U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
(Name of Small Business Issuer in its charter)
FLORIDA 65-0794113
(State of incorporation) (I.R.S. Employer Identification No.)
3391 Southeast 14th Avenue, Port Everglades, Florida 33316
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number (954) 523-8985
Securities to be registered pursuant to 12(b) of the Act: None
Securities to be registered pursuant to 12(g) of the Act:
Common Stock $.001 Par Value
(Title of Class)
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS
-----------------------
Business
Jupiter Marine International Holdings, Inc. ("JMIH"), a Florida
corporation, was incorporated on May 19, 1998. JMIH's goal is to become a
consolidator as well as a builder in the highly fragmented marine industry. On
May 26, 1998, JMIH acquired all of the outstanding shares of common stock of
Jupiter Marine International, Inc. ("JMI"), a boat manufacturing company, which
was incorporated under the laws of the State of Florida on November 7, 1997.
JMIH and JMI will sometimes be collectively referred to as the "Company".
The Company believes that it has assembled a management team that is
not only capable of recognizing opportunities in the marine industry but can
also operate and enhance the value of opportunities. Management believes that a
tremendous number of potential consolidation candidates as well as manufacturing
customers can be found, and that the Company is positioned well for the future.
Boat Models
The Company currently builds four outboard powered boats in three sizes
(the "Jupiter Line").
31' Center Console
The 31' Center Console qualifies as one of the best built, best
performing center console boats in the world as quoted in Sportfishing Magazine.
The 31' Center Console is designed for the family fisherman and provides what
management of the Company believes is unmatched offshore performance while
offering amenities and features not normally found in other open boats. This
model includes a private stand up compartment with 6'2" headroom containing a
vanity with sink and shower and room for optional marine head.
31" Cuddy Cabin
This is the same basic boat as the 31" Center Console that includes a
small cuddy cabin forward with cruising amenities and a comfortable 4-place
dinette that converts to a queen berth for sleeping.
<PAGE>
27" Center Console
This model is available in either single or twin engines. It was added
to the line in order to enable the entry level boat buyer to acquire a Jupiter
boat at an affordable price. New features in the 27' Center Console design
include an integrated engine mounting platform, above deck livewell, transom
door, and a 6'2" berth built into the console department.
21' Shallow Water Skiff
Unlike the typical "flat boats", this full size skiff offers what
management of the company believes is unbeatable versatility and performance.
Light enough to operate in shallow water yet large and stable enough to run
comfortably in open water or offshore chop, this boat can also be marketed as a
family runabout, skit boat, or a yacht tender.
To further enhance its sport fishing boat line, the Company plans to
introduce a new 33' walk around cabin model based upon the proven 31' center
console hull design. This model will feature a deck design, which incorporates a
walk-in cable, enclosed head with shower, and a full galley. With twin outboard
engine power this model will be offered as either a fishing boat for the serious
angler or as a purely recreational sport boat type cruiser. The Company is also
in the process of designing new 32 and 35 foot boats which the Company hopes to
eventually manufacture and sell as part of the JMI line. The new boats will
feature diesel powered, inboard engines. The sale price of the new models will
range from approximately $160,000.00 to $300,000.00 depending on customization.
Although the boats are suitable for many different purposes, they are
primarily used for fishing and fishing related activities. The sales prices for
the boats range from $75,000 to $110,000 for the Jupiter 31 models, from $45,000
to $78,000 for the Jupiter 27, and from $24,000 to $39,000 for the Jupiter 21.
The Company provides each boat purchaser with a limited lifetime warranty.
Manufacturing
The Company's manufacturing plant is set up with five full length
assembly lines. Each line operates at a rate that is determined by sales and
demand. It is planned that each assembly line run at a consistent line rate so
that the work stations become repetitive and components can be assembled in
quantity more efficiently. A line rate can be increased or decreased by simply
adding or subtracting workers and material on the line. Production capacity is
sufficient to accommodate approximately 20 boats in various stages of
construction at any one time. Construction of a boat currently made, depending
on size, takes approximately five weeks. The Company, with additional personnel,
currently has the ability to manufacture approximately 200 boats per year. The
Company can further expand its manufacturing capacity by adding additional
personnel, plant, equipment and tooling. The Company owns over sixty (60)
different molds which are used interchangeably depending on which model of boat
the Company has contracted to build.
2
<PAGE>
The first phase of manufacturing involves creating the hulls and decks
of the boats which is accomplished by the hand "laying-up" of vinylester blended
resins and high quality stitched, bi-directional and quad-directional fiberglass
material over a foam core in the molds. This creates a composite structure with
strong out and inner skins with a thicker, lighter core in between. The
"laying-up" of fiberglass by hand rather than using chopped fiberglass and
mechanical applicators results in superior strength and appearance. The resin
used to bind the composite structure together is a vinylester type, which is
stronger, better bonding and more flexible than the polyester resins used by
most other fiberglass boat manufacturers.
During the second phase of manufacturing, the fuel tanks and inner
liner (or deck), which is made of the same material as the hull, are installed
in the hull. Decks are bonded to the hulls using bonding agents, screws and
fiberglass to achieve a strong, unitized construction. The third phase involves
installing the console, wiring, electrical components, various accessories and
engines. The final segment involves installing custom accessories, upholstery,
seating, electronics and navigational aids.
The third phase involves installing the wiring, electrical components,
various accessories and engines. The final segment involves installing aluminum
structures used for seating, storage and the navigational console.
Design
The Jupiter Line's Deep-V hulls are specifically designed to perform at
high speeds in offshore sea conditions, while providing their passengers a
smooth, comfortable and dry ride. There is no lean or cavitation in a turn and
the hull tracks as if it were on rails.
The Jupiter Line's performance characteristics result from its
exclusive "Posit-stern" hull paid design which reduces drag, planes faster,
turns sharper, and increases fuel economy. This hull design combined with unique
stern lifting strakes creates a variable dynamic lift that provides a level,
stable, and soft ride at any speed.
The additional increase in stern life balances the hull on its lines
and allows the boat to raise on plane very quickly with never a loss of
visibility from the helm. The resulting running angle allows the bow to cut
through the water at a sharper angle and to deflect the spray out, not up, for a
soft and dry ride with no pounding or hopping commonly associated with boats.
JMI Sales and Marketing
JMI's marketing efforts will focus on Carl Herndon's name and
reputation as a leader in the boat manufacturing industry. Management of the
Company believes Mr. Herndon's name used in conjunction with his background and
experience with Blackfin Yacht Corporation, which he founded, and Bertram
Yachts, which he was instrumental in turning around, will provide significant
sales leverage. JMI intends to market its boats in nationally circulated
magazines and trade publications including Boating Magazine, Sports Fishing,
3
<PAGE>
Florida Sportsman, Motor Boating and Sailing and Saltwater Sportsman. JMI
intends to attend all major boat shows and exhibitions, as well as sponsoring
boats in fishing tournaments. Boats are sold and distributed through authorized
marine dealers throughout the United States. These dealers are not exclusive to
the Company and carry the boats of other companies. The territories served by
any dealer are not exclusive to the dealer. However, the company uses discretion
in locating new dealers in an effort to protect the interests of the existing
dealers. The Company normally does not manufacture boats for inventory. Most
boats are pre-sold to a dealer with entering the production line. The Company
currently has agreements with four boat dealers located in Dania, Florida,
Stuart, Florida, Wilmington, North Carolina and Neptune, New Jersey and is in
the process of seeking additional qualified boat retailers to act as dealers.
The Company delivers boats to its dealers on a cash on delivery basis.
However, approximately one-half of the Company shipments are made pursuant to
commercial dealer "floor plan financing" programs in which the Company
participates on behalf of its dealers. Under these arrangements, a dealer
establishes lines of credit with one or more third-party lenders for the
purchase of showroom inventory. When a dealer purchases a boat pursuant to a
floor plan arrangement, it draws against its line of credit and the lender pays
the invoice cost of the boat, net of shipping charges, directly to the Company.
Employees
JMIH currently has no employees other than its officers and directors
who are not being compensated. JMI currently employs a total of 37 people 32 of
whom are directly involved in the boat manufacturing process and 5 of whom are
administrative and executive personnel. As JMI nears full operating capacity,
estimated by the Company to be in July 2000, JMI expects to employ 65 people in
the boat manufacturing area.
ITEM 2. DESCRIPTION OF PROPERTY
-----------------------
The Company leases a 32,140 square foot facility located at 3391 S.E.
14th Avenue, Port Everglades, Florida. The facility houses the Company's boat
manufacturing operation and executive offices. The Company leases the facility
from Carl Herndon, the Company's President, Chief Executive Officer and
Director. The lease agreement requires the Company to pay monthly lease payments
of approximately $10,700.00 per month plus applicable taxes. The lease payments
are subject to a 5% annual increase. The lease terminates in May 2002. The
Company has an exclusive option to purchase the facility during certain periods
until November 1, 2000 at a price between $900,000 and $1,000,000.
4
<PAGE>
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND SIGNIFICANT EMPLOYEES
------------------------------------------------------------------
The following table sets forth the names, positions with JMIH and ages
of the executive officers and directors of JMIH. Directors will be elected at
JMIH's annual meeting of shareholders and serve for one year or until their
successors are elected and qualify. Officers are elected by the Board and their
terms of office are, except to the extent governed by employment contract, at
the discretion of the Board of Directors.
Name Age Position Held
- ---- --- -------------
Carl Herndon 60 Director, President and Chief
Executive Officer, Secretary
Larry Tierney 53 Director
Carl Herndon, Jr. 32 Vice President Sales &
Marketing JMI
Significant Personnel
Paul Douglas 56 Production Manager JMI
Carl Herndon - Mr. Herndon has been President, Chief Executive Officer
and a director of JMIH since its inception on May 19, 1998. Mr. Herndon has also
been President, Chief Executive Officer and a director of JMI since May 15,
1998. Between 1973 and 1997, Mr. Herndon was president, chief executive officer,
director and sole shareholder of Blackfin Yacht Corporation, a Fort Lauderdale,
Florida based designer, manufacturer and seller of Sportfishing boats
("Blackfin"). Between 1993 and 1995, Mr. Herndon was president and Chief
Executive Officer of Bertram Yacht Corporation in Miami, Florida. During Mr.
Herndon's tenure as officer and director of Blackfin, Blackfin filed for Chapter
11 Bankruptcy Reorganization protection. The bankruptcy proceeding was
subsequently converted to a Chapter 7 proceeding.
Larry Tierney - Mr. Tierney joined JMIH as a Director and Consultant in
January 1999. Since April 1997, Mr. Tierney is owner and operator of AAMCO
transmissions of Plant City, Florida. From March 1995 to March 1997, Mr. Tierney
was Chief Financial Officer of MAKO Marine International, Inc., a manufacturer
of high quality offshore fishing boats. From June of 1993 to March of 1995, Mr.
Tierney served as Chief Financial Officer of Chris Craft Boats, a wholly owned
subsidiary of Outboard Marine Corporation (OMC) a full line manufacturer of
power boats. From June 1991 to June 1993, Mr. Tierney acted as Chief Operating
Officer of Chris Craft boats. From August 1986 to June 1991, Mr. Tierney was Sr.
Vice President of Finance for Chris Craft.
5
<PAGE>
Carl Herndon, Jr. - Mr. Herndon has been Vice President of Sales and
Marketing at JMI since October 1998 and joined JMI on a full-time basis in
January of 1999. From November 1997 to January 1998, Mr. Herndon was selling new
boats and brokering boats at Northside Marine Sales. From January 1992 to July
1997, Mr. Herndon was National Sales Manager for Blackfin Yacht Corporation.
From April 1987 to January 1992, Mr. Herndon was Production Manager for Blackfin
Yacht Corporation.
Paul Douglas - Mr. Douglas has been the Plant Manager for JMI since May
of 1998. From March 1987 to July 1996, Mr. Douglas was Facilities/Maintenance
Foreman for Blackfin Yacht Corporation. From 1980 to 1987, Mr. Douglas was
Maintenance Craftsman, First Class and Acting Foreman for Special Projects for
Tracor Marine.
Employment Agreements
In November 1998, JMI entered into a five year employment agreement
with Mr. Herndon with 2 one year renewal options. The agreement obligates Mr.
Herndon to devote all his time to supervising, designing and manufacturing
boats for the JMI as president and chief executive officer of JMI. Mr.
Herndon will earn a base salary of $72,000.00 per year. Mr. Herndon's salary
adjustments are tied to the Company successfully reaching specific financial
milestones. Subsequent salary adjustments will be decided by the board of
directors of the Company. The employment agreement also entitles Mr. Herndon to
an aggregate of options to purchase 600,000 shares of common stock of the
Company at prices between $.50 and $1.00 per share over a period of five years.
The employment agreement includes standard non-compete and confidentiality
provisions. Due to Mr. Herndon's experience, the business of JMI and the Company
will be largely dependent on Mr. Herndon's experience and ability to design,
manufacture and sell boats produced by JMI.
In May 1999, JMI entered into a five year employment agreement with
Carl Herndon, Jr. with 2 one year renewal options. The agreement obligates Mr.
Herndon to devote all his time to supervising the sales and marketing of the
Company's boats as Vice President of Sales and Marketing. Mr. Herndon will earn
a base salary of $70,000.00 for the first year of the agreement, $85,000 for the
second year of the agreement, $100,000 for the third year of the agreement and a
salary to be determined by the Board of Directors of JMIH for years four, five
and any renewal period. The employment agreement includes standard non-compete
and confidentiality provisions.
ITEM 4. EXECUTIVE COMPENSATION
----------------------
The following table sets forth information relating to the compensation
paid by the Company during the past two fiscal years to: (i) the Company's
President and Chief Executive Officer; and (ii) each of the Company's executive
officers who earned more than $100,000 during the period from May 19, 1998
(inception) through May 31, 1999 (collectively, the "Named Executive Officers"):
6
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
-----------------------------------------------------------------------------
Awards Payouts
------------------------ ---------------------
Securities
Other Under-
Annual Restricted Lying All Other
Name and Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation Award(s) SARs Payouts sation
($) ($) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Carl Herndon, Director
CEO and President(1) 1998 $29,560
- -------------------------------------------------------------------------------------------------------------------
1997 N/A
- -------------------------------------------------------------------------------------------------------------------
1996 N/A
===================================================================================================================
</TABLE>
(1) Does not include 850,000 shares of Common Stock of the Company
issued to Mr. Herndon as founder's shares.
<TABLE>
<CAPTION>
Stock Options
OPTION/SAR GRANTS IN LAST FISCAL YEAR
---------------------------------------------------------------------------------
Individual Grants
---------------------------------------------------------------------------------
Percent of
Number Of Total
Securities Options/
Underlying SARs Granted Exercise Of
Options/SARs To Employees Base Price Expiration
Name Granted (#) In Fiscal Year (S/Sh) Date
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carl Herndon, 150,000 25% $ .50 11/10/03
Director CEO and
President(1)
---------------------------------------------------------------------------------
150,000 25% $ .625 11/10/03
---------------------------------------------------------------------------------
150,000 25% $ .75 11/10/03
---------------------------------------------------------------------------------
150,000 25% $1.00 11/10/03
=================================================================================
</TABLE>
Option Exercises and Holdings
The following table sets forth information with respect to the exercise
of options to purchase shares of JMIH's common stock during the period from May
19, 1998 (inception) through May 31, 1999, of each person named in the Summary
Compensation Table and the unexercised options held as of the end of such
period.
7
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
- --------------------------------------------------------------------------------------------------------------------
Number of Value Of
Securities Unexercised
Underlying In-The-Money
Unexercised Options/SARs
Options/SARs At Fiscal Year-
Shares At Fiscal Year-End End ($)
Acquired On Value (#) Exercisable/
Exercise (#) Realized Exercisable/ Unexercisable
Name ($) Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carl Herndon, Director, President N/A N/A 600,000 -0-
and CEO
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 5. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth certain information regarding the
Company's common stock beneficially owned on June 28, 1999, for (i) each
shareholder known by the Company to be the beneficial owner of five (5%) percent
or more of the Company's outstanding common stock, (ii) each of the Company's
executive officers and directors, and (iii) all executive officers and directors
as a group. On June 28, 1999, there were approximately 4,033,500 shares of
Company common stock, par value $.001 (the "Common Stock"), outstanding.
<TABLE>
<CAPTION>
Number of Percentage of
Beneficially Owned Outstanding Shares
Name Shares (1) Beneficially Owned
---- ---------- ------------------
<S> <C> <C> <C>
Carl Herndon 1,487,500 (2) 36.9%
Carl Herndon, Jr. 172,500 (3) 4.2%
Triton Holding International Corp. 500,000 (4) 12.3%
Donald B. Gasgarth 666,000 (5) 16.5%
Jeffrey K. Zwitter 216,000 (6) 5.3%
Four M International, Inc. 300,000 (7) 7.4%
Alan Lyons 300,000 (7) 7.4%
Richard Friedman 150,000 (8) 3.7%
Richard Aulicino 188,000 4.6%
Larry Tierney (9) 0 0.0%
Officers and Directors as a Group 1,660,000 41.2%
(3 persons)
</TABLE>
8
<PAGE>
(1) As of June 12, 1999, there were approximately 4,033,500 shares of
Common Stock outstanding not including: an aggregate of 600,000 shares
of Common Stock issuable upon the exercise of options; (ii) 984,000
shares of Common Stock issuable upon the conversion of 328,000 shares
of the Company's Series A Preferred Stock; (iii) 615,000 shares of the
Company's Common Stock issuable upon the exercise of 205,000 shares of
the Company's Series B Preferred Stock and (iv) 885,000 shares of the
Company's Common Stock issuable upon the conversion of 245,000 shares
of the Company's Series B Preferred Stock issuable upon the exercise of
warrants exercisable at $1.00.
(2) Mr. Herndon is a Director and the President and Chief Executive Officer
of both JMI and the Company. Includes (i) 37,500 shares of Common Stock
issuable upon the conversion of 12,500 shares of Series A Convertible
Preferred Stock and (ii) up to 600,000 shares of common stock issuable
upon the exercise of options at exercise prices between $.50 and $1.00
per share over a five year period beginning November 10, 1998.
(3) Carl Herndon, Jr. is Mr. Herndon's son and is JMI's Vice President of
Sales and Marketing. Includes 22,500 shares of Common Stock issuable
upon the conversion of 7,500 shares of Series A Convertible Preferred
Stock.
(4) Mr. Gasgarth and Mr. Zwitter, principal shareholders of JMIH, are also
principal shareholders and Directors of Triton. Does not include (i) up
to 1,400,000 shares of Common Stock that may be issued upon conversion
of the Triton Note; (ii) 66,000 shares of Common Stock owned by Mr.
Gasgarth; and (iii) 66,000 shares owned by Mr. Zwitter.
(5) Includes 300,000 shares of Common Stock issuable upon the conversion of
100,000 shares of Series A Convertible Preferred Stock of the Company,
and (ii) 300,000 shares of Common Stock issuable upon the exercise of
warrants to purchase 100,000 Series B Convertible Preferred Stock at
$1.00 until November, 2004, subsequently convertible into common stock
at a 3:1 ratio. Does not include 500,000 shares of Common Stock owned
by Triton in which Mr. Gasgarth is a principal shareholder, and
Director.
(6) Includes 75,000 shares of Common Stock issuable upon the conversion of
25,000 shares of Series A Preferred Stock of the Company, and (ii)
75,000 shares of Common Stock issuable upon the exercise 25,000
warrants to purchase Series B Convertible Preferred Stock at $1.00
until November, 2004, subsequently convertible into Common Stock at a
3:1 ratio. Does not include 500,000 shares of Common Stock owned by
Triton, in which Mr. Zwitter is a principal shareholder and Director.
9
<PAGE>
(7) Includes 150,000 shares of common stock of the Company issuable upon
the conversion of 50,000 shares of Series A Preferred Stock and (ii)
150,000 shares of common stock issuable upon the exercise of 50,000
warrants to purchase Series B Convertible Preferred Stock at $1.00
until November, 2004, subsequently convertible into common stock at a
3:1 ratio.
(8) Includes 150,000 shares of common stock of the Company issuable upon
the conversion of 50,000 shares of Series B Convertible Preferred
Stock.
(9) Mr. Tierney is a Director of JMIH. Mr. Tierney is also employed by
Triton.
ITEM 6. INTEREST OF MANAGEMENT AND OTHER CERTAIN TRANSACTIONS
-----------------------------------------------------
Certain Transactions
Mr. Herndon personally owns the manufacturing facility in Port
Everglades, Florida (the "Manufacturing Facility"). On May 20, 1998, the Company
entered into a lease agreement (the "Lease Agreement") with Mr. Herndon in which
the Company leases the Manufacturing Facility for a period of five years at
$4.00 per square foot or $10,714 per month (the "Lease Amount"). The Company
believes that since the Lease Amount is below current market price, and the
Company requires the additional space in which to execute its business plan, the
Lease Agreement between the Company and Mr. Herndon was consummated on terms no
less favorable than with an unrelated party. On November 1, 1998 the Company
negotiated a three year option with Mr. Herndon to purchase the property. During
year one, the price is $900,000, year two $950,000 and year three $1,000,000.
Loans from Triton Holdings International Corp.
In November 1998, the Company initiated a loan for $350,000 from Triton
Holdings International Corp. ("Triton"). Two principal shareholders and
Directors of Triton are principal shareholders of the Company. The promissory
note ("the Note") issued to Triton by the Company evidencing the loan accrues
interest at 10% per annum. The note is convertible into shares of common stock
of the Company, at the option of Triton at $.50 per share before January 14,
2000, at $.375 per share between January 14, 2001 and January 14, 2002, and at
$.25 after January 14, 2003. The note matures on January 14, 2003, Triton also
received 500,000 shares of Common stock as additional incentive for making the
loan.
The Company also entered into a 5 year management agreement with Triton
under which Triton is to perform general business consulting services in
connection with the Company's conducting of its business, including, but not
limited to, development and maintenance of internal bookkeeping functions,
business planning, consulting and advice with respect to structure and expansion
of the Company. In consideration for its services, the Company will pay Triton a
fee of $5,000.
10
<PAGE>
Between February 1999 and March 1999, Premier Global, Inc., a company
controlled by Messrs. Zwitter and Gasgarth loaned the Company $59,000 pursuant
to the terms of a promissory note. The note accrued interest at 12% per annum.
The Company paid $60,000 satisfying in full its obligations the note in full on
April 8, 1999.
ITEM 7. DESCRIPTION OF SECURITIES
-------------------------
Common Stock
The authorized capital stock of JMIH currently includes 50,000,000
shares of Common Stock, par value $.001 per share. The holders of Common Stock:
[i] have equal ratable rights to dividends from funds legally available
therefor, when, as and if declared by the Board of Directors of JMIH; [ii] are
entitled to share ratably in all of the assets of the Company available for
distribution to holders of Common Stock upon liquidation, dissolution or winding
up of the affairs of JMIH; [iii] do not have preemptive subscription or
conversion rights and there are no redemption or sinking fund provisions
applicable thereto; and [iv] are entitled to one vote per share on all matters
on which shareholders may vote at all meetings of shareholders. All shares of
Common Stock now outstanding are fully paid and non-assessable. The holders of
shares of JMIH's Common Stock do not have cumulative voting rights, which means
that the holders of more than 51% of such outstanding shares, voting for the
election of Directors, can elect all of the Directors to be elected, if they so
choose and in such event, the holders of the remaining shares will not be able
to elect any of JMIH's Directors. JMIH's Board of Directors is empowered to take
all actions necessary to increase the number of shares authorized of JMIH as
necessary, and subject to appropriate financing arrangements, intends to alter
the capital stock structure of JMIH.
Preferred Stock
JMIH is authorized to issue 5,000,000 shares of preferred stock with
such designations, rights and preferences as may be determined from time to time
by the Board of Directors. Accordingly, the Board of Directors is empowered,
without shareholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights which could adversely effect the
voting power or other rights of the holders of the JMIH's Common Stock. In the
event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of JMIH.
The Board of Directors of JMIH has designated 500,000 shares of the
Corporation's authorized preferred stock as Series A Convertible Preferred Stock
(the "Series A Preferred Stock"). There were 328,000 shares of Series A
Preferred Stock issued and outstanding as of June 25, 1999.
11
<PAGE>
Dividends. The holders of outstanding Series A Preferred Stock shall be
entitled to receive cumulative dividends at the annual rate of 10% based on the
stated value per share, when and if declared by the Board of Directors.
Dividends are payable quarterly on the fifteenth day of April, July, October and
January of each year (the "Dividend Payment Date"). Any accrued interest on
unpaid dividends shall be paid in full or in kind in Series B Preferred Stock
valued at $1.00 as payment in October of each year. The Series A Preferred Stock
shall also entitle the holders thereof to participate, pro rata, in dividends
paid on outstanding shares of Common Stock. The Series A Preferred Stock has
rights to the assets of the Company superior to those of the Series B Preferred
Stock and Common Stock upon the liquidation, dissolution, or winding up of the
Company in an amount equal to $1.00 per share of Series A Preferred Stock.
Redemption. JMIH may redeem the Series A Preferred Stock at a
redemption price of $1.20 per share after providing 120 day prior written notice
to the holders thereof ("Redemption Notice"). The holders of the Series A
Preferred Stock will have 15 days from receiving such Redemption Notice to
convert the Series A Preferred Stock into Common Stock.
Voting Rights. Holders of the Series A Preferred Stock shall be
entitled to vote with the holders of the Common Stock as a single class on all
matters presented for a vote to the shareholders of the Common Stock. The number
of votes per share of Series A Preferred Stock which can be cast will equal the
number of shares of Common Stock into which each share of Series A Preferred
Stock may be converted.
Conversion Subject to adjustment for mergers, stock splits and stock
dividends, the holders of the Series A Preferred Stock can, at their option,
convert the Series A Preferred Stock into three (3) shares of Common Stock at
any time. In addition, each outstanding share of Series A Preferred Stock will
automatically convert into three (3) shares of Common Stock (i) upon the fifth
anniversary of the date of issue if such shares are not converted prior to such
time, or (ii) at such time as a registration statement registering for sale
under the Securities Act of 1933, as amended, the shares of Common Stock
issuable upon such conversion of the Series A Preferred Stock is declared
effective by the Securities and Exchange Commission.
Series B Preferred Stock
The Board of Directors of JMIH has designated 205,000 shares of JMIH's
authorized Preferred Stock as Series B Convertible Preferred Stock all of which
are issued and outstanding (the "Series B Preferred Stock"). With the exception
of the fact that the right of the holders of the Series B Preferred Stock is
subordinate to the rights of the holders of the Series A Preferred Stock to the
assets of the Company upon liquidation, the Series A Preferred Stock and the
Series B Preferred Stock is for all material purposes identical.
12
<PAGE>
Warrants
There are currently 295,000 warrants to purchase 295,000 shares of
Series B Preferred Stock outstanding exercisable for a period of five years at a
price of $1.00 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 of a
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires super majority approval by disinterested shareholders of
certain specified transactions between a public corporation and holders of more
than 10% of the outstanding voting shares of the corporation (or their
affiliates). Florida law and JMIH's Articles and Bylaws also authorize JMIH to
indemnify JMIH's directors, officers, employees and agents. In addition, JMIH's
Articles and Florida law presently limit the personal liability of corporate
directors for monetary damages, except where the directors (i) breach their
fiduciary duties; and (ii) such breach constitutes or includes certain
violations of criminal law, a transaction from which the directors derived an
improper personal benefit, certain unlawful distributions or certain other
reckless, wanton or willful acts or misconduct.
Anti-takeover Effects of Certain Provisions of JMIH's Articles of Incorporation
- -------------------------------------------------------------------------------
and Bylaws
- ----------
The preceding paragraph, and above under the Section entitled
"Preferred Stock", may be deemed to have an anti-takeover effect and may delay,
defer or prevent a tender offer or takeover attempt, including attempts that
might result in a premium being paid over the market price for the shares held
by shareholders. Despite the belief of JMIH as to the benefits to shareholders
of these provisions of JMIH's Articles of Incorporation, these provisions may
also have the effect of discouraging a future takeover attempt which would not
be approved by JMIH's Board, but pursuant to which the shareholders may receive
a substantial premium for their shares over then current market prices. As a
result, shareholders who might desire to participate in such a transaction may
not have any opportunity to do so. Such provisions will also render the removal
of JMIH's Board of Directors and management more difficult and may tend to
stabilize JMIH's stock price, thus limiting gains which might otherwise be
reflected in price increases due to a potential merger or acquisition. The Board
of Directors, however, has concluded that the potential benefits of these
provisions outweigh the possible disadvantages. Pursuant to applicable
regulations, at any annual or special meeting of its shareholders, JMIH may
adopt additional Articles of Incorporation provisions regarding the acquisition
of its equity securities that would be permitted to a Florida corporation.
13
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
-------------------------------------------------------------------
OTHER STOCKHOLDER MATTERS
-------------------------
There is currently no public trading market for JMIH's Common Stock.
The transfer agent for JMIH's Common Stock is Florida Atlantic Stock Transfer,
Inc., 5701 N. Pine Island Road Tamarac, FL 33321.
JMIH has never paid cash dividends on its Common Stock. JMIH presently
intends to retain future earnings, if any, to finance the expansion of its
business and does not anticipate that any cash dividends will be paid in the
foreseeable future. The future dividend policy will depend on JMIH's earnings,
capital requirements, expansion plans, financial condition and other relevant
factors.
ITEM 2. LEGAL PROCEEDINGS
-----------------
There are no material legal proceedings filed, or to the Company's
knowledge, threatened against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
---------------------------------------------
Not Applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
---------------------------------------
In May 1998, JMIH issued an aggregate 920,000 shares of Common Stock to
founders of JMIH. The founders/officers had access to financial and other
information concerning the Company and had the opportunity to ask questions
concerning the Company and its operations. Accordingly, the issuance of the
shares was exempt from the registration requirements of the Act pursuant to
Section 4(2) of the Act.
In May 1998, JMIH completed an exchange offer pursuant to the exemption
from registration provided by Rule 504 of Regulation D promulgated under the Act
wherein JMIH issued an aggregate of 360,000 shares of Common Stock to five
accredited investors of JMI in exchange for an equal number of shares of stock
in JMI.
Also in May 1998, JMIH completed an exchange offer with the President
of JMI, and at that time, an officer and director of the Company in which such
individual exchanged 250,000 shares of Common Stock in JMI for 100,000 shares of
Common Stock in the Company. The President had access to financial and other
information concerning the Company and had the opportunity to ask questions
concerning the Company and its operations. Accordingly, the issuance of the
shares was exempt from the registration requirements of the Act pursuant to
Section 4(2) of the Act.
14
<PAGE>
Between May 1998 and September 1998, JMIH completed a private offering
of an aggregate of 205,000 shares of Common Stock to 14 investors, 11 of whom
were accredited, pursuant to the exemption from registration provided by Rule
504 of Regulation D promulgated under the Act at an offering price of $1 per
share. The investors in this offering subsequently agreed to convert the 205,000
share of Common Stock into an equal number of shares of JMIH's Series B
Preferred Stock for no additional consideration.
In November 1998, JMIH issued 295,000 shares of Series A Convertible
Preferred Stock and Warrants to purchase 295,000 shares of JMIH's Series B
Preferred Stock to 10 investors, 9 of whom were accredited. The shares of Series
A Preferred and warrants were issued in exchange for promissory notes issued by
JMI in the aggregate amount of $295,000 and Warrants to purchase 295,000 shares
of JMI's Common Stock at $1 per share. The individuals had access to financial
and other information concerning JMIH and had the opportunity to ask questions
concerning JMIH and its operations. Accordingly, the issuance of the shares was
exempt from the registration requirements of the Act pursuant to Section 4(2) of
the Act.
In November 1998, JMIH issued 500,000 shares of Common Stock to Triton
Holdings International Corporation as an incentive to make a loan of $350,000 to
JMIH. It is evidenced by a promissory note whose interest at a rate of 10% per
annum and is convertible into shares of Common Stock at the option of Triton at
50 cents per share before January 14, 2000, and at $.375 a share between January
14, 2001 and January 14, 2002, and at $.25 per share after January 14, 2003. The
investor had access to financial and other information concerning the Company
and had the opportunity to ask questions concerning the Company and its
operations. Accordingly, the issuance of the shares was exempt from the
registration requirements of the Act pursuant to Section 4(2) of the Act.
On November 6, 1998, JMIH issued 150,000 shares of Common Stock to an
officer of the JMIH in consideration for services performed. The officer had
access to financial and other information concerning the Company and had the
opportunity to ask questions concerning the Company and its operations.
Accordingly, the issuance of the shares was exempt from the registration
requirements of the Act pursuant to Section 4(2) of the Act.
Between February 1999 and March 1999, JMIH issued an aggregate of
1,948,500 shares of Common Stock to 65 investors, 43 of whom were accredited, at
an offering conducted in accordance with Rule 504 of Regulation D promulgated
under the Act at an offering price of $.40 per share. JMIH received gross
proceeds of $779,400 from the offering.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The Florida Business Corporation Act (the "Corporation Act") permits
the indemnification of directors, employees, officers and agents of Florida
corporations. The JMIH's Articles of Incorporation (the "Articles") and Bylaws
provide that the JMIH shall indemnify its directors and officers to the fullest
extent permitted by the Corporation Act. Insofar as indemnification for
liabilities arising under the Act may be permitted to directors, officers or
persons controlling JMIH pursuant to the foregoing provisions, JMIH has been
informed that, in the opinion of the Commission, such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
15
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling JMIH
pursuant to the foregoing provisions, JMIH has been informed that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as express in the act and is therefore unenforceable.
The Articles of Incorporation and Bylaws of JMIH require JMIH to
indemnify its Directors and officers to the fullest extent permitted by the
Business Corporation Act of the State of Florida.
The above indemnification provisions notwithstanding, JMIH is aware
that insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling JMIH
pursuant to the foregoing provisions, JMIH has been informed that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as express in the act and is therefore unenforceable.
PART F/S
The financial statements and supplementary data are included herein.
FINANCIAL STATEMENTS AND EXHIBITS
- ---------------------------------
The following consolidated financial statements of JMIH, include the
audited balance sheet at February 28, 1999 and the related audited statements of
operations, changes in capital deficiency and cash flows for the period
beginning August 1, 1998 through February 28, 1999 and the interim financial
statement as of May 31, 1999(unaudited).
16
<PAGE>
JUPITER MARINE
INTERNATIONAL HOLDINGS,
INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL
STATEMENTS
February 28, 1999
TABLE OF CONTENTS
PAGES
-----
Independent Auditor's Report F-1
Consolidated Balance Sheet F-2-3
Consolidated Statement of Loss F-4
Consolidated Statement of Changes in Stockholders' Deficiency F-5
Consolidated Statement of Cash Flows F-6
Notes to Consolidated Financial Statements F-7-12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Jupiter Marine International Holdings, Inc.
Fort Lauderdale, Florida
We have audited the accompanying consolidated balance sheet of Jupiter
Marine International Holdings, Inc. and subsidiary as of February 28, 1999, and
the related consolidated statements of loss, changes in stockholders' deficiency
and cash flows for the seven months then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Jupiter
Marine International Holdings, Inc. and subsidiary as of February 28, 1999, and
the results of their operations and their cash flows for the seven months then
ended, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
12 to the consolidated financial statements, the Company has sustained net
operating losses, has deficit cash flows from operations, and working capital
and stockholders' deficiencies at February 28, 1999, all of which raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding these matters are described in Note 12. The consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
April 5, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
February 28, 1999
A S S E T S
<S> <C>
CURRENT ASSETS:
Cash $ 7,608
Inventories 244,600
Prepaid expenses 8,272
--------------
Total current assets 260,480
PROPERTY AND EQUIPMENT, at cost or allocated cost:
Boat molds $ 910,096
Leasehold improvements 93,837
Machinery and equipment 31,200
Office equipment 7,000
--------------
1,042,133
Less accumulated depreciation 211,795 830,338
-------------- --------------
Total assets $ 1,090,818
==============
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
February 28, 1999
L I A B I L I T I E S A N D S T O C K H O L D E R S ' D E F I C I E N C Y
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 53,583
Payroll taxes payable 95,104
Accrued expenses 89,760
Other current liabilities 163,001
Customer deposits 270,687
Current portion of debt 50,000
Warranty reserve 49,084
--------------
Total current liabilities 771,219
LONG-TERM DEBT, less current portion 350,000
--------------
Total liabilities 1,121,219
COMMITMENTS (Note 7) --
STOCKHOLDERS' DEFICIENCY:
Capital stock, 5,000,000 shares of $ .001
par value preferred stock authorized,
500,000 shares designated as 10% cumulative Series A preferred stock, $ .001
par value ($ 328,000 aggregate liquidation preference),
328,000 shares issued and outstanding $ 328
205,000 shares designated as 10% cumulative Series B preferred stock, $ .001
par value ($ 205,000 aggregate liquidation preference),
205,000 shares issued and outstanding 205
Capital stock, 50,000,000 shares of $ .001
par value common stock authorized,
2,085,000 shares issued and outstanding 2,085
Additional paid in capital 620,382
Accumulated deficit (653,401) (30,401)
-------------- --------------
Total liabilities and stockholders' deficiency $ 1,090,818
==============
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF LOSS
For the Seven Months Ended February 28, 1999
<S> <C>
SALES $ 96,651
COST OF SALES 158,611
--------------
Gross loss (61,960)
GENERAL AND ADMINISTRATIVE EXPENSES, including
interest expense of $ 12,570 and provision for depreciation
of $ 117,461 329,503
--------------
Loss from operations (391,463)
OTHER EXPENSE:
Loss on disposition of property and equipment (1,554)
--------------
Loss before provision (credit) for income taxes (393,017)
PROVISION (CREDIT) FOR INCOME TAXES --
--------------
Net loss $ (393,017)
==============
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-4
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
For the Seven Months Ended February 28, 1999
<TABLE>
<CAPTION>
Preferred Preferred Additional
Stock Stock Common Paid-In Accumulated
Series A Series B Stock Capital Deficit
-------- -------- ----- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCES,
August 1, 1998 $ -- $ -- $ 2,130 $ 265,120 $ (260,384)
Cancellation of shares
issued to Atlantis
Capital Partners, Inc. -- -- (490) -- --
Issuance of 150,000
shares of common stock
to Carl Herdon, Jr. -- -- 150 -- --
Issuance of 295,000
shares of Series A
preferred stock in
exchange for canceling
$ 295,000 in promissory
notes 295 -- -- 294,705 --
Issuance of 33,000 shares
of Series A preferred
stock for services
rendered to the Company 33 -- -- 60,557 --
Issuance of 500,000
shares of common stock
to Triton Holdings
International Corp. in
connection with a loan
to the Company -- -- 500 -- --
Issuance of 205,000 shares
of Series B preferred
stock in exchange for
205,000 shares of common
stock -- 205 (205) -- --
Net loss for the period
ended February 28, 1999 -- -- -- -- (393,017)
------------- ------------- ------------- ------------- -------------
BALANCES,
February 28, 1999 $ 328 $ 205 $ 2,085 $ 620,382 $ (653,401)
============= ============= ============= ============= =============
</TABLE>
The accompanying notes to consolidated financial statements are
an integral part of these statements.
F-5
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Seven Months Ended February 28, 1999
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (393,017)
Adjustments to reconcile net loss to
net cash used in operating activities:
Provision for depreciation 117,461
Loss on disposition of property and equipment 1,554
Changes in assets and liabilities:
Decrease in inventories 86,210
Decrease in prepaid expenses 7,113
Decrease in accounts receivable 411
Increase in accounts payable 34,013
Increase in payroll taxes payable 48,005
Increase in accrued expenses 51,295
Decrease in other current liabilities (385,988)
Increase in customer deposits 114,498
--------------
Net cash used in operating activities (318,445)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the disposition of property and equipment $ 5,600
Payments for purchase of property and equipment (93,836)
--------------
Net cash used in investing activities (88,236)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt 400,000
Proceeds from issuance of common stock 61,750
Principal payments on debt (50,000)
--------------
Net cash provided by financing activities 411,750
--------------
Net increase in cash 5,069
CASH, August 1, 1998 2,539
--------------
CASH, February 28, 1999 $ 7,608
==============
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
F-6
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1999
NOTE 1 - ORGANIZATION AND OPERATIONS
Jupiter Marine International Holdings, Inc. (the Company) is
located in Fort Lauderdale, Florida and is engaged in the manufacture and
sale of offshore fishing and pleasure boats.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation:
---------------------------
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Jupiter Marine International, Inc.
All significant intercompany transactions and balances have been eliminated
in consolidation.
Provision for depreciation:
---------------------------
The Company provides for depreciation of its property and
equipment using the straight-line method over estimated useful lives of 5
and 7 years.
Additions and major renewals to property and equipment are
capitalized. Maintenance and repairs are charged to expense when incurred.
The cost and accumulated depreciation of assets sold or retired are removed
from the respective accounts and any gain or loss is reflected in income.
Revenue recognition:
--------------------
Revenue from the sale of boats is recognized when delivered.
Use of estimates:
-----------------
The presentation of a financial statement 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 statement and the reported amounts of revenues and
expenses during the reporting period. Actual amounts could differ from
those estimates.
Inventories:
------------
<TABLE>
<CAPTION>
At February 28, 1999, inventories consisted of the following:
<S> <C>
Finished boats $ 99,646
Boats in process, including
overhead applied 136,026
Materials and parts 8,928
-----------
$ 244,600
===========
</TABLE>
Inventories are stated at the lower of cost or market. The cost of
boats in process and finished boats includes labor, materials and allocated
production overhead. The first-in, first-out method is used to cost parts
and supplies for production. Boats in process and finished boats are valued
using the average cost method.
Warranty reserves:
------------------
The Company furnishes limited warranties on its manufactured boats
and has accrued a reserve for anticipated future warranty costs.
F-7
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Advertising costs:
------------------
The Company expenses advertising costs as they are incurred. For
the period ended February 28, 1999, advertising costs were approximately $
59,369.
Cash equivalents:
-----------------
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
NOTE 3 - LEASE COMMITMENTS
The Company leases office and manufacturing space from its
principle stockholder. The lease provides for monthly payments adjusted
annually for cost of living adjustments and space utilized until it expires
in May, 2002. The monthly rental was $ 13,184 at February 28, 1999,
including sales and real estate taxes.
The Company previously received four months rental in
consideration for making various leasehold improvements and modifications.
Rental expense for the period ended February 28, 1999 totaled approximately
$ 64,600.
The following is a schedule of approximate future lease payments
required:
Year ending
February 28
-----------
2000 $ 133,400
2001 $ 140,100
2002 $ 147,100
2003 $ 37,200
2004 $ NONE
In connection with the lease above, the Company has been granted
an option to purchase the building as discussed in Note 6.
NOTE 4 - DEBT
<TABLE>
<CAPTION>
At February 28, 1999, debt consisted of the following:
<S> <C>
Note payable to Triton Holdings International Corp., a
stockholder and related party, interest only at 10% through
January, 2003, at which time the principal balance is due.
The note is collateralized by substantially all of the assets
of the Company. The note is convertible into shares of common
stock of the Company, at the option of Triton at $ .50 per
share before January 14, 2000, at $ .375 per share from
January 14, 2000 to January 14, 2002, and at $ .25 thereafter
until January 14, 2003. $ 350,000
F-8
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1999
NOTE 4 - DEBT (continued)
Note payable to Premier Global, Inc., a related party,
interest only at 12% through April, 1999, at which time the
principal balance is due, collateralized by certain assets of
the Company.
Less current portion
50,000
-------------
400,000
50,000
-------------
$ 350,000
=============
</TABLE>
Future debt principal payments in the aggregate under arrangements
existing at February 28, 1999, are as follows:
Year ending
February 28
-----------
2000 $ 50,000
2001 $ NONE
2002 $ NONE
2003 $ 350,000
Thereafter $ NONE
NOTE 5 - PROVISION (CREDIT) FOR INCOME TAXES
Deferred taxes, if applicable, are provided at the combined
effective Federal and state statutory rates on timing differences which
occur when certain income and expense items are recognized at different
times for financial reporting and tax purposes.
The Company accounts for income taxes in accordance with the
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which requires the recognition of deferred tax liabilities and
assets at currently enacted tax rates for the expected future tax
consequences of events that have been included in the financial statements
or tax returns. A valuation allowance is recognized to reduce the net
deferred tax asset to an amount that is more likely than not to be
realized. The tax provision (credit) shown on the accompanying statement of
loss is zero, because the deferred tax asset that is generated from net
operating losses through February 28, 1999 is offset in its entirety by a
valuation allowance. Net operating loss carryforwards for financial
reporting purposes through February 28, 1999 total approximately $ 653,000.
For tax purposes, these carryforwards expire in 2018 and 2019.
NOTE 6 - RELATED PARTY TRANSACTIONS
In connection with the lease agreement with its principle
stockholder (Note 3), the Company has been granted a purchase option on the
leased property for a three year period ending November 1, 2001. The option
price is as follows:
a. If option is exercised prior to November 1, 1999; purchase
price is $ 900,000
b. If option is exercised after November 1, 1999 but prior to
November 1, 2000; purchase price is $ 950,000
c. If option is exercised after November 1, 2000 but prior to
November 1, 2001; purchase price is $ 1,000,000
F-9
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1999
NOTE 6 - RELATED PARTY TRANSACTIONS (continued)
As more fully discussed in Note 4, the Company is obligated on
notes payable in the amounts of $ 350,000 and $ 50,000 to related parties.
Triton Holdings International Corp. is a stockholder of the Company and
several of its directors are also stockholders of the Company. In addition,
officers of Premier Global, Inc. are also stockholders of the Company.
In addition, the Company has entered into a management agreement
with Triton Holdings International Corp. which is more fully discussed in
Note 7.
NOTE 7 - COMMITMENTS
The Company entered into an employment agreement with its
President for his services until October, 2003 for $ 72,000 per year. The
agreement provides for an additional $ 2,500 per month when the Company has
a positive cash flow from operations for three consecutive months and $
2,000 per month when the Company has a net profit from operations for three
consecutive months. The agreement may be automatically renewed for up to
two successive one year periods by mutual agreement between the parties.
In addition, the employment agreement provides for the President
to receive options to purchase 150,000 shares of common stock at $ .50 per
share, 150,000 shares of common stock at $ .625 per share, 150,000 shares
of common stock at $ .75 per share and 150,000 shares of common stock at $
1.00 per share. The options vest equally and may be exercised over a period
of five years. The employment agreement includes non-compete and
confidentiality provisions.
Further, the Company also entered into a five year management
agreement with Triton Holdings International Corp., a stockholder and
related party, Notes 4 and 6, until December, 2003. The agreement calls for
a payment of $ 5,000 per month for general business consulting services
during the term of the agreement.
The Company has made commitments to sell boats at cost or at a
dealer discount to certain stockholders and other related parties.
NOTE 8 -LITIGATION
From time to time the Company is subject to legal proceedings and
claims in the ordinary course of business. Included in accrued expenses on
the balance sheet at February 28, 1999, is $ 28,160 in settlement fees for
various legal claims. The Company is not currently aware of any additional
legal proceedings or claims that the Company believes will have,
individually or in the aggregate, a material adverse effect on the Company.
NOTE 9 - CAPITAL STOCK
The capital stock structure of the Company is as follows:
Preferred stock, voting:
Series A, $ .001 par value, 10% cumulative, callable at $ 1.20 per
share, convertible into three shares of common stock until the
fifth anniversary of the date of issue at which time automatic
conversion will occur, 500,000 shares authorized and 328,000
shares issued.
F-10
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1999
NOTE 9 - CAPITAL STOCK (continued)
Preferred stock, nonvoting:
Series B, $ .001 par value, 10% cumulative, callable at $ 1.20 per
share, convertible into three shares of common stock until the
fifth anniversary of the date of issue at which time automatic
conversion will occur, 205,000 shares authorized and issued.
Common stock, voting, $ .001 par value, 50,000,000 shares
authorized and 2,085,000 shares issued.
NOTE 10 - EQUITY TRANSACTIONS
In December, 1998, the Company issued 295,000 shares of the Series
A Preferred Stock along with warrants to purchase 295,000 shares of the
Series B Preferred Stock at $ 1.00 per share, exercisable for a period of
five years from the date of issuance. The stock was issued in consideration
for the cancellation of $ 295,000 in promissory notes. As of February 28,
1999, all of the warrants were still outstanding.
NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for -
Interest $ 31,584
Other Noncash Financing Activities:
Issuance of stock $ 356,750
Debt reduction in connection
with issuance of Series A
preferred stock (295,000)
-------------
Proceeds from issuance of stock $ 61,750
=============
</TABLE>
NOTE 12 - SUBSEQUENT EVENT
Subsequent to February 28, 1999, the Company finalized a second
private placement of its common stock issuing 1,948,500 shares at a
purchase price of $ .40 per share. The Company raised approximately $
600,000 net of offering expenses.
NOTE 13 - GOING CONCERN MATTERS
As shown in the accompanying financial statements, the Company
sustained net operating losses totalling $ 653,401 through February 28,
1999, and as of that date, had current liabilities exceeding current assets
by $ 510,739 and total liabilities exceeding total assets by $ 30,401.
These deficiencies, as well as deficit cash flows from operations, create
an uncertainty about the Company's ability to continue as a going concern.
F-11
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1999
NOTE 13 - GOING CONCERN MATTERS (continued)
The management and principal stockholders are committed to
subsidizing the operations of the Company until future profitable
operations can be achieved. In addition, the following actions have been
taken:
(1) The Company has obtained six new dealers with a total of
ten sales locations. Previously, the Company sold out of
its manufacturing facility without dealer participation.
The Company's effort in establishing a sound dealer base,
which is the customary selling method in the industry,
should have a positive effect on sales.
(2) During April, 1999, the Company completed a stock offering
which raised approximately $ 600,000 for working capital
purposes.
(3) The Company has completed improvements to its facility and
modifications to its production methods which should
improve efficiency and favorably impact future operations.
F-12
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibits Description of Document
- -------- -----------------------
3.1 Articles of Incorporation of Jupiter Marine International
Holdings, Inc.
3.2 Articles of Amendment to the Articles of Incorporation of
Jupiter Marine International Holdings, Inc.
3.3 Bylaws of Jupiter Marine International Holdings, Inc.
10.1 Employment Agreement between Jupiter Marine International
Holdings, Inc. and Carl Herndon, Sr. dated November 10, 1998.
10.2 Employment Agreement between Jupiter Marine International
Holdings, Inc. and Carl Herndon, Jr. dated May 28, 1999.
10.3 Management Agreement between Jupiter Marine International
Holdings, Inc. and Triton Holdings International Corp. dated
January 14, 1999.
10.4 Secured Promissory Note issued by Jupiter Marine International
Holdings, Inc. and Triton Holdings International Corp. dated
January 14, 1998.
10.5 Lease Agreement between Jupiter Marine International Holdings,
Inc. and Carl Herndon, Sr. dated May 19, 1998.
21 Subsidiaries of Jupiter Marine International Holdings, Inc.
27 Financial Data Schedule.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Amendment to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
Date: _____, 1999 By:
-------------------------------------------------
Carl Herndon, Director, CEO and President
Date: _____, 1999 By:
-------------------------------------------------
Larry Tierney, Director
Date: _____, 1999 By:
-------------------------------------------------
Carl Herndon, Jr., Vice President of Sales
and Marketing
ARTICLES OF INCORPORATION
-------------------------
OF
--
JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
-------------------------------------------
The undersigned, a natural person competent to contract, does hereby
make, subscribe and file these Articles of Incorporation for the purpose of
organizing a corporation under the laws of the State of Florida.
ARTICLE I
CORPORATE NAME
--------------
The name of this Corporation shall be: JUPITER MARINE INTERNATIONAL
HOLDINGS, INC.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
------------------------------------
The principal office and mailing address of the Corporation is 1 South
Ocean Blvd., Suite 315, Boca Raton, Florida 33432.
ARTICLE III
NATURE OF CORPORATE BUSINESS AND POWERS
---------------------------------------
The general nature of the business to be transacted by this Corporation
shall be to engage in any and all lawful business permitted under the laws of
the United States and the State of Florida.
Robert J. Burnett, Esq., Florida bar No. 0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Blvd., Suite 1900
Fort Lauderdale, Florida 33301
(954) 763-1200
1
<PAGE>
ARTICLE IV
CAPITAL STOCK
-------------
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be 50,000,000 shares of
common stock, par value $.001 per share and 5,000,000 shares of Preferred Stock,
par value $.001 per share. Series of the Preferred Stock may be created and
issued from time to time, with such designations, preferences, conversion
rights, cumulative, relative, participating, optional or other rights, including
voting rights, qualifications, limitations or restrictions thereof as shall be
stated and expressed in the resolution or resolutions providing for the creation
and issuance of such series of Preferred Stock as adopted by the Board of
Directors pursuant to the authority in this paragraph given.
ARTICLE V
TERM OF EXISTENCE
-----------------
This Corporation shall have perpetual existence.
ARTICLE VI
REGISTERED AGENT AND
INITIAL REGISTERED OFFICE IN FLORIDA
------------------------------------
The Registered Agent and the street address of the initial Registered
Office of this Corporation in the State of Florida shall be:
South Florida Registered Agents, Inc.
200 East Las Olas Blvd., Suite 1900
Fort Lauderdale, Florida 33301
ARTICLE VII
BOARD OF DIRECTORS
------------------
This Corporation shall have one (1) Directors initially.
2
<PAGE>
ARTICLE VIII
INITIAL DIRECTOR
----------------
The name and address of the initial Directors of this Corporation are:
Robert D. Keyser, Jr.
1 South Ocean Blvd., Suite 315
Boca Raton, Florida 33432
The persons named as initial Directors shall hold office for the first
year of existence of this Corporation, or until their successors are elected or
appointed and have qualified, whichever occurs first.
ARTICLE IX
INCORPORATOR
------------
The name and address of the person signing these Articles of
Incorporation as the Incorporator is Robert J. Burnett, Esq., 200 E. Las Olas
Blvd., #1900, Ft. Lauderdale, FL 33301.
ARTICLE X
INDEMNIFICATION
---------------
This Corporation may indemnify any director, officer, employee or agent
of the Corporation to the fullest extent permitted by Florida law.
ARTICLE XI
AFFILIATED TRANSACTIONS
-----------------------
This Corporation expressly elects not to be governed by Section
607.0901 of the Florida Business Corporation Act, as amended from time to time,
relating to affiliated transactions.
IN WITNESS WHEREOF, the undersigned Incorporator has executed the
foregoing Articles of Incorporation on the 18th day of May, 1998.
-------------------------------
Robert J. Burnett, Incorporator
3
<PAGE>
CERTIFICATE DESIGNATING REGISTERED AGENT
AND OFFICE FOR SERVICE OF PROCESS
Jupiter Marine International Holdings, Inc., a corporation existing
under the laws of the State of Florida with its principal office and mailing
address at 1 South Ocean Blvd., Suite 315, Boca Raton, Florida 33432 has named
South Florida Registered Agents, Inc. whose address is 200 East Las Olas Blvd.,
Suite 1900, Fort Lauderdale, Florida 33301 as its agent to accept service of
process within the State of Florida.
ACCEPTANCE:
-----------
Having been named to accept service of process for the above named
Corporation, at the place designated in this Certificate, I hereby accept the
appointment as Registered Agent, and agree to comply with all applicable
provisions of law. In addition, I hereby am familiar with and accept the duties
and responsibilities as Registered Agent for said Corporation.
SOUTH FLORIDA REGISTERED AGENTS, INC.
(a Florida Corporation)
-------------------------------------
Beverly F. Bryan, President
4
ARTICLES OF AMENDMENT
---------------------
TO THE
------
ARTICLES OF INCORPORATION
-------------------------
OF
--
JUPITER MARINE INTERNATIONAL, INC.
----------------------------------
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned , the sole Director of Jupiter Marine
International, Inc., a corporation organized and existing under and by virtue of
the Business Corporation Act of the State of Florida, bearing document number
P97000018609, does hereby certify:
First: That pursuant to Written Consent of the Board of Directors of
said Corporation dated December 23, 1997, acting without shareholder approval
pursuant to Section 607.1002 of the Business Corporation Act of the State of
Florida, the Directors approved the amendment to the Corporation's Certificate
of Incorporation as follows:
Article IV of the Certificate of Incorporation of this Corporation is
amended to read in its entirety as follows:
ARTICLE IV
CAPITAL STOCK
-------------
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be 10,000,000 shares of
common stock, par value $.001 per share and 5,000,000 shares of Preferred Stock,
par value $.001 per share. Series of the Preferred Stock may be created and
issued from time to time, with such designations, preferences, conversion
rights, cumulative, relative, participating, optional or other rights, including
voting rights, qualifications, limitations or restrictions thereof as shall be
stated and expressed in the resolution or resolutions providing for the creation
and issuance of such series of Preferred Stock as adopted by the Board of
Directors pursuant to the authority in this paragraph given.
The foregoing amendment was adopted by the Board of Directors of the
Corporation pursuant to Written Consent of the Board of Directors of the
Corporation dated December 23, 1997 acting unanimously by Written Consent
pursuant to Section 607.0821 of the Florida Business Corporation Act. Therefore,
the number of votes cast for the amendment to the Corporation's Certificate of
Incorporation was sufficient for approval.
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment as of December 23, 1997.
Jupiter Marine International, Inc.
By:____________________________________
ROBERT D. KEYSER, JR., DIRECTOR
BY-LAWS
OF
JUPITER MARINE INTERNATIONAL INCORPORATED
a Florida corporation
<PAGE>
<TABLE>
<CAPTION>
INDEX
-----
PAGE
----
ARTICLE I
---------
Offices
-------
<S> <C> <C>
Section 1.01 Principal Office........................................................ 1
----------------
Section 1.02 Registered Office....................................................... 1
-----------------
Section 1.03 Other Offices........................................................... 1
-------------
ARTICLE II
----------
Meetings of Shareholders
------------------------
Section 2.01 Annual Meeting.......................................................... 1
--------------
Section 2.02 Special Meetings........................................................ 2
----------------
Section 2.03 Shareholders' List for Meeting.......................................... 2
------------------------------
Section 2.04 Record Date............................................................. 3
-----------
Section 2.05 Notice of Meetings and Adjournment...................................... 3
----------------------------------
Section 2.06 Waiver of Notice........................................................ 4
----------------
ARTICLE III
-----------
Shareholder Voting
------------------
Section 3.01 Voting Group Defined.................................................... 5
--------------------
Section 3.02 Quorum and Voting Requirements for
----------------------------------
Voting Groups..................................................... 5
-------------
Section 3.03 Action by Single and Multiple Voting
Groups............................................................ 5
------
i
<PAGE>
Section 3.04 Shareholder Quorum and Voting; Greater
or Lesser Voting Requirements..................................... 6
-----------------------------
Section 3.05 Voting for Directors; Cumulative Voting................................. 6
---------------------------------------
Section 3.06 Voting Entitlement of Shares............................................ 7
----------------------------
Section 3.07 Proxies................................................................. 8
-------
Section 3.08 Shares Held by Nominees................................................. 10
-----------------------
Section 3.09 Corporation's Acceptance of Votes....................................... 10
---------------------------------
Section 3.10 Action by Shareholders Without Meeting.................................. 11
--------------------------------------
ARTICLE IV
----------
Board of Directors and Officers
-------------------------------
Section 4.01 Qualifications of Directors............................................. 11
---------------------------
Section 4.02 Number of Directors..................................................... 12
-------------------
Section 4.03 Terms of Directors Generally............................................ 12
----------------------------
Section 4.04 Staggered Terms for Directors........................................... 12
-----------------------------
Section 4.05 Vacancy on Board........................................................ 13
----------------
Section 4.06 Compensation of Directors............................................... 13
-------------------------
Section 4.07 Meetings................................................................ 13
--------
Section 4.08 Action by Directors Without a Meeting................................... 13
-------------------------------------
Section 4.09 Notice of Meetings...................................................... 14
------------------
Section 4.10 Waiver of Notice........................................................ 14
----------------
Section 4.11 Quorum and Voting....................................................... 14
-----------------
Section 4.12 Committees.............................................................. 14
----------
ii
<PAGE>
Section 4.13 Loans to Officers, Directors and
Employees; Guaranty of Obligations............................... 15
----------------------------------
Section 4.14 Required Officers....................................................... 16
-----------------
Section 4.15 Duties of Officers...................................................... 16
------------------
Section 4.16 Resignation and Removal of Officers..................................... 16
-----------------------------------
Section 4.17 Contract Rights of Officers............................................. 16
---------------------------
Section 4.18 General Standards for Directors......................................... 17
-------------------------------
Section 4.19 Director Conflicts of Interest.......................................... 17
------------------------------
Section 4.20 Resignation of Directors................................................ 18
------------------------
ARTICLE V
---------
Indemnification of Directors, Officers,
Employees and Agents
--------------------
Section 5.01 Directors, Officers, Employees
and Agents........................................................ 19
----------
ARTICLE VI
----------
Office and Agent
----------------
Section 6.01 Registered Office and Registered Agent.................................. 23
--------------------------------------
Section 6.02 Change of Registered Office or Registered
Agent; Resignation of Registered Agent........................... 23
--------------------------------------
ARTICLE VII
-----------
Shares, Option, Dividends and Distributions
-------------------------------------------
Section 7.01 Authorized Shares....................................................... 24
-----------------
Section 7.02 Terms of Class or Series Determined
by Board of Directors............................................. 25
---------------------
iii
<PAGE>
Section 7.03 Issued and Outstanding Shares........................................... 25
-----------------------------
Section 7.04 Issuance of Shares...................................................... 26
------------------
Section 7.05 Form and Content of Certificates........................................ 26
--------------------------------
Section 7.06 Shares Without Certificates............................................. 27
---------------------------
Section 7.07 Restriction on Transfer of Shares
and Other Securities.............................................. 28
--------------------
Section 7.08 Shareholder's Pre-emptive Rights........................................ 28
--------------------------------
Section 7.09 Corporation's Acquisition of its
Own Shares........................................................ 28
----------
Section 7.10 Share Options........................................................... 28
-------------
Section 7.11 Terms and Conditions of Stock Rights
and Options....................................................... 29
-----------
Section 7.12 Share Dividends......................................................... 29
---------------
Section 7.13 Distributions to Shareholders........................................... 30
-----------------------------
ARTICLE VIII
------------
Amendment of Articles and Bylaws
--------------------------------
Section 8.01 Authority to Amend the Articles of
Incorporation..................................................... 31
-------------
Section 8.02 Amendment by Board of Directors......................................... 32
-------------------------------
Section 8.03 Amendment of Bylaws by Board of
Directors......................................................... 32
---------
Section 8.04 Bylaw Increasing Quorum or Voting
Requirements for Directors........................................ 32
--------------------------
iv
<PAGE>
ARTICLE IX
----------
Records and Report
------------------
Section 9.01 Corporate Records....................................................... 33
-----------------
Section 9.02 Financial Statements for Shareholders................................... 34
-------------------------------------
Section 9.03 Other Reports to Shareholders........................................... 35
-----------------------------
Section 9.04 Annual Report for Department of State................................... 36
-------------------------------------
ARTICLE X
Miscellaneous
Section 10.01 Definition of the "Act"................................................. 36
-----------------------
Section 10.02 Application of Florida Law.............................................. 36
--------------------------
Section 10.03 Fiscal Year............................................................. 36
-----------
Section 10.04 Conflicts with Articles of
Incorporation.................................................... 36
-------------
</TABLE>
v
<PAGE>
ARTICLE I
Offices
-------
Section 1.01. Principal Office.
----------------
The principal office of the corporation in the State of Florida shall
be established at such places as the board of directors from time to time
determine.
Section 1.02. Registered Office.
-----------------
The registered office of the corporation in the State of Florida shall
be at the office of its registered agent as stated in the articles of
incorporation or as the board of directors shall from time to time determine.
Section 1.03. Other Offices.
-------------
The corporation may have additional offices at such other places,
either within or without the State of Florida, as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
Meetings of Shareholders
------------------------
Section 2.01. Annual Meeting.
--------------
(1) The corporation shall hold a meeting of shareholders annually, for
the election of directors and for the transaction of any proper business, at a
time stated in or fixed in accordance with a resolution of the board of
directors.
(2) Annual shareholders' meeting may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution by the
board of directors or, when not inconsistent with the board of directors'
resolution stated in the notice of the annual meeting. If no place is stated in
or fixed in accordance with these bylaws, or stated in the notice of the annual
meeting, annual meetings shall be held at the corporation's principal office.
(3) The failure to hold the annual meeting at the time stated in or
fixed in accordance with these bylaws or pursuant to the Act does not affect the
validity of any corporate action and shall not work a forfeiture of or
dissolution of the corporation.
1
<PAGE>
Section 2.02. Special Meeting.
---------------
(1) The corporation shall hold a special meeting of shareholders:
(a) On call of its board of directors or the person or persons
authorized to do so by the board of directors; or
(b) If the holders of not less than 10% 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.
(2) Special shareholders' meetings may be held in or out of the State
of Florida at a place stated in or fixed in accordance with a resolution of the
board of directors, or, when not inconsistent with the board of directors'
resolution, in the notice of the special meeting. If no place is stated in or
fixed in accordance with these bylaws or in the notice of the special meeting,
special meetings shall be held at the corporation's principal office.
(3) Only business within the purpose or purposes described in the
special meeting notice may be conducted at a special shareholders' meeting.
Section 2.03. Shareholders' List for Meeting.
------------------------------
(1) After fixing a record date for a meeting, a corporation shall
prepare a list of the names of all its shareholders who are entitled to notice
of a shareholders' meeting, in accordance with the Florida Business Corporation
Act (the "Act"), or arranged by voting group, with the address of, and the
number and class and series, if any, of shares held by, each.
(2) The shareholders' list must be available for inspection by any
shareholder for a period of ten days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list (subject to the
requirements of Section 607.1602(3) of the Act), during regular business hours
and at his expense, during the period it is available for inspection.
(3) The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.
2
<PAGE>
Section 2.04. Record Date.
-----------
(1) The board of directors may set a record date for purposes of
determining the shareholders entitled to notice of and to vote at a
shareholders' meeting; however, in no event may a record date fixed by the board
of directors be a date preceding the date upon which the resolution fixing the
record date is adopted.
(2) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to demand a special meeting is the date
the first shareholder delivers his demand to the corporation. In the event that
the board of directors sets the record date for a special meeting of
shareholders, it shall not be a date preceding the date upon which the
corporation receives the first demand from a shareholder requesting a special
meeting.
(3) If no prior action is required by the board of directors pursuant
to the Act, and, unless otherwise fixed by the board of directors, the record
date for determining shareholders entitled to take action without a meeting is
the date the first signed written consent is delivered to the corporation under
Section 607.0704 of the Act. If prior action is required by the board of
directors pursuant to the Act, the record date for determining shareholders
entitled to take action without a meeting is at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
(4) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to notice of and to vote at an annual or
special shareholders' meeting is the close of business on the day before the
first notice is delivered to shareholders.
(5) A record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
(6) A determination of shareholders entitled to notice of or to vote at
a shareholders' meeting is effective for any adjournment of the meeting unless
the board of directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than one 120 days after the date fixed for the
original meeting.
Section 2.05. Notice of Meetings and Adjournment.
----------------------------------
(1) The corporation shall notify shareholders of the date, time and
place of each annual and special shareholders' meeting no fewer than 10 or more
than 60 days before the meeting date. Unless the Act requires otherwise, the
corporation is required to give notice only to shareholders entitled to vote at
the meeting. Notice shall be given in the manner provided in Section 607.0141 of
the Act, by or at the direction of the president, the secretary, of the officer
or persons calling the meeting. If the notice is
mailed at least 30
3
<PAGE>
days before the date of the meeting, it may be done by a class of United States
mail other than first class. Notwithstanding Section 607.0141, if mailed, such
notice shall be deemed to be delivered when deposited in the United Statement
mail addressed to the shareholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid.
(2) Unless the Act or the articles of incorporation requires otherwise,
notice of an annual meeting need not include a description of the purpose or
purposes for which the meeting is called.
(3) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(4) If an annual or special shareholders meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
or place if the new date, time or place is announced at the meeting before
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If
a new record date is or must be fixed under Section 607.0707 of the Act,
however, notice of the adjourned meeting must be given under this section to
persons who are shareholders as of the new record date who are entitled to
notice of the meeting.
(5) Notwithstanding the foregoing, no notice of a shareholders' meeting
need be given if: (a) an annual report and proxy statements for two consecutive
annual meetings of shareholders, or (b) all, and at least two checks in payment
of dividends or interest on securities during a 12-month period, have been sent
by first-class United States mail, addressed to the shareholder at his address
as it appears on the share transfer books of the corporation, and returned
undeliverable. The obligation of the corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
corporation has received a new address for such shareholder for entry on its
share transfer books.
Section 2.06. Waiver of Notice.
----------------
(1) A shareholder may waive any notice required by the Act, the
articles of incorporation, or bylaws before or after the date and time stated in
the notice. The waiver must be in writing, be signed by the shareholder entitled
to the notice, and be delivered to the corporation for inclusion in the minutes
or filing with the corporate records. Neither the business to be transacted at
nor the purpose of any regular or special meeting of the shareholders need be
specified in any written waiver of notice.
(2) A shareholder's attendance at a meeting: (a) Waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the
4
<PAGE>
meeting objects to holding the meeting or transacting business at the meeting;
or (b) waives objection to consideration of a particular matter at the meeting
that is not within the purpose or purposes described in the meeting notice,
unless the shareholder objects to considering the matter when it is presented.
ARTICLE III
Shareholder Voting
------------------
Section 3.01. Voting Group Defined.
--------------------
A "voting group" means all shares of one or more classes or series that
under the articles of incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the articles of incorporation or the Act to vote generally on
the matter are for that purpose a single voting group.
Section 3.02. Quorum and Voting Requirements for Voting Groups.
------------------------------------------------
(1) Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. Unless the articles of incorporation or the Act provides otherwise,
a majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
(2) Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
(3) If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation or the Act requires a greater number of affirmative
votes.
Section 3.03. Action by Single and Multiple Voting Groups.
-------------------------------------------
(1) If the articles of incorporation or the Act provides for voting by
a single voting group on a matter, action on that matter is taken when voted
upon by that voting group as provided in Section 3.02 of these bylaws.
(2) If the articles of incorporation or the Act provides for voting by
two or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately as provided in
Section 3.02 of these bylaws.
5
<PAGE>
Action may be taken by one voting group on a matter even though no action is
taken by another voting group entitled to vote on the matter.
Section 3.04. Shareholder Quorum and Voting; Greater or Lesser
------------------------------------------------
Voting Requirements.
-------------------
(1) A majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders, but in no
event shall a quorum consist of less than one-third of the shares entitled to
vote. When a specified item of business is required to be voted on by a class or
series of stock, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such item of business by that class
or series.
(2) An amendment to the articles of incorporation that adds, changes or
deletes a greater or lesser quorum or voting requirement must meet the same
quorum requirement and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirements then in effect or proposed
to be adopted, whichever is greater.
(3) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by the Act or the articles of
incorporation.
(4) After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
(5) The articles of incorporation may provide for a greater voting
requirement or a greater or lesser quorum requirement for shareholders (or
voting groups of shareholders) than is provided by the Act, but in no event
shall a quorum consist of less than one-third of the shares entitled to vote.
Section 3.05. Voting for Directors; Cumulative Voting.
---------------------------------------
(1) Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present.
(2) Each shareholder who is entitled to vote at an election of
directors has the right to vote the number of shares owned by him for as many
persons as there are directors to be elected and for whose election he has a
right to vote. Shareholders do not
6
<PAGE>
have a right to cumulate their votes for directors unless the articles of
incorporation so provide.
Section 3.06. Voting Entitlement of Shares.
----------------------------
(1) Unless the articles of incorporation or the Act provides otherwise,
each outstanding share, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of shareholders. Only shares are
entitled to vote.
(2) The shares of the corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
the first corporation owns, directly or indirectly, a majority of shares
entitled to vote for directors of the second corporation.
(3) This section does not limit the power of the corporation to vote
any shares, including its own shares, held by it in a fiduciary capacity.
(4) Redeemable shares are not entitled to vote on any matter, and shall
not be deemed to be outstanding, after notice of redemption is mailed to the
holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
(5) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of the
corporate shareholder may prescribe or, in the absence of any applicable
provision, by such person as the board of directors of the corporate shareholder
may designate. In the absence of any such designation or in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
(6) Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
(7) Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
7
<PAGE>
(8) If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, then acts with respect to voting have the following effect:
(a) If only one votes, in person or in proxy, his act binds
all;
(b) If more than one vote, in person or by proxy, the act of
the majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote
is evenly split on any particular matter, each faction is entitled to vote the
share or shares in question proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or objections and for the
purpose of ascertaining the presence of a quorum;
(f) Subject to Section 3.08 of these bylaws, nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or their fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
Section 3.07. Proxies.
-------
(1) A shareholder, other person entitled to vote on behalf of a
shareholder pursuant to Section 3.06 of these bylaws, or attorney in fact may
vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for him
by signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is a sufficient appointment form.
8
<PAGE>
(3) An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An appointment
is valid for up to 11 months unless a longer period is expressly provided in the
appointment form.
(4) The death or incapacity of the shareholder appointing a proxy does
not affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
(5) An appointment of a proxy is revocable by the shareholder unless
the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest. Appointments coupled with an interest
include the appointment of: (a) a pledgee; (b) a person who purchased or agreed
to purchase the shares; (c) a creditor of the corporation who extended credit to
the corporation under terms requiring the appointment; (d) an employee of the
corporation whose employment contract requires the appointment; or (e) a party
to a voting agreement created in accordance with the Act.
(6) An appointment made irrevocable under this section becomes
revocable when the interest with which it is coupled is extinguished and, in a
case provided for in Subsection 5(c) or 5(d), the proxy becomes revocable three
years after the date of the proxy or at the end of the period, if any, specified
herein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided in this
section. This does not affect the duration of a proxy under subsection (3).
(7) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the certificate representing the shares or on the
information statement for shares without certificates.
(8) Subject to Section 3.09 of these bylaws and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, a corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment.
(9) If an appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
9
<PAGE>
Section 3.08. Shares Held by Nominees.
-----------------------
(1) The corporation may establish a procedure by which the beneficial
owner of shares that are registered in the name of a nominee is recognized by
the corporation as the shareholder. The extent of this recognition may be
determined in the procedure.
(2) The procedure may set forth (a) the types of nominees to which it
applies; (b) the rights or privileges that the corporation recognizes in a
beneficial owner; (c) the manner in which the procedure is selected by the
nominee; (d) the information that must be provided when the procedure is
selected; (e) the period for which selection of the procedure is effective; and
(f) other aspects of the rights and duties created.
Section 3.09. Corporation's Acceptance of Votes.
---------------------------------
(1) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent waiver, or proxy appointment and
give it effect as the act of the shareholder.
(2) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the corporation if acting in
good faith is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if: (a) the
shareholder is an entity and the name signed purports to be that of an officer
or agent of the entity; (b) the name signed purports to be that of an
administrator, executor, guardian, personal representative, or conservator
representing the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment; (c) the name signed purports
to be that of a receiver, trustee in bankruptcy, or assignee for the benefit of
creditors of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, or proxy appointment; (d) the name signed purports to be
that of a pledgee, beneficial owner, or attorney in fact of the shareholder and,
if the corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder has been presented with
respect to the vote, consent, waiver, or proxy appointment; or (e) two or more
persons are the shareholder as covenants or fiduciaries and the name signed
purports to be the name of at least one of the co-owners and the person signing
appears to be acting on behalf of all the co-owners.
(3) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
10
<PAGE>
(4) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(5) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
Section 3.10. Action by Shareholders Without Meeting.
--------------------------------------
(1) Any action required or permitted by the Act to be taken at any
annual or special meeting of shareholders of the corporation may be taken
without a meeting, without prior notice and without a vote, if the action is
taken by the holders of outstanding stock of each voting group entitled to vote
thereon having not less than the minimum number of votes with respect to each
voting group that would be necessary to authorize or take such action at a
meeting at which all voting groups and shares entitled to vote thereon were
present and voted. In order to be effective, the action must be evidenced by one
or more written consents describing the action taken, dated and signed by
approving shareholders having the requisite number of votes of each voting group
entitled to vote thereon, and delivered to the corporation by delivery to its
principal office in this state, its principal place of business, the corporate
secretary, or another office or agent of the corporation having custody of the
book in which proceedings of meetings of shareholders are recorded. No written
consent shall be effective to take the corporate action referred to therein
unless, within 60 days of the date of the earliest dated consent is delivered in
the manner required by this section, written consent signed by the number of
holders required to take action is delivered to the corporation by delivery as
set forth in this section.
(2) Within 10 days after obtaining such authorization by written
consent, notice in accordance with Section 607.0704(3) of the Act must be given
to those shareholders who have not consented in writing.
ARTICLE IV
Board of Directors and Officers
-------------------------------
Section 4.01. Qualifications of Directors.
---------------------------
Directors must be natural persons who are 18 years of age or older but
need not be residents of the State of Florida or shareholders of the
corporation.
11
<PAGE>
Section 4.02. Number of Directors.
-------------------
(1) The board of directors shall consist of not less than one nor more
than nine individuals.
(2) The number of directors may be increased or decreased from time to
time by amendment to these bylaws.
(3) Directors are elected at the first annual shareholders' meeting and
at each annual meeting thereafter unless their terms are staggered under Section
4.04 of these bylaws.
Section 4.03. Terms of Directors Generally.
----------------------------
(1) The terms of the initial directors of the corporation expire at the
first shareholders' meeting at which directors are elected.
(2) The terms of all other directors expire at the next annual
shareholders' meeting following their election unless their terms are staggered
under Section 4.04 of these bylaws.
(3) A decrease in the number of directors does not shorten an incumbent
director's term.
(4) The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected.
(5) Despite the expiration of a director's term, he continues to serve
until his successor is elected and qualifies or until there is a decrease in the
number of directors.
Section 4.04. Staggered Terms for Directors.
-----------------------------
The directors of any corporation organized under the Act may, by the
articles of incorporation, or by amendment to these bylaws adopted by a vote of
the shareholders, be divided into one, two or three classes with the number of
directors in each class being as nearly equal as possible; the term of office of
those of the first class to expire at the annual meeting next ensuing; of the
second class one year thereafter; at the third class two years thereafter; and
at each annual election held after such classification and election, directors
shall be chosen for a full term, as the case may be, to succeed those whose
terms expire. If the directors have staggered terms, then any increase or
decrease in the number of directors shall be so apportioned among the classes as
to make all classes as nearly equal in number as possible.
12
<PAGE>
Section 4.05. Vacancy on Board.
----------------
(1) Whenever a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, it may be filled
by the affirmative vote of a majority of the remaining directors.
(2) A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
Section 4.06. Compensation of Directors.
-------------------------
The board of directors may fix the compensation of directors.
Section 4.07. Meetings.
--------
(1) The board of directors may hold regular or special meetings in or
out of the State of Florida.
(2) A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the board of directors to another time and
place. Notice of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other directors.
(3) Meetings of the board of directors may be called by the chairman of
the board or by the president.
(4) The board of directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
Section 4.08. Action by Directors Without a Meeting.
-------------------------------------
(1) Action required or permitted by the Act to be taken at a board of
directors' meeting or committee meeting may be taken without a meeting if the
action is taken by all members of the board or of the committee. The action must
be evidenced by one or more written consents describing the action taken and
signed by each director or committee member.
(2) Action taken under this section is effective when the last director
signs the consent, unless the consent specifies a different effective date.
13
<PAGE>
(3) A consent signed under this section has the effect of a meeting
vote and may be described as such in any document.
Section 4.09. Notice of Meetings.
------------------
Regular and special meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meeting.
Section 4.10. Waiver of Notice.
----------------
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting or promptly upon
arrival at the meeting, any objection to the transaction of business because the
meeting is not lawfully called or convened.
Section 4.11. Quorum and Voting.
-----------------
(1) A quorum of a board of directors consists of a majority of the
number of directors prescribed by the articles of incorporation or these bylaws.
(2) If a quorum is present when a vote is taken, the affirmative vote
of a majority of directors present is the act of the board of directors.
(3) A director of a corporation who is present at a meeting of the
board of directors or a committee of the board of directors when corporate
action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting specified business at the
meeting; or
(b) He votes against or abstains from the action taken.
Section 4.12. Committees.
----------
(1) The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution, shall have and may exercise all the authority of the board
of directors, except that no such committee shall have the authority to:
14
<PAGE>
(a) Approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders.
(b) Fill vacancies on the board of directors or any committee
thereof.
(c) Adopt, amend, or repeal these bylaws.
(d) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors.
(e) Authorize or approve the issuance or sale or contract for
the sale of shares, or determine the designation and relative rights,
preferences, and limitations of
a voting group except that the board of directors may authorize a committee (or
a senior executive officer of the corporation) to do so within limits
specifically prescribed by the board of directors.
(2) The sections of these bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the board of directors
apply to committees and their members as well.
(3) Each committee must have two or more members who serve at the
pleasure of the board of directors. The board, by resolution adopted in
accordance herewith, may designate one or more directors as alternate members of
any such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
(4) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any member of the board of directors not a
member of the committee in question with his responsibility to act in good
faith, in a manner he reasonably believes to be in the best interests of the
corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
Section 4.13. Loans to Officers, Directors, and Employees; Guaranty
-----------------------------------------------------
of Obligations.
- --------------
The corporation may lend money to, guaranty any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing in this section shall be deemed to deny, limit, or restrict the powers
15
<PAGE>
of guaranty or warranty of any corporation at common law or under any statute.
Loans, guaranties, or other types of assistance are subject to section 4.19.
Section 4.14. Required Officers.
-----------------
(1) The corporation shall have such officers as the board of directors
may appoint from time to time.
(2) A duly appointed officer may appoint one or more assistant
officers.
(3) The board of directors shall delegate to one of the officers
responsibility for preparing minutes of the directors' and shareholders'
meetings and for authenticating records of the corporation.
(4) The same individual may simultaneously hold more than one office in
the corporation.
Section 4.15. Duties of Officers.
------------------
Each officer has the authority and shall perform the duties set forth
in a resolution or resolutions of the board of directors or by direction of any
officer authorized by the board of directors to prescribe the duties of other
officers.
Section 4.16. Resignation and Removal of Officers.
-----------------------------------
(1) An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation accepts the future effective date, the board of
directors may fill the pending vacancy before the effective date if the board of
directors provides that the successor does not take office until the effective
date.
(2) The board of directors may remove any officer at any time with or
without cause. Any assistant officer, if appointed by another officer, may
likewise be removed by the board of directors or by the officer which appointed
him in accordance with these bylaws.
Section 4.17. Contract Rights of Officers.
---------------------------
The appointment of an officer does not itself create contract rights.
16
<PAGE>
Section 4.18. General Standards for Directors.
-------------------------------
(1) A director shall discharge his duties as a director, including his
duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like
position would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best
interests of the corporation.
(2) In discharging his duties, a director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
(a) One or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the persons' professional or
expert competence; or
(c) A committee of the board of directors of which he is not a
member if the director reasonably believes the committee merits confidence.
(3) In discharging his duties, a director may consider such factors as
the director deems relevant, including the long-term prospects and interests of
the corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
(4) A director is not acting in good faith if he has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) unwarranted.
(5) A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
Section 4.19. Director Conflicts of Interest.
------------------------------
No contract or other transaction between a corporation and one or more
interested directors shall be either void or voidable because of such
relationship or interest, because such director or directors are present at the
meeting of the board of directors or a
17
<PAGE>
committee thereof which authorizes, approves or ratifies such contract or
transaction, or because his or their votes are counted for such purpose, if:
(1) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves or ratifies the
contract or transactions by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors;
(2) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(3) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at the meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
For the purpose of paragraph (2) above, a conflict of interest
transaction is authorized, approved or ratified if it receives the vote of a
majority of the shares entitled to be counted under this subsection. Shares
owned by or voted under the control of a director who has a relationship or
interest in the conflict of interest transaction may not be counted in a vote of
shareholders to determine whether to authorize, approve or ratify a conflict of
interest transaction under paragraph (2). The vote of those shares, however, is
counted in determining whether the transaction is approved under other sections
of the Act. A majority of the shares, whether or not present, that are entitled
to be counted in a vote on the transaction under this subsection constitutes a
quorum for the purpose of taking action under this section.
Section 4.20. Resignation of Directors.
------------------------
A director may resign at any time by delivering written notice to the
board of directors or its chairman or to the corporation.
A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date, the board of directors may fill the pending vacancy before the
effective date if the board of directors provides that the successor does not
take office until the effective date.
18
<PAGE>
ARTICLE V
Indemnification of Directors, Officers,
Employees and Agents
--------------------------------------
Section 5.01. Directors, Officers, Employees and Agents.
-----------------------------------------
(1) The corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall have power to indemnify any person, who was
or is a party to any proceeding by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment of the
board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made under this
subsection in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable unless, and only to the extent that, the
court in which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper.
(3) To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsections (1) or (2), or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith.
19
<PAGE>
(4) Any indemnification under subsections (1) or (2), unless pursuant
to a determination by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (1) or (2).
Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable,
by majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
(i) Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
(ii) If a quorum of the directors cannot be obtained
for paragraph (a) and the committee cannot be designed under paragraph (b),
selected by majority vote of the full board of directors (in which directors who
are parties may participate); or
(d) By the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding or, if no
such quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and the corporation may make any other or
further
20
<PAGE>
indemnification or advancement of expenses of any of its directors, officers,
employees, or agents, under any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee,
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Section 607.0834 under the Act are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
(9) Notwithstanding the failure of the corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent if entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
21
<PAGE>
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether such person met
the standard of conduct set forth in subsection (1), subsection (2) or
subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or agent of a
constituent corporation, or is or was serving at the request of a constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit
plans;
(b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to any employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation"
includes any service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including duties relating to an
employee benefit plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith and in a
manner he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.
22
<PAGE>
(12) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this section.
ARTICLE VI
Office and Agent
----------------
Section 6.01. Registered Office and Registered Agent.
--------------------------------------
(1) The corporation shall have and continuously maintain in the State
of Florida:
(a) A registered office which may be the same as its place of
business; and
(b) A registered agent, who, may be either:
(i) An individual who resides in the State of Florida
whose business office is identical with such registered office; or
(ii) Another corporation or not-for-profit
corporation as defined in Chapter 617 of the Act, authorized to transact
business or conduct its affairs in the State of Florida, having a business
office identical with the registered office; or
(iii) A foreign corporation or not-for-profit foreign
corporation authorized pursuant to chapter 607 or chapter 617 of the Act to
transact business or conduct its affairs in the State of Florida, having a
business office identical with the registered office.
Section 6.02. Change of Registered Office or Registered Agent;
-----------------------------------------------
Resignation of Registered Agent.
- -------------------------------
(1) The corporation may change its registered office or its registered
agent upon filing with the Department of State of the State of Florida a
statement of change setting forth:
(a) The name of the corporation;
(b) The street address of its current registered office;
23
<PAGE>
(c) If the current registered office is to be changed, the
street address of the new registered office;
(d) The name of its current registered agent;
(e) If its current registered agent is to be changed, the name
of the new registered agent and the new agent's written consent (either on the
statement or attached to it) to the appointment;
(f) That the street address of its registered office and the
street address of the business office of its registered agent, as changed, will
be identical;
(g) That such change was authorized by resolution duly adopted
by its board of directors or by an officer of the corporation so authorized by
the board of directors.
ARTICLE VII
Shares, Options, Dividends and Distributions
--------------------------------------------
Section 7.01. Authorized Shares.
-----------------
(1) The articles of incorporation prescribe the classes of shares and
the number of shares of each class that the corporation is authorized to issue,
as well as a distinguishing designation for each class, and prior to the
issuance of shares of a class the preferences, limitations, and relative rights
of that class must be described in the articles of incorporation.
(2) The articles of incorporation must authorize:
(a) One or more classes of shares that together have unlimited
voting rights, and
(b) One or more classes of shares (which may be the same class
or classes as those with voting rights) that together are entitled to receive
the net assets of the corporation upon dissolution.
(3) The articles of incorporation may authorize one or more classes of
shares that have special, conditional, or limited voting rights, or no rights,
or no right to vote, except to the extent prohibited by the Act;
(a) Are redeemable or convertible as specified in the articles
of incorporation;
24
<PAGE>
(b) Entitle the holders to distributions calculated in any
manner, including dividends that may be cumulative, non-cumulative, or partially
cumulative;
(c) Have preference over any other class of shares with
respect to distributions, including dividends and distributions upon the
dissolution of the corporation.
(4) Shares which are entitled to preference in the distribution of
dividends or assets shall not be designated as common shares. Shares which are
not entitled to preference in the distribution of dividends or assets shall be
common shares and shall not be designated as preferred shares.
Section 7.02. Terms of Class or Series Determined by Board of
-----------------------------------------------
Directors.
- ---------
(1) If the articles of incorporation so provide, the board of directors
may determine, in whole or part, the preferences, limitations, and relative
rights (within the limits set forth in Section 7.01) of:
(a) Any class of shares before the issuance of any shares of
that class, or
(b) One or more series within a class before the issuance of
any shares of that series.
(2) Each series of a class must be given a distinguishing designation.
(3) All shares of a series must have preferences, limitations, and
relative rights identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the series, of
those of other series of the same class.
(4) Before issuing any shares of a class or series created under this
section, the corporation must deliver to the Department of State of the State of
Florida for filing articles of amendment, which are effective without
shareholder action, in accordance with Section 607.0602 of the Act.
Section 7.03. Issued and Outstanding Shares.
-----------------------------
(1) A corporation may issue the number of shares of each class or
series authorized by the articles of incorporation. Shares that are issued are
outstanding shares until they are reacquired, redeemed, converted, or canceled.
(2) The reacquisition, redemption, or conversion of outstanding shares
is subject to the limitations of subsection (3) and to Section 607.06401 of the
Act.
25
<PAGE>
(3) At all times that shares of the corporation are outstanding, one or
more shares that together have unlimited voting rights and one or more shares
that together are entitled to receive the net assets of the corporation upon
dissolution must be outstanding.
Section 7.04. Issuance of Shares.
------------------
(1) The board of directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
corporation.
(2) Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued,
fully paid, and non-assessable. When it cannot be determined that outstanding
shares are fully paid and non-assessable, there shall be a conclusive
presumption that such shares are fully paid and non-assessable if the board of
directors makes a good faith determination that there is no substantial evidence
that the full consideration for such shares has not been paid.
(3) When the corporation receives the consideration for which the board
of directors authorized the issuance of shares, the shares issued therefor are
fully paid and non-assessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
(4) The corporation may place in escrow shares issued for a contract
for future services or benefits or a promissory note, or make other arrangements
to restrict the transfer of the shares, and may credit distributions in respect
of the shares against their purchase price, until the services are performed,
the note is paid, or the benefits received. If the services are not performed,
the shares escrowed or restricted and the distributions credited may be canceled
in whole or part.
Section 7.05. Form and Content of Certificates.
--------------------------------
(1) Shares may but need not be represented by certificates. Unless the
Act or another statute expressly provides otherwise, the rights and obligations
of shareholders are identical whether or not their shares are represented by
certificates.
(2) At a minimum, each share certificate must state on its face:
26
<PAGE>
(a) The name of the issuing corporation and that the
corporation is organized under the laws of the State of Florida;
(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the
series, if any, the certificate represents.
(3) If the shares being issued are of different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder a full statement of this information on request and
without charge.
(4) Each share certificate:
(a) Must be signed (either manually or in facsimile) by an
officer or officers designated by the board of directors, and
(b) May bear the corporate seal or its facsimile.
(5) If the person who signed (either manually or in facsimile) a share
certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
(6) Nothing in this section may be construed to invalidate any share
certificate validly issued and outstanding under the Act on July 1, 1990.
Section 7.06. Shares Without Certificates.
---------------------------
(1) The board of directors of the corporation may authorize the issue
of some or all of the shares of any or all of its classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
(2) Within a reasonable time after the issue or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by the Act.
27
<PAGE>
Section 7.07. Restriction on Transfer of Shares and Other
-------------------------------------------
Securities.
- ----------
(1) The articles of incorporation, these bylaws, an agreement among
shareholders, or an agreement between shareholders and the corporation may
impose restrictions on the transfer or registration of transfer of shares of the
corporation. A restriction does not affect shares issued before the restriction
was adopted unless the holders of such shares are parties to the restriction
agreement or voted in favor of the restriction.
(2) A restriction on the transfer or registration of transfer of shares
is valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section, and effected in compliance with the
provisions of the Act, including having a proper purpose as referred to in the
Act.
Section 7.08. Shareholder's Pre-emptive Rights.
--------------------------------
The shareholders of the corporation do not have a pre-emptive right to
acquire the corporation's unissued shares.
Section 7.09. Corporation's Acquisition of its Own Shares.
-------------------------------------------
(1) The corporation may acquire its own shares, and, unless otherwise
provided in the articles of incorporation or except as provided in subsection
(4), shares so acquired constitute authorized but unissued shares of the same
class but undesignated as to series.
(2) If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation.
(3) Articles of amendment may be adopted by the board of directors
without shareholder action, shall be delivered to the Department of State of the
State of Florida for filing, and shall set forth the information required by
Section 607.0631 of the Act.
(4) Shares of the corporation in existence on June 30, 1990, which are
treasury shares under Section 607.004(18), Florida Statutes (1987), shall be
issued, but not outstanding, until canceled or disposed of by the corporation.
Section 7.10. Share Options.
-------------
(1) Unless the articles of incorporation provide otherwise, the
corporation may issue rights, options, or warrants for the purchase of shares of
the corporation. The board of directors shall determine the terms upon which the
rights, options, or warrants are issued, their form and content, and the
consideration for which the shares are to be issued.
28
<PAGE>
(2) The terms and conditions of stock rights and options which are
created and issued by the corporation, or its successor, and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized by unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.11. Terms and Conditions of Stock Rights and Options.
------------------------------------------------
The terms and conditions of the stock rights and options which are
created and issued by the corporation [or its successor], and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions or conditions that preclude or limit the exercise, transfer,
receipt or holding of such rights or options by any person or persons, including
any person or persons owning or offering to acquire a specified number or
percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.12. Share Dividends.
---------------
(1) Shares may be issued pro rata and without consideration to the
corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend
in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize,
(b) A majority of the votes entitled to be cast by the class
or series to be issued approves the issue, or
(c) There are no outstanding shares of the class or series to
be issued.
(3) If the board of directors does not fix the record date for
determining shareholders entitled to a share dividend, it is the date of the
board of directors authorizes the share dividend.
29
<PAGE>
Section 7.13. Distributions to Shareholders.
-----------------------------
(1) The board of directors may authorize and the corporation may make
distributions to its shareholders subject to restriction by the articles of
incorporation and the limitations in subsection (3).
(2) If the board of directors does not fix the record date for
determining shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), it is
the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they
become due in the usual course of business; or
(b) The corporation's total assets would be less than the sum
of its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
(4) The board of directors may base a determination that a distribution
is not prohibited under subsection (3) either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the shareholders concurrent with their receipt
of the distribution.
(5) Except as provided in subsection (7), the effect of a distribution
under subsection (3) is measured;
(a) In the case of distribution by purchase, redemption, or
other acquisition of the corporation's shares, as of the earlier of:
(i) The date money or other property is transferred
or debt incurred by the corporation, or
(ii) The date the shareholder ceases to be a
shareholder with respect to the acquired shares;
30
<PAGE>
(b) In the case of any other distribution of indebtedness, as
of the date the indebtedness is distributed;
(c) In all other cases, as of:
(i) The date the distribution is authorized if the
payment occurs within 120 days after the date of authorization, or
(ii) The date the payment is made if it occurs more
than 120 days after the date of authorization.
(6) A corporation's indebtedness to a shareholder incurred by reason of
a distribution made in accordance with this section is at parity with the
corporation's indebtedness to its general, unsecured creditors except to the
extent subordinated by agreement.
(7) Indebtedness of the corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations under
subsection (3) if its terms provide that payment of principal and interest are
made only if and to the extent that payment of a distribution to shareholders
could then be made under this section. If the indebtedness is issued as a
distribution, each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the payment is
actually made.
ARTICLE VIII
Amendment of Articles and Bylaws
Section 8.01. Authority to Amend the Articles of Incorporation.
------------------------------------------------
(1) The corporation may amend its articles of incorporation at any time
to add or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment.
(2) A shareholder of the corporation does not have a vested property
right resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.
31
<PAGE>
Section 8.02. Amendment by Board of Directors.
-------------------------------
The corporation's board of directors may adopt one or more amendments
to the corporation's articles of incorporation without shareholder action:
(1) To extend the duration of the corporation if it was incorporated at
a time when limited duration was required by law;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the Department of
State of the State of Florida;
(4) To delete any other information contained in the articles of
incorporation that is solely of historical interest;
(5) To change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the corporation has
only shares of that class outstanding;
(6) To delete the authorization for a class or series of shares
authorized pursuant to Section 607.0602 of the Act, if no shares of such class
or series have been issued;
(7) To change the corporate name by substituting the word
"corporation," "incorporated," or "company," or the abbreviation "corp.," Inc.,"
or Co.," for a similar word or abbreviation in the name, or by adding, deleting,
or changing a geographical attribution for the name; or
(8) To make any other change expressly permitted by the Act to be made
without shareholder action.
Section 8.03. Amendment of Bylaws by Board of Directors.
-----------------------------------------
The corporation's board of directors may amend or repeal the
corporation's bylaws unless the Act reserves the power to amend a particular
bylaw provision exclusively to the shareholders.
Section 8.04. Bylaw Increasing Quorum or Voting Requirements for
--------------------------------------------------
Directors.
- ---------
(1) A bylaw that fixes a greater quorum or voting requirement for the
board of directors may be amended or repealed:
32
<PAGE>
(a) If originally adopted by the shareholders, only by the
shareholders;
(b) If originally adopted by the board of directors, either by
the shareholders or by the board of directors.
(2) A bylaw adopted or amended by the shareholders that fixes a greater
quorum or voting requirement for the board of directors may provide that it may
be amended or repealed only by a specified vote of either the shareholders or
the board of directors.
(3) Action by the board of directors under paragraph (1)(b) to adopt or
amend a bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the same vote
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
ARTICLE IX
Records and Reports
-------------------
Section 9.01. Corporate Records.
-----------------
(1) The corporation shall keep as permanent records minutes of al
meetings of its shareholders and board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, and a record
of all actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation.
(2) The corporation shall maintain accurate accounting records.
(3) The corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares showing
the number and series of shares held by each.
(4) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
(5) The corporation shall keep a copy of the following records:
(a) Its articles or restated articles of incorporation and all
amendments to them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them
currently in effect;
33
<PAGE>
(c) Resolutions adopted by the board of directors creating one
or more classes or series of shares and finding their relative rights,
preferences, and limitations, if shares issued pursuant to those resolutions are
outstanding;
(d) The minutes of all shareholders' meetings and records of
all action taken by shareholders without a meeting for the past three years;
(e) Written communications to all shareholders generally or
all shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years;
(f) A list of the names and business street addresses of its
current directors and officers; and
(g) Its most recent annual report delivered to the Department
of State of the State of Florida.
Section 9.02. Financial Statements for Shareholders.
-------------------------------------
(1) Unless modified by resolution of the shareholders within 120 days
of the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If financial
statements are prepared for the corporation on the basis of generally-accepted
accounting principles, the annual financial statements must also be prepared on
that basis.
(2) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were
prepared on the basis of generally-accepted accounting principles and, if not,
describing the basis of preparation; and
(b) Describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year.
(3) The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements, if for reasons beyond the corporation's
control, it is unable to prepare its
34
<PAGE>
financial statements within the prescribed period. Thereafter, on written
request from a shareholder who was not mailed the statements, the corporation
shall mail him the latest annual financial statements.
Section 9.03. Other Reports to Shareholders.
-----------------------------
(1) If the corporation indemnifies or advances expenses to any
director, officer, employee or agent otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time
such meeting is held, which report shall include a statement specifying the
persons paid, the amounts paid, and the nature and status at the time of such
payment of the litigation or threatened litigation.
(2) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
Section 9.04. Annual Report for Department of State.
-------------------------------------
(1) The corporation shall deliver to the Department of State of the
State of Florida for filing a sworn annual report on such forms as the
Department of State of the State of Florida prescribes that sets forth the
information prescribed by Section 607.1622 of the Act.
(2) Proof to the satisfaction of the Department of State of the State
of Florida on or before July 1 of each calendar year that such report was
deposited in the United States mail in a sealed envelope, properly addressed
with postage prepaid, shall be deemed in compliance with this requirement.
(3) Each report shall be executed by the corporation by an officer or
director or, if the corporation is in the hands of a receiver or trustee, shall
be executed on behalf of the corporation by such receiver or trustee, and the
signing thereof shall have the same legal effect as if made under oath, without
the necessity of appending such oath thereto.
(4) Information in the annual report must be current as of the date the
annual report is executed on behalf of the corporation.
(5) Any corporation failing to file an annual report which complies
with the requirements of this section shall not be permitted to maintain or
defend any action in any court of this state until such report is filed and all
fees and taxes due under the Act are
35
<PAGE>
paid and shall be subject to dissolution or cancellation of its certificate of
authority to do business as provided in the Act.
ARTICLE X
Miscellaneous
-------------
Section 10.01. Definition of the "Act".
-----------------------
All references contained herein to the "Act" or to sections of the
"Act" shall be deemed to be in reference to the Florida Business Corporation
Act.
Section 10.02. Application of Florida Law.
--------------------------
Whenever any provision of these bylaws is inconsistent with any
provision of the Florida Business Corporation Act, Statutes 607, as they may be
amended from time to time, then in such instance Florida law shall prevail.
Section 10.03. Fiscal Year.
-----------
The fiscal year of the corporation shall be determined by resolution of
the board of directors.
Section 10.04. Conflicts with Articles of Incorporation.
----------------------------------------
In the event that any provision contained in these bylaws conflicts
with any provision of the corporation's articles of incorporation, as amended
from time to time, the provisions of the articles of incorporation shall prevail
and be given full force and effect, to the full extent permissible under the
Act.
36
AMENDED EMPLOYMENT AGREEMENT
----------------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 10th day of November, 1998 (the "Effective Date"), between Jupiter
Marine International, Inc. whose address is 3391 S.E. 14th Ave, Fort Lauderdale,
Florida (the "Company"), and Carl M. Herndon (the "Executive").
WHEREAS, the Company is in the business of designing, manufacturing and
selling boats (the "Business"); and
WHEREAS, the Company intends to established a valuable reputation and
goodwill in its business, with expertise in all aspects of the Business; and
WHEREAS, the Executive has considerable experience in the marine
industry and particularly designing, manufacturing and selling boats; and
WHEREAS, the Executive is desirous of being employed by the Company,
and the Company has agreed to hire the Executive upon certain terms and
conditions, one of which is the execution of this Agreement by Executive; and
WHEREAS, the Executive, by virtue of the Executive's employment by the
Company shall become familiar with the manner, methods, trade secrets and other
confidential information pertaining to the Company's Business, including the
Company's customer base;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Executive do hereby agree as follows:
1. Engagement. The Company hereby employs the Executive as President
and Chief Executive Officer of the Company, and the Executive hereby accepts
such employment, upon the terms and conditions hereinafter set forth.
2. Authority and Power During Employment Period. The Executive shall
have full discretion authority to conduct the Business subject only to the
direction of the Board of Directors of the Company with regard to material
expenditures or those in excess of $30,000. The Executive shall devote full
attention and render exclusive, full time services to the Company, and shall be
employed solely by the Company according to the terms of this Agreement.
3. Term. Except as otherwise provided herein and unless terminated
sooner pursuant to Section 15 of this Agreement, the Term of employment will
commence on the Effective Date and continue for a period of five (5) years
thereafter (the "Term"). This Agreement may be automatically renewed for up to
two (2) successive one (1) year periods upon mutual agreement between the
parties (the "Renewal Term"), unless terminated pursuant to Section 15 of this
Agreement.
1
<PAGE>
4. Compensation and Benefits.
-------------------------
a. Salary. The Executive shall be paid a base salary as set
forth in section 4(a) of Schedule A attached hereto.
b. Executive Benefits. The Executive shall be entitled to the
benefits set forth in section 4(b) of Schedule A attached hereto.
c. Business Expense Reimbursement. During the Term or any
Renewal Term of employment, the Executive shall be entitled to receive proper
reimbursement for all reasonable, out-of-pocket expenses incurred by the
Executive (in accordance with the policies and procedures established by the
Company for its executive officers) in performing services hereunder, provided
the Executive properly accounts therefor by providing written receipts to the
Company and provided further that any expense in excess of $1,500 or in the
aggregate of $5,000 must be approved by the Board of Directors.
d. Options. Executive will receive options to purchase an
aggregate of 600,000 shares of Common Stock of the Company (the "Options") as
follows: (i) options to purchase 150,000 shares of Common Stock at $.50 per
share; (ii) options to purchase 150,000 shares of Common Stock at $.625 per
share; (iii) options to purchase 150,000 shares of Common Stock at $.75 per
share; and (iv) options to purchase 150,000 shares of Common Stock at $1.00 per
share. The Options will vest equally over a period of five years. The Options
will be exercisable for a period of five years. The Options may vest at an
accelerated rate as provided on Schedule B hereto.
5. Covenant Not to Compete. Executive acknowledges and recognizes the
highly competitive nature of Company's Business and that the goodwill, continued
patronage, and specifically the names and addresses of the Company's customers
which includes any persons, partnerships, corporations, professional
associations or other organizations for whom the Company has performed Business
Activities (the "Company Customers") constitute a substantial asset of the
Company having been acquired through considerable time, money and effort.
Executive further acknowledges and recognizes that during the course of the
Executive's employment, Executive will receive specific knowledge of Company's
Business, access to trade secrets and Confidential Information, as defined in
Section 8, participate in business and hiring decisions, and that it would be
impossible for Executive to work for a competitor without using and divulging
this valuable confidential information. That Executive acknowledges that Company
is without an adequate remedy at law in the event this covenant is violated.
Executive further acknowledges that this covenant not to compete is an
independent covenant within this Agreement. This covenant shall survive this
Agreement and shall be treated as an independent covenant for the purposes of
enforcement. The Executive recognizes that the terms of this covenant are
reasonable and necessary for the protection of the Company's business because
the value of Executive's services will be enhanced by his association with
Company. Accordingly, Executive agrees to the following:
2
<PAGE>
a. That during the Restricted Period (as defined herein) and
within the Restricted Area (as defined herein), the Executive will not,
individually or in conjunction with others, directly or indirectly, engage in
any Business Activities (as hereinafter defined) other than on behalf of the
Company, whether as an officer, director, proprietor, employer, partner,
independent contractor, investor, stockholder (other than as a holder of less
than 1% of the outstanding capital stock of a publicly traded corporation),
consultant, advisor, agent or otherwise. Except that during the term of
Executive's employment with the Company, the foregoing limitations as to
Restricted Area shall not be applicable.
b. That during the Restricted Period and within the Restricted
Area (as defined herein), the Executive will not, indirectly or directly,
compete with the Company by soliciting, inducing or influencing any of the
Company's Clients which have a business relationship with the Company at any
time during the Restricted Period to discontinue or reduce the extent of such
relationship with the Company. Except that during the term of Executive's
employment with the Company, the foregoing limitations as to Restricted Area
shall not be applicable.
c. During the term of the Executive's employment with the
Company and for any time thereafter, the Executive will not (a) directly or
indirectly recruit, solicit or otherwise influence any employee or agent of the
Company to discontinue such employment or agency relationship with the Company,
or (b) employ or seek to employ, or cause or permit any business which competes
directly or indirectly with the Business Activities of Company (the "Competitive
Business") to employ or seek to employ for any Competitive Business any person
who is then (or was at any time within six (6) months prior to the date
Executive or the Competitive Business employs or seeks to employ such person)
employed by the Company.
d. During the term of the Executive's employment with the
Company and for any time thereafter, the Executive will not interfere with,
disrupt or attempt to disrupt any past, present or prospective relationship,
contractual or otherwise, between the Company and any Company's client,
employee, agent, vendor, supplier or customer.
6. Non-Disclosure of Confidential Information.
------------------------------------------
a. The Executive acknowledges that the Company's trade
secrets, private or secret processes, methods and ideas, as they exist from time
to time, customer lists and information concerning the Company's products,
services, business records and plans, inventions, product design information,
price structure, discounts, costs, computer programs and listings, source code
and/or subject code, copyright, trademark, proprietary information, formulae,
protocols, forms, procedures, training methods, development, technical
information, marketing activities and procedures, method for operating of the
Company's Business, credit and financial data concerning the Company and the
Company's Clients and Client Lists, which Client Lists shall not only mean one
or more of the names and addresses of the Clients of the Company but it shall
also encompass any and all information whatsoever regarding them, including
their needs, and marketing and
3
<PAGE>
advertising practices and plans and information which is embodied in written or
otherwise recorded form, but it shall also include information which is mental,
not physical (collectively, the "Confidential Information") as valuable, special
and unique assets of the Company, access to and knowledge of which are essential
to the performance of the Executive hereunder. In light of the highly
competitive nature of the industry in which the Company's business is conducted,
the Executive agrees that all Confidential Information, heretofore or in the
future obtained by the Executive as a result of the Executive's association with
the Company, shall be considered confidential.
b. Excluded from the Confidential Information, and therefore
not subject to the provisions of this Agreement, shall be any information which:
(1) At the time of disclosure, is in the public
domain as evidenced by printed publications;
(2) After the disclosure, enters the public domain by
way of printed publication through no fault of the Executive or those
in privity with it;
(3) Executive can show by written documentation was
in its possession at the time of disclosure and which was not acquired
directly or indirectly from the Company; or
(4) Executive can show by written documentation was
acquired, after disclosure, from a third party who did not receive it
from the Company, and who had the right to disclose the information
without any obligation to hold such information confidential.
c. The Executive acknowledges that, as between the Company and
the Executive, the Confidential Information and any and all rights and
privileges provided under the trademark, copyright, trade secret and other laws
of the United States, the individual states thereof, and jurisdictions foreign
thereto, and the goodwill associated therewith, are and at all times will be the
property of the Company.
4
<PAGE>
d. Executive agrees that he shall:
(1) Hold in confidence and not disclose or make
available to any third party any such Confidential Information unless
so authorized in writing by the Board of Directors of the Company;
(2) Exercise all reasonable efforts to prevent third
parties from gaining access to the Confidential Information;
(3) Not use, directly or indirectly, the Confidential
Information in any respect of its business, except as necessary to
evaluate the information;
(4) Restrict the disclosure or availability of the
Confidential Information to those of Executive's employees who have
read and understand this Agreement and who have a need to know the
information in order to achieve the purposes of this Agreement;
(5) Not copy or modify any Confidential Information
without prior written consent of the Board of Directors of the Company.
(6) Take such other protective measures as may be
reasonably necessary to preserve the confidentiality of the
Confidential Information; and
(7) Relinquish all of his rights in any matter, such
as drawings, documents, models, samples, photographs, patterns,
templates, molds, tools or prototypes, which may contain, embody or
make use of the Confidential Information; promptly deliver to the
Company any such matter as the Company may direct at any time; and not
retain any copies or other reproductions thereof.
e. Executive further agrees:
(1) That it shall promptly disclose in writing to the
Company all ideas, inventions, improvements and discoveries which may
be conceived, made or acquired by Executive or its employees as the
direct or indirect result of the disclosure by the Company of the
Confidential Information to Executive;
(2) That all such ideas, inventions, improvements and
discoveries conceived, made or acquired by Executive, alone or with the
assistance of others, relating to the Confidential Information, shall
be the property of the Company and shall be treated as Confidential
Information in accordance with the provisions hereof and that Executive
shall not acquire any intellectual property rights under this Agreement
except the limited right to use set forth in this Agreement.
(3) That Executive and its employees shall assist in
the preparation and execution of all applications, assignments and
other documents which the
5
<PAGE>
Company may deem necessary to obtain patents, copyrights and the like
in the United States and in jurisdictions foreign thereto, and to
otherwise protect the Company.
f. Upon written request of the Company, Executive shall return
to the Company all written materials containing the Confidential Information.
Executive shall also deliver to the Company written statements signed by the
Executive certifying all materials have been returned within five (5) days of
receipt of the request.
7. Company's Customers. The "Company's Customers" shall be deemed to be
any persons, partnerships, corporations, professional associations or other
organizations within the POP as defined in Section 9 for whom the Company has
performed or solicited Business Activities.
8. Restrictive Period. The "Restrictive Period" shall be deemed to be
the period of time beginning on the date hereof and continuing through the Term,
or any Renewal Term, and for a period of one (1) year thereafter if this
Agreement is terminated either (i) for Cause or (ii) without cause by the
Executive.
9. Restricted Area. The Restricted Area shall be deemed to mean
anywhere within 200 miles of any Point of Presence ("POP") of the Company (the
"Restricted Area").
10. Business Activities. "Business Activities" shall be deemed to
include any activities related to the Business now or during the effective
period of this Agreement.
11. Covenants as Essential Elements of this Agreement; Survival of
--------------------------------------------------------------
Covenants.
- ---------
a. It is understood by and between the parties hereto that the
foregoing covenants by Executive contained in Sections 5 through 10 of this
Agreement shall be construed to be agreements independent of any other element
of the Executive's employment with the Company. The existence of any other claim
or cause of action, whether predicated on any other provision in this Agreement,
or otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of the covenants in this Agreement
against the Executive.
b. The covenants by Executive contained in Sections 5 through
10 shall survive the expiration of this Agreement if the Executive continues to
work for the Company, in any manner, without renewing this Agreement. The
Executive further agrees that the covenants set forth in Sections 5 through 10
of this Agreement shall continue to be in effect following the expiration or
termination of the Executive's employment with the Company, or the expiration or
termination of any other provision in this Agreement.
12. Remedies.
--------
a. The Executive acknowledges and agrees that the Company's
remedy at law for a breach or threatened breach of any of the provisions of
Sections 5 through 10
6
<PAGE>
herein would be inadequate and the breach shall be per se deemed as causing
irreparable harm to the Company. In recognition of this fact, in the event of a
breach by the Executive of any of the provisions of Sections 5 through 10, the
Executive agrees that, in addition to any remedy at law available to the Company
including, but not limited to, monetary damages, the Company, without posting
any bond, shall be entitled to obtain, and the Executive agrees not to oppose
the Company's request for equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available to the Company.
b. The Executive acknowledges that the granting of a temporary
injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Confidential Information would not be an adequate remedy
upon breach or threatened breach of Sections 5 through 10 and consequently
agrees, upon proof of any such breach, to the granting of injunctive relief
prohibiting any form of competition with the Company. Nothing herein contained
shall be construed as prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach.
c. In the event that the Executive shall be in violation of
the aforementioned restrictive covenants as set forth in Sections 5 through 10,
then the time limitation during which breach or breaches should occur, and in
the event the Company should be required to seek relief from such breach in any
court or other tribunal, then the covenant shall be extended for a period of
time equal to the pendency of such proceedings, including appeal.
13. Attorneys' Fees. The Parties agree that in the event that the
either party is required to engage an attorney to enforce the terms of the
covenants in Sections 5 through 10 of this Agreement, the prevailing party in
any law suit, including appeals of such law suit shall pay all costs and
expenses of that attorney or firm.
14. Effect on Prior Agreements. This Agreement supersedes any and all
prior or written agreement in their entirety between the Company and the
Executive, which shall be void and of no further force and effect after the date
of this Agreement.
15. Termination.
-----------
a. Mutual Agreement. The Company and the Executive may
terminate this Agreement by mutual agreement of the parties hereto at any time.
b. Immediate Termination. This Agreement may be terminated
immediately by the Company upon the occurrence of any of the following events:
(1) The death of the Executive;
(2) The Executive has a guardian of the person or
estate appointed by a court of competent jurisdiction;
7
<PAGE>
(3) The Executive is disabled so as to be unable to
perform duties required under this Agreement for a period of ninety
(90) consecutive days or ninety (90) days in any one-hundred eighty
(180) day period; or
(4) [intentionally omitted]; or
(5) For "Cause," as defined below.
c. "Cause" means (i) committing or participating in an
injurious act of fraud, gross neglect, misrepresentation, embezzlement or
dishonesty against the Company; (ii) engaging in a criminal enterprise involving
moral turpitude; (iii) conviction of a felony under the laws of the United
States or any state thereof; (iv) if applicable, loss of any state or federal
license required for the Executive to perform the Executive's material duties or
responsibilities for the Company; or (v) any assignment of this Agreement in
violation of Section 20 of this Agreement.
Notwithstanding anything else contained in this
Agreement, this Agreement will not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a notice of
termination stating that the Executive committed one of the types of conduct set
forth in the definition of Cause contained in this Agreement and specifying the
particulars thereof.
16. Notices. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent postage
prepaid by registered or certified mail, return receipt requested; by overnight
delivery; by courier; or by confirmed telecopy, in the case of the Executive to
the Executive's last place of business or residence as shown on the records of
the Company, or in the case of the Company to its principal office as set forth
in the introductory paragraph, or such other place as it may designate.
17. Waiver. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
18. Complete Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the contents hereof and supersedes
all prior agreements and understandings between the parties with respect to such
matters, whether written or oral. Neither this Agreement nor any term or
provision hereof may be changed, waived, discharged or amended in any manner
other than by an instrument in writing, signed by the party against which the
enforcement of the change, waiver, discharge or amendment is sought.
8
<PAGE>
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one agreement.
20. Binding Effect/Assignment. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and assigns. This
Agreement shall not be assignable by the Executive but shall be assignable by
the Company in connection with the sale, transfer or other disposition of its
business or to any of the Company's affiliates controlled by or under common
control with the Company.
21. Governing Law. This Agreement shall become valid when executed and
accepted by Company. The parties agree that it shall be deemed made and entered
into in the State of Florida and shall be governed and construed under and in
accordance with the laws of the State of Florida. Anything in this Agreement to
the contrary notwithstanding, the Executive shall conduct the Executive's
business in a lawful manner and faithfully comply with applicable laws or
regulations of the state, city or other political subdivision in which the
Executive is located.
22. Headings. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
23. Survival. Any termination of this Agreement shall not, however,
affect the ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
24. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. If any court
determines that any provision of Section 5 or 6 hereof is unenforceable because
of the duration or scope of such provision, such court shall have the power to
reduce the scope or duration of such provision, as the case may be, and, in its
reduced form, such provision shall then be enforceable.
25. Enforcement. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
26. Venue. Company and Executive acknowledge and agree that the U.S.
District for the Southern District of Florida, or if such court lacks
jurisdiction, the 15th Judicial Circuit (or its successor) in and for Palm Beach
County, Florida, shall be the venue
9
<PAGE>
and exclusive proper forum in which to adjudicate any case or controversy
arising either, directly or indirectly, under or in connection with this
Agreement and the parties further agree that, in the event of litigation arising
out of or in connection with this Agreement in these courts, they will not
contest or challenge the jurisdiction or venue of these courts.
27. Construction. This Agreement shall be construed within the fair
meaning of each of its terms and not against the party drafting the document.
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, UNDERSTAND ITS TERMS AND
CONDITIONS, HAVE HAD THE OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF
THEIR OWN CHOICE AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS.
10
<PAGE>
IN WITNESS WHEREOF, the Effective Date shall be the date the Agreement has been
accepted by the Company at its principal offices in __________County, Florida.
THE COMPANY
------------------------------------
By:
---------------------------------
, President
-------------
THE EXECUTIVE
------------------------------------
11
<PAGE>
SCHEDULE A
12
<PAGE>
SCHEDULE B
13
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 28th day of May, 1999 (the "Effective Date"), between Jupiter Marine
International, Inc. whose address is 3391 S.E. 14th Ave, Fort Lauderdale,
Florida (the "Company"), and Carl M. Herndon, Jr. (the "Executive").
WHEREAS, the Company is in the business of designing, manufacturing and
selling boats (the "Business"); and
WHEREAS, the Company intends to established a valuable reputation and
goodwill in its business, with expertise in all aspects of the Business; and
WHEREAS, the Executive has considerable experience in the marine
industry and particularly designing, manufacturing and selling boats; and
WHEREAS, the Executive is desirous of being employed by the Company,
and the Company has agreed to hire the Executive upon certain terms and
conditions, one of which is the execution of this Agreement by Executive; and
WHEREAS, the Executive, by virtue of the Executive's employment by the
Company shall become familiar with the manner, methods, trade secrets and other
confidential information pertaining to the Company's Business, including the
Company's customer base;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Executive do hereby agree as follows:
1. Engagement. The Company hereby employs the Executive as Vice
President and Sales Manager of the Company, and the Executive hereby accepts
such employment, upon the terms and conditions hereinafter set forth.
2. Authority and Power During Employment Period. The Executive shall
serve at the discretion of the Board of Directors of the Company and the
President of the Company. The Executive shall devote full attention and render
exclusive, full time services to the Company, and shall be employed solely by
the Company according to the terms of this Agreement.
3. Term. Except as otherwise provided herein and unless terminated
sooner pursuant to Section 15 of this Agreement, the Term of employment will
commence on the Effective Date and continue for a period of five (5) years
thereafter (the "Term"). This Agreement may be automatically renewed for up to
two (2) successive one (1) year periods upon mutual agreement between the
parties (the "Renewal Term"), unless terminated pursuant to Section 15 of this
Agreement.
1
<PAGE>
4. Compensation and Benefits.
-------------------------
a. Salary. The Executive shall be paid a base salary (i) of
$70,000 for the first year of the Term; (ii) of $85,000 for the second year of
the Term; (iii) of $100,000 for the third year of the Term; and (iv) to be
determined by the Board of Directors of the Company for years four, five and any
Renewal Term periods. All amounts due Executive as base salary shall be paid on
a weekly basis.
b. Executive Benefits. The Executive shall be entitled to
participate in all benefit programs of the Company currently existing or
hereafter made available to other salaried officers of the Company including,
but not limited to, pension, profit sharing and any other retirement plans,
group life insurance, hospitalization, surgical, dental and major medical
coverage, sick leave, salary continuation, vacation and holidays, long-term
disability, and other fringe benefits. In addition thereto, Executive shall be
entitled to use an automobile owned or leased by the Company in the discretion
of the Board of Directors of the Company.
5. Covenant Not to Compete. Executive acknowledges and recognizes the
highly competitive nature of Company's Business and that the goodwill, continued
patronage, and specifically the names and addresses of the Company's customers
which includes any persons, partnerships, corporations, professional
associations or other organizations for whom the Company has performed Business
Activities (the "Company Customers") constitute a substantial asset of the
Company having been acquired through considerable time, money and effort.
Executive further acknowledges and recognizes that during the course of the
Executive's employment, Executive will receive specific knowledge of Company's
Business, access to trade secrets and Confidential Information, as defined in
Section 8, participate in business and hiring decisions, and that it would be
impossible for Executive to work for a competitor without using and divulging
this valuable confidential information. That Executive acknowledges that Company
is without an adequate remedy at law in the event this covenant is violated.
Executive further acknowledges that this covenant not to compete is an
independent covenant within this Agreement. This covenant shall survive this
Agreement and shall be treated as an independent covenant for the purposes of
enforcement. The Executive recognizes that the terms of this covenant are
reasonable and necessary for the protection of the Company's business because
the value of Executive's services will be enhanced by his association with
Company. Accordingly, Executive agrees to the following:
a. That during the Restricted Period (as defined herein) and
within the Restricted Area (as defined herein), the Executive will not,
individually or in conjunction with others, directly or indirectly, engage in
any Business Activities (as hereinafter defined) other than on behalf of the
Company, whether as an officer, director, proprietor, employer, partner,
independent contractor, investor, stockholder (other than as a holder of less
than 1% of the outstanding capital stock of a publicly traded corporation),
consultant, advisor,
2
<PAGE>
agent or otherwise. Except that during the term of Executive's employment with
the Company, the foregoing limitations as to Restricted Area shall not be
applicable.
b. That during the Restricted Period and within the Restricted
Area (as defined herein), the Executive will not, indirectly or directly,
compete with the Company by soliciting, inducing or influencing any of the
Company's Clients which have a business relationship with the Company at any
time during the Restricted Period to discontinue or reduce the extent of such
relationship with the Company. Except that during the term of Executive's
employment with the Company, the foregoing limitations as to Restricted Area
shall not be applicable.
c. During the term of the Executive's employment with the
Company and for any time thereafter, the Executive will not (a) directly or
indirectly recruit, solicit or otherwise influence any employee or agent of the
Company to discontinue such employment or agency relationship with the Company,
or (b) employ or seek to employ, or cause or permit any business which competes
directly or indirectly with the Business Activities of Company (the "Competitive
Business") to employ or seek to employ for any Competitive Business any person
who is then (or was at any time within six (6) months prior to the date
Executive or the Competitive Business employs or seeks to employ such person)
employed by the Company.
d. During the term of the Executive's employment with the
Company and for any time thereafter, the Executive will not interfere with,
disrupt or attempt to disrupt any past, present or prospective relationship,
contractual or otherwise, between the Company and any Company's client,
employee, agent, vendor, supplier or customer.
6. Non-Disclosure of Confidential Information.
------------------------------------------
a. The Executive acknowledges that the Company's trade
secrets, private or secret processes, methods and ideas, as they exist from time
to time, customer lists and information concerning the Company's products,
services, business records and plans, inventions, product design information,
price structure, discounts, costs, computer programs and listings, source code
and/or subject code, copyright, trademark, proprietary information, formulae,
protocols, forms, procedures, training methods, development, technical
information, marketing activities and procedures, method for operating of the
Company's Business, credit and financial data concerning the Company and the
Company's Clients and Client Lists, which Client Lists shall not only mean one
or more of the names and addresses of the Clients of the Company but it shall
also encompass any and all information whatsoever regarding them, including
their needs, and marketing and advertising practices and plans and information
which is embodied in written or otherwise recorded form, but it shall also
include information which is mental, not physical (collectively, the
"Confidential Information") as valuable, special and unique assets of the
Company, access to and knowledge of which are essential to the performance of
the Executive hereunder. In light of the highly competitive nature of the
industry in which the Company's business is conducted, the Executive agrees that
all Confidential Information,
3
<PAGE>
heretofore or in the future obtained by the Executive as a result of the
Executive's association with the Company, shall be considered confidential.
b. Excluded from the Confidential Information, and therefore
not subject to the provisions of this Agreement, shall be any information which:
(1) At the time of disclosure, is in the public
domain as evidenced by printed publications;
(2) After the disclosure, enters the public domain by
way of printed publication through no fault of the Executive or those
in privity with it;
(3) Executive can show by written documentation was
in its possession at the time of disclosure and which was not acquired
directly or indirectly from the Company; or
(4) Executive can show by written documentation was
acquired, after disclosure, from a third party who did not receive it
from the Company, and who had the right to disclose the information
without any obligation to hold such information confidential.
c. The Executive acknowledges that, as between the Company and
the Executive, the Confidential Information and any and all rights and
privileges provided under the trademark, copyright, trade secret and other laws
of the United States, the individual states thereof, and jurisdictions foreign
thereto, and the goodwill associated therewith, are and at all times will be the
property of the Company.
d. Executive agrees that he shall:
(1) Hold in confidence and not disclose or make
available to any third party any such Confidential Information unless
so authorized in writing by the Board of Directors of the Company;
(2) Exercise all reasonable efforts to prevent third
parties from gaining access to the Confidential Information;
(3) Not use, directly or indirectly, the Confidential
Information in any respect of its business, except as necessary to
evaluate the information;
(4) Restrict the disclosure or availability of the
Confidential Information to those of Executive's employees who have
read and understand this Agreement and who have a need to know the
information in order to achieve the purposes of this Agreement;
4
<PAGE>
(5) Not copy or modify any Confidential Information
without prior written consent of the Board of Directors of the Company.
(6) Take such other protective measures as may be
reasonably necessary to preserve the confidentiality of the
Confidential Information; and
(7) Relinquish all of his rights in any matter, such
as drawings, documents, models, samples, photographs, patterns,
templates, molds, tools or prototypes, which may contain, embody or
make use of the Confidential Information; promptly deliver to the
Company any such matter as the Company may direct at any time; and not
retain any copies or other reproductions thereof.
e. Executive further agrees:
(1) That it shall promptly disclose in writing to the
Company all ideas, inventions, improvements and discoveries which may
be conceived, made or acquired by Executive or its employees as the
direct or indirect result of the disclosure by the Company of the
Confidential Information to Executive;
(2) That all such ideas, inventions, improvements and
discoveries conceived, made or acquired by Executive, alone or with the
assistance of others, relating to the Confidential Information, shall
be the property of the Company and shall be treated as Confidential
Information in accordance with the provisions hereof and that Executive
shall not acquire any intellectual property rights under this Agreement
except the limited right to use set forth in this Agreement.
(3) That Executive and its employees shall assist in
the preparation and execution of all applications, assignments and
other documents which the Company may deem necessary to obtain patents,
copyrights and the like in the United States and in jurisdictions
foreign thereto, and to otherwise protect the Company.
f. Upon written request of the Company, Executive shall return
to the Company all written materials containing the Confidential Information.
Executive shall also deliver to the Company written statements signed by the
Executive certifying all materials have been returned within five (5) days of
receipt of the request.
7. Company's Customers. The "Company's Customers" shall be deemed to be
any persons, partnerships, corporations, professional associations or other
organizations within the POP as defined in Section 9 for whom the Company has
performed or solicited Business Activities.
8. Restrictive Period. The "Restrictive Period" shall be deemed to be
the period of time beginning on the date hereof and continuing through the Term,
or any Renewal
5
<PAGE>
Term, and for a period of one (1) year thereafter if this Agreement is
terminated either (i) for Cause or (ii) without cause by the Executive.
9. Restricted Area. The Restricted Area shall be deemed to mean
anywhere within 200 miles of any Point of Presence ("POP") of the Company (the
"Restricted Area").
10. Business Activities. "Business Activities" shall be deemed to
include any activities related to the Business now or during the effective
period of this Agreement.
11. Covenants as Essential Elements of this Agreement; Survival of
--------------------------------------------------------------
Covenants.
- ---------
a. It is understood by and between the parties hereto that the
foregoing covenants by Executive contained in Sections 5 through 10 of this
Agreement shall be construed to be agreements independent of any other element
of the Executive's employment with the Company. The existence of any other claim
or cause of action, whether predicated on any other provision in this Agreement,
or otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of the covenants in this Agreement
against the Executive.
b. The covenants by Executive contained in Sections 5 through
10 shall survive the expiration of this Agreement if the Executive continues to
work for the Company, in any manner, without renewing this Agreement. The
Executive further agrees that the covenants set forth in Sections 5 through 10
of this Agreement shall continue to be in effect following the expiration or
termination of the Executive's employment with the Company, or the expiration or
termination of any other provision in this Agreement.
12. Remedies.
--------
a. The Executive acknowledges and agrees that the Company's
remedy at law for a breach or threatened breach of any of the provisions of
Sections 5 through 10 herein would be inadequate and the breach shall be per se
deemed as causing irreparable harm to the Company. In recognition of this fact,
in the event of a breach by the Executive of any of the provisions of Sections 5
through 10, the Executive agrees that, in addition to any remedy at law
available to the Company including, but not limited to, monetary damages, the
Company, without posting any bond, shall be entitled to obtain, and the
Executive agrees not to oppose the Company's request for equitable relief in the
form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available
to the Company.
b. The Executive acknowledges that the granting of a temporary
injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Confidential Information would not be an adequate remedy
upon breach or threatened breach of Sections 5 through 10 and consequently
agrees, upon proof of any such breach, to the granting of injunctive relief
prohibiting any form of competition with the Company.
6
<PAGE>
Nothing herein contained shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or threatened
breach.
c. In the event that the Executive shall be in violation of
the aforementioned restrictive covenants as set forth in Sections 5 through 10,
then the time limitation during which breach or breaches should occur, and in
the event the Company should be required to seek relief from such breach in any
court or other tribunal, then the covenant shall be extended for a period of
time equal to the pendency of such proceedings, including appeal.
13. Attorneys' Fees. The Parties agree that in the event that the
either party is required to engage an attorney to enforce the terms of the
covenants in Sections 5 through 10 of this Agreement, the prevailing party in
any law suit, including appeals of such law suit shall pay all costs and
expenses of that attorney or firm.
14. Effect on Prior Agreements. This Agreement supersedes any and all
prior or written agreement in their entirety between the Company and the
Executive, which shall be void and of no further force and effect after the date
of this Agreement.
15. Termination.
a. Mutual Agreement. The Company and the Executive
may terminate this Agreement by mutual agreement of the parties hereto at any
time.
b. Immediate Termination. This Agreement may be terminated
immediately by the Company upon the occurrence of any of the following events:
(1) The death of the Executive;
(2) The Executive has a guardian of the person or
estate appointed by a court of competent jurisdiction;
(3) The Executive is disabled so as to be unable to
perform duties required under this Agreement for a period of ninety
(90) consecutive days or ninety (90) days in any one-hundred eighty
(180) day period; or
(4) [intentionally omitted]; or
(5) For "Cause," as defined below.
c. "Cause" means (i) committing or participating in an
injurious act of fraud, gross neglect, misrepresentation, embezzlement or
dishonesty against the Company; (ii) engaging in a criminal enterprise involving
moral turpitude; (iii) conviction of a felony under the laws of the United
States or any state thereof; (iv) if applicable, loss of any state or federal
license required for the Executive to perform the Executive's material
7
<PAGE>
duties or responsibilities for the Company; or (v) any assignment of this
Agreement in violation of Section 20 of this Agreement.
Notwithstanding anything else contained in this
Agreement, this Agreement will not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a notice of
termination stating that the Executive committed one of the types of conduct set
forth in the definition of Cause contained in this Agreement and specifying the
particulars thereof.
16. Notices. Any notice required or permitted to be given under the
terms of this Agreement shall be sufficient if in writing and if sent postage
prepaid by registered or certified mail, return receipt requested; by overnight
delivery; by courier; or by confirmed telecopy, in the case of the Executive to
the Executive's last place of business or residence as shown on the records of
the Company, or in the case of the Company to its principal office as set forth
in the introductory paragraph, or such other place as it may designate.
17. Waiver. Unless agreed in writing, the failure of either party, at
any time, to require performance by the other of any provisions hereunder shall
not affect its right thereafter to enforce the same, nor shall a waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other preceding or succeeding breach of any term or provision of
this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
18. Complete Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the contents hereof and supersedes
all prior agreements and understandings between the parties with respect to such
matters, whether written or oral. Neither this Agreement nor any term or
provision hereof may be changed, waived, discharged or amended in any manner
other than by an instrument in writing, signed by the party against which the
enforcement of the change, waiver, discharge or amendment is sought.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one agreement.
20. Binding Effect/Assignment. This Agreement shall be binding upon the
parties hereto, their heirs, legal representatives, successors and assigns. This
Agreement shall not be assignable by the Executive but shall be assignable by
the Company in connection with the sale, transfer or other disposition of its
business or to any of the Company's affiliates controlled by or under common
control with the Company.
21. Governing Law. This Agreement shall become valid when executed and
accepted by Company. The parties agree that it shall be deemed made and entered
into in the State of Florida and shall be governed and construed under and in
accordance with
8
<PAGE>
the laws of the State of Florida. Anything in this Agreement to the contrary
notwithstanding, the Executive shall conduct the Executive's business in a
lawful manner and faithfully comply with applicable laws or regulations of the
state, city or other political subdivision in which the Executive is located.
22. Headings. The headings of the sections are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
23. Survival. Any termination of this Agreement shall not, however,
affect the ongoing provisions of this Agreement which shall survive such
termination in accordance with their terms.
24. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. If any court
determines that any provision of Section 5 or 6 hereof is unenforceable because
of the duration or scope of such provision, such court shall have the power to
reduce the scope or duration of such provision, as the case may be, and, in its
reduced form, such provision shall then be enforceable.
25. Enforcement. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
26. Venue. Company and Executive acknowledge and agree that the U.S.
District for the Southern District of Florida, or if such court lacks
jurisdiction, the 15th Judicial Circuit (or its successor) in and for Palm Beach
County, Florida, shall be the venue and exclusive proper forum in which to
adjudicate any case or controversy arising either, directly or indirectly, under
or in connection with this Agreement and the parties further agree that, in the
event of litigation arising out of or in connection with this Agreement in these
courts, they will not contest or challenge the jurisdiction or venue of these
courts.
27. Construction. This Agreement shall be construed within the fair
meaning of each of its terms and not against the party drafting the document.
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, UNDERSTAND ITS TERMS AND
CONDITIONS, HAVE HAD THE OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF
THEIR OWN CHOICE AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS.
9
<PAGE>
IN WITNESS WHEREOF, the Effective Date shall be the date the Agreement has been
accepted by the Company at its principal offices in County, Florida.
Jupiter Marine International Holdings, Inc.
By:
------------------------------------
Carl M. Herndon, Sr., President
THE EXECUTIVE
---------------------------------------
Carl M. Herndon, Jr.
10
MANAGEMENT AGREEMENT
AGREEMENT made this ___ day of January, 1999, by and between Jupiter Marine
International Holdings, Inc., a Florida corporation with an address at 3391
Southeast 14th Street, Port Everglades, Florida 33317 (the "Company") and Triton
Holdings International Corp., a Delaware corporation with an address at 1081
Fairview Lane, Singer Island, Florida 33404 (the "Consultant").
W I T N E S S E T H
WHEREAS, the Company is engaged in the business of manufacturing, marketing and
distributing custom yachts;
WHEREAS, the Consultant is a company which possesses general financial and
business expertise;
WHEREAS, the Company desires to retain the Consultant to provide financial and
management consulting services to the Company pursuant to the terms and
conditions of this agreement (the "Agreement");
WHEREAS, the Consultant has offered to provide to the Company, and the Company
has agreed to accept the Consultant's expertise and services to consult and
advise the Company with respect to various financial and management aspects of
the Company's business.
NOW, THEREFORE, in consideration of the mutual covenants of the parties which
are hereinafter set forth and for other good and valuable consideration, receipt
of which is hereby acknowledged,
IT IS AGREED:
1. Recitals.
The parties hereby adopt as part of this Agreement each of the recitals which
are contained above in the WHEREAS clauses, and agree that such recitals shall
be binding upon the parties hereto by way of contract and not merely by way of
recital or inducement; and such clauses are hereby confirmed and ratified as
being accurate by each party as to itself.
2. Retention as Consultant
The Company hereby retains the Consultant to be an adviser and consultant to the
Company and its officers and directors upon the terms and conditions hereinafter
set forth.
A. The Consultant shall not be required to devote any minimum number of weeks,
days, or hours to the affairs of the Company during the term of this Agreement,
and the Consultant shall only be required to devote such time, attention and
energies to the business of the Company as the Consultant, in its sole and
absolute discretion, deems necessary to fulfill its duties hereunder. The
parties acknowledge and agree that the services which are to be provided by the
Consultant pursuant to this Agreement shall not be required to be provided at
the Company's place of business.
B. The Consultant acknowledges that it does not have and, without the prior
written approval of the Company, shall not have the authority to commit or bind
the Company to any recommendation or course of action or to perform any act on
its behalf including, but not limited to, entering into any agreement or
contract on behalf of the Company.
C. The Company acknowledges that the Consultant is, and will be, engaged in
numerous other business activities and that it will continue such activities
during the term of this Agreement. The Consultant shall not be restricted from
engaging in other business activities during the Term (hereinafter defined in
Article "5" of this Agreement).
1
<PAGE>
D. During the Term and in order to facilitate the performance of the
Consultant's services hereunder, the Company shall give the Consultant
reasonable advance notice of all meetings of the Board of Directors of the
Company and a designee of the Consultant shall be authorized and permitted to
attend and participate in such meetings of the Board of Directors.
E. The Company shall, upon presentation of proper receipts or payment vouchers,
pay for or reimburse the Consultant for all reasonable and necessary travel,
entertainment and other out-of-pocket expenses which may be incurred by the
Consultant in the performance of its duties hereunder and during the Term .
3. Services.
The Company hereby engages the Consultant to perform general business consulting
services in connection with the Company's conduct of its business including, but
not limited to, development and maintenance of internal bookkeeping functions,
business planning and consulting and advice with respect to the structure and
expansion of the Company, public relations, financial, accounting and tax
reporting.
4. Term.
The term of this Agreement shall be for a period of five (5) years, commencing
on the 1st day of January, 1999 and ending on December 31, 2003 (the
"Termination Date").
5. Compensation.
In consideration for the services which are to be rendered by the Consultant
pursuant to this Agreement, the Consultant shall receive Five Thousand ($5,000)
Dollars per month payable on the first day of each month during the term of this
Agreement commencing January 1, 1999.
6. Representations and Warranties of the Company. The Company covenants,
represents and warrants to the Consultant the following:
A. The Company is a corporation duly and validly organized and existing under
the laws of the State of Florida and has the full right, power and authority to
enter into this Agreement, and to execute, deliver and receive all instruments
and documents executed and delivered or received. There are no actions, suits or
proceedings pending against the Company before or by any court, administrative
agency or other governmental agency or other governmental authority which brings
into question the validity of, or in any way, legally impairs, the execution,
delivery or performance by the Company of this Agreement.
2
<PAGE>
B. The execution and delivery of this Agreement by the Company and the
performance by the Company of its obligations hereunder, have been duly
authorized by all necessary actions of the Company and does not violate or
conflict with (i) any provision of the Articles of Incorporation, (ii) By-laws,
(iii) any law or any order, writ, injunction, decree, rule or regulation of any
court, administrative agency or any other governmental authority, or (iv) any
agreement to which the Company is a party or by which its assets is bound.
C. The Company is not subject to any restriction or agreement which, with or
without the giving of notice, the passage of time, or both, prohibits or would
be violated by, the execution, delivery and consummation of this Agreement and
the transactions which are referred to in this Agreement. All consents which are
necessary for such execution delivery or consummation by the Company have been
obtained.
7. Representations and Warranties of the Consultant. The Consultant covenants,
represents and warrants to the Company as follows:
A. The Consultant is a corporation duly and validly organized and existing under
the laws of the State of Delaware and has full right, power and authority to
enter into this Agreement, and to execute, deliver and receive all instruments
and documents executed and delivered or received, or to be executed and
delivered or received, in connection with the transactions which are
contemplated by this Agreement. There are no actions, suits or proceedings
pending against the Consultant before or by any court, administrative agency or
other governmental agency or other governmental authority which brings into
question the validity of, or in any way, legally impairs, the execution,
delivery or performance by the Consultant of this Agreement.
B. The execution and delivery of this Agreement by the Consultant and the
performance by the Consultant of its obligations hereunder, have been duly
authorized by all necessary actions of the Officers or Directors of the
Consultant and does not violate or conflict with (i) any provision of the
Consultant's Articles of Incorporation, (ii) By-laws, (iii) any law or any
order, writ, injunction, decree, rule or regulation of any court, administrative
agency or any other governmental authority, or (iv) any agreement to which the
Consultant is a party or by which the Consultant or its assets are bound.
C. The Consultant is not subject to any restriction or agreement which, with or
without the giving of notice, the passage of time, or both, prohibits or would
be violated by, the execution, delivery and consummation of this Agreement and
the transactions which are referred to in this Agreement. All consents which are
necessary for such execution, delivery or consummation by the Consultant have
been obtained.
8. Survival of Representations, Warranties and Covenants. All covenants,
agreements, representations and warranties made in or in connection with this
Agreement shall survive its termination, and shall continue in full force and
effect after its
3
<PAGE>
termination, it being understood and agreed that each of such covenants,
agreements, representations and warranties is of the essence of this Agreement
and the same shall be binding upon and shall inure to the benefit of the parties
hereto, their successors and assigns.
9. Indemnification. The Company hereby agrees to indemnify and hold harmless the
Consultant, its affiliates and all partners, directors, officers, shareholders,
employees and agents of the foregoing (each a "Consultant Indemnified Person"),
from and against any and all claims, suits, actions, judgments, damages,
liabilities, expenses and costs, including reasonable attorney fees and court
costs, that the Consultant Indemnified Person may incur as a result of or
otherwise related to the performance of services by the Consultant solely in its
capacity as a consultant; provided, however, that the Consultant agrees and
acknowledges that the indemnification provided herein shall not apply with
respect to any matter which is the result of bad faith or gross negligence or
willful misconduct of the Consultant and/or any other indemnified person or a
breach of any law or this Agreement by any such person. The Consultant hereby
agrees to indemnify and hold harmless the Company, and all their respective
affiliates, partners, directors, officers, shareholders, employees and agents of
the foregoing (each an "Indemnified Person"), from and against any and all
claims, suits, actions, judgments, damages, liabilities, expenses and costs,
including reasonable attorneys fees and court costs, that any Consultant
Indemnified Person may incur as a result of or otherwise related to any matter
which is the result of bad faith or the gross negligence or willful misconduct
of any Consultant Indemnified Person or a breach of any law or this Agreement by
such Person.
10. No Agency. The Consultant is not and shall not be deemed to be the legal
representative or agent of the Company for any purpose whatsoever. Neither party
shall have the right or authority to act or bind the other in any way or to sign
the name of the other or to represent that the other is in any way responsible
for his or its acts or omissions. The Consultant and the Company shall not be
deemed to be a partner or joint venturer of the other. The Consultant's
employees shall not be entitled to any benefits available to employees of the
Company.
11. Miscellaneous.
A. Headings. Headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
B. Enforceability. If any provision which is contained in this Agreement should,
for any reason, be held to be invalid or unenforceable in any respect under the
laws of any jurisdiction, such invalidity or unenforceability shall not affect
any other provision of this Agreement. Instead, this Agreement shall be
construed as if such invalid or unenforceable provisions had not been contained
herein.
C. Notices. Any notice or other communication required or permitted hereunder
must be in writing and sent by either (i) certified mail, return receipt
requested, postage prepaid, (ii)
4
<PAGE>
overnight delivery with confirmation of delivery, or (iii) facsimile
transmission with an original mailed by first class mail, postage prepaid,
addressed as follows:
If to Consultant: Triton Holdings International Corp.
1081 Faurview Lane
Singer Island, FL 33404
Attn.: Thomas Conlan
Facsimile No.:
(561) 881-5339
with a copy to: Mintz & Fraade, P.C.
488 Madison Avenue
New York, New York 10022
Attn.: Frederick M. Mintz, Esq.
Facsimile No.: (212) 486-0701
If to Company: Jupiter Marine International
Holdings, Inc.
3391 Southeast 14th Street
Port Everglades, Florida 33317
Attn.: Carl Herndon
Facsimile No.: (954) 941-4484
and copies to: Atlas, Pearlmen, Trop and Borkson
201 East Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Attn: Robert Burnett
Facsimile: (561) 763-7862
or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing is impossible due to an absence of
postal service, and if the other methods of sending notice set forth in this
Paragraph "C" of this Article "11" of this Agreement are not available, the
notice shall be hand delivered to the above addresses. Each notice or
communication shall be deemed to have been give as of the date so mailed or
delivered, as the case may be; provided, however, that any notice sent by
facsimile shall be deemed to have been given as of the date sent by facsimile if
a copy of such notice is also mailed by first class mail on the date sent by
facsimile; if the date of mailing differs from the date of sending by facsimile,
then the date of mailing by first class mail shall be deemed to be the date upon
which notice was given.
D. Governing Law; Disputes. This Agreement shall in all respects be construed,
governed, applied and enforced under with the internal laws of the State of
Delaware without giving effect to the principles of conflicts of laws and be
deemed to be an agreement entered into in the State of Delaware and made
pursuant to the laws of the State of Delaware. Except as otherwise provided in
Article "9" of this Agreement, the parties agree that they shall be deemed to
have agreed to binding arbitration in Boca
5
<PAGE>
Raton, Florida, with respect to the entire subject matter of any and all
disputes relating to or arising under this Agreement including, but not limited
to, the specific matters or disputes as to which arbitration has been expressly
provided for by other provisions of this Agreement. Any such arbitration shall
be by a panel of three arbitrators and pursuant to the commercial rules then
existing of the American Arbitration Association in the State of Florida, County
of Palm Beach. In all arbitrations, judgment upon the arbitration award may be
entered in any court having jurisdiction. The parties agree, further, that the
prevailing party in any such arbitration as determined by the arbitrators shall
be entitled to such costs and attorney's fees, if any, in connection with such
arbitration as may be awarded by the arbitrators. In connection with the
arbitrators' determination for the purpose of which party, if any, is the
prevailing party, they shall take into account all of the factors and
circumstances including, without limitation, the relief sought, and by whom, and
the relief, if any, awarded, and to whom. In addition, and notwithstanding the
foregoing sentence, a party shall not be deemed to be the prevailing party in a
claim seeking monetary damages, unless the amount of the arbitration award
exceeds the amount offered in a legally binding writing by the other party by
fifteen percent (15%) or more. For example, if the party initiating arbitration
("A") seeks an award of $100,000 plus costs and expenses, the other party ("B")
has offered A $50,000 in a legally binding written offer prior to the
commencement of the arbitration proceeding, and the arbitration panel awards any
amount less than $57,500 to A, the panel should determine that B has
"prevailed". The parties specifically designate the Courts in the City of Boca
Raton, State of Florida as properly having jurisdiction for any proceeding to
confirm and enter judgment upon any such arbitration award. The parties hereby
consent to and submit to personal jurisdiction over each of them by the Courts
of the State of Florida in any action or proceeding, waive personal service of
any and all process and specifically consent that in any such action or
proceeding, any service of process may be effectuated upon any of them by
certified mail, return receipt requested, in accordance with Paragraph "C" of
this Article "11" of this Agreement.
E. Entire Agreement. The parties have not made any representations, warranties,
or covenants about the subject matter hereof which is not set forth herein, and
this Agreement, together with any instruments executed simultaneously herewith,
constitutes the entire Agreement between them about the subject matter hereof.
All understandings and agreements heretofore had between the parties about the
subject matter hereof are merged in this Agreement and any such instrument which
alone fully and completely expresses their Agreement.
F. Modification. This Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing which is
signed by all of the parties to this Agreement.
G. Further Assurances. The Parties agree to execute any and all such other and
further instruments and documents, and to take
6
<PAGE>
any and all such further actions which are reasonably required to consummate,
evidence, confirm or effectuate this Agreement and the intents and purposes
hereof.
H. Binding Agreement. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators,
personal representatives, successors and assigns.
I. Waiver. Except as otherwise expressly provided herein, no waiver of any
covenant, condition, or provision of this Agreement shall be deemed to have been
made unless expressly in writing and signed by the party against whom such
waiver is charged; and (i) the failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants, or conditions of
this Agreement or to exercise any option herein contained shall not be construed
as a waiver or relinquishment for the future of any such provisions, covenants
or conditions, (ii) the acceptance of performance of anything required by this
Agreement to be performed with knowledge of the breach or failure of a covenant,
condition, or provision hereof shall not be deemed a waiver of such breach or
failure, and (iii) no waiver by any party of one breach by another party shall
be construed as a waiver of any other or subsequent breach.
J. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.
Jupiter Marine International Holdings, Inc.
- ------------------------------
By: Carl Herndon
President
Triton Holdings International Corp.
- ----------------------------
By:Thomas E. Conlan
President
7
Draft: January 13, 1999
Jupiter Marine International Holdings, Inc.
Senior Secured Note
Due __________, 20___
FOR VALUE RECEIVED, Jupiter Marine International Holdings, Inc., a corporation
duly organized and existing under the laws of the State of Florida (the
"Payor"), having its principal place of business at 3391 Southeast 14th Street,
Port Everglades, Florida 33137, hereby promises to pay to Triton Holdings
International Corp. or its assignee, (the "Payee"), on ________, 20___ (the
"Maturity Date"), unless earlier converted or redeemed in accordance with the
terms of this Senior Secured Note, the principal sum of $350,000 together with
interest as set forth in Paragraph "1" hereof, in lawful money of the United
States. This Senior Secured Note is entered into pursuant to a Loan Agreement
dated as of the 14th day of January, 1999, by and between Payor and Payee,
providing for a loan of the principal amount of $350,000 (the "Loan") and has
been designated by the Payor as its Senior Secured Note (the "Note").
1
<PAGE>
1. Interest.
Interest on the unpaid balance (including any accrued and unpaid
interest) shall be calculated from the date which is set forth on the last page
of this Note at an interest rate equal to ten (10%) percent per annum. All such
interest shall, at the option of the Payee, by providing written notice to the
Payee pursuant to Paragraph "C" of Article "12" of this Note at least ten (10)
days prior to the payment date, be either (A) paid quarterly or (B) capitalized
quarterly by the addition of such accrued interest to the principal amount
outstanding pursuant to this Note and shall be due together with the principal
sum hereof on the Maturity Date. All future references to "Principal" in this
Note shall be deemed to include any interest which is capitalized pursuant to
the foregoing sentence. Such interest payments shall be paid or capitalized on
March 31, June 30, September 30, and December 31 (the "Due Dates") during each
year of the term of this Note. If Payor does not give written notice that
interest should be capitalized, the Payee shall be required to make the interest
payments on the Due Dates.
2. Method of Payment
(A) Payment of the Principal balance of this Note, together with
accrued interest thereon, shall be due and payable in full four (4) years from
the date hereof (the "Maturity Date"), unless earlier converted or redeemed in
accordance with the terms of this Note.
(B) Repayment of this Note by the Payor shall be made by check drawn to
the Payee at the Payee's address, which is located at 6680 Serena Lane, Boca
Raton, Florida 33433, or at such other place as may be designated in writing by
the Payee to Payor.
3. Conversion.
(A) The Payee of this Note has the right, at its option, by notifying
the Payor in writing, pursuant to Paragraph "C" of Article "12" of this Note, at
any time prior to the Maturity Date, to convert the Principal amount of this
Note into shares of the Payor's Common Stock, par value $0.001 (the "Common
Shares" or "Shares"), at a conversion price based upon the conversion schedule
set forth in Paragraph "(B)" of this Article "3" of this Note or if the
conversion price has been adjusted pursuant to Paragraph "(F)" of this Article
"3" of this Note then at such adjusted conversion price, upon surrender of this
Note at the office of the Payor, accompanied by a written instrument of
conversion which shall be in the form of the instrument annexed hereto and made
a part hereof, as Exhibit "1", and which shall be duly executed by the Payee or
its assigns.
(B) Conversion Schedule: Payee has the option to convert the Principal
amount of this Note into Shares in accordance with the following schedule. Year
1 commences on the date of the execution of this Note.
2
<PAGE>
Year Conversion Price per Share
---- --------------------------
1 $.50
2 $.375
3 $.25
The Payor agrees that if this Note has not been previously converted or paid in
full on or prior to the last day of Year 3, the Payor shall issue to the Payee
such number of Common Shares as shall be determined by dividing the then
Principal amount of this Note by twenty five ($0.25) cents. Notwithstanding the
issuance of such Shares, the outstanding balance of this Note shall remain due
and payable in full upon the Maturity Date. If, for example, on the last day of
Year 3, the total Principal is $25,000, the Payor shall issue 100,000 shares of
its Common Shares to the Payee and said $25,000 shall be due and payable upon
the Maturity Date.
(C) As promptly as practicable after any conversion, as herein
provided, of this Note by the Payee, the Payor shall:
(i) Deliver or cause to be delivered to or upon the written order
of the Payee, certificates representing the number of fully paid and
nonassessable Shares into which this Note is converted in accordance with the
provisions of this Note and;
(ii) Deliver to the holder of the shares of Common Stock which were
converted, pursuant to this Article "3", the whole number of shares rounded up
or down to the nearest whole number determined by rounding to the next greater
whole number if the fractional Share is 0.5 or greater and the next lower whole
number if the fractional share is less than 0.5.
Subject to the following provisions of this Article "3" of this Note,
such conversion shall be deemed to have been made at the close of business on
the date that this Note has been surrendered for conversion, so that the rights
of the Payee of this Note with respect to the Principal amount of this Note so
converted shall cease at such time and the person or persons entitled to receive
the Shares upon conversion of this Note shall be treated, for all purposes, as
having become the record holder or holders of such Shares at the time of such
surrender for conversion; provided, however, that such surrender on any date
when the stock transfer books of the Payor are closed shall be effective to
constitute the person or persons entitled to receive the Shares upon such
conversion as the record holder or holders of such Shares on such date, but such
surrender shall be effective to constitute the person or persons entitled to
receive such Shares as the record holder or holders thereof for all purposes at
the close of business on the next succeeding day on which such stock transfer
books are open.
(D) If the last day for the exercise of the conversion right is a
Saturday, Sunday, or Holiday, such conversion right may be exercised until the
next succeeding day which is not a
3
<PAGE>
Saturday, Sunday, or Holiday. The term "Holidays" shall include New Year's Day,
Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
the day after Thanksgiving Day, Christmas Day, and any other weekday upon which
banks are closed in the State of Florida.
(E) The Payee shall not be required to pay any costs or expenses in
connection with the issuance of certificates for Shares upon conversion of this
Note. Such certificates shall be issued in the name or names directed by the
Payee.
(F) In order to preserve the conversion rights of the Payee of this
Note, the conversion price is subject to adjustment if certain events occur,
including, but not limited to, any of the events which are set forth below:
(i) The issuance of any previously authorized or newly authorized
shares (common or any other securities convertible into common) of the Payor for
less than $0.33 per share.
(ii) A recapitalization of the outstanding shares of the Payor
which has the effect of changing the percentage of Shares which this Note may be
converted into in relation to the total number of outstanding shares;
(iii) The payment of any stock dividends;
(iv) The distribution to any holders of shares of the Payor's
securities, evidences of indebtedness of the Payor or assets (excluding cash
dividends paid from retained earnings); and
(v) The issuance after the date hereof of any stock options,
warrants or other rights to acquire shares in the Payor at a price less than
$0.33 per share.
(vi) Any capital reorganization by the Payor, any reclassification
or recapitalization of the Payor's capital stock, or any transfer of all or
substantially all the assets of the Payor to or consolidation or merger of the
Payor with or into any other Person.
Upon occurrence of any of the above events, or any other event which
might result in a change in the percentage of the number of shares of each class
of stock of the Payor which this Note may be converted into (any of such events
is hereinafter referred to as a "Dilution Event"), then, in such event, the
Payor will immediately take whatever measures are necessary to insure that the
percentage interest in the Payor which the Note may be converted into would not
be increased or reduced. Any adjustment which is required by this Paragraph "F"
of Article "3" of this Note shall be deemed effective retroactive to the date of
the
4
<PAGE>
Dilution Event. The provisions of this Paragraph "F" of Article "3" of this Note
shall be applicable to any Dilution Event which occurs at any time after the
date of this Note. In the event that any of the Dilution Events occur, the Payor
will mail or cause to be mailed a notice, pursuant to Paragraph "C" of Article
"12", to the Payee of this Note
(G) The Payor may not, without the prior written consent of the Payee,
issue any (i) Common Stock at less than thirty three ($0.33) cents per share or
(ii) securities convertible into Common Stock at less than thirty three ($0.33)
cents per share.
4. Prepayment
(A) The Payor may, at its option, upon giving 30 days written notice
(the "30 Day Period") to Payee pursuant to Paragraph "C" of Article "12", prepay
the outstanding balance hereunder, in whole or in part, without premium or
penalty.
(B) Notwithstanding the provisions of Paragraph "A" of this Article "4"
of this Note, in addition to any other rights which the Payee has pursuant to
this Note, Payee shall have the right to convert this Note into Common Shares
pursuant to Article "3" of this Note during the 30 Day Period.
5. Events of Default
The term "Event of Default" as used herein shall mean the occurrence
and continuation of any one or more of the following events:
(A) The failure of the Payor to promptly pay when due the Principal
which is due and payable under this Note, which failure continues for five (5)
days after its due date.
(B) The failure of the Payor to promptly pay when due any payment of
interest which is due and payable under this Note, which failure continues for
five (5) days after the Payee gives the Payor written notice of such default;
provided however, that the Payee shall not be obligated to give to the Payor the
aforesaid written notice of its default with respect to its failure to pay
interest which is due and payable if written notice has been given to the Payor
on any two (2) prior occasions.
(C) If the Payor shall:
(i) The default (after the applicable time to cure) in the due
observance or performance of any material covenant, condition or agreement on
the part of the Payor to be observed or performed pursuant to the terms of this
Note, any other Senior Secured Note(s) issued pursuant to the Loan, any other
agreements entered into between the Payor and the Payee, or any agreement
entered into between the Payor and any third party;
(ii) The admission in writing by the Payor of its inability to pay
its debts as they mature;
5
<PAGE>
(iii) The filing by the Payor of a petition in bankruptcy, or a
petition to take advantage of any insolvency act;
(iv) The filing of a petition in bankruptcy against the Payor with
or without the consent of the Payor, and the failure to have such petition
dismissed within thirty (30) days from the date that such petition is filed;
(v) The filing of a petition or answer seeking reorganization or
relief under any bankruptcy or insolvency laws or any other law for the relief
of debtors or the filing of an answer admitting, or failing to deny, the
material allegations of a petition filed against the Payor for any such relief;
(vi) The entry by a court of competent jurisdiction of a final
non-appealable order, judgment or decree appointing, without the consent of the
Payor, of a receiver, trustee or custodian for the Payor or of all or
substantially all of the respective property or assets of Payor, and such order,
judgment or decree shall not be vacated or set aside or stayed within thirty
(30) days from the date of entry thereof;
(vii) The sale by the Payor of all or substantially all of its
assets, or the merger or consolidation by the Payor with or into another
corporation, except for mergers or consolidations where the Payor is the
surviving entity or where the surviving entity expressly accepts and assumes all
of the obligations of the Payor under this Note;
(viii) The commencement of a proceeding to foreclose the security
interest or lien in any property or assets to satisfy the security interest or
lien therein of any secured creditor of the Payor;
(ix) The entry of a final judgment for the payment of money by a
court of competent jurisdiction against the Payor which judgment the Payor shall
not discharge (or provide for such discharge) in accordance with its terms
within fifteen (15) days of the date of entry thereof, or procure a stay of
execution thereof within fifteen (15) days from the date of entry thereof and,
within such fifteen (15) day period, or such longer period during which
execution of such judgment shall have been stayed, appeal therefrom and cause
the execution thereof to be stayed during such appeal; or
(x) Any voluntary or involuntary dissolution, liquidation or
winding up of the Payor.
(B) In the event that any of the Events of Default occur, the Payor
will mail or cause to be mailed a notice, pursuant to Paragraph "C" of Article
"12" of this Note, to the Payee immediately upon the occurrence of any such
Event of Default.
6. Remedies Upon Default
6
<PAGE>
(A) Upon the occurrence of an Event of Default (as defined in Article
"4" of this Note), and any time thereafter while such Event of Default is
continuing, the entire unpaid Principal balance and all accrued and unpaid
interest which is due pursuant to this Note and all other amounts payable to the
Payee pursuant to this Note shall, at the Payee's option, be accelerated and
become and be immediately due and payable without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by the Payor.
(B) The liability of the Payor hereunder shall be unconditional and
shall not be in any manner affected by any indulgence whatsoever granted or
consented to by the Payee including, but not limited to, any extension of time,
renewal, waiver or other modification.
(C) The Payor shall be liable for all costs of collections, including,
but not limited to, attorney's fees and expenses which Payee may incur as a
result of the exercise by Payee of any rights or remedies pursuant to this Note
or otherwise available, including, but not limited to, any remedy upon default
provided for in this Article "6" of this Note.
(D) No failure on the part of the Payee to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
(E) The remedies which are provided herein are cumulative and not
exclusive of any remedies which are provided by law.
(F) Any provision of this Note which may prove to be unenforceable
under any law shall not affect the validity of any other provision of this Note.
If from any circumstances whatsoever, fulfillment of any provisions of this Note
or any other instrument evidencing or securing the indebtedness evidenced
hereby, at the time performance of such provision shall be due, shall involve
transcending the limit of validity presently prescribed by any applicable usury
statute or any other applicable law, with regard to obligations of like
character and amount, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, so that in no event shall any exaction be
possible under this Note or under any other instrument evidencing or securing
the indebtedness evidenced hereby, that is in excess of the current limit of
such validity, but such obligation shall be fulfilled to the limit of such
validity.
7. Priority
The indebtedness which is evidenced by this Note, including Principal
and interest, shall be senior in priority with respect to payment of all other
debt of the Payor
7
<PAGE>
8. Security Interest
The indebtedness which is evidenced by this Note, including Principal
and interest, is secured by all assets of the Payor, pursuant to the Security
Agreement dated as of the 14th day of January, 1999 by and between the Payee and
the Payor.
9. Full Recourse
Anything in this Note to the contrary notwithstanding, the Payor
hereunder shall be liable on this Note for the full amount of the interest and
Principal due under this Note.
10. Transferability
This Note shall be registered in the Payee's name on the books of the
Payor at the office of the Payor, after which no transfer hereof shall be valid
unless transfer instructions are received by the Payor from the registered Payee
hereof or by his attorney duly authorized in writing. The following legend is
applicable to this Note and shall appear on this Note, any substitute Note and
on any certificate evidencing any Shares which the Payee of this Note will
receive upon the conversion of the Note. "The Note [Shares] which is [are]
represented by this Certificate has not been registered under the Securities Act
of 1933, as amended. These securities have been acquired for investment purposes
only and not with a view to distribution or resale, and may not be sold,
transferred, made subject to a security interest, pledged, hypothecated or
otherwise disposed of unless and until registered under the Securities Act of
1933, as amended, or on an opinion of counsel for the Payor, that registration
is not required under such Act."
11. Payee Deemed Owner
The Payor, any paying agent, any conversion agent and any Note
registrar shall deem and treat the registered Payee hereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding any
notice of ownership or writing hereon or thereon made by anyone other than the
Payor or any Note registrar), for the purpose of receiving payment hereof or
thereof or on account hereof or thereof and for all other purposes, and neither
the Payor nor any paying agent nor any conversion agent nor any Note registrar
shall be affected by any notice to the contrary.
12. Miscellaneous
(A) Headings. Headings contained in this Note are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Note.
8
<PAGE>
(B) Enforceability. If any provision which is contained in this Note
should, for any reason, be held to be invalid or unenforceable in any respect
under the laws of any state or of the United States, such invalidity or
unenforceability shall not affect any other provision of this Note. Instead,
this Note shall be construed as if such invalid or unenforceable provisions had
not been contained herein.
(C) Notices. Any notice or other communication required or permitted
hereunder must be in writing and sent by either (i) registered or certified
mail, postage prepaid, return receipt requested, (ii) overnight delivery with
confirmation of delivery or (iii) facsimile transmission with an original mailed
by first class mail, postage prepaid, in each case addressed as follows:
If to Payee: Triton Holdings International Corp.
1081 Fairview Lane
Singer Island, Florida 333404
Facsimile No.: (561) 487-6646
with a copy to: Mintz & Fraade, P.C.
488 Madison Avenue
New York, New York 10022
Attention: Frederick M. Mintz
Facsimile No.: (212) 486-0701
If to the Payor: Jupiter Marine International Holdings, Inc.
3391 Southeast 14th Street
Port Everglades, Florida 33317
Facsimile No.: (954)523-9390
with a copy to: Atlas, Pearlman, Trop and Borkson
200 East Las Olas Blvd., Suite 1900
Fort Lauderdale, Florida 33301
Attention: Robert Burnett, Esq.
Facsimile No.:(561) 763-7800
or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing by registered or certified mail is
impossible due to an absence of postal service, and if the other methods of
sending notice set forth in this Paragraph "C" of this Article "12" of this Note
are not otherwise available, notice shall be in writing and personally delivered
to the aforesaid address. Each notice or communication shall be deemed to have
been given as of the date so mailed or delivered, as the case may be; provided,
however that any notice sent by facsimile shall be deemed to have been given as
of the date sent by facsimile if a copy of such notice is also mailed by first
class mail on the date sent by facsimile; if the date of mailing differs from
the date of sending by facsimile, then the date of mailing by first class mail
shall be deemed to be the date upon which notice was given.
(D) Governing Law; Disputes. This Note shall in all respects be
construed, governed, applied and enforced under with the internal laws of the
State of Delaware without giving effect to the principles of conflicts of laws
and be deemed to be an agreement entered into in the State of Delaware and made
pursuant to the laws of the State of Delaware. The parties agree that they shall
be deemed to have agreed to binding arbitration in Boca Raton, Florida, with
respect to the entire subject matter of any and all disputes relating to or
arising under this Note including, but not limited to, the specific matters or
disputes as to which arbitration has been expressly provided for by other
provisions of this Note. Any such arbitration shall be by a panel of three
arbitrators and pursuant to the commercial rules then existing of the American
Arbitration Association in the State of Florida, County of Palm Beach. In all
arbitrations, judgment upon the arbitration award may be entered in any court
having jurisdiction. The parties agree, further, that the prevailing party in
any such arbitration as determined by the arbitrators shall be entitled to
9
<PAGE>
such costs and attorney's fees, if any, in connection with such arbitration as
may be awarded by the arbitrators. In connection with the arbitrators'
determination for the purpose of which party, if any, is the prevailing party,
they shall take into account all of the factors and circumstances including,
without limitation, the relief sought, and by whom, and the relief, if any,
awarded, and to whom. In addition, and notwithstanding the foregoing sentence, a
party shall not be deemed to be the prevailing party in a claim seeking monetary
damages, unless the amount of the arbitration award exceeds the amount offered
in a legally binding writing by the other party by fifteen percent (15%) or
more. For example, if the party initiating arbitration ("A") seeks an award of
$100,000 plus costs and expenses, the other party ("B") has offered A $50,000 in
a legally binding written offer prior to the commencement of the arbitration
proceeding, and the arbitration panel awards any amount less than $57,500 to A,
the panel should determine that B has "prevailed". The parties specifically
designate the Courts in the City of Boca Raton, State of Florida as properly
having jurisdiction for any proceeding to confirm and enter judgment upon any
such arbitration award. The parties hereby consent to and submit to personal
jurisdiction over each of them by the Courts of the State of Florida in any
action or proceeding, waive personal service of any and all process and
specifically consent that in any such action or proceeding, any service of
process may be effectuated upon any of them by certified mail, return receipt
requested, in accordance with Paragraph "C" of this Article "12" of this Note.
(E) Entire Agreement. The parties have not made any representations,
warranties, or covenants with respect to the subject matter hereof which is not
set forth herein, and this Note, together with any instruments or other
agreements executed simultaneously herewith, constitutes the entire agreement
between them with respect to the subject matter hereof. All understandings and
agreements heretofore had between the parties with respect to the subject matter
hereof are merged in this Note and any such instrument, which alone fully and
completely expresses their agreement. This Note may not be changed, modified,
extended, terminated or discharged orally, but only by an agreement in writing,
which is signed by all of the parties to this Note.
(F) Further Assurances. The Parties agree to execute any and all such
other and further instruments and documents, and to take any and all such
further actions, which are reasonably required to effectuate this Note and the
intents and purposes hereof.
(G) Binding. This Note shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, personal
representatives, successors and assigns.
(H) Waiver. Except as otherwise expressly provided herein, no waiver of
any covenant, condition, or provision of this Note shall be deemed to have been
made unless expressly in writing and signed by the party against whom such
waiver is charged; and (i) the failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants, or
10
<PAGE>
conditions of this Note or to exercise any option herein contained shall not be
construed as a waiver or relinquishment for the future of any such provisions,
covenants, or conditions, (ii) the acceptance of performance of anything
required by this Note to be performed with knowledge of the breach or failure of
a covenant, condition, or provision hereof shall not be deemed a waiver of such
breach or failure, and (iii) no waiver by any party of one breach by another
party shall be construed as a waiver with respect to any other or subsequent
breach.
(I) Expenses. Each party hereto shall pay its own expenses incident to
the negotiation and preparation of this Note and all other documents necessary
or appropriate to consummate the transactions provided for herein, and shall
bear its own costs and expenses incurred in closing and carrying out the
transactions provided for by this Note.
(J) Counterparts. This Note may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(K) Exhibits All Exhibits annexed or attached to this Note are
incorporated into this Note by reference thereto and constitute an integral part
of this Note.
11
<PAGE>
IN WITNESS WHEREOF, Jupiter Marine International Holdings, Inc. has
caused this Note to be signed in its name by the signature of its President.
Dated: __________________
Attest: Jupiter Marine
International Holdings, Inc
By:________________________________
Secretary Carl Herndon,
President
Corporate
Seal:
12
L E A S E A G R E E M E N T
--------- -----------------
THIS LEASE AGREEMENT made and entered into this 19th day of May, 1998
by and between Carl M. Herndon, hereinafter referred to as "LANDLORD" and
Jupiter Marine International, Inc., hereinafter referred to as "TENANT".
WITNESSETH
LANDLORD does this day lease unto Tenant and Tenant does hereby agree
and take as Tenant on the terms and conditions as contained herein as follows:
1. PREMISES: Landlord hereby leases to Tenant upon the terms and
conditions contained herein approximately 32,140 square feet
of space known as 3391 S.E. 14th Avenue, Fort Lauderdale,
Florida 33316 (hereinafter referred to as the "Premises"). In
the event that the terms of this Lease Agreement conflict with
the terms of the Addendum to the Lease Agreement attached
hereto, the terms of the Addendum will supersede the terms of
the Lease Agreement; otherwise, the terms of the Addendum are
incorporated by reference herein.
2. TERM: The commencement date of this Lease is may 19, 1998 and
the termination date is May 18, 2002.
3. RENT: Tenant agrees to pay Landlord as rental for the premises
the monthly rent commencing May 19, 1998 in the amount of Ten
Thousand Seven Hundred Fourteen Dollars ($10,714.00) per
month, plus any applicable sales tax required by governmental
authorities. The rent shall be payable to the Landlord without
demand in advance on or before the first day of each month
during the term of this Lease at the address of Landlord as
stated herein or such other address that Landlord shall
designate in writing to Tenant.
The above rental rate shall be increased by 5% each year
commencing on the anniversary date of this Agreement, May 19,
1999, 2000, 2001 and 2002, respectively.
In addition to the monthly rent stated above, Tenant shall pay
each month, as additional rent, a sum equal to one-twelfth
(1/12) of the real property taxes assessed against the
Premises of the time that this Lease is in effect. This amount
shall be based on the gross taxes for the most recent calendar
year available.
1
<PAGE>
4. SECURITY DEPOSIT AND LAST MONTH'S RENT: Landlord acknow-
ledges receipt of a Security Deposit in the amount of Ten
Thousand Dollars ($10,000.00) that Landlord shall retain as a
security for the faithful performance of all the terms and
conditions of this Lease. Tenant acknowledges that Landlord is
not holding the last month's Rent. Landlord shall not be
obligated to apply the Security Deposit on Rents or other
charges in arrears, or in damages for failure to perform the
terms and conditions of this Lease. Application of the
Security Deposit to the arrears of rental payments or damages
shall be at the sole option of the Landlord, and the right to
possession of the Premises by the Landlord for non-payment of
Rent or for any other reason shall not in any event be
affected by the Security Deposit. The Security Deposit is to
be returned to Tenant when this Lease is terminated, according
to the terms of this Lease, if not otherwise applied by reason
of any breach of the terms and conditions of this Lease by
Tenant. Tenant expressly acknowledges that Tenant shall not
have the right to apply the Security Deposit to Rent. In no
event is the Security Deposit to be returned until Tenant has
vacated the Premises and delivered possession to the Landlord.
In the event Landlord repossess the Premises because of the
default of the Tenant or because of the failure by the Tenant
to carry out the terms and conditions of this Lease, Landlord
may apply the Security Deposit on all damages suffered to the
day of repossession and may retain the balance of the Security
Deposit to apply on damages that may accrue or be suffered
thereafter by reason of a default or breach of the Tenant.
landlord shall not be obligated to hold the Security Deposit
in a separate fund, but may mix the security deposit with
other funds of the Landlord, and Landlord shall not be
obligated to pay interest to Tenant on the Security Deposit.
5. UTILITIES: Tenant shall be solely responsible for paying the
cost of all electricity, telephone and other utilities
provided to the leased Premises.
6. LATE CHARGES: Tenant acknowledges that late payment by Tenant
to Landlord of Rent, Tenant's share of Operating Expenses or
other sums due hereunder, will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such costs
being extremely difficult and impracticable to fix. Such costs
include, without limitation, processing and accounting
charges, and late charges that may be imposed on Landlord by
the terms of any encumbrance and note secured by any
encumbrance covering the Premises. Therefore, if any
installment of Rent or other sum due from Tenant is not paid
to Landlord when due, Tenant shall pay to Landlord an
additional sum equal to 5% of such overdue amount as a late
charge. The parties agree that this late charge shall not
constitute a waiver of Tenant's default with respect to the
overdue amount, nor prevent Landlord from exercising any of
the other rights and remedies available to Landlord.
2
<PAGE>
The late charge equaling 5% of the rent will be paid if the
rent is not received within ten (10) days of its due date.
7. USE OF PREMISES: The Premises are to be used for boat
construction and for no other purposes without Landlord's
consent. Tenant shall not use or allow the Premises to be used
for any improper, immoral, unlawful or objectionable purposes,
nor shall Tenant cause, maintain or permit any nuisance in, or
about the Premises. Tenant shall not damage or deface or
otherwise commit or suffer to be committed any waste in or
upon the Premises or permit the same to be used in a manner
that would impair the structural strength of or endanger any
building or part of the lease Premises.
8. ENVIRONMENTAL MATTERS:
A. At any time during the term of this Lease, if
Landlord believes the Premises may have been
contaminated by any Hazardous Substance, and within
ninety (90) days after the termination or expiration
of this Lease, Landlord and its consultants shall
have the right, but not the obligations, to sample,
analyze, inspect and monitor the air, soil, the
surface water, the ground water and any materials or
substances (whether or not belonging to Tenant) in,
on or about the Premises of the purpose of
determining the presence of any Hazardous Substance.
B. Tenant shall not, without the consent of Landlord,
disclose to any third party or to the public any
information obtained through any environmental
assessment or investigation of the Premises which is
not publically known. Notwithstanding the foregoing,
any such confidential information may be disclosed to
a governmental agency or to the public if Tenant
believes in good faith that such disclosure is
required by pertinent law, and Tenant notifies
Landlord in writing of its intent to disclose such
confidential information within a reasonable period
of time before such disclosure.
C. Tenant shall defend, indemnify and hold Landlord
harmless from any against any and all claims,
response or remediation costs, losses, damages,
penalties, other costs, actions, judgments, expenses
and liabilities of every kind and nature whatsoever
(including, without limitation, attorneys' and
consultants' fees and costs and expenses of
investigation, remediation or defense) (i) which
arise either directly or indirectly from Tenant's
violation of any Environmental Law or (ii) which
arise directly or indirectly from generation,
treatment, storage, spillage, handling, disposal or
release on, under or from the Premises
3
<PAGE>
by Tenant or any of its affiliates, agents,
contractors, employees, or invitees of any Hazardous
Substance.
D. Tenant warrants, represents and covenants that it
shall, at all times and at its own expense:
(i) comply promptly with all applicable
Environmental Laws;
(ii) immediately notify Landlord of any notice of
violation, noncompliance or other written
communication by any governmental authority
or others of any violation of any
Environmental Laws;
(iii) immediately inform Landlord if Tenant
becomes aware of or causes a release of
Hazardous Substance on the Premises or
anywhere in the vicinity of the foregoing;
(iv) cause to be performed and provide a written
report as to the results thereof to be
delivered to Landlord within ninety (90)
days of written request of Landlord an
environmental and contamination study of the
Premises performed by a reputable licensed
and environmental reporting form reasonably
acceptable by Landlord, which includes the
sampling, analyzing and inspection of the
air, soil, surface water, ground water, and
any materials or substances in, on or about
the Premises for the purpose of determining
the presence of any Hazardous Substance.
(v) If any assessment confirms the existence of
any contamination from Hazardous Substances
on, under or about the Premises caused by
Tenant's use of or activities in the
Premises, Tenant shall be responsible for
(i) the removal of any such Hazardous
Substance from the Premises or any adjoining
property if such Hazardous Substance
migrated to any adjoining property; (ii) the
disposal of the same strictly in accordance
with applicable law; and (iii) any
remediation work on the Premises which shall
be done in compliance with existing
standards of Environmental Laws, or in the
event there are no such standards for any
particular contaminant, then the Premises
shall be free of any Hazardous Substance to
a standard of background levels of
contamination, meaning the level of
contaminant naturally occurring in or under
the air, soil, surface water or ground
water, which presents no significant
environmental or health risks.
4
<PAGE>
9. ALTERNATIONS AND ADDITIONS Tenant shall not install any signs,
building or trade fixtures or improvements to the Premises
without the express prior written consent of Landlord, not to
be unreasonably withheld or delayed. Tenant shall keep the
Premises and the property on which the Premises are situated
free from any and all liens and encumbrances arising out of
any work performed, materials furnished or obligations
incurred by or on behalf of tenant.
Upon termination of this lease, Tenant shall remove all signs,
building or trade fixtures, furniture and furnishings and
repair any damage caused by the installation or removal of
such signs, trade fixtures, furniture and furnishings and
leave the Premises in as good condition as they were in at the
time of the commencement of this Lease excepting for
reasonable wear and tear. Unless otherwise agreed in writing
by the parties, all improvements and fixtures shall remain the
property of the Landlord.
10. RESTRICTION AGAINST CONSTRUCTION LIENS: Neither Tenant nor
anyone claiming by, through or under Tenant, shall have any
right to file or place any lien of any kind or character
whatsoever on the property and notice is hereby given that no
contractor, subcontractor, or anyone else that may furnish any
material, service or labor to the property at any time shall
be or become entitled to any lien thereon whatsoever. For the
further security of Landlord, Tenant shall give actual notice
of this restriction in advance to any and all contractors,
subcontractors, or other persons, firms or corporations that
may furnish any such material, service or labor. Landlord
shall have the right to record a notice of this provision the
Public Records of the County in which the Premises are
located.
If such lien is filed against Landlord's interest on the
property, Tenant shall cause such lien to be released of
record or bonded within ten (10) days of Tenant's knowledge of
such lien.
11. REPAIRS AND MAINTENANCE: Tenant hereby agrees and acknowledges
that all maintenance and repair of the leased Premises is the
responsibility and obligation of the Tenant. The Tenant hereby
agrees that the Tenant shall maintain the Premises on a
regular basis and shall repair the Premises immediately upon
determining that repair is necessary. The Tenant shall return
the Premises to Landlord at the expiration of termination of
the lease term in the same or better condition as existed
prior to the Tenant taking possession. The failure to
adequately maintain and repair the Premises may be deemed a
default of this Lease at the Landlord's option. It is
understood, though, that the Landlord is responsible to
maintain the structural integrity of the foundation, floors,
walls and rood, unless an act or omission of the Tenant caused
or contributed to the damage.
5
<PAGE>
12. INSURANCE: Tenant shall at all times during the term of this
Lease, and at its sole cost and expense , maintain workers
compensation insurance for its employees and agents; and
shall, in addition, maintain comprehensive general liability
insurance against liability for bodily injury and property
damage with liability limits as set forth below; such general
liability insurance naming Landlord and its employees, agents
and assignees as additional insured. The above-mentioned
comprehensive general liability insurance shall be in the
amount of not less than $1,000,000.00 per occurrence and not
less that $1,000,000.00 in the aggregate. In no event shall
the limits of said policy or policies be considered as
limiting the liability of Tenant under this Lease.
13. LIMITATION OF LIABILITY AND INDEMNITY: Tenant agrees to save
and hold Landlord harmless and indemnify Landlord against all
liabilities, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the
prosecution or defense of any litigation) by reason of injury
to person or property, from whatever cause, while in or on the
lease Premises, with the improvements or personal property
therein, including any liability for injury to person or
property of Tenant, its agents or employees or third party
persons except for damages resulting from the act or omissions
of Landlord or its authorized representatives.
Further, Landlord shall not be liable to Tenant for any damage
to Tenant or Tenant's property, nor for any injury to any
person from any cause except for damage or injury to any
person from any cause except for damage resulting from the
acts or omissions of Landlord or its authorized
representatives.
14. ASSIGNMENT AND SUBLETTING: Tenant shall not either
voluntarily, or by operation of law assign, transfer,
mortgage, pledge, hypothecate or encumber this Lease or any
interest therein, and shall not sublet the Premises or any
part thereof, or any right or privilege appurtenant thereto,
without the written consent of Landlord first had and
obtained, which consent shall not be unreasonably withheld or
delayed. Tenant shall give Landlord at least thirty (30) days
written notice of its desire to assign or sublet all or some
of the Premises. Any such assignment, sublease or the like
which is approved by the Landlord must be pursuant to a
written agreement in a form acceptable to the Landlord. Each
permitted assignee or transferee shall assume and be deemed to
have assumed this Lease and shall be and remain liable jointly
and severally with Tenant for the payment of Rent and for the
due performance of and compliance with all the terms,
covenants, conditions and agreements herein contained on
Tenant's part to be performed or complied with for the term of
this Lease.
15. SUBROGATION: Landlord and Tenant hereby mutually waive their
respective rights of recovery against each other from any loss
insured by fire,
6
<PAGE>
extended coverage and other property insurance policies
existing for the benefit of the respective parties. Each party
shall endeavor to obtain any special endorsements, if required
by their insurer to evidence compliance with the
aforementioned waiver.
16. SUBORDINATION: Provided Tenant is given a non disturbance
agreement in reasonable form, Tenant shall, upon request of
the Landlord, execute any instrument necessary or desirable to
subordinate this Lease and all its rights contained hereunder
to any and all encumbrances now or hereafter in force against
the Lot and Project of which the Premises are a part. In the
event of any proceedings are brought for foreclosure or in the
event of the exercise of the power of sale under any mortgage
or deed of trust made by Landlord covering the Premises,
Tenant shall attorn to the purchaser upon any such foreclosure
of sale and recognize such purchaser as the Landlord under
this Lease.
17. RIGHT OF ENTRY: Tenant grants to Landlord or its agents the
right to enter the Premises at all reasonable times for
purposes of inspection, repair or alteration and showing the
Premises to prospective tenants or owners of the Premises or
Project. Landlord shall at all times have and retain a key
with which to unlock all the doors in, upon and about the
Premises, excluding Tenant's vaults and safes and Landlord
shall also have the right to place "for rent" and/or "for
sale" signs on the outside of the Premises. Landlord shall
have no liability in connection with the exercise of its
rights in this paragraph provided it complies with the
following: (i) except in case of emergency, Landlord's right
of entry will be coordinated in advance with Tenant and
scheduled at a mutually convenient time that will minimize to
the greatest extent possible, interference with Tenant's
business; (ii) Tenant reserves the right to maintain secured
areas for storage of records and documents for which Landlord
will not be given a passkey or combination. Entry for showing
the Premises to prospective new tenants shall be permitted at
all times during the Lease terms.
18. ESTOPPEL CERTIFICATE: Tenant shall execute and deliver to
Landlord, upon not less than ten (10) days prior written
notice, a statement in writing certifying that this Lease is
un-modified and in full force and effect (of, if modified
stating the nature of such modification) and the date to which
the Rent (other charges are paid in advance, if any), and
acknowledging that there are not, to Tenant's knowledge, any
uncured defaults on the part of Landlord hereunder or
specifying such defaults as they are claimed. Any such
statement may be conclusively relied upon by any prospective
purchaser or encumbrances of the Premises. Tenant's failure to
deliver such statement within such time shall be conclusive
upon the Tenant that (i) this Lease is in full force and
effect, without modification except as may be represented by
Landlord; (ii) there are no uncured defaults in the Landlord's
7
<PAGE>
performance, and (iii) not more than one month's rent has been
paid in advance.
19. TENANT'S DEFAULT: The occurrence of any one or more of the
following events shall constitute a default and breach of this
Lease by Tenant:
A. The vacation or abandonment of the Premises by the
Tenant; except that Tenant will not be in default if
it gives Landlord advance notice of its intention to
vacate the Premises and remains current in its other
obligations under this Lease.
B. The failure by Tenant to make payment of Rent or any
other payment required hereunder for a period of
seven (7) days after written notice demanding
payment. This clause shall not be deemed a
modification of Paragraph 8.
C. The failure of Tenant to observe, perform or comply
with any of the conditions or provisions of this
Lease for a period, unless otherwise noted herein,
within ten (10) days after written notice of such
default or if such default cannot be cured within
that time, then such additional time as may be
necessary, if within such ten (10) days, the Tenant
has commenced and is diligently pursuing the remedies
necessary to cure such default, in which event this
Lease shall not be terminated while such remedies are
being so diligently pursued.
20. REMEDIES FOR TENANT'S DEFAULT: In the event of Tenant's
default or breach of the Lease, Landlord may terminate
Tenant's right to possession of the Premises by any lawful
means in which case this Lease shall terminate and Tenant
shall immediately surrender possession of the Premises to
Landlord. In addition, the Landlord shall have the immediate
right of re-entry following abandonment of the Premises by
Tenant and Landlord may consider any personal property
belonging to Tenant and left on the Premises to also have been
abandoned, in which case Landlord may dispose of all such
personal property in any manner Landlord shall deem property
and is hereby relieved of all liability for doing so.
If Tenant breaches this Lease and abandons the Premises before
the end of the term, or if Tenant's right to possession is
terminated by Landlord because of a breach of the Lease, then
in either such case, Landlord may recover from Tenant all
damages suffered by Landlord as a result of Tenant's failure
to perform its obligations hereunder, including, but not
restricted to, the worth at the time of the award of the
amount by which the Rent then unpaid hereunder for the balance
of the Lease term after the time of award exceeds the amount
of such loss of Rent for the same period which
8
<PAGE>
the Tenant proves could be reasonably avoided by Landlord and
in such case, Landlord prior tot eh award, may relet the
Premises for the purpose of mitigating damages suffered by
Landlord because of Tenant's failure perform his obligations
hereunder; provided, however, that even though Tenant has
abandoned the Premises following such breach, this Lease shall
nevertheless continue in full force and effect for as long as
the Landlord does not terminate Tenant's right of possession,
and until such termination, Landlord may enforce all his
rights and remedies under this Lease. Landlord may declare all
of the installments of rent for the whole term of this Lease
to be immediately due and payable at once without further
demand, in which event all sums payable to the Landlord shall
bear interest from the date of default at the highest rate
permitted by law. The foregoing remedies are not exclusive;
they are cumulative in addition to any remedies now or later
allowed by law or equity, and to any remedies Landlord may
have under bankruptcy laws or laws affecting creditor's rights
generally. The waiver of Landlord of any breach of any term of
this Lease shall not be deemed a waiver of such term or of any
subsequent breach thereof.
21. SURRENDER OF PREMISES: Upon termination of the Lease or
expiration for the term hereof, if Tenant retains possession
of the Premises without Landlord's written consent first had
and obtained, then Tenant's possession shall be deemed a
tenancy at sufferance, and the Landlord may bring an action
for possession or detainer at any time thereafter. If Tenant
holds possession of the Premises after the term of this Lease
without Landlord's consent, Tenant shall become a Tenant from
month to month at the base rent, as provided by Florida law,
payable in advance on or before the first day of each month.
All options, if any, granted under the terms of this Lease
shall be deemed terminated and be of no effect during said
month to month tenancy, and the tenancy may thereafter be
terminated as provided by Florida law. By signing this Lease
Agreement the Tenant agrees that upon surrender or
abandonment, as defined by the Florida Statutes, the Landlord
shall not be liable or responsible for storage or disposition
of the Tenant's personal property.
22. LANDLORD'S DEFAULT: Tenant agrees to give any Mortgage and/or
Trust Deed Holders, of whose existence Tenant has been
previously notified by Registered Mail, a copy of any Notice
of default served upon the Landlord, provided that prior to
such notice Tenant has been notified in writing (by way of
Notice of Assignment of Rents and Leases, or otherwise) of the
address of such Mortgage and/or Trust Deed Holders. Such
Mortgage and/or Trust Deed Holders shall have an additional
ten (10) days within which to cure such default or if such
default cannot be cured within that time, then such additional
time as may be necessary, if within such ten (10) days, the
Tenant has commenced and is diligently pursuing the remedies
necessary to cure
9
<PAGE>
such default, in which event this Lease shall not be
terminated while such remedies are being so diligently
pursued.
23. SALE OR TRANSFER OF PREMISES: In the event of any transfer of
title of the Premises by Landlord, Landlord shall be and is
hereby entirely freed and relieved of all liability under any
and all of its covenants and obligations contained in or
derived from this Lease arising out of any act, occurrence or
omission occurring in or derived from this Lease arising out
of any act, occurrence or omission occurring after the
consummation of such transfer of title; and the transferee
shall be deemed without any further agreement between the
parties or their successors in interest or between the parties
and any such transferee, to have assumed and agreed to carry
out any and all of the covenants and obligations of the
Landlord under this Lease.
24. WAIVER: No delay or omission in the exercise of any right or
remedy of Landlord on any by Tenant shall impair such a right
of remedy or be construed as a waiver.
The subsequent acceptance of Rent by Landlord after breach by
Tenant of any covenant or term of this Lease shall not be
deemed a waiver of such breach, other than a waiver of timely
payment of the particular rent payment involved, and shall not
prevent Landlord from maintaining an unlawful detainer or
other action based on such breach.
No payment by Tenant or receipt by Landlord of a lesser amount
than the monthly Rent and other sums due hereunder shall be
deemed to be other than on account of the earliest Rent or
other sums due, nor shall any endorsement or statement on any
check or accompanying any check or payment be deemed an accord
and satisfaction; and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the
balance of such Rent or other sum or pursue any other remedy
provided in this Lease.
25. CASUALTY DAMAGE: If the Premises or any part thereof shall be
damaged by fire or other casualty, Tenant shall give prompt
written notice thereof to Landlord. In case the Premises shall
be so damaged by fire or other casualty that substantial
alteration or reconstruction of the Premises shall, in
Landlord's sole opinion, be required (whether or not the
Premises shall have been damaged by such fire or other
casualty), Landlord may, at its option, terminate this Lease
and the term and estate hereby granted by notifying Tenant in
writing of such termination within sixty (60) days after the
date of such damage. If Landlord does not thus elect to
terminate this Lease, Landlord shall within ninety (90) days
after the date of such damage commence to repair and restore
the Premises and shall proceed with reasonable diligence to
restore the Premises (except that Landlord shall not
10
<PAGE>
be responsible for delays outside its control) to
substantially the same condition in which it was immediately
prior to the happening of the casualty, except that Landlord
shall not be required to rebuild, repair or replace any part
of Tenant's furniture, furnishings ro fixtures and equipment
removable by Tenant under the provisions of this Lease, but
such work shall not exceed the scope of the work done by
Landlord in originally constructing the Premises, nor shall
Landlord in any event be required to spend for such work an
amount in excess of the insurance proceeds actually received
by Landlord as a result of the fire or other casualty.
Landlord shall not be liable for any inconvenience or
annoyance to Tenant, injury to the business of Tenant, loss of
use of any part of the Premises by the Tenant or loss of
Tenant's personal property resulting in any way from such
damage or the repair thereof, except that, subject to the
provisions of the next sentence, Landlord shall allow Tenant a
fair diminution of Rent during the time and to the extent the
Premises are unfit for occupancy. If the Premises or any other
portion of the Project are damaged by fire or other casualty
resulting from the fault or negligence of Tenant or any of
Tenant's agents, employees, or invitees, the Rent shall not be
diminished during the repair of such damages and Tenant shall
be liable to Landlord for the cost and expense of the repair
and restoration of the Premises caused thereby to the extent
such costs and expense is not covered by insurance proceeds.
Notwithstanding anything herein to the contrary, Tenant shall
be entitled to cancel this Lease in the event that Tenant's
business is interrupted for more than sixty (60) days
following such casualty unless the damage was caused by
Tenant's negligence.
26. GENERAL PROVISIONS:
A. Riders and Addendums. Riders and Addendums, if any,
signed by the Landlord and Tenant and endorsed and/or
affixed to this Lease are a part hereof.
AA. Time. Time is of the essence in this Lease and with
respect to each and all of its provisions in which
performance is a factor.
B. Landlord shall ensure that the Premises shall be
usable by Tenant, and both Tenant and its invitees
shall have access to the Premises 24 hours per day,
365 days per year.
C. Successors and Assigns. The covenants and conditions
herein contained apply to and bind the heirs,
successors, executors, administrators and assigns of
the parties hereto. (Any assignment of this Lease by
Tenant is subject to the provisions of Paragraph 14).
11
<PAGE>
D. Recordation. Tenant shall not record this Lease or a
short form memorandum hereof without the prior
written consent of the Landlord.
E. No judgment shall be taken against any partner,
subsidiary, officer, shareholder, director, employee,
sister corporation or agent of Landlord and no writ
of execution shall be levied against the assets of
any partner, subsidiary, officer, shareholder,
director, employee, sister corporation or agent of
Landlord. Any liability of Landlord shall be limited
to Landlord's interest in the Project.
F. Choice of Law. This Lease shall be governed by and
construed pursuant to the laws of the State in which
the Premises are located.
G. Attorneys' fees. Notwithstanding the indemnity, hold
harmless and duty to defend provisions hereunder, in
the event any legal action is brought to enforce or
interpret the provisions of this Lease, the
prevailing party therein shall be entitled to recover
all costs and expenses including reasonable
attorneys' fees.
H. Notices. All notices, demands, consents or approvals which may
be given by either party to the other shall delivered either
personally or by certified mail, return receipt requested, and
addressed to Landlord at and to Tenant at the leased Premises
respectively, or at such other address as the parties may from
time to time designate. Notices sent by mail shall be deemed
to have been given when properly mailed and the postmark
affixed by the United States Post Office shall be conclusive
evidence of the date of mailing.
notice by facsimile is not notice.
I. Partial Invalidity; Severability; Construction. If any term or
provision of this Lease shall to any extent be held to be in
valid or unenforceable, the remainder of this Lease shall not
be affected thereby, and each term and provision of this Lease
shall be valid and enforced to the fullest extent permitted by
law.
J. Corporate Resolution. If Tenant is a corporation, Tenant shall
deliver to Landlord, upon execution of this Lease, a certified
copy of a resolution of its board of directors authorizing the
execution of this Lease and naming the officers who are
authorized to execute this Lease on behalf of the corporation.
K. Captions. The captions or headings in this Lease are inserted
only as a matter of convenience and for reference, and they in
no way define, limit or describe the scope of this Lease or
the intent of any provision thereof.
12
<PAGE>
L. Brokers's Commissions. Tenant represents to Landlord that it
is not obligated to any broker, finder of real estate or
financing agent in connection with this Lease unless specified
herein and Tenant agrees to defend, indemnify and hold
harmless Landlord from any claim, suit, liability or demand
made upon Landlord by any other person, firm or corporation
for brokerage or finder's fees or commissions or other similar
compensation with respect to this Lease or any sublease on the
Premises; only, however, if Tenant has dealt with such person,
firm or corporation. This provision shall survive termination
of the Lease.
M. Counterparts. This Lease may be executed in counterparts, each
of which may be deemed an original but all of which together
shall constitute one and the same instrument.
N. Sole Agreement. This Lease contains all of the agreements of
the parties hereto with respect to the lease transaction, and
no prior agreements, oral or written, or representations of
any nature whatsoever pertaining to any such matters shall be
effective for any purpose unless specifically incorporated in
writing. This Lease may only be modified in writing with the
same formalities as are shown by the execution of this Lease.
O. No Merger. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work as a
merger, and shall, at the option of Landlord, operate as an
assignment to it of any or all subleases or subtenancies.
P. Modification for Lender. If, in connection with obtaining
financing for the Building of which the Premises are a part,
the lender shall request reasonable modifications in this
Lease as a condition to such financing, Tenant shall not
unreasonably withhold, delay or defer its consent thereto,
provided that such modifications do not increase the
obligations of Tenant hereunder or materially adversely affect
the leasehold interest thereby created.
Q. Compliance with Law. Tenant shall, at Tenant's expense, comply
promptly with all present and future applicable statutes,
ordinances, rules, regulations, orders, permits, covenants and
restrictions of record, and any other requirements of any
federal, state or local authority in effect during the term of
any part of the term hereof, regulating the use or condition
of the Premises, including, but not limited to, environmental
matters and employee health and safety. Tenant shall not use
nor permit the use of the Premises in any unlawful or
dangerous manner or in any manner that will tend to create
waste or a nuisance.
13
<PAGE>
R. Radon Gas. Radon is a naturally occurring radioactive gas
that, when it has accumulated in a building in sufficient
quantities, may represent 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 or public health unit.
S. Joint and Several Obligations. If more than one person or
entity is Tenant, the obligations imposed on that party shall
be joint and several. If Tenant is a partnership, the
obligations of each general partner shall be joint and
several.
T. Light, Air, View. Any diminution or shutting off of light, air
or view by any structure which may be erected on lands
adjacent to the Premises shall in no way affect this Lease or
impose any liability on Landlord.
U. No Offer. The submission of this document for examination and
discussion dies not constitute an offer to lease, or a
reservation of, or portion for, the Premises. This document
will become effective and binding only upon execution and
delivery by Landlord to Tenant.
V. Vacating Premises. Upon vacating the Premises, Tenant will be
responsible for removing all fiberglass and boat building
residue that may exist and return Premises in the same
condition as received.
W. Exhibits. The exhibit(s) and addendum(s), if any, specified
herein are attached to this Lease and by reference are
incorporated herein.
X. Indemnification. All indemnification, hold harmless and duty
to defend provisions hereunder shall survive termination of
this Lease.
Y. Subordination. In the event Tenant shall finance any new
equipment to be placed in the leased Premises, and Tenant's
Lender shall require a subordination of Landlord's interest in
same, Landlord agrees not to unreasonably withhold such
subordination.
Z. Ambiguities. The normal rule of construction to the effect
that ambiguities in an agreement are construed against the
drafting party shall not apply to this Lease.
IN WITNESS WHEREOF, this Lease is executed on the date and year
first-above written.
14
<PAGE>
TENANT
JUPITER MARINE INTERNATIONAL, INC.
_______________________________ By: _____________________________
WITNESS
- -------------------------------
WITNESS
LANDLORD
_______________________________ By: _____________________________
WITNESS CARL M. HERNDON
_______________________________
WITNESS
15
<PAGE>
ADDENDUM TO LEASE AGREEMENT
BETWEEN CARL HERNDON AND
JUPITER MARINE INTERNATIONAL, INC.
Unless otherwise indicated, the paragraph numbers in this Addendum
shall correspondence to the paragraph numbers in the Lease Agreement itself.
3. RENT. Notwithstanding anything to the contrary contained in the
Lease Agreement, Tenant shall not be obligated to pay Landlord rental payments
for the first four (4) months as contemplated in the Lease Agreement is
("Waiver"). In consideration for the Waiver, Tenant shall be obligated to invest
$40,000 in leasehold improvements in the Premises. Landlord represents and
warrants that such leasehold improvements will place the premises in a condition
which will allow Tenant to operate its business efficiently for a period of 30
days after the boat building operations commence (the "Thirty Day Period"). In
the event the Tenant becomes obligated to make additional leasehold improvements
within the Thirty Day Period, such additional amounts shall be reduced from
subsequent monthly rental payments to Landlord from Tenant.
4. SECURITY DEPOSIT AND LAST MONTH'S RENT. Landlord and Tenant agree
that a security deposit equal to the amount of one (1) month's rent shall be
collectible by the Landlord from the Tenant at any time beginning six (6) months
from the date hereof after the payment of such security deposit is approved by
the board of directors of the Tenant.
8. ENVIRONMENTAL MATTERS. Notwithstanding anything to the contrary in
the Lease Agreement, Tenant shall not be obligated to defend, indemnify or hold
harmless or be responsible in any way for any environmental matters or damage on
or to the Premises which was caused prior to the date the Tenant assumes
occupancy of the Premises. Landlord shall indemnify or hold harmless or be
responsible in any way for any environmental matters or damage on or to the
Premises which was caused prior to the date the Tenant assumes occupancy of the
Premises.
8.5 LANDLORDS REPRESENTATIONS AND WARRANTIES. Landlord represents and
warrants to Tenant: (i) that the Landlord has the power and authority to enter
into the Lease Agreement and that when executed by the parties, the Lease
Agreement will be a valid and binding obligation on the Landlord; (ii) that the
Premises is not in violation of any law, rule or regulation (including
environmental laws, rules or regulations) that relates to the Premises or the
contemplated uses thereof nor is Landlord aware of any such conditions which
could result in such a violation; (iii) that there is no litigation, including
Bankruptcy proceedings against Landlord, relating to, or affecting, the
Premises. Landlord further represents and warrants that it has complied with the
terms of any mortgage or note secured by the Premises and that Landlord shall
continue to do so throughout the terms of this Lease Agreement or any renewal
period. Landlord agrees to indemnify and hold harmless Tenant for any damage or
loss suffered by Tenant or its
<PAGE>
employees as a result of the condition of the Premises or Landlord's negligent
maintenance of the Premises.
23. SALE OR TRANSFER OF PREMISES. Notwithstanding anything to the
contrary contained herein, in the event of any transfer of title of the
Premises, Landlord will remain responsible to Tenant for the security deposit as
set forth in paragraph 4 hereof.
LANDLORD:
- ---------------------
Carl Herndon
TENANT:
By:
- ------------------------------
Thomas Weaver, Chief Financial Officer of Jupiter
Marine International, Inc.
Date
- -----------------
Subsidiaries of Jupiter Marine International Holdings, Inc.
1) Jupiter Marine International, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> FEB-28-1999
<CASH> 7,608
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 244,600
<CURRENT-ASSETS> 260,480
<PP&E> 1,042,133
<DEPRECIATION> 211,795
<TOTAL-ASSETS> 1,090,818
<CURRENT-LIABILITIES> 771,219
<BONDS> 350,000
533
0
<COMMON> 2,085
<OTHER-SE> (33,019)
<TOTAL-LIABILITY-AND-EQUITY> 1,090,818
<SALES> 96,651
<TOTAL-REVENUES> 96,651
<CGS> 158,611
<TOTAL-COSTS> 158,611
<OTHER-EXPENSES> 318,487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,570
<INCOME-PRETAX> (393,017)
<INCOME-TAX> 0
<INCOME-CONTINUING> (393,017)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (393,017)
<EPS-BASIC> (.19)
<EPS-DILUTED> (.11)
</TABLE>
