unless it has paid or declared and set aside for
payment or contemporaneously pays or declares and sets aside for payment all
accrued and unpaid dividends for all periods on the Parity Dividend Stock.
Whenever all accrued dividends are not paid in full on the Series A Preferred
Stock or any Parity Dividend Stock, all dividends declared on the Series A
Preferred Stock and such Parity Dividend Stock will be declared or made pro rata
so that the amount of dividends declared per share of the Series A Preferred
Stock and such Parity Dividend Stock will bear the same ratio that accrued and
unpaid dividends per share on the Series Preferred Stock and such Parity
Dividend Stock bear to each other.
3. Liquidation Rights. In case of the voluntary or involuntary
liquidation, dissolution or winding up of the Company, holders of the Series A
Preferred Stock will be entitled to receive the liquidation price per share
equal to the redemption price for the period during which the voluntary or
involuntary liquidation, dissolution or winding up of the Company occurred, plus
an amount equal to any accrued and unpaid dividends to the payment date, before
any payment or distribution is made to the holders of Common Stock or any other
series or class of the Company's stock hereafter issued which ranks junior as to
liquidation rights to the Series A Preferred Stock, but the holders of the
shares of the Series A Preferred Stock will not be entitled to receive the
liquidation price of such shares until the liquidation price of any other series
or class of the Company's stock hereafter issued which ranks senior as to
liquidation rights of the Series A Preferred Stock (Senior Liquidation Stock)
has been paid in full. No such Senior Liquidation Stock may be issued without
the approval of holders of a majority of the shares Series A Preferred Stock and
all series or classes of the Company's stock hereafter issued which rank on a
parity as to liquidation rights with the Series A Preferred Stock. Holders of
Series A Preferred Stock and holders of any series or class of stock which rank
on a parity basis as to liquidation rights with the Series A Preferred Stock are
entitled to share ratably, in accordance with the respective preferential
amounts payable on such stock in any distribution (after payment of the
liquidation price of any Senior Liquidation Stock) which is not sufficient to
pay in full the aggregate of the amounts payable thereon. After payment in full
of the liquidation price of the shares of the Series A Preferred Stock, the
holders of such shares will not be entitled to any further participation in any
distribution of assets by the Company. Neither a consolidation nor merger of the
company with another corporation nor a sale or transfer of all or part
<PAGE>
of the Company's assets for cash, securities or other property will be
considered a liquidation, dissolution or winding up of the Company.
4. Voting Rights. The holders of the Series A Preferred Stock will have
no voting rights except as described below or as required by Florida law. In
exercising any such vote, each outstanding share of Series A Preferred Stock
will be entitled to one vote except as described below.
In the event that the Company does not have net earnings before taxes,
as determined by Generally Accepted Accounting Principles, of at least two
million dollars for the calendar year ending December 31, 1999, then in that
event, the holders of the Series A Preferred Stock shall have voting rights
along with the holders of the Common Stock whereby each Series A Preferred Stock
shall have eight votes.
So long as any shares of the Series A Preferred Stock are outstanding,
the Company will not without the affirmative vote or consent of the holders of
at least a majority of the outstanding shares of the Series A Preferred Stock,
voting as a class, (i) create, authorize or issue any shares of any other class
of Senior Dividend Stock or Senior Liquidation Stock or (ii) amend, alter or
repeal, whether by merger, consolidation or otherwise, the Charter, if the
amendment, alteration or repeal materially and adversely affects the powers,
preferences or special rights of the Series A Preferred Stock. However, any
increase in the authorized Series A Preferred Stock of the company or the
creation and issuance of any other capital stock of the Company ranking on a
parity with or junior to the Series A Preferred Stock will not be deemed to
materially and adversely affect such powers, preferences or special rights. In
addition, holders of Series A Preferred Stock will not have voting rights with
respect to any merger or consolidation involving the amendment, alteration or
repeal of the Charter, if such amendment, alteration or repeal does not
materially and adversely affect such powers, preferences or special rights.
5. Conversion Rights. The holders of Series A Preferred Stock will be
entitled at any time after one year from the date of issue to convert their
shares of Series A Preferred Stock into Common Stock at a floating price, which
shall be the lower of (i) 70% of the average of the closing bid and asked price
per share of Common Stock as reported by the National Association of Securities
Dealers Automated Quotation System (NASDAQ) or a similar source selected from
time to time by our Company for such purpose during the thirty (30) consecutive
business days preceding the date on which the Preferred Stockholder specifies
that a Preferred Stock conversion into shares of Common Stock is to be effected,
or (ii) $10 per share, subject to adjustment as described below, except that,
with respect to shares of Series A Preferred Stock which the Company has called
for redemption or which the holders thereof have elected to convert pursuant to
their special conversion rights (the "Special Right") as a result of a business
combination or acquisition of shares referred to below in "Special Conversion
Rights Upon Corporate Change or Ownership Change," conversion rights in the case
of redemption will expire at the close of business on the redemption date
(unless the Company defaults in the payment of the redemption price) or, in the
case of the Special Right, within 45 days after the notice from the Company of
the availability of the Special Right. Notwithstanding, in no event will the
conversion price be less than $5.00 per share.
<PAGE>
The conversion rate is subject to adjustment in certain circumstances,
including the payment of a stock dividend on shares of the Common Stock,
combinations and subdivisions of the Common Stock, certain reclassifications of
the Common Stock, the issuance to the Company's stockholders of rights or
warrants to subscribe for or purchase shares of Common Stock at a price per
share less than the then current market price (determined as provided in the
Designation) of the Common Stock, and certain cash dividends and distributions
of evidence of indebtedness or assets to holders of certain of the Company's
capital stock. No adjustment in the conversion rate is required unless it would
result in at least 1% increase or decrease in the conversion rate, however, any
adjustment not made is carried forward. The conversion rate may also be adjusted
pursuant to the Special Right as set forth in the "Special Conversion Rights
Upon Corporate Change or Ownership Change."
In the case of any consolidation or merger of the Company with any
other corporation (other than a wholly owned subsidiary), or in the case of a
sale or transfer of all or substantially all of the assets of the Company, or in
the case of any share exchange whereby the Common Stock is converted into other
securities or property, the Company will be required to make appropriate
provision's so that the holder of each share of Series A Preferred Stock then
outstanding will have the right thereafter to convert such share of Series A
Preferred Stock into the kind and amount of shares of stock and other securities
and property receivable by the common stockholder upon such consolidation,
merger, sale, transfer or share exchange.
In connection with the foregoing adjustments, no fractional shares will
be issued and, in lieu of any fractional share, cash in an amount based on the
then applicable market value as defined below of the Common Stock will be paid.
The holder of record of a share of Series A Preferred Stock on a record
date with respect to the payment of a dividend on the Series A Preferred Stock
shall be entitled to receive such dividend on such share of Series A Preferred
Stock on the corresponding dividend due date, notwithstanding the conversion
thereof after such record date or default by the Company in the payment of the
dividend payable on such dividend due date. However, shares of Series A
Preferred Stock surrendered for conversion during the period from the close of
business on any record date for the payment of a dividend on the Series A
Preferred Stock to the opening of business on the corresponding dividend due
date (except a share of Series A Preferred Stock called for redemption on a
redemption date during such period) must be accompanied by payment of an amount
equal to the dividend payable on such dividend due date. Holders of record of
shares of Series A Preferred Stock on a record date with respect to the payment
of a dividend on the Series A Preferred Stock who convert such shares on or
after the corresponding dividend due date will receive the dividend payable by
the Company on such date and need not include payment in the amount of such
dividend upon surrender of such shares br conversion. Except as aforesaid, no
payment or adjustment is to be made on conversion for dividends accrued on the
shares of Series A Preferred Stock or for dividends on Common Stock issued on
conversion.
6. Redemption. The Series A Preferred Stock shall be redeemable in
whole or in part from time to time at any time after the twenty-fourth month
following the Series A Preferred Stock Issuance Date, at the option of the Board
of Directors of the Company, upon giving the Preferred Stockholders 30 days
written notice of our intention to redeem at $10.00 per share, plus an amount
<PAGE>
equal to all unpaid accumulated dividends thereon. All Series A Preferred Stock
so redeemed shall be canceled and retired in such manner as maybe proscribed by
law and no Series A Preferred Stock so redeemed shall be reissued.
7. Other Provisions. The shares of Series A Preferred Stock, when
issued, will be duly and validly issued, fully paid and non-assessable. The
holders of the shares of the Series A Preferred Stock will have no preemptive
rights with respect to any shares of capital stock of the Company or any other
securities of the Company convertible into carrying rights or options to
purchase any such shares.
The foregoing Amendment to Articles of Incorporation was adopted by all
of the Directors of the corporation on September 15, 1998.
IN WITNESS WHEREOF, the undersigned, being President of the
corporation, has executed these Articles of Amendment this 15th day of
September, 1998.
/s/ Cydelle Mendius
- -------------------
Cydelle Mendius, President
ARTICLES OF AMENDMENT
OF
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
1. The name of the Company is Universal Beverages Holdings Corporation,
a Florida company ("the "Company").
2. Article III of the Company's Articles of Incorporation is hereby
amended to read as follows:
The aggregate number of shares which the Company shall have the
authority to issue is Fifty Million (50,000,0000), consisting of (i) Thirty
Million (30,000,000) shares of common stock, par value $.001 per share (the
"Common Stock") and (ii) Twenty Million (20,000,000) shares of preferred stock,
par value $.001 per share (the "Preferred Stock").
The designations and the preferences, limitations and relative rights
of the Preferred Stock and the Common Stock of the Company are as follows:
Provisions Relating to the Preferred Stock.
-------------------------------------------
1. The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such designations
and powers, preferences and rights, and qualifications, limitations and
restrictions thereof as are stated and expressed herein and in the resolution or
resolutions providing for the issuance of such class or series adopted by the
Board of Directors as hereinafter prescribed.
2. Authority is hereby expressly granted to and vested in the Board of
Directors to authorize the issuance of the Preferred Stock from time to time in
one or more classes or series, to determine and take necessary proceedings fully
to effect the issuance and redemption of any such Preferred Stock, and, with
respect to each class or series of Preferred Stock, to fix and state by the
resolution or resolutions from time to time adopted providing for the issuance
thereof the following:
a. whether or not the class or series is to have voting
rights, full or limited, or is to be without voting rights;
b. the number of shares to constitute the class or series and
the designations thereof;
c. the preferences and relative, participating, optional or
other special rights, if any, and the qualifications, limitations or
restrictions thereof, if any, with respect to any class or series;
d. whether or not the shares of any class or series shall be
redeemable and if
<PAGE>
redeemable the redemption price or prices, and the time or times at which and
the terms and conditions upon which, such shares shall be redeemable and the
manner of redemption;
e. whether or not the shares of a class or series shall be
subject to the operation of retirement or sinking funds to be applied to the
purchase or redemption of such shares for retirement, and if such retirement or
sinking fund or funds shall be established, the annual amount thereof and the
terms and provisions relative to the operation thereof;
f. The dividend rate, if any, whether any, whether any such
dividends are payable in cash, stock of the corporation or other property, the
conditions upon which and the times when any such dividends are payable, the
preference to or the relation to the payment of the dividends, payable on any
other class or classes or series of stock, whether or not such dividend shall be
cumulative or noncumulative, and if cumulative, the date or dates from which
such dividends shall accumulate;
g. the preferences, if any, and the amounts thereof which the
holders of any class or series thereof shall be entitled to receive upon the
voluntary or involuntary dissolution of, or upon any distribution of the assets
of, the corporation;
h. whether or not the shares of any class or series shall be
convertible into, or exchangeable for, the shares of any other class or classes
or of any other series of the same or any other class or classes of stock of the
corporation and the conversion price, ratio or rate at which such conversion or
exchange may be made, with such adjustments, if any, as shall be stated and
expressed or provided for in such resolution or resolutions; and
i. such other special rights and protective provisions with
respect to any class or series as the Board of Directors may deem advisable and
in the best interests of the Company.
The shares of each class or series of Preferred Stock may vary from the
shares or any other series thereof in any or all of the foregoing respects. The
Board of Directors may increase the number of shares of Preferred Stock
designated for any existing class or series by a resolution adding to such class
or series authorized and unissued shares of Preferred Stock not designated for
any other class or series. The Board of Directors may decrease the number of
shares of Preferred Stock designated for any existing class or series by a
resolution, subtracting from such series unissued shares of Preferred Stock
designated for such class or series, and the shares so subtracted shall become
authorized, unissued and undesignated shares of Preferred Stock.
Provisions to the Common Stock.
-------------------------------
1. Except as otherwise required by law or as may be provided by the
resolutions of the Board of Directors authorizing the issuance of any class or
series of Preferred Stock, as herein above provided, all rights to vote and all
voting power shall be vested exclusively in the holders of Common Stock.
2. Subject to the rights of the holders of the Preferred Stock, the
holders of Common
-2-
<PAGE>
Stock shall be entitled to receive when, as and if declared by the Board of
Directors, out of funds legally available therefor, dividends payable in cash,
stock or otherwise.
3. Upon any liquidation, dissolution or winding-up of the corporation,
whether voluntary or involuntary, and after the holders of the Preferred Stock
shall have been paid in full the amounts to which they shall be entitled (if
any) or a sum sufficient for such payment in full shall have been set aside, the
remaining net assets of the corporation shall be distributed pro rata to the
holders of the Common Stock in accordance with their respective rights and
interests to the exclusion of the holders of the Preferred Stock.
General Provisions.
-------------------
1. Except as may be provided by the resolutions of the Board of
Directors authorizing the issuance of any class or series of Preferred Stock, as
hereinabove provided, cumulative voting by any shareholder is hereby expressly
denied.
2. No shareholder of this corporation shall have, by reason of its
holding shares of any class or series of stock of the corporation, any
preemptive rights to purchase or subscribe for any other shares of any class or
series of this corporation now or hereafter authorized, and any other equity
securities, or any notes, debentures, warrants, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter authorized, whether or not the issuance of any such
shares, or such notes, debentures, bonds or other securities, would adversely
affect the dividend or voting rights of such shareholder.
A. Provisions Relating to Series A 10% Convertible Preferred
---------------------------------------------------------
Stock.
------
1. Designation, Amount, Par Value, and Rank. A series of
Preferred Stock shall be designated as Series A 10% Convertible Preferred Stock
(the "Series A Preferred Stock"), and the number of shares so designated shall
be 600,000. Each share of Series A Preferred Stock shall have a par value of
$.01 per share. The Series A Preferred Stock shall rank prior to all classes or
series of equity securities cf the Company, including the Common Stock.
2. Dividends. Subject to the limitations described below,
holders of the Series A Preferred Stock will be entitled to receive, when, as,
and if declared by the Board of Directors out of funds of the Company legally
available for payment, cash dividends or at the option of the Board of
Directors, Common Stock of the Company pursuant to a formula as hereinafter
described, at an annual rate of $1.00 per share, payable on December 31 in each
year, except that if such date is a Saturday, Sunday or legal holiday, then such
dividend shall be payable on the next day that is not a Saturday, Sunday or
legal holiday. Dividends will be cumulative from the date of original issuance
of the Series A Preferred Stock and will be payable to holders of record as they
appear on the stock books of the Company on such record dates as are fixed by
the Board of Directors. No senior dividend stock may be issued without the
approval of holders of a majority of the Series A Preferred Stock.
Holders of record of our Series A Convertible Preferred Stock, of
record prior to October 15,
-3-
<PAGE>
1998, shall be paid a prorated dividend of not less the $1.00 per share for
1998. Holders of record of our Series A Convertible Preferred Stock, or record
prior to November 15, 1998, shall receive a prorated dividend of not less that
$.50 per share for 1998. Holders of our Series A Convertible Preferred Stock, of
record after November 15, 1998, shall receive a prorated dividend for year 1998
such prorate based on 365 day year.
In the event that the Board of Directors determines that the dividends
shall be paid in Common Stock of the Company, the number of shares shall be
determined by dividing the aggregate cash value of such dividends payable by 70%
of the average of the closing bid and asked price per share of Common Stock as
reported by the National Association of Securities Dealers Automated Quotation
System (NASDAQ) or a similar source selected from time to time by the Company
for such purpose during the thirty (30) consecutive business days preceding the
date that the Board of Directors makes the election to pay the stock dividend.
The Series A Preferred Stock will have the priority as to dividends
over the Common Stock and any other series or class of the Company's stock
hereafter issued which ranks junior as to dividends to the Series A Preferred
Stock ("Junior Dividend Stock"), and no dividend (other than dividends payable
solely in Junior Dividend Stock) may be paid on, and (with certain limited
exceptions) no purchases, redemption or other acquisition may be made by the
Company of any Junior Dividend Stock unless all accrued and unpaid dividends on
the Series A Preferred Stock for all prior periods and the current period have
been paid or declared and set aside for payment. The Company also may not pay
dividends on any class or series of the Company's stock having parity with the
Series A Preferred Stock as to dividends ("Parity Dividend Stock"), unless it
has paid or declared and set aside for payment or contemporaneously pays or
declares and sets aside for payment all accrued and unpaid dividends for all
prior periods on the Series A Preferred Stock and may not pay dividends on the
Series A Preferred Stock unless it has paid or declared and set aside for
payment or contemporaneously pays or declares and sets aside for payment all
accrued and unpaid dividends for all periods on the Parity Dividend Stock.
Whenever all accrued dividends are not paid in full on the Series A Preferred
Stock or any Parity Dividend Stock, all dividends declared on the Series A
Preferred Stock and such Parity Dividend Stock will be declared or made pro rata
so that the amount of dividends declared Per share of the Series A Preferred
Stock and such Parity Dividend Stock will bear the same ratio that accrued and
unpaid dividends per share on the Series A Preferred Stock and such Parity
Dividend Stock bear to each other.
3. Liquidation Rights. In case of the voluntary or involuntary
liquidation, dissolution or winding up of the Company, holders of the Series A
Preferred Stock will be entitled to receive the liquidation price per share
equal to the redemption price for the period during which the voluntary or
involuntary liquidation, dissolution or winding up of the Company occurred, plus
an amount equal to any accrued and unpaid dividends to the payment date, before
any payment or distribution is made to the holders of Common Stock or any other
series or class of the Company's stock hereafter issued which ranks junior as to
liquidation fights to the Series A Preferred Stock, but the holders of the
shares of the Series A Preferred Stock will not be entitled to receive the
liquidation price of such shares until the liquidation price of any other series
or class of the Company's stock hereafter issued which ranks senior as to
liquidation fights of the Series A Preferred Stock ("Senior Liquidation Stock")
has been paid in full. No such Senior Liquidation Stock may be issued without
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the approval of holders of a majority of the shares Series A Preferred Stock and
all series or classes of the Company's stock hereafter issued which rank on a
parity as to liquidation rights with the Series A Preferred Stock. Holders of
Series A Preferred Stock and holders of any series or class of stock which rank
on a parity basis as to liquidation fights with the Series A Preferred Stock are
entitled to share ratably, in accordance with the respective preferential
amounts payable on such stock, in any distribution (after payment of the
liquidation price of any Senior Liquidation Stock) which is not sufficient to
pay in full the aggregate of the amounts payable thereon. After payment in full
of the liquidation price of the shares of the Series A Preferred Stock, the
holders of such shares will not be entitled to any further participation in any
distribution of assets by the Company. Neither a consolidation nor merger of the
Company with another corporation nor a sale or transfer of all or part of the
Company's assets for cash, securities or other property will be considered a
liquidation, dissolution or winding up of the Company.
4. Voting Rights. The holders of the Series A Preferred Stock will have
no voting rights except as described below or as required by Florida law. In
exercising any such vote, each outstanding share of Series A Preferred Stock
will be entitled to one vote except as described below.
In the event that the Company does not have net earnings before taxes,
as determined by Generally Accepted Accounting Principles, of at least two
million dollars for the calendar year ending December 31, 1999, then in that
event, the holders of the Series A Preferred Stock shall have voting fights
along with the holders of the Common Stock whereby each Series A Preferred Stock
shall have eight votes.
So long as any shares of the Series A Preferred Stock are outstanding,
the Company will not, without the affirmative vote or consent of the holders of
at least a majority of the outstanding shares of the Series A Preferred Stock,
voting as a class, (i) create, authorize or issue any shares of any other class
of Senior Dividend Stock or Senior Liquidation Stock or (ii) amend, alter or
repeal, whether by merger, consolidation or otherwise, the Charter, if the
amendment, alteration or repeal materially and adversely affects the powers,
preferences or special fights of the Series A Preferred Stock. However, any
increase in the authorized Series A Preferred Stock of the company or the
creation and issuance of any other capital stock of the Company ranking on a
parity with or junior to the Series A Preferred Stock will not be deemed to
materially and adversely affect such powers, preferences or special rights. In
addition, holders cf Series A Preferred Stock will not have voting fights with
respect to any merger or consolidation involving the amendment, alteration or
repeal of the Charter, if such amendment, alteration or repeal does not
materially and adversely affect such powers, preferences or special rights.
5. Conversion Rights. The holders of Series A Preferred Stock will be
entitled at any time after one year from the date of issue to convert their
shares of Series A Preferred Stock into Common Stock at a floating price, which
shall be the lower of (i) 70% of the average of the closing bid and asked price
per share of Common Stock as reported by the National Association of Securities
Dealers Automated Quotation System (NASDAQ) or a similar source selected from
time to time by our Company for such purpose during the thirty (30) consecutive
business days preceding the date on which the preferred Stockholder specifies
that a Preferred Stock conversion into shares of Common Stock is to be effected,
or (ii) $10 per share, subject to adjustment as described below,
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except that, with respect to shares of Series A Preferred Stock which the
Company has called for redemption or which the holders thereof have elected to
convert pursuant to their special conversion rights (the "Special Right") as a
result of a business combination or acquisition of shares referred to below in
"Special Conversion Rights Upon Corporate Change or Ownership Change,"
conversion rights in the case of redemption will expire at the close cf business
on the redemption date (unless the Company defaults in the payment of the
redemption price) or, in the case of the Special Right, within 45 days after the
notice from the Company of the availability of the Special Right.
Notwithstanding, in no event will the conversion price be less than $5,00 per
share.
The conversion rate is subject to adjustment in certain circumstances,
including the payment of a stock dividend on shares of the Common Stock,
combinations and subdivisions of the Common Stock, certain reclassifications of
the Common Stock, the issuance to the Company's stockholders of rights or
warrants to subscribe for or purchase shares of Common Stock at a price per
share less than the then current market price (determined as provided in the
Designation) of the Common Stock, and certain cash dividends and distributions
of evidence of indebtedness or assets to holders of certain of the Company's
capital stock. No adjustment in the conversion rate is required unless it would
result in at least 1% increase or decrease in the conversion rate; however, any
adjustment not made is carried forward. The conversion rate may also be adjusted
pursuant to the Special Right as set forth in the "Special Conversion Rights
Upon Corporate Change or Ownership Change."
In the case of any consolidation or merger of the Company with any
other corporation (other than a wholly owned subsidiary), or in the case of a
sale or transfer of all or substantially all of the assets of the Company, or in
the case of any share exchange whereby the Common Stock is converted into other
securities or property, the Company will be required to make appropriate
provisions so that the holder cf each share of Series A Preferred Stock then
outstanding will have the right thereafter to convert such share of Series A
Preferred Stock into the kind and amount of shares of stock and other securities
and property receivable by the common stockholder upon such consolidation,
merger, sale, transfer or share exchange.
In connection with the foregoing adjustments, no fractional shares will
be issued and, in lieu cf any fractional share, cash in an amount based on the
then applicable market value as defined below of the Common Stock will be paid.
The holder of record of a share of Series A Preferred Stock on a record
date with respect to the payment of a dividend on the Series A Preferred Stock
shall be entitled to receive such dividend on such share of Series A Preferred
Stock on the corresponding dividend due date, notwithstanding the conversion
thereof after such record date or default by the Company in the payment of the
dividend payable on such dividend due date. However, shares of Series A
Preferred Stock surrendered for conversion during the period from the close of
business on any record date for the payment of a dividend on the Series A
Preferred Stock to the opening of business on the corresponding dividend due
date (except a share of Series A Preferred Stock called for redemption on a
redemption date during such period) must be accompanied by payment of an amount
equal to the dividend payable on such dividend due date. Holders of record cf
shares of Series A Preferred Stock on a record date with respect to the payment
of a dividend on the Series A Preferred Stock who convert such shares on or
after the corresponding dividend due date will receive the dividend
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payable by the Company on such date and need not include payment in the amount
of such dividend upon surrender of such shares for conversion. Except as
aforesaid, no payment or adjustment is to be made on conversion for dividends
accrued on the shares of Series A Preferred Stock or for dividends on Common
Stock issued on conversion.
6. Redemption. The Series A Preferred Stock shall be redeemable in
whole or in part from time to time at any time after the twenty-fourth month
following the Series A preferred Stock Issuance Date, at the option of the Board
of Directors of the Company, upon giving the Preferred Stockholders 30 days
written notice of our intention to redeem at $10.00 per share, plus an amount
equal to all unpaid accumulated dividends thereon. All Series A Preferred Stock
so redeemed shall be cancelled and retired in such manner as may be proscribed
by law and no Series A Preferred Stock so redeemed shall be reissued.
7. Other Provisions. The shares of Series A Preferred Stock, when
issued, will be duly and validly issued, fully paid and non-assessable. The
holders of the shares of the Series A Preferred Stock will have no preemptive
rights with respect to any shares of capital stock or the Company or any other
securities of the Company convertible into carrying rights or options to
purchase any such shares.
B. Provisions Relating to Series B 10% Convertible Preferred
---------------------------------------------------------
Stock
-----
1. Designation, Amount, Par Value, and Rank. A series of Preferred
Stock shall be designated as Series B 10% Convertible Preferred Stock (the
"Series B Preferred Stock"), and the number of Shares so designated shall be
450,000. Each share of Series B Preferred Stock shall have a par value of $.01
per share. The Series B Preferred Stock shall rank prior to all classes or
series of equity securities of the Company, including the Common Stock.
2. Dividends. Subject to the limitations described below, holders of
the Series B Preferred Stock will be entitled to receive, when, as, and if
declared by the Board of Directors out of funds of the Company legally available
for payment, cash dividends or at the option of the Board of Directors, Common
Stock of the Company, at an annual rate of $1.00 per share, payable quarterly in
arrears on January 10, April 10, July 10 and October 10 of each year (the
"Dividend Payment Date"), commencing on July 10, 2000. In the case of any
accrued but unpaid dividends, the Company's Board of Directors may make these
payments at any time. In the event that any Dividend Payment Date shall fall on
any day other than a business day, the preferred dividends due on such Dividend
Payment Date shall be paid on the business day immediately following such
Dividend Payment Date.
Dividends will be cumulative from the date of original issuance of the Series B
Preferred Stock and dividends will cease to accrue after the Series B Preferred
Stock is converted or redeemed as described in Sections 6 and 7 of this Article
B. Dividends accrued for any period less than a full quarterly period between
the date of initial issuance of a share of Series B Preferred Stock through the
first Dividend Payment Date shall be computed on the basis of a 360 day year,
consisting of twelve 30-day months. Accrued but unpaid dividends shall cumulate
as of the Dividend Payment Date on which they first become payable, but no
interest shall accrue on accumulated unpaid
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preferred dividends. Dividends shall be payable to holders of record as they
appear on the stock transfer records of the Company on such record dates, which
shall be not more than 60 days nor less than 10 days preceding the payment
dates, as shall be fixed by the Board of Directors. No senior dividend stock may
be issued without the approval of holders of a majority of the Series B
Preferred Stock.
If the Company's common stock is trading at or above $4.50 per share as
reported by the National Association of Securities Dealers Automated Quotation
System (NASDAQ) or a similar source selected from time to time by the Company
for such purposes during the thirty (30) calendar day period preceding the
record date for the dividend payment, the Board of Directors may elect to make
dividend payments to the Series B Preferred Stock holders in Common Stock of the
Company. Each Preferred Shareholder will receive such shares and cash
representing the fractional shares, if any, of Common Stock times the number of
Series B Preferred Shares held plus cash for any fractional share.
The Series B Preferred Stock will have priority as to dividends over
the Common Stock and all other series or classes of the Company's stock
hereafter issued which ranks junior as to dividends to the Series B Preferred
Stock ("Junior Dividend Stock"), and no dividend may be made by the Company on
any Junior Dividend Stock unless all accrued and unpaid dividends on Series B
Preferred Stock for all periods and the current period have been paid or
declared and set aside for payment.
3. Default. The holders of at least 60% of the Company's issued and
outstanding Series B Preferred Stock may declare an event of default ("Event of
Default") if the Company fails to make payments of dividends for three fiscal
quarters. Prior to having the Event of Default be effective, the holders of at
least 60% of the Company's issued and outstanding Series B Preferred Stock must
(1) approve in writing a resolution to declare the Series B Preferred Stock in
default and (2) must send the Company written notice ("Notice of Default") of
their intent to declare the Series B Preferred Stock in Default. The Notice of
Default shall specify the date on which the Event of Default shall be deemed to
be effective; provided that an Event of Default will not be effective until at
least sixty (60) days after the date on which the Company receives the Notice of
Default. Once all the conditions for the Event of Default have occurred, the
holders of the Company's Series B Preferred Stock will have certain voting
rights described in Section 5 of this Article B.
4. Liquidation Rights. In case of voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of Series B Preferred Stock
will be entitled to receive a liquidation price equal to the $10 per share for
the period during which the voluntary or involuntary liquidation, dissolution or
winding up of the Company occurred, plus an amount equal to any accrued and
unpaid dividends to the payment date, before any payment or distribution is made
to the holders of Common Stock or any other series or class of the Company's
stock hereafter issued which ranks junior as to liquidation rights to the Series
B Preferred Stock. However, the holders of the shares of the Series B Preferred
Stock will not be entitled to receive the liquidation price of such shares until
the liquidation price of any other series or class of the Company's stock
hereafter issued which ranks senior as to liquidation rights of the Series B
Preferred Stock ("Senior Liquidation Stock") has been paid in full. No such
Senior Liquidation Stock may be issued without approval of
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<PAGE>
the holders of a majority of the shares of Series B Preferred Stock. Neither a
consolidation nor merger of the Company with another corporation nor a sales or
transfer of all or part of the Company's assets for cash, securities or other
property will be considered a liquidation, dissolution or winding up of the
Company.
5. Voting Rights. Except as indicated below or otherwise required by
law, holders of Series B Preferred Shares will have no voting rights.
In the event that the holders of 60% of the issued and outstanding
shares of the Company's Series B Preferred Stock elect and declares an event of
default as described in Section 3 of this Article B, each holder of Series B
Preferred Stock may vote, along with holders of the Company's Common Stock and
any other equity securities which have voting rights, in the election of the
Company's Board of Directors. With respect to the election of directors, each
share of Series B Preferred Share shall have 10 votes per share. Except for the
foregoing voting rights for directors in the Event of Default and as required by
Florida law, the Series B Preferred Stock will not have voting rights on any
other corporate matters.
6. Conversion Rights. At any time after issuance, each holder of Series
B Preferred Stock will be entitled to convert one (1) share of Series B
Preferred Stock into two and one half (2.5) shares of the Company's Common Stock
(the "Conversion Ratio"). If a holder decides to convert his Series B Preferred
Stock, he shall send the Company written notice of such election. The conversion
shall be deemed to have occurred on the date the Company receives a notice of
election from the holder, so that the rights of the holder shall be treated for
all purposes as having become the record holder of shares of common stock on the
conversion date.
In the case of any consolidation or merger of the Company with any
other corporation (other than a wholly owned subsidiary), or in the case of a
sale or transfer of all or substantially all of the assets of the Company, or in
the case of any share exchange whereby the Common Stock is converted into other
securities or property, the Company will be required to make appropriate
provisions so that the holder of each share of Series B Preferred Stock then
outstanding will have the right thereafter to convert such shares of Series B
Preferred Stock into the kind and amount of shares of stock and other securities
and property receivable by the common stockholder upon such consolidation,
merger, sale, transfer or share exchange. If the Series B Preferred Stock does
not consent to such conversions the Company will be required to redeem ( per
Redemption in Section 7 of this Article B below) such shares so held before and
such merger, consolidation or share exchange occurs. In connection with the
forgoing adjustments, no fractional shares will be issued and, in lieu of any
fractional share, cash in an amount based on the then applicable market value as
defined below of the Common Stock will be paid.
The holder of record of a share of Series B Preferred Stock on a record
date with respect to the payment of a dividend on the Series B Preferred Stock
shall be entitled to receive such dividends on such share of Series B Preferred
Stock on the corresponding Dividend Payment Date, notwithstanding the conversion
thereof after such record date or default by the Company in the payment of the
dividend payable on such Dividend Payment Date. However, shares of Series B
Preferred Stock surrendered for conversion during the period from the close of
business on any
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<PAGE>
record date for the payment of a dividend on the Series B Preferred Stock to the
opening of business on the corresponding Dividend Payment Date (except a share
of Series B Preferred Stock called for redemption on a redemption date during
such period) must be accompanied by payment of an amount equal to the dividend
payable on such Dividend Payment Date. Holders of record of shares of Series B
Preferred Stock on a record date with respect to the payment of a dividend on
the Series B Preferred Stock who convert such shares on or after the
corresponding Dividend Payment Date will receive the dividend payable by the
Company on such date and need not include payment in the amount of such dividend
upon surrender of such shares for conversion.
7. Redemption. At any time after issuance, the Series B Preferred Stock
shall be redeemable, at the option of the Board of Directors of the Company, in
whole on in part, upon giving the Series B Preferred Shareholders 30 days
written notice of its intention to redeem the Series B Preferred Stock. The
redemption price shall be $12.00 per share, plus an amount equal to all unpaid
accumulated dividends thereon. The redemption notice shall (1) identify the
Series B Preferred Stock or portions thereof to be redeemed, (2) list the date
on which the redemption will be effective (the "Redemption Date") and (3)
describe the redemption procedures. During the period after the redemption
notice but prior to the redemption date, the holders of Series B Preferred
Shares shall have the right to convert the Series B Preferred Shares into Common
Stock of the Company at the conversion rate of 2.5 shares of the Company's
Common Stock per share of Series B Preferred Stock.
Unless provided otherwise in the notice of redemption, the Company
shall send the holder's payment for the shares of Series B Preferred Stock to be
redeemed on the Redemption Date. On the Redemption Date, the shares of Series B
Preferred Stock redeemed by the Company shall be deemed to be canceled and
extinguished as a result of the redemption payment and the cancellation of such
shares will be noted in the Company's stock transfer records. The holders of
redeemed Series B Preferred Stock may return their shares of Series B Preferred
Stock to the Company for cancellation; however, such cancellation will be
automatic as of the Redemption Date. All Series B Preferred Stock so redeemed
shall be canceled and retired in such manner as may be prescribed by law and no
Series B Preferred Stock so redeemed shall be reissued.
8. Adjustment to Conversion Ratio and Redemption Price. If the Company
(1) subdivides or reclassifies its outstanding shares of Common Stock into a
greater number of shares (pursuant to a forward stock split) or (2) combine or
reclassify its outstanding shares of Common Stock into a smaller number of
shares (pursuant to a reverse stock split), the Conversion Ratio and Redemption
Price shall be adjusted proportionately.
9. Other Provisions. The shares of Series B Preferred Stock, when
issued, will be duly and validly issued, fully paid and non-assessable. The
holders of the shares of Series B Preferred Stock will have no preemptive rights
with respect to any shares of capital stock or the Company or any other
securities or the Company convertible into carrying rights or options to
purchase any such shares.
10. Appointment of Directors. Series B Preferred Shareholders will have
the right to appoint two directors to the Board of Directors of the Company.
Such directors will be selected by
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<PAGE>
a majority of the Series B Preferred Shares outstanding at such time. Directors
to the Company's Board of Directors so appointed can only serve on the Board of
Directors while a majority of the originally issued Series B Preferred Shares
(those shares of Series B Preferred Shares issued between February 1, 2000 and
June 1, 2000) remain outstanding, unconverted and unredeemed.
11. No Liens or Encumbrances and No Adverse Changes.
------------------------------------------------
The Company is further prohibited from encumbering the underlying
assets of the Company, other than cash, accounts receivable, and inventories,
for the purposes of pledging, securing or otherwise encumbering these assets for
any reason including further borrowing or other purposes without the unanimous
approval of the Board of Directors of the Company including the directors so
appointed by the majority of' the Series B Preferred Shares.
So long as any shares of Series B Preferred Stock are outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of the Series B Preferred Stock,
voting a class: (i) create, authorize or issue any shares of any other class of
Senior Dividend Stock or Senior Liquidation Stock or (ii) amend, alter or
repeal, whether by merger, consolidation or otherwise, the Articles of
Incorporation, if amendment, alteration or repeal materially and adversely
affects, the powers, preferences or special rights of the Series B Preferred
Stock. However, any increase in or the creation and issuance of any other
capital stock of the Company junior to the Series B Preferred Stock will not be
deemed to materially and adversely affect such powers, preferences or special
rights. In addition, holders of Series B Preferred Stock will not have voting
rights with respect to any merger or consolidation involving the amendment,
alteration or repeal of the Articles of Incorporation, if such amendment,
alteration or repeal does not materially and adversely affect such powers,
preferences or special rights.
C. Provisions Relating to Series C 10% Convertible Preferred
---------------------------------------------------------
Stock
-----
1. Designation, Amount, Par Value, and Rank. A series of Preferred
Stock shall be designated as Series C 10% Convertible Preferred Stock (the
"Series C Preferred Stock"), and the number of Shares so designated shall be
300,000. Each share of Series C Preferred Stock shall have a par value of $.01
per share. The Series C Preferred Stock shall rank prior to all lower series or
classes of preferred stock (Series D, E, F) and common stock, with respect to
dividends. The Series C Preferred Stock shall be subordinate to the Series B
Stock with respect to dividends and liquidation rights. The Series C Preferred
Stock shall rank in pari passu with the Series D, E and F Stock with respect to
liquidation rights and shall rank prior to all lower series or classes of
preferred stock with respect to liquidation rights (Series G, H, etc.).
2. Dividends. Subject to the limitations described below, holders of
the Series C Preferred Stock will be entitled to receive, out of funds of the
Company legally available for payment under Florida law, dividends at an annual
rate of $1.00 per share, payable quarterly in arrears on January 10, April 10,
July 10 and October 10 of each year (the "Dividend Payment Date"), commencing on
July 10, 2000. In the case of any accrued but unpaid dividends, the Company's
Board of Directors will attempt to make those dividend payments to the Series C
Preferred Shareholders, in the next quarter or at an earlier date, if such
distributions are permitted under
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<PAGE>
Florida law. In the event that any Dividend Payment Date shall fall on any day
other than a business day, the preferred dividends due on such Dividend Payment
Date shall be paid on the business day immediately following such Dividend
Payment Date.
Dividends will be cumulative from the date of original issuance of the
Series C Preferred Stock and dividends will cease to accrue after the Series C
Preferred Stock is converted or redeemed as described in Sections 6 and 7 of
this Article C. Dividends accrued for any period less than a full quarterly
period between the date of initial issuance of a share of Series C Preferred
Stock through the first Dividend Payment Date shall be computed on the basis of
a 360 day year, consisting of twelve 30-day months. Accrued but unpaid dividends
shall cumulate as of the Dividend Payment Date on which they first become
payable, but no interest shall accrue on accumulated unpaid preferred dividends.
Dividends shall be payable to holders of record as they appear on the stock
transfer records of the Company on such record dates, which shall be not more
than 60 days nor less than 10 days preceding the payment dates, as shall be
fixed by the Board of Directors. No senior dividend stock may be issued without
the approval of holders of a majority of the Series C Preferred Stock.
The Series C Preferred Stock will have the priority as to dividends
over the Common Stock and all other series or classes of the Company's stock
hereafter issued which ranks junior as to dividends to the Series C Preferred
Stock ("Junior Dividend Stock"), and no dividend may be made by the Company on
any Junior Dividend Stock unless all accrued and unpaid dividends on Series C
Preferred Stock for all periods and the current period have been paid or
declared and set aside for payment.
3. Default. The holders of at least 60% of the Company's issued and
outstanding Series C Preferred Stock may declare an event of default ("Event of
Default") if the Company fails to make payments of dividends for three fiscal
quarters. Prior to having the Event of Default be effective, the holders of at
least 60% of the Company's issued and outstanding Series C Preferred Stock must
(1) approve in writing a resolution to declare the Series C Preferred Stock in
default and (2) must send the Company written notice ("Notice of Default") of
their intent to declare the Series C Preferred Stock in Default. The Notice of
Default shall specify the date on which the Event of Default shall be deemed to
be effective; provided that an Event of Default will not be effective until at
least sixty (60) days after the date on which the Company receives the Notice of
Default. Once all the conditions for the Event of Default have occurred, the
holders of the Company's Series C Preferred Stock will have certain voting
rights described in Section 5 of this Article C.
4. Liquidation Rights. In case of voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of Series C Preferred Stock
will be entitled to receive a liquidation price equal to the $10 per share for
the period during which the voluntary or involuntary liquidation, dissolution or
winding up of the Company occurred, plus an amount equal to any accrued and
unpaid dividends to the payment date, before any payment or distribution is made
to the holders of Common Stock or any other series or class of the Company's
stock hereafter issued which ranks junior as to liquidation rights to the Series
C Preferred Stock. However, the holders of the shares of the Series C Preferred
Stock will not be entitled to receive the liquidation price of such shares until
the liquidation price of any other series or class of the Company's stock
hereafter issued
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<PAGE>
which ranks senior as to liquidation rights of the Series C Preferred Stock
("Senior Liquidation Stock") has been paid in full. If upon liquidation,
dissolution or winding up of the Company, the amounts payable with respect to
the Series C, Series D, Series E and Series F shares and any other shares
ranking as to such distribution on a parity with the Series D Preferred Shares
are not paid in full, the holders of the Series C, D, E and F shall share
ratably in such distribution of assets in proportion to their full respective
preferential amounts to which they are entitled. No such Senior Liquidation
Stock may be issued without approval of the holders of a majority of the shares
of Series C Preferred Stock. Neither a consolidation nor merger of the Company
with another corporation nor a sales or transfer of all or part of the Company's
assets for cash, securities or other property will be considered a liquidation,
dissolution or winding up of the Company.
5. Voting Rights. Except as indicated below or otherwise required by
law, holders of Series C Preferred Shares will have no voting rights.
In the event that the holders of 60% of the issued and outstanding
shares of the Company's Series C Preferred Stock elect and declares an event of
default as described in Section 3 of this Article C, each holder of Series C
Preferred Stock may vote, along with holders of the Company's Common Stock and
any other equity securities which have voting rights, in the election of the
Company's Board of Directors. With respect to the election of directors, each
share of Series C Preferred Share shall have 10 votes per share. Except for the
foregoing voting rights for directors in the Event of Default and as required by
Florida law, the Series C Preferred Stock will not have voting rights on any
other corporate matters.
6. Conversion Rights. At any time after October 21, 2003, each holder
of Series C Preferred Stock will be entitled to convert, in whole or in part,
its shares of Series C Preferred Stock into shares of the Company's Common Stock
at the following conversion ratio: each share of Series C Preferred Stock shall
be deemed to have a value equal to $10 per share and each share of the Company's
common stock shall be deemed to have a value equal to the stock's closing price
on the date preceding the conversion (the "Conversion Date"). For example, if
the Company's common stock has a closing price of $10 per share on the date
preceding the Conversion Date, each share of Series C Preferred Stock can be
converted into one share of the Company's common stock. By way of further
illustration if the Company's common stock has a trading price of $5 per share
on the date preceding the Conversion Date, each share of Series C Preferred
Stock can be converted into two (2) shares of the Company's common stock. If a
holder decides to convert its Series C Preferred Stock, it shall send the
Company written notice of such election on the date of Conversion. The
conversion shall be deemed to have occurred on the date the Company receives a
notice of election from the holder, so that the rights of the holder shall be
treated for all purposes as having become the record holder of shares of common
stock on the Conversion Date.
In the case of any consolidation or merger of the Company with any
other corporation (other than a wholly owned subsidiary), or in the case of a
sale or transfer of all or substantially all of the assets of the Corporation,
or in the case of any share exchange whereby the Common Stock is converted into
other securities or property, the Company will be required to make appropriate
provisions so that the holder of each share of Series C Preferred Stock then
outstanding will have the right thereafter to convert such shares of Series C
Preferred Stock into the kind and amount of
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shares of stock and other securities and property receivable by the common
stockholder upon such consolidation, merger, sale, transfer or share exchange.
If the holders of a majority of the Series C Preferred Stock do not consent to
such conversion, the Company will be required to redeem ( per Redemption in
Section 7 of this Article C below) such shares so held before and such merger,
consolidation or share exchange occurs. In connection with the forgoing
adjustments, no fractional shares will be issued and, in lieu of any fractional
share, cash in an amount based on the then applicable market value as defined
below of the Common Stock will be paid.
The holder of record of a share of Series C Preferred Stock on a record
date with respect to the payment of a dividend on the Series C Preferred Stock
shall be entitled to receive such dividends on such share of Series C Preferred
Stock on the corresponding Dividend Payment Date, notwithstanding the conversion
thereof after such record date or default by the Company in the payment of the
dividend payable on such dividend date due. However, shares of Series C
Preferred Stock surrendered for conversion during the period from the close of
business on any record date for the payment of a dividend on the Series C
Preferred Stock to the opening of business on the corresponding Dividend Payment
Date (except a share of Series C Preferred Stock called for redemption on a
redemption date during such period) must be accompanied by payment of an amount
equal to the dividend payable on such Dividend Payment Date. Holders of record
of shares of Series C Preferred Stock on a record date with respect to the
payment of a dividend on the Series C Preferred Stock who convert such shares on
or after the corresponding Dividend Payment Date will receive the dividend
payable by the Company on such date and need not include payment in the amount
of such dividend upon surrender of such shares for conversion.
7. Redemption. At any time after issuance, the Series C Preferred Stock
shall be redeemable, at the option of the Board of Directors of the Company, in
whole on in part, upon giving the Series C Preferred Stockholders 30 days
written notice of its intention to redeem the Series C Preferred Stock. The
redemption price shall be $10.00 per share, plus an amount equal to all unpaid
accumulated dividends thereon. The redemption notice shall (1) identify the
Series C Preferred Stock or portions thereof to be redeemed, (2) list the date
on which the redemption will be effective (the "Redemption Date") and (3)
describe the redemption procedures. During the period after the redemption
notice but prior to the redemption date, the holders of Series C Preferred
Shares shall have the right to convert the Series C Preferred Shares into Common
Stock of the Company at the conversion rate of 2.5 shares of the Company's
Common Stock per share of Series C Preferred Stock.
Unless provided otherwise in the notice of redemption, the Company
shall send the holder's payment for the shares of Series C Preferred Stock to be
redeemed on the Redemption Date. On the Redemption Date, the shares of Series C
Preferred Stock redeemed by the Company shall be deemed to be canceled and
extinguished as a result of the redemption payment and the cancellation of such
shares will be noted in the Company's stock transfer records. The holders of
redeemed Series C Preferred Stock may return their shares of Series C Preferred
Stock to the Company for cancellation; however, such cancellation will be
automatic as of the Redemption Date. All Series C Preferred Stock so redeemed
shall be canceled and retired in such manner as may be prescribed by law and no
Series C Preferred Stock so redeemed shall be reissued.
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8. Adjustment to Conversion Ratio and Redemption Price. If the Company
(1) subdivides or reclassifies its outstanding shares of Common Stock into a
greater number of shares (pursuant to a forward stock split) or (2) combine or
reclassify its outstanding shares of Common Stock into a smaller number of
shares (pursuant to a reverse stock split), the Conversion Ratio and Redemption
Price shall be adjusted proportionately.
9. Other Provisions. The shares of Series C Preferred Stock, when
issued, will be duly and validly issued, fully paid and non-assessable. The
holders of the shares of Series C Preferred Stock will have no preemptive rights
with respect to any shares of capital stock or the Company or any other
securities or the Company convertible into carrying rights or options to
purchase any such shares.
10. No Liens or Encumbrances and No Adverse Changes. The Company is
further prohibited from encumbering the underlying assets of the Company, other
than cash, accounts receivable, and inventories, for the purposes of pledging,
securing or otherwise encumbering these assets for any reason including further
borrowing or other purposes without the unanimous approval of the Board of
Directors of the Company including the directors so appointed by the majority
of' the Series C Preferred Shares.
So long as any shares of Series C Preferred Stock are outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of the Series C Preferred Stock,
voting a class: (i) create, authorize or issue any shares of any other class of
Senior Dividend Stock or Senior Liquidation Stock or (ii) amend, alter or
repeal, whether by merger, consolidation or otherwise, the Company's Articles of
Incorporation, if amendment, alteration or repeal materially and adversely
affects, the powers, preferences or special rights of the Series C Preferred
Stock. However, any increase in or the creation and issuance of any other
capital stock of the Company junior to the Series C Preferred Stock will not be
deemed to materially and adversely affect such powers, preferences or special
rights. In addition, holders of Series C Preferred Stock will not have voting
rights with respect to any merger or consolidation involving the amendment,
alteration or repeal of the Articles of Incorporation, if such amendment,
alteration or repeal does not materially and adversely affect such powers,
preferences or special rights.
D. Provisions Relating to Series D 10% Convertible Preferred
---------------------------------------------------------
Stock
-----
1. Designation, Amount, Par Value, and Rank. A series of Preferred
Stock shall be designated as Series D 10% Convertible Preferred Stock (the
"Series D Preferred Stock"), and the number of Shares so designated shall be
200,000. Each share of Series D Preferred Stock shall have a par value of $.01
per share. The Series D Preferred Stock shall be subordinate to the Series B and
Series C Preferred Stock with respect to dividend rights and shall rank prior to
all lower series or classes of preferred stock with respect to dividends (such
as Series E, F, etc.) and the Company's common stock. The Series D Preferred
Stock shall be in pari passu with the Series C, E and F Preferred Stock with
respect to liquidation rights and shall rank prior to all lower series or
classes of preferred stock with respect to liquidation rights (G, H, etc.). The
Series D Preferred Stock shall be subordinated to the Series B Preferred Stock
with respect to liquidation rights.
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<PAGE>
2. Dividends. Subject to the limitations described below, holders of
the Series D Preferred Stock will be entitled to receive, when, as, and if
declared by the Board of Directors out of funds of the Company legally available
for payment, cash dividends or at the option of the Board of Directors, Common
Stock of the Company, at an annual rate of $1.00 per share, payable quarterly in
arrears on April 10, July 10, October 10 and January 10 of each year (the
"Dividend Payment Date"), commencing on July 10, 2000. In the case of any
accrued but unpaid dividends, the Company's Board of Directors may make these
payments at any time. In the event that any Dividend Payment Date shall fall on
any day other than a business day, the preferred dividends due on such Dividend
Payment Date shall be paid on the business day immediately following such
Dividend Payment Date.
Dividends will be cumulative from the date of original issuance of the
Series D Preferred Stock and dividends will cease to accrue after the Series D
Preferred Stock is converted or redeemed as described in Sections 6 and 7 of
this Article D. Dividends accrued for any period less than a full quarterly
period between the date of initial issuance of a share of Series D Preferred
Stock through the first Dividend Payment Date shall be computed on the basis of
a 360 day year, consisting of twelve 30-day months. Accrued but unpaid dividends
shall cumulate as of the Dividend Payment Date on which they first become
payable, but no interest shall accrue on accumulated unpaid preferred dividends.
Dividends shall be payable to holders of record as they appear on the stock
transfer records of the Company on such record dates, which shall be not more
than 60 days nor less than 10 days preceding the payment dates, as shall be
fixed by the Board of Directors. No senior dividend stock may be issued without
the approval of holders of a majority of the Series D Preferred Stock.
The Series D Preferred Stock will have the priority as to dividends
over the Common Stock and all other series or classes of the Company's stock
hereafter issued which ranks junior as to dividends to the Series D Preferred
Stock ("Junior Dividend Stock"), and no dividend may be made by the Company on
any Junior Dividend Stock unless all accrued and unpaid dividends on Series D
Preferred Stock for all periods and the current period have been paid or
declared and set aside for payment.
3. Default. The holders of at least 60% of the Company's issued and
outstanding Series D Preferred Stock may declare an event of default ("Event of
Default") if the Company fails to make payments of dividends for three fiscal
quarters. Prior to having the Event of Default be effective, the holders of at
least 60% of the Company's issued and outstanding Series D Preferred Stock must
(1) approve in writing a resolution to declare the Series D Preferred Stock in
default and (2) must send the Company written notice ("Notice of Default") of
their intent to declare the Series D Preferred Stock in Default. The Notice of
Default shall specify the date on which the Event of Default shall be deemed to
be effective; provided that an Event of Default will not be effective until at
least sixty (60) days after the date on which the Company receives the Notice of
Default. Once all the conditions for the Event of Default have occurred, the
holders of the Company's Series D Preferred Stock will have certain voting
rights described in Section 5 of this Article D.
4. Liquidation Rights. In case of voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of Series D Preferred Stock
will be entitled to receive a
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liquidation price equal to the $10 per share for the period during which the
voluntary or involuntary liquidation, dissolution or winding up of the Company
occurred, plus an amount equal to any accrued and unpaid dividends to the
payment date, before any payment or distribution is made to the holders of
Common Stock or any other series or class of the Company's stock hereafter
issued which ranks junior as to liquidation rights to the Series D Preferred
Stock. However, the holders of the shares of the Series D Preferred Stock will
not be entitled to receive the liquidation price of such shares until the
liquidation price of any other series or class of the Company's stock which
ranks senior as to liquidation rights of the Series D Preferred Stock ("Senior
Liquidation Stock") has been paid in full. If upon liquidation, dissolution or
winding up of the Company, the amounts payable with respect to the Series C,
Series D, Series E and Series F shares and any other shares ranking as to such
distribution on a parity with the Series D Preferred Shares are not paid in
full, the holders of the Series C, D, E and F shall share ratably in such
distribution of assets in proportion to their full respective preferential
amounts to which they are entitled. No such Senior Liquidation Stock may be
issued without approval of the holders of a majority of the shares of Series D
Preferred Stock. Neither a consolidation nor merger of the Company with another
corporation nor a sales or transfer of all or part of the Company's assets for
cash, securities or other property will be considered a liquidation, dissolution
or winding up of the Company.
5. Voting Rights. Except as indicated below or otherwise required by
law, holders of Series D Preferred Shares will have no voting rights.
In the event that the holders of 60% of the issued and outstanding
shares of the Company's Series D Preferred Stock elect and declares an event of
default as described in Section 3 of this Article D, each holder of Series D
Preferred Stock may vote, along with holders of the Company's Common Stock and
any other equity securities which have voting rights, in the election of the
Company's Board of Directors. With respect to the election of directors, each
share of Series D Preferred Share shall have 10 votes per share. Except for the
foregoing voting rights for directors in the Event of Default and as required by
Florida law, the Series D Preferred Stock will not have voting rights on any
other corporate matters.
6. Conversion Rights. At any time after issuance, each holder of Series
D Preferred Stock shall have the right to convert its shares of Series D
Preferred Stock into shares of the Company's common stock. For purposes of
determining the Conversion Rate, each share of Series D Preferred Stock shall be
deemed to have a value equal to $10 per share. The Conversion Price shall equal
the average "bid" and "ask" price of the Company's common stock during the
preceding thirty (30) day trading period discounted by a factor of twenty
percent (20%). For example, if the Company's common stock is trading at a price
of $4.00 per share during the preceding thirty (30) day period, the Conversion
Price would be $3.20 per share. Accordingly if the Conversion Price is $3.20 per
share, one share of the Company's Series D Preferred Stock can be converted into
3.125 shares of the Company's common stock.
To exercise its voluntary conversion rights, the holder shall give
written notice (the "Conversion Notice") to the Company at the Company's offices
stating the number of shares that it wishes to convert into common stock and the
date that he wishes to use as the starting point for the calculation of the
"bid" and "ask" price calculated from during the preceding thirty day period.
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<PAGE>
The date specified as the starting date shall not be more than10 days from the
date of the Conversion Notice. The conversion shall be deemed to have occurred
on the date the Company receives a notice of election from the holder (the
"Conversion Date"), so that the rights of the holder shall be treated for all
purposes as having become the record holder of shares of common stock on the
conversion date. Any accrued but unpaid dividends outstanding on the Conversion
Date shall be paid, at the option of the Company, to the Holder in cash or
shares of the Company's common stock.
In the case of any consolidation or merger of the Company with any
other corporation (other than a wholly owned subsidiary), or in the case of a
sale or transfer of all or substantially all of the assets of the Company, or in
the case of any share exchange whereby the Common Stock is converted into other
securities or property, the Company will be required to make appropriate
provisions so that the holder of each share of Series D Preferred Stock then
outstanding will have the right thereafter to convert such shares of Series D
Preferred Stock into the kind and amount of shares of stock and other securities
and property receivable by the common stockholder upon such consolidation,
merger, sale, transfer or share exchange. If the holders of a majority of the
Series D Preferred Stock do not consent to such conversion, the Company will be
required to redeem (per Redemption in Section 7 of this Article D below) such
shares so held before and such merger, consolidation or share exchange occurs.
In connection with the forgoing adjustments, no fractional shares will be issued
and, in lieu of any fractional share, cash in an amount based on the then
applicable market value as defined below of the Common Stock will be paid.
The holder of record of a share of Series D Preferred Stock on a record
date with respect to the payment of a dividend on the Series D Preferred Stock
shall be entitled to receive such dividends on such share of Series D Preferred
Stock on the corresponding Dividend Payment Date, notwithstanding the conversion
thereof after such record date or default by the Company in the payment of the
dividend payable on such Dividend Payment Date. However, shares of Series D
Preferred Stock surrendered for conversion during the period from the close of
business on any record date for the payment of a dividend on the Series D
Preferred Stock to the opening of business on the corresponding Dividend Payment
Date (except a share of Series D Preferred Stock called for redemption on a
redemption date during such period) must be accompanied by payment of an amount
equal to the dividend payable on such Dividend Payment Date. Holders of record
of shares of Series D Preferred Stock on a record date with respect to the
payment of a dividend on the Series D Preferred Stock who convert such shares on
or after the corresponding Dividend Payment Date will receive the dividend
payable by the Company on such date and need not include payment in the amount
of such dividend upon surrender of such shares for conversion.
7. Redemption. At any time after issuance, the Series D Preferred Stock
shall be redeemable, at the option of the Board of Directors of the Company, in
whole on in part, upon giving the Series D Preferred Stockholders 30 days
written notice of its intention to redeem the Series D Preferred Stock. The
redemption price shall be $10.00 per share, plus an amount equal to all unpaid
accumulated dividends thereon. The redemption notice shall (1) identify the
Series D Preferred Stock or portions thereof to be redeemed, (2) list the date
on which the redemption will be effective (the "Redemption Date") and (3)
describe the redemption procedures. During the period after the redemption
notice but prior to the Redemption Date, the holders of Series D Preferred
Shares shall have the right to convert the Series D Preferred Shares into Common
Stock of the Company at the
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<PAGE>
Conversion Price described in Section 6 of this Article D.
Unless provided otherwise in the notice of redemption, the Company
shall send the holder's payment for the shares of Series D Preferred Stock to be
redeemed on the Redemption Date. On the Redemption Date, the shares of Series D
Preferred Stock redeemed by the Company shall be deemed to be canceled and
extinguished as a result of the redemption payment and the cancellation of such
shares will be noted in the Company's stock transfer records. The holders of
redeemed Series D Preferred Stock may return their shares of Series D Preferred
Stock to the Company for cancellation; however, such cancellation will be
automatic as of the Redemption Date. All Series D Preferred Stock so redeemed
shall be canceled and retired in such manner as may be prescribed by law and no
Series D Preferred Stock so redeemed shall be reissued.
8. Adjustment to Conversion Ratio and Redemption Price. If the Company
(1) subdivides or reclassifies its outstanding shares of Common Stock into a
greater number of shares (pursuant to a forward stock split) or (2) combine or
reclassify its outstanding shares of Common Stock into a smaller number of
shares (pursuant to a reverse stock split), the Conversion Ratio and Redemption
Price shall be adjusted proportionately.
9. Other Provisions. The shares of Series D Preferred Stock, when
issued, will be duly and validly issued, fully paid and non-assessable. The
holders of the shares of Series D Preferred Stock will have no preemptive rights
with respect to any shares of capital stock or the Company or any other
securities or the Company convertible into carrying rights or options to
purchase any such shares.
10. No Liens or Encumbrances and No Adverse Changes. The Company is
further prohibited from encumbering the underlying assets of the Company, other
than cash, accounts receivable, and inventories, for the purposes of pledging,
securing or otherwise encumbering these assets for any reason including further
borrowing or other purposes without the unanimous approval of the Board of
Directors of the Company including the directors so appointed by the majority
of' the Series D Preferred Shares.
So long as any shares of Series D Preferred Stock are outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of the Series D Preferred Stock,
voting a class: (i) create, authorize or issue any shares of any other class of
Senior Dividend Stock or Senior Liquidation Stock or (ii) amend, alter or
repeal, whether by merger, consolidation or otherwise, the Company's Articles of
Incorporation, if amendment, alteration or repeal materially and adversely
affects, the powers, preferences or special rights of the Series D Preferred
Stock. However, any increase in or the creation and issuance of any other
capital stock of the Company junior to the Series D Preferred Stock will not be
deemed to materially and adversely affect such powers, preferences or special
rights. In addition, holders of Series D Preferred Stock will not have voting
rights with respect to any merger or consolidation involving the amendment,
alteration or repeal of the Articles of Incorporation, if such amendment,
alteration or repeal does not materially and adversely affect such powers,
preferences or special rights.
E. Provisions Relating to Series E 8% Convertible Preferred Stock
--------------------------------------------------------------
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<PAGE>
1. Designation, Amount, Par Value, and Rank. A series of Preferred
Stock shall be designated as Series E 8% Convertible Preferred Stock ( the
"Series E Preferred Stock"), and the number of Shares so designated shall be
200,000. Each share of Series E Preferred Stock shall have a par value of $.01
per share. The Series E Preferred Stock shall rank prior to all lower series or
classes of preferred stock (Series F, etc.) and common stock with respect to
dividends and liquidation rights. The Series E Preferred Stock shall be
subordinate to the Series B and Series C with respect to dividends. The Series E
Preferred Stock will be subordinate to the Series B Stock with respect to
liquidation rights. The Series E Preferred Stock shall be in pari passu with the
Series C, D and F with respect to liquidation rights.
2. Dividends. Subject to the limitations described below, holders of
the Series E Preferred Stock will be entitled to receive, when, as, and if
declared by the Board of Directors out of funds of the Company legally available
for payment, cash dividends or at the option of the Board of Directors, Common
Stock of the Company, at an annual rate of $0.80 per share, payable quarterly in
arrears on January 10, April 10, July 10 and October 10 of each year (the
"Dividend Payment Date"), commencing on July 10, 2000. In the case of any
accrued but unpaid dividends, the Company's Board of Directors may make these
payments at any time. In the event that any Dividend Payment Date shall fall on
any day other than a business day, the preferred dividends due on such Dividend
Payment Date shall be paid on the business day immediately following such
Dividend Payment Date.
Dividends will be cumulative from the date of original issuance of the
Series E Preferred Stock and dividends will cease to accrue after the Series E
Preferred Stock is converted or redeemed as described in Sections 6 and 7 of
this Article E. Dividends accrued for any period less than a full quarterly
period between the date of initial issuance of a share of Series E Preferred
Stock through the first Dividend Payment Date shall be computed on the basis of
a 360 day year, consisting of twelve 30-day months. Accrued but unpaid dividends
shall cumulate as of the Dividend Payment Date on which they first become
payable, but no interest shall accrue on accumulated unpaid preferred dividends.
Dividends shall be payable to holders of record as they appear on the stock
transfer records of the Company on such record dates, which shall be not more
than 60 days nor less than 10 days preceding the payment dates, as shall be
fixed by the Board of Directors. No senior dividend stock may be issued without
the approval of holders of a majority of the Series E Preferred Stock.
The Series E Preferred Stock will have the priority as to dividends
over the Common Stock and all other series or classes of the Company's stock
hereafter issued which ranks junior as to dividends to the Series E Preferred
Stock ("Junior Dividend Stock"), and no dividend may be made by the Company on
any Junior Dividend Stock unless all accrued and unpaid dividends on Series E
Preferred Stock for all periods and the current period have been paid or
declared and set aside for payment.
3. Default. The holders of at least 60% of the Company's issued and
outstanding Series E Preferred Stock may declare an event of default ("Event of
Default") if the Company fails to make payments of dividends for three fiscal
quarters. Prior to having the Event of Default be effective, the holders of at
least 60% of the Company's issued and outstanding Series E Preferred Stock must
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<PAGE>
(1) approve in writing a resolution to declare the Series E Preferred Stock in
default and (2) must send the Company written notice ("Notice of Default") of
their intent to declare the Series E Preferred Stock in Default. The Notice of
Default shall specify the date on which the Event of Default shall be deemed to
be effective; provided that an Event of Default will not be effective until at
least sixty (60) days after the date on which the Company receives the Notice of
Default. Once all the conditions for the Event of Default have occurred, the
holders of the Company's Series E Preferred Stock will have certain voting
rights described in Section 5 of this Article E.
4. Liquidation Rights. In case of voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of Series E Preferred Stock
will be entitled to receive a liquidation price equal to the $10 per share for
the period during which the voluntary or involuntary liquidation, dissolution or
winding up of the Company occurred, plus an amount equal to any accrued and
unpaid dividends to the payment date, before any payment or distribution is made
to the holders of Common Stock or any other series or class of the Company's
stock hereafter issued which ranks junior as to liquidation rights to the Series
E Preferred Stock. However, the holders of the shares of the Series E Preferred
Stock will not be entitled to receive the liquidation price of such shares until
the liquidation price of any other series or class of the Company's stock
hereafter issued which ranks senior as to liquidation rights of the Series E
Preferred Stock ("Senior Liquidation Stock") has been paid in full. If upon
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Series C, Series D, Series E and Series F shares and any other
shares ranking as to such distribution on a parity with the Series D Preferred
Shares are not paid in full, the holders of the Series C, D, E and F shall share
ratably in such distribution of assets in proportion to their full respective
preferential amounts to which they are entitled. No such Senior Liquidation
Stock may be issued without approval of the holders of a majority of the shares
of Series E Preferred Stock. Neither a consolidation nor merger of the Company
with another corporation nor a sales or transfer of all or part of the Company's
assets for cash, securities or other property will be considered a liquidation,
dissolution or winding up of the Company.
5. Voting Rights. Except as indicated below or otherwise required by
law, holders of Series E Preferred Shares will have no voting rights.
In the event that the holders of 60% of the issued and outstanding
shares of the Company's Series E Preferred Stock elect and declares an event of
default as described in Section 3 of this Article E, each holder of Series E
Preferred Stock may vote, along with holders of the Company's Common Stock and
any other equity securities which have voting rights, in the election of the
Company's Board of Directors. With respect to the election of directors, each
share of Series E Preferred Share shall have 10 votes per share. Except for the
foregoing voting rights for directors in the Event of Default and as required by
Florida law, the Series E Preferred Stock will not have voting rights on any
other corporate matters.
6. Conversion Rights. At any time after issuance, each holder of Series
E Preferred Stock shall have the right to convert its shares of Series E
Preferred Stock into shares of the Company's common stock. For purposes of
determining the Conversion Rate, each share of Series E Preferred Stock shall be
deemed to have a value equal to $10 per share. The Conversion Price shall equal
the average "bid" and "ask" price of the Company's common stock during the
preceding thirty
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<PAGE>
(30) day trading period discounted by a factor of twenty percent (20%). For
example, if the Company's common stock is trading at a price of $4.00 per share
during the preceding thirty (30) day period, the Conversion Price would be $3.20
per share. Accordingly if the Conversion Price is $3.20 per share, one share of
the Company's Series E Preferred Stock can be converted into 3.125 shares of the
Company's common stock.
To exercise its voluntary conversion rights, the holder shall give
written notice (the "Conversion Notice") to the Company at the Company's offices
stating the number of shares that it wishes to convert into common stock and the
date that he wishes to use as the starting point for the calculation of the
"bid" and "ask" price calculated from during the preceding thirty day period.
The date specified as the starting date shall not be more than10 days from the
date of the Conversion Notice. The conversion shall be deemed to have occurred
on the date the Company receives a notice of election from the holder (the
"Conversion Date"), so that the rights of the holder shall be treated for all
purposes as having become the record holder of shares of common stock on the
conversion date. Any accrued but unpaid dividends outstanding on the Conversion
Date shall be paid, at the option of the Company, to the Holder in cash or
shares of the Company's common stock.
In the case of any consolidation or merger of the Company with any
other corporation (other than a wholly owned subsidiary), or in the case of a
sale or transfer of all or substantially all of the assets of the company, or in
the case of any share exchange whereby the Common Stock is converted into other
securities or property, the Company will be required to make appropriate
provisions so that the holder of each share of Series E Preferred Stock then
outstanding will have the right thereafter to convert such shares of Series E
Preferred Stock into the kind and amount of shares of stock and other securities
and property receivable by the common stockholder upon such consolidation,
merger, sale, transfer or share exchange. If the holders of a majority of the
Series E Preferred Stock do not consent to such conversion, the Company will be
required to redeem ( per Redemption in Section 7 of this Article E below) such
shares so held before and such merger, consolidation or share exchange occurs.
In connection with the forgoing adjustments, no fractional shares will be issued
and, in lieu of any fractional share, cash in an amount based on the then
applicable market value as defined below of the Common Stock will be paid.
The holder of record of a share of Series E Preferred Stock on a record
date with respect to the payment of a dividend on the Series E Preferred Stock
shall be entitled to receive such dividends on such share of Series E Preferred
Stock on the corresponding Dividend Payment Date, notwithstanding the conversion
thereof after such record date or default by the Company in the payment of the
dividend payable on such Dividend Payment Date. However, shares of Series E
Preferred Stock surrendered for conversion during the period from the close of
business on any record date for the payment of a dividend on the Series E
Preferred Stock to the opening of business on the corresponding Dividend Payment
Date (except a share of Series E Preferred Stock called for redemption on a
redemption date during such period) must be accompanied by payment of an amount
equal to the dividend payable on such Dividend Payment Date. Holders of record
of shares of Series E Preferred Stock on a record date with respect to the
payment of a dividend on the Series E Preferred Stock who convert such shares on
or after the corresponding Dividend Payment Date will receive the dividend
payable by the Company on such date and need not include payment in the
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amount of such dividend upon surrender of such shares for conversion.
7. Redemption. At any time after issuance, the Series E Preferred Stock
shall be redeemable, at the option of the Board of Directors of the Company, in
whole on in part, upon giving the Series E Preferred Stockholders 30 days
written notice of its intention to redeem the Series E Preferred Stock. The
redemption price shall be $10.00 per share, plus an amount equal to all unpaid
accumulated dividends thereon. The redemption notice shall (1) identify the
Series E Preferred Stock or portions thereof to be redeemed, (2) list the date
on which the redemption will be effective (the "Redemption Date") and (3)
describe the redemption procedures. During the period after the redemption
notice but prior to the Redemption Date, the holders of Series E Preferred
Shares shall have the right to convert the Series E Preferred Shares into Common
Stock of the Company as described in conversion rights in Section 6 of this
Article E.
Unless provided otherwise in the notice of redemption, the Company
shall send the holder's payment for the shares of Series E Preferred Stock to be
redeemed on the Redemption Date. On the Redemption Date, the shares of Series E
Preferred Stock redeemed by the Company shall be deemed to be canceled and
extinguished as a result of the redemption payment and the cancellation of such
shares will be noted in the Company's stock transfer records. The holders of
redeemed Series E Preferred Stock may return their shares of Series E Preferred
Stock to the Company for cancellation; however, such cancellation will be
automatic as of the Redemption Date. All Series E Preferred Stock so redeemed
shall be canceled and retired in such manner as may be prescribed by law and no
Series E Preferred Stock so redeemed shall be reissued.
8. Adjustment to Conversion Ratio and Redemption Price. If the Company
(1) subdivides or reclassifies its outstanding shares of Common Stock into a
greater number of shares (pursuant to a forward stock split) or (2) combine or
reclassify its outstanding shares of Common Stock into a smaller number of
shares (pursuant to a reverse stock split), the Conversion Ratio and Redemption
Price shall be adjusted proportionately.
9. Other Provisions. The shares of Series E Preferred Stock, when
issued, will be duly and validly issued, fully paid and non-assessable. The
holders of the shares of Series E Preferred Stock will have no preemptive rights
with respect to any shares of capital stock or the Company or any other
securities or the Company convertible into carrying rights or options to
purchase any such shares.
10. No Liens or Encumbrances and No Adverse Changes. The Company is
further prohibited from encumbering the underlying assets of the Company, other
than cash, accounts receivable, and inventories, for the purposes of pledging,
securing or otherwise encumbering these assets for any reason including further
borrowing or other purposes without the unanimous approval of the Board of
Directors of the Company including the directors so appointed by the majority
of' the Series E Preferred Shares.
So long as any shares of Series E Preferred Stock are outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares
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<PAGE>
of the Series E Preferred Stock, voting a class: (i) create, authorize or issue
any shares of any other class of Senior Dividend Stock or Senior Liquidation
Stock or (ii) amend, alter or repeal, whether by merger, consolidation or
otherwise, the Company's Articles of Incorporation, if amendment, alteration or
repeal materially and adversely affects, the powers, preferences or special
rights of the Series E Preferred Stock. However, any increase in or the creation
and issuance of any other capital stock of the Company junior to the Series E
Preferred Stock will not be deemed to materially and adversely affect such
powers, preferences or special rights. In addition, holders of Series E
Preferred Stock will not have voting rights with respect to any merger or
consolidation involving the amendment, alteration or repeal of the Articles of
Incorporation, if such amendment, alteration or repeal does not materially and
adversely affect such powers, preferences or special rights.
F. Provisions Relating to Series F 8% Convertible Preferred Stock
--------------------------------------------------------------
1. Designation, Amount, Par Value, and Rank. A series of Preferred
Stock shall be designated as Series F 8% Convertible Preferred Stock ( the
"Series F Preferred Stock"), and the number of Shares so designated shall be
200,000. Each share of Series F Preferred Stock shall have a par value of $.01
per share. The Series F Preferred Stock shall be subordinate to the Series B,
Series C, Series D and Series E Preferred Stock with respect to dividend rights
and shall rank prior to all lower series or classes of preferred stock with
respect to dividends (such as Series G, H, I Preferred Stock) and the Company's
common stock. The Series F Preferred Stock shall be in pari passu with the
Series C, D, E and F Preferred Stock with respect to liquidation rights and
shall be subordinated to higher classes of preferred stock with respect to
liquidation rights (such as Series B). The Series F Preferred Stock shall have
priority over the common stock and all lower classes of preferred stock with
respect to liquidation rights (such as Series G, H, I, etc.).
2. Dividends. Subject to the limitations described below, holders of
the Series F Preferred Stock will be entitled to receive, when, as, and if
declared by the Board of Directors out of funds of the Company legally available
for payment, cash dividends or at the option of the Board of Directors, Common
Stock of the Company, at an annual rate of $.80 per share, payable quarterly in
arrears on January 10, April 10, July 10 and October 10 of each year (the
"Dividend Payment Date"), commencing on July 10, 2000. In the case of any
accrued but unpaid dividends, the Company's Board of Directors may make these
payments at any time. In the event that any Dividend Payment Date shall fall on
any day other than a business day, the preferred dividends due on such Dividend
Payment Date shall be paid on the business day immediately following such
Dividend Payment Date.
Dividends will be cumulative from the date of original issuance of the
Series F Preferred Stock and dividends will cease to accrue after the Series F
Preferred Stock is converted or redeemed as described in Sections 6 and 7 of
this Article F. Dividends accrued for any period less than a full quarterly
period between the date of initial issuance of a share of Series F Preferred
Stock through the first Dividend Payment Date shall be computed on the basis of
a 360 day year, consisting of twelve 30-day months. Accrued but unpaid dividends
shall cumulate as of the Dividend Payment Date on which they first become
payable, but no interest shall accrue on accumulated unpaid preferred dividends.
Dividends shall be payable to holders of record as they appear on the stock
transfer records of the Company on such record dates, which shall be not more
than 60 days nor less
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than 10 days preceding the payment dates, as shall be fixed by the Board of
Directors. No senior dividend stock may be issued without the approval of
holders of a majority of the Series F Preferred Stock.
The Series F Preferred Stock will have the priority as to dividends
over the Common Stock and all other series or classes of the Company's stock
hereafter issued which ranks junior as to dividends to the Series F Preferred
Stock ("Junior Dividend Stock"), and no dividend may be made by the Company on
any Junior Dividend Stock unless all accrued and unpaid dividends on Series F
Preferred Stock for all periods and the current period have been paid or
declared and set aside for payment.
3. Default. The holders of at least 60% of the Company's issued and
outstanding Series F Preferred Stock may declare an event of default ("Event of
Default") if the Company fails to make payments of dividends for three fiscal
quarters. Prior to having the Event of Default be effective, the holders of at
least 60% of the Company's issued and outstanding Series F Preferred Stock must
(1) approve in writing a resolution to declare the Series F Preferred Stock in
default and (2) must send the Company written notice ("Notice of Default") of
their intent to declare the Series F Preferred Stock in Default. The Notice of
Default shall specify the date on which the Event of Default shall be deemed to
be effective; provided that an Event of Default will not be effective until at
least sixty (60) days after the date on which the Company receives the Notice of
Default. Once all the conditions for the Event of Default have occurred, the
holders of the Company's Series F Preferred Stock will have certain voting
rights described in Section 5 of this Article F.
4. Liquidation Rights. In case of voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of Series F Preferred Stock
will be entitled to receive a liquidation price equal to the $10 per share for
the period during which the voluntary or involuntary liquidation, dissolution or
winding up of the Company occurred, plus an amount equal to any accrued and
unpaid dividends to the payment date, before any payment or distribution is made
to the holders of Common Stock or any other series or class of the Company's
stock hereafter issued which ranks junior as to liquidation rights to the Series
F Preferred Stock. However, the holders of the shares of the Series F Preferred
Stock will not be entitled to receive the liquidation price of such shares until
the liquidation price of any other series or class of the Company's stock which
ranks senior as to liquidation rights of the Series F Preferred Stock ("Senior
Liquidation Stock") has been paid in full. If upon liquidation, dissolution or
winding up of the Company, the amounts payable with respect to the Series C,
Series D, Series E and Series F shares and any other shares ranking as to such
distribution on a parity with the Series F Preferred Shares are not paid in
full, the holders of the Series C, D, E and F shall share ratably in such
distribution of assets in proportion to their full respective preferential
amounts to which they are entitled. No such Senior Liquidation Stock may be
issued without approval of the holders of a majority of the shares of Series F
Preferred Stock. Neither a consolidation nor merger of the Company with another
corporation nor a sales or transfer of all or part of the Company's assets for
cash, securities or other property will be considered a liquidation, dissolution
or winding up of the Company.
5. Voting Rights. Except as indicated below or otherwise required by
law, holders of Series F Preferred Shares will have no voting rights.
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<PAGE>
In the event that the holders of 60% of the issued and outstanding
shares of the Company's Series F Preferred Stock elect and declare an event of
default as described in Section 3 of this Article F, each holder of Series F
Preferred Stock may vote, along with holders of the Company's Common Stock and
any other equity securities which have voting rights, in the election of the
Company's Board of Directors. With respect to the election of directors, each
share of Series F Preferred Share shall have 10 votes per share. Except for the
foregoing voting rights for directors in the Event of Default and as required by
Florida law, the Series F Preferred Stock will not have voting rights on any
other corporate matters.
6. Conversion Rights. At any time after issuance, each holder of Series
F Preferred Stock shall have the right to convert its shares of Series F
Preferred Stock into shares of the Company's common stock. For purposes of
determining the Conversion Rate, each share of Series F Preferred Stock shall be
deemed to have a value equal to $10 per share. The Conversion Price shall equal
the average "bid" and "ask" price of the Company's common stock during the
preceding thirty (30) day period discounted by a factor of twenty percent (20%).
For example, if the Company's common stock is trading at a price of $4 per share
during the preceding thirty (30) day period, the Conversion Price would be $3.20
per share. Accordingly if the Conversion Price is $3.20 per share, one share of
the Company's Series F Preferred Stock can be converted into 3.125 shares of the
Company's common stock.
To exercise its voluntary conversion rights, the holder shall give
written notice (the "Conversion Notice") to the Company at the Company's offices
stating the number of shares that it wishes to convert into common stock and the
date that he wishes to use as the starting point for the calculation of the
"bid" and "ask " price calculated during the preceding thirty day period. The
date specified as the starting date shall not be more than 10 days from the date
of the Conversion Notice. The conversion shall be deemed to have occurred on the
date the Company receives a notice of election from the holder (the "Conversion
Date"), so that the rights of the holder shall be treated for all purposes as
having become the record holder of shares of common stock on the conversion
date. Any accrued but unpaid dividends outstanding on the Conversion Date shall
be paid, at the option of the Company, to the Holder in cash or shares of the
Company's common stock.
In the case of any consolidation or merger of the Company with any
other corporation (other than a wholly owned subsidiary), or in the case of a
sale or transfer of all or substantially all of the assets of the Company, or in
the case of any share exchange whereby the Common Stock is converted into other
securities or property, the Company will be required to make appropriate
provisions so that the holder of each share of Series F Preferred Stock then
outstanding will have the right thereafter to convert such shares of Series F
Preferred Stock into the kind and amount of shares of stock and other securities
and property receivable by the common stockholder upon such consolidation,
merger, sale, transfer or share exchange. If the holders of a majority of the
Series F Preferred Stock do not consent to such conversion, the Company will be
required to redeem ( per Redemption in Section 7 of this Article F below) such
shares so held before and such merger, consolidation or share exchange occurs.
In connection with the forgoing adjustments, no fractional shares will be issued
and, in lieu of any fractional share, cash in an amount based on the then
applicable market value as defined below of the Common Stock will be paid.
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<PAGE>
The holder of record of a share of Series F Preferred Stock on a record
date with respect to the payment of a dividend on the Series F Preferred Stock
shall be entitled to receive such dividends on such share of Series F Preferred
Stock on the corresponding Dividend Payment Date, notwithstanding the conversion
thereof after such record date or default by the Company in the payment of the
dividend payable on such Dividend Payment Date. However, shares of Series F
Preferred Stock surrendered for conversion during the period from the close of
business on any record date for the payment of a dividend on the Series F
Preferred Stock to the opening of business on the corresponding Dividend Payment
Date (except a share of Series F Preferred Stock called for redemption on a
redemption date during such period) must be accompanied by payment of an amount
equal to the dividend payable on such due date. Holders of record of shares of
Series F Preferred Stock on a record date with respect to the payment of a
dividend on the Series F Preferred Stock who convert such shares on or after the
corresponding Dividend Payment Date will receive the dividend payable by the
Company on such date and need not include payment in the amount of such dividend
upon surrender of such shares for conversion.
7. Redemption. At any time after issuance, the Series F Preferred Stock
shall be redeemable, at the option of the Board of Directors of the Company, in
whole on in part, upon giving the Series F Preferred Stockholders 30 days
written notice of its intention to redeem the Series F Preferred Stock. The
redemption price shall be $10.00 per share, plus an amount equal to all unpaid
accumulated dividends thereon. The redemption notice shall (1) identify the
Series F Preferred Stock or portions thereof to be redeemed, (2) list the date
on which the redemption will be effective (the "Redemption Date") and (3)
describe the redemption procedures. During the period after the redemption
notice but prior to the redemption date, the holders of Series F Preferred
Shares shall have the right to convert the Series F Preferred Shares into Common
Stock of the Company at the Conversion Price described in Section 6 of this
Article F.
Unless provided otherwise in the notice of redemption, the Company
shall send the holder's payment for the shares of Series F Preferred Stock to be
redeemed on the Redemption Date. On the Redemption Date, the shares of Series F
Preferred Stock redeemed by the Company shall be deemed to be canceled and
extinguished as a result of the redemption payment and the cancellation of such
shares will be noted in the Company's stock transfer records. The holders of
redeemed Series F Preferred Stock may return their shares of Series F Preferred
Stock to the Company for cancellation; however, such cancellation will be
automatic as of the Redemption Date. All Series F Preferred Stock so redeemed
shall be canceled and retired in such manner as may be prescribed by law and no
Series F Preferred Stock so redeemed shall be reissued.
8. Adjustment to Conversion Ratio and Redemption Price. If the Company
(1) subdivides or reclassifies its outstanding shares of Common Stock into a
greater number of shares (pursuant to a forward stock split) or (2) combine or
reclassify its outstanding shares of Common Stock into a smaller number of
shares (pursuant to a reverse stock split), the Conversion Ratio and Redemption
Price shall be adjusted proportionately.
9. Other Provisions. The shares of Series F Preferred Stock, when
issued, will be duly and validly issued, fully paid and non-assessable. The
holders of the shares of Series F Preferred Stock will have no preemptive rights
with respect to any shares of capital stock or the Company or
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<PAGE>
any other securities or the Company convertible into carrying rights or options
to purchase any such shares.
10. No Liens or Encumbrances and No Adverse Changes. The Company is
further prohibited from encumbering the underlying assets of the Company, other
than cash, accounts receivable, and inventories, for the purposes of pledging,
securing or otherwise encumbering these assets for any reason including further
borrowing or other purposes without the unanimous approval of the Board of
Directors of the Company including the directors so appointed by the majority
of' the Series F Preferred Shares.
So long as any shares of Series F Preferred Stock are outstanding, the
Company will not, without the affirmative vote or consent of the holders of at
least a majority of the outstanding shares of the Series F Preferred Stock,
voting a class: (i) create, authorize or issue any shares of any other class of
Senior Dividend Stock or Senior Liquidation Stock or (ii) amend, alter or
repeal, whether by merger, consolidation or otherwise, the Company's Articles of
Incorporation, if amendment, alteration or repeal materially and adversely
affects, the powers, preferences or special rights of the Series F Preferred
Stock. However, any increase in or the creation and issuance of any other
capital stock of the Company junior to the Series F Preferred Stock will not be
deemed to materially and adversely affect such powers, preferences or special
rights. In addition, holders of Series F Preferred Stock will not have voting
rights with respect to any merger or consolidation involving the amendment,
alteration or repeal of the Articles of Incorporation, if such amendment,
alteration or repeal does not materially and adversely affect such powers,
preferences or special rights.
3. The foregoing amendment was unanimously adopted by all the Directors
of the Company be a unanimous written consent, manifesting their intention that
this amendment to the Articles of Incorporation be adopted, pursuant to Section
607.1002, Florida Statutes. Shareholder approval is not required for this
amendment.
IN WITNESS WHEREOF, the undersigned President of the Company has
executed these Articles of Amendment this 31st day of March 2000.
/s/ Cydelle Mendius
-------------------
Cydelle Mendius, President
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AMENDED AND RESTATED BYLAWS
UNIVERSAL BEVERAGES HOLDINGS CORPORATION
ARTICLE I
SHARES
1. Every Stockholder of record shall be entitled to a stock certificate
representing the shares owned by him, but a stock certificate shall not be
issued to any stockholder until the shares represented thereby have been fully
paid. No note or obligation given by a stockholder, whether secured by pledge or
otherwise, shall be considered as payment in whole part, of any shares.
2. Share certificates of the corporation shall be in such form as the
Board of Directors may from time to time determine. Stock certificates shall be
issued to each holder of fully-paid shares, in numerical order, from the stock
certificate books, signed by the President or Vice- President, countersigned by
the Secretary or Treasurer, and sealed with the corporate seal. Facsimile
signatures may be used as permitted by law. Share certificates restricted as to
transfer or resale shall bear an appropriate restriction legend and "stop
transfer" notices may be placed in the stock transfer records with respect to
such certificates. A record of each certificate issued shall be kept either on
the stub thereof or in appropriate files.
3. Transfers of shares shall be make only upon the books of the
corporation and, before a new certificate is issued, the old certificate must be
surrendered for cancellation. The corporation shall not be bound by any
restrictions on the transferability of shares imposed by any agreement to which
it is not a party unless both written notice of such agreement or restriction is
given to the Secretary and notice of such agreement or restriction has been put
up in the stock certificates(s) so restricted. No transfer shall be made where
such transfer is restricted by law or governmental regulation. The corporation
shall be entitled to delay or refuse any transfer pending adequate proof of
entitlement to transfer.
4. In case a stock certificate is lost or destroyed, the claimant
thereof shall make an affirmation or affidavit of the fact and advertise the
same in such manner as the Board of Directors may require, and shall give the
corporation a bond of indemnity in form and amount acceptable to the Board, and
with one or more sureties satisfactory to the Board and upon satisfactory proof
being produced to the Board of Directors of such loss or destruction, a new
certificate may be issued of the same tenor and for the same number of shares as
the one alleged to be lost or destroyed, but always subject to the approval of
the Board of Directors.
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5. The holder of record of any share or shares shall be entitled to be
treated by the corporation as the holder in fact thereof, and the corporation
accordingly shall not be bound to recognize any equitable claim to, or interest
in, such share on the part of any other person, whether or not the corporation
shall have express or other notice thereof, save as expressly provided by
applicable laws.
6. A stockholder shall not be personally liable for any debt or
liability of the corporation, except as may be imposed by law.
7. The treasury stock of the corporation shall consist of such issued
and outstanding shares of the corporation as may be donated to the corporation
or otherwise acquire , and shall be held subject to disposal by the Board of
Directors. Such shares shall neither vote nor participate in dividends while
held by the corporation.
ARTICLE II
MEETINGS OF STOCKHOLDERS
1. The annual meeting, of the stockholders of this corporation shall be
held at such place either within or without the State of Florida, on such date,
and at such time, as may be designated by the Board of Directors. Failure to
hold an annual meeting at the designated time shall not work any forfeiture or
dissolution of the corporation.
2. Special meetings of the stockholders may be called to be held at the
registered office of the corporation, or at such other place designated in the
call, at any time, (a) by the President or (b) by resolution of the Board of
Directors, or (c) upon written request of the stockholders holding a majority of
the outstanding shares having voting rights. Upon written request of the
stockholder or stockholders entitled to call a special meeting, the Secretary
shall give notice of such special meeting, to be held at such time as the
Secretary may fix, not less than ten (10) nor more than sixty (60) days after
the receipt of such request. Upon neglect or refusal of the Secretary to issue
such call, the person or persons making the request may do so.
3. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any Dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of share or for the purpose of any
other lawful action the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action,
If no record date is fixed:
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<PAGE>
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, on which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed.
(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
(d) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
4. At least ten days before each meeting of stockholders, the officer
having charge of the transfer books for shares shall make a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
with the address of and the number of shares held by each, which Est 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 be produced and kept open at the time and place of meeting, subject to the
inspection of any stockholders during the whole time of the meeting. The
preparation of such list may be dispensed with by oral or written agreement of
all stockholders.
5. Except as herein otherwise provided, notice of meeting, written or
printed for every regular or special meeting of the stockholders, shall be
prepared and mailed to the last known post office address of each stockholder
having voting fights, not less than five (lays before any such meeting, and if
for a special meeting, such notice shall also state the object or objects
thereof. No failure of or irregularity in notice of any regular meeting shall
invalidate such meeting or any proceeding thereat. Notice of a meeting may be
waived by written waiver signed by persons entitled to vote. Attendance at a
meeting shall constitute waiver of notice of place, date, time and purpose.
6. A quorum at any meeting of the stockholders shall consist of a
majority of the voting shares of the corporation, represented in person or by
proxy. A majority of such quorum shall decide any question that may come before
the meeting unless such question is by statute required to be decided by a
majority of the outstanding shares or otherwise.
7. At any meeting duly called and held for the election of directors at
which a quorum is present, directors shall be elected by a plurality of the
votes cast by the holders (acting as such) of shares of stock of the corporation
entitled to elect such directors.
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<PAGE>
8. Removal of directors. Notwithstanding any other provisions of the
Certificate of Incorporation or the Bylaws of the corporation (and
notwithstanding the fact that some lesser percentage may be specified by law,
the Certificate of Incorporation or the Bylaws of the corporation), any director
or the entire board of Directors of the corporation may be removed at any time,
for cause or without cause, by the affirmative vote of the holders of a majority
of the outstanding shares of capital stock of the corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that purpose.
9. A director may be removed from office for cause by the vote of a
majority of the Board of Directors without notice. Cause shall include the
occurrence of one of the following events:
(a) the director commits, is arrested, or is officially
charged with a felony or any crime involving moral turpitude or unethical
conduct which in the good faith opinion of the Board of Directors could impair
his ability to perform his duties;
(b) the director commits an act, or fails to take action in
bad faith and to the detriment of the corporation;
(c) in the good faith opinion of the Board of Directors, the
director fails to fully and faithfully perform his obligations as a director; or
(d) the director engages in conduct which is either to promote
a personal interest rather than the interests of the stockholders of this
corporation or engages in conduct which constitutes a conflict of interest with
this corporation.
10. The order of business at the annual meeting and, as far as
possible, at all other meetings of the stockholders, shall be:
(a) Call to order
(b) Proof of due notice of meeting
(c) Call of roll, filing of proxies, and determination of
a quorum
(d) Reading and disposal of any unapproved minutes
(e) Unfinished business
(f) Amendments of Articles of Incorporation or Bylaws
(g) Fixing the number of directors and election of
directors
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(h) Reports of officers and committees
(i) New business
(j) Adjournment
Any agenda item may be waived. Unless an alternative procedure is
adopted by the Chairman of any meeting, Robert's Rules of Order shall determine
any question or dispute regarding procedure.
Business transacted at all special meetings shall be confined to the
objects state in the call and matters germane thereto, unless 0 stockholders
entitled to vote are present and consent.
11. Stockholders shall have the right to be represented and vote by
proxy at any meeting of stockholders. Proxies shall be filed with the Secretary
prior to the meeting and failure to do so file shall preclude exercise thereof
by the proxy holder at such meeting.
12. Any action which may be taken at a meeting of stockholders 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 stockholders who would be entitled
to vote at a meeting or such lesser percentage of shares as shall be set by the
Articles, and the consent shall be filed with the Secretary of the corporation.
ARTICLE III
DIRECTORS
1. The Board of Directors of the Company shall be comprised on not less
than one, nor more than twenty (21) directors, who shall be natural persons of
full age. The Board shall be elected annually by the shareholders having voting
rights, for the term of one year and shall serve until the election and
acceptance of their duly qualified successors. In the event of any delay in
holding, or adjournment of, or failure to hold an annual meeting, the terms of
the sitting directors shall be automatically continued indefinitely until their
successors shall be duly elected and qualified. Directors need not be
shareholders. Any vacancies, including vacancies resulting from an increase in
the number of directors, may be filled by the Board of Directors, through less
than a quorum of the unexpired term. The Board of Directors shall have full
power, and its hereby expressly authorized, to increase or decrease the number
of directors from time to time without requiring a vote of stockholders.
2. The annual meeting of the Board of Directors shall be held at the
offices of the corporation within thirty (30) days following the annual meeting
of stockholder At such meeting, the Board may elect a Chairman of the Board (who
shall thereafter chair meetings of the Board), a Secretary (who shall thereafter
keep the minutes of the meetings of the card), and such other officials as the
Board may deem desirable.
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3. Special meeting of the Board of Directors, may be called at any time
by the President, or by a majority of the members of the Board, and may be held
at any time and place, either within or without the State of Florida, either
with notice as provided Section 4 or without if by written consent of all the
absent members any by the presence of all other members at such meeting.
4. Notice of special meetings shall be given by any means of
communication by the Secretary to each member of the Board not less than
twenty-four (24) hours before any such meeting, and notice of such special
meetings shall include a general statement of the purposes thereof Notice of
such meetings may be waived by written waiver.
5. A quorum at any meeting shall consist of a majority of the entire
membership of the Board. A majority of such quorum shall decide any question
that may come before the meeting, unless otherwise provided by statute.
6. The Board of Directors may, by resolution adopted by a majority of
the whole Board, delegate not less than two of its number to constitute an
Executive Committee which, to the extent provided in such resolution, shall have
and exercise the authority of the Board of Directors in the management of the
business of the corporation. Written minutes shall be kept of all actions taken
by the Executive Committee between intervals of the regular meetings of the
Board of Directors, and these minutes must be reported at the next regular
meeting of the Board.
7. The Board of Directors may, by resolution adopted by a majority of
the whole Board, delegate not less than two of its number to constitute a
special committee which, to the extent and scope provided in such resolution,
shall have and exercise authority in such matters as the Board shall declare.
Written minutes shall be kept of all actions taken by any such special committee
between the intervals of the regular meetings of the Board of Directors, and
those minutes must be reported at the next regular meeting of the Board.
8. One or more directors may participate in a meeting of the Board or
of an Executive or other committee of the Board by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other.
9. Any action which may be taken at a meeting of the Board or of any
committee thereof may be taken without a meeting, if a consent in writing,
setting forth the action so taken shall be signed by all of the Directors who
would be entitled to vote at a meeting for such purposes and shall be filed with
the Secretary of the Corporation.
10. Officers of the corporation including the President, shall be
elected by ballot, by the Board of Directors, at its first meeting after the
election of directors each year. If any office becomes vacant, including the
office of the President, during the year, the Board of Directors shall fill it
for the unexpired term. The President need not be chosen from the Board of
Directors.
6
<PAGE>
11. The order of business at any regular or special meeting of the
Board of Directors shall be:
(a) Call to order an call of roll
(b) Reading and disposal of any unapproved minutes
(c) Unfinished business
(d) Reports of officers and committees
(e) New business
(f) Adjournment
Any agenda item may be waived. Robert's Rules of Order shall determine
any question or dispute regarding procedure.
12. Directors shall receive such compensation for their services, or
alternatively a fixed sum and expenses of attendance, if any, for attendance at
each regular or special meeting of the Board, as fixed by specific resolution of
the Board of Directors and provided that no herein contained shall be construed
to preclude any director from servicing the corporation in any other capacity
and receiving compensation therefor.
ARTICLE IV
OFFICERS
1. The officers of the corporation shall be a President, a Secretary
and Treasurer. In addition, there may be one or more Vice Presidents and such
other officers, assist t officers, and agents as the Board of Directors may
determine. All officers and agents shall b elected for the term of one year and
shall hold office until their successors are elected and qualified. Any two or
more offices may be held by the same person including the offices of President
and Secretary.
2. The President shall be the senior officer of the corporation; shall
preside at all meetings of the stockholders and directors; shall have general
supervision of the affairs of the corporation; shall sign or countersign
certificates, contracts, and other instruments of the corporation, as authorized
by the Board of Directors; shall make reports to the directors and stockholders;
and
7
<PAGE>
shall perform all such other duties as are incident to his office or are
properly required of him by the Board of Directors.
3. The Secretary shall issue notices for all meetings; shall keep
minutes, shall have charge of the seal and the books of the corporation; shall
sign with the President o the seal to such instruments as require such signature
or seal and attest to the signature of the resident by affixation of the seal
thereto; shall record the minutes of all meetings of the stockholders and, in
the absence of an elected secretary of the Board of Directors, record the
minutes of all meetings of the Board of Directors; and shall make such reports
and perform such other duties as are incident to his office, or are properly
required of him by the Board of Directors.
4. The Treasurer shall have the custody of all monies and securities of
the corporation and shall keep regular books of account. He shall sign or
countersign such documents and instruments as require his signature, shall
perform all duties incident to his office or that are properly required of him
by the Board of Directors, and if required by the Board of Directors, shall give
bond for the faithful performance of his duties in such sum. and with such
sureties as may be required by the Board of Directors.
5. All other officers,. assistant officers, and agents shall perform
such duties as may be required of them by the Board of Directors. All officers,
assistant officers, and agents of the corporation shall be subject to removal by
the Board of Directors whenever in its judgment the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person removed. Any vacancy occurring in
any office of the corporation by death, resignation, removal or otherwise shall
be filled by the Board of Directors.
6. In addition to the officers, the Corporation may have such
management officials, including a Chief Executive Officer (CEO), Chief Operating
Officer (Q), Chief Financial Officer (CFO), and Chief Information Officer (CIO),
as the Board of Directors may determine from time to time. Such management
officials shall have such duties and authority, and shall receive such
compensation, as the Board of Directors shall determine.
7. All officers, assistant officers, and agents of the Corporation
shall be subject to removal by the Board of Directors whenever in its judgment
the best interests of the Corporation will be serviced thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person
removed.
8. The Board of Directors shall have power to fix the compensation of
all officers and assistant officers of the corporation. It may authorize any
officer, upon whom the power of appointing subordinate officers may have been
conferred, to fix the compensation of such subordinate officers.
9. Any payments made to an officer or employee of the corporation such
as a salary, commission, bonus, interest, rent, travel or entertainment expense
incurred by him, which shall be
8
<PAGE>
disallowed in whole or in part as a deductible expense by the Internal Revenue
Service, shall be reimbursed by such officer or employee to the corporation to
the full extent of such disallowance. It shall be the duty of the directors, as
a Board, to enforce payment of each such amount disallowed, In lieu of payment
by the officer or employee, subject to the determination of the directors,
proportionate amounts may be withheld from his future compensation payments
until the amount owed to the corporation has been recovered.
10. Any director or officer may resign at any time, such resignation to
be in writing, and to take effect from the time of its receipt by the
corporation, unless some time be fixed in the resignation and then from that
date. The acceptance of a resignation shall not be required to make it
effective.
ARTICLE V
DIVIDENDS AND FINANCE
1. Dividends shall be declared as provided by law at such times as the
Board of Directors shall direct, and no dividend shall be declared that will
impair the capital of the corporation.
2. The monies of the corporation shall be deposited in the name of the
corporation, in such banks, savings and loan associations or trust companies as
the Board of Directors shall designate, and shall be drawn out only by check or
other negotiable instrument signed as directed by the Board of Directors. Funds
in excess of current working capital needs may be invested in such certificates
of deposit, mutual funds government securities, money market funds, and similar
liquid investments, as the Board of Directors may authorize.
3. The officers of the corporation shall tender to the Board of
Directors such financial reports of the condition of the corporation as may be
required by the Board of Directors. The directors and officers shall be required
to forward to the stockholders an annual financial report within one hundred
eighty (180) days after the close of each fiscal year. No report of the
financial condition of the corporation need be prepared, compiled, reviewed or
audited by a certified public accountant, unless directed to be so prepared by
an order of the Board of Directors.
4. A fiscal year basis may be established for the operations of the
corporation by the Board of Directors and may be changed, from time to time, as
desirable to the extent permitted by applicable tax laws or regulations.
5. The Treasurer, with the approval of the President, may make
charitable contributions out of the funds of the corporation for purposes
permitted by law, without the consent of the stockholders or directors, to the
extent that such contributions shall be deductible by the corporation for income
tax purposes; provided, however, that full report of such contributions shall be
made to the Board of Directors at its next meeting.
9
<PAGE>
ARTICLE VI
SEAL
1. The corporate seal of the corporation shall consist of two
concentric circles, between which is the name of the corporation, and the word,
"Florida", and in the circle shall be inscribed the words "Corporate Seal"
together with the year of incorporation, and such seal is impressed on the
margin hereof and is hereby adopted as the corporate seal of the corporation.
ARTICLE VII
CONFLICT OF INTEREST
1. No contract or transaction between the corporation and one or more
of its directors or officers, or between the corporation and any other
corporation partnership, association, or other organization in which one or more
of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for such reason, or solely because
the director or officer is present at or participates in the meeting of the
Board which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if
(a) The material facts as to his (their) interest and as to
the contract or transaction are disclosed to or are known by the Board of
Directors, and the Board, in good faith authorizes the contract or transaction
by the affirmative vote of a majority of the disinterested directors, or
(b) The material facts as to his (their) relationship or
interest and as to the contract or transaction are disclosed to or are known by
the stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the Board of Directors
or the stockholders.
2. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors which authorizes a
contract or transaction specified in Section I of the Article.
3. This Article shall be in addition to, and not in limitation of, any
applicable provisions of law validating contracts in situations involving
interested directors, officers and stockholders. Furthermore, this Article shall
be subject to such restrictions and limitations as may be imposed by applicable
law, in the event of the Corporation electing to become a business development
company, a small business investment company, or other regulated entity.
ARTICLE VIII
LIMITATION OF LIABILITY
10
<PAGE>
1. No director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, that the foregoing clause shall not apply to any
liability of a director for any action for which the Business Corporation Act of
the State of Florida proscribes this limitation and then only to the extent that
this limitation is specifically proscribed.
2. It is the intent that this Article be interpreted to provide the
maximum protection against liability afforded to directors under the Florida
Business Corporation Act as it may be amended from time to time. Whichever law
(that law in effect at the time of' the director's election, at the time of the
director's action, or at the time of interpretation) provides the greatest
protection shall be applicable.
ARTICLE IX
INDEMNIFICATION
1. The corporation shall, and by this Article hereby does, to the
fullest extent permitted by applicable law as then in effect, indemnify each
director, each officer and each other person who may have acted as a
representative of the corporation at its request,, and his heirs, executors, and
administrators. Any such person shall be indemnified by the corporation against:
(a) any costs and expenses, including counsel fees, reasonably
incurred in connection with any civil, criminal, administrative or other claim,
action, suit or proceeding, in which he may become involved or with which he may
be threatened, by reason of his being or having been a director or officer of
the corporation or by reason of his serving or having served any corporation,
trust, committee, firm or other organization as director, officer, employee,
trustee, member or otherwise at the request of this corporation, and
(b) any payments in settlement of any such claim, suit,
action, or proceeding or in satisfaction of any related judgment, fine, or
penalty, except costs, expenses or payments in relation to any matter as to
which he shall be finally adjudged derelict in the performance of his duties to
the corporation, unless the corporation shall receive an opinion from
independent counsel that such director, officer, or representative has not so
been derelict. In the case of a criminal action, suit, or proceeding, a
conviction or judgment (whether after trial or based on a plea of guilty or nolo
contendere or its equivalent) shall not be deemed an adjudication that the
director, officer or representative was derelict in the performance of his
duties to the corporation of he acted in good faith in what he considered to be
the best interests of the corporation and with no reasonable cause to believe
the action was illegal.
The foregoing fight of indemnification shall not be exclusive of other
rights to which directors, officers and others may be entitled under the
Certificate of Incorporation as a matter of law or otherwise.
11
<PAGE>
The foregoing provision is intended to be self-executing; however, the
corporation may also provide any Indemnified person with a separate
Indemnification Agreement, which shall be in addition to the foregoing
indemnification.
2. It is the intent that this Article be interpreted to provide the
maximum indemnification permitted under the Business Corporation Act as it may
be amended from time to time. Whichever law (that law in effect at the time of
the director's election, at the time of the director's action, or at the time of
interpretation) provides the greatest protection shall be applicable.
3. This corporation shall have the power to purchase and maintain
insurance on behalf of any person who (1) is or was a director, officer,
employee or agent of the corporation, or (2) is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability.
ARTICLE X
EMERGENCY BYLAWS
1. Emergency Powers. During any emergency resulting from warlike
damage, including civil disorder, or an attack on the United States or any
nuclear or atomic disaster, the regular bylaws shall be suspended to the extent
necessary under the circumstances and the Board of Directors may make any
emergency bylaw that may be practical or necessary for the circumstances of the
emergency, even though inconsistent with the regular bylaws. No director,
officer, or employee acting in accordance with any such emergency bylaws shall
be liable, except for willful misconduct.
2. Meeting. A meeting of the Board of Directors may be called by any
officer or director with no prescribed period of notice, so long as an attempt
is made to notify each director as soon as conditions may permit Such notice may
be given by any feasible means at the time, including publication or radio.
3. Quorum. The director or directors in attendance at the meeting of
the Board shall constitute a quorum.
4. Emergency Directors. Prior to such an emergency, the Board of
Directors may designate officers or other persons who shall serve as directors
in emergency meetings in the event that the elected directors shall for any
reason be rendered incapable of discharging their duties.
5. Lines of Succession. The Board of Directors, either before or during
any such emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all officers or
agents of the corporation shall for any reason be rendered incapable of
discharging their duties.
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<PAGE>
6. Termination. Upon termination of the emergency, as declared by the
Board of Directors or other person discharging their duties, the emergency
bylaws shall cease to be operative. Termination shall not affect the legality of
actions taken hereunder.
ARTICLE XI
AMENDMENTS
1. These bylaws may be amended, repealed or altered in whole or in
part, by a majority vote of the outstanding stocks of the corporation, at any
regular or special meeting of the stockholders, Written notice shall, not less
than five (5) days before a stockholders' meeting called by the Board of
Directors for the purpose of considering proposed amendments, be given to each
stockholder of record entitled to vote. Such notice shall set forth the proposed
amendment or a summary of the changes to be effected thereby.
2. These Bylaws may also be amended, repealed, or altered, in whole or
in part, by a majority vote of the Board of Directors, at any meeting, without
prior notice.
13
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made and entered into as of this 6th day of March,
1998, by and between UNIVERSAL BEVERAGES HOLDINGS CORPORATION, a Florida
corporation (the "Company"), and JONATHON 0. MOORE (the "Executive").
WITNESSETH:
-----------
WHEREAS, pursuant to a Stock Purchase Agreement of even date herewith
(the "Acquisition Agreement"), the Company has acquired all of the stock of
Universal Beverages, Inc., a Florida corporation ("UBI"), which is owned in part
by Executive; and
WHEREAS, the parties wish to provide for the employment of the
Executive by the Company from and after the Company's purchase of UBI, all on
the terms and conditions herein set forth;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company's acquisition of UBI, and
for other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Employment. The Company hereby employs Executive for a term of three
(3) years (the "Employment Term"), commencing on the date hereof, to serve as
Chief Executive Officer and Chairman of the Board of Directors of the Company
and to perform such services and duties as the Board of Directors of the Company
may from time to time designate, Executive hereby accepts such employment.
Executive hereby agrees that during the term of his employment hereunder, he
shall devote his full time to the diligent performance of his duties hereunder
and shall not engage in any venture or activity that may result in adverse
publicity for the Company or its affiliates, or that may interfere with
Executive's performance of his duties hereunder, noting that Executive is not
prohibited from owning other businesses or providing consulting services in
other capacities subject to the limitations set forth herein.
2. Compensation and Benefit. The Company shall pay Executive the
compensation and other amounts set forth below:
a. The Company shall pay Executive an annual salary of
$60,000.00, payable in equal installments according to the Company's regular
payroll practices and subject to such deductions as may be required by law.
b. Executive: (i) shall be entitled to receive all health and
dental insurance and retirement benefits available from time to time to other
officers of the Company; (ii) shall be entitled to reimbursement for reasonable
and necessary out-of-pocket expenses incurred in the performance of his duties
hereunder, including but not limited to travel! and entertainment expenses (such
expenses shall be reimbursed by the Company, from time to time, upon
presentation of appropriate
<PAGE>
receipts therefor); and (iii) shall be entitled to four (4) weeks' paid vacation
each fiscal year, provided however, that any vacation time not taken during any
calendar year shall not be paid or carried over into any other calendar year.
c. The Company shall pay Executive an annual bonus in an
amount determined in the discretion of the Board of Directors.
d. Executive shall receive options to purchase common stock,
par value $.01 per share (the "Common Stock"), of the Company in such amounts at
such times, and on such other terms as agreed upon by the Company's Board of
Directors.
3. Termination. Executive's employment pursuant to this Agreement shall
be terminated by the first to occur of the following events. Except as expressly
provided in Section 3.1 below, the Company shall be released from all
obligations hereunder upon any such termination, including without limitation,
the obligation to compensate Executive pursuant to Section 2 hereof.
a. The death of Executive.
b. The Complete Disability of Executive. "Complete Disability"
as used herein shall mean the inability of Executive, due to illness, accident
or any other physical or mental incapacity (other than incapacity or illness
resulting from Executive's performance of his duties hereunder) to perform the
services provided for in this Agreement for an aggregate of one hundred twenty
(120) days within any period of twelve (12) consecutive months during the term
hereof.
c. The discharge of Executive by the Company for Cause.
"Cause" as used herein shall mean: (i) Executive's substance abuse, alcoholism,
or conviction of a crime involving moral turpitude; (ii) acts of fraud by
Executive against the Company or its affiliates or in connection with their
business; or (iii) if Executive resigns or abandons his employment.
3.1 In the event of termination for Executive's death or Complete
Disability, Executive or his personal representatives and successors shall
continue to receive the salary payable under Section 2(a) of this Agreement for
a period of one (1) year following the date of such termination provided, such
one year period shall not extend beyond the original three year term of this
Agreement.
4. Miscellaneous.
--------------
a. Modification and Waiver. Any term or condition of this
Agreement may be waived at any time by the party hereto that is entitled to the
benefit thereof, provided, however, that any such waiver shall be in writing and
signed by the waiving party, and no such waiver of any breach or default
hereunder is to be implied from the omission of the other party to take any
action on account thereof. A waiver on one occasion shall not be deemed to be a
waiver of the same or of any other breach on a future occasion. This Agreement
may be modified or amended only by a writing signed by all of the parties
hereto.
2
<PAGE>
b. Governing Law. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Florida. Each of the parties hereto hereby submits to the
jurisdiction of any federal or state court sitting in Duval County, Florida, for
the purpose of any action arising out of or relating to this Agreement (an
"Action"), and the parties agree that all such actions shall be heard and
determined in such Florida federal court or in such state court. Each of the
parties hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of any Action in
Duval County, Florida. In the event: any legal proceedings are filed to enforce
this Agreement, the prevailing party shall be entitled to recover its reasonable
attorneys fees and court costs.
c. Successors and Assigns. This Agreement requires the
personal services of, and shall not be assignable by, Executive. This Agreement
shall be assignable by the Company without Executive's consent. This Agreement
shall be binding upon, and shall inure to the benefit of, the Company and its
successors and assigns.
d. Section Captions. Section and other captions contained in
this Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
e. Severability. Every provision of this Agreement is intended
to be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder of this Agreement.
f. Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understandings, restrictions,
representations or warranties among the parties other than those set forth
herein or herein provide for.
g. Interpretation. No provision of this Agreement is to be
interpreted for or against any party because that party or that party's legal
representative drafted such provision.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals the day and year first above written.
UNIVERSAL BEVERAGES HOLDINGS
CORPORATION
By: /s/ Cydelle Mendius
----------------------
Name: Cydelle Mendius
Title: President
/s/ Jonathan Moore
----------------------
JONATHAN MOORE
3
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made and entered into as of this 6th day of March,
1998, by and between UNIVERSAL BEVERAGES HOLDINGS CORPORATION, a Florida
corporation (the "Company"), and CYDELLE MENDIUS (the "Executive").
WITNESSETH:
-----------
WHEREAS, pursuant to a Stock Purchase Agreement of even date herewith
(the "Acquisition Agreement"), the Company has acquired all of the stock of
Universal Beverages, Inc., a Florida corporation ("UBI"), which is owned in part
by Executive; and
WHEREAS, the parties wish to provide for the employment of the
Executive by the Company from and after the Company's purchase of UBI, all on
the terms and conditions herein set forth;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company's acquisition of UBI, and
for other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Employment. The Company hereby employs Executive for a term of three
(3) years (the "Employment Term"), commencing on the date hereof, to serve as
Secretary and Treasurer of the Company and to perform such services and duties
as the Board of Directors of the Company may from time to time designate,
Executive hereby accepts such employment. Executive hereby agrees that during
the term of his employment hereunder, he shall devote his full time to the
diligent performance of his duties hereunder and shall not engage in any venture
or activity that may result in adverse publicity for the Company or its
affiliates, or that may interfere with Executive's performance of his duties
hereunder, noting that Executive is not prohibited from owning other businesses
or providing consulting services in other capacities subject to the limitations
set forth herein.
2. Compensation and Benefit. The Company shall pay Executive the
compensation and other amounts set forth below:
a. The Company shall pay Executive an annual salary of
$80,000.00, payable in equal installments according to the Company's regular
payroll practices and subject to such deductions as may be required by law.
b. Executive: (i) shall be entitled to receive all health and
dental insurance and retirement benefits available from time to time to other
officers of the Company; (ii) shall be entitled to reimbursement for reasonable
and necessary out-of-pocket expenses incurred in the performance of his duties
hereunder, including but not limited to travel! and entertainment expenses (such
expenses shall be reimbursed by the Company, from time to time, upon
presentation of appropriate
<PAGE>
receipts therefor); and (iii) shall be entitled to four (4) weeks' paid vacation
each fiscal year, provided however, that any vacation time not taken during any
calendar year shall not be paid or carried over into any other calendar year.
c. The Company shall pay Executive an annual bonus in an
amount determined in the discretion of the Board of Directors.
d. Executive shall receive options to purchase common stock,
par value $.01 per share (the "Common Stock"), of the Company in such amounts at
such times, and on such other terms as agreed upon by the Company's Board of
Directors.
3. Termination. Executive's employment pursuant to this Agreement shall
be terminated by the first to occur of the following events. Except as expressly
provided in Section 3.1 below, the Company shall be released from all
obligations hereunder upon any such termination, including without limitation,
the obligation to compensate Executive pursuant to Section 2 hereof.
a. The death of Executive.
b. The Complete Disability of Executive. "Complete Disability"
as used herein shall mean the inability of Executive, due to illness, accident
or any other physical or mental incapacity (other than incapacity or illness
resulting from Executive's performance of his duties hereunder) to perform the
services provided for in this Agreement for an aggregate of one hundred twenty
(120) days within any period of twelve (12) consecutive months during the term
hereof.
c. The discharge of Executive by the Company for Cause.
"Cause" as used herein shall mean: (i) Executive's substance abuse, alcoholism,
or conviction of a crime involving moral turpitude; (ii) acts of fraud by
Executive against the Company or its affiliates or in connection with their
business; or (iii) if Executive resigns or abandons his employment.
3.1 In the event of termination for Executive's death or Complete
Disability, Executive or his personal representatives and successors shall
continue to receive the salary payable under Section 2(a) of this Agreement for
a period of one (1) year following the date of such termination provided, such
one year period shall not extend beyond the original three year term of this
Agreement.
4. Miscellaneous.
--------------
a. Modification and Waiver. Any term or condition of this
Agreement may be waived at any time by the party hereto that is entitled to the
benefit thereof, provided, however, that any such waiver shall be in writing and
signed by the waiving party, and no such waiver of any breach or default
hereunder is to be implied from the omission of the other party to take any
action on account thereof. A waiver on one occasion shall not be deemed to be a
waiver of the same or of any other breach on a future occasion. This Agreement
may be modified or amended only by a writing signed by all of the parties
hereto.
2
<PAGE>
b. Governing Law. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Florida. Each of the parties hereto hereby submits to the
jurisdiction of any federal or state court sitting in Duval County, Florida, for
the purpose of any action arising out of or relating to this Agreement (an
"Action"), and the parties agree that all such actions shall be heard and
determined in such Florida federal court or in such state court. Each of the
parties hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of any Action in
Duval County, Florida. In the event: any legal proceedings are filed to enforce
this Agreement, the prevailing party shall be entitled to recover its reasonable
attorneys fees and court costs.
c. Successors and Assigns. This Agreement requires the
personal services of, and shall not be assignable by, Executive. This Agreement
shall be assignable by the Company without Executive's consent. This Agreement
shall be binding upon, and shall inure to the benefit of, the Company and its
successors and assigns.
d. Section Captions. Section and other captions contained in
this Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
e. Severability. Every provision of this Agreement is intended
to be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder of this Agreement.
f. Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understandings, restrictions,
representations or warranties among the parties other than those set forth
herein or herein provide for.
g. Interpretation. No provision of this Agreement is to be
interpreted for or against any party because that party or that party's legal
representative drafted such provision.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals the day and year first above written.
UNIVERSAL BEVERAGES HOLDINGS
CORPORATION
By: /s/ Cydelle Mendius
-----------------------
Name: Cydelle Mendius
Title: President
/s/ Cydelle Mendius
-----------------------
CYDELLE MENDIUS
3
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made and entered into as of this 6th day of March,
1998, by and between UNIVERSAL BEVERAGES HOLDINGS CORPORATION, a Florida
corporation (the "Company"), and MARSHA FLAIGE (the "Executive").
WITNESSETH:
-----------
WHEREAS, pursuant to a Stock Purchase Agreement of even date herewith
(the "Acquisition Agreement"), the Company has acquired all of the stock of
Universal Beverages, Inc., a Florida corporation ("UBI"), which is owned in part
by Executive; and
WHEREAS, the parties wish to provide for the employment of the
Executive by the Company from and after the Company's purchase of UBI, all on
the terms and conditions herein set forth;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company's acquisition of UBI, and
for other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Employment. The Company hereby employs Executive for a term of three
(3) years (the "Employment Term"), commencing on the date hereof, to serve as
President of the Company and to perform such services and duties as the Board of
Directors of the Company may from time to time designate, Executive hereby
accepts such employment. Executive hereby agrees that during the term of his
employment hereunder, he shall devote his full time to the diligent performance
of his duties hereunder and shall not engage in any venture or activity that may
result in adverse publicity for the Company or its affiliates, or that may
interfere with Executive's performance of his duties hereunder, noting that
Executive is not prohibited from owning other businesses or providing consulting
services in other capacities subject to the limitations set forth herein.
2. Compensation and Benefit. The Company shall pay Executive the
compensation and other amounts set forth below:
a. The Company shall pay Executive an annual salary of
$60,000.00, payable in equal installments according to the Company's regular
payroll practices and subject to such deductions as may be required by law.
b. Executive: (i) shall be entitled to receive all health and
dental insurance and retirement benefits available from time to time to other
officers of the Company; (ii) shall be entitled to reimbursement for reasonable
and necessary out-of-pocket expenses incurred in the performance of his duties
hereunder, including but not limited to travel! and entertainment expenses (such
expenses shall be reimbursed by the Company, from time to time, upon
presentation of appropriate receipts therefor); and (iii) shall be entitled to
four (4) weeks' paid vacation each fiscal year, provided
<PAGE>
however, that any vacation time not taken during any calendar year shall not be
paid or carried over into any other calendar year.
c. The Company shall pay Executive an annual bonus in an
amount determined in the discretion of the Board of Directors.
d. Executive shall receive options to purchase common stock,
par value $.01 per share (the "Common Stock"), of the Company in such amounts at
such times, and on such other terms as agreed upon by the Company's Board of
Directors.
3. Termination. Executive's employment pursuant to this Agreement shall
be terminated by the first to occur of the following events. Except as expressly
provided in Section 3.1 below, the Company shall be released from all
obligations hereunder upon any such termination, including without limitation,
the obligation to compensate Executive pursuant to Section 2 hereof.
a. The death of Executive.
b. The Complete Disability of Executive. "Complete Disability"
as used herein shall mean the inability of Executive, due to illness, accident
or any other physical or mental incapacity (other than incapacity or illness
resulting from Executive's performance of his duties hereunder) to perform the
services provided for in this Agreement for an aggregate of one hundred twenty
(120) days within any period of twelve (12) consecutive months during the term
hereof.
c. The discharge of Executive by the Company for Cause.
"Cause" as used herein shall mean: (i) Executive's substance abuse, alcoholism,
or conviction of a crime involving moral turpitude; (ii) acts of fraud by
Executive against the Company or its affiliates or in connection with their
business; or (iii) if Executive resigns or abandons his employment.
3.1 In the event of termination for Executive's death or Complete
Disability, Executive or his personal representatives and successors shall
continue to receive the salary payable under Section 2(a) of this Agreement for
a period of one (1) year following the date of such termination provided, such
one year period shall not extend beyond the original three year term of this
Agreement.
4. Miscellaneous.
--------------
a. Modification and Waiver. Any term or condition of this
Agreement may be waived at any time by the party hereto that is entitled to the
benefit thereof, provided, however, that any such waiver shall be in writing and
signed by the waiving party, and no such waiver of any breach or default
hereunder is to be implied from the omission of the other party to take any
action on account thereof. A waiver on one occasion shall not be deemed to be a
waiver of the same or of any other breach on a future occasion. This Agreement
may be modified or amended only by a writing signed by all of the parties
hereto.
2
<PAGE>
b. Governing Law. The validity and effect of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Florida. Each of the parties hereto hereby submits to the
jurisdiction of any federal or state court sitting in Duval County, Florida, for
the purpose of any action arising out of or relating to this Agreement (an
"Action"), and the parties agree that all such actions shall be heard and
determined in such Florida federal court or in such state court. Each of the
parties hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of any Action in
Duval County, Florida. In the event: any legal proceedings are filed to enforce
this Agreement, the prevailing party shall be entitled to recover its reasonable
attorneys fees and court costs.
c. Successors and Assigns. This Agreement requires the
personal services of, and shall not be assignable by, Executive. This Agreement
shall be assignable by the Company without Executive's consent. This Agreement
shall be binding upon, and shall inure to the benefit of, the Company and its
successors and assigns.
d. Section Captions. Section and other captions contained in
this Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
e. Severability. Every provision of this Agreement is intended
to be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder of this Agreement.
f. Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understandings, restrictions,
representations or warranties among the parties other than those set forth
herein or herein provide for.
g. Interpretation. No provision of this Agreement is to be
interpreted for or against any party because that party or that party's legal
representative drafted such provision.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals the day and year first above written.
UNIVERSAL BEVERAGES HOLDINGS
CORPORATION
By: /s/ Cydelle Mendius
-----------------------
Name: Cydelle Mendius
Title: President
/s/ Marsha Flaige
-----------------------
MARSHA FLAIGE
3
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease"), made as of the ______ day of May, 1999,
by and between Treetops of Jacksonville, L.C., whose address is 2700 N.W. 43rd
Street, Suite D, Gainesville, Florida 32606 ("Lessor"), and Universal Beverages,
Inc., whose address is 7563 Philips Highway, The Treetops Park, Waterside
Building, Suite ____, Jacksonville, Florida 32256 ("Lessee").
WITNESSETH
The Lessor hereby leases and rents unto the Lessee and the Lessee
hereby hires and takes from the Lessor the following described property ("Leased
Premises"), to wit:
Space designated as Suite comprising approximately 2,000 square feet,
as shown on Exhibit A attached hereto to be improved pursuant to the office
layout plan as shown in Exhibit B and made a part hereof, located at 7563
Philips Highway, Waterside Building, Suite 110, Jacksonville, Florida 32256,
such building and any other building forming a part of the office complex and
related facilities owned by the Lessor being herein referred to as the "Project"
located in the County of Duval, State of Florida.
1. TERM:
-----
Lessee to have and to hold above described premises for a term of 12
months, commencing 6/1/99, and ending on 5/31/00, on the terms and conditions
set forth herein.
2. RENTS:
------
(a) Base Rent. Lessee hereby covenants and agrees to pay as monthly
base rent:
Rental Monthly Sales Tax
Period Base Rent at 6.5% Total
------ --------- ------- -----
6/l/99-5/31/00 $2,41667 $157.08 $2,573,75
in lawful United States currency, together with any and all sales use taxes
levied upon the use and occupancy of the Leased Premises in advance and
beginning on the commencement date of this Lease and on the first day of each
and every month thereafter throughout the term of this Lease as follows, Rent
shall be paid to Lessor without set off or deduction. In order to defray the
additional expenses involved in collecting and handling delinquent payments,
Lessee shall pay on demand in addition to any rent due hereunder a later charge
equal to the lesser of 10% of the base monthly rent or One Hundred Fifty Dollars
and no/100 ($150.00) when any installment of rent is past due more
1
<PAGE>
than ten (10) days after the due date thereof Lessee acknowledges that this
charge is made to compensate Lessor for additional costs incurred by Lessor as a
result of Lessee's failure to pay when due, and is not a payment for the
extension of the rent due date. Failure of Lessor to insist upon the payment of
the late charge, isolated or repeated, shall not be deemed a waiver of Lessor's
fights to collect such charge for any future delinquencies.
If Lessee's possession commences on other than the first day of the
month, Lessee shall occupy the Leased Premises under the terms and provisions of
this Lease and for the pro rata portion of said month rent shall be paid and the
term of this Lease shall commence on the first day of the month following that
in which possession is given.
(b) Operating Expense. It is understood and agreed that the Base Rent
specified herein does not anticipate any increase in the operating expenses of
the Property. Therefore, Lessee shall pay in Additional Rent the anticipated pro
rate share of any increases in operating expenses (as hereinafter defined) in
excess of an amount equal to $5.46 per square foot of the Lease Premises per
annum, An operating expense budget shall be submitted to Lessee by December 31
(or reasonable time thereafter), of each lease year, outlining Lessor's
anticipated operating expenses for the Project during the next calendar year and
Lessee's pro rata share of these operating expenses. Commencing with January's
rent payment date and until further notice from the Lessor of any adjustment,
Lessee shall remit as Additional Rent one-twelfth (1/12) of the anticipated
increases in operating expenses to the scheduled Base Rent. Lessee's share of
said increases shall be equal to that proportion of the total building area of
the Project which the Lewd Premises represents, and is agreed to be 8.33 percent
of such increase in Lessee's anticipated pro rata share for the first and lag
lease years shall be prorated based on the number of days of those lease years
coinciding with the calendar year budget then in effect.
(c) Definition of Base Year. For the purpose of ascertaining the amount
of increase in operating expenses in any subsequent year, the term "base year"
shall mean the calendar year of 1997. In the event the Project has not been in
full operation during the entire base year, the operating expenses incurred
during the months of operating within the base year shall be annualized as to
arrive at an equivalent total annual operating expense amount for said base year
and that annualized amount shall be used for the purposes of ascertaining future
increases in operating expenses during subsequent calendar years.
(d) Definition of Operating Expenses. The term "operating expenses"
shall be deemed to include, but not limited to, the following costs incurred in
the normal operating, preventive and corrective maintenance and repair of office
complex and any parking lot, landscaping, and other common areas used in
conjunction therewith, whether paid to employees of Lessor or to independent
suppliers or contractors engaged by Lessor; wages and salaries, taxes imposed in
respect to wages and salaries (including social security, unemployment insurance
and disability insurance), fringe benefits, and worker's compensation insurance
with respect to such wages and salaries, full costs and fees, expenses and
charges such as management fees, janitorial services, security guards, garage
cleaning, window washing, rubbish removal, elevator preventive and corrective
maintenance, air
2
<PAGE>
conditioning maintenance, water treatment, filter replacement, inspection and
maintenance of turbine equipment, pump and piping, supply and cleaning of
uniforms and work clothes, cost of utilities, including electricity and gas
consumed in the operating and maintenance of the Project, water charges, sewer
charges, pressure vessels, sprinkler leakage, water damage, water damage legal
liability, public liability and property damage, accidental breakdown or
malfunction of machinery, air conditioning systems and heating systems and
electrical fixtures and apparatus, pest control service, building supplies,
insurance premiums, real estate taxes, including any special assessments levied
against the property, interior and exterior building preventive and corrective
maintenance, grounds parking lot or garage preventive and corrective
maintenance, repair and general maintenance not of a capital nature; and the
cost of all supplies and taxes improved in any one or more of the foregoing.
The operating expenses shall not include the cost of any repairs or
replacements which, by sound accounting practices, should be capitalized. In
this connection, the decision of Lessor's accountants shall be final,
(e) Statement and Payment of Expenses. On or before March 31 (or within
a reasonable time thereafter), following the base year and each year thereafter
during the term of the Lease and the month in which the Lease terminates, Lessor
shall deliver to Lessee a statement setting forth the amount of operating
expenses paid or incurred by Lessor, directly or indirectly, ensuring the
immediately preceding calendar year and in the case of the month of termination
based upon an annualization of such expenses incurred through the month
preceding the month of termination and, except in the statements for the base
year, comparable to figures for the base year. Said statement shall delineate
Lessee's actual pro rata share of the demonstrated increases in operating
expenses for said preceding calendar year or annualized period in relation to
the base year. Within thirty (30) days after delivery of said statement, other
than the statement immediately following the base year, Lessee shall pay to
Lessor as Additional Rent Lessee's share of such increases in operating expenses
not previously collected. If the term of this Lease Agreement begins after
January 1 or ends prior to December 31, Lessee's share of the increases in
operating expenses shown on the statement delivered at the end of such year
shall be reduced proportionately and paid as aforesaid. In the event Lessee's
share of such increases in operating expenses is less than the amount previously
anticipated and collected by Lessor, Lessee's share of anticipated increases in
operating expenses scheduled for the calendar year shall be reduced
proportionately or in the event the Lease Agreement has terminated, any excess
shall be applied to sums owed to Lessor, and if none, then shall be remitted to
Lessee, Tenant will not be required to pay overage expenses in 1997. Disclosure
of this confidential information by Tenant to existing or prospective tenants
will result in penalty payment of 2 x waived amount.
3. USE AND POSSESSION:
-------------------
(a) Use. It is understood that the Leased Premises are to be used for
general office purposes and for no other use without prior written consent of
Lessor.
3
<PAGE>
(b) Possession. The Lessor agrees to have the Leased Premises completed
and ready for possession on or before the above commencement date bating
strikes, insurrection, Acts of God and other casualties or unforeseen events
beyond the control of the Lessor. If Lessor is unable to give possession of the
Lease Premises on the date of the commencement of the initial term of the Lease
Agreement by reason of the holding overt of any prior Lessee or Lessees,
incomplete construction, or for any other reason, unless the same shall result
from causes attributable to the Lessee, an abatement or diminution of the rent
to be paid hereunder, for the period of time Lessor is unable to give
possession, shall be allowed Lessee and the term of the Lease shall be wended
beyond the agreed expiration date by the number of days possession was delayed
and said abatement of rent shall be the full extent of Lessor's liability to
Lessee for any loss or damage to Lessee on account of said delay in obtaining
possession of the Leased Premises. If the Leased Premises have not been tendered
ninety days after the scheduled commencement date, Lessee shall have the right
to terminate this Lease after fifteen days written notice to the Lessor,
(c) Expiration of Term. The Lessee, at the expiration to the term,
shall deliver up the Leased Premises in good repair and condition, damaged
beyond the control of the Lessee, reasonable use, ordinary decay, wear and tear
expected. The Lessee further agrees to provide and use carpet mats for all desk
areas in order to prevent the unnecessary wear and tear on the carpeted area.
4. ACCEPTANCE OF PREMISES:
-----------------------
Lessee acknowledges that it has fully inspected and accepts the Leased
Premises in its present condition and "as is," or, in the event the Leased
Premises is yet to be constructed, that it has reviewed the drawings and
specifications for said construction and will accept the Leased Premises when it
is constructed substantially in accordance with said drawings and
specifications, and in either event, that the Leased Premises is suitable for
the use specified herein. Upon Lessee accepting possession of the Leases
Premises, it shall execute and deliver to Lessor a certificate of occupancy in a
form reasonably acceptable to Lessor certifying that it accepts the Leased
Premises in its then "as is" condition and stating the date upon which occupancy
and the term has commenced, otherwise, Lessee shall be deemed to have accepted
the Leased Premises in its then "as is" condition and the term shall be deemed
to have commenced on the date specified in Paragraph 1 hereof
5. SALES AND USE TAX:
------------------
Any sales, use or the tax, excluding State and/or Federal Income Taxes,
now or hereafter imposed by the United States of America, the State, or any
political subdivision thereof, shall be paid monthly or annually as required as
Additional Rent by the Lessee notwithstanding the fact that such statute,
ordinance or enactment imposing the same may endeavor to impose the tax on the
Lessor, and Lessee's Base Rent shall be increased by an amount sufficient to pay
any such tax or taxes. The sale or use of tax now imposed in the State of
Florida is 6.5%,
6. NOTICES:
--------
4
<PAGE>
For purpose of notice or demand, the respective parties shall be served
by certified or registered mail, addressed to the Lessee at its home office
address, it stated herein, or addressed to the Lessor as shown on Page One
hereof with a copy addressed to Weaver Realty, 7400 Baymeadows Way, Suite 100,
Jacksonville, Florida 32256, telephone (904)733-0039, FAX (904)733-0232.
Lessee's home office address is 7563 Philips Highway, Suite 110, Jacksonville,
Florida 32256.
7. ORDINANCES AND REGULATIONS:
---------------------------
The Lessee hereby covenants and agrees to comply with all the rules and
regulations of the Board of Fire Underwriters, Officers or Board of the City,
County or State having jurisdiction over the Leased Premises, and with all
ordinances and regulations or governmental authorities wherein the Leased
Premises are located, at Lessee's sole cost and expense, but only insofar as any
of such rules, ordinances and regulations pertain to the manner in which the
Lessee shall use the Leased Premises, the obligation to comply in every other
case, and also all cases where such rules, regulations and ordinances require
repairs, alterations, changes or additions to the Project (including the Leased
Premises) or building equipment, or any part of either, are hereby expressly
assumed by Lessor, and Lessor covenants and agrees promptly and duly to comply
with all such rules, regulations and ordinances, with which Lessee has not
herein expressly agreed to comply. Said Leased Premises shall not be used for
any unlawful purposes nor shall it be used so as to constitute a nuisance.
8. SIGNS:
------
The Lessee will not place any signs or other advertising matter or
material on the exterior or on the interior where they can be seen from the
exterior, of any of the Leased Premises without the written consent of the
Lessor, and any lettering or signs placed on a portion of said building shall be
for directional purposes only and at Lessee's expense, and such signs shall be
approved in writing by Lessor, at Lessor's sole discretion.
9. UTILITIES AND SERVICES:
-----------------------
(a) Utilities. So long as Lessee is not in default under any of the
covenants of this Lease Agreement, Lessor shall furnish and maintain (a) heat
and air conditioning, Monday through Friday, during normal business hours (7:00
a.m. to 6:00 p.m.) and at such other times as Lessor in its sole discretion
deems necessary for normal office occupancy and for the comfort of Lessees and
occupants of the Property, (b) in common areas, water for drinking fountain and
toilet and lavatory purposes only, (c) janitorial services, (d) flourescent
ceiling lighting fixtures which will make available to Lessee light at desk
level similar to that furnished other Lessees in the Property; and (e)
electricity for light and ordinary office purposes.
(b) Use by Lessee. Lessee agrees to exercise due care and prudence in
the use of utilities at all times, and to comply with all Federal, State, and
local guidelines concerning same. In the event Lessor incurs electrical costs
resulting from Lessee's use of the Leased Premises during periods other
5
<PAGE>
than normal business hours, Lessee agrees to reimburse Lessor for that portion
of the costs which are attributable to the additional use Lessor shall submit to
Lessee a statement itemizing the additional use and the cost thereof, and Lessee
shall pay such sums to Lessor with the next due rental payment. Lessor in
furnishing the foregoing services does not contemplate occupancy involving
extraordinary consumption of electricity or generation of heat affecting
temperatures otherwise normally maintained by the air conditioning system,
Lessor reserves the right to discontinue temporally any of the aforesaid
services where necessary by reason of accident, need for repairs, strikes, labor
disputes, or the necessity for alterations or improvements requested by Lessee
or causes beyond Lessor's control, Lessor shall be liable for damages for such
discontinuance and there shall be no abatement or reduction in rent unless
Lessor fails to take prompt action to restore such services.
(c) Excess Use of Utilities. If Lessee shall require water in the
Leased Premises or electrical current in excess of that usually furnished or
supplied to the Leased Promises when used as general office space, including but
without limitation thereto, electrical heating or refrigeration equipment,
electronic data processing machines, punch card machines, machines or equipment
using cur-rent in excess of 110 volts or which will in any way increase the
amount of water or electricity usually furnished, Lessee will procure prior
written approval from Lessor and make arrangements to pay periodically for the
additional direct expenses involved, including any installing costs thereof
Further, use of utilities including H.V.A.C. during hours other than "normal
business hours" as described herein will result in additional charges. Lessee
agrees to reimburse Lessor immediately following the rendering of a bill to
Lessee for any such charges incurred.
10. ALTERATIONS:
------------
Lessee shall maintain Leased Premises and every part thereof in good
repair and condition, damage thereto by fire, windstorm, Acts of God, or the
elements excepted. Lessee shall not make or suffer to be made any alterations,
additions, or improvements to or of the Leased Premises or any part thereof
without prior written consent of Lessor. In the event Lessor consents to the
proposed alterations, additions or improvements, the same shall be at the
Lessee's cost and expense and Lessee shall hold the Lessor harmless on account
of the cost thereof. Any such alterations shall be made at such times and in
such mariner as not to unreasonably interfere with the occupation, use and
enjoyment of the remainder of the building by the other tenants thereof If
required by Lessor, such alterations shall be removed by Lessee upon the
expiration or sooner termination of the term of this Lease and Lessee shall
repair damage to the premises caused by such removal, all at Lessee's cost and
expense, Lessee shall be liable for injuries sustained during the installation,
existence or removal of same.
Lessee agrees not to suffer or permit any lien of any mechanic or
materialman to be placed or filed against the Project or the Leased Premises. in
case any such lien shall be filed, Lessee shall immediately satisfy and release
such hen of record. If Lessee shall fail to have such lien immediately satisfied
and released of record, Lessor may, on behalf of Lessee, without being
responsible for making any investigation as to the validity thereof, pay the
amount of said lien and Lessee shall
6
<PAGE>
promptly reimburse Lessor therefor. Lessee has no authority or power to cause or
permit any lien or encumbrance of any kind whatsoever, whether created by act of
Lessee, operation of law or otherwise, to attach or to be placed upon Lessor's
title or interest in the Property, and any and all liens and encumbrances
created by Lessee shall be attached to Lessee's leasehold interest only.
11. QUIET ENJOYMENT:
----------------
The Lessor covenants and agrees that Lessee, on paying said rent and
performing the covenants herein, shall and may peaceably and quietly hold and
enjoy the said Leased Premises for the term aforesaid.
12. LESSOR'S RIGHT TO INSPECT AND ENTER:
------------------------------------
The Lessor shall have the right, at reasonable times during the term of
this Lease, to enter the Leased Premises for the purpose of examining or
inspecting same and of making such repairs or alterations therein as the Lessor
shall deem necessary, and may, at any time within six (6) months immediately
proceeding the expiration of the specified term, show the Leased Premises to
others for the purpose of rental and may affix to suitable pans of the Leased
Premises a notice of Landlord's intention to lease or sell the Leased Premises.
13. FIRE OR CASUALTY:
-----------------
If the Leased Premises are damaged by fire or other casualty, Lessor
will promptly repair the damage and restore the Leased Premises to their
condition immediately prior to the occurrence of the casualty, but only to the
extent possible within the limitation of the available insurance Proceeds. If
the reasonable time for completing any such restoration or repair is ninety (90)
days or longer, either party shall have the option to terminate this Lease
Agreement by giving notice of termination to the other party, That notice shall
be given within fifteen (15) days after the date of the casualty. If the damage
or destruction to the Leased Premises occurs within six (6) months of the
expiration of the then existing term of the Lease or if the damage or
destruction to the Leased Premises is so substantial that it has effectively
destroyed the Leased Premises totally, Lessor may, at its sole option, terminate
the Lease by giving written notice to Lessee within fifteen (15) days after the
date of the casualty. if the Leased Premises are damaged by fire or other
casualty, the rent shall abate until the Leased Premises are restored or until
the Lease is terminated in accordance with this paragraph. The abatement shall
be in proportion to the impairment of the use that Lessee can reasonably make of
the Leased Premises, The Lessor shall not be liable for any inconvenience or
interruption of the business of the Lessee occasioned by fire or other casualty.
14. CONDEMNATION:
-------------
If any part of the Leased Premises is taken by eminent domain, Lessor
may, at its sole option, terminate the Lease by giving written notice to Lessee
within forty-five (45) days after the taking, or if by reason of any such
taking, Lessee's operation on the Leased Premises is materially impaired,
7
<PAGE>
Lessee shall have the option to terminate this Lease Agreement, by giving
written notice to Lessor within forty-five (45) days after the taking, and the
rent will be adjusted as of the date of the notice, If the Leased Promises are
damaged or if access to the Leased Premises is impaired by reason of such taking
and neither Lessor nor Lessee elects to terminate this Lease Agreement, Lessor
will promptly rebuild or repair the damage to the extent possible within the
imitations of the available condemnation awards. All condemnation awards belong
to Lessor, except that specifically awarded to Lessee for its separate property
and fixtures.
15. ASSIGNMENT AND SUBLEASE:
------------------------
Lessee shall not mortgage this Lease Agreement or sublet the Leased
Premises without the prior written consent of Lessor, which consent shall be at
Lessor's sole discretion. No assignment shall relieve Lessee of its obligations
under this Lease Agreement.
Upon subletting of premises as outlined above, Lessor shall be entitled
to any excess rents paid under a sublease arrangement over and above the rents
applicable or time of sublease agreement.
Lessee may, without Lessor's approval, sublet said premises to any
parent firm of Lessee, affiliated firm or subsidiary company. Lessee shall
notify Lessor of said sublease.
16. HOLDOVER:
---------
Any holding over by the Lessee after the expiration date of this lease
shall be construed as a Tenancy of Sufferance, unless such occupancy is with the
written consent of the Lessor, in which event the Lessee will be a tenant from
month to month, upon the same terms and conditions of this Lease, at a rental
rate equal to 125% of the rent payable for the last month of the lease term or
any renewal or extension thereof, Acceptance by the Lessor of rent after such
termination shall not constitute a renewal.
17. SUBORDINATION:
--------------
This Lease shall be subject and subordinated at all times to the terms
of any ground or underlying leases which now exist or may hereafter be executed
affecting the Leased Premises under which Lessor shall claim, and to the liens
of any mortgages or deeds of trust in any amount or amounts whatsoever now
existing or hereafter encumbering the Leased Premises, without the necessity of
having further instruments executed by the Lessee to effect such subordination.
Notwithstanding the foregoing, Lessee covenants and agrees to execute and
deliver upon demand such further instruments evidencing such subordination of
this Lease to such ground or underlying leases and to the lien of any such
mortgages or deeds of trust as may be requested by Lessor and if Lessee shall
fail to do so within seven (7) days of the Lessor's request, Lessor is hereby
granted an irrevocable power of attorney to execute such instruments in the name
of Lessee as the act and deed of Lessee, and this authorization is hereby
declared to be coupled with an interest and not revocable.
8
<PAGE>
In the event of termination for any reason whatsoever of any underlying Lessor
and shall attorn to such underlying Lessor at his request or at the option of
any first mortgagee or deed or trust holder. So long as the Lessee hereunder
shall pay the rest reserved and comply with, abide by and discharge the terms,
conditions, covenants, and obligations on its part, to be kept and performed
hereunder and shall attorn to the successor in title notwithstanding the
foregoing, the peaceable possession of the Lessee in and to the Leased Premises
for the term of this Lease, shall not be distributed, in the event of the
foreclosure of any such mortgage or deed or trust, by the purchaser at such
foreclosure sale or such purchaser's successor in title.
18. INDEMNITY AND INSURANCE:
------------------------
(a) Indemnity. Lessee will save Lessor harmless and indemnify Lessor
from and against any and all claims, actions, damages, liability and expenses in
connection with loss of life, personal injury or loss or damage of whatever
nature including property damage (1) caused by or resulting from, or claimed to
have been caused by or to have resulted from, wholly or in part, any act,
omission or negligence of Lessee or anyone claiming under Lessee, including but
without limitation, subtenants, concessionaires, agents, employees, servants and
contractors of Lessee or its subtenants or concessionaires), no matter where
occurring, or (2) occurring in, upon, or at the demised premises, no matter how
caused or (3) arising out of the occupancy or use by the Tenant of the demised
premises or any part thereof, This indemnity and hold harmless agreement shall
include indemnity against all costs, expenses, and liabilities incurred in
connection with any such injury, loss or damage or any such claim in connection
with such injury, loss or damage or any such claim, or any he proceeding brought
thereon or the defense thereof. If Lessee or anyone claiming under Lessee or the
whole or any part of the property of Lessee shall be injured, lost or damaged by
theft, fire, water or steam or in any other way or manner whether similar or
dissimilar to the foregoing, no part of said injury, loss or damage is to be
borne by the Lessor or its agents. Lessee agrees that Lessor shall not be liable
to Lessee or anyone claiming under Lessee for injury, loss, or damage that may
be caused by or result from the act, omission, default or negligence of any
persons occupying adjoining premises or any other part of the Building or the
property. In case the Lessor shall without fault on its part, be made a party to
any litigation commenced by or against Lessee, the Lessee shall protect and hold
Lessor harmless and shall pay all costs, expenses and reasonable attorney's fees
incurred or paid by Lessor in connection with such litigation, Lessee shall also
pay all costs, expenses and reasonable attorney's fees that may be incurred or
paid by Lessor in enforcing the covenants and agreements in this Lease.
(b) Insurance. Lessee will maintain public liability insurance with
respect to the Leased Premises, naming Lessor and Lessee as insured, with a
combined single limit of not less than One Million Dollars (S 1,000,000) on an
occurrence basis with respect to both bodily injury and property damage. Lessee
shall deliver to Lessor a certificate of insurance at lease fifteen (15) days
prior to the commencement of the term of this Lease and a renewal Certificate at
lease fifteen (15) days prior to the expiration of the Certificate it renews.
Said Certificates must provide for thirty (30) days notice to Lessor in event of
material change or cancellation, Lessee also agrees to maintain during the term
9
<PAGE>
hereof, broad form coverage on Lessee's personal business property and
improvements and betterments.
(c) Waiver of Subornation. Neither party shall be liable to the other
for loss or damage, caused by fire or any other peril insured against under
standard extended coverage insurance even though the loss of or damage is caused
by the party's negligence. Each insurance policy carried by Lessor and Lessee in
accordance with this paragraph shall contain a provision by which the insurance
company shall waive all right of recovery by subrogation against the other party
for loss or damage to the insured property.
19. CONSTRUCTION OF LANGUAGE:
-------------------------
Words of any gender used in this Lease shall be held to include any
other gender, and words in the singular number shall be hold to include the
plural when the sense requires, The paragraph headings and titles are not a part
of this Lease and shall have no effect upon the construction or interpretation
of any part hereof.
20. DEFAULT:
--------
(a) Events of Default. The happening of any one or more of the
following listed events shall constitute a breach of the Lease Agreement on the
part of Lessee:
(1) The failure of Lessee to pay any rent payable under this
Lease Agreement on the due date thereof,
(2) The failure of Lessee to fully and properly perform any
act required of it in the performance of this Lease, or otherwise to comply with
any term or provision hereof,
(3) The filing by or on behalf of Lessee of any petition
pleading to declare Lessee as bankrupt or the adjudication in bankruptcy of
Lessee under any bankruptcy law or act,
(4) The appointment by any court or under any law of a
receiver trustee or other custodian of the property, assets, or business of
Lessee,
(5) The assignment by Lessee of all or any part of its
property or assets for the benefit of its creditors, or
(6) The levy, execution, attachment, or other taking of
property, assets or of the leasehold interest of Lessee by process of law or
otherwise in satisfaction of any judgement, debt or claim or the abandonment of
the Leased Premises by the Lessee
(b) Remedies. Upon the happening of any event of default, Lessor, if it
shall so elect, may elect to pursue any remedy allowed by applicable law,
including but not limited to either (a)
10
<PAGE>
collect cash installment of rental when the same matures; (b) accelerate and
collect rents for the remainder of the terms of this Lease; or (c) enter the
Leased Premises without process of law and terminate Lessee's possession without
being liable for any prosecution therefor, and re-lease the Leased Premises to
any person, firm, or corporation, and upon such terms and conditions as Lessor
may deem advisable, as agent of Lessee or otherwise, for whatever rent it can
obtain. Lessee shall remain liable for the rent reserved herein, and all other
obligations hereunder. Lessor shall apply the proceeds of such re-leasing (i)
first to the payment of expenses that Lessor may incur in the entering and
re-leasing, and (ii) then to the payment of rent due by Lessee and the
fulfillment of Lessee's covenants and obligations hereunder- In the caw of any
deficiency, Lessee shall remain liable, Lessee hereby waives service of any
demand for the payment of rent, or notice to terminate or demand for possession
of the Leased Premises, including any and all other forms of demand and notice
described by law.
(c) Attorneys' Fees and Costs. Lessee agrees to pay reasonable
attorneys' fees and all costs if it becomes necessary for the Lessor to employ
an attorney or other agent to collect any of the rent or enforce any of the
provisions of this Lease, whether or not suit be brought, and including such
fees and costs on appeal. Lessee expressly waives all exemptions secured to
Lessee under the laws of the State of Florida, or any state of the United States
as against the collection of any debt hereby secured or incurred.
(d) Additional Security. As additional security for the performance of
the Lessee's obligations hereunder, Lessee hereby pledges and assigns to Lessor
all the furniture, fixtures, goods inventory, stock and chattels of Lessee which
are now or may hereafter be brought or put in the Leased Premises, and further
grants to Lessor a security interest therein under the Uniform Commercial Code.
Upon the request of Lessor, Lessee hereby agrees to execute and deliver to
Lessor all financing statements which Lessor may reasonably request,
(e) No Waiver by Lessor. Nothing herein contained shall be deemed to be
a waiver by Lessor of its statutory lien to rent, and the remedies, rights, and
privileges of Lessor in the case of default of Lessee as set forth above shall
not be exclusive and in addition thereto Lessor may also exercise and enforce
all its rights at law or in equity which it may otherwise have as a result of
Lessee's default hereunder. Lessor is herein specifically granted all of the
rights or a secured creditor under the Uniform Commercial Code with respect to
the property in which Lessor has been granted a security interest by Lessee.
21. NOTICE OF TERMINATION NOT REQUIRED:
-----------------------------------
Notwithstanding any provision of law or any judicial decision to the
contrary, no notice shall be required to terminate the term of this Lease
Agreement, or extension hereof, on the date herein specified, and the term
hereof shall expire on the date herein provided without notice being required
from either party.
11
<PAGE>
22. SUCCESSORS AND ASSIGNS:
-----------------------
This Lease shall bind and inure to the benefit of the successors,
heirs, and assigns of the parties hereto.
23. SECURITY DEPOSIT:
-----------------
The Lessee, concurrently with the execution of this Lease, has
deposited with the Lessor the sum of $2,350 in April, 1996, which sum shall be
retained by the Lessor as security for the payment by the Lessee of the rent
herein agreed to be paid and for the faithful performance of the covenants of
this Lease. If at any time the Lessee shall be in default in any of the
provisions of this Lease, the Lessor shall have the right to apply said deposit,
or so much thereof as may be necessary in payment of any rent in default as
aforesaid and/or in payment of any expense incurred by the Lessor in and about
the curing of any default by said Lessee, and/or in payment of any damages
incurred by the Lessor, at the Lessor's option, the same may be retained by the
Lessor in liquidation of part of the damages suffered by the Lessor by reason of
default of the Lessee, In the event that said deposit shall not be utilized for
any such purpose, then such deposit shall be applied to the rent last due for
the term of this Lease. Lessor shall be entitled to deposit, apply or otherwise
utilize Lessee's security deposit Lessor shall deem appropriate. In no event
shall Lessee be entitled to interest on said deposit, except to the extent
required by applicable law.
24. RELATIONSHIP OF THE PARTIES:
----------------------------
Nothing herein contained shall be deemed or constituted as creating the
relationship of principal and agent or of partnership or joint venture between
the parties hereto; it being understood and agreed that neither the method of
computing rent nor a provision contained herein nor any acts of the parties
hereto shall be deemed to create any relationship between the parties other than
that of Lessor to Lessee.
25. ENTIRE AGREEMENT:
-----------------
It is agreed between the parties that neither Lessor nor Lessee nor any
of their agents have made any statement, promises, or agreements verbally or in
writing in conflict with the terms of this Lease Agreement. Any and all
representations by either of the parties or their agents made during
negotiations prior to the execution of this Lease Agreement and which
representations are not contained in the provisions hereof shall not be binding
upon either of the parties hereto. It is further agreed that this Lease
Agreement contains the entire agreement between the parties, and no rights are
to be conferred upon either party until this Lease Agreement has been executed
by Lessee and Lessor.
26. MODIFICATION:
-------------
12
<PAGE>
No modification, alteration or amendment to this Lease Agreement shall
be binding unless in writing and executed by the parties hereto, their heirs,
successors or assigns.
27. BROKER'S COMMISSION:
--------------------
Lessee covenants, represents and warrants that Lessee has had no
dealings or negotiations with any Broker, or Agent other than Investec Services,
Inc., in connection with the consummation of this Lease, and Lessee covenants
and agrees to pay, hold harmless and indemnify Lessor from and against any and
all costs, expenses (including reasonable attorney's fees before trial, at
trial, and on appeal) or liability for any compensation, commissions, or charges
claimed by any broker or agent, other than the Brokers set forth in this
paragraph with respect to this Lease or the negotiation thereof.
28. PROVISIONS SEVERABLE:
---------------------
If any term or provision of this Lease Agreement or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease Agreement or the application if such
term or provision to person or circumstances other than those to which it is
held invalid or enforceable shall not be affected thereby and each term and
provision of this Lease Agreement shall he valid and enforced to the fullest
extent permitted by law.
29. NO RECORDING:
-------------
This Lease Agreement shall not be recorded in the public records
without Lessor's prior written consent.
30. LAW AND VENUE:
--------------
This Lease Agreement shall be enforced in accordance with the laws of
the State of Florida. The agreed upon venue is Jacksonville, Duval County,
Florida.
31. RELOCATION OF PREMISES:
-----------------------
If the space described herein contains less than 2,000 square feet,
Lessor reserves the right on sixty (60) days notice to move the Lessee to other
similarly improved space in the Project under the terms of this Lease except the
Base Rent will be adjusted for the variation in the square footage of the new
Leased Premises. Lessor agrees to make reasonable efforts to accommodate
Lessee's requests regarding the location and size of relocated premises. If
Lessor and Lessee do not agree in writing within ten (10) days of Lessor's
notice upon the term and conditions of the relocation, then this Lease Agreement
shall become null and void and no further effect, sixty (60) days from the date
of the Lessor's notice. Lessor agrees to pay or credit expenses not exceeding
the amount if the Lessee's base rent for two (2) months for moving Lessee to the
new space agreed upon, subject to adjustment by Lessee's authentication of
Lessee's actual relocation expenses.
13
<PAGE>
32. RULES AND REGULATIONS:
----------------------
The Rules and Regulations pertaining to the Project attached hereto as
Exhibit "D", and all Rules and Regulations which Lessor may hereafter from time
to time adopt and promulgate for the management of the Property, are hereby made
a part of this Lease Agreement and shall, during the term of this Agreement be
in all respects observed and performed by Lessee and Lessee's employees,
servants, agents, invitees and guests. Lessee agrees to abide by, uphold and
fully comply with the rules and regulations as shown on Exhibit "D" and with
such reasonable modifications thereof and additions thereto as Lessor may make.
Insofar as the attached Standard Rules and Regulations conflict with any of the
terms and provisions of this Lease Agreement, the terms and provisions of this
Lease shall control. Lessee further agrees that Lessor shall have the right to
waive any or all such rules in the case of any one or more tenants in the
Property without affecting Lessee's obligations under this Lease and the Rules
and Regulations and that Lessor shall not be responsible to Lessee for the
failure of any other tenant to comply with the Rules and Regulations,
33. SPECIAL CONDITIONS:
-------------------
If Lessor cannot deliver possession of the premises at commencement of
the term hereof, rent shall abate for the period between commencement of the
term and the time when Lessor can deliver possession but the term shall not be
extended by reason of such delay. If the Lessor does not deliver possession of
the premises within one hundred twenty (120) days after the commencement of the
term hereof, this Lease may be terminated upon Lessee's giving written notice
within five (5) days following the expiration of said one hundred twenty (120)
day period but Lessor shall not be liable to Lessee for damages or otherwise.
34. SEE ADDENDUM:
-------------
35. AGENCY DISCLOSURE:
------------------
Investec Services, Inc., as agents for the Lessor will be paid by the
Lessor a fee for the professional services rendered. Because of this fiduciary
relationship, Investec Services, Inc. represents the Lessor, but also has the
legal and ethical duty to treat the Buyer with honesty, integrity and fairness.
The undersigned Lessee acknowledges that this disclosure was made prior to the
execution of any contract or lease for real property in question.
36. RADON GAS:
----------
RADON is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time, Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public health
unit.
14
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease to be duly
executed as of the date of this Lease, by their respective officers or parties
thereunto duly authorized.
Signed, sealed and delivered "LESSEE"
in the presence of UNIVERSAL BEVERAGES, INC.
Marsha M. Flaige By: /s/ Cydelle Mendius
- ---------------- -----------------------
Cydelle Mendius
Judith Pritchard Date: May 25, 1999
- ---------------- -----------------------
"LESSOR"
TREETOPS OF JACKSONVILLE, L.C,
___________________________________ By: /s/ James F. Morgan
-----------------------
James F. Morgan
___________________________________ Vice President/Secretary
15
EXHIBIT 10.5
DEPOSIT RECEIPT & PURCHASE AND SALE AGREEMENT
Date: March 30, 2000
--------------
Receipt is hereby acknowledged by BNS of Central Florida, LTD.,
hereinafter called AGENT, of the sum of $5,000.00, from UNIVERSAL BEVERAGE
HOLDINGS CORPORATION, hereinafter called BUYER (which term may be singular or
plural and shall include the heirs, successors, personal representatives and
assigns of the Buyer) as a deposit and as a part of the purchase price on
account of offer to purchase the property of BNS of Central Florida, LTD.,
hereinafter called SELLER (which term may be singular or plural and shall
include the heirs, successors, personal representatives and assigns of the
Seller) said property being in Lake County, Florida, and described as follows:
See Exhibit "A"
Legal Description
The SELLER hereby agrees to sell said property to the BUYER and the
BUYER hereby agrees to purchase said property from the SELLER upon the following
terms and conditions (if completed or marked):
1. The total PURCHASE PRICE to be paid by the BUYER is payable as follows: (If
the following items, (c), (d) and (e) are to be adjusted at closing, the agreed
adjustments may be indicated by writing "not less than," "not more than" or
"approximately" before the amounts of the items.)
<TABLE>
<CAPTION>
<S> <C>
(a) Earnest money deposit; receipt of which is hereinabove and hereby acknowledged...................................$5,000.00
(b) Additional Payment..............................................................................................$95,000.00
(c) Additional Payment due at closing (not including costs of BUYER).............................................$1,300,000.00
(d) Proceeds of new note and mortgage to be executed by the BUYER to any lender other than the SELLER.....................$
(e) Existing mortgage balance encumbering the property to be assumed by the BUYER ........................................$
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(f) Balance due to the SELLER to be evidenced by a negotiable promissory
note of the BUYER, secured by a valid purchase money mortgage, in a
form acceptable to SELLER, on said property executed by a valid
purchase money mortgage, in a form acceptable to SELLER on said
property executed and delivered by the BUYER to the SELLER dated
the date of closing, bearing interest.................................................................................$
At the rate of _____ % per annum and payable $__________ per _____________.......................................$________
TOTAL PURCHASE PRICE.........................................................................................$1,400,000.00
</TABLE>
2. It is understood that the said property will be conveyed by WARRANTY DEED
subject to current taxes, existing zoning ordinances, covenants, restrictions,
and easements of record.
3. The BUYER will pay for: (__) Recording Fees (__) Stamps on Note ( X %)
Intangible Tax on Mortgage (__) ________ Attorney's Fee
1
<PAGE>
(__) Mortgagee's Initial Service Fee (__) Mortgagor's Transfer Charge (__)
Appraisal Fee (__) Prepaid Insurance and Taxes (__) Credit Report (__) Opinion
of Title (__) Photos _____________ ____________ (__) Mortgage insurance premium
(__) ____________ ___________ ____________
4. The SELLER will pay for: ( X ) Stamps on Deed (__) Surtax ( X ) Title
Insurance ( X ) Survey (__) Real Estate Sales Tax (__) Abstract of Title (__)
FHA or VA Discount (__) FHA or VA mortgage costs except prepare items (__)
___________ Attorney's Fee (__) Appraisal Fee (__) Satisfaction of Mortgage
(__)Termite Report_________________________
(__) --------------------------------------------------------------------------
5. PRORATIONS: All taxes for the current year, rentals, FHA insurance premiums,
hazard insurance premiums and interest on existing mortgages (if any) shall be
prorated as of the date of closing. If part of the purchase price is to be
evidenced by the assumption of a mortgage requiring deposit of funds in escrow
for payment of taxes, insurance or other charges, the BUYER agrees to reimburse
the SELLER for said escrowed funds assigned to BUYER at closing.
6. TITLE EVIDENCE: Within 90 days ( X ) after this date, (__) after date of
approval of mortgage loan the SELLER will furnish and deliver to the BUYER AGENT
or closing ATTORNEY: (__) Title insurance binder for a fee policy in the amount
of the purchase price. (__) Title insurance binder for a mortgage policy in the
amount of $______________ (__) Abstract of title certified from previous title
insurance.
7. SURVEY: Within 30 days ( X ) after this date, (__) after date of approval of
mortgage loan, the SELLER will furnish and deliver to the BUYER or AGENT: (__) A
new staked survey showing all improvements now existing thereon. (__) An
accurate survey of said property recertified within 3 months of the date of
closing. ( X ) A copy of a previously made survey of said property, showing all
improvements now existing thereon. (__) No survey is required.
8. TITLE EXAMINATION AND TIME FOR CLOSING: If said title evidence and survey as
specified above show that the SELLER is vested with a good and insurable title
to said property, subject to the usual exceptions contained in title insurance
binders (such as exceptions for survey, current taxes, zoning ordinances,
covenants, restrictions and easements of record), the transaction shall be
closed and the SELLER and the BUYER shall perform the agreements made herein on
or before July 1, 2000. If said title evidence and survey reveal any defects
which are not acceptable to the BUYER, the BUYER shall within 15 days notify the
SELLER of such title defects and the SELLER agrees to use reasonable diligence
to cure such defects and shall have 30 days to do so, in which event this
transaction shall be closed within ten days after delivery to the BUYER of
evidence that such defects have been cured. If the SELLER is unable to convey to
the BUYER a good and insurable title to said property, the BUYER shall have the
right to demand and receive from the AGENT all sums deposited hereunder, at the
same time returning the SELLER all title evidence and surveys received from the
SELLER and the BUYER's copy of this Agreement, whereupon all rights and
liabilities of the parties hereunder shall cease and determine; or the BUYER
shall have the right to accept such title as the SELLER may be able to convey,
and to close this transaction upon the other terms as stated herein.
9. DEFAULT BY BUYER: If the said BUYER fails to perform the covenants herein
contained within the time specified, SELLER shall have the election to either
(a) require specific performance on the part of BUYER, (b) bring suit against
BUYER for damage resulting from the breach, or (c) retaining as liquidated
damages one-half of
2
<PAGE>
all sums which have theretofore been paid to the SELLER or his agent by the
BUYER, after deducting closing expenses incurred with regards to subject
property and one-half shall be paid to the AGENT, providing, however, the
AGENT's portion shall not exceed the agreed commission.
10. DEFAULT BY SELLER: If the SELLER fails to perform any of the covenants of
this contract, the aforesaid money paid by the BUYER, at the option of the
BUYER, shall be returned to the BUYER on demand; the BUYER may bring suit
against SELLER for damages resulting from the breach, or the BUYER shall have
only the right of specific performance.
11. ATTORNEYS' FEES AND COSTS: In connection with any litigation arising out of
the contract, the prevailing party shall be entitled to recover all costs
incurred, including reasonable attorneys' fees.
12. LOSS OR DAMAGE: The risk of loss or damage to premises by fire, or
otherwise, is assumed by SELLER, until closing.
13. The SELLER agrees to deliver and the BUYER agrees to accept the property in
its present condition, excepting normal wear and tear, unless otherwise agreed
in this contract.
14. POSSESSION of the property shall be delivered to the BUYER upon closing.
15. (__) FINANCING -- It is agreed that the BUYER will require a mortgage
loan in order to finance this transaction. The responsibility for
arranging such loan is assumed by (__) SELLER or (__) BUYER; and in
the event such financing cannot be arranged before the time specified
above for the closing of this transaction, either party shall have the
right to terminate this agreement and thereupon the AGENT will return
to the BUYER all sums deposited hereunder, and the BUYER will return
to the SELLER all title evidence and surveys received from the SELLER
and BUYER's copy of this agreement. BUYER shall make application for
financing within _____ days.
16. (__) It is expressly agreed that, notwithstanding any other provisions
of this contract, the BUYER shall not be obligated to complete the
purchase of the property described herein or to incur any penalty by
forfeiture of earnest money deposits or otherwise unless the SELLER
has delivered to the BUYER a written statement issued by the Federal
Housing Commissioner setting forth the appraised value of the property
for mortgage insurance purposes of not less than $__________ which
statement the SELLER hereby agrees to deliver to the BUYER promptly
after such appraised value statement is made available to the SELLER.
The BUYER shall, however, have the privilege and option of proceeding
with the consummation of the contract without regard to the amount on
the appraised valuation.
17. (__) It is expressly agreed that, notwithstanding any other provisions
of this contract, the BUYER shall not incur any penalty for forfeiture
of earnest money or otherwise or be obligated to complete the purchase
of the property described herein, if the contract purchase price or
cost exceeds the reasonable value of the property established by the
Veterans Administration. The BUYER shall, however, have the privilege
and option of proceeding with the consummation of this contract
without regard to the amount of reasonable value established by the
VA.
3
<PAGE>
18. (__) TERMITE INSPECTION -- The SELLER agrees to furnish, without
expense to the BUYER, a termite inspection report showing all
buildings on the premises to be visibly free and clear from
infestation or damage by termites or other wood-boring insects. This
inspection report is to be furnished by a bonded and licensed firm. If
a report shows such infestation or damage, the SELLER shall have the
right to remedy the same within a reasonable time, and if the SELLER
elects not to remedy same, the BUYER shall have the right to complete
this transaction or to terminate this Agreement and receive a refund
of all sums theretofore deposited with the AGENT.
19. (__) ZONING -- Unless the property is property zoned for Bottling
Plant use at the time of closing, the BUYER shall have the right to
terminate this Agreement and receive a refund of all sums theretofore
deposited with the AGENT.
20. (__) PERSONAL ITEMS -- The following personal property items are
included at no additional charge. All fixed equipment, plants and
shrubbery now installed on said property.
21. (__) The offer of the BUYER shall terminate if the SELLER does not
indicate his acceptance of this contract by signing and delivering
same to the AGENT before 11:00 p.m. on March 31, 2000.
22. (__) ADDITIONAL PROVISIONS:
N/A
23. There are no other agreements, promises or understandings between these
parties except as specifically set forth herein. No alterations or changes shall
be made to the contract except in writing and signed or initialed by the parties
herein.
24. REAL ESTATE SALES FEE: The SELLER agrees to pay the listing AGENT, a sale
fee of _____% of the purchase price of this transaction no later than at the
closing of this transaction. (Co-op sale with _________________________).
25. NOT TO BE RECORDED: Both parties agree that this instrument shall not be
recorded in the public records.
26. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
4
<PAGE>
THIS AGREEMENT SHALL BE BINDING upon and inure to the benefit of the heirs,
legal representatives, successors and assigns of the SELLER and BUYER, when
accepted by both the SELLER and BUYER .
SIGNED AND SEALED as of the day and year first above written.
<TABLE>
<CAPTION>
<S> <C> <C>
______________________________ UNIVERSAL BEVERAGES HOLDINGS
CORPORATION
______________________________ /s Jonathon Moore
As to BUYER BUYER
Jonathan D. Moore, CEO
______________________________ _________ /s/Sullivan Talley, President
As to SELLER Date SELLER: BNS, Inc., General Partner
</TABLE>
WE HEREBY ACKNOWLEDGE receipt of the sum of $_________________ (__)
Cash; (__) Check; being the sum mentioned in the first paragraph of this
Agreement, same to be held by us pending disbursement according to the terms.
By:________________________________________
5
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
That part of the East 1/2 of the Northwest 1/4 of the Northwest 1/4 of Section
25, Township 15 South, Range 26 East in Lake County, Florida, lying South of the
Southerly line of the right-of-way of State Road No. 44 and West line of the
right-of-way of State Road No. 459.
LESS:
Begin at the point of intersection of the Westerly right-of-way Line of State
Road S-468 and the Southerly boundary line of the Northwest 1/4 of the Northwest
1/4 of Section 28, Township 15 South, Range 24 East; thence run North 320.23
feet for a point of beginning. Thence run West, parallel with the South boundary
of said Northwest 1/4 of the Northwest 1/4 a distance of 20 feet; thence run
North, parallel with said West right-of-way boundary of State Road 0-468 a
distance of 10 feet; thence run East, parallel with the South boundary of this
description, a distance of 20 feet to the Westerly boundary line of State Road
S-468; thence run South along the Westerly boundary line of State Road S-468 to
the Point of Beginning.
AND LESS:
A parcel of land lying within Section 28, Township 15 South, Range 24 East, Lake
County, Florida, more particularly described as follows: Commence at a 5"
concrete filled stove pipe being the Northwest corner of said Section 28; thence
South 00'10'32(degree) West along the West line of the Northwest 1/4 of said
Section 28 a distance of 1,331.46 feet; thence South 09"48'09(degree) East along
the South line of the Northwest 1/4 of the Northwest 1/4 of said Section 28 a
distance of 1,269.35 feet to a point on the existing Westerly right-of-way line
of State Road No. 44, said point being 50 feet from, measured at a right angle
to the centerline of survey of said State Road No. 44 project Section 110022502,
thence North 00'10" 05(degree) East along said existing Westerly right-of-way
line 535.21 feet to the POINT OF BEGINNING; thence continue North
00"10'05(degree) East along said existing Westerly right-of-way line 6.50 feet;
thence North 50'05"57(degree) West along said existing Westerly right-of-way
line 51.14 feet to a point on the existing Southerly right-of-way line of said
State Road 44, said point being 50.00 feet from, measured at a right angle to
the centerline of survey of said State Road No. 44, Project Section 110022502,
thence South 75"30'00(degree) west along said existing Southerly right-of-way
line 6.50 fee; thence leaving said existing southerly right-of-way line south
50"05'37(degree) East 59.45 feet to the POINT OF BEGINNING.
6
ADDENDUM
To the Deposit Receipt & Purchase and Sale Agreement dated March 30, 2000, by
and between BNS of Central Florida, Ltd., as Seller and Universal Beverages, as
Buyer. It is hereby agreed as follows:
1. Paragraph 4 of the subject contract is hereby amended as
follows:
4. The Seller will pay for the state documentary stamps
on the deed of conveyance and the owner's title
insurance policy insuring the title of the subject
property equal to the purchase price. The Seller
shall provide the Buyer with any survey currently in
Seller's possession to Buyer.
2. Paragraph 9 of the subject Agreement is hereby amended and
modified as follows:
9. Default by Buyer: if the said Buyer fails to perform
the covenants and requirements herein contained
within the time specified, Seller shall be entitled
to retain as liquidated damages the entire deposit,
said deposit being demed non-refundable. The parties
further agree that this paragraph shall not be deemed
a penalty and that is a reasonable sum equaling the
liquidated damages due Seller in light of Seller's
removal of the subject property for sale during the
term of this Agreement. As such, paragraphs 15, 16
and 17 are hereby deleted in their entirety.
3. Paragraph 13 of the subject Agreement is hereby amended as
follows:
13. Buyer has been in continued possession of the subject
property and hereby agrees to purchase same in its
"AS IS" condition with no warranty whatsoever from
Seller with regard to the condition of the property.
As such, paragraphs 18 and 19 of the subject contract
are hereby deleted in their entirety.
4. Paragraph 21 of the subject contract is hereby amended as
follows:
21. Seller's offer to sell subject property to Buyer
under the terms and conditions contained herein shall
be open through April 14, 2000. In the event Buyer
has not executed this contract and delivered to
Seller's attorney the deposit to be held in trust of
the total amount of $100,000.00 by April 14, 2000,
this offer shall expire and this contract shall be
considered null and void. The deposit shall be held
in escrow under the "McLin Burnsed Trust Account."
5. Paragraph 24 of the subject contract is hereby amended as
follows:
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24. Each party represents to the other that there is no
real estate agent or broker involved with this
transaction.
6. The subject property is currently leased from Seller to Buyer under
a separate rental agreement reference thereto is hereby incorporated herein by
reference. In the event of default under said lease agreement, including the
failure to pay rent due by midnight of the third day written notice is given by
the Seller to Buyer to pay the rental due, such default shall also constitute an
immediate default under this contract allowing Seller to retain the deposit as
liquidated damages and terminating this contract in its entirety.
Universal Beverages Holding Corporation
By: /s/ Jonathan O. Moore
-------------------------
Jonathon O. Moore, CEO
BNS of Central Florida, Ltd.
By: /s/ BNS, Inc.
-------------------------
BNS, Inc., General Partner
LEASE AGREEMENT
THIS LEASE AGREEMENT, is made and entered into by and between BNS OF
CENTRAL FLORIDA, LTD., or assigns, hereinafter referred to as "Landlord" and
UNIVERSAL BEVERAGES, INC., hereinafter referred to as "Tenant";
WITNESSETH:
1. PREMISES AND TERM. In consideration of the obligation of Tenant to pay rent
herein provided, and in consideration of the other terms, provisions and
covenants hereof, Landlord hereby demises and leases to Tenant, and Tenant
hereby takes from Landlord certain premises situated within the County of Lake,
State of Florida, more particularly described on Exhibit "A" attached hereto and
incorporated herein by reference, together with the buildings and other
Improvements situated or to be situated upon said premises (said real property,
buildings and improvements being hereinafter referred to as the "premises").
TO HAVE AND TO HOLD the same for a term commencing on May 1, 1998, and
ending August 31, 1999, Tenant acknowledges that it has inspected and accepts
the premises, and specifically the buildings and improvements comprising the
same, in their present condition as suitable for the purpose for which the
premises are leased. Taking of possession by Tenant shall be deemed conclusively
to establish that said buildings and other Improvements are in good and
satisfactory condition as of when possession was taken. Tenant further
acknowledges that no representations as to the repair of the premises, nor
promises to alter, remodel or improve the premises have been made by Landlord,
unless such are expressly set forth in this lease. If this lease is executed
before the premises become vacant or otherwise available and ready for
occupancy, or if any present tenant or occupant of the premises holds over, the
Landlord cannot acquire possession of the premises prior to the date above
recite as the commencement date of this lease, Landlord shall not be deemed to
be in default hereunder, and Tenant agrees to accept possession of the premises
at such time as Landlord is able to tender the same, which dat shall thenceforth
be deemed the "commencement date." After the commencement date Tenant shall,
upon demand, execute and deliver to Landlord a letter of acceptance of delivery
of the premises.
2. RENT.
A. Base Rent. Tenant agrees to pay to Landlord rent for the premises in
advance without demand, deduction or set off, for the entire term hereof at the
following rates: for the period of May 1, 1998 through July 31, 1998, $10,000.00
per month, plus applicable sales tax. Commencing August 1, 1998, through the
conclusion of the lease term hereunder, the monthly rent shall increase to
$16,132.70, plus applicable sales tax. Each such monthly installment shall be
due and payable, without demand, on or before the first day of each calendar
month during the hereby demised term.
Such monthly rental payments shall be referred to herein as "Base Rent."
B. Secondary Rent. In addition to the monthly rental amount referred to
in Paragraph 2A above, Tenant agrees to pay Landlord the sum of $50,000.00 no
later than may 10, 1998.
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Further, Tenant shall pay Landlord the amount of $25,000.00 each on the
following dates: June 1, 1998 and July 1, 1998. These additional payments
totaling $100,000.00, shall be deemed rental payments and hereinafter referred
to as "Secondary Rent," and non-refundable.
C. Additional Rent. Any and all references herein to "additional rent"
shall mean and include Tenant's obligation to pay the taxes, utilities,
insurance premiums and maintenance and repair costs and any other expenses with
respect to the premises as specified herein.
3. USE.
A. Permitted Use. The premises shall be used only for the purpose of
receiving, storing, shipping and selling (other than retail) products, materials
and merchandise made and/or distributed by Tenant, and for such other lawful
purposes as may be incidental thereto. Tenant shall, at its own cost and
expense, obtain any and all licenses and permits necessary for any such use.
Tenant shall comply with all governmental laws, ordinances and regulations
applicable to the use of the premises including without limitation ADA, OSHA,
and Environmental Law as defined herein, and shall promptly comply with all
governmental orders and directives for the correction, prevention and abatement
of nuisances in or upon, or connected with the premises, all at Tenant's sole
expense. Tenant shall not permit any objectionable or unpleasant odors, smoke,
dust, gas noise or vibrations to emanate from the premises, nor take any other
action which would constitute a nuisance. Without Landlord's prior written
consent, Tenant shall not receive, store or otherwise handle any product,
material or merchandise which is explosive or highly inflammable. Tenant will
not permit the premises to be used for any purpose or in any manner (including
without limitation any method of storage) which would render the insurance
thereon void or the insurance risk more hazardous.
B. Environmental Definitions. As used in this lease, "Hazardous
Material" shall mean any substance that is (a) defined under any Environmental
Law as a hazardous substance, hazardous waste, hazardous material, pollutant or
contaminant, (b) a petroleum hydrocarbon, including crude oil or any fraction or
mixture thereof, (c) hazardous, toxic, corrosive, flammable, explosive,
infectious, radioactive, carcinogenic or a reproductive toxicant, or (d)
otherwise regulated pursuant to any Environmental Law. As used in this lease,
"environmental Law" shall mean all federal, state and local laws, statutes,
ordinances, regulations, rules, judicial and administrative orders and decrees,
permits, licenses, approvals, authorizations and similar requirements of all
federal, state and local governmental agencies or other governmental authorities
pertaining to the protection of human health and safety or the environment, now
existing or late adopted during the term of this lease. As used in this lease,
"Permitted Activities" shall mean the lawful activities of Tenant that are part
of the ordinary course of Tenant's business in accordance with the Permitted Use
specified in Paragraph 3.A hereof. As used in this lease, "Permitted Materials"
shall mean the materials handled by Tenant in the ordinary course of conducting
Permitted Activities.
C. Environmental Requirements. Tenant hereby agrees that: (a) Tenant
shall not conduct, or permit to be conducted, on the premises any activity which
is not a Permitted Activity; (b) Tenant shall not use, store or otherwise
handle, or permit any use, storage or other handling of,
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any Hazardous Material which is not a Permitted Material on or about the
premises; (c) Tenant shall obtain and maintain in effect all permits and
licenses required pursuant to any Environmental law for Tenant's activities on
the premises, and Tenant shall at all times comply with all applicable
Environmental Laws; (d) Tenant shall not engage in the storage, treatment or
disposal on or about the premises of any Hazardous Material except for any
temporary accumulation of waste generated in the course of Permitted Activities;
(e) Tenant shall not install any aboveground or underground storage tank or any
subsurface lines for the storage or transfer of any Hazardous Material, except
for the lawful discharge of waste to the sanitary sewer, and Tenant shall store
all Hazardous Materials in a manner that protects the premises and the
environment from accidental spills and releases; (f) Tenant shall not cause or
permit to occur any release of any Hazardous Material or any condition of
pollution or nuisance on or about the premises, whether affecting surface water
or groundwater, air, the land or the subsurface environment; (g) Tenant shall
promptly remove from the premises any Hazardous Material introduced, or
permitted to be introduced, onto the premises by Tenant which is not a Permitted
Material and, on or before the date Tenant ceases to occupy the premises, Tenant
shall remove from the premises all Hazardous Materials and all Permitted
Materials handled by or permitted on the premises by Tenant; and (h) if any
release of a Hazardous Material to the environment, or any condition of
pollution or nuisance, occurs on or about or beneath the premises as a result of
any act or omission of Tenant or its agents, officers, employees, contractors,
invitees of licensees, Tenant shall, at Tenant's sole cost and expense, promptly
undertake all remedial measures required to clean up and abate or otherwise
respond to the release, pollution or nuisance in accordance with all applicable
Environmental Laws. Landlord and landlord's representatives shall have the
right, but not the obligation, to enter the premises at any reasonable time for
the purpose of inspecting the storage, use and handling of any Hazardous
Material on the premises in order to determine Tenant's compliance with the
requirements of this lease and applicable Environmental Law. IF Landlord gives
written notice to Tenant that Tenant's use, storage or handling of any Hazardous
Material on the property may not comply with this lease or applicable
Environmental Law, Tenant shall correct any such violation within five (5) days
after Tenant's receipt of such notice from Landlord. Tenant shall indemnify and
defend Landlord against and hold Landlord harmless from all claims, demands,
actions, judgments, liabilities, costs, expenses, losses, damages, penalties,
fines and obligations of any nature (including reasonable attorneys' fees and
disbursements incurred in the investigation, defense or settlement of claims)
that Landlord may incur as a result of, or in connection with, claims arising
from the presence, use, storage, transportation, treatment, disposal, release or
other handling, on or about or beneath the premises, or any Hazardous Material
introduced or permitted on or about or beneath the premises by any act or
omission of tenant or its agents, officers, employees, contractors, invitees or
licensees. The liability of Tenant under this Paragraph 3.C shall survive the
termination of this lease with respect to acts or omissions that occur before
such termination.
4. TAXES.
A. Tenant agrees to pay before they become delinquent all taxes,
assessments, and governmental charges of any kind and nature whatsoever
(hereinafter collectively referred to as the "taxes") lawfully levied or
assessed against the premises and the grounds, parking areas, driveways
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<PAGE>
and alleys around the premises. Landlord agrees to provide Tenant with the tax
bill for the premises within fifteen (15) business days after receipt of tax
bills from the appropriate taxing authority. Tenant shall furnish to Landlord,
not late than twenty (20) days before the date of any such taxes become
delinquent, official receipts of the appropriate taxing authority or other
evidence satisfactory to Landlord evidencing payment thereof. If Tenant should
fail to pay any taxes, assessments, or governmental charges required to be paid
by Tenant hereunder, in addition to any other remedies provided herein, Landlord
may, if it so elects, pay such taxes, assessments, and governmental charges. Any
sums so paid by Landlord shall be deemed to be so much additional rental owing
by Tenant to Landlord and due and payable, on demand, by Landlord, together with
interest thereon, at t he rate of ten percent (10%) per annum from the date paid
by Landlord to date of repayment by Tenant.
B. If, at any time during the term of this lease, the present method of
taxation shall be changed so that in lieu of the whole or any part of any taxes,
assessments of governmental charges levied, assessed or imposed on real estate
and the Improvements thereon, there shall be levied, assessed or imposed on
Landlord a capital levy or other tax directly on the rents received therefrom
and/or a franchise tax, assessment, levy or charge measured by or based, in
whole or in part, upon such rents for the present or any future building or
buildings on the premises then all such taxes, assessments, levies or charges,
or the part thereof so measured or based, shall be deemed to be included within
the term "taxes" for the purposes hereof.
C. Tenant may, at its sole cost and expense, in it own name and/or in
the name of Landlord, dispute and contest any "taxes" by appropriate proceedings
diligently conducted in good faith, but only after Tenant has deposited with
Landlord the amount so contested and unpaid, which shall be held by Landlord
without obligation for interest until the termination of the proceedings, at
which time the amount deposited shall be applied by Landlord toward the payment
of the items held valid (plus any court costs, interest, penalties, and other
liabilities associated with the proceedings),a and Tenant's share of any excess
shall be returned to Tenant. Tenant further agrees to pay to Landlord, upon
demand, all court costs, interest, penalties, and other liabilities relating to
such proceedings. Tenant hereby indemnifies and agrees to hold harmless the
Landlord from and against any cost, damage, or expense (including attorneys'
fees) in connection with any such proceedings.
D. Any payment to be made pursuant to this Paragraph 4, with respect to
the real estate tax year in which this lease commences or terminates shall be
prorated.
5. REPAIRS AND MAINTENANCE.
A. Tenant shall, at its own cost and expense, keep and maintain all
parts of the premises in good condition, promptly making all necessary repairs
and replacements, interior and exterior, structural and non-structural, ordinary
and extraordinary, including but not limited to, windows, glass and plate glass,
doors and any special office entry, walls and finish work, floors and floor
covering, roof, foundation, downspout, gutters, heating and air conditioning
systems, dock boards, truck doors, dock bumpers, paving, plumbing work and
fixtures, termite and pest extermination,
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regular removal of trash and debris, regular mowing of any grass, trimming, weed
removal and general landscape maintenance, keeping the parking areas, driveways,
alleys and the whole of the premises in a clean and sanitary condition. Tenant
shall at its own cost and expense repaint exterior overhead doors, canopies,
entries, handrails, gutters and other exposed parts of the building which
reasonably require repairing to prevent deterioration or to maintain aesthetic
standards.
B. Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
for servicing all heating and air conditioning systems and equipment within the
premises. The maintenance contractor and the contract must be approved by
Landlord. The service contract must include all services suggested by the
equipment manufacturer within the operation/maintenance manual and must become
effective (and a copy thereof delivered to Landlord) within thirty (30) days of
the date Tenant takes possession of the premises.
6. ALTERATIONS. Tenant shall not make any alterations, additions or Improvements
to the premises without the prior written consent of Landlord, but at its own
cost and expense and in a good workmanlike manner make such minor alterations,
additions or improvements or erect, remove or alter such partitions, or erect
such shelves, bins, machinery and trade fixtures as it may deem advisable,
without altering the basic character of the building or Improvements and without
overloading or damaging such building or Improvements, and in each case
complying with all applicable governmental laws, ordinances, regulations and
other requirements. All alterations, additions, improvements and partitions
erected by Tenant shall be and remain the property of Tenant during the term of
this lease and Tenant shall unless Landlord otherwise elects as hereinafter
provided, remove all alterations, additions, improvements and partitions erected
by Tenant and restore the premises to their original condition by the date of
termination of this lease; provided, however, that if Landlord so elects prior
to termination of this lease, such alterations, additions, improvements and
partitions shall become the property of Landlord as of the date of termination
of this lease, such alterations, additions, improvements and partitions shall
become the property of Landlord as of the date of termination of this lease and
shall be delivered up to the landlord with the premises. All shelves, bins,
machinery and trade fixtures installed by Tenant may be removed by Tenant prior
to the termination of this lease if Tenant so elects, and shall be removed by
Tenant at Tenant's expense if required by Landlord upon the expiration or
termination of this lease; upon any such removal Tenant shall restore the
premises to their original condition. All such removals and restoration shall be
accomplished in a good workmanlike manner so as not to damage the primary
structure or structural qualities of the buildings and other improvements
situated on the premises.
7. SIGNS. Tenant shall have the right to install signs upon the premises only
when first approved in writing by Landlord and subject to any applicable
governmental laws, ordinances, regulations and other requirements. Tenant shall
remove all such signs on or before the termination of this lease. Such
installations and removals shall be made in such manner as to avoid injury to or
defacement of the building and other improvements, and Tenant shall repair any
injury or defacement including without limitation discoloration, caused by such
installation or removal.
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8. INSPECTION. Landlord and Landlord's agent and representatives shall have the
right to enter and inspect the premises any reasonable time during business
hours, for the purpose of ascertaining the condition of the premises or in order
to make such repairs as may be required or permitted to be made by Landlord
under the terms of this lease. During the period that is twelve (12) months
prior to the end of the term hereof, Landlord and Landlord's agents and
representatives shall have the right to enter the premises at any reasonable
time during business hours for the purpose of showing the premises, and shall
have the right to elect on the premises a suitable sign indicating that the
premises are available. Tenant shall give written notice to Landlord at least
thirty (30) days prior to vacating the premises and shall arrange to meet with
Landlord for a joint inspection of the premises at the time of vacating. In the
event of Tenant's failure to give such notice or arrange such joint inspection,
Landlord' inspection at or after Tenant's vacating the premise shall be
conclusively deemed correct for purposes of determining Tenant's responsibility
for repairs and restoration.
9. UTILITIES. Tenant shall pay for all water, gas, heat, light, power,
telephone, sewer, sprinkler charges and other utilities and services used on or
from the premises, together with any taxes, penalties, surcharges or the like
pertaining thereto, and maintenance charges for utilities, and shall furnish all
electric light bulbs and tubes. Landlord shall in no event be liable for any
interruption or failure of utility services on the premises.
10. ASSIGNMENT AND SUBLETTING. Tenant shall not have the right to assign this
lease or to sublet the whole or any part of the premises without the prior
written consent of Landlord. Notwithstanding any permitted assignment or
subletting. Tenant shall at all times remain directly, primarily and fully
responsible and liable for the repayment of the rent herein specified and for
compliance with all of Tenant's other obligations under the terms, provisions
and covenants of this lease. Upon the occurrence of an "event of default" as
hereinafter defined, if the premises or any part thereof are then assigned or
sublet. Landlord, in addition to any other remedies herein provided or provided
by law, may at its option collect directly from such assignee or subtenant all
rents becoming due to Tenant under such assignment or sublease and apply such
rent against any sums due to Landlord from Tenant hereunder, and no such
collection shall be construed to constitute a novation or a release of Tenant
from the further performance of Tenant's obligations hereunder.
11. INDEMNIFICATION AND INSURANCE.
A. Damage or Injury. Landlord shall not be liable to Tenant, and Tenant
hereby waives all claims against Landlord, for any damage to or loss or theft of
any property or for any bodily or personal injury, illness or death of any
person in, on or about the premises arising at any time and from any cause
whatsoever, except to the extent caused by the willful negligence or willful
misconduct of Landlord. Tenant shall indemnify and defend Landlord against and
hold Landlord harmless from all claims, demands, liabilities, damages, losses,
costs and expenses, including reasonable attorneys' fees and disbursements,
arising from or related to any use or occupancy of the premises, or any
condition of the premises, or any default in the performance of Tenant's
obligations under this lease, or any damage to any property (including property
of employees and invitees of Tenant) or any bodily or personal injury, illness
or death of any person (including employees and
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invitees of Tenant) occurring in, on or about the premises or any part thereof
arising at any tie and from any cause whatsoever (except to the extent caused by
the gross negligence or willful misconduct of Landlord) or occurring in, on or
about the premises or any part thereof arising at any time and from any cause
whatsoever (except to the extent caused by the willful negligence or willful
misconduct of Landlord) or occurring in, on or about any part of the property of
which the premises are a part when such damage, bodily or personal injury,
illness or death is caused by any act or omission of Tenant or its agents,
officers, employees, contractors, invitees or licensees. This Paragraph 11.A
shall survive the termination of this lease with respect to any damage, bodily
or personal injury, illness or death prior to such termination.
B. Insurance Coverage and Amounts. Tenant shall, at all times during
the term of this lease and at Tenant's sole cost and expense, obtain and keep in
force the insurance coverage and amounts set forth in this Paragraph 11.B.
Tenant shall maintain commercial general liability insurance, including
contractual liability, broad form property damage liability, fire coverage,
legal liability, premises and completed operations, and medical payments, with
limits not less than on million dollars ($1,000,000) per occurrence and
aggregate, insuring against claims for bodily injury, personal injury and
property damage arising from the use, occupancy or maintenance of the premises.
Any general aggregate shall apply on a per location basis. Tenant shall maintain
business auto liability insurance with limits not less than one million dollars
per accident covering owned, hired and non-owned vehicles used by Tenant. Tenant
shall maintain umbrella excess liability insurance on a following form basis in
excess of the required commercial general liability, business auto and employers
liability insurance with limits not less than five million dollars ($5,000,000)
per occurrence and aggregate. Tenant shall carry workers' compensation insurance
for all of its employees in statutory limits in the state in which the premises
is located and employers liability insurance which affords not less than five
hundred thousand dollars ($500,000) for each coverage. Tenant shall maintain all
risk property insurance for all personal property of Tenant and improvement,
fixtures and equipment constructed or installed by Tenant in the premises in an
amount not less than the full replacement cost, which shall include business
income and extra expense coverage with limits not less than one hundred percent
(100%) of gross revenues for a period of twelve (12) months. Tenant shall
maintain boiler and machinery insurance against loss or damage from an accident
from the equipment in the premises in an amount of $200,000.00 and plate glass
insurance coverage against breakage of plate glass in the premises. Any
deductibles selected by Tenant shall be the sole responsibility of Tenant.
Tenant, when required by Landlord's mortgage holder, shall name such mortgage
holder as additional insured in such policies.
C. Insurance Requirements. All insurance and all renewals thereof shall
be issued by companies with a rating of at least "A", "VIII" or better in the
current edition of Best's Insurance Reports and be licensed to do and doing
business in the state in which the premises is located. Each policy shall
expressly provide that the policy shall not be canceled or materially altered
without thirty (30) days' prior written notice to Landlord and shall remain in
effect notwithstanding any such cancellation or alteration until such notice
shall have been given to Landlord and such period of thirty (30) days shall have
expired. All liability insurance (except employers liability) shall name
Landlord and any other parties designated by landlord (including any investment
manager, asset
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manager or property manager) as an additional insured, shall be primary and
noncontributing with any insurance which may be carried by Landlord, shall
afford coverage for all claims based on the act, omission, event or condition
that occurred or arose (or the onset of which occurred or arose) during the
policy period, and shall expressly provide that Landlord, although named as an
insured, shall nevertheless be entitled to recover under the policy for any
loss, injury or damage to Landlord. All property insurance shall name Landlord
as loss payee to the full extent of Landlord's interest in any improvements and
betterments. Tenant shall deliver certificates of insurance, acceptable to
Landlord, to Landlord at least ten (10) days before the commencement date and at
least ten (10) days before expiration of each policy. IF Tenant fails to insure
or fails to furnish any such insurance certificate, Landlord shall have the
right from time to time but not the obligation to effect such insurance for the
benefit of Tenant or Landlord or both of them, and Tenant shall pay to Landlord
on written demand, as additional rent, all premiums paid by Landlord.
D. Subrogation. Tenant waives on behalf of all insurers under all
policies of property insurance now or hereafter carried by Tenant insuring or
covering the premises, or any portion or any contents thereof, or any operations
therein, all rights of subrogation which any such insurer might otherwise, if at
all, have to any claims of Tenant against Landlord. Landlord waives on behalf of
all insurers under all policies of property insurance now or hereafter carried
by Landlord insuring or covering the premises, or any portion or any contents
thereof, or any operations therein, all rights of subrogation which any such
insurer might otherwise, if at all, have to any claims of Landlord against
Tenant. Tenant shall procure from each of the insurers under all policies of
property insurance now or hereafter carried by Tenant insuring or covering the
premises, or any portion or any contents thereof, or any operations therein, a
waiver of all rights of subrogation which the insurer might otherwise, if at all
, have to any claims of Tenant against Landlord as required by this Paragraph
11.D.
E. If the premises, or any part thereof, is damaged or destroyed by
fire or other casualty, Tenant shall at its sole coast and expense thereupon
proceed with reasonable diligence to rebuild and repair such buildings and/or
other improvements to substantially the condition in which they existed prior to
such damage or destruction, subject to Landlord's written approval of the plans
and specifications for such rebuilding and repairing, which approval shall not
be unreasonably withheld.
F. Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
premises requires that the insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this lease by delivering written
notice of termination to Tenant within fifteen (15) days after such requirement
is made by any such holder, whereupon all rights and obligations hereunder shall
cease and terminate.
G. Each of Landlord and Tenant hereby releases the other from any and
all liability or responsibility to the other or any claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any other perils insured in policies of insurance
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covering such property, even if such loss or damage shall have been caused by
the fault or negligence of the other party, or anyone for whom such party may be
responsible, provided, however, that this release shall be applicable and in
force and effect only with respect to loss or damage occurring during such times
as the releasor's policies shall contain a clause or endorsement to the effect
any such release shall not adversely affect or impair said policies or prejudice
the right of the releasor to recover thereunder and then only to the extent of
the insurance proceeds payable under such policies. Each of Landlord and Tenant
agrees that its insurance carriers shall include in its policies such a clause
or endorsement.
12. CONDEMNATION.
A. If the whole or any substantial part of the premises should be taken
for any public or quasi-public use under governmental law, ordinance or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the use of
the premises for the purpose for which they are then being used, this lease
shall terminate and the rent shall be abated during the unexpired portion of
this lease, effective when the physical taking of said premises shall occur.
B. If part of the premises shall be taken for any public or
quasi-public use under any governmental law, ordinance, or regulation, or by
right of eminent domain, or by private purchase in lieu thereof, and this lease
is not terminated as provided in Paragraph 12. Above, this lease shall not
terminate, but the rent payable hereunder during the unexpired portion of the
lease shall be equitably reduced as reasonably determined by Landlord.
C. In the event of any such taking or private purchase in lieu thereof,
Landlord shall be entitled to receive and retain all such awards in the
condemnation proceeding and Tenant shall have no right to share in the
condemnation award or in any judgment for damages caused by the taking. Nothing
in this paragraph shall preclude an award being made to Tenant for loss of
business or depreciation to and cost of removal of equipment or fixtures,
provided that Landlord's award is not reduced as a result thereof.
13. HOLDING OVER. Tenant will, at the termination of this lease by lapse of time
or otherwise, yield up immediate possession to Landlord. In the event of any
holding over by Tenant or any of its successors in interest after the expiration
of termination of this lease, unless the parties hereto otherwise agree in
writing, the hold over tenancy shall be subject to termination by Landlord at
any time upon not less than five (5) days advance written notice, or by tenant
at any time upon not less than thirty (30) days advance written notice, and all
of the other terms and provisions of this lease shall be applicable during that
period. No holding over by Tenant, whether with or without consent of Landlord,
shall operate to extend this lease except as otherwise expressly provided.
14. QUIET ENJOYMENT. Landlord covenants that it now has, or will acquire before
Tenant takes possession of the premises, good title to the premises, free and
clear of all liens and encumbrances, excepting only the lien for current taxes
not yet due such mortgage or mortgages as
9
<PAGE>
are permitted by the terms of this lease, zoning ordinances, and other building
and fire ordinances and governmental regulations relating to the use of such
property, and easements, restrictions, and other conditions of record. In the
event this lease is a sublease, then Tenant agrees to take the premises subject
to the provisions of the prior leases. Landlord represents and warrants that it
has full right and authority to enter into this lease and that Tenant, upon
paying the rental herein set forth and performing its other covenants and
agreements herein set forth, shall peaceably and quietly have, hold, and enjoy
the premise for the term hereof without hindrance or molestation from Landlord,
subject to the terms and provisions of this lease.
15. EVENTS OF DEFAULT. The following events shall be deemed to be events of
default by Tenant under this lease:
(a) Tenant shall fail to pay any installment of rent (base rent and/or
secondary rent), or additional rent hereby received when due, or any payment
with respect to taxes or insurance hereunder when due, or any other payment or
reimbursement to Landlord required herein when due, and such failure shall
continue for a period of fie (5) days from the ate such payment was due.
(b) Tenant shall become insolvent, or shall make a transfer in fraud or
creditors, or shall make and assignment for the benefit of creditors.
(c) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute of the
United States or any State thereof; or Tenant shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant thereunder.
(d) A receiver or trustee shall be appointed or all or substantially
all of the assets of Tenant.
(e) Tenant shall desert or vacate any substantial portion of the
premises.
(f) Tenant shall fail to comply with any term, provision, or covenant
of this lease (other than the foregoing in this Paragraph 15), and shall not
cure such failure within twenty (20) days after written notice thereof to
Tenant.
16. REMEDIES. Upon the occurrence of any of such events of default described in
Paragraph 15 hereof, Landlord shall have the option to pursue any one or more of
the following remedies without any notice or demand whatsoever against Tenant:
(a) Terminate this lease, in which event Tenant shall immediately
surrender the premises to the Landlord, and if Tenant fails so to do, Landlord
may, without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the premises and expel or
remove Tenant and any other person who may be occupying such premises or any
part thereof without being liable for prosecution or any claim or damages
therefor; and Tenant agrees to pay to Landlord on demand the amount of any loss
and damage which Landlord may suffer
10
<PAGE>
by reason of such termination, whether through liability to relet the premises
on satisfactory terms or otherwise.
(b) Enter upon and take possession of the premises and expel or remove
Tenant ans any other person who may be occupying such premises or any part
thereof without being liable for prosecution or any claim for damages therefor,
and relet the premises and receive the rent therefor, and Tenant agrees to pay
to the Landlord on demand any deficiency that may arise by reason of such
reletting. In the event Landlord is successful in reletting the premises at a
rental in excess of that agreed to be paid by Tenant pursuant to the terms of
this lease, Landlord and Tenant each mutually agree that Tenant shall not be
entitled, under any circumstances, to such excess rental, and Tenant does hereby
specifically waive any claim to such excess rental.
(c) Enter upon the premises without being liable for prosecution or any
claim for damages therefor, and do whatever Tenant is obligated to do under the
terms of this lease; and Tenant agrees to reimburse Landlord, on demand, for any
expenses which Landlord may incur in this effecting compliance with Tenant's
obligations under this lease, and Tenant further agrees that Landlord shall not
be liable for any damages resulting to the Tenant from such action, whether
caused by the negligence of the Landlord or otherwise.
(d) In the event Tenant fails to pay any installment of rent hereunder
as and when such installment is due, to help defray the additional cost to
Landlord for processing such late payments, Tenant shall pay to Landlord on
demand a late charge in an amount equal to five percent (5%) of such
installment; and the failure to pay such amount within ten (10) days after
demand therefor shall be an event of default hereunder. The provision for such
late charge shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner.
Pursuant to any of the foregoing remedies shall not preclude pursuit of
any of the other remedies herein provided or any other remedies provided by law,
nor shall pursuit of any remedy herein provided constitute a forfeiture or
waiver of any rent due to Landlord hereunder or of any damages accruing to
Landlord by reason of the violation of any of the germs, provisions and
covenants herein contained. No act of thing done by the Landlord or its agents
during the term hereby granted shall be deemed a termination of this lease or
aan acceptance of the surrender of the premises, and not agreement to terminate
this lease or to accept a surrender of said premises shall be valid unless in
writing signed by Landlord. No waiver by Landlord of any violation or breach of
any of the terms, provisions and covenants herein contained shall be deemed or
construed to constitute a waiver of any other violation or breach of any of the
terms, provisions and covenants herein contained. Landlord's acceptance of the
payment of rental or other payments hereunder after the occurrence of an event
of default shall not be construed as a waiver of such default, unless Landlord
so notifies Tenant in writing. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default or of Landlord's right to
enforce any such remedies with respect to such default or any subsequent
default, if, on account of any breach or default by Tenant in Tenant's
11
<PAGE>
obligations under the terms and conditions of this lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney
concerning or to enforce or defend any of Landlord's rights or remedies
hereunder, Tenant agrees to pay any reasonable attorneys' fees and court costs
so incurred.
17. MORTGAGES. Tenant accepts this lease subject and subordinate to any
mortgage(s) and/or deed(s) of trust now or at any time hereafter constituting a
lien or charge upon the premises or the Improvements situated thereon; provided,
however, that if the mortgagee, trustee, or holder of any such mortgage or deed
of trust elects to have Tenant's interest in this lease superior to any such
instrument, then by notice to Tenant from such mortgagee, trustee or holder,
this lease shall be deemed superior to such lien, whether this lease was
executed before or after said mortgage or deed of trust. Tenant shall at any
time hereafter, on demand, execute any instruments, releases or other documents
which may be required by any mortgages for the purpose of subjecting and
subordinating this lease to the lien of any such mortgage.
18. SUBORDINATION AND SALE.
A. Subordination. This lease shall be subject and subordinate at all
times to the lien of all mortgages and deeds of trust securing any amount or
amounts whatsoever which may now exist or hereafter be placed on or against the
premises or on or against Landlord's interest or estate therein, all without the
necessity of having further instruments executed by Tenant to effect such
subordination. Notwithstanding the foregoing, in the event of a foreclosure of
any such mortgage or deed of trust or of any other action or proceeding for the
enforcement thereof, or of any sale thereunder, this lease shall not be
terminated or extinguished, nor shall the rights and possession of Tenant
hereunder be disturbed, if no event of default then exists under this lease, and
Tenant shall attorn to the person who acquired Landlord's interest hereunder
through any such mortgage or deed of trust. Tenant agrees to execute,
acknowledge and deliver upon demand such further instruments evidencing such
subordination of this lease to the lien of all such mortgages and deeds of trust
as may reasonably be required by Landlord.
B. Sale of the Property. If the original Landlord hereunder, or any
successor owner of the premises, sells or conveys the premises, all liabilities
and obligations on the part of the original Landlord, or such successor owner,
under this lease accruing after such sale or conveyance shall terminate and the
original Landlord, or such successor owner, shall automatically be released
therefrom and thereupon all such liabilities and obligations shall be binding
upon the new owner. Tenant agrees to attorn to such new owner.
C. Estoppel Certificate. At any time and from time to time, Tenant
shall, within ten (10) days after written request by Landlord, execute,
acknowledge and deliver to Landlord a certificate certifying; (a) that this
lease is unmodified and in full force and effect (or, if there have been
modifications, that this lease is in full force and effect as modified, and
stating the date and nature of each modification; (b) the commencement date and
the expiration date determined in accordance with Paragraph 1 hereof and the
date, if any, to which all rent and other sums payable hereunder have
12
<PAGE>
been paid; (c) that no notice has been received by Tenant of any default by
Tenant hereunder which has not been cured, except as to defaults specified in
such certificate; (d) that Landlord is not in default under this lease, except
as to defaults specified in such certificate; and (e) such other maters as may
be reasonably requested by Landlord or any actual or prospective purchaser or
mortgage lender of the premises or any part thereof. At any time and from time
to time, Tenant shall, within ten (10) days after written request by Landlord,
deliver to Landlord copies of all current financial statements (including a
balance sheet, an income statement, and an accumulated retained earnings
statement), annual reports and other financial and operating information and
data of Tenant prepared by Tenant in the course of Tenant's business. Unless
available to the public, Landlord shall disclose such financial statements,
annual reports and other information or data only to actual or prospective
purchasers or mortgage lenders of the premises or any part thereof, and
otherwise keep them confidential unless other disclosure is required by law.
19. MECHANICS LIENS. Tenant shall have no authority, express or implied, to
create or place any lien or encumbrance, of any kind or nature whatsoever upon,
or in any manner to bind, the interest of Landlord in the premises or to charge
the rental payable hereunder for any claim in favor of any person dealing with
Tenant, including those who may furnish materials or perform labor for any
construction or repairs, and each such claim shall affect and each such lien
shall attach to, if at all, only the leasehold interest granted to Tenant by
this instrument. Tenant covenants and agrees that it will pay or cause to be
paid all sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the premises on
which any lien is or can be validly and legally asserted against its leasehold
interest in the premises or the improvements thereon and that it will save and
hold Landlord harmless from any and all loss, cost or expense based on or
arising out of asserted claims or liens against the leasehold estate or against
the right, title and interest of the Landlord in the premises or under the terms
of this lease.
20. NOTICES. Each provision of this instrument or of any applicable governmental
laws, ordinances regulations and other requirements with reference to the
sending, mailing or delivery of any notice or the making of any payment by
Landlord to Tenant or with reference to the sending, mailing, or delivery of any
notice or the making of any payment by Tenant to Landlord shall be deemed to be
complied with when and if the following steps are taken.
(a) All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address hereinbelow set
forth or at such other address as Landlord may specify from time to time by
written notice delivered in accordance herewith. Tenant's obligation to pay rent
and other amounts to Landlord under the terms of this lease shall not be deemed
satisfied until such rent and other amounts have been actually received by
Landlord.
(b) All payments required to be made by Landlord to Tenant hereunder
shall be payable to Tenant at the address hereinbelow set forth, or at such
other address within the continental United States as Tenant may specify from
time to time by written notice delivered in accordance herewith.
13
<PAGE>
(c) Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered whether actually received or not when
deposited in the United states Mail, postage prepaid, Certified or Registered
Mail, addressed to the parties hereto at the respective address set out below,
or at such other address as they have theretofore specified by written notice
delivered in accordance herewith:
<TABLE>
<CAPTION>
<S> <C>
Landlord: BNS of Central Florida, Ltd. Tenant: Universal Beverages, Inc.
c/o Steve LaFreniere 7563 Philips Highway, Suite 110
The Quest Companies Jacksonville, FL 32236
921 Douglas Ave., Suite 200
Altamonte Springs, FL 33714
</TABLE>
If and when included within the term "Landlord," as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address for the receipt of notices
and payments to Landlord, if and when included within the term "Tenant," as used
in this instrument, there are more than one person, firm or corporation, all
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Tenant. All parties
included within the terms "Landlord" and "Tenant," respectively, shall be bound
by notices given in accordance with the provisions of this paragraph to the same
effect as if each has received such notice.
21. REAL ESTATE BROKERS. The parties hereto represent to each other that the
only real estate broker involved in this lease is the Quest Company. Tenant
represents that it has had previous dealings with John Thomas Century 21 Realty,
but hereby represents and affirms that this broker is no longer involved with
this matter and tenant further agrees to indemnify and hold harmless Landlord
from any and all liability or damages (including attorneys' fees) resulting from
a claim for commissions from John Thomas Century 21 Realty.
22. OPTION TO PURCHASE. Providing Tenant is current in all respects under this
lease, and providing Tenant pays Landlord the additional sum of $150,000.00,
Tenant shall have the option to purchase the premises pursuant to the terms
contained herein. Such additional payment for this option shall be made no later
than August 31, 1998. This option shall allow Tenant to purchase the leased
premises for the total purchase price of $1,500,000.00, said option to purchase
being available between march 1, 1999 and August 31, 1999 with closing thereon
to take place at Landlord's attorney's office no later than August 31, 1999.
This option becomes void if not exercised by notice given to Landlord, in
writing, not less than sixty (60) days prior to the expiration of the lease
term. Should Tenant exercise the option, the $150,000.00 paid for this option,
together with the Secondary Rent, shall be applied to the purchase price; if
Tenant does not exercise this option, or should Tenant default hereunder, this
$150,000.00 option money shall be retained by Landlord in payment for this
option and removal of the property from the market during the term hereof. In
the event Tenant exercises this option, Tenant agrees it is purchasing the
subject premises in "AS IS" condition.
14
<PAGE>
Further, should this option be exercised, Landlord hereby agrees to pay the
documentary stamps on the deed of conveyance as well as the owners title
insurance evidencing marketable title. Tenant agrees to pay all other closing
costs and expenses.
23. GUARANTORS. Johnathon Moore and Jay Marsh, hereby join in the execution
hereof to jointly and severally unconditionally personally guarantee all
payments and performance of Tenant requires hereunder. Should Tenant fail to
perform any covenant or condition hereof, Landlord shall notify guarantor of
such default and guarantor shall, within five (5) days of such notice, cure the
default of Tenant. Such notice of default shall be deemed delivered when sent by
U.S. Mail, postage prepaid, Certified or Registered Mail, to:
Johnathon Moore and Jay Marsh
_____________________________
_____________________________
The only exception to this guarantee is the requirement of Guarantor to
guarantee the payment o the Secondary Rent. Nothing herein shall preclude
Landlord from exercising any other remedy, or remedies, available to Landlord in
the event of Tenant's default.
24. MISCELLANEOUS.
A. Words of any gender used in this lease shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires.
B. The terms, provisions, covenants, and conditions contained in this
lease shall apply to, inure to the benefit of, and be binding upon, the parties
hereto and upon their respective heirs, legal representatives, successors and
permitted assigns except as otherwise herein expressly provided. Each party
agrees to furnish the other, promptly upon demand, a corporate resolution, proof
of due authorization by partners, or other appropriate documentation evidencing
the due authorization of such party to enter into this lease.
C. The captions inserted in this lease are for convenience only and in
no way define, limit or otherwise describe the scope or intent of this lease or
any provision hereof, or in any way affect the interpretation of this lease.
D. This lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
E. All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the term of this lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation all payment obligations with respect to taxes and insurance and all
obligations concerning the condition of the premises. Upon the expiration or
earlier termination
15
<PAGE>
of the term hereof, and prior to Tenant vacating the premises, Tenant shall pay
to Landlord any amount reasonably estimated by Landlord as necessary to put the
premises, including without limitation all heating and air conditioning systems
and equipment therein in good condition and repair. Tenant shall also, prior to
vacating the premises, pay to Landlord the amount as estimated by Landlord, of
Tenant's obligation hereunder for real estate taxes and insurance premiums for
the year in which the lease expires or terminates. All such amounts shall be
used and held by Landlord for payment of such obligations of Tenant hereunder,
with Tenant being liable for any additional costs therefor upon demand by
Landlord, or with any excess to be returned to Tenant after all such obligations
have been determined and satisfied, as the case may be.
F. If any clause of provision of this lease is illegal, invalid or
unenforceable under resent or future laws effective during the term of this
lease, then and in that event, it si the intention of the parties hereto that
the remainder of this lease shall not be affected thereby, and it is also the
intention of the parties of this lease that in lieu of each clause or provision
of this lease that is illegal, invalid or unenforceable, there be added as a
part of this lease contract a clause or provision as similar in terms to such
illegal, invalid or unenforceable clause or provision as may be possible and be
legal, valid and enforceable.
G. All reference in this lease to "the date hereof" or similar
references shall be deemed to refer to the last date, in point of time, on which
all parties hereto have executed this lease.
H. Net Lease. Landlord and Tenant acknowledge that hit lease is
intended to be a "Net Lease." Tenant shall be responsible for all maintenance,
repairs and replacements to the premises and the payment of utilities, taxes and
all insurance premiums relating to the premises, Landlord shall have no
obligation of any kind to maintain, repair or replace the premises, insure the
premises or pay any portion of the taxes or utilities relating to the premises.
I. Applicable Law. This lease and the rights and obligations of the
parties arising hereunder shall be construed in accordance with the laws of the
state where the parties are located.
EXECUTED BY LANDLORD, this _________ day of May, 1998.
LANDLORD: BNS OF CENTRAL FLORIDA, LTD.
By: /S/ Stephen J. Lawrence
---------------------------
Printed Name: Stephen J. Lawrence
Title: General Partner
16
<PAGE>
EXECUTED BY TENANT, this _________ day of May, 1998.
UNIVERSAL BEVERAGES, INC.
By: /S/ Johnathon S. Moore
--------------------------
Printed Name: Johnathon S. Moore
Title: Chief Executive Officer
EXECUTED BY GUARANTOR, this _____ day of May, 1998.
GUARANTOR:
/S/ Johnathon S. Moore
--------------------------
Johnathon S. Moore, Individually
GUARANTOR:
_____________________________
Jay Marsh, Individually
17
EXHIBIT 10.8
LEASE EXTENSION AGREEMENT
WHEREAS, BNS OF CENTRAL FLORIDA, LTD., hereinafter referred to as "Landlord,"
entered into a lease agreement leasing certain property to UNIVERSAL BEVERAGES,
INC., hereinafter referred to as "Tenant," said lease with a commencement date
of May 1, 1998, and hereinafter referred to as the "Lease";
WHEREAS, according to the terms and conditions of the Lease, the expiration
thereof was August 31, 1999;
WHEREAS, Tenant desires to extend the termination date of the Lease;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto agree as follows:
1. Paragraph 1 of the Lease Agreement regarding PREMISES AND
TERM, is hereby amended by changing the termination date of
the lease from August 31, 1999 to August 31, 2004.
2. Paragraph 2A of the Lease Agreement regarding the BASE RENT is
hereby amended to reflect that the monthly rent shall continue
to be paid at the beginning of each month commencing September
1, 1999, in the amount of $16,132.70, plus applicable sales
tax, and on the 1st of each month thereafter until the 1st of
January, 2000, at which time the rent shall increase to $2,50
psf or $18,758.96 per month plus applicable sales tax and
increase 4% each January thereafter.
3. Paragraph 22 of the Lease Agreement is deleted in its
entirety.
4. Except as expressly modified and amended herein, all terms
and conditions of the Lease shall remain in full force and
effect.
EXECUTED BY LANDLORD, this 8th day of October, 1999.
LANDLORD, BNS OF CENTRAL FLORIDA, LTD.
By: BNS OF LEESBURG, INC., Its General Partner
By:/s/ Stephen J. La Freniere
- ------------------------------
Printed Name: Stephen J. La Freniere
Title: Vice President
1
<PAGE>
EXECUTED BY TENANT, this 5th day of October 1999.
UNIVERSAL BEVERAGES, INC.
By: /s/ Cydelle Mendius
- ------------------------------
Printed Name: Cydelle Mendius
Title: President
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
accompanying financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<CASH> (37,885)
<SECURITIES> 0
<RECEIVABLES> 169,097
<ALLOWANCES> 0
<INVENTORY> 358,159
<CURRENT-ASSETS> 560,209
<PP&E> 1,849,825
<DEPRECIATION> (250,938)
<TOTAL-ASSETS> 2,874,216
<CURRENT-LIABILITIES> 3,878,007
<BONDS> 0
0
0
<COMMON> 4,363,454
<OTHER-SE> 1,052,557
<TOTAL-LIABILITY-AND-EQUITY> 2,874,216
<SALES> 2,774,153
<TOTAL-REVENUES> 2,774,153
<CGS> 1,514,101
<TOTAL-COSTS> 1,514,101
<OTHER-EXPENSES> 3,442,396
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 460,999
<INCOME-PRETAX> (2,182,344)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,182,344)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,182,344)
<EPS-BASIC> (.792)
<EPS-DILUTED> (.792)
</TABLE>
