U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
REGISTRATION OF SECURITIES OF SMALL ISSUERS
UNDER THE 1934 ACT
KENWICK INDUSTRIES, INC.
(Name of Small Business Issuer in its Charter)
FLORIDA 65-0596319
(State of (IRS Employer
incorporation) Identification No.)
KENWICK INDUSTRIES, INC.
660 LINTON BOULEVARD, SUITE 202
DELRAY BEACH, FLORIDA 33445
(Address of Principal Place of Business)
(561) 278-6080
(Issuer's Telephone Number)
SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT
Common Stock, par value $0.01 per share
(Title of class)
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TABLE OF CONTENTS
Description of Business ................................................. 4
Management Discussion and Analysis of Financial Condition ............... 10
Description of Property ................................................. 18
Security Ownership of Certain Beneficial Owners and Management .......... 19
Directors, Executive Officers, Promoters and Control Persons ............ 21
Certain Relationships and Related Transactions .......................... 23
Description of Securities ............................................... 24
Market for Common Equity and Related Stockholder Matters ................ 25
Legal Proceedings ....................................................... 25
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure .................................................. 25
Recent Sales of Unregistered Securities; Use of Proceeds from
Registered Securities ................................................. 26
Indemnification of Directors and Officers ............................... 27
Financial Statements, December 31, 1998 ................................. F-1
Financial Statements, Nine Months Ended September 30 .................... F-16
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Description of Exhibits.................................................. 25
3
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DESCRIPTION OF BUSINESS
Kenwick Industries, Inc. ("Kenwick" or the "Company") is a corporation organized
under the laws of the State of Florida as Kenwick Inc., effective July 7, 1995.
In July, 1998, the Company's name was changed to Kenwick Industries, Inc.
The Company's address is 660 Linton Boulevard, Suite 202, Delray Beach, Florida
33445. Its telephone number is (561) 278-6090.
Kenwick has been doing business as American Video Language Institute since 1995
when the Company acquired certain assets and the rights to license certain
intellectual property from American Video Language Institute, Inc. In August,
1998 the Company acquired Automax USA, Inc., a Florida corporation, and its
subsidiaries Automax International, Inc. and Automax USA Finance, Inc., through
the exchange of stock.
Kenwick owns 80% of the common stock of Sphere Advertising, Inc., a Florida
corporation, incorporated on August 21, 1998 to perform advertising for American
Video Language Institute. This corporation is currently inactive.
American Video Language Institute
American Video Language Institute (AVLI) markets video learning systems that
teach English. AVLI's products include specialty courses that teach basic
English, business English terminology and children's English lessons.
AVLI specializes in videos because:
o Most of its present potential customers have video viewing equipment.
o Videos allow the learner to hear, see, and interact with the lessons,
strengthening both learning and retention.
o The student can replay the instructions as often as needed and at a time
and place convenient to the student.
o Cost of lessons are reasonable and affordable.
In the past, AVLI's primary target customers were immigrants settling in the
United States, institutions, such as libraries, schools, government agencies,
and special-interest groups and interested parties outside the United States.
Most of AVLI's business was derived from immigrant groups coming from China,
Korea, Vietnam and Latin America. Due to the inability of these groups to either
read or speak English, AVLI advertised in the foreign language media appropriate
for the linguistic group. It also employed foreign language speaking marketing
personnel on its premises to respond to 800 number calls from targeted groups.
Due to the weak economy in Asian countries and changes in the educational
background of the AVLI's market, a study was conducted which indicated that the
re-evaluation
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of its marketing approach be made. There is increasing worldwide demand for the
ability to speak English due to the growth of the computer industry combined
with the growth of the Internet. Therefore, AVLI has moved to new advertising
and marketing to help attain a healthy future expansion.
AVLI has formulated two projects utilizing the Internet. Project 1 would offer
the Company's products for sale via the Internet by presentations in foreign
languages geared to reach overseas individuals desiring to learn to speak
English. This project can be implemented in the short to intermediate term
because significant technical development and financing are not required. AVLI
is in the process of discussing with Internet companies, specializing in foreign
language websites, the formation of strategic alliances in the marketing of the
courses. AVLI products would be advertised on, and ordered through, appearances
on its partners' websites in return for a portion of the sales revenues
generated from each site.
Project 2 would create an AVLI website in the United States that could be
accessed worldwide for a fee to obtain ALVI's programs in English speech through
the Internet. This educational website would be used by people in the United
States and abroad who wish to learn English without physical course materials
used in Project 1. The courses offered through the site also would be suitable
for use by various institutions. The website would include chat rooms, related
merchandise offerings and future support. The technical development associated
with Project 2 would take approximately one year after securing the necessary
technical development support. AVLI would seek an Internet website development
firm which would create and maintain the AVLI Project 2 website in return for a
portion of the revenues received from the site. Securing a partner and
development of the Project 2 Site will not commence prior to the implementation
of Project 1.
AVLI already has quality proprietary video properties necessary to present a
full program. Meetings with interested companies are in progress to obtain the
appropriate entity for collaboration to supply the technical and financial
ingredients so that the program to be put into effect.
In order to implement these projects the Company is seeking joint venture
partners or strategic alliances with established companies with the required
technical knowledge and facilities. There is no assurance that the necessary
partners can be found and that the financial projections for these projects can
be met.
There is significant competition in teaching English as a second language. There
are public and private schools, publishers of printed lessons and producers of
audio, video and CD instruction.
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Competition from video lessons similar to the Company's products is very
fragmented. However, there is one high profile competitor, Ingles Sin Barreres,
which specializes in teaching English to Spanish-speaking people only. This
competitor does not have an assortment of products similar to AVLI and its
pricing is substantially higher. Nevertheless, it has established itself
utilizing an advertising budget far exceeding the capabilities of AVLI.
Management believes that its AVLI products are competitively superior in three
areas: quality of products, range of products, and application to various
language groups. In 1995, AVLI's Speak to Me, Sets 1, 2 and 3, were awarded four
star ratings, out of five stars, by the Video Rating Guide for Libraries. The
entire range of a the AVLI products are used by schools and libraries throughout
the United States. AVLI offers a broader range of specialized courses than many
of its competitors. Also, the Company offers courses of to speakers of Chinese,
Vietnamese, Korean, Spanish, Portuguese, Russia, and German.
AVLI is positioning itself to take advantage of the expansion of the Internet in
Asia, South America, and Europe and the growing demand for learning English. Its
marketing strategy is to work with a partner who has the ability to present AVLI
programs in Projects 1 and 2, described above, and to conduct an effective
advertising program in various countries to draw attention to the benefits of
AVLI's programs.
AVLI's marketing will be focused on individuals desiring to learn English,
business organizations that will subscribe for employees, for instance, schools,
distance learning programs and government agencies.
AVLI has rights in the United States to the following intellectual property:
Trademarks-
1. Speak To Me(TM), U.S. Trademark Reg. No. 1,628,078, registered December
18, 1990
2. Business Express(R), U.S. Trademark Application No. 74/611,814, filed
December 16, 1994
Trade name-
American Video Language Institute
Copyrights-
1. Speak To Me, Set One, Registration No. Pa 1 367 423
2. Speak To Me, Set Two, Registration No. Pa 450 383
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3. Speak To Me, Set Three, Registration No. Pa 465 656
4. Speak To Me Set Survival Vocabulary, Registration No. Pa 523 549
5. English Pronunciation & Vocabulary Course On Video, Registration No. Pa
383 641
6. AVLI English Course, Registration No. Pa 712 822
AVLI owns or has licensed, from Philips Consumer Electronics in the Netherlands
and from Integrated English International, Inc. ("IEI") in the United States,
the following intellectual property:
1. Integrated English - a videotape program which also utilizes audio tapes
and voice monitor to refine pronunciation.
2. International Business - a business language course that deals with global
businesses such as exporting, importing and international finance and
banking.
3. Blip and Blab - a course developed to teach children how to speak English
which combines teaching with entertainment to maintain the child's
interest.
The Company has rights to sell its licensed products exclusively in within the
United States and on a nonexclusive basis anywhere in the world with the
exception of Austria, Germany and Switzerland. AVLI has an option to exclusive
distribution rights in Mexico and Canada. Under the license, the Company must
purchase a minimum quality of product from IEI and pay royalties to IEI.
AVLI's business, products and properties are not subject to federal state or
local regulation.
The revenues received in 1998 and 1999 by AVLI from the sale of its products
are:
1999
Course 1998 (9 months ended Sept. 30)
------ ---- -------------------------
Speak To Me $ 95,500 $ 34,000
Integrated English 26,500 6,200
Business Express 31,000 3,900
Blip and Blab -- 8,100
International Business -- 1,200
-------- --------
Total $153,000 $ 53,400
AVLI has 3 employees, one full time and two part time.
Automax, USA
Automax operates two stores in South Florida that sell used cars. Automax
retails 4 to 10 year old cars which are divided into four groups: (1) foreign
cars under 100,000 miles; (2) American cars under 90,000 miles; (3) vans, trucks
and sport utility vehicles; and (4) high mileage specialty cars. Automax also
wholesales used cars which do not fit into these four categories.
Through its finance companies subsidiary, Automax USA Finance, Inc., Automax
provides financing for its customers ("self financed") by originating retail
automobile installment sales contracts secured by the cars it sells. Automax's
customers typically have limited credit histories, low income and/or past credit
problems. Automax intends to expand primarily by opening additional used car
stores in Florida and extending its operations to other areas of the
southeastern United States.
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Automax believes the quality and reliability of its cars (1) reduce the
probability of product failure (which Management believes is the leading cause
of defaults on finance contracts in Automax's industry), (2) reduce losses on
Automax's repossession of cars, and (3) define the Automax brand. Due to the
quality and reliability of its cars, Automax is able to provide a 24
month/24,000 mile self funded service contract to its customers. The Company's
sells used cars in its retail stores for an average price of approximately
$8,000.
Automax intends to become the leading self financed retailer of used vehicles in
the southeastern United States by capitalizing on its operating strengths and
executing the growth strategy described below.
We believe that product failure is a leading cause of defaults on finance
contracts in the self financed used car industry. Generally, Automax's cars are
models having good or superior reputation for quality and reliability. All
Automax retail vehicles undergo a comprehensive 110 points inspection,
reconditioning, and, as necessary, repair at our mechanical affiliates, or our
own facilities. Due to the quality, and reliability, condition and age of
Automax's cars, we are able to provide a self funded 24 month/24,000 mile
service contract to our customers. The service contract is a limited warranty
insurance policy on the car's power train. The policy is purchased through an
insurance company and its cost is passed through to the customers through a
portion of the dealer preparation charge. Free maintenance services offered by
Automax include oil and transmission fluid changes, tire rotation and minor
tune-ups. Self funded repairs require Automax's customers to visit Automax's
preferred repair shops, and allow Automax to evaluate the condition, road
worthiness, and mechanical reliability of its cars from time to time. This gives
Automax the opportunity to evaluate the condition of every vehicle and keep the
vehicle powertrain in road worthy condition.
Automax separates the credit approval process from the sales process. Credit
review approvals conducted by experienced finance personnel at Automax's
headquarters. The credit underwriting process strictly adheres to objective
underwriting standards. This results in improved collection experience. Automax
regularly reviews its collection results to assess the effectiveness of its
underwriting standards.
Automax diligently and proactively pursues collection of its finance receivables
or maintaining a professional, customer friendly atmosphere. Automax generally
begins repossession procedures when a customer is two payments past due. We
believe that one of the reasons Automax generally experiences lower losses on
defaults than our competitors because we act quickly to repossess our cars when
defaults occur. This, in turn, helps assure that repossessed cars are in better
condition than they would be otherwise.
In order to become the leading self financed retailer of used cars in
southeastern United States, Automax intends to open additional stores in both
the geographic markets where it currently operates and in new markets. The
choice of locations is based upon the presence of suitable customers. Automax's
criteria for opening additional used car stores in existing markets include
sufficient projected incremental sales volume, reconditioning capacity,
geographic media coverage and market share. We believe significant expansion
opportunities satisfying these criteria are available within its existing
markets. Automax's criteria for opening used car stores in
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new markets include the adequacy of radio and television coverage, demographic
makeup of the market, availability of qualified managers, access to an adequate
supply quality used cars and availability of appropriate store locations.
The automobile industry in southern Florida, as well as the Southeast generally,
has consolidated due to the tightening of credit to sub-prime dealers/customers.
Automax draws customers from Miami to Port St. Lucie. There is little
competition in this geographic area for the vehicles sold by Automax.
Competition in Automax's market is based pricing and condition of the vehicles
sold. Reputation and customer service are also important factors. We have many
repeat customers and a good reputation in our geographic area. We sell cars at
100 percent markup, including warranties.
Automax uses TV, radio, newspaper and trade publications to advertise its
vehicles. It also uses direct marketing voice mail and caller ID to accept
responses to Automax ads. Every call is recorded and returned. Customers are
encouraged to visit Automax locations. Other car dealerships are solicited and
their salesmen paid a commission should they refer a customer that purchased an
Automax vehicle.
Automax has fifteen employees. It also has eight commission sales persons. The
number of commission sales persons varies from time to time.
Automax is subject to regulation by various departments of the State of Florida.
The Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles,
licenses Automax as a dealer of motor vehicles. Automax has a Motor Vehicle
Retail Installment Seller License from the Department of Banking and Finance to
conduct motor vehicle retail installment sales. The Department of Agriculture
and Consumer Services, Division of Consumer Services, licenses motor vehicle
repairs. Additionally, Palm Beach County issues a County Occupational License.
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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The following discussion and analysis of the Company's consolidated financial
position and consolidated results of operations should be read in conjunction
with the Company's Selected Consolidated Financial Information included and the
Consolidated Financial Statements and related Notes thereto included herein.
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RESULTS OF OPERATIONS
The Company operates in two business segments:
In August 1995, upon organization, the Company acquired the assets of American
Video Language Institute, Inc. These assets consisted of the trade name,
trademarks and copyrights needed to produce English language courses. The cost
of the acquisition was $725,000, which exceeded the fair value of the net
tangible assets acquired by $655,000.
In August 1998, the Company acquired all of the issued and outstanding shares of
the common stock of Automax USA, Inc., Automax International, Inc. and Automax
USA Finance, Inc. (collectively referred to as "Automax") in exchange for
1,000,000 shares of Kenwick's common stock. This acquisition is being accounted
for by the pooling-of-interest method. Our financial statements have been
restated to reflect the acquisition.
Automax is a Florida corporation organized in 1997, and is engaged in the
business of buying, selling and financing used cars in West Palm Beach, Florida.
COMPARISON OF UNAUDITED YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31,
1998.
The following table sets forth revenues and expenses in aggregate dollars and as
a percentage of net sales for the Company for the years ended December 31, 1997
and 1998. As a result of the Automax acquisition discussed above, and
differences in the unaudited results for the year ended December 31, 1997 and
the audited results of the year ended December 31, 1998, the results of
operations for the year ended December 31, 1998 are not comparable to those for
the year ended December 31, 1997.
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------------------
1998 Unaudited 1997
-------------------- ----------------------
<S> <C> <C> <C> <C>
Net Sales $ 3,953,759 100.0% $ 2,111,736 100.0%
Cost of Goods Sold 2,407,599 60.9% 1,209,583 57.3%
Interest Income 315,033 8.0% 7,311 0.3%
General and Administrative Expenses 1,274,562 32.2% 1,226,289 58.1%
Impairment loss 405,000 10.2% --
Income (loss) before Income Tax 181,631 4.6% (316,825) (15.0)%
Net income (loss) $ 44,931 1.1% $ (316,825) (15.0)%
==================== ======================
</TABLE>
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The differences discussed below between the year ended December 31, 1997 and the
year ended December 31, 1998 are primarily attributable to the acquisition of
Automax in 1998, with the exception of the Impairment Loss.
NET SALES. The Company's revenues increased approximately $1.8 million, or 86%,
from $2.1 million for the year ended December 31, 1997, to $3.9 million for the
year ended December 31, 1998.
COSTS. Costs of goods sold were $2.4 million for the year ended December 31,
1998 compared to $1.2 million during the same period in 1997, representing an
increase of $1.2 million, or 100%.
INTEREST INCOME. Interest income increased from approximately $7,300 for the
year ended December 31, 1997 to $315,000 for the year end December 31, 1998, an
increase of 42 times. Interest income increased primarily due to addition of
the Automax segment. Automax's primary business is buying, selling and
fianancing used cars and interest income is a significant source of income. The
average Automax loan to customers returns 29% over a three year contract.
IMPAIRMENT LOSS. During 1998, the Company had significant losses from its AVLI
operations resulting in limited cash flow and was unable to market its video
courses. Management reviewed its intangible assets for impairment based on
assessments of future operations and recorded an impairment loss of $405,000.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
(including depreciation and amortization), increased approximately $48,300, or
3.9%, for the year ended December 31, 1998 compared to 1997. The Company does
not foresee any material expenditures in the near future.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth the major components of the increase in the cash
and cash equivalents of the combined predecessor companies:
For the year ended December 31,
-------------------------------
1998 Unaudited 1997
-------------- --------------
Net cash (used) by operating activities (1,642,594) (1,081,337)
Net cash (used) by investing activities (27,554) (25,608)
Net cash provided by financing activities 1,661,434 1,103,152
Net (decrease) in cash (8,714) (3,793)
The Company requires capital to support increases in finance receivables,
inventories, property and equipment, and working capital for general corporate
purposes. Funding sources available to the Company include operating cash flow,
related party borrowing, third party investors, financial institution borrowing
and borrowing against finance receivables.
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Net cash flows used in operating activities were approximately $1.1 million and
$1.6 million during 1997 and 1998, respectively. Cash used in operating
activities in 1997 can be primarily attributed about $317,000 in net operating
losses, an increase of $628,000 in accounts receivable, and an increase of
$494,000 in inventory. Cash used in operating activities in 1998 can be
primarily attributed to an increase of over $1.6 million in accounts receivable
and an increase of about $552,000 in inventory. Additionally, during 1998, the
Company had significant losses from its AVLI operations resulting in limited
cash flow and was unable to market its video courses. Management reviewed its
intangible assets for impairment based on assessments of future operations and
recorded an impairment loss of $405,000.
Cash used in investing activities was approximately $26,000 and $28,000 during
1997 and 1998, respectively. The 1997 and 1998 amounts reflect the acquisition
of property and equipment.
Cash provided by financing activities was approximately $1.1 million and $1.7
million during 1997 and 1998, respectively. In 1997, over $1 million was raised
through increases in related party loans and over $78,000 was raised by the sale
of common stock. This was offset by an approximate $53,000 principal reduction
on notes payable. In 1998, $400,000 was raised through the sale of debenture
bonds, over $861,000 was raised through increases in related party loans and
over $410,000 was raised by the sale of common stock. This was offset by an
approximate $18,000 principal reduction on notes payable. The Company does not
have a line of credit with any bank.
The activities described above resulted in net decrease in cash of $8,714 in
1998 and $3,793 in 1997.
REVENUES AND EXPENSES BY SEGMENT
The following table sets forth the revenues and expenses of the Company by
segment for the year ended December 31, 1998.
Total/
Kenwick Automax Consolidated
------- ------- ------------
Revenues $ 153,036 $ 3,800,723 $ 3,953,759
Interest Income 1,118 313,915 315,033
Interest Expense 42,804 -- 42,804
Depreciation and Amortization 65,088 6,199 71,287
Net Income (loss) (512,758) 557,689 44,931
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 TO NINE MONTHS ENDED
SEPTEMBER 30, 1999.
The following table sets forth revenues and expenses in aggregate dollars and as
a percentage of net sales for the Company for the nine months ended September
30, 1998 and 1999. As a result of the Automax acquisition discussed above, the
results of operations for the nine months ended September 30, 1998 are not
comparable to those for the nine months ended September 30, 1999.
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<TABLE>
<CAPTION>
For the nine months ended September 30,
-----------------------------------------------------
Unaudited 1998 Unaudited 1999
------------------------ ------------------------
<S> <C> <C> <C> <C>
Net Sales $ 2,978,641 100.0% $ 4,297,777 100.0%
Cost of Goods Sold 1,825,109 61.3% 2,957,542 68.8%
Interest Income 236,470 7.9% 1,647,959 38.3%
General and Administrative Expenses 916,364 30.8% 1,758,742 40.9%
Income before Income Tax 473,638 15.9% 1,229,452 28.6%
Net income $ 284,183 9.5% $ 737,671 17.2%
======================== ========================
</TABLE>
NET SALES. The Company's revenues increased approximately $1.3 million, or 43%
from approximatly $3.0 million for the nine months ended September 30, 1998, to
$4.3 million for the nine months ended September 30, 1999. Kenwick revenues
continued to decline while Automax revenues increased.
COSTS. Costs of goods sold were $3 million for the nine months ended September
30, 1999 compared to $1.8 million during the same period in 1998, representing
an increase of $1.2 million, or 67%.
INTEREST INCOME. Interest income increased from approximately $236,000 for the
nine months ended September 30, 1998 to $1.6 million for the nine months ended
September 30, 1999, an increase of almost 7 times. The increase in interest
income is attributable to Automax. Automax's primary business activity is
buying, selling and financing used cars and interest income is a significant
source of income.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
(including depreciation and amortization), increased from approximately $916,000
for the nine months ended September 30, 1998 to about $1.8 million for the nine
months ended September 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth the major components of the increase in the cash
and cash equivalents of the combined predecessor companies:
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<TABLE>
<CAPTION>
For the nine months ended September 30,
---------------------------------------
Unaudited 1998 Unaudited 1999
------------------ -----------------
<S> <C> <C>
Net cash (used) by operating activities (1,253,244) (514,922)
Net cash (used) by investing activities (20,485) (99,888)
Net cash provided by financing activities 1,384,477 750,747
Net increase in cash 110,718 135,937
</TABLE>
Net cash flows used in operating activities were approximately $1.25 million and
$515,000 during the nine months ended September 30, 1998 and 1999, respectively.
Cash used in operating activities during the nine months ended September 30,
1998 can be primarily attributed about $284,000 in net operating income, an
increase of $2.1 million in accounts receivable, an increase of $562,000 in
inventory, an increase of $164,000 in accounts payable, and an increase of
$203,000 in accrued liabilities. Cash used in operating activities in the nine
months ended September 30, 1999 can be primarily attributed to about $738,000 in
net operating income, an increase of over $2.1 million in accounts receivable,
an increase of $209,000 in inventory, an increase of $30,000 in accounts
payable, and an increase of $477,000 in accrued liabilities.
Cash used in investing activities was approximately $20,000 and $100,000 during
the nine months ended September 30, 1998 and 1999, respectively. The 1998 and
1999 amounts reflect the acquisition of property and equipment.
Cash provided by financing activities was approximately $1.38 million and
$750,000 during the nine months ended September 30, 1998 and 1999, respectively.
During the six months ended September 30, 1998, over $1 million was raised
through increases in related party loans and $356,000 was raised by the sale of
convertible debentures. During the six months ended June 30, 1999, over $442,000
was raised through increases in related party loans and over $317,000 was raised
by the sale of convertible debentures.
The activities described above resulted in net increase in cash of $111,000 and
$136,000 for the nine month period ended September 30, 1998 and 1999,
respectively.
REVENUES AND EXPENSES BY SEGMENT
The following table sets forth the unaudited revenues and expenses of the
Company by segment for the nine months ended September 30, 1998.
For the 9 Months Ended September 30, 1998 (unaudited)
Total/
Kenwick Automax Elim Consolidated
------- ------- ---- ------------
Revenues 128,099 2,850,542 2,978,641
Interest Income 1,034 235,436 236,470
Interest Expense 34,859 0 34,859
Deprecation and
Amortization 52,955 4,649 57,604
Net Income (Loss) (175,127) 459,310 284,183
Total Assets 841,684 3,459,941 (100,000) 4,201,625
The following table sets forth the unaudited revenues and expenses of the
Company by segment for the nine months ended September 30, 1999.
For the 9 Months Ended September 30, 1999 (unaudited)
Total/
Kenwick Automax Elim Consolidated
------- ------- ---- ------------
Revenues 53,382 4,244,395 4,297,777
Interest Income 4 1,647,955 1,647,959
Interest Expense 88,312 147,607 235,919
Deprecation and
Amortization 17,508 7,818 25,326
Net Income (Loss) (235,104) 972,775 737,671
Total Assets 895,818 5,695,620 (504,542) 6,086,896
OPERATIONAL CHANGES.
American Video Language Institute
AVLI has not produced sufficient revenues in the past two fiscal years to cover
expenses. Therefore, the Company has undertaken a complete reassessment of
marketing techniques, advertising expenditures and personnel. Substantial
changes in this division are now underway.
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The prime target customers for our English Speech Videos were immigrants to the
United States from the Pacific Rim, Latin America and Eastern Europe. In the
past the Company invested in continuous advertising in foreign language media in
an attempt to develop consumer recognition and attention. This program was
supported by foreign speaking telemarketers to respond to questions from
prospective customers and to finalize orders.
Changes in the market, due in part to a more English proficient immigrant,
paired with the support of foreign communities within the United States have
reduced the traditional target market. Furthermore, substantially increased
marketing by competitors aimed at the Spanish speaking market, a still viable
market, has caused the Company to reconsider its marketing strategies and goals
and to undertake major changes.
There is still a worldwide need for proficiency in the English language. With
the growth of the Internet, the need may even be greater now than ever before.
With this in mind, the Company has formulated a strategy to utilize the Internet
as an effective vehicle for selling and transmitting educational properties such
as those owned by the Company.
The Company is now in the development phase of forming alliances with companies
currently active in the sale of language and educational properties through the
Internet. We are negotiating with several companies who have both established
Internet presence and consumer interest. Our programs can be effectively
integrated with the offerings of these companies at no cost to the Company. AVLI
can offer not only its educational properties but can offer its proven ability
to produce and ship its quality, award-winning programs to consumers. The
Company's knowledge of the market and its experience with foreign consumers is
an added incentive for Internet companies to form an alliance with AVLI.
Progress has been made with interested parties and AVLI is optimistic that it
will finalize an agreement shortly which should turn this division into a
profitable one. However, there can be no assurance that negotiations will be
concluded successfully.
While attempting to form our new alliances and Internet sales programs, AVLI has
made the following changes in an attempt to reduce overhead and to channel the
corporate energies toward the ultimate goal of Internet inclusion.
1. Personnel were reduced from 9 to 3 people.
2. Advertising has been cancelled.
3. Telemarketing has ceased, thus, substantially reducing phone
expenses.
4. Since space requirements have diminished, the Company has reduced
the size of its corporate headquarters.
With the focus on establishing strategic alliances to sell its educational
properties and the cost cutting outlined above, AVLI hopes to improve revenues
and profits in near future when the alliances are established.
16
<PAGE>
Automax
Automax was established in the first quarter of 1997 by Andrea Parkoff, who
purchased the assets of Exim Motorworks, a company involved in mechanical
repairs, body works and the sales of used vehicles. Automax was acquired by
Kenwick in August 1998 for one million (1,000,000) shares of Common Stock.
Automax has two locations in West Palm Beach, Florida.
The Company's vehicles undergo thorough inspection, reconditioning and, as
necessary, repair. Through our finance company subsidiary, we provide financing
for our customers by originating retail automobile installment sales contracts
secured by the cars we sell. Revenues from Automax include the sales of used
vehicles, automotive repairs, bodywork and automobile financing. We believe that
the quality and reliability of the Company's cars reduce the probability of
product failure which industry analysts believe is traditionally the leading
cause of defaults on finance contracts.
The market for the sale of the Company's vehicles, although general in nature,
targets customers who are "high risk" borrowers. Since the majority of all sales
are financed directly by Automax, the price of each vehicle, and the interest
rate charged for financing, reflect the risks inherent in selling to this
market. The sale price must take into consideration the possibility of
repossession and consequent reconditioning.
The Company benefits from repossessing vehicles. The original purchaser forfeits
the down payment and any weekly payments received and the sales price of the
vehicle reverts to its original sales price. Even taking into account any
necessary reconditioning, repairs, and repossession costs, the Company realizes
additional significant revenues on all repossessions. Given the customer base,
we closely track current information on each of its finance customers, including
employment and residence, in the event that repossession becomes necessary.
Additionally, unlike traditional finance contracts, payments are demanded on a
weekly, rather than monthly, basis so that any payment defaults can be dealt
with more swiftly than with traditional contracts and can thereby minimize its
loss exposure. We take aggressive action if the customer fails to continue
making payments.
All monies received from sales and financing, after overhead and expenses are
paid, are invested in the purchase of additional vehicles. Since the Company
internally finances the majority of its receivables, in order to effect growth,
the Company must seek outside financing. To date Automax has been unable to
secure such financing. The parent company, Kenwick Industries, Inc., has loaned
Automax funds to purchase new inventory. In the future, additional monies from
Kenwick might not be available.
The used car industry in which the Automax competes is highly fragmented and
very competitive. Although most other retailers face increased competition from
automobile consolidators such as CarMax and AutoNation USA, as well as the
marketing of used vehicles on the Internet, Automax does not market to the same
consumer. Unlike Automax, these retailers focus on the
17
<PAGE>
consumer who can readily qualify for conventional financing. The primary focus
of the Company's marketing strategy for its used cars is its ability to finance
consumers with poor credit histories. However, given the target consumer of
Automax, as long as we can provide financing to poor credit consumers, Automax's
sales potential appears to be good.
The Company offers financing to its customers who purchase used cars at its used
car locations. Automax does not give any loans to persons who are not customers.
The Company has established a policy not to acquire third party originated
finance contracts. It provides financing only for its own customers, thereby
relying on its own underwriting standards and not those of a third party. The
Company finances approximately 95% of the used car sales through finance
contracts that the Company originates and services.
DESCRIPTION OF PROPERTY
In April 1997, Kenwick entered into a five-year lease, for the term June, 1997
through May, 2002, for 1990 square feet of office space at 2455 East Sunrise
Boulevard, Fort Lauderdale Florida. The rent for the first year was $2,611.88
per month and increases to $3,056.11 per month in the fifth year. The lease is
guaranteed by Kenneth Wulwick and Sheldon Glickman, both officers and directors
of the Company, and Jerold Nabridge, husband of Margaret Nabridge, an officer
and director of the Company. In December 1999 this premise was sublet for the
remainder of the lease period at a base rent of $2,825.00 per month plus 4%
annual increases.
In August 1999, Andrea Parkoff, the former owner of Automax USA and Michael
Parkoff, her husband entered into a three-year lease, for the term August, 1999
through July, 2002, for the premises located at 216 North Military Trail, West
Palm Beach, Florida, at a rent of $8,000 per month. This premise was sublet to
Automax on the same date.
In January 1998, Automax USA entered into a five-year lease, for the term
January 20, 1998 through January 19, 2003, for the premises located at 813 North
Military Trail, West Palm Beach, Florida, at a rent of $10,000 per month.
In January 2000, the Company entered into a three year, lease for the term
January, 2000 through January, 2003, for 760 square feet of office space at 660
Linton Boulevard, Delray Beach, Florida, at a rent of $939.87 per month.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 15, 2000 by (i) each
person or entity known to the Company to own beneficially five percent or more
of the Company's Common Stock, (ii) each of the Company's directors, and (iii)
the Company's executives.
18
<PAGE>
Security Ownership of Certain Beneficial Owners
Name and Address of Amount and Nature
Title of Class Beneficial Owner (1) of Beneficial Owner Percent of Class
Common Stock Sheldon Glickman 786,429 (2) (3) 7.20
Common Stock Margaret Nabridge 836,429 (3) (4) 7.66
Common Stock Andrea Parkoff
7101 Lyons Head Rd. 1,000,000 9.16
Boca Raton, FL 33493
Common Stock Ronnie S. Wulwick 929,671 (5) (6) 8.51
8781 SW 8th St.
Plantation, FL 33324
(1) The address of all persons who are executive officers or directors of the
Company is in care of the Company, 660 Linton Boulevard, Suite 202, Delray
Beach, Florida 33445.
(2) Sheldon Glickman is an officer and director of the Company. Of this total
number, Stephanie Jill Cohen, a daughter of Sheldon Glickman owns 10,000 shares;
Michelle Engel, a daughter of Sheldon Glickman owns 20,000 shares individually
or as custodian; Marla Jean Glickman, a daughter of Sheldon Glickman owns 25,000
shares; and Monica Glickman Haber, a daughter of Sheldon Glickman owns 15,000
shares individually or as custodian.
(3) Does not include options to purchase 200,000 shares of Common Stock at
$0.4375 per share which are exercisable in three equal installments commencing
July 15, 1997, January 15, 1998 and July 15, 1998, respectively, until March 31,
2002.
(4) Margaret Nabridge is an officer and director of the Company. Of this total
number, Donna Nabridge Bland, a daughter of Margaret Nabridge, owns 15,000
shares individually as custodian; Brett Nabridge, a son of Margaret Nabridge,
owns 6,000 shares; Caren Fersten Nabridge, the daughter-in-law of Margaret
Nabridge, owns 23,000 shares individually or as custodian; Elyssa Nabridge, the
daughter of Margaret Nabridge, owns 10,000 shares; Jerold Nabridge, the husband
of Margaret Nabridge, owns 8,000 shares; and Robert Nabridge, a son of Margaret
Nabridge, owns 10,000 shares.
19
<PAGE>
(5) Ronnie S. Wulwick is the wife of Kenneth S. Wulwick, an officer and director
of the Company. Of this total number, Norman Wulwick, the uncle of Ronnie S.
Wulwick, owns 100 shares, and Samuel Wulwick, the father-in-law of Ronnie S.
Wulwick, owns 1,000 shares.
(6) Does not include options granted to Kenneth S. Wulwick to purchase 200,000
shares of Common Stock at $0.4375 per share which are exercisable in three equal
installments commencing July 15, 1997, January 15, 1998 and July 15, 1998,
respectively, until March 31, 2002.
Security Ownership of Management
Name and Address of Amount and Nature
Title of Class Beneficial Owner (1) of Beneficial Owner Percent of Class
Common Stock Sheldon Glickman 786,429 (2) (3) 7.20
Common Stock Margaret Nabridge 836,429 (3) (4) 7.66
Common Stock Kenneth S. Wulwick 929,671 (5) (6) 8.51
All directors
and executive
officers as
a group
(3 persons) 2,552,529 23.37
(1) The address of all persons who are executive officers or directors of the
Company is care of the Company, 660 Linton Boulevard, Suite 202, Delray
Beach, Florida 33445.
(2) Sheldon Glickman is an officer and director of the Company. Of this total
number, Stephanie Jill Cohen, a daughter of Sheldon Glickman owns 10,000 shares;
Michelle Engel, a daughter of Sheldon Glickman owns 20,000 shares individually
or as custodian; Marla Jean Glickman, a daughter of Sheldon Glickman owns 25,000
shares; and Monica Glickman Haber, a daughter of Sheldon Glickman owns 15,000
shares individually or as custodian.
(3) Does not include options to purchase 200,000 shares of Common Stock at
$0.4375 per share which are exercisable in three equal installments commencing
July 15, 1997, January 15, 1998 and July 15, 1998, respectively, until March 31,
2002.
(4) Margaret Nabridge is an officer and director of the Company. Of this total
number, Donna Nabridge Bland, a daughter of Margaret Nabridge, owns 15,000
shares individually or as custodian; Brett Nabridge, a son of Margaret Nabridge,
owns 6,000 shares; Caren Fersten Nabridge, the daughter-in-law of Margaret
Nabridge, owns 23,000 shares individually or as custodian; Elyssa Nabridge, the
daughter of Margaret Nabridge, owns 10,000 shares; Jerold Nabridge, the husband
of Margaret Nabridge, owns 8,000 shares; and Robert Nabridge, a son of Margaret
Nabridge, owns 10,000 shares.
(5) Kenneth S. Wulwick is an officer and director of the Company. Mr. Wulwick
owns none of the securities shown. Of this total number, Ronnie S. Wulwick, the
wife of Kenneth S.
20
<PAGE>
Wulwick, owns 928,571 shares, Norman Wulwick, the uncle of Kenneth S. Wulwick,
owns 100 shares, and Samuel Wulwick, the father of Kenneth S. Wulwick, owns
1,000 shares.
(6) Does not include options granted to Kenneth S. Wulwick to purchase 200,000
shares of Common Stock at $0.4375 per share which are exercisable in three equal
installments commencing July 15, 1997, January 15, 1998 and July 15, 1998,
respectively, until March 31, 2002.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following sets forth information, as of September 30, 1999, concerning the
Company's directors and executive officers:
<TABLE>
<CAPTION>
Name Age Position Since
<S> <C> <C> <C>
Kenneth S. Wulwick 53 Chief Executive Officer, President and July, 1995
Director
Sheldon Glickman 66 Senior Vice President, Sales and Marketing July, 1996
and Director
Margaret Nabridge 54 Senior Vice President, Planning, Secretary July, 1996
and Director
</TABLE>
Kenneth S. Wulwick serves as Chief Executive Officer of the Company, President
and a Director since its inception in July, 1995. Mr. Wulwick graduated from C.
W. Post College in New York in 1969 with a Bachelor of Science degree in
marketing. From 1975 through 1995 Mr. Wulwick served as Executive Vice President
in charge of hard lines for Playtogs Factory Outlet, an independent discount
store selling a complete variety of consumer goods. Mr. Wulwick was responsible
for merchandising and procurement of hard goods sold in his retail outlet,
control of inventory and advertising. From September 1969 through 1975 Mr.
Wulwick was the resident buyer for a buying syndicate involved in electronics
industry.
Sheldon Glickman serves as Senior Vice President in charge of Sales and
Marketing and a Director of the Company. Mr. Glickman graduated from City
College of New York, Bernard Baruch campus with a Bachelor of Business
Administration degree with a major in international trade in 1955. Mr. Glickman
has at least 40 years experience in merchandising and sales with extensive
background in domestic and international trade. From 1995 to present, Mr.
Glickman served as President and Chief Executive Officer of In Focus
International, Inc., a company involved in international trade and development
of furniture products of foreign origin for sale within the United States. From
1992 to 1995, Mr. Glickman served as Chief Executive Officer of Pricerite
Stores, a Hong Kong retail chain. From 1989 to 1992, Mr. Glickman served as
21
<PAGE>
President of the Sheldon Glickman Company. The company specialized in sales to
large United States retailers of goods.
Margaret Nabridge serves as Senior Vice President of Planning, Secretary, and a
Director of the Company. From 1988 to 1996, Ms. Nabridge was Chief Executive
Officer of Abstractions II Inc., a national interior design firm specializing in
both commercial and residential installations with particular emphasis on the
design needs of the health care industry. She currently divides her time 70% to
Kenwick and 30% to Abstractions II. From 1994 through 1996, Ms. Nabridge served
as a consultant to Laser Vision of America, Inc. a corporation serving the
ophthalmic medical community with mobile laser units throughout North Carolina.
Ms. Nabridge developed the concept of providing the advanced ophthalmic lasers
on a mobile, cost per use, basis to physicians. From 1974 to 1980, Ms. Nabridge
was the Chief Executive Officer of Miami Medical Pavilion, North Shore Medical
Pavilion and Deerfield Medical Pavilion where she built, designed, purchased and
staffed each of the facilities, oversaw and directed a large staff of auxiliary
personnel and medical technicians, concentrated on marketing strategies and
enhanced patient relations. Ms. Nabridge graduated from the City University of
New York, Hunter College, cum laude, in 1996 with a dual major in psychology in
education. She was a member of both the education and psychology honor
societies. She received a Juris Doctor degree from the Shepherd Law Center, Nova
University, Fort Lauderdale, Florida, magna cum laude in 1984.
EXECUTIVE COMPENSATION
The following table discloses the annual and long-term compensation earned for
services rendered in all capacities by the Company's Chairman of the Board and
President and the Company's four other most highly compensated executive
officers for 1996, 1997, 1998 and 1999 (through September 30, 1999):
22
<PAGE>
Summary Compensation Table
Securities
Underlying
Salary Options
Name and Principal Position Year ($) (#)
Kenneth S. Wulwick,
CEO, President and Director
1996 20,000.00 --
1997 38,333.48 100,000(1)
1998 21,279.74 --
1999(through 14,167.00 100,000
9/30)
Sheldon Glickman,
Senior Vice President and Director
1996 1,250.00 --
1997 13,670.00 100,000(1)
1998 6,835.00 --
1999(through 9,875.00 100,000
9/30)
Margaret Nabridge,
Senior Vice President and Director
1996 1,250.00 --
1997 34,175.00 100,000(1)
1998 29,940.00 --
1999(through 17,003.00 100,000
9/30)
(1) In 1997, the Company granted options for 360,800 shares to key employees at
an exercise price of $3.00 per share. In 1999, the grant was modified to 300,000
at an exercise price of the then current market, $0.4375.
OPTIONS GRANTED IN 1999
(Individual Grants)
<TABLE>
<CAPTION>
Number of Percent of
securities total options
underlying granted to
options employees in Exercise price Expiration
Name granted (#) fiscal year ($/Sh) date
(a) (b) (c) (d) (e)
<S> <C> <C> <C> <C>
Kenneth S. Wulwick,
CEO, President and
Director 100,000 33.3% $0.4375 3/31/02
Sheldon Glickman,
Senior Vice President
and Director 100,000 33.3% $0.4375 3/31/02
Margaret Nabridge,
Senior Vice President
and Director 100,000 33.3% $0.4375 3/31/02
</TABLE>
AGGREGATED OPTION EXERCISES IN 1999
(Individual Grants)
<TABLE>
<CAPTION>
Number of Value of
securities unexercised
underlying in-the-money
unexercised options at
options at 1999-end ($)
Shares 1999-end exercisable/
acquired on Value realized exercisable/ unexercisable
Name exercise (#) ($) unexercisable (1)
(a) (b) (c) (d) (e)
<S> <C> <C> <C> <C>
Kenneth S. Wuiwick,
CEO, President and
Director 0 0 200,000/0 0/0
Sheldon Glickman,
Senior Vice President and
Director 0 0 200,000/0 0/0
Margaret Nabridge,
Senior Vice President and
Director 0 0 200,000/0 0/0
</TABLE>
(1) The closing price was $0.271 on December 22, 1999, the last day in 1999 the
Company's stock traded.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two years, the company had the following transactions with
certain persons identified in Items 4 and 5 above:
<TABLE>
<CAPTION>
Year Person Position Transaction Amount ($)
- ---- ------ -------- ----------- ----------
<S> <C> <C> <C> <C>
1997 Kenneth S. Wulwick CEO, President, Director Payment of outstanding loan(1) 68,130
Andrea Parkoff 5% Shareholder Loan(1) 1,145,880
1998 Kenneth S. Wulwick CEO, President, Director Payment of outstanding loan(1) 107,677
Andrea Parkoff 5% Shareholder Loan(1) 968,833
</TABLE>
(1) The loans from Mr. Wulwick and Ms. Parkoff are non-interest bearing open
loans.
23
<PAGE>
DESCRIPTION OF SECURITIES
The Company is authorized to issue 50,000,000 shares of Common Stock, $.01 par
value per share, the 10,921,683 shares of which are issued and outstanding as of
February 15, 2000. Of this amount, 3,861,729 shares are restricted and 7,059,954
shares are free trading stock.
Holders of Common Stock are entitled to one vote per share of all matters to be
voted on by the shareholders and do not have cumulative voting rights. Subject
to the rights of holders of outstanding shares of preferred stock, if any, the
holders of Common Stock are entitled to receive such dividends, if any, as may
be declared from time to time by the Board of Directors in its discretion in
legally available funds. There are presently no plans to pay dividends with
respect to the shares of Common Stock. Upon liquidation, dissolution or winding
up of the Company, after payment of creditors and holders of any senior
securities of the Company, including preferred stock, if any, the assets of the
Company will be divided per route honor per share basis among the holders of the
shares of Common Stock. All shares of Common Stock are fully paid and
nonassessable.
24
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market information
Until January 19, 2000, the Company's Common Stock was traded on the Over The
Counter Bulletin Board ("OTCBB") system under the symbol KWIN. It was delisted
on January 20, 2000 for failing to meet the OTCBB Eligibility Rules. The
Company's Common Stock is currently quoted in the National Quotation Bureau's
"pink sheets".
The high and low bids, by quarter, for the Company's Common Stock for the period
that such information is available are:
Quarter High Bid Low Bid
------- -------- -------
October, 1999 - December, 1999 1 1/4 5/32
July, 1999 - September,1999 2 3/16 1/2
April, 1999 - June, 1999 2 1/16 7/16
January, 1999 - March, 1999 1 19/32 7/16
October, 1998 - December, 1998 1 9/16 5/8
July, 1998 - September,1998 4 3/16 1 1/16
April, 1998 - June, 1998 7 5/16 2
March 1998 5 1/4 4
As of February 15, 2000, there were approximately 250 holders of record of the
Company's Common Stock.
The Company has not paid dividends on shares of its Common Stock. There
presently are no plans to pay dividends with respect to the shares of Common
Stock.
LEGAL PROCEEDINGS
There are no legal proceedings currently pending against the Company.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
25
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED
SECURITIES
Within the past three years, the Company has sold the following securities
without registering the securities under the Securities Act.
<TABLE>
<CAPTION>
Exemption
Amount ---------
Date Title ($) Purchaser (Section/Rule)
----
<S> <C> <C> <C> <C>
July 31, 1997 Common Stock 10,000 Rosebud Financial, Inc. 4(2) (services)
Dec. 2, 1997 - Common Stock @ $3.50/share 98,245 Various Purchasers 504
Nov. 29, 1998
Jan. 20, 1998 - Common Stock @ $3.50/share 411,131 Various Purchasers 504
Mar. 27, 1998
Feb. 25, 1998 Common Stock 2,000 Claudia Zaman 4(2) (services)
Apr. 2, 1998 Common Stock 300 Wall Street 4(2) (services)
Communications
Apr. 16, 1998 Common Stock 2,500 Venture Capital & 4(2) (services)
Marketing
May 11, 1998 Common Stock 1,000 Venture Capital & 4(2) (services)
Marketing
May 22, 1998 Common Stock 500 Venture Capital & 4(2) (services)
Marketing
June 16, 1998 Common Stock 1,000 Bonnie Bonomo 4(2) (services)
July 6, 1999 Common Stock 600 Brett Nabridge 4(2) (services)
July 14, 1998 Common Stock 200 Keith Decker 4(2) (services)
July 14, 1998 Common Stock 200 Portfolio Investments 4(2) (services)
July 16, 1998 Series A Convertible Debenture 175,000 Sholem Liebenthal 504
Sept. 2, 1998 Common Stock 300 Wall Street 4(2) (services)
Communications
Sept. 16, 1998 Series B Convertible Debenture 225,000 Sholem Liebenthal 504
Oct. 19, 1998 Common Stock 2,500 Bonomo Inc. 4(2) (services)
Oct. 20, 1998 Common Stock 900 Portfolio Investments 4(2) (services)
Nov. 20, 1998 Series C Convertible Debenture 115,000 Amram Rothman 504
Dec. 23, 1998 Common Stock 2,500 Bonomo Inc. 4(2) (services)
Feb. 1, 1999 Series D Convertible Debenture 115,000 Joshua Heimlich 504
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Exemption
Amount ---------
Date Title ($) Purchaser (Section/Rule)
----
<S> <C> <C> <C> <C>
Feb. 22, 1999 Series E Convertible Debenture 170,000 Amram Rothman 504
Mar. 28, 1999 Series F Convertible Debenture 200,000 Y. L. Hirsch 504
July 22, 1999 Series G Convertible Debenture 175,000 HLKT Holdings, LLC 504
Sept. 21, 1999 Series H Convertible Debenture 225,000 M&B Trading, LLC 504
January 6, 2000 Series I Convertible Debenture 115,000 M&B Trading, LLC 504
</TABLE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850 of the Florida Business Corporation Act provides that a
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 or she is or was a director, officer, employee, or
agent of the corporation against liability incurred in connection with such
proceeding if he or she acted in good faith and in a manner he or she 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 or her conduct was unlawful.
27
<PAGE>
KENWICK INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1998
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
of Kenwick Industries, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Kenwick
Industries, Inc. and Subsidiaries as of December 31, 1998 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Kenwick Industries,
Inc. and Subsidiaries as of December 31, 1998, and the results of its operations
and cash flows for the year then ended, in conformity with generally accepted
accounting principles.
October 13, 1999 Puritz & Weintraub, LLP
Plantation, Florida Certified Public Accountants
F-2
<PAGE>
KENWICK INDUSTRIES, INC.
Consolidated Balance Sheet
December 31, 1998
ASSETS
Cash $ 12,037
Installment loans receivable, net 2,351,904
Inventory 1,101,639
Property and equipment, net 63,653
Intangible assets 110,732
Security deposits and other assets 6,537
-----------
Total assets $ 3,646,502
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 384,765
Payroll tax payable 78,424
Due to related parties 2,152,220
Notes payable 304,691
Convertible debentures 208,401
Income tax payable 136,700
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none issued
Common stock, $.01 and par value, 10,000,000 shares authorized, 42,335
4,233 497 shares issued and outstanding
Additional paid in capital 714,677
Retained (deficit) (375,711)
-----------
Total liabilities and stockholders' equity $ 3,646,502
===========
Notes to financial statements are an integral part of this statement.
F-3
<PAGE>
KENWICK INDUSTRIES, INC.
Consolidated Statements of Income
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1998 Unaudited 1997
----------- --------------
<S> <C> <C>
Net Sales $ 3,953,759 $ 2,111,736
Less: Cost of Goods Sold 2,407,599 1,209,583
----------- --------------
Gross Profit 1,546,160 902,153
Interest Income 315,033 7,311
----------- --------------
Income Before Operating Expenses 1,861,193 909,464
----------- --------------
General and Administrative Expenses
Advertising 88,522 208,600
Amortization 45,543 44,478
Provision for doubtful accounts 426,428 301,739
Depreciation 25,744 7,514
Interest 42,804 33,790
Insurance 32,950 61,274
Rent 187,313 71,827
Salaries and commissions 102,354 125,882
Taxes and Licenses 14,105 13,212
Other general & administrative expenses 308,799 357,973
----------- --------------
Total general and administrative expenses 1,274,562 1,226,289
Impairment loss 405,000 0
----------- --------------
Total expenses 1,679,562 1,226,289
Income (loss) before Income Tax 181,631 (316,825)
Income tax 136,700 0
----------- --------------
Net income (loss) $ 44,931 $ (316,825)
=========== ==============
Basic earnings per share:
Weighted average shares outstanding 3,907,743 3,620,113
=========== ==============
Earnings per share $ 0.01 $ (0.09)
=========== ==============
Diluted earnings per share:
Adjusted weighted average shares outstanding 3,961,917 3,620,113
=========== ==============
Earnings per share $ 0.01 $ (0.09)
=========== ==============
</TABLE>
Notes to financial statements are an integral part of this statement.
F-4
<PAGE>
KENWICK INDUSTRIES, INC.
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Common Stock Additional
----------------------------- Paid in Retained
Shares Amount Capital (deficit) Total
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1997 3,571,429 $ 35,714 $ 16,556 $ (103,817) $ (51,547)
Sale of Common Stock 128,070 1,281 74,657 75,938
Net (Loss) - 1997 (Unaudited) (316,825) (316,825)
------------ ------------- ------------- ------------- ------------
Balances at December 31,
1997 3,699,499 36,995 91,213 (420,642) (292,434)
Conversion of debentures to
equity 229,532 2,295 196,678 198,973
Sale of common stock 117,466 1,175 409,956 411,131
Issuance of common stock for
services 187,000 1,870 16,830 18,700
Net income - 1998 44,931 44,931
------------ ------------- ------------- ------------- ------------
Balances at December 31,
1998 4,233,497 $ 42,335 $ 714,677 $ (375,711) $ 381,301
============ ============= ============= ============= ============
</TABLE>
Notes to financial statements are an integral part of this statement.
F-5
<PAGE>
KENWICK INDUSTRIES, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the year ended December 31,
-------------------------------
1998 Unaudited 1997
----------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 44,931 $ (316,825)
Adjustment to reconcile net income (loss) to
cash (used in) operating activities:
Depreciation and amortization 71,287 51,992
Impairment loss 405,000 0
Issuance of common stock for services 18,700 0
(Increase) in accounts receivables (1,663,698) (627,793)
(Increase) in security deposit (940) (1,024)
(Increase) in inventory (552,085) (493,738)
Decrease in other assets 373 4,413
Increase/(decrease) in accounts payable (140,907) 261,259
Increase in payroll tax payable 38,045 40,379
Increase in income tax payable 136,700 0
----------- -----------
Net cash (used) in operating activities (1,642,594) (1,081,337)
----------- -----------
INVESTING ACTIVITIES
Purchase of property and equipment (27,554) (25,608)
----------- -----------
Net cash (used) by investing activities (27,554) (25,608)
----------- -----------
FINANCING ACTIVITIES
Principal reduction on note payable (18,228) (53,035)
Sale of debenture bonds 400,000 0
Decrease in bond discount 7,374
Increase in related party loans 861,157 1,077,749
Sale of common stock 411,131 78,438
----------- -----------
Net cash provided in financing activities 1,661,434 1,103,152
----------- -----------
Net (decrease) in cash (8,714) (3,793)
Cash at the beginning of the year 20,751 24,544
----------- -----------
Cash at the end of the year $ 12,037 $ 20,751
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 35,523 $ 28,854
=========== ===========
Conversion of convertible debt to common stock $ 198,873 0
=========== ===========
</TABLE>
Notes to financial statements are an integral part of this statement.
F-6
<PAGE>
KENWICK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
The Company operates in two business segments:
In August 1995, upon organization, the Company acquired the assets of American
Video Language Institute, Inc. These assets consisted of the trade name,
trademarks and copyrights needed to produce the English language courses. The
cost of the acquisition was $725,000, which exceeded the fair value of the net
tangible assets acquired by $655,000.
In August 1998, the Company acquired all of the issued and outstanding shares of
the common stock of Automax USA, Inc., Automax International, Inc. and Automax
USA Finance, Inc. (collectively referred to as "Automax") in exchange for
1,000,000 shares of Kenwick's common stock. This acquisition is being accounted
for by the pooling-of-interest method. These financial statements have been
restated to reflect the acquisition.
Automax is a Florida corporation organized in 1997, and is engaged in the
business of buying, selling and financing used cars in West Palm Beach, Florida.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All intercompany accounts and
transactions have been eliminated.
Revenue Recognition
The Company and its subsidiaries utilizes the accrual basis of accounting. Sales
are recorded when products are shipped or when cars are delivered. The Company
recognizes interest on its installment loans receivable over the terms of the
loan using the interest method.
Installment Loans Receivable
The installment loans receivable are stated at the amount of unpaid principal
reduced by an allowance for doubtful accounts as follows:
F-7
<PAGE>
Installment Loans Receivable (Cont'd.):
Automax Kenwick Combined
------- ------- --------
Retail trade receivables $2,704,046 $7,325 $2,711,371
Less: allowance for doubtful accounts (359,467) -- (359,467)
---------- ------ ----------
$2,344,579 $7,325 $2,351,904
========== ====== ==========
The receivables are collateralized by automobiles. If payments are delinquent,
the Company repossesses the automobiles which are then resold.
The allowance for doubtful accounts is maintained at a level considered adequate
to provide for losses that can be reasonably anticipated. The Company makes
continuous credit reviews of the loan portfolios and considers current economic
conditions, review of specific problem loans, and other factors in determining
the adequacy of its allowances. The Company's charge-off policy is based on a
loan-by-loan review. Since the Company has a short history, historical
information is being developed.
Inventories
Kenwick's inventories consist of blank and completed video tapes and shipping
materials. Inventories are stated at the lower of cost (determined on the
first-in first-out basis) or market.
Automax's inventories consist of used automobiles held for sale using the
specific identification method. Cost includes acquisition expenses, including
reconditioning and transportation costs. Inventories including parts and
accessories are valued at the lower of cost (first-in, first-out) or market.
The Company compares its inventory values to current market values on a monthly
basis and makes adjustments when necessary.
Property and Equipment
Property and equipment are carried at cost. Expenditures for major additions and
improvements are capitalized, while minor replacements, maintenance and repairs
are charged to expense as incurred. When property is retired or otherwise
disposed of, the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in the Consolidated Statement of
Income.
Depreciation is computed using the straight line method for financial reporting
purposes, and modified accelerated cost recovery system for income tax purposes.
For both methods, the useful lives are 5-7 years.
Deferred income taxes on the difference between tax and book depreciation is
insignificant.
F-8
<PAGE>
Property and Equipment (Cont'd.)
A summary of property and equipment at December 31, 1998 is as follows:
Furniture, fixtures and equipment $ 67,402
Machinery and equipment 24,685
Leasehold improvements 19,166
--------
Subtotal 111,253
Less: accumulated depreciation (47,600)
--------
$ 63,653
========
Intangible Assets
Intangible assets consist primarily of the cost of the acquired business in
excess of the fair value of the net tangible assets acquired (goodwill). These
costs also include copyrights, trademarks and customer lists.
The intangible assets were being amortized over 15 years, straight line method,
for both financial reporting and federal income taxes.
During 1998, the Company had significant losses from operations resulting in
limited cash flow and was unable to market its video courses. Management
reviewed its intangible assets for impairment based on assessments of future
operations and recorded an impairment loss of $405,000.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Advertising
Advertising costs are expensed as incurred.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". Accordingly, deferred income would be provided to
show the effect of temporary differences between the recognition of revenue and
expenses for financial and income tax reporting purposes and between the tax
basis of assets and liabilities and their reported amounts in the financial
statements.
F-9
<PAGE>
The acquired business in 1998, which was accounted for under the
pooling-of-interests method of accounting was an S corporation for income tax
purposes. The S corporation status of this company was terminated in 1998. For
purposes of these consolidated financial statements, federal and state income
taxes have been recorded as if this company had filed a conventional C
corporation tax return for the pre-acquisition periods.
The components of the provision for income taxes for the years ended December 31
are as follows:
1998 1997
---- ----
Current:
Federal $117,800 -0-
State 18,900 -0-
-------- -----
Provision for income taxes $136,700 $ -0-
======== =====
A reconciliation of income taxes reported on pretax income at statutory rates to
actual income tax expenses for the years ended December 31, is as follows:
<TABLE>
<CAPTION>
1998 % 1997 %
--------- ------- --------- --------
<S> <C> <C> <C> <C>
Income tax at statutory rates $ 61,800 34.0 $ -0- 0
State income taxes, net of
federal tax benefit 12,200 6.8 -0- 0
Tax savings on imputed interest expense (35,000) (18.5) -0- 0
Non-deductible expenses 9,000 4.7 -0- 0
Increase in allowance for loan losses 81,800 43.2 -0- 0
Other 6,900 3.6 -0- 0
--------- ------- --------- --------
Total income tax expense $ 136,700 73.8 $ -0- 0
========= ======= ========= ========
</TABLE>
As of December 31, 1997, the Company had approximately $210,000 of net operating
loss carryforwards which can be utilized to offset future taxable income through
2012. Due to the acquisition of Automax, the use of these prior losses are
doubtful and a full valuation allowance has been established.
Fair Value of Financial Instruments
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties
other than in a forced sale or liquidation.
At December 31, 1998, the Company's financial instruments included cash,
receivables, accounts payable, and borrowings.
F-10
<PAGE>
At December 31, 1998, the fair values of the above financial instruments
approximated carrying values because of the short-term nature of these
instruments.
Earnings (Loss) Per Common Share
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share", which simplifies the standards for computing earnings
per share ("EPS") previously found in APR No. 15, "Earnings Per Share". It
replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the diluted EPS computation.
The Company adopted SFAS No. 128 in 1997 and its implementation did not have a
material effect on the financial statements. EPS has been restated for all prior
periods presented.
Basic and dilutive net income (loss) per common share is based on the net income
(loss) divided by the weighted average number of common shares outstanding
during each year.
The Company's potential issuable shares of common stock pursuant to outstanding
stock purchase warrants and employee stock options are excluded from the
Company's diluted computation as their effect would be antidilutive. However,
the Company's convertible debentures are included in the computation of diluted
earnings per share since they are dilutive.
NOTE 2 - LONG-TERM DEBT
The Company has a promissory note to American Video Language Institute, Inc.,
due in 72 monthly payments, at approximately $8,500 per month, including
interest at prime plus 1%. The note matures on September 15, 2001. The note is
collateralized by all assets of the parent company.
Maturities of long-term debt for each of the next three years are as follows:
Year Ending
December 31 Amount
----------- ------
1999 $ 168,394
2000 76,095
2001 60,202
---------
Total 304,691
Current portion (168,394)
---------
Long-term portion $ 136,297
=========
F-11
<PAGE>
Due to Related Parties
The Company has non-interest bearing open loans with various shareholders in the
amount of $2,152,220 at December 31, 1998.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases office space under operating leases. Future minimum lease
obligations regarding operating leases are approximately:
Year Ending
December 31 Amount
----------- ------
1999 $ 200,000
2000 202,000
2001 205,000
2002 186,000
2003 25,000
---------
$ 818,000
=========
Contingencies
On June 10, 1998, a customer of the Company test drove one of the automobiles
and ran into a pole injuring the passenger. The passenger sustained a broken
neck and is presently making a claim against the Company's insurance company.
There is presently no pending litigation in this matter.
NOTE 4 - STOCKHOLDERS EQUITY
In July, 1997, the Company entered into an agreement with a marketer to assist
the Company in opening a Canadian office.. The Company paid a $10,000 fee and
issued 100,000 shares of restricted common stock as part of the agreement. At
the time of the agreement, the Company's common stock, because of its sustained
losses, had no market value. Accordingly, the Company recorded the above
restricted shares at par value.
In late 1997, pursuant to a private placement, the Company sold 28,070 units at
$3.50 per unit. Each unit consisted of one share of common stock and one warrant
entitling the holder to purchase one share of common stock at $3.90 per share
until March 10, 2002. These warrants are subject to redemption by the Company,
on not less than thirty days notice, at $.05 per warrant. No warrants have been
exercised.
F-12
<PAGE>
NOTE 4 - STOCKHOLDERS EQUITY (Cont'd.)
During 1998, the Company entered into an agreement with several companies to
assist in the public relations of the Company. The Company issued 187,000 shares
of stock for various services rendered. Although the stock was trading at an
average of $.50 share, these shares were recorded at $.10 per share. The
majority of these shares were restricted.
During 1998, the Company sold 117,466 share of stock at $3.50 per share.
NOTE 5 - EMPLOYEE STOCK OPTIONS
In January 1997, the shareholders approved the adoption of the 1997 stock option
plan (The "Plan"). The Plan provided for the granting of a maximum 500,000
options.
In January, 1997, the Board of Directors granted to key employees, officers, and
directors, 360,800 incentive options under the plan. The vested employees may
purchase the shares at an exercise price of $3. There was no market value at the
time of the grant. The expiration date of the options are five years from the
date of the grant. The following is a summary of outstanding stock options:
December 31,
------------
1998 1997
---- ----
Number of Option Number of Option
Shares Price Shares Price
------ ----- ------ -----
Beginning of Year 360,800 $ 3.00 360,800 $ 3.00
Cancelled (60,800) (3.00) 0 0
Granted 0 0 0 0
------- ------ ------- ------
End of year 300,000 $ 3.00 360,800 $ 3.00
======= ====== ======= ======
During May 1999, the Board of Directors adjusted the exercise price of the
options already granted to the various officers and directors to the then
current market rate of $.4375 from $3.00, and granted an additional 300,000
options.
NOTE 6 - CONVERTIBLE DEBENTURES
In July 1998, the Company sold 1% convertible debentures of $175,000. The
debentures are due July 2001.
During the year, holders converted $157,500 of the debentures into 229,532
shares of the Company's common stock.
F-13
<PAGE>
NOTE 6 - CONVERTIBLE DEBENTURES (Cont'd.)
In September, 1998, the Company sold 8% convertible debentures of $225,000. The
debentures are due September 2001. There were no conversions during the year.
The above debentures may be converted at any time into common stock at
approximately 80% of the average closing bid of the common stock.
NOTE 7 - SEGMENT AND RELATED INFORMATION
Effective December 31, 1998, the Company adopted SFAS No. 131, "Disclosure About
Segments of an Enterprise and Related Information." The Company's reportable
business segments are its video language business, which is selling video tapes
to individual and institutions, and the selling and financing used automobiles
in West Palm Beach, Florida.
For the Year Ended December 31, 1998
Total/
Kenwick Automax Consolidated
------- ------- ------------
Revenues $ 153,036 $ 3,800,723 $ 3,953,759
Interest Income 1,118 313,915 315,033
Interest Expense 42,804 -- 42,804
Depreciation and
Amortization 65,088 6,199 71,287
Net Income (loss) (512,758) 557,689 44,931
Total Assets 186,561 3,459,941 3,646,502
For the Period Ended December 31, 1997 (unaudited)
Automax
from inception
(July 1997)
Kenwick through Dec. 31, Total
12 mos. ended 1997)(Unaudited) Consolidated
------------- ---------------- ------------
Revenues $ 739,950 $1,371,786 $2,111,736
Interest income -- 7,311 7,311
Interest expense 33,790 -- 33,790
Depreciation and
amortization 51,992 -- 51,992
Net Income (loss) (223,401) (93,424) (316,825)
F-14
<PAGE>
NOTE 8 - SUBSEQUENT EVENTS
In 1999, the Company sold additional 8% convertible debentures of $600,000.
In 1999, the Company entered into a consulting agreement whereby the Company
would issue approximately 80,000 shares of common stock at prices ranging from
$1.50 to $2.50 per share.
Also, in 1999, the Company entered into an investment banking agreement where by
the Company issued a warrant to purchase 25,000 shares of common stock at $.01.
The warrant expires on June 7, 2006.
F-15
<PAGE>
KENWICK INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED
(UNAUDITED)
FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30
F-16
<PAGE>
KENWICK INDUSTRIES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited)
As of September 30
ASSETS 1998 1999
----------- -----------
Cash and Cash equivalences $ 131,469 $ 147,973
Installment loans receivable, net 2,359,247 4,323,233
Inventory 1,112,019 1,310,706
Property and equipment, net 64,087 106,891
Intangible assets 522,659 142,056
Security deposits and other assets 12,144 56,037
----------- -----------
Total assets 4,201,625 $ 6,086,896
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses 743,970 $ 465,769
Due to related parties 2,222,120 2,291,976
Note payable 320,310 257,691
Convertible debentures 356,000 526,350
Income tax payable 189,455 633,657
Common stock 38,067 54,350
Additional paid in capital 468,193 1,486,976
Retained (deficit) (136,490) 370,099
----------- -----------
Total liabilities and stockholders' equity $ 4,201,625 $ 6,086,896
=========== ===========
Notes to financial statements are an integral part of this statement.
F-17
<PAGE>
KENWICK INDUSTRIES, INC.
Consolidated Statements of Income
(Unaudited)
Nine Months Ended September 30
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Net Sales $ 2,978,641 $ 4,297,777
Less: Cost of Goods Sold 1,825,109 2,957,542
----------- -----------
Gross Profit 1,153,532 1,340,235
Interest Income 236,470 1,647,959
----------- -----------
Income Before Operating Expenses 1,390,002 2,988,194
----------- -----------
General and Administrative Expenses
Advertising 57,956 41,864
Amortization 34,259 14,054
Bad Debts Expense 319,821 369,956
Depreciation 23,345 11,272
Interest 34,859 235,919
Insurance 25,415 51,810
Rent 139,176 167,774
Salaries and commissions 80,744 369,335
Taxes and Licenses 9,522 8,796
Other general & administrative expenses 191,267 437,962
----------- -----------
Total general and administrative expenses 916,364 1,758,742
----------- -----------
Net income before income tax 473,638 1,229,452
Income tax 189,455 491,781
----------- -----------
Net income $ 284,183 $ 737,671
=========== ===========
Basic net income per share 0.07 0.15
Diluted net income per share 0.07 0.13
Average shares outstanding 3,829,455 4,845,624
Dilutive effect of convertible debentures not converted 1,620 837,500
Average shares outstanding assuming dilution 3,831,065 5,683,124
</TABLE>
Notes to financial statements are an integral part of this statement.
F-18
<PAGE>
KENWICK INDUSTRIES, INC.
Consolidated Statements of Cash Flow
(Unaudited)
Nine Months Ended September 30
<TABLE>
<CAPTION>
1998 1999
----------- -----------
OPERATING ACTIVITY
<S> <C> <C>
Net income $ 284,183 $ 737,671
Adjustments to reconcile net income to net cash provided
(used) by operating activity:
Depreciation and amortization 57,604 25,326
Conversion of debenture bonds to common stock 378,052 746,920
Provision for uncollectible trade accounts receivable 319,821 369,955
Changes in operating assets and liabilities:
Accounts receivables (2,090,862) (2,139,284)
Inventory (562,465) (209,140)
Prepaid expenses and other assets (6,920) (554,042)
Accounts payable 163,920 30,732
Accrued liabilities 203,423 476,867
----------- -----------
Net cash used by operating activities (1,253,244) (514,922)
INVESTING ACTIVITY
Additions to property and equipment (24,843) (54,510)
Proceeds from intangible assets 4,358 (45,378)
----------- -----------
Net cash used by investing activity (20,485) (99,888)
FINANCING ACTIVITY
Principal payments to reduce notes payable (2,609) (47,000)
Proceeds from related parties 1,031,056 442,298
Proceeds from sale of common stock 0 0
Proceeds from sale of convertible debenture 356,000 317,949
Capital contribution by shareholders 0 37,500
----------- -----------
Net cash provided by financing activity 1,384,447 750,747
----------- -----------
Net Increase in cash and cash equivalents 110,718 135,937
Cash and cash equivalents at the beginning of period 20,751 12,037
----------- -----------
Cash And cash equivalents at the end of the period $ 131,469 $ 147,974
=========== ===========
</TABLE>
Notes to financial statements are an integral part of this statement.
F-19
<PAGE>
KENWICK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements include all adjustments (consisting only of normal
recurring accruals), which are necessary for a fair presentation of the results
for the periods presented. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in conjunction
with the Company's Annual Report for the year ended December 31, 1998. The
results of operations for the nine months ended September 30, 1999 are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
The Company operates in two business segments:
In August 1995, upon organization, the Company acquired the assets of American
Video Language Institute, Inc. These assets consisted of the trade name,
trademarks and copyrights needed to produce the English language courses. The
cost of the acquisition was $725,000, which exceeded the fair value of the net
tangible assets acquired by $655,000.
In August 1998, the Company acquired all of the issued and outstanding shares of
the common stock of Automax USA, Inc., Automax International, Inc. and Automax
USA Finance, Inc. (collectively referred to as "Automax") in exchange for
1,000,000 shares of Kenwick's common stock. This acquisition is being accounted
for by the pooling-of-interest method. These financial statements have been
restated to reflect the acquisition.
Automax is a Florida corporation organized in 1997, and is engaged in the
business of buying, selling and financing used cars in West Palm Beach, Florida.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All intercompany accounts and
transactions have been eliminated.
Revenue Recognition
The Company and its subsidiaries utilizes the accrual basis of accounting. Sales
are recorded when products are shipped or when cars are delivered. The Company
recognizes Interest on its installment loans receivable over the term of the
loan using the interest method.
F-20
<PAGE>
Installment Loans Receivable
The installment loans receivable are stated at the amount of unpaid principal
reduced by an allowance for doubtful accounts as follows:
Automax Kenwick Combined
------- ------- --------
Retail Trade Receivables $ 5,051,136 $ 1,519 $ 5,052,655
Less: allowance for doubtful accounts (729,422) -- (729,422)
------------ -------- ------------
$ 4,321,714 $ 1,519 $ 4,323,233
============ ======== ============
The receivables are collateralized by automobiles. If payments are delinquent,
the Company repossesses the automobiles which are then resold.
The allowance for doubtful accounts is maintained at a level considered adequate
to provide for losses that can be reasonably anticipated. The Company makes
continuous credit reviews of the loan portfolios and considers current economic
conditions, review of specific problem loans, and other factors in determining
the adequacy of its allowances. The Company's charge-off policy is based on a
loan-by-loan review. Since the Company has a short history, historical
information is being developed.
Inventories
Kenwick's inventories consist of blank and completed video tapes and shipping
materials. Inventories are stated at the lower of cost (determined on a
first-in-first-out basis) or market.
Automax's inventories consist of used automobiles held for sale using the
specific identification method. Cost includes acquisition expenses, including
reconditioning and transportation costs. Inventories including parts and
accessories are valued at the lower of cost (first-in, first-out) or market.
Property and Equipment
Property and equipment are carried at cost. Expenditures for major additions and
improvements are capitalized, while minor replacements, maintenance and repairs
are charged to expense as incurred. When property is retired or otherwise
disposed of, the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in the Consolidated Statement of
Income.
Depreciation is computed using the straight line method for financial reporting
purposes, and modified accelerated cost recovery system for income tax purposes.
For both methods, the useful lives are 5-7 years.
Deferred income taxes on the difference between tax and book depreciation is
insignificant.
F-21
<PAGE>
A summary of property and equipment at September 30, 1999 is as follows;
Furniture, fixtures and equipment $ 85,309
Machinery and equipment 26,834
Leasehold improvements 53,619
Subtotal 165,762
Less: accumulated depreciation (58,871)
---------
106,891
=========
Intangible Assets
Intangible assets consist primarily of the cost of the acquired business in
excess of the fair value of the net tangible assets acquired (goodwill). These
costs also include copyrights, trademarks and customer lists.
The intangible assets were being amortized over 15 years, straight line method,
for both financial reporting and federal income taxes.
During 1998, the Company had significant losses from operations resulting in
limited cash flow was unable to market its video courses. Management reviewed
its intangible assets for impairment based on assessments of future operations
and recorded an impairment loss of $405,000,
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Advertising
Advertising costs are expensed as incurred.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Accordingly, deferred income would be provided to
show the effect of temporary differences between the recognition of revenue and
expenses for financial and income tax reporting purposes and between the tax
basis of assets and liabilities and their reported amounts in the financial
statements.
F-22
<PAGE>
The acquired business in 1998, which was accounted for under the
pooling-of-interests method of accounting was an S corporation for income tax
purposes. The S corporation status of this company was terminated in 1998. For
purposes of these consolidated financial statements, federal and state income
taxes, have been recorded as if this company had filed a conventional C
corporation tax return for the pre-acquisition periods.
The components of the provision for income taxes for the six months ended
September 30 are as follows;
1999 1998
Current:
Federal $544,944 $162,931
State 88,713 26,524
-------- --------
Provision for income taxes $633,657 $189,455
======== ========
Fair Value of Financial Instruments
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties
other than in a forced sale or liquidation.
At September 30, 1999, the Company's financial instruments included cash,
receivables, accounts payable and borrowings.
At September 30, 1999, the fair values of the above financial instruments
approximated carrying values because of the short-term nature of these
instruments.
Earnings (Loss) Per Common Share
In February 1997, the Financial Accounting Standards Board issued Statements No.
128, "Earnings Per Share", which simplifies the standards for computing earnings
per share ("EPS") previously found in APR No. 15, "Earnings Per Share". It
replaces the presentation of primary EPS with a presentation basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the diluted EPS computation.
The Company adopted SFAS No. 128 in 1997 and its implementation did not have a
material effect on the financial statements. EPS has been restated for all prior
periods presented.
Basic and dilutive net income (loss) per common share is based on the net income
(loss) divided by the weighted average number of common shares outstanding
during each year.
The Company's potential issuable shares of common stock pursuant to outstanding
stock purchase warrants and employee stock options are excluded from the
Company's diluted
F-23
<PAGE>
computation as their effect would be antidilutive. However, the Company's
convertible debentures are included in the computation of diluted earnings per
share since they are dilutive.
NOTE 3 - DUE TO RELATED PARTIES
The Company has non-interest bearing open loans with various shareholders in the
amount of $2,291,976 at September 30, 1999.
F-24
<PAGE>
DESCRIPTION OF EXHIBITS
The following Exhibits are filed pursuant to Item 601 of Regulation S-B.
Exhibit No. Description
- ----------- -----------
3. Articles of Incorporation and By-laws
3.1 Articles of Incorporation of Kenwick Industries, Inc., effective
July 7, 1995
3.2 Articles of Amendment of Kenwick Industries, Inc., filed July 30,
1998
3.3 Articles of Amendment of Kenwick Industries, Inc., filed June 31,
1999
3.4 Articles of Incorporation of Automax USA, Inc., filed January 1,
1997
3.5 Articles of Incorporation of Automax USA Finance, Inc., filed June
3, 1997
3.6 Articles of Incorporation of Automax International, Inc., filed June
16, 1998
3.7 By-Laws of Kenwick Industries, Inc., as of November 10, 1999
4. Instruments Defining the Rights of Security Holders
4.1 Series A Convertible Debenture, July 16, 1998
4.2 Series B Convertible Debenture, September 16, 1998
4.3 Series C Convertible Debenture, November 20, 1998
4.4 Series D Convertible Debenture, February 1, 1999
4.5 Series E Convertible Debenture, February 22, 1999
4.6 Series F Convertible Debenture, March 28, 1999
4.7 Series G Convertible Debenture, July 22, 1999
4.8 Series H Convertible Debenture, September 21, 1999
4.9 Series I Convertible Detenture, January 6, 2000
10. Material contracts
10.1 Licensing Agreement with Integrated English International, Inc.,
dated January 9, 1997
10.2 Distribution Sub-Licensing Agreement with Integrated English
International, Inc., dated June 15, 1998
10.3 Distribution License Agreement with Philips Consumer Electronics,
B.V., dated August 31, 1998
10.4 Stock Exchange Agreement with Automax International, Inc., et al.,
dated August 20, 1998
10.5 Lease of 2172 North Military Trail, West Palm Beach, Florida by
Automax USA, Inc., dated June 7, 1997
10.6 Lease of 2110 North Military Trail, West Palm Beach, Florida by
Andrea Parkoff and Michael Parkoff, dated August 1, 1999
10.7 Sublease of 2110 North Military Trail, West Palm Beach, Florida by
Andrea Parkoff and Michael Parkoff to Automax USA, Inc., dated
August 1, 1999
10.8 1997 Stock Option Plan
10.9 Landlord's Consent to Sublease 2455 E. Sunrise Boulevard, Suite 512,
Fort Lauderdale, Florida, dated December 28, 1999
10.10 Lease of 660 Linton Boulevard, Suite 202, Delray Beach, Florida,
effective January 7, 2000.
25
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on behalf by the
undersigned, thereunto duly authorized.
KENWICK INDUSTRIES, INC.
(Registrant)
Date: March 8, 2000
By:
/s/ Kenneth S. Wulwick
- ---------------------------
Kenneth S. Wulwick Chief Executive Officer, President and Director
/s/ Sheldon Glickman
- ---------------------------
Sheldon Glickman Senior Vice President, Sales and Marketing and
Director
/s/ Margaret Nabridge
- ---------------------------
Margaret Nabridge Senior Vice President, Planning, Secretary and
Director
26
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify from the records of this office that KENWICK, INC., is a corporation
organized under the laws of the State of Florida, filed on July 11, 1995,
effective July 7, 1995.
The document number of this corporation is P95000053188.
I further certify that said corporation has paid all fees and penalties due this
office through December 31, 1996, that its most recent annual report was filed
on June 24, 1996, and its status is active.
I further certify that said corporation has not filed Articles of Dissolution.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capitol, this the
Thirteenth day of January, 1997
[SEAL OF THE STATE OF FLORIDA]
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
<PAGE>
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of KENWICK, INC., a corporation organized under the laws of the
State of Florida, filed on July 11, 1995, effective July 7, 1995, as shown by
the records of this office.
The document number of this corporation is P95000053188.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capitol, this the
Thirteenth day of January, 1997
[SEAL OF THE STATE OF FLORIDA]
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
KENWICK, INC.
- --------------------------------------------------------------------------------
ARTICLE I - NAME
The name of the corporation is: KENWICK, INC.
ARTICLE II - DURATION
This corporation shall be perpetual commencing the date of execution and
acknowledgement of these Articles.
ARTICLE III - PURPOSE
This corporation is organized for the purpose of transacting any or all
lawful business, including but not limited to:
a. Any and all lawful business.
b. Pursue its purposes and business in any and all locations, foreign and
domestic.
c. Acquire, own, hold, develop, deal in and with, maintain and operate,
unlimitedly, such real and personal property of every kind and description
within and without the State of Florida.
d. Buy and sell real and personal property of any nature whatsoever.
e. Convey, sell, assign, transfer, lease, mortgage, pledge, exchange or
otherwise deal with any property.
f. Import and export wares, goods and merchandise of any nature
whatsoever.
g. Carry on all or any of the business of manufacturers, producers,
fabricators, processors, distributors, purchasers and sellers of products and
supplies of every kind, character and nature.
h. Purchase, hold, sell, transfer or deal in any manner with or in stocks,
bonds, obligations, securities or interests of its own or of any other person,
firm or corporation.
i. Pay cash or issue capital stock, debentures, bonds, mortgages, or other
obligations of the corporation for any acquisition by the corporation and for
any other lawful purpose.
j. Engage in the acquisition, ownership, sale, distribution and licensing
of patents, improvements and franchises, trademarks and trade names, and to
operate thereunder.
This document prepared by:
HAROLD WEISSMAN, ESQUIRE
1776 North Pine Island Road, Suite 118
Plantation, Florida 33322 Tel: (305) 474-2001
Florida Bar No: 334154
<PAGE>
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of KENWICK, INC., a corporation organized under the laws of the
State of Florida, filed on July 11, 1995, effective July 7, 1995, as shown by
the records of this office.
The document number of this corporation is P95000053188.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capitol, this the
Thirteenth day of January, 1997
[SEAL OF THE STATE OF FLORIDA]
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
KENWICK, INC.
- --------------------------------------------------------------------------------
ARTICLE I - NAME
The name of the corporation is: KENWICK, INC.
ARTICLE II - DURATION
This corporation shall be perpetual commencing the date of execution and
acknowledgement of these Articles.
ARTICLE III - PURPOSE
This corporation is organized for the purpose of transacting any or all
lawful business, including but not limited to:
a. Any and all lawful business.
b. Pursue its purposes and business in any and all locations, foreign and
domestic.
c. Acquire, own, hold, develop, deal in and with, maintain and operate,
unlimitedly, such real and personal property of every kind and description
within and without the State of Florida.
d. Buy and sell real and personal property of any nature whatsoever.
e. Convey, sell, assign, transfer, lease, mortgage, pledge, exchange or
otherwise deal with any property.
f. Import and export wares, goods and merchandise of any nature
whatsoever.
g. Carry on all or any of the business of manufacturers, producers,
fabricators, processors, distributors, purchasers and sellers of products and
supplies of every kind, character and nature.
h. Purchase, hold, sell, transfer or deal in any manner with or in stocks,
bonds, obligations, securities or interests of its own or of any other person,
firm or corporation.
i. Pay cash or issue capital stock, debentures, bonds, mortgages, or other
obligations of the corporation for any acquisition by the corporation and for
any other lawful purpose.
j. Engage in the acquisition, ownership, sale, distribution and licensing
of patents, improvements and franchises, trademarks and trade names, and to
operate thereunder.
This document prepared by:
HAROLD WEISSMAN, ESQUIRE
1776 North Pine Island Road, Suite 118
Plantation, Florida 33322 Tel: (305) 474-2001
Florida Bar No: 334154
<PAGE>
k. Enter into, make and perform contracts of every kind and description
with any person, firm or association, corporation and body politic conducive to
the attainment of any of the objects or purposes of the corporation.
l. Enter into any and all types of agreements relating to financing,
factoring and guarantees and to guarantee or secure, in any way, the debts or
obligations of any other persons, firms and/or corporations.
m. Guarantee performance by any other person and/or entity.
In general, this corporation may, without restriction, perform any and all
acts and functions permitted by law.
ARTICLE IV - CAPITAL STOCK
This corporation is authorized to issue 500 shares of common stock at ONE
DOLLAR ($1.00) par value common stock.
ARTICLE V - PRINCIPAL PLACE OF BUSINESS
The principal place of business for KENWICK, INC. is 8781 Southwest 8th
Street, Plantation, Florida 33324.
ARTICLE VI - INITIAL REGISTERED OFFICE AND AGENT
The name and street address of the registered agent of this corporation
is:
HAROLD WEISSMAN, ESQUIRE
1776 Pine Island Road
Suite 118
Plantation, Florida 33322
Telephone: (305) 474-2001
<PAGE>
ARTICLE VII - INITIAL BOARD OF DIRECTORS
This corporation shall have one (1) director initially. The number of
directors shall be increased from time to time by the by-laws but shall never be
less than one (1). The name and address of the director of this corporation are:
NAME ADDRESS
- ---- -------
Kenneth Wulwick 8781 Southwest 8th Street
Plantation, Florida 33324
ARTICLE VIII - INCORPORATION
The name and address of the person signing these articles is:
Kenneth Wulwick
8781 Southwest 8th Street
Plantation, Florida 33324
ARTICLE IX - AMENDMENT
This corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation, or any amendment hereto, and any
right conferred upon the shareholders is subject to this reservation.
IN WITNESS WHEREOF, the undersigned subscriber has executed these Articles
of Incorporation this 7th day of July, 1995.
/s/ Kenneth Wulwick
-------------------
KENNETH WULWICK
<PAGE>
STATE OF FLORIDA ) SS.
COUNTY OF BROWARD)
The foregoing Articles of Incorporation were acknowledge before me this
7th day of July, 1995 by KENNETH WULWICK, who is personally known to me / or who
has produced the foregoing identification [ILLEGIBLE] Drivers License 461 899
495 and who did / did not take an oath.
/s/ Nancy L. Roberts
--------------------
NOTARY PUBLIC
STATE OF FLORIDA
Name:
My Commission expires: [NOTARY SEAL OF NANCY L. ROBERTS]
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS
OR DOMICILE FOR THE SERVICE OF PROCESS
WITHIN THIS STATE, NAMING AGENT UPON
WHOM PROCESS MAY BE SERVED
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
In pursuance with Chapter 48.091 of the Florida Statutes, the following is
submitted in compliance with said Act:
FIRST; That KENWICK, INC, desiring to organize under the laws of the State
of Florida, with its registered office as indicated in the Articles of
Incorporation, in the City of Fort Lauderdale, Broward County, State of Florida,
has named HAROLD WEISSMAN, ESQUIRE, 1776 North Pine Island Road, Suite 118,
Plantation, Florida as its registered agent to accept service of process within
the State.
ACKNOWLEDGEMENT
Having been named to accept service of process for the above stated
Corporation, at the place designated in this Certificate, I hereby accept to act
in this capacity and agree to comply with the provisions of said Act relative to
keeping open said office.
/s/ Harold Weissman
-------------------
HAROLD WEISSMAN
REGISTERED AGENT
[SEAL OF THE STATE OF FLORIDA]
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
July 30, 1998
KENWICK INDUSTRIES, INC.
2445 E SUMMER BLVD
STE 512
FT LAUD, FL 33304US
Re: Document Number P95000053188
The Articles of Amendment to the Articles of Incorporation for KENWICK, INC.
which changed its name to KENWICK INDUSTRIES, INC., a Florida corporation, were
filed on July 30, 1998.
The certification requested is enclosed. To be official, the certification for a
certified copy must be attached to the original document that was electronically
submitted and filed under FAX audit number H98000014089.
Should you have any question regarding this matter, please telephone (850)
487-6050, the Amendment Filing Section.
Darlene Connell
Corporate Specialist
Division of Corporations Letter Number: 098A00040113
<PAGE>
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify the attached is a true and correct copy of the Articles of Amendment,
filed on July 30, 1998, to Articles of Incorporation for KENWICK, INC. which
changed its name to KENWICK INDUSTRIES, INC., a Florida corporation, as shown by
the records of this office.
I further certify the document was electronically received under FAX audit
number H98000014089. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P95000053188.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Thirtieth day of July, 1998
Authentication Code: 098A00040113-073098-P95000053188-1/1
/s/ Sandra B. Mortham
[SEAL]
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
KENWICK, INC.
Pursuant to Section 607.1006 of the Business Corporation Act of the State
of Florida, the undersigned President of KENWICK, INC., a corporation organized
and existing under and by virtue of the Business Corporation Act of the State of
Florida, do hereby certify that pursuant to Written Consent of all of the
Directors and a Majority of the Shareholders of the Corporation dated July 27,
1998, the shareholders and Directors approved the following amendment to the
Corporation's Articles of Incorporation bearing document number P95000053188,
and does hereby certify:
ARTICLE I of the Articles of Incorporation of this Corporation shall be
amended to read as follows:
"ARTICLE I
CORPORATE NAME
The name of this Corporation shall be: KENWICK INDUSTRIES, INC."
The foregoing amendment was adopted by a Majority of the shareholders and
all of the Directors of the Corporation by Written Consent dated July 27, 1998.
The number of votes cast for the amendment to the Corporation's Articles of
Incorporation was sufficient for approval.
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation has executed these Articles of Amendment to the Articles of
Incorporation as of July 27, 1998.
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
---------------------------------
Kenneth S. Wulwick, President
Prepared By:
ROXANNE BEILLY FL BAR # 851450
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
(954) 763-1200
<PAGE>
WRITTEN CONSENT
OF THE BOARD OF DIRECTORS
AND MAJORITY SHAREHOLDERS OF
KENWICK, INC.
The undersigned, being all of the Directors and Majority Shareholders of
Kenwick, Inc., a Florida corporation (the "Corporation"), hereby consent to the
corporate actions specified below and adopt the following resolutions by written
consent pursuant to Sections 607.0821 and 607.0704 of the Florida Business
Corporation Act;
RESOLVED, the Board of Directors and Majority Shareholders hereby approve
the filing by the Corporation of Articles of Amendment to its Articles of
Incorporation changing the Corporation's name to "Kenwick Industries, Inc." in
substantially the form attached hereto and changing the trading symbol of the
Corporation's common stock on the Over-The-Counter Bulletin Board; and
BE IT FURTHER RESOLVED, that the appropriate officers or representatives
of the Corporation be and hereby are authorized and directed to execute and
deliver any and all documents and to perform any and all acts as they may deem
necessary or appropriate in their sole discretion to consummate the actions
described herein.
DATED as of July 27, 1998.
/s/ Kenneth Wulwick
----------------------------------
Kenneth S. Wulwick, Director
/s/ Ronnie Wulwick
----------------------------------
Ronnie H. Wulwick, Shareholder
Number of Shares Owned: 1,028,571
-----------
/s/ Sheldon Glickman
----------------------------------
Sheldon Glickman, Director and
Shareholder
Number of Shares Owned: 771,429
-----------
/s/ Margaret Nabridge
----------------------------------
Margaret Nabridge, Director and
Shareholder
Number of Shares Owned: 716,429
-----------
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify the attached is a true and correct copy of the Articles of Amendment,
filed on June 21, 1999, to Articles of Incorporation for KENWICK INDUSTRIES,
INC., a Florida corporation, as shown by the records of this office.
I further certify the document was electronically received under FAX audit
number H99000014938. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P95000053188.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Twenty-second day of June, 1999
Authentication Code: 699A00033178-062299-P95000053188-1/1
/s/ Katherine Harris
[SEAL OF THE STATE OF FLORIDA]
Katherine Harris
Secretary of State
<PAGE>
[SEAL OF THE STATE OF FLORIDA]
FLORIDA DEPARTMENT OF STATE
Katherine Harris
Secretary of State
June 22, 1998
KENWICK INDUSTRIES, INC.
2455 E SUNRISE BLVD
STE 512
FT LAUD, FL 33304US
Re: Document Number P95000053188
The Articles of Amendment to the Articles of Incorporation for KENWICK
INDUSTRIES, INC., a Florida corporation, were filed on June 21, 1999.
The certification requested is enclosed. To be official, the certification for a
certified copy must be attached to the original document that was electronically
submitted and filed under FAX audit number H99000014938.
Should you have any question regarding this matter, please telephone (850)
487-6050, the Amendment Filing Section.
Karen Gibson
Corporate Specialist
Division of Corporations Letter Number: 699A00033178
Division of Corporations - P.O. Box 6327 - Tallahassee, Florida 32314
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
KENWICK INDUSTRIES, INC.
Pursuant to Section 607.1006 of the Business Corporation Act of the State
of Florida, the undersigned, being the President of Kenwick Industries, Inc., a
Florida corporation d/b/a American Video Language Institute (the "Corporation"),
a corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida bearing Document #P95000053188 does
hereby certify:
Pursuant to a Written Consent of the Board of Directors and Majority
Shareholders of said Corporation dated June 17, 1999, the Board of Directors
approved the following amendment to the Corporation's Articles of Incorporation
increasing the number of shares of authorized stock as follows:
Article IV of the Corporation's Articles of Incorporation shall be deleted
in its entirety and replaced with the following:
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 fifty million (50,000,000)
shares of common stock, par value $.001 per share and five million (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.
ROXANNE K. BEILLY, Esq., Florida Bar No. 851450
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Blvd., Ste. 1900
Ft. Lauderdale, FL 33301 (954) 763-1200
H99000014938 7
<PAGE>
The foregoing amendment was adopted by the Board of Directors of the Corporation
pursuant to a Unanimous Written Consent of the Board of Directors of the
Corporation and by the Majority of the Shareholders of the Common Stock of the
Corporation dated June 17, 1999, acting by Written Consent pursuant to Sections
607.0821 and 607.0704 of the Florida Business Corporation Act. Therefore, the
number of votes cast for the amendment to the Corporation's Articles of
Incorporation was sufficient for approval.
IN WITNESS WHEREOF, said Corporation has caused this Amendment to be
signed in its name by its President this 17th day of June, 1999.
/s/ Kenneth Wulwick
--------------------------------------
Kenneth Wulwick, President
H99000014938 7
2
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of AUTOMAX USA, INC., a Florida corporation, filed on January 13,
1997, as shown by the records of this office.
The document number of this corporation is P97000004971.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capitol, this the
Seventeenth day of January, 1997
/s/ Sandra B. Mortham
[SEAL OF THE STATE OF FLORIDA]
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
AUTOMAX USA, INC.
The undersigned incorporator(s), for the purpose of forming a corporation under
the Florida Business Corporation Act, hereby adopt(s) the following Articles of
Incorporation.
ARTICLE I NAME
The name if the corporation shall be:
AUTOMAX USA, INC.
ARTICLE II PRINCIPAL OFFICE
The principal place of business and mailing address of this corporation shall
be:
7101 Lion Head Lance
Boca Raton, Florida 33496
ARTICLE III SHARES
The name of shares of stock that this corporation is authorized to have
outstanding at any one time is:
1,000
ARTICLE IV INITIAL REGISTERED AGENT AND STREET ADDRESS
The name and address of the initial registered agent is:
Michael Parkoff
7101 Lion Head Lane
Boca Raton, Florida 33496
<PAGE>
ARTICLE V INCORPORATOR(S)
The name(s) and street address(es) of the incorporator(s) to these Articles of
Incorporation is(are):
GARY OREMAN
17549 SCARSDALE WAY
BOCA RATON, FL 33496
ANDREA PARKOFF
7101 LION HEAD LANE
BOCA RATON, FL 33496
The undersigned incorporator(s) has(have) executed these Articles of
Incorporation this 3 day of JUNE, 1997.
/s/ Andrea Parkoff
------------------------------------
Signature
/s/ Gary Oreman
------------------------------------
Signature
------------------------------------
Signature
Articles of Incorporation
Filing Fee - $35
<PAGE>
Consent in Lieu of Special Meeting
of the Board of Directors of
AutoMax USA, Inc.
In lieu of a, special meeting of the board of directors of AutoMax USA, Inc.,
the undersigned, constituting all the directors of the corporation, unanimously
consent as follows:
RESOLVED: That the Shareholders of the Corporation are selling all the issued
and outstanding shares of the Corporation to Kenwick Industries, Inc., f/k/a
Kenwick, Inc.
FURTHER RESOLVED: That the Corporation execute any and all documents and
instruments required in order to consummate the said transaction, including, but
not limited to, contracts, amendments, non-competition agreements, promissory
notes, security agreements, lien documents, UCC-1 financing statements,
affidavits, indemnities, closing statements and hold harmless agreements as may
be required, and further that the Corporation perform any and an obligations and
exercise any and all rights created under or by virtue of said documents and
instruments.
FURTHER RESOLVED: That the following individual is hereby authorized to execute
on behalf of the Corporation all documents and instruments to sell, vend, close,
finance and otherwise consummate the transaction, including but not limited to
Bills of Sale, Closing Statements, Compliance Agreements and Security
Agreements, and any and all similar documentation: Andrea Parkoff.
DATED at West Palm Beach, Florida, this August 1, 1998.
AutoMax USA, Inc.
By: /s/ Andrea Parkoff
-----------------------------
Andrea Parkoff, Sole Director
I, being the only Shareholder of AutoMax USA, Inc. hereby acquiesce to the above
resolutions in full this August 1, 1998.
/s/ Andrea Parkoff
- --------------------------------
Andrea Parkoff, Sole Shareholder
<PAGE>
Consent in Lieu of Special Meeting
of the Board of Directors of
AutoMax USA, Inc.
In lieu of a, special meeting of the board of directors of AutoMax USA, Inc.,
the undersigned, constituting all the directors of the corporation, unanimously
consent as follows:
RESOLVED: That in order to expedite the business matters of the corporation, the
directors find it necessary to give authority to Andrea Parkoff to bind the
corporation as its agent. Andrea Parkoff is hereby given full power and
authority to bind the corporation as if she were the President of the
corporation.
FURTHER RESOLVED: That the corporation hereby ratifies each and every previous
act taken by Andrea Parkoff in the name of the corporation, as if authorized by
the corporation.
DATED at West Palm Beach, Florida, this January 31, 1997.
AutoMax USA, Inc.
By: /s/ Andrea Parkoff
-----------------------------
Andrea Parkoff, Sole Director
I, being the only Shareholder of AutoMax USA, Inc. hereby acquiesce to the above
resolution in full this January 31, 1997.
/s/ Andrea Parkoff
- --------------------------------
Andrea Parkoff, Sole Shareholder
<PAGE>
CERTIFICATE OF RESIGNATION
REGISTERED AGENT/REGISTERED OFFICE
Pursuant to the provisions of sections 607.0501 or 617.0501, Florida Statutes
the undersigned corporation, organized under the laws of the State of Florida
submits the following statement in designating the registered office/registered
agent, in the State of Florida.
1. The name of the corporation is: AUTOMAX USA, INC.
---------------------------------------------
- --------------------------------------------------------------------------------
2. The name and address of the registered agent and office is:
MICHAEL PARKOFF
- --------------------------------------------------------------------------------
(NAME)
7101 Lion Head Lane
- --------------------------------------------------------------------------------
(P.O. BOX NOT ACCEPTABLE)
BOCA RATON FLORIDA 33496
- --------------------------------------------------------------------------------
(CITY/STATE/ZIP)
HAVING BEEN NAMED AS REGISTERED AGENT AND TO ACCEPT SERVICE OF PROCESS FOR THE
ABOVE STATED CORPORATION AT THE PLACE DESIGNATED IN THIS CERTIFICATE, I HEREBY
ACCEPT THE APPOINTMENT AS REGISTERED AGENT AND AGREE TO ACT IN THIS CAPACITY. I
FURTHER AGREE TO COMPLY WITH THE PROVISIONS OF ALL STATUTES RELATING TO THE
PROPER AND COMPLETE PERFORMANCE OF MY DUTIES. AND I AM FAMILIAR WITH AND ACCEPT
THE OBLIGATIONS OF MY POSITION AS REGISTERED AGENT.
SIGNATURE /s/ [ILLEGIBLE]
--------------------------------
DATE 1/10/97
--------------------------------------
<PAGE>
ARTICLE V INCORPORATOR(S)
The name(s) and street address(es) of the incorporator(s) to these Articles of
Incorporation is(are):
Gary Oreman
17549 Scarsdale Way
Boca Raton, Florida 33496
Andrea Parkoff
7101 Lion Head Lane
Boca Raton, Florida 33496
The undersigned incorporator(s) has(have) executed these Articles of
Incorporation this 10th day of January, 1997.
/s/ Gary Oreman
------------------------------------
Signature
/s/ Andrea Parkoff
------------------------------------
Signature
------------------------------------
Signature
Articles of Incorporation
Filing Fee - $35
<PAGE>
Consent in Lieu of 1/20/98 Special Meeting of the Shareholders of
AutoMax USA, Inc.
In lieu of a Special Meeting of the Shareholders of AutoMax USA, Inc., Andrea
Parkoff, the sole shareholder of the corporation, hereby consents to the
following:
1. The resignations of Gary Oreman and Fred Shapiro, copies of which are
attached hereto, relinquished any and all directorships, officerships and
other positions with the Corporation, are [ILLEGIBLE] effective
immediately.
2. Andrea Parkoff elected the sole director of the Corporation, to sit until
her successor is duly elected and qualified.
There was no [ILLEGIBLE] business this January 20, 1998.
/s/ Andrea Parkoff
- --------------------------------
Andrea Parkoff, Sole Shareholder
<PAGE>
Resignation of Gary Oreman
I hereby resign all my directorships, officerships and other positions with
AutoMax USA, Inc. effective immediately this January 20, 1998.
/s/ Gary Oreman
- --------------------------------
Gary Oreman
<PAGE>
Resignation of Fred Shapiro
I hereby resign all my directorships, officerships and other positions with
AutoMax USA, Inc. effective immediately this January 20, 1998.
/s/ Fred Shapiro
- --------------------------------
Fred Shapiro
[SEAL OF THE STATE OF FLORIDA]
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
June 5, 1997
MICHAEL PARKOFF
7101 LION HEAD LANE
BOCA BATON, FL 33495
The Articles of Incorporation for AUTOMAX USA FINANCE, INC. were filed on June
3, 1997 and assigned document number P97000049497. Please refer to this number
whenever corresponding with this office regarding the above corporation. The
certification you requested is enclosed.
PLEASE NOTE: COMPLIANCE WITH THE FOLLOWING PROCEDURES IS ESSENTIAL TO
MAINTAINING YOUR CORPORATE STATUS. FAILURE TO DO SO MAY RESULT IN DISSOLUTION OF
YOUR CORPORATION.
A CORPORATION ANNUAL REPORT MUST BE FILED WITH THIS OFFICE BETWEEN JANUARY 1 AND
MAY 1 OF EACH YEAR BEGINNING WITH THE CALENDAR YEAR FOLLOWING THE YEAR OF THE
FILING DATE NOTED ABOVE AND EACH YEAR THEREAFTER. FAILURE TO FILE THE ANNUAL
REPORT ON TIME MAY RESULT IN ADMINISTRATIVE DISSOLUTION OF YOUR CORPORATION.
A FEDERAL EMPLOYER IDENTIFICATION (FEI) NUMBER MUST BE SHOWN ON THE ANNUAL
REPORT FORM PRIOR TO ITS FILING WITH THIS OFFICE. CONTACT THE INTERNAL REVENUE
SERVICE TO RECEIVE THE FEI NUMBER IN TIME TO FILE THE ANNUAL REPORT AT
1-800-829-3676 AND REQUEST FORM SS-4.
SHOULD YOUR CORPORATE MAILING ADDRESS CHANGE, YOU MUST NOTIFY THIS OFFICE IN
WRITING, TO INSURE IMPORTANT MAILINGS SUCH AS THE ANNUAL REPORT NOTICES REACH
YOU.
Should you have any questions regarding corporations, please contact this office
at the address given below.
Randall Purintun, Document Specialist
New Filing Section Letter Number: 997A00030366
Division of Corporations - P.O. Box 6327 - Tallahassee, Florida 32314
<PAGE>
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of AUTOMAX USA FINANCE, INC., a Florida corporation, filed on
June 3, 1997, as shown by the records of this office.
The document number of this corporation is P97000049497.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capitol, this the
Fifth day of June, 1997
/s/ Sandra B. Mortham
[SEAL OF THE STATE OF FLORIDA]
Sandra B. Mortham
Secretary of State
<PAGE>
97 JUN -3 AM 9:48
ARTICLES OF INCORPORATION
OF
AUTOMAX USA FINANCE, INC
The undersigned incorporator(s), for the purpose of forming a corporation under
the Florida Business Corporation Act, hereby adopt(s) the following Articles of
Incorporation.
ARTICLE I NAME
The name of the corporation shall be:
AUTOMAX USA FINANCE, INC
ARTICLE II PRINCIPAL OFFICE
The principal place of business and mailing address of this corporation shall
be:
7101 Lion Head Lane
Boca Raton FL 33496
ARTICLE III SHARES
The name of shares of stock that this corporation is authorized to have
outstanding at any one time is:
1,000
ARTICLE IV INITIAL REGISTERED AGENT AND STREET ADDRESS
The name and address of the initial registered agent is:
Michael Parkoff
7101 Lion Head Lane
Boca Raton, FL 33496
<PAGE>
CERTIFICATE OF RESIGNATION
REGISTERED AGENT/REGISTERED OFFICE
Pursuant to the provisions of sections 607.0501 or 617.0501, Florida Statutes,
the undersigned corporation, organized under the laws of the State of Florida,
submits the following statement in designating the registered office/registered
agent, in the State of Florida.
1. The name of the corporation is: AUTOMAX USA FINANCE, INC
- --------------------------------------------------------------------------------
2. The name and address of the registered agent and office is:
MICHAEL PARKOFF
- --------------------------------------------------------------------------------
(NAME)
7101 Lion Head Lane
- --------------------------------------------------------------------------------
(P.O. BOX NOT ACCEPTABLE)
BOCA RATON, FLORIDA 33496
- --------------------------------------------------------------------------------
(CITY/STATE/ZIP)
HAVING BEEN NAMED AS REGISTERED AGENT AND TO ACCEPT SERVICE OF PROCESS FOR THE
ABOVE STATED CORPORATION AT THE PLACE DESIGNATED IN THIS CERTIFICATE, I HEREBY
ACCEPT THE APPOINTMENT AS REGISTERED AGENT AND AGREE TO ACT IN THIS CAPACITY. I
FURTHER AGREE TO COMPLY WITH THE PROVISIONS OF ALL STATUTES RELATING TO THE
PROPER AND COMPLETE PERFORMANCE OF MY DUTIES, AND I AM FAMILIAR WITH AND ACCEPT
THE OBLIGATIONS OF MY POSITION AS REGISTERED AGENT.
SIGNATURE /s/ [ILLEGIBLE]
--------------------------------
DATE 6/3/97
--------------------------------------
<PAGE>
Consent in Lieu of Special Meeting
of the Board of Directors of
AutoMax USA Finance, Inc.
In lieu of a, special meeting of the board of directors of AutoMax USA Finance,
Inc.., the undersigned, constituting all the directors of the corporation,
unanimously consent as follows:
RESOLVED: That in order to expedite the business matters of the corporation, the
directors find it necessary to give authority to Andrea Parkoff to bind the
corporation as its agent. Andrea Parkoff is hereby given full power and
authority to bind the corporation as if she were the President of the
corporation.
FURTHER RESOLVED: That the corporation hereby ratifies each and every previous
act taken by Andrea Parkoff in the name of the corporation, as if authorized by
the corporation.
DATED at West Palm Beach, Florida, this June 30, 1997.
AutoMax USA, Inc.
By: /s/ Andrea Parkoff
-----------------------------
Andrea Parkoff, Sole Director
I, being the only Shareholder of AutoMax USA Finance, Inc. hereby acquiesce to
the above resolutions in full this June 30, 1997.
/s/ Andrea Parkoff
- --------------------------------
Andrea Parkoff, Sole Shareholder
<PAGE>
Consent in Lieu of Special Meeting
of the Board of Directors of
AutoMax USA Finance, Inc.
In lieu of a, special meeting of the board of directors of AutoMax USA Finance,
Inc., the undersigned, constituting all the directors of the corporation,
unanimously consent as follows:
RESOLVED: That the Shareholders of the Corporation are selling all the issued
and outstanding shares of the Corporation to Kenwick Industries, Inc., f/k/a
Kenwick, Inc.
FURTHER RESOLVED: That the Corporation execute any and all documents and
instruments required in order to consummate the said transaction, including, but
not limited to, contracts, amendments, non-competition agreements, promissory
notes, security agreements, lien documents, UCC-1 financing statements,
affidavits, indemnities, closing statements and hold harmless agreements as may
be required, and further that the Corporation perform any and an obligations and
exercise any and all rights created under or by virtue of said documents and
instruments.
FURTHER RESOLVED: That the following individual is hereby authorized to execute
on behalf of the Corporation all documents and instruments to sell, vend, close,
finance and otherwise consummate the transaction, including but not limited to
Bills of Sale, Closing Statements, Compliance Agreements and Security
Agreements, and any and all similar documentation: Andrea Parkoff.
DATED at West Palm Beach, Florida, August 1, 1998.
AutoMax USA Finance, Inc.
By: /s/ Andrea Parkoff
-----------------------------
Andrea Parkoff, Sole Director
I, being the only Shareholder of AutoMax USA Finance, Inc. hereby acquiesce to
the above resolutions in full this August 1, 1998.
/s/ Andrea Parkoff
- --------------------------------
Andrea Parkoff, Sole Shareholder
<PAGE>
[LOGO] Department of the Treasury Date of this Notice: JULY 28, 1997
Internal Revenue Service Taxpayer Identifying Number 65-0759507
ATLANTA, GA 39901 Form: Tax Period.
For assistance you may
call us at
1-800-829-1040
Or you may write to us at
the address shown at the
left. If you write, be
sure to attach the bottom
part of this notice
AUTOMAX USA FINANCE INC
7101 LION HEAD LN
BOCA RATON FL 33496-5938019
NOTICE OF ACCEPTANCE AS AN S-CORPORATION
YOUR ELECTION TO BE TREATED AS AN S-CORPORATION WITH AN ACCOUNTING PERIOD
OF DECEMBER IS ACCEPTED. THE ELECTION IS EFFECTIVE BEGINNING JUNE 3, 1997,
SUBJECT TO VERIFICATION IF WE EXAMINE YOUR RETURN.
IF YOUR EFFECTIVE DATE IS NOT AS REQUESTED, IT WILL HAVE BEEN CHANGED FOR
ONE OF TWO REASONS. EITHER YOUR ELECTION WAS MADE AFTER THE 15TH DAY OF THE
THIRD MONTH OF THE TAX YEAR TO WHICH IT APPLIES, BUT BEFORE THE END OF THAT TAX
YEAR, OR THE ELECTION WHEN SUBMITTED WAS INCOMPLETE, AND REQUESTED INFORMATION
WAS RECEIVED AFTER THE FILING PERIOD. IN EITHER CASE, YOUR ELECTION IS INVALID
FOR THE TAX YEAR REQUESTED AND HAS THEREFORE, BEEN TREATED AS THOUGH IT WERE
MADE FOR THE NEXT TAX YEAR.
PLEASE KEEP THIS NOTICE IN YOUR PERMANENT RECORDS AS VERIFICATION OF YOUR
ACCEPTANCE AS AN S-CORPORATION.
IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE OR THE ACTIONS WE HAVE TAKEN,
PLEASE WRITE TO US AT THE ADDRESS SHOWN ABOVE. IF YOU PREFER, YOU MAY CALL US AT
THE IRS TELEPHONE NUMBER LISTED IN YOUR LOCAL DIRECTORY. AN EMPLOYEE THERE MAY
BE ABLE TO HELP YOU; HOWEVER, THE OFFICE AT THE ADDRESS SHOWN ON THIS NOTICE IS
MOST FAMILIAR WITH YOUR CASE.
IF YOU WRITE TO US, PLEASE PROVIDE YOUR TELEPHONE NUMBER AND THE MOST
CONVENIENT TIME FOR US TO CALL SO WE CAN CONTACT YOU TO RESOLVE YOUR INQUIRY.
PLEASE RETURN THE BOTTOM PART OF THIS NOTICE TO HELP US IDENTIFY YOUR CASE.
THANK YOU FOR YOUR COOPERATION.
To make sure that IRS employees give courteous responses and correct information
to taxpayers, a second IRS employee sometimes listens in on telephone calls.
Keep this part for your records Overlay S Form 8489 (Rev. 8-91)
- --------------------------------------------------------------------------------
Return this part to us with your check or inquiry
- ------------------------- -----------------------
Your telephone number Best time to call
( ) -
- ------------------------- -----------------------
INTERNAL REVENUE SERVICE
ATLANTA, GA 39901
AUTOMAX USA FINANCE INC
7101 LION HEAD LN
BOCA RATON FL 33496-5938019
<PAGE>
DEPARTMENT OF THE TREASURY DATE OF THIS NOTICE: 06-17-97
INTERNAL REVENUE SERVICE NUMBER OF THIS NOTICE: CP 575 A
ATLANTA, GA 39901 EMPLOYER IDENTIFICATION NUMBER: 65-0759507
FORM: SS-4
0716801547 B
FOR ASSISTANCE YOU MAY CALL US AT:
1-800-829-1040
OR WRITE TO THE ADDRESS
SHOWN AT THE TOP LEFT.
IF YOU WRITE, ATTACH THE
STUB OF THIS NOTICE.
AUTOMAX USA FINANCE INC
7101 LION HEAD LN
BOCA RATON FL 33496
WE ASSIGNED YOU AN EMPLOYER IDENTIFICATION NUMBER (EIN)
Thank you for your Form SS-4, Application for Employer Identification
Number (EIN). We assigned you EIN 65-0759507. This EIN will identify your
business account, tax returns, and documents, even if you have no employees.
Please keep this notice in your permanent records.
Use your complete name and EIN shown above on all federal tax forms,
payments, and related correspondence. If you use any variation in your name or
EIN, it may cause a delay in processing, incorrect information in your account,
or cause you to be assigned more than one EIN.
If you're required to deposit for employment taxes (Forms 941, 943, 940,
945, CT-1, or 1042), excise taxes (Form 720), or income taxes (Form 1120), we
will send an initial supply of Federal Tax Deposit (FTD) coupon books within
five to six weeks. You can use the enclosed coupons if you need to make a
deposit before you receive your supply.
Based on the information shown on your Form SS-4, you must file the
following forms(s) by the date we show.
Form 941 10/31/97
Form 1120 02/15/98
Form 940 01/31/98
If the due date has passed please complete the form and send it to us by
07-02-97. If we don't receive the form by that date additional penalties and
interest will be charged. If you weren't in business or didn't hire employees
for the tax period shown, please file the form showing that you have no
liability.
If you need help in determining what your tax year is, you can get
Publication 538, Accounting Periods and Methods, at your local IRS office.
If you have any questions about the forms shown or the date they are due,
you may call us at 1-800-829-1840 or write to us at the address shown above.
Thank you for your cooperation.
================================================================================
State of Florida
[GRAPHIC OMITTED]
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of AUTOMAX INTERNATIONAL, INC., a Florida corporation, filed on
June 16, 1998, as shown by the records of this office.
I further certify the document was electronically received under FAX audit
number E98000011212. This certificate is issued in accordance with section
15.16, Florida Statutes, and authenticated by the code noted below.
The document number of this corporation is P98000053836.
Given under my hand and the
Great Seal of the State of Florida,
At Tallahassee, the Capital, this the
Sixteenth day of June, 1998
Authentication Code: 898A00033470-061698-P98000053836-1/1
[SEAL OF THE STATE OF FLORIDA] /s/ Sandra B. Mortham
Sandra B. Mortham
CR2E022 (1-95) Secretary of State
================================================================================
<PAGE>
ARTICLES OF INCORPORATION
OF
AUTOMAX, INTERNATIONAL, INC.
The undersigned subscribers to these Articles of Incorporation hereby form a
corporation under the Florida General Corporation Act, as amended.
ARTICLE I - NAME OF THE CORPORATION
The name of the corporation shall be AutoMax International, Inc.
ARTICLE II - PURPOSE OF THE CORPORATION
The corporation is organized for any and all legal purposes under Florida
Statutes.
ARTICLE III - ADDRESS OF THE CORPORATION
The principal mailing office of the corporation shall be: c/o 1601 Forum Place,
Suite 801, West Palm Beach, Florida 33401.
ARTICLE IV - SHARES
The corporation shall be authorized to issue ten thousand (10,000) shares of
common voting stock each of which with a par value of one and no/100 dollars (US
$1.00).
ARTICLE V - REGISTERED AGENT AND OFFICE
The initial registered agent and registered office of the corporation shall be:
John T. Paxman, Esq., 1601 Forum Place, Suite 801, West Palm Beach, Florida
33401.
- ---------------------------
Prepared by:
John T. Paxman
1601 Forum Place, Suite 801
W. Palm Beach. FL 33401
(561) 712-8700
FBN 867039
- ---------------------------
- --------------------------------------------------------------------------------
Articles of Incorporation AutoMax International, Inc. Page 1
<PAGE>
ARTICLE VI - INCORPORATORS
The incorporators of this corporation and their addresses are as follows: John
T. Paxman, Esq., 1601 Forum Place, Suite 801, West Palm Beach, Florida 33401.
ARTICLE VII - DATE OF EXISTENCE
The date when the corporate existence for this corporation shall begin shall be
the date of the filing of these articles of incorporation.
ARTICLE VIII - BYLAWS
The power to adopt, alter, amend or repeal bylaws shall be vested in and is
hereby reserved to the Shareholders. Bylaws shall be adopted, amended or
repealed as provided therein.
This June 16, 1998.
By: /s/ John T. Paxman
----------------------
John T. Paxman
Incorporator
- --------------------------------------------------------------------------------
Articles of Incorporation AutoMax International, Inc. Page 2
KENWICK INDUSTRIES, INC.
CORPORATE BYLAWS
ARTICLE I. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual shareholder meeting of the above
named corporation will be held on the the 15th day of May, of each year or at
such other time and place as designated by the Board of Directors of the above
named corporation provided that if said day falls on a Sunday or legal holiday,
then the meeting will be held on the first business day thereafter. Business
transacted at said meeting will include the election of directors of the above
named corporation.
Section 2. Special Meetings. Special meetings of the shareholders will be
held when directed by the President, Board of Directors, or the holders of not
less than 10 percent of all the shares entitled to be cast on any issue proposed
to be considered at the proposed special meeting; provided that said persons
sign, date and deliver to the above named corporation one or more written
demands for the meeting describing the purposes(s) for which it is to be held. A
meeting requested by shareholders of the above named corporation will be called
for a date not less than 10 nor more than 60 days after the request is made,
unless the shareholders requesting the meeting designate a later date. The call
for the meeting will be issued by the Secretary, unless the President, Board of
Directors or shareholders requesting the meeting designate another person to do
so.
Section 3. Place. Meetings of shareholders will be held at the principal
place of business of the above named corporation or at such other place as is
designated by the Board of Directors.
Section 4. Record Date and List of Shareholders. The Board of Directors of
the above named corporation shall fix the record date; however, in no event may
a record date fixed by the Board of Directors be a date prior to the date on
which the resolution fixing the record date is adopted.
After fixing a record date for a meeting, the Secretary shall prepare an
alphabetical list of the names of all the above named corporation's shareholders
who are entitled to notice of a shareholders' meeting, arranged by voting group
with the address of and the number and class and series, if any, of shares held
by each. Said list shall be available for inspection in accordance with Florida
Law.
1 of 11
<PAGE>
Section 5. Notice. Written notice stating the place, day and hour of the
meeting, and the purpose(s) for which said special meeting is called, will be
delivered not less than 10 nor more than 60 days before the meeting, either
personally or by first class mail, by or at the direction of the President, the
Secretary or the officer or persons calling the meeting to each shareholder of
record entitled to vote at such meeting. If mailed, such notice will be deemed
to be effective when deposited in the United States mail and addressed to the
shareholder at the shareholder's address as it appears on the stock transfer
books of the above named corporation, with postage thereon prepaid.
The above named corporation shall notify each shareholder, entitled to a
vote at the meeting, 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. Notice of a special meeting shall describe the purpose(s) for which the
meeting is called. A shareholder may waive any notice required hereunder either
before or after the date and time stated in the notice; however, the waiver must
be in writing, signed by the shareholder entitled to the notice and be delivered
to the above named corporation for inclusion in the minutes or filing in the
corporate records.
Section 6. Notice of Adjourned Meeting. When a meeting is adjourned to
another time or place, it will not be necessary to give any notice of the
adjourned meeting provided that the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken. At
such an adjourned meeting, any business may be transacted that might have been
transacted on the original date of the meeting. If, however, a new record date
for the adjourned meeting is made or is required, then, a notice of the
adjourned meeting will be given on the new record date as provided in this
Article to each shareholder of record entitled to notice of such meeting.
Section 7. Shareholder Quorum and Voting. A majority of the shares
entitled to vote, represented in person or by proxy, will constitute a quorum at
a meeting of shareholders.
If a quorum, as herein defined, is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter thereof will be the act of the
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<PAGE>
shareholders unless otherwise provided by law.
Section 8. Voting of Shares. Each outstanding share will be entitled to
one vote on each matter submitted to a vote at a meeting of shareholders.
Section 9. Proxies. A shareholder may vote either in person or by proxy
provided that any and all proxies are executed in writing by the shareholder or
his duly authorized attorney-in-fact. No proxy will be valid after the duration
of 11 months from the date thereof unless otherwise provided in the proxy.
Section 10. Action by Shareholders Without a Meeting. Any action required
or permitted by law, these bylaws, or the Articles of Incorporation of the above
named corporation to be taken at any annual or special meeting of shareholders
may be taken without a meeting, without prior notice and without a vote,
provided that 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 necesssary to authorize or
take such action at a meeting at which all voting groups and shares entitled to
vote thereon were present and voted, as provided by law. The foregoing
actions(s) shall be evidenced by 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 above named
corporation in accordance with Florida Law. Within 10 days after obtaining such
authorization by written consent, notice shall be given to those shareholders
who have not consented in writing or who are not entitled to vote. Said notice
shall fairly summarize the material features of the authorized action and if the
action requires the providing of dissenters' rights, said notice whall comply
with the disclosure requirements pertaining to dissenters' rights of Florida
Law.
ARTICLE II - DIRECTORS
Section 1. Function. All corporate powers, business, and affairs will be
exercised, managed and directed under the authority of the Board of Directors.
Section 2. Qualification. Directors must be natural persons of 18 years of
age or older but need not be residents of this state and need not be
shareholders of the above named corporation.
3 of 11
<PAGE>
Section 3. Compensation. The Board of Directors will have authority to fix
the compensation for directors of the above named corporation.
Section 4. Presumption of Assent. A director of the above named
corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken will be presumed to have assented to the
action taken unless such director votes against such action or abstains from
voting in respect thereto because of an asserted conflict of interest.
Section 5. Number. The above named corporation will have 3 director(s).
Section 6. Election and Term. Each person named in the Articles of
Incorporation as a member of the initial Board of Directors will hold office
until said directors will have been qualified and elected at the first annual
meeting of shareholders, or until said directors earlier resignation, removal
from office or death.
At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders will elect directors to hold office until the next
annual meeting. Each director will hold office for a term for which said
director is elected until said director's successor will have been qualified and
elected, said director's prior resignation, said director's removal from office
or said director's death.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors will
be filled by the affirmative vote of a majority of the shareholders or of the
remaining directors even though less than a quorum of the Board of Directors. A
director elected to fill a vacancy will hold office only until the next election
of directors by the shareholders.
Section 8. Removal and Resignation of Directors. At a meeting of
shareholders called expressly for that purpose, any director or the entire Board
of Directors may be removed, with or without cause, by a vote of the holders of
a majority of the shares then entitled to vote at an election of directors.
A director may resign at any time by delivering written notice to the
Board of Directors or its chairman or to the above named corporation by and
through one of its officers. Such a resignation is effective when the notice is
delivered unless a later effective
4 of 11
<PAGE>
date is specified in said notice.
Section 9. Quorum and Voting. A majority of the number of directors fixed
by these Bylaws shall constitute a quorum for the transaction of business. The
act of a majority of the directors present at a meeting at which a quorum is
present will be the act of the Board of Directors.
Section 10. Executive and Other Committees. A resolution, adopted by a
majority of the full Board of Directors, may designate from among its members an
executive committee and/or other committee(s) which will have and may exercise
all the authority of the Board of Directors to the extent provided in such
resolution, except as is provided by law. Each committee must have two or more
members who serve at the pleasure of the Board of Directors. The board may, by
resolution adopted by a majority of the full Board of Directors, designate one
or more directors as alternate members of any such committee who may act in the
place and instead of any absent member or members at any meeting of such
committee.
Section 11. Place of Meeting. Special or regular meetings of the Board of
Directors will be held within or without the State of Florida.
Section 12. Notice, Time and Call of Meetings. Regular meetings of the
Board of Directors will be held without notice on such dates as are designated
by the Board of Directors. Written notice of the time and place of special
meetings of the Board of Directors will be given to each director by either
personal delivery, telegram or cablegram at least two (2) days before the
meeting or by notice mailed to the director at least five (5) days before the
meeting.
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 will constitute a waiver of notice of such
meeting and 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, any objection to
the transaction of business because the meeting is not lawfully called or
convened.
Neither the business to be transacted nor the purpose of, regular or
special meetings of the Board of Directors need be specified in the
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<PAGE>
notice or waiver of notice of such meeting.
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 will be given to the directors who were not
present at the time of the adjournment.
Meetings of the Board of Directors may be called by the Chairman of the
Board, the President of the above named corporation or any two directors.
Members of the Board of Directors may participate in a meeting of such
board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
Section 13. Action Without a Meeting. Any action required to be taken at a
meeting of the Board of Directors, or any action which may be taken at a meeting
of the Board of Directors or a committee thereof, may be taken without a meeting
if a consent in writing, setting forth the action to be so taken, signed by all
the directors, or all the members of the committee, as the case may be, is filed
in the minutes of the proceedings of the board or of the committee. Such consent
will have the same effect as a unanimous vote.
ARTICLE III. OFFICERS
Section 1. Officers. The officers of the above named corporation will
consist of a president, a vice president, a secretary and a treasurer, each of
whom will be elected by the Board of Directors. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors from time to time. Any two or more offices
may be held by the same person.
Section 2. Duties. The officers of the above named corporation will have
the following duties:
The President will be the chief executive officer of the above named
corporation, who generally and actively manages the business and affairs of the
above named corporation subject to the directions of the Board of Directors.
Said officer will preside at all meetings of the shareholders and Board of
Directors.
The Vice President will, in the event of the absence or inability of the
President to exercise his office, become acting president of
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<PAGE>
the organization with all the rights, privileges and powers as if said person
had been duly elected president.
The Secretary will have custody of, and maintain all of the corporate
records except the financial records. Furthermore, said person will record the
minutes of all meetings of the shareholders and Board of Directors, send all
notices of meetings and perform such other duties as may be prescribed by the
Board of Directors or the President. Furthermore, said officer shall be
responsible for authenticating records of the above named corporation.
The Treasurer shall retain custody of all corporate funds and financial
records, maintain full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of shareholders and whenever else
required by the Board of Directors or the President, and perform such other
duties as may be prescribed by the Board of Directors or the President.
Section 3. Removal and Resignation of Officers. An officer or agent
elected or appointed by the Board of Directors may be removed by the Board of
Directors whenever in the Board's judgment the best interests of the above named
corporation will be served thereby.
Any officer may resign at any time by delivering notice to the above named
corporation. Said resignation is effective upon delivery unless the notice
specifies a later effective date.
Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
Section 1. Issuance. Every holder of share(s) in the above named
corporation will be entitled to have a certificate representing all share(s) to
which he is holder. No certificate representing share(s) will be issued until
such share(s) is/are fully paid.
Section 2. Form. Certificates representing share(s) in the above named
corporation will be signed by the President or Vice President and the Secretary
or an Assistant Secretary and will be sealed with the seal of the above named
corporation.
Section 3. Transfer of Stock. The above named corporation will register a
stock certificate presented for transfer if the certificate is properly endorsed
by the holder of record or by his duly authorized agent.
Section 4. Lost, Stolen, or Destroyed Certificates. If a
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<PAGE>
shareholder claims that a stock certificate representing shares issued and
recorded by the above named corporation has been lost or destroyed, a new
certificate will be issued to said shareholder, provided that said shareholder
presents an affidavit claiming the certificate of stock to be lost, stolen or
destroyed. At the discretion of the Board of Directors, said shareholder may be
required to deposit a bond or other indemnity in such amount and with such
sureties, if any, as the board may require.
ARTICLE V. BOOKS AND RECORDS
Section 1. Books and Records. The above named corporation shall keep as
permanent records minutes of all 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 above
named corporation. Furthermore, the above named corporation shall maintain
accurate accounting records. Furthermore, the above named corporation shall
maintain the following:
(i) 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;
(ii) The above named corporation's Articles or Restated Articles of
Incorporation and all amendments thereto currently in effect;
(iii) The above named corporation's Bylaws or Restated Bylaws and all amendments
thereto currently in effect;
(iv) Resolutions adopted by the Board of Directors creating one or more classes
or series of shares and fixing their relative rights, preferences and
limitations if shares issued pursuant to those resolutions are outstanding;
(v) The minutes of all shareholders' meetings and records of all actions taken
by shareholders without a meeting for the past 3 years;
(vi) Written communications to all shareholders generally or all shareholders of
a class or series within the past 3 years including the financial statements
furnished for the past 3 years to shareholders as may be required under Florida
Law;
(vii) A list of the names and business street addresses of the above named
corporation's current directors and officers; and
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<PAGE>
(viii) A copy of the above named corporation's most recent annual report
delivered to the Department of State.
Any books, records and minutes may be in written form or in any other form
capable of being converted into written form.
Section 2. Shareholder's Inspection Rights. A shareholder of the above
named corporation (including a beneficial owner whose shares are held in a
voting trust or a nominee on behalf of a beneficial owner) may inspect and copy,
during regular business hours at the above named corporation's principal office,
any of the corporate records required to be kept pursuant to Section 1, of this
Article of these Bylaws, if said shareholder gives the above named corporation
written notice of such demand at least 5 business days before the date on which
the shareholder wishes to inspect and copy. The foregoing right of inspection is
subject however to such other restrictions as are applicable under Florida Law,
including, but not limited to, the inspection of certain records being permitted
only if the demand for inspection is made in good faith and for a proper purpose
(as well as the shareholder describing with reasonable particularity the purpose
and records desired to be inspected and such records are directly connected with
the purpose).
Section 3. Financial Information. Unless modified by resolution of the
shareholders within 120 days of the close of each fiscal year, the above named
corporation shall furnish the shareholders annual financial statements which may
be consolidated or combined statements of the above named 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 flow for that year. If financial statements are prepared on the basis of
generally accepted accounting principles, the annual financial statements must
also be prepared on that basis. If the annual financial statements are reported
on by a public accountant, said accountant's report shall accompany said
statements. If said annual financial statements are not reported on by a public
accountant, then the statements shall be accompanied by a statement of the
president or the person responsible for the above named 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
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<PAGE>
respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The annual
financial statements shall be mailed to each shareholder of the above named
corporation within 120 days after the close of each fiscal year or within such
additional time as is reasonably necessary to enable the above named corporation
to prepare same, if, for reasons beyond the above named corporation's control,
said annual financial statement cannot be prepared within the prescribed period.
Section 4. Other Reports to Shareholders. The above named corporation
shall report any indemnification or advanced expenses to any director, officer,
employee, or agent (for indemnification relating to litigation or threatened
litigation) 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.
Additionally, if the corporation issues or authorizes the issuance of
shares for promises to render services in the future, the above named
corporation shall report in writing to the shareholders the number of shares
authorized or issued and the consideration received by the above named
corporation, with or before the notice of the next shareholders' meeting.
ARTICLE VI. DIVIDENDS
The Board of Directors of the above named corporation may, from time to
time declare dividends on its shares in cash, property or its own shares, except
when the above named corporation is insolvent or when the payment thereof would
render the above named corporation insolvent, subject to Florida Law.
ARTICLE VII. CORPORATE SEAL
The Board of Directors will provide a corporate seal which will be in
circular form embossing in nature and stating "Corporate Seal", "Florida", year
of above named incorporation and name of said above named corporation.
ARTICLE VIII. AMENDMENT
These Bylaws may be altered, amended or repealed, and altered,
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<PAGE>
amended or new Bylaws may be adopted by a majority vote of the full Board of
Directors.
ARTICLE IX. CORPORATE INDEMNIFICATION PLAN
The above named corporation shall indemnify any person:
(1) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by, or in the
right of, the above named corporation) by reason of the fact that he is or was a
director, officer, employee, or agent of the above named corporation or is or
was serving at the request of the above named corporation as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against such costs and expenses, and to the extent
and in the manner provided under Florida Law.
(2) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the above
named 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 above named
corporation or is or was serving at the request of the above named corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against such costs and expenses, and
to the extent and in the manner provided under Florida Law.
The extent, amount, and eligibility for the indemnification provided
herein will be made by the Board of Directors. Said determinations will be made
by a majority vote to a quorum consisting of directors who were not parties to
such action, suit, or proceeding or by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action, suit, or
proceeding.
The above named corporation will have the power to make further
indemnification as provided under Florida Law except to indemnify any person
against gross negligence or willful misconduct.
The above named corporation is further authorized to purchase and maintain
insurance for indemnification of any person as provided herein and to the extent
provided under Florida Law.
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DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE
"1933 ACT"), AND RULE 504 OF REGULATION D PROMULGATED
THEREUNDER.
A-001 US $175,000
KENWICK INC.
d/b/a AMERICAN VIDEO LANGUAGE INSTITUTE
1 % SERIES A SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE JULY 6, 2001
THIS DEBENTURE of Kenwick, Inc. d/b/a American Video Language
Institute, a corporation duly organized and existing under the laws of Florida
("Company"), designated as its 1 % Series A Senior Subordinated Convertible
Redeemable Debentures Due July 6, 2001, in an aggregate principal face amount
not exceeding One Hundred Seventy-Five Thousand Dollars (U.S. $175,000), which
Debentures are being purchased at 100% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to Sholem Liebenthal
the registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed One Hundred
Seventy-Five Thousand Dollars (U.S. $175,000) on July 6, 2001 ("Maturity Date"),
and to pay interest on the principal sum outstanding, at the rate of 1 % per
annum due and payable monthly commencing August 6, 1998 pursuant to paragraph
4(b) herein. Accrual of outstanding principal sum has been made or duly provided
for. The interest so payable will be paid to the person in whose name this
Debenture is registered on the records of the Company regarding registration and
transfers of the Debentures ("Debenture Register"); provided, however, that the
Company's obligation to a transferee of this Debenture arises only if such
transfer, sale or other disposition is made in accordance with the terms and
conditions of the Securities Subscription Agreement dated as of July 6, 1998
between the Company and Sholem Liebenthal ("Subscription Agreement"). The
principal of, and interest on, this Debenture are payable at the address last
appearing on the Debenture Register of the Company as
<PAGE>
designated in writing by the Holder hereof from time to time. The Company will
pay the outstanding principal due upon this Debenture before or on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder
of this Debenture by check if paid more than 10 days prior to the Maturity Date
or by wire transfer and addressed to such Holder at the last address appearing
on the Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer. Interest shall be payable in Common
Stock (as defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $10,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being converted ("Notice of Conversion") in the form annexed hereto as Exhibit
I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into shares of Common Stock,
$0.01 par value per share, of the Company ("Common Stock"), at a conversion
price for each share of Common Stock equal to the lower of (a) 80% of the
average closing bid price of the Common Stock for the three(3)days immediately
preceding the date of receipt by the Company of Notice of Conversion
("Conversion Shares") or (b) 80% of the average closing bid price of the Common
Stock on the three(3) days immediately preceding the date of subscription by the
Holder as reported by the National Association of Securities Dealers Electronic
Bulletin Board ("OTC-Bulletin Board") ("Conversion Price"). If the number of
resultant Conversion Shares would as a matter of law or pursuant to regulatory
authority require the Company to seek shareholder approval of such issuance, the
Company shall, as soon as
<PAGE>
practicable, take the necessary steps to seek such approval. If such approval is
not received within 30 days, then Company shall be required to redeem the
Debenture pursuant to paragraph 4(c) herein. Such conversion shall be
effectuated, as provided in a certain Escrow Agreement executed simultaneously
with this Debenture, by the Company delivering the Conversion Shares to the
Holder within 5 days of receipt by the Company of the Notice of Conversion. Once
the Holder has received such Conversion Shares, the Escrow Agent shall surrender
the Debentures to be converted to the Company, executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion hereof, and accompanied by proper assignment hereof in blank.
Accrued but unpaid interest shall be subject to conversion. No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 1% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the lower of (a) the average
closing bid price of the Common Stock for the three (3) days immediately
preceding the date of the monthly interest payment due as reported by the
National Association of Securities Dealers Electronic Bulletin Board
("OTC-Bulletin Board" )or (b) the average closing bid prices of the Common Stock
for the last three (3) consecutive trading days as reported by the National
Association of Securities Dealers Electronic Bulletin Board ("OTC- Bulletin
Board") prior to Closing ("Market Price"), the Company shall issue to the Holder
shares of Common Stock in an amount equal to the total monthly interest accrued
and due divided by 80% of the Market Price ("Interest Shares"). The dollar
amount of interest payable pursuant to this paragraph 4(b) shall be calculated
based upon the total amount of payments actually made by the Holder in
connection with the purchase of the Debentures at the time any interest payment
is due. If such payment is made by check, interest shall accrue beginning 10
days from the date the check is received by the Company. If such payment is made
by wire transfer directly into the Company's account, interest shall accrue
beginning on the date the wire transfer is received by the Company. Common Stock
issued pursuant hereto shall be issued pursuant to Rule 504 of Regulation D in
accordance with the terms of the Subscription Agreement.
(c) At any time after 90 days the Company shall have the option to
pay to the Holder 120% of the principal amount of the Debenture, in full, to the
extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture. Any
shares issued pursuant to this paragraph 4(c) shall be issued pursuant to Rule
504 of Regulation D.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for
<PAGE>
hereunder and shall be directly and primarily liable for the payment of all sums
owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture
and such failure shall continue uncured for a period of thirty
(30) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature: (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent
to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to
<PAGE>
the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 3 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance
with the laws of New York applicable to contracts made and wholly to be
performed within the State of
<PAGE>
New York and shall be binding upon the successors and assigns of each party
hereto. The Holder and the Company hereby mutually waive trial by jury and
consent to exclusive jurisdiction and venue in the courts of the State of New
York. At Holder's election, any dispute between the parties may be arbitrated
rather than litigated in the courts, before the arbitration board of the
National Association of Securities Dealers in New York City and pursuant to its
rules. Upon demand made by the Holder to the Company, the Company agrees to
submit to and participate in such arbitration. This Agreement may be executed in
counterparts, and the facsimile transmission of an executed counterpart to this
Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: July 6, 1998
KENWICK INC. d/b/a
American Video Language Institute
By: /s/ Kenneth Wulwick
------------------------------
Kenneth Wulwick
Title: President
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $____________
of the above Debenture No. _______ into Shares of Common Stock of Kenwick Inc.
d/b/a American Video Language Institute ("Company") according to the conditions
set forth in such Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion______________________________________________________________
Applicable Conversion Price_____________________________________________________
Signature_______________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:________________________________________________________________________
________________________________________________________________________
SSN or EIN:_____________________________________________________________________
Shares are to be registered in the following name:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Tel:___________________________________
Fax:___________________________________
SSN or EIN:____________________________
Shares are to be sent or delivered to the following account:
Account Name:___________________________________________________________________
Address:________________________________________________________________________
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT
TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND RULE
504 OF REGULATION D PROMULGATED THEREUNDER.
B-001 US $225,000
KENWICK INDUSTRIES, INC.
8% SERIES B SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE SEPTEMBER 16, 2001
THIS DEBENTURE of Kenwick Industries, Inc., a corporation duly
organized and existing under the laws of Florida ("Company"), designated as its
8% Series B Senior Subordinated Convertible Redeemable Debentures Due September
16, 2001, in an aggregate principal face amount not exceeding Two Hundred Twenty
Five Thousand Dollars (U.S. $225,000), which Debentures are being purchased at
100% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to Sholem Liebenthal
the registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed Two Hundred Twenty
Five Thousand Dollars (U.S. $225,000) on September 16, 2001 ("Maturity Date"),
and to pay interest on the principal sum outstanding, at the rate of 8% per
annum due and payable monthly commencing October 16, 1998 pursuant to paragraph
4(b) herein. Accrual of outstanding principal sum has been made or duly provided
for. The interest so payable will be paid to the person in whose name this
Debenture is registered on the records of the Company regarding registration and
transfers of the Debentures ("Debenture Register"); provided, however, that the
Company's obligation to a transferee of this Debenture arises only if such
transfer, sale or other disposition is made in accordance with the terms and
conditions of the Securities Subscription Agreement dated as of September 16,
1998 between the Company and Sholem Liebenthal ("Subscription Agreement"). The
principal of, and interest on, this Debenture are payable at the address last
appearing on
<PAGE>
the Debenture Register of the Company as designated in writing by the Holder
hereof from time to time. The Company will pay the outstanding principal due
upon this Debenture before or on the Maturity Date, less any amounts required by
law to be deducted or withheld, to the Holder of this Debenture by check if paid
more than 10 days prior to the Maturity Date or by wire transfer and addressed
to such Holder at the last address appearing on the Debenture Register. The
forwarding of such check or wire transfer shall constitute a payment of
outstanding principal hereunder and shall satisfy and discharge the liability
for principal on this Debenture to the extent of the sum represented by such
check or wire transfer. Interest shall be payable in Common Stock (as defined
below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $10,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being converted ("Notice of Conversion") in the form annexed hereto as Exhibit
I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into shares of Common Stock,
$0.01 par value per share, of the Company ("Common Stock"), at a conversion
price for each share of Common Stock equal to the lower of (a) 80% of the
average closing bid price of the Common Stock for the day immediately preceding
the date of receipt by the Company of Notice of Conversion ("Conversion Shares")
or (b) 80% of the closing bid price of the Common Stock on the three (3) days
immediately preceding the date of subscription by the Holder as reported by the
National Association of Securities Dealers Electronic Bulletin Board ("NASDAQ")
("Conversion Price"). If the number of resultant Conversion Shares would as a
matter of law or pursuant to regulatory authority require the Company to seek
shareholder approval of such issuance, the Company shall, as soon
<PAGE>
as practicable, take the necessary steps to seek such approval. If such approval
is not received within 30 days, then Company shall be required to redeem the
Debenture pursuant to paragraph 4(c) herein. Such conversion shall be
effectuated, as provided in a certain Escrow Agreement executed simultaneously
with this Debenture, by the Company delivering the Conversion Shares to the
Holder within 5 days of receipt by the Company of the Notice of Conversion. Once
the Holder has received such Conversion Shares, the Escrow Agent shall surrender
the Debentures to be converted to the Company, executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion hereof, and accompanied by proper assignment hereof in blank.
Accrued but unpaid interest shall be subject to conversion. No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the lower of (a) the average
closing bid price of the Common Stock for the day immediately preceding the date
of the monthly interest payment due or (b) the closing bid prices of the Common
Stock for the last 5 consecutive trading days prior to Closing ("Market Price"),
the Company shall issue to the Holder shares of Common Stock in an amount equal
to the total monthly interest accrued and due divided by 80% of the Market Price
("Interest Shares"). The dollar amount of interest payable pursuant to this
paragraph 4(b) shall be calculated based upon the total amount of payments
actually made by the Holder in connection with the purchase of the Debentures at
the time any interest payment is due. If such payment is made by check, interest
shall accrue beginning 10 days from the date the check is received by the
Company. If such payment is made by wire transfer directly into the Company's
account, interest shall accrue beginning on the date the wire transfer is
received by the Company. Common Stock issued pursuant hereto shall be issued
pursuant to Rule 504 of Regulation D in accordance with the terms of the
Subscription Agreement.
(c) At any time after 90 days the Company shall have the option to
pay to the Holder 120% of the principal amount of the Debenture, in full, to the
extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture. Any
shares issued pursuant to this paragraph 4(c) shall be issued pursuant to Rule
504 of Regulation D.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including
reasonable
<PAGE>
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Debenture.
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture
and such failure shall continue uncured for a period of thirty
(30) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent
to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any
bankruptcy law or any law for the
<PAGE>
relief of debtors shall be instituted by or against the
Company and, if instituted against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 3 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance
with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors
and assigns of each party hereto. The Holder and the Company hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of New York. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
arbitration
<PAGE>
board of the National Association of Securities Dealers in New York City and
pursuant to its rules. Upon demand made by the Holder to the Company, the
Company agrees to submit to and participate in such arbitration. This Agreement
may be executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: September 16, 1998
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
----------------------------------
Kenneth Wulwick
Title: President
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $____________
of the above Debenture No. _______ into Shares of Common Stock of Kenwick
Industries, Inc. ("Company") according to the conditions set forth in such
Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion_________________________________________________________
Applicable Conversion Price________________________________________________
Signature__________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________________
___________________________________________________________________
SSN or EIN:________________________________________________________
Shares are to be registered in the following name:
Name:______________________________________________________________________
Address:___________________________________________________________________
Tel:_______________________________
Fax:_______________________________
SSN or EIN:________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________________________________
Address:___________________________________________________________________
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER.
C-001 US $115,000
KENWICK INDUSTRIES, INC.
8% SERIES C SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE NOVEMBER 20, 2001
THIS DEBENTURE of Kenwick Industries, Inc., a corporation duly
organized and existing under the laws of Florida ("Company"), designated as its
8% Series C Senior Subordinated Convertible Redeemable Debentures Due November
20, 2001, in an aggregate principal face amount not exceeding One Hundred
Fifteen Thousand Dollars (U.S. $115,000), which Debentures are being purchased
at 100% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to Avram Rothman the
registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed One Hundred Fifteen
Thousand Dollars (U.S. $115,000) on November 20, 2001 ("Maturity Date"), and to
pay interest on the principal sum outstanding, at the rate of 8% per annum due
and payable monthly commencing December 20, 1998 pursuant to paragraph 4(b)
herein. The interest so payable will be paid to the person in whose name this
Debenture is registered on the records of the Company regarding registration and
transfers of the Debentures ("Debenture Register"); provided, however, that the
Company's obligation to a transferee of this Debenture arises only if such
transfer, sale or other disposition is made in accordance with the terms and
conditions of the Securities Subscription Agreement dated as of November 20,
1998 between the Company and Avram Rothman ("Subscription Agreement"). The
principal of, and interest on, this Debenture are payable at the address last
appearing on the Debenture Register of the Company as designated in writing by
the Holder hereof from time to time. The Company will pay the outstanding
principal due upon this
<PAGE>
from time to time. The Company will pay the outstanding principal due upon this
Debenture before or on the Maturity Date, less any amounts required by law to be
deducted or withheld, to the Holder of this Debenture by check if paid more than
10 days prior to the Maturity Date or by wire transfer and addressed to such
Holder at the last address appearing on the Debenture Register. The forwarding
of such check or wire transfer shall constitute a payment of outstanding
principal hereunder and shall satisfy and discharge the liability for principal
on this Debenture to the extent of the sum represented by such check or wire
transfer. Interest shall be payable in Common Stock (as defined below) pursuant
to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $10,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being converted ("Notice of Conversion") in the form annexed hereto as Exhibit
I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into shares of Common Stock,
$0.01 par value per share, of the Company ("Common Stock"), at a conversion
price for each share of Common Stock equal to the lower of (a) 80% of the
average closing bid price of the Common Stock as reported on the National
Association of Securities Dealers Electronic Bulletin Board ("OTC-Bulletin
Board") for the three (3) consecutive trading days immediately preceding the
date of receipt by the Company of Notice of Conversion ("Conversion Shares") or
(b) 80% of the closing bid price of the Common Stock on the three (3)
consecutive trading days immediately preceding the date of subscription by the
Holder as reported on the OTC-Bulletin Board ("Conversion Price"). If the number
of resultant Conversion Shares would as a matter of law or pursuant to
regulatory authority require the Company to seek shareholder approval of such
issuance, the Company shall, as soon as practicable, take the
<PAGE>
necessary steps to seek such approval. If such approval is not received within
30 days, then Company shall be required to redeem the Debenture pursuant to
paragraph 4(c) herein. Such conversion shall be effectuated, as provided in a
certain Escrow Agreement executed simultaneously with this Debenture, by the
Company delivering the Conversion Shares to the Holder within 5 days of receipt
by the Company of the Notice of Conversion. Once the Holder has received such
Conversion Shares, the Escrow Agent shall surrender the Debentures to be
converted to the Company, executed by the Holder of this Debenture evidencing
such Holder's intention to convert this Debenture or a specified portion hereof,
and accompanied by proper assignment hereof in blank. Accrued but unpaid
interest shall be subject to conversion. No fractional shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the lower of (a) the average
closing bid price of the Common Stock for three (3) consecutive trading days
immediately preceding the date of the monthly interest payment due as reported
on the OTC-Bulletin Board or (b) the average closing bid prices of the Common
Stock for the last three (3) consecutive trading days as reported on the
OTC-Bulletin Board prior to Closing ("Market Price"), the Company shall issue to
the Holder shares of Common Stock in an amount equal to the total monthly
interest accrued and due divided by 80% of the Market Price ("Interest Shares").
The dollar amount of interest payable pursuant to this paragraph 4(b) shall be
calculated based upon the total amount of payments actually made by the Holder
in connection with the purchase of the Debentures at the time any interest
payment is due. If such payment is made by check, interest shall accrue
beginning 10 days from the date the check is received by the Company. If such
payment is made by wire transfer directly into the Company's account, interest
shall accrue beginning on the date the wire transfer is received by the Company.
Common Stock issued pursuant hereto shall be issued pursuant to Rule 504 of
Regulation D in accordance with the terms of the Subscription Agreement.
(c) At any time after 90 days the Company shall have the option to
pay to the Holder 120% of the principal amount of the Debenture, in full, to the
extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture. Any
shares issued pursuant to this paragraph 4(c) shall be issued pursuant to Rule
504 of Regulation D.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
<PAGE>
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture
and such failure shall continue uncured for a period of thirty
(30) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent
to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other
<PAGE>
proceedings for relief under any bankruptcy law or any law for
the relief of debtors shall be instituted by or against the
Company and, if instituted against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 3 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance
with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors
and assigns of each party hereto. The Holder and the Company hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of New York. At Holder's election, any dispute between the
<PAGE>
parties may be arbitrated rather than litigated in the courts, before the
arbitration board of the American Arbitration Association in New York City and
pursuant to its rules. Upon demand made by the Holder to the Company, the
Company agrees to submit to and participate in such arbitration. This Agreement
may be executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized
Dated: November 20, 1998
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
----------------------------------
Kenneth Wulwick
Title: President
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $____________
of the above Debenture No. _______ into Shares of Common Stock of Kenwick
Industries, Inc. ("Company") according to the conditions set forth in such
Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion_________________________________________________________
Applicable Conversion Price________________________________________________
Signature__________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________________
___________________________________________________________________
SSN or EIN:________________________________________________________
Shares are to be registered in the following name:
Name:______________________________________________________________________
Address:___________________________________________________________________
Tel:_______________________________
Fax:_______________________________
SSN or EIN:________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________________________________
Address:___________________________________________________________________
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER.
D-001 US $115,000
KENWICK INDUSTRIES, INC.
8% SERIES D SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE FEBRUARY 1, 2002
THIS DEBENTURE of Kenwick Industries, Inc., a corporation duly
organized and existing under the laws of Florida ("Company"), designated as its
8% Series D Senior Subordinated Convertible Redeemable Debentures Due February
1, 2002, in an aggregate principal face amount not exceeding One Hundred Fifteen
Thousand Dollars (U.S. $115,000), which Debentures are being purchased at 100%
of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to Joshua Heimlich
the registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed One Hundred Fifteen
Thousand Dollars (U.S. $115,000) on February 1, 2002 ("Maturity Date"), and to
pay interest on the principal sum outstanding, at the rate of 8% per annum due
and payable monthly commencing March 1, 1999 pursuant to paragraph 4(b) herein.
The interest so payable will be paid to the person in whose name this Debenture
is registered on the records of the Company regarding registration and transfers
of the Debentures ("Debenture Register"); provided, however, that the Company's
obligation to a transferee of this Debenture arises only if such transfer, sale
or other disposition is made in accordance with the terms and conditions of the
Securities Subscription Agreement dated as of February 1, 1999 between the
Company and Joshua Heimlich ("Subscription Agreement"). The principal of, and
interest on, this Debenture are payable at the address last appearing on the
Debenture Register of the Company as designated in writing by the Holder hereof
from time to time. The Company will pay the
<PAGE>
outstanding principal due upon this Debenture before or on the Maturity Date,
less any amounts required by law to be deducted or withheld, to the Holder of
this Debenture by check if paid more than 10 days prior to the Maturity Date or
by wire transfer and addressed to such Holder at the last address appearing on
the Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer. Interest shall be payable in Common
Stock (as defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $10,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being convened ("Notice of Conversion") in the form annexed hereto as Exhibit I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into shares of Common Stock,
$0.01 par value per share, of the Company ("Common Stock"), at a conversion
price for each share of Common Stock equal to the lower of (a) 75% of the
average closing bid price of the Common Stock as reported on the National
Association of Securities Dealers Electronic Bulletin Board ("OTC-Bulletin
Board") for the three (3) consecutive trading days immediately preceding the
date of receipt by the Company of Notice of Conversion ("Conversion Shares") or
(b) 75% of the closing bid price of the Common Stock on the three (3)
consecutive trading days immediately preceding the date of subscription by the
Holder as reported on the OTC-Bulletin Board ("Conversion Price"). If the number
of resultant Conversion Shares would as a matter of law or pursuant to
regulatory authority require the Company to seek shareholder approval of such
issuance, the Company shall, as soon as practicable, take the necessary steps to
seek such approval. If such approval is not received within 30 days, then
Company shall be required to redeem
<PAGE>
the Debenture pursuant to paragraph 4(c) herein. Such conversion shall be
effectuated, as provided in a certain Escrow Agreement executed simultaneously
with this Debenture, by the Company delivering the Conversion Shares to the
Holder within 5 days of receipt by the Company of the Notice of Conversion. Once
the Holder has received such Conversion Shares, the Escrow Agent shall surrender
the Debentures to be converted to the Company, executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion hereof, and accompanied by proper assignment hereof in blank.
Accrued but unpaid interest shall be subject to conversion. No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the lower of (a) the average
closing bid price of the Common Stock for three (3) consecutive trading days
immediately preceding the date of the monthly interest payment due as reported
on the OTC-Bulletin Board or (b) the average closing bid prices of the Common
Stock for the last three (3) consecutive trading days as reported on the
OTC-Bulletin Board prior to Closing ("Market Price"), the Company shall issue to
the Holder shares of Common Stock in an amount equal to the total monthly
interest accrued and due divided by 80% of the Market Price ("Interest Shares").
The dollar amount of interest payable pursuant to this paragraph 4(b) shall be
calculated based upon the total amount of payments actually made by the Holder
in connection with the purchase of the Debentures at the time any interest
payment is due. If such payment is made by check, interest shall accrue
beginning 10 days from the date the check is received by the Company. If such
payment is made by wire transfer directly into the Company's account, interest
shall accrue beginning on the date the wire transfer is received by the Company.
Common Stock issued pursuant hereto shall be issued pursuant to Rule 504 of
Regulation D in accordance with the terms of the Subscription Agreement.
(c) At any time after 90 days the Company shall have the option to
pay to the Holder 125% of the principal amount of the Debenture, in full, to the
extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture. Any
shares issued pursuant to this paragraph 4(c) shall be issued pursuant to Rule
504 of Regulation D.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this
<PAGE>
Debenture.
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture
and such failure shall continue uncured for a period of thirty
(30) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent
to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any
bankruptcy law or any law for the relief of
<PAGE>
debtors shall be instituted by or against the Company and, if
instituted against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 3 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance
with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors
and assigns of each party hereto. The Holder and the Company hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of New York. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
arbitration board of the American Arbitration Association in New York City and
pursuant to its rules. Upon demand made by the Holder to the
<PAGE>
Company, the Company agrees to submit to and participate in such arbitration.
This Agreement may be executed in counterparts, and the facsimile transmission
of an executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: February 1, 1999
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
----------------------------------
Kenneth Wulwick
Title: President
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $____________
of the above Debenture No. _______ into Shares of Common Stock of Kenwick
Industries, Inc. ("Company") according to the conditions set forth in such
Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion_________________________________________________________
Applicable Conversion Price________________________________________________
Signature__________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________________
___________________________________________________________________
SSN or EIN:________________________________________________________
Shares are to be registered in the following name:
Name:______________________________________________________________________
Address:___________________________________________________________________
Tel:_______________________________
Fax:_______________________________
SSN or EIN:________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________________________________
Address:___________________________________________________________________
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER.
E-001 US $170,000
KENWICK INDUSTRIES, INC.
8% SERIES E SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE FEBRUARY 22, 2002
THIS DEBENTURE of Kenwick Industries, Inc., a corporation duly
organized and existing under the laws of Florida ("Company"), designated as its
8% Series E Senior Subordinated Convertible Redeemable Debentures Due February
22, 2002, in an aggregate principal face amount not exceeding One Hundred
Seventy Thousand Dollars (U.S. $170,000), which Debentures are being purchased
at 100% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to Amram Rothman the
registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed One Hundred Seventy
Thousand Dollars (U.S. $170,000) on February 22, 2002 ("Maturity Date"), and to
pay interest on the principal sum outstanding, at the rate of 8% per annum due
and payable monthly commencing March 21, 1999 pursuant to paragraph 4(b) herein.
The interest so payable will be paid to the person in whose name this Debenture
is registered on the records of the Company regarding registration and transfers
of the Debentures ("Debenture Register"); provided, however, that the Company's
obligation to a transferee of this Debenture arises only if such transfer, sale
or other disposition is made in accordance with the terms and conditions of the
Securities Subscription Agreement dated as of February 22, 1999 between the
Company and Amram Rothman ("Subscription Agreement"). The principal of, and
interest on, this Debenture are payable at the address last appearing on the
Debenture Register of the Company as designated in writing by the Holder hereof
from time to time. The Company will pay the
<PAGE>
outstanding principal due upon this Debenture before or on the Maturity Date,
less any amounts required by law to be deducted or withheld, to the Holder of
this Debenture by check if paid more than 10 days prior to the Maturity Date or
by wire transfer and addressed to such Holder at the last address appearing on
the Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer. Interest shall be payable in Common
Stock (as defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $10,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being converted ("Notice of Conversion") in the form annexed hereto as Exhibit
I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into shares of Common Stock,
$0.01 par value per share, of the Company ("Common Stock"), at a conversion
price for each share of Common Stock equal to the lower of (a) 77% of the
average closing bid price of the Common Stock as reported on the National
Association of Securities Dealers Electronic Bulletin Board ("OTC-Bulletin
Board") for the three (3) consecutive trading days immediately preceding the
date of receipt by the Company of Notice of Conversion ("Conversion Shares") or
(b) 77.5% of the closing bid price of the Common Stock on the three (3)
consecutive trading days immediately preceding the date of subscription by the
Holder as reported on the OTC-Bulletin Board ("Conversion Price"). If the number
of resultant Conversion Shares would as a matter of law or pursuant to
regulatory authority require the Company to seek shareholder approval of such
issuance, the Company shall, as soon as practicable, take the necessary steps to
seek such approval. If such approval is not received within 30 days, then
Company shall be required to redeem
<PAGE>
the Debenture pursuant to paragraph 4(c) herein. Such conversion shall be
effectuated, as provided in a certain Escrow Agreement executed simultaneously
with this Debenture, by the Company delivering the Conversion Shares to the
Holder within 5 days of receipt by the Company of the Notice of Conversion. Once
the Holder has received such Conversion Shares, the Escrow Agent shall surrender
the Debentures to be converted to the Company, executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion hereof, and accompanied by proper assignment hereof in blank.
Accrued but unpaid interest shall be subject to conversion. No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the lower of (a) the average
closing bid price of the Common Stock for three (3) consecutive trading days
immediately preceding the date of the monthly interest payment due as reported
on the OTC-Bulletin Board or (b) the average closing bid prices of the Common
Stock for the last three (3) consecutive trading days as reported on the
OTC-Bulletin Board prior to Closing ("Market Price"), the Company shall issue to
the Holder shares of Common Stock in an amount equal to the total monthly
interest accrued and due divided by 77.5% of the Market Price ("Interest
Shares"). The dollar amount of interest payable pursuant to this paragraph 4(b)
shall be calculated based upon the total amount of payments actually made by the
Holder in connection with the purchase of the Debentures at the time any
interest payment is due. If such payment is made by check, interest shall accrue
beginning 10 days from the date the check is received by the Company. If such
payment is made by wire transfer directly into the Company's account, interest
shall accrue beginning on the date the wire transfer is received by the Company.
Common Stock issued pursuant hereto shall be issued pursuant to Rule 504 of
Regulation D in accordance with the terms of the Subscription Agreement.
(c) At any time after 90 days the Company shall have the option to
pay to the Holder 122.5% of the principal amount of the Debenture, in full, to
the extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture. Any
shares issued pursuant to this paragraph 4(c) shall be issued pursuant to Rule
504 of Regulation D.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this
<PAGE>
Debenture.
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture
and such failure shall continue uncured for a period of thirty
(30) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent
to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any
bankruptcy law or any law for the relief of
<PAGE>
debtors shall be instituted by or against the Company and, if
instituted against the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 3 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance
with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors
and assigns of each party hereto. The Holder and the Company hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of New York. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
arbitration board of the American Arbitration Association in New York City and
pursuant to its rules. Upon demand made by the Holder to the
<PAGE>
Company, the Company agrees to submit to and participate in such arbitration.
This Agreement may be executed in counterparts, and the facsimile transmission
of an executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized
Dated: February 22, 1999
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
----------------------------------
Kenneth Wulwick
Title: President
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $____________
of the above Debenture No. _______ into Shares of Common Stock of Kenwick
Industries, Inc. ("Company") according to the conditions set forth in such
Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion_________________________________________________________
Applicable Conversion Price________________________________________________
Signature__________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________________
___________________________________________________________________
SSN or EIN:________________________________________________________
Shares are to be registered in the following name:
Name:______________________________________________________________________
Address:___________________________________________________________________
Tel:_______________________________
Fax:_______________________________
SSN or EIN:________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________________________________
Address:___________________________________________________________________
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER
F-001 US $200,000
KENWICK INDUSTRIES, INC.
8% SERIES F SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE MARCH 28, 2002
THIS DEBENTURE of Kenwick Industries, Inc., a corporation duly
organized and existing under the laws of Florida ("Company"), designated as its
8% Series F Senior Subordinated Convertible Redeemable Debentures Due March
28, 2002, in an aggregate principal face amount not exceeding Two Hundred
Thousand Dollars (U.S. $200,000), which Debentures are being purchased at 100%
of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to Y.L. Hirsch the
registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed Two Hundred Thousand
Dollars (U.S. $200,000) on March 28, 2002 ("Maturity Date"), and to pay interest
on the principal sum outstanding, at the rate of 8% per annum due and payable
monthly commencing April 27, 1999 pursuant to paragraph 4(b) herein. The
interest so payable will be paid to the person in whose name this Debenture is
registered on the records of the Company regarding registration and transfers of
the Debentures ("Debenture Register"); provided, however, that the Company's
obligation to a transferee of this Debenture arises only if such transfer, sale
or other disposition is made in accordance with the terms and conditions of the
Securities Subscription Agreement dated as of March 29, 1999 between the Company
and Y.L. Hirsch ("Subscription Agreement"). The principal of, and interest on,
this Debenture are payable at the address last appearing on the Debenture
Register of the Company as designated in writing by the Holder hereof from time
to time. The Company will pay the outstanding principal
<PAGE>
due upon this Debenture before or on the Maturity Date, less any amounts
required by law to be deducted or withheld, to the Holder of this Debenture by
check if paid more than 10 days prior to the Maturity Date or by wire transfer
and addressed to such Holder at the last address appearing on the Debenture
Register. The forwarding of such check or wire transfer shall constitute a
payment of outstanding principal hereunder and shall satisfy and discharge the
liability for principal on this Debenture to the extent of the sum represented
by such check or wire transfer. Interest shall be payable in Common Stock (as
defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $10,000. No service charge will be made for such
registration or transfer or exchange, except that Holder shall pay any tax or
other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being converted ("Notice of Conversion") in the form annexed hereto as Exhibit
I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into shares of Common Stock,
$0.01 par value per share, of the Company ("Common Stock"), at a conversion
price for each share of Common Stock equal to the lower of (a) 77.5% of the
average closing bid price of the Common Stock as reported on the National
Association of Securities Dealers Electronic Bulletin Board ("OTC-Bulletin
Board") for the three (3) consecutive trading days immediately preceding the
date of receipt by the Company of Notice of Conversion ("Conversion Shares") or
(b) 77.5% of the closing bid price of the Common Stock on the three (3)
consecutive trading days immediately preceding the date of subscription by the
Holder as reported on the OTC-Bulletin Board ("Conversion Price"). If the number
of resultant Conversion Shares would as a matter of law or pursuant to
regulatory authority require the Company to seek shareholder approval of such
issuance, the Company shall, as soon as practicable, take the necessary steps to
seek such approval. If such approval is not received within 30 days, then
Company shall be required to redeem
<PAGE>
the Debenture pursuant to paragraph 4(c) herein. Such conversion shall be
effectuated, as provided in a certain Escrow Agreement executed simultaneously
with this Debenture, by the Company delivering the Conversion Shares to the
Holder within 5 days of receipt by the Company of the Notice of Conversion. Once
the Holder has received such Conversion Shares, the Escrow Agent shall surrender
the Debentures to be converted to the Company, executed by the Holder of this
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion hereof, and accompanied by proper assignment hereof in blank.
Accrued but unpaid interest shall be subject to conversion. No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the lower of (a) the average
closing bid price of the Common Stock for three (3) consecutive trading days
immediately preceding the date of the monthly interest payment due as reported
on the OTC-Bulletin Board or (b) the average closing bid prices of the Common
Stock for the last three (3) consecutive trading days as reported on the
OTC-Bulletin Board prior to Closing ("Market Price"), the Company shall issue to
the Holder shares of Common Stock in an amount equal to the total monthly
interest accrued and due divided by 77.5% of the Market Price ("Interest
Shares"). The dollar amount of interest payable pursuant to this paragraph 4(b)
shall be calculated based upon the total amount of payments actually made by the
Holder in connection with the purchase of the Debentures at the time any
interest payment is due. If such payment is made by check, interest shall accrue
beginning 10 days from the date the check is received by the Company. If such
payment is made by wire transfer directly into the Company's account, interest
shall accrue beginning on the date the wire transfer is received by the Company.
Common Stock issued pursuant hereto shall be issued pursuant to Rule 504 of
Regulation D in accordance with the terms of the Subscription Agreement.
(c) At any time after 90 days the Company shall have the option to
pay to the Holder 122.5% of the principal amount of the Debenture, in full, to
the extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
<PAGE>
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made or the Company shall
violate any covenants in the Subscription Agreement including
but not limited to Section 5(b) or 10; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture
and such failure shall continue uncured for a period of thirty
(30) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; or (4) apply for or consent
to the appointment of a trustee, liquidator or receiver for
its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against
<PAGE>
the Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market, or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 5 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance
with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors
and assigns of each party hereto. The Holder and the Company hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of New York. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
arbitration board of the American Arbitration Association in New York City and
pursuant to its rules. Upon demand made by the Holder to the Company, the
Company agrees to submit to and participate in such arbitration. This Agreement
may
<PAGE>
be executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: March 29, 1999
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
----------------------------------
Kenneth Wulwick
Title: President
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $____________
of the above Debenture No. _______ into Shares of Common Stock of Kenwick
Industries, Inc. ("Company") according to the conditions set forth in such
Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion_________________________________________________________
Applicable Conversion Price________________________________________________
Signature__________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________________
___________________________________________________________________
SSN or EIN:________________________________________________________
Shares are to be registered in the following name:
Name:______________________________________________________________________
Address:___________________________________________________________________
Tel:_______________________________
Fax:_______________________________
SSN or EIN:________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________________________________
Address:___________________________________________________________________
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER
G-001 US $175,000
KENWICK INDUSTRIES, INC.
8% SERIES G SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE JULY 22, 2002
THIS DEBENTURE of Kenwick Industries, Inc., a corporation duly
organized and existing under the laws of Florida ("Company"), designated as its
8% Series G Senior Subordinated Convertible Redeemable Debentures Due July 22,
2002, in an aggregate principal face amount not exceeding One Hundred Seventy
Five Thousand Dollars (U.S. $175,000), which Debentures are being purchased at
100% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to HLKT Holdings,
L.L.C. the registered holder hereof and his authorized successors and permitted
assigns ("Holder"), the aggregate principal face sum not to exceed One Hundred
Seventy Five Thousand Dollars (U.S. $175,000) on July 22, 2002 ("Maturity
Date"), and to pay interest on the principal sum outstanding, at the rate of 8%
per annum commencing August 22, 1999 and due in full at the Maturity Date
pursuant to paragraph 4(b) herein. Accrual of outstanding principal sum has been
made or duly provided for. The interest so payable will be paid to the person in
whose name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("Debenture Register") provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of July
22, 1999 between the Company and HLKT Holdings, L.L.C. ("Subscription
Agreement"). The principal of, and interest on, this Debenture are payable at
the address last appearing on the Debenture Register of the
<PAGE>
writing by the Holder hereof from time to time. The Company will pay the
outstanding principal due upon this Debenture before or on the Maturity Date,
less any amounts required by law to be deducted or withheld, to the Holder of
this Debenture by check if paid more than 10 days prior to the Maturity Date or
by wire transfer and addressed to such Holder at the last address appearing on
the Debenture Register. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer. Interest shall be payable in Common
Stock was defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same but
not less than U.S. $10,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being converted ("Notice of Conversion") in the form annexed hereto as Exhibit
I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into shares of Common Stock,
$0.01 par value per share, of the Company freely tradeable and without
restrictive legend of any kind "Common Stock"), at a conversion price
("Conversion Price") for each share of Common Stock equal to 77.5% of the
average closing bid price of the Common Stock as reported on the National
Association of Securities Dealers Electronic Bulletin Board ("OTC-Bulletin
Board") for the three (3) consecutive trading days immediately preceding the
date of receipt by the Company of Notice of Conversion ("Conversion Shares"). If
the number of resultant Conversion Shares would as a matter of law or pursuant
to regulatory authority require the Company
-2-
<PAGE>
to seek shareholder approval of such issuance, the Company shall, as soon as
practicable, take the necessary steps to seek such approval. Such conversion
shall be effectuated, as provided in a certain Escrow Agreement executed
simultaneously with this Debenture, by the Company delivering the Conversion
Shares to the Holder within 5 business days of receipt by the Company of the
Notice of Conversion. Once the Holder has received such Conversion Shares, the
Escrow Agent shall surrender the Debentures to he converted to the Company,
executed by the Holder of this Debenture evidencing such Holder's intention to
convert this Debenture or a specified portion hereof, and accompanied by proper
assignment hereof in blank. Accrued but unpaid interest shall be subject to
conversion. No fractional shares or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded to
the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the average closing bid price
of the Common Stock for three (3) consecutive trading days immediately preceding
the date of the monthly interest payment due as reported on the OTC-Bulletin
Board ("Market Price"), the Company shall issue to the Holder shares of Common
Stock in an amount equal to the total monthly interest accrued and due divided
by 77.5% of the Market Price ("Interest Shares"). The dollar amount of interest
payable pursuant to this paragraph 4(b) shall be calculated based upon the total
amount of payments actually made by the Holder in connection with the purchase
of the Debentures at the time any interest payment is due. If such payment is
made by check, interest shall accrue beginning 10 days from the date the check
is received by the Company. If such payment is made by wire transfer directly
into the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement and shall be freely tradeable and without restrictive
legend of any kind.
(c) At any time after 90 days the Company shall have the option to
pay to the Holder 125% of the principal amount of the Debenture, in full, to the
extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
-3-
<PAGE>
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made or the Company shall
violate any covenants in the Subscription Agreement including
but not limited to Section 5(b) or 10: or
c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture,
the Subscription Agreement or the Escrow Agreement and such
failure shall continue uncured for a period of thirty (30)
days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent: (2) admit in writing
its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; (4) apply for or consent to
the appointment of a trustee, liquidator or receiver for its
or for a substantial part of its property or business; (5)
file a petition for bankruptcy relief, consent to the filing
of such petition or have filed against it an involuntary
petition for bankruptcy relief, all under federal or state
laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) day's after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
-4-
<PAGE>
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted voluntarily by or involuntarily against the
Company: or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market or other market or exchange on which
the Common Stock is or becomes listed or trading in the Common
Stock shall be suspended for more than 10 consecutive days; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 5 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and
-5-
<PAGE>
the validity and enforceability of the remaining provisions of this Debenture
will not in any way be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance
with the laws of Colorado applicable to contracts made and wholly to be
performed within the State of Colorado and shall be binding upon the successors
and assigns of each party hereto. The Holder and the Company hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of Colorado. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Denver and pursuant to its rules. Upon
demand made by the Holder to the Company, the Company agrees to submit to and
participate in such arbitration. This Agreement may be executed in counterparts,
and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: July 22, 1999
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
----------------------------------
Kenneth Wulwick
Title: President
-6-
<PAGE>
G SERIES
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $____________
of the above Debenture No. _______ into Shares of Common Stock of Kenwick
Industries, Inc. according to the conditions set forth in such Debenture, as of
the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion_________________________________________________________
Applicable Conversion Price________________________________________________
Signature__________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________________
___________________________________________________________________
SSN or EIN:________________________________________________________
Shares are to be registered in the following name:
Name:______________________________________________________________________
Address:___________________________________________________________________
Tel:_______________________________
Fax:_______________________________
SSN or EIN:________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________________________________
Address:___________________________________________________________________
-7-
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER.
H-001 US $225,000
KENWICK INDUSTRIES, INC.
8% SERIES H SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE SEPTEMBER 21, 2002
THIS DEBENTURE of Kenwick Industries, Inc., a corporation duly
organized and existing under the laws of Florida ("Company"), designated as its
8% Series H Senior Subordinated Convertible Redeemable Debentures Due September
21, 2002, in an aggregate principal face amount not exceeding Two Hundred
Twenty-Five Thousand Dollars (U.S.$225,000), which Debentures are being
purchased at 100% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to M&B Trading,
L.L.C. the registered holder hereof and his authorized successors and permitted
assigns ("Holder"), the aggregate principal face sum not to exceed Two Hundred
Twenty-Five Thousand Dollars (U.S. $225,000) on September 21, 2002 ("Maturity
Date"), and to pay interest on the principal sum outstanding, at the rate of 8%
per annum commencing October 21, 1999 and due in full at the Maturity Date
pursuant to paragraph 4(b) herein. Accrual of outstanding principal sum has been
made or duly provided for. The interest so payable will be paid to the person in
whose name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("Debenture Register"); provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of
September 21, 1999 between the Company and M&B Trading, L.L.C. ("Subscription
Agreement"). The principal of, and interest on, this Debenture are payable at
the address last appearing on the Debenture Register
<PAGE>
Register of the Company as designated in writing by the Holder hereof from time
to time. The Company will pay the outstanding principal due upon this Debenture
before or on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Debenture by check if paid more than 10 days
prior to the Maturity Date or by wire transfer and addressed to such Holder at
the last address appearing on the Debenture Register. The forwarding of such
check or wire transfer shall constitute a payment of outstanding principal
hereunder and shall satisfy and discharge the liability for principal on this
Debenture to the extent of the sum represented by such check or wire transfer.
Interest shall be payable in Common Stock (as defined below) pursuant to
paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $10,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being converted ("Notice of Conversion") in the form annexed hereto as Exhibit
I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into shares of Common Stock,
$0.01 par value per share, of the Company freely tradeable and without
restrictive legend of any kind ("Common Stock"), at a conversion price
("Conversion Price") for each share of Common Stock equal to 77.5% of the
average closing bid price of the Common Stock as reported on the National
Association of Securities Dealers Electronic Bulletin Board ("OTC-Bulletin
Board") for the three (3) consecutive trading days immediately preceding the
date of receipt by the Company of Notice of Conversion ("Conversion Shares"). If
the number of resultant
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<PAGE>
Conversion Shares would as a matter of law or pursuant to regulatory authority
require the Company to seek shareholder approval of such issuance, the Company
shall, as soon as practicable, take the necessary steps to seek such approval.
Such conversion shall be effectuated, as provided in a certain Escrow Agreement
executed simultaneously with this Debenture, by the Company delivering the
Conversion Shares to the Holder within 5 business days of receipt by the Company
of the Notice of Conversion. Once the Holder has received such Conversion
Shares, the Escrow Agent shall surrender the Debentures to be converted to the
Company, executed by the Holder of this Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion hereof, and
accompanied by proper assignment hereof in blank. Accrued but unpaid interest
shall be subject to conversion. No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the average closing bid price
of the Common Stock for three (3) consecutive trading days immediately preceding
the date of the monthly interest payment due as reported on the OTC-Bulletin
Board ("Market Price"), the Company shall issue to the Holder shares of Common
Stock in an amount equal to the total monthly interest accrued and due divided
by 77.5% of the Market Price ("Interest Shares"). The dollar amount of interest
payable pursuant to this paragraph 4(b) shall be calculated based upon the total
amount of payments actually made by the Holder in connection with the purchase
of the Debentures at the time any interest payment is due. If such payment is
made by check, interest shall accrue beginning 10 day's from the date the check
is received by the Company. If such payment is made by wire transfer directly
into the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement and shall be freely tradeable and without restrictive
legend of any kind.
(c) At any time after 90 day's the Company shall have the option to
pay to the Holder 122.5% of the principal amount of the Debenture, in full, to
the extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 day's shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
-3-
<PAGE>
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 day's, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made or the Company shall
violate any covenants in the Subscription Agreement including
but not limited to Section 5(b) or 10; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture,
the Subscription Agreement or the Escrow Agreement and such
failure shall continue uncured for a period of thirty (30)
day's after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; (4) apply for or consent to
the appointment of a trustee, liquidator or receiver for its
or for a substantial part of its property or business; (5)
file a petition for bankruptcy relief, consent to the filing
of such petition or have filed against it an involuntary
petition for bankruptcy relief, all under federal or state
laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
-4-
<PAGE>
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted voluntarily by or involuntarily against the
Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market or other market or exchange on which
the Common Stock is or becomes listed or trading in the Common
Stock shall be suspended for more than 10 consecutive days; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 5 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and
-5-
<PAGE>
the validity and enforceability of the remaining provisions of this Debenture
will not in any way be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
12. This Debenture shall be governed by and construed in accordance
with the laws of Colorado applicable to contracts made and wholly to be
performed within the State of Colorado and shall be binding upon the successors
and assigns of each party hereto. The Holder and the Company hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of Colorado. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Denver and pursuant to its rules. Upon
demand made by the Holder to the Company, the Company agrees to submit to and
participate in such arbitration. This Agreement may be executed in counterparts,
and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: September 21, 1999
KENWICK INDUSTRIES, INC.
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
----------------------------------
Kenneth Wulwick
Title: President
-6-
<PAGE>
H SERIES
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $____________
of the above Debenture No. _______ into Shares of Common Stock of Kenwick
Industries, Inc. according to the conditions set forth in such Debenture, as of
the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion_________________________________________________________
Applicable Conversion Price________________________________________________
Signature__________________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________________
___________________________________________________________________
SSN or EIN:________________________________________________________
Shares are to be registered in the following name:
Name:______________________________________________________________________
Address:___________________________________________________________________
Tel:_______________________________
Fax:_______________________________
SSN or EIN:________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________________________________
Address:___________________________________________________________________
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT
TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND RULE
504 OF REGULATION D PROMULGATED THEREUNDER.
I-001 US $115,000
KENWICK INDUSTRIES, INC.
8% SERIES I SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE
DEBENTURE DUE JANUARY _, 2002
THIS DEBENTURE of Kenwick Industries, Inc., a corporation duly
organized and existing under the laws of Florida ("Company'), designated as its
8% Series I Senior Subordinated Convertible Redeemable Debentures Due January _,
2002, in an aggregate principal face amount not exceeding One Hundred Fifteen
Thousand Dollars (U.S. $115,000), which Debentures are being purchased at 100%
of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay to _______ the
registered holder hereof and his authorized successors and permitted assigns
("Holder"), the aggregate principal face sum not to exceed One Hundred Fifteen
Thousand Dollars (U.S. $115,000) on January _, 2002 ("Maturity Date"), and to
pay interest on the principal sum outstanding, at the rate of 8% per annum
commencing February __, 1999 and due in full at the Maturity Date pursuant to
paragraph 4(b) herein. Accrual of outstanding principal sum has been made or
duly provided for. The interest so payable will be paid to the person in whose
name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("Debenture Register"); provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of
September _, 1999 between the Company and ______ ("Subscription Agreement"). The
principal of, and interest on, this Debenture are payable at the address last
appearing on the Debenture
-1-
<PAGE>
Register of the Company as designated in writing by the Holder hereof from time
to time. The Company will pay the outstanding principal due upon this Debenture
before or on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Debenture by check if paid more than 10 days
prior to the Maturity Date or by wire transfer and addressed to such Holder at
the last address appearing on the Debenture Register. The forwarding of such
check or wire transfer shall constitute a payment of outstanding principal
hereunder and shall satisfy and discharge the liability for principal on this
Debenture to the extent of the sum represented by such check or wire transfer.
Interest shall be payable in Common Stock (as defined below) pursuant to
paragraph 4(b) herein.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US$10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same, but
not less than U.S. $10,000. No service charge will be made for such registration
or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any
amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended ("Act") and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary. Any Holder of this Debenture, electing to exercise the right of
conversion set forth in Section 4(a) hereof, in addition to the requirements set
forth in Section 4(a), and any prospective transferee of this Debenture, are
also required to give the Company written confirmation that the Debenture is
being converted ("Notice of Conversion") in the form annexed hereto as Exhibit
I.
4. (a) The Holder of this Debenture is entitled, at its option, at
any time immediately following execution of this Agreement and delivery of the
Debenture hereof, to convert all or any amount over $10,000 of the principal
face amount of this Debenture then outstanding into freely tradeable shares of
Common Stock, $0.01 par value per share, of the Company without restrictive
legend of any nature ("Common Stock"), at a conversion price ("Conversion
Price") for each share of Common Stock equal to the 75% of the average closing
bid price of the Common Stock as reported on the National Association of
Securities Dealers Electronic Bulletin Board ("OTC-Bulletin Board") for three
(3) consecutive trading days immediately preceding the date of receipt by the
Company of Notice of Conversion ("Conversion Shares"). If the number of
resultant Conversion Shares would as a matter of law or pursuant to regulatory
authority require the Company to seek shareholder approval of such
-2-
<PAGE>
issuance, the Company shall, as soon as practicable, take the necessary steps to
seek such approval. Such conversion shall be effectuated, as provided in a
certain Escrow Agreement executed simultaneously with this Debenture, by the
Company delivering the Conversion Shares to the Holder within 5 business days of
receipt by the Company of the Notice of Conversion. Once the Holder has received
such Conversion Shares, the Escrow Agent shall surrender the Debentures to be
converted to the Company, executed by the Holder of this Debenture evidencing
such Holder's intention to convert this Debenture or a specified portion hereof,
and accompanied by proper assignment hereof in blank. Accrued but unpaid
interest shall be subject to conversion. No fractional shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall be paid by issuing
Common Stock of the Company as follows: Based on the average closing bid price
of the Common Stock for three (3) consecutive trading days immediately preceding
the date of the monthly interest payment due as reported on the OTC Bulletin
Board ("Market Price"), the Company shall issue to the Holder shares of Common
Stock in an amount equal to the total monthly interest accrued and due divided
by 75% of the Market Price ("Interest Shares"). The dollar amount of interest
payable pursuant to this paragraph 4(b) shall be calculated based upon the total
amount of payments actually made by the Holder in connection with the purchase
of the Debentures at the time any interest payment is due. If such payment is
made by check, interest shall accrue beginning 10 days from the date the check
is received by the Company. If such payment is made by wire transfer directly
into the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement freely tradeable and without restrictive legend of
any kind.
(c) At any time alter 90 days the Company shall have the option to
pay to the Holder 125% of the principal amount of the Debenture, in full, to the
extent conversion has not occurred pursuant to paragraph 4(a) herein, or pay
upon maturity if the Debenture is not converted. The Company shall give the
Holder 5 days written notice and the Holder during such 5 days shall have the
option to convert the Debenture or any part thereof into shares of Common Stock
at the Conversion Price set forth in paragraph 4(a) of this Debenture.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for
payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by the Holder in collecting
any amount due under this Debenture.
-3-
<PAGE>
8. If one or more of the following described "Events of Default"
shall occur and continue for 30 days, unless a different time frame is noted
below:
(a) The Company shall default in the payment of principal or
interest on this Debenture; or
(b) Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate
or financial or other written statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Debenture
or the Subscription Agreement shall be false or misleading in
any material respect at the time made or the Company shall
violate any covenants in the Subscription Agreement including
but not limited to Section 5(b) or 10; or
(c) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture,
the Subscription Agreement or the Escrow Agreement and such
failure shall continue uncured for a period of thirty (30)
days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3)
make an assignment for the benefit of creditors or commence
proceedings for its dissolution; (4) apply for or consent to
the appointment of a trustee, liquidator or receiver for its
or for a substantial part of its property or business; (5)
file a petition for bankruptcy relief, consent to the filing
of such petition or have filed against it an involuntary
petition for bankruptcy relief, all under federal or state
laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company; or
(g) Any money judgment, writ or warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
-4-
<PAGE>
(h) Bankruptcy, reorganization, insolvency or liquidation
proceedings, or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted voluntarily by or involuntarily against the
Company; or
(i) The Company shall have its Common Stock delisted from the
over-the-counter market or other market or exchange on which
the Common Stock is or becomes listed or trading in the Common
Stock shall be suspended for more than 10 consecutive days; or
(j) The Company shall not deliver to the Buyer the Common Stock
pursuant to paragraph 4 herein without restrictive legend
within 5 business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized obligation of the
Company. However, no recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
10. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
11. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Bolder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
-5-
<PAGE>
12. This Debenture shall be governed by and construed in accordance
with the laws of Colorado applicable to contracts made and wholly to be
performed within the State of Colorado and shall be binding upon the successors
and assigns of each party hereto. The Holder and the Company hereby mutually
waive trial by jury and consent to exclusive jurisdiction and venue in the
courts of the State of Colorado. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Denver and pursuant to its rules. Upon
demand made by the Holder to the Company, the Company agrees to submit to and
participate in such arbitration. This Agreement may be executed in counterparts,
and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: January , 2000
KENWICK INDUSTRIES, INC.
By: /s/ Kenneth Wulwick
-------------------------------------
Kenneth Wulwick
Title: President
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<PAGE>
SERIES I EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $___________ of
the above Debenture No. _______ into Shares of Common Stock of Kenwick
Industries, Inc. according to the conditions set forth in such Debenture, as of
the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion___________________________________________________
Applicable Conversion Price__________________________________________
Signature____________________________________________________________
[Print Name of Holder and Title of Signer]
Address:_____________________________________________________________
_____________________________________________________________
SSN or EIN:___________________________________________________________
Shares are to be registered in the following name:
Name:________________________________________________________________
Address:_____________________________________________________________
Tel:_______________________
Fax:_______________________
SSN or EIN:________________
Shares are to be sent or delivered to the following account.
Account Name:________________________________________________________
Address:_____________________________________________________________
-7-
LICENSING AGREEMENT
This agreement is hereby executed in Dade County, Florida on this 9th day
of January, 1997, by and between KENWICK SALES, INC. D/B/A AMERICAN VIDEO
LANGUAGE INSTITUTE (hereinafter known as "AVLI", the Licensee) and INTEGRATED
ENGLISH INTERNATIONAL, INC., (hereinafter known as "IEI", the Licensor);
WITNESSETH:
WHEREAS, AVLI and IEI, licensee and licensor, respectively, are desirous
of the entering into a licensing agreement, as IEI produces, licenses and
manufactures educational aids and AVLI has the desire, means and ability to
sell, distribute and market the products of IEI; and,
WHEREAS, the above parties agree that the purpose of this licensing
agreement is mutually advantageous and beneficial to all parties identified
herein; and,
NOW THEREFORE, in consideration of the promises, mutual covenants and
agreements contained herein, the parties who are intending to be legally bound
by this agreement, agree as follows:
1. That the representations made by the parties herein are true and
correct and are known to be relied upon by the other parties to
induce their execution of this agreement.
2. That the terms of this agreement shall begin immediately upon formal
execution of this agreement and shall continue in the manner set
forth herein.
3. That AVLI shall be granted the exclusive rights, to the exclusion of
all other license, sub-license or to sell products manufactured,
produced, devised, planned and created by IEI in the regions of the
world known as:
A. The United States of America;
B. Canada;
C. Costa Rica (for 1 year renewable)
D. Remainder of Central and South America upon individual
agreements going forth.
1
<PAGE>
The policy of IEI with regard to granting and/or transferring EXCLUSIVE
DISTRIBUTION RIGHTS is as follows:
a. These rights can only apply to a specific, named corporation in a
specific country;
b. Distributor must be an established corporation in good standing;
c. Distributor must have the demonstrated financial backing to
successfully promote and sell the product;
d. For an exclusive sales contract to be binding, AVLI must purchase a
mutually accepted initial quantity of the product or products and
pay cash (US Dollars) for the production expenses of said products;
e. Corresponding royalties are required to be paid by Distributor
within ten (10) days after product was sold, but not later than 90
days after original purchase date from IEI;
f. Additional orders will only be accepted once all royalties on
products previously delivered to Distributor have been paid to IEI.
The policy for NON EXCLUSIVE DISTRIBUTORSHIP is as follows:
An appointed Distributor through AVLI (Costa Rica) is authorized to sell
the products to other Central American countries, until an exclusive
distributor might be appointed. If sales success is demonstrated, the
distributor could also be awarded distribution rights in other countries
within the region.
E. Exclusive licensing for the Language Course has been reserved by IEI for the
countries/locations of: Canada, The United States of America, Central America
and South America, while the rights for the Business Course have been assigned
worldwide to Philips Media Distribution located in The Netherlands. Therefore,
IEI has requested Philips to issue an exclusive licensing agreement for Canada,
The United States of America and Costa Rica to AVLI. Consequently, the licensing
for AVLI is subject to the receipt of the license from Philips for the Business
Course.
2
<PAGE>
F. Other territories to be identified in writing and agreed to by the parties
during the term of this agreement.
4. That the term of this agreement shall be for a period of five (5) years
from the date of execution of this agreement. This agreement shall be
automatically renewed for an additional five (5) year term and
continuously in the same manner thereafter, unless either party notices
the other party, in the manner set forth herein, at least sixty (60)
calendar days prior to the termination date of each five year period of
their desire not to automatically renew the agreement.
5. That all production costs, to completely produce a finished product,
ready for distribution and / or sale by AVLI, shall be borne by IEI.
6. That IEI shall deliver to AVLI all components of the finished products
ready for packaging.
7. That AVLI shall be considered to be granted the exclusive rights to any
and all new products developed and produced by IEI in the territories
described in paragraph #3. Products manufactured for, or in conjunction
with, other distributors must be licensed under individual agreements,
which IEI will negotiate.
8. That pricing terms shall be as follows:
A. That AVLI shall pay for the initial cost of the product when
delivered to AVLI (C.O.D.); as set forth in sub-paragraphs B
through H.
B. The existing inventory cost ex-warehouse for the Language
Course with Spanish Work Books is $50.08 plus the actual
duplication expenses of the 13 video tapes;
C. The existing inventory cost ex-warehouse for the Business
Language Course with Spanish Workbooks complete with four (4)
tapes is $54.95;
3
<PAGE>
Once the existing inventory items must be reordered, slight price
variations (up or down) may occur.
D. That the royalties resulting from the subsequent sale of the
products shall be due to IEI from AVLI no later than ten (10)
days after AVLI receives the payment from the customer, but
not later than 90 days after initial delivery of the products.
E. That the total royalty due for the Language Course is $81.00
for the complete course, or $27.00 in three equal parts,
depending on how the product is sold.
F. The total wholesale royalty due for the language Course is
$60.00 for the complete course, or in three equal parts of
$20.00, depending on the manner in which it was sold.
G. The royalty due in either wholesale or retail sales on the
Business Course is $75.00 to be paid to Philips Media
Distribution, Eindhoven, The Netherlands.
H. Due to an existing contract in effect between IEI and Prentice
Hall, the book Import Export Can Make You Rich must be sold
with The Business Course.
9. AVLI has expressed its interest in selling both the Basic Language and
Business Courses to Vietnamese, Chinese and Korean minorities living in
The United States of America and Canada. This will require the translation
and printing of the workbooks into these three languages.
IEI is willing to undertake the translation and printing of the workbooks
in the above three languages for both the Basic Language and Business
Courses under the following terms:
i. IEI will finance the expenses of the translations and
printing, provided that AVLI will guarantee to purchase an
agreed upon initial number of courses in each language and pay
for the full amount within 30 days upon delivery. This will
produce sufficient dollars that will enable IEI to pay for the
translation and production expenses incurred.
4
<PAGE>
ii. The cost of the translation and printing of the workbooks will
be submitted to AVLI for consideration and approval so IEI can
proceed with the work. At the same time, it will be
established, the number of courses AVLI would have to purchase
and pay for in full, in order for the royalties to cover that
translation and printing expense.
At the same time, the initial cost price of these new versions
will be established with mutual consent.
10. That AVLI will have the right to change the name of any product
provided by IEI, with the consent and notice of IEI. Said consent shall
not be unreasonably withheld.
11. That inventory levels be kept to satisfy both companies and that
they shall be revised from time to time based on sales levels and
mutual agreement.
12. That IEI has full authority to enter into this agreement in the
territories assigned to AVLI. In the event of any claim of litigation
arising, IEI shall hold harmless and fully indemnify AVLI for any
interference, breach, encumbrance or other related action. This
indemnification shall include the reimbursement for responsible attorney
fees, costs and judgement, that might arise therefrom.
13. That IEI will furnish to AVLI any and all inquiries and/or marketing
leads whether direct or indirect, for the products provided to AVLI by
IEI, when such inquiries originate or affect any of the territories
identified herein or that are identified in any subsequent agreements,
where AVLI has exclusive rights and license to market IEI's products.
5
<PAGE>
14. That IEI will provide AVLI with any and all advertising materials
already prepared by them. Any new commercial or promotional productions
will be prepared by IEI and produced for AVLI at cost.
15. That in the event of a breach of any provision of this agreement, the
non-breaching party shall give the alleged breaching party written notice,
in the manner set forth herein, to cure the breach, within ten (10) days
of receipt of the notice. If the breach is not cured then the grieving
party shall have the right to terminate this agreement.
That a default is deemed to have occurred when any of the provisions
contained herein are not complied with, within ten (10) days from the date
that the notice of the breach is sent to the breaching party, in the
manner set forth herein.
16. That each of the parties shall execute and deliver at the execution of
this agreement and in the future all instruments reasonably necessary to
carry out the terms and intent of this agreement.
17. That the parties agree that the existence and content of this
Agreement and all related agreements, documents and communications shall
be confidential; as such the contents thereof shall not be disclosed by
either party, their successor or assigns at any time to any third party
without the express written consent of both parties.
18. That the party who is in actual physical control of the products shall
assume the risk of loss for the products. During transportation of the
products from IEI to AVLI, the risk of loss shall remain with IEI until
such time that the product is delivered and accepted by AVLI.
6
<PAGE>
19. That this agreement shall be binding upon and inure to the benefits of
the heirs, distributees, personal representatives, successors and assigns
of each of the parties hereto.
20. That this agreement represents the full and complete agreement between
the parties and that any prior or contemporaneous oral representations
that are not identified and addressed in this agreement are not relied
upon by the parties in their execution of this agreement and are not a
part hereof
That each party contributed to the creation and drafting of this
agreement.
21. That any modification, waiver or discharge of this agreement or any
part thereof must be executed with the same formalities employed in the
execution of this agreement, to be valid.
22. That any and all notices and communications relating to this agreement
shall be deemed duly given, only if delivered by Certified mail, Return
Receipt Requested, to the intended parties at their last known address.
The last known address at the time of execution of this agreement
is:
KENWICK SALES, INC.
3909 NE 163 Street, Suite 308
North Miami Beach, FL 33160
INTEGRATED ENGLISH INTERNATIONAL, INC.
7000 SW 59 Place
Miami, FL 33143
7
<PAGE>
23. In case the distributor or any of its sub-distributors become
incapable of selling the products in their respective territories due to
circumstances within or beyond their control, the respective exclusive
licensing agreement shall become automatically null and void.
24. That if any provision set forth in this agreement is deemed invalid by
a court of competent jurisdiction, that the unenforceability of that
provision shall not affect the enforceability of the other remaining
provisions.
25. That the use of masculine, feminine or neuter gender and the singular
or plural shall include the others whenever the context so indicates.
26. That any and all legal action associated with this agreement or any of
the conditions set forth herein, shall be litigated in the 11th Judicial
Circuit In and For Dade County or the County Court of Dade County,
depending on the subject matter jurisdiction, and construed and enforced
in accordance with the laws of the State of Florida.
27. That the parties by signing this agreement, agree to be subject to the
personal jurisdiction of the aforementioned court(s) and waive any defense
related thereto, with regard to venue and/or jurisdiction.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto set their hands and seals the day and
year first above written in the presence of:
/s/ [ILLEGIBLE] /s/ Kenneth Wulwick
- ---------------------- -----------------------------------------
Witness As President of Kenwick Sales, Inc.
w420-517-46-210-0
/s/ [ILLEGIBLE]
- ----------------------
Witness
STATE OF FLORIDA
COUNTY OF DADE
--------
The foregoing instrument was acknowledged and sworn to (or affirmed) and
subscribed before me this 9 day of January, 1997, by KENNETH WULWICK, who is
either personally known to me or has produced FLORIDA DRIVERS LICENSE, as
identification of their identity.
NOTARY PUBLIC: /s/ Cynthia H. Romine
-------------------------------------
(name and seal)
-------------------------------------
OFFICIAL NOTARY SEAL
CYNTHIA H ROMINE
NOTARY PUBLIC STATE OF FLORIDA
COMMISSION NO. CC566222
MY COMMISSION EXP. JULY 11, 2000
-------------------------------------
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ---------------------- -----------------------------------------
Witness As President of Integrated English
International, Inc.
The foregoing instrument was acknowledged and sworn to (or affirmed) and
subscribed before me this 9 day of January, 1997, by AKOS LITSEK, who is either
personally known to me or has produced _______________________, as
identification of their identity.
NOTARY PUBLIC: /s/ Cynthia H. Romine
-------------------------------------
(name and seal)
-------------------------------------
OFFICIAL NOTARY SEAL
CYNTHIA H ROMINE
NOTARY PUBLIC STATE OF FLORIDA
COMMISSION NO. CC566222
MY COMMISSION EXP. JULY 11, 2000
-------------------------------------
9
DISTRIBUTION SUB-LICENSING AGREEMENT
Addendum to the original licensing agreement
This agreement was entered into effect on June 15th, 1998 between Integrated
English International, Inc., whose registered office is at 7000 SW 59th Place
Miami FL. 33143
and
American Video Language Institute, whose registered office is at International
Building 2455 E Sunrise Blvd. Suite 512, Ft. Lauderdale whereas:
The Licensor has produced an International Business Language Course. This course
consists of:
a] 4 video lessons, a total of 2.40 Hours of duration,
b] A work book with full translations in Spanish
c] Trade manual: Lanze, Export Import can Make You Rich
AVLI is interested to distribute the Business Course in the USA and Canada.
Licensee:
The Licensor herewith grants to AVLI, for the duration of this Agreement, the
exclusive license to distribute in the named territory the International
Business Language Course.
With the understanding that Philips at the Netherlands has obtained previously
the exclusive right for worldwide distribution of the International Business
Language Course, Integrated English International, Inc. has obtained from
Philips a sublicense for AVLI, against the payment of US$ 75.00 royalty to
Philips for every unit sold.
This exclusive licensing agreement will be in force for the period of one year,
and will be automatically extended, if not canceled by either party 30 days
prior to the end of the licensing year.
<PAGE>
either party 30 days prior to the end of the licensing year.
The royalty due to Philips on the Business Course has to be paid directly to
Philips Media Distribution as set forth in the basic licensing agreement between
IEI and AVLI.
This licensing agreement will automatically be void if sales do not initiate
within a period of 90 days.
Licensor will provide Licensee with the VHS video tapes, while Licensee will
complete the packaging.
Licensee will send quarterly statements to Philips on the amount of units sold,
and shall pay the royalties due within 30 days from the end of each quarterly
period.
Licensee shall defend and hold harmless Philips and it affiliated companies
within the Philips group against any third party claim in connection with the
distribution of the International Business Language program.
The Licensor will have the right to audit, at its own expense, AVLI's books of
accounting related to the distribution of the product, in order to verify the
royalty statement in respect of the sales.
Agreed to:
/s/ [ILLEGIBLE]
- --------------------------------------
Integrated English International, Inc.
- --------------------------------------
American Video Language Institute
Date:________________
DISTRIBUTION LICENSE AGREEMENT
This agreement is made with effect from the 31st day of August 1998 by and
between
PHILIPS CONSUMER ELECTRONICS B.V.
of
Glaslaan 2
5616 LD Eindhoven
THE NETHERLANDS
(herein called "Licensor")
AND
Kenwick Inc., doing business under the name
AMERICAN VIDEO LANGUAGE INSTITUTE
of
International Building
2455 E Sunrise Blvd.
Suite 512
Ft. Lauderdale, Florida
33304 USA.
(herein called "Licensee")
WHEREAS:
A. Licensor is entitled to exploit in the Territory (as hereinafter defined)
certain content recordings and printed material relative to language
learning, at present owned or controlled by Licensor and to grant certain
distribution rights therein to Licensee for the Territory upon the terms
and conditions hereof.
B. The terms and conditions of any prior licence or distribution agreement
relating to content recordings between Licensor and Licensee shall from
the Commencement Date (as hereinafter defined) be replaced and superseded
by this agreement so that such recordings shall from the Commencement Date
become subject to the license herein granted.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. Definitions
For the purposes of this Agreement the following terms shall have the
meaning ascribed below:
Initial Philips [ILLEGIBLE] Initial Kenwick [ILLEGIBLE]
----------- -----------
<PAGE>
(a) "Licensed Product" shall mean a compilation consisting of
10 VHS tapes in black cassette boxes
featuring 9 sequential episodes and 1
collection of songs together forming the
screen displayed part of Licensors
language learning programme entitled
"Blip and Blab, the Language Explorers"
(b) "Master Print Materials" shall mean plate and/or films for the
applicable VHS box cover, inner sleeve,
label, inlay cards, original manuscript,
and/or available manuscript translations
and/or workbooks and from which the
printed part of Licensors language
learning programme entitled "Blip and
Blab, the Language Explorers" may be
manufactured.
(c) "Commencement Date" shall mean August 31, 1998
(d) "Term" shall mean the period starting from
Commencement Date and ending August 31,
1999, and thereafter continuing unless
and until terminated by either party on
giving 6 months prior notice to expire
at the end of any calendar month.
(e) "Territory" shall mean The United States of America
and Canada.
(f) "Licensed Product Supplier" shall mean Integrated English
International Inc., 7000S.W.59th Place.
South Miami, Florida 33143, who is a
manufacturer of Licensed Products.
2. Rights
Subject always to the limitations and restrictions on Licensor's rights
communicated to Licensee from time to time Licensor hereby grants for the
Term and the Territory the right for each Licensed Product and the Master
Print Material made available to Licensee hereunder, subject to the
exceptions and restrictions herein set out, the non-exclusive right to
market, distribute and sell Licensed Products and using marketing
materials derived from Master Print Materials, it being understood that
this license -
(a) does not comprise the right of Licensee to copy Licensed Products,
and that Licensed Products to be distributed by Licensee are all to
be sourced by Licensee from the Licensed Product Supplier, on terms
and conditions to be agreed upon directly between Licensee and the
said supplier, and
Initial Philips [ILLEGIBLE] Initial Kenwick [ILLEGIBLE]
----------- -----------
<PAGE>
(b) does comprise the right for Licensee to copy from Master Print
Materials for the sole purpose of creating advertising, and
materials associated with the marketing, sale and use of the
Licensed Products.
3. Licensor's Representations and Warranties
Licensor represents and warrants that at the time of granting the licenses
hereunder, and during the Term or such shorter period as is notified by
Licensor to Licensee, Licensor has the selling and distribution rights in
the said materials, subject, however, to the restrictions and obligations
on Licensor of which Licensee may be notified by Licensor from time to
time.
Licensor agrees to indemnify and to keep indemnified the Licensee against
any loss, damage, claim or expense suffered by Licensee as a result of
Licensor's breach of this representation and warranty.
4. Acknowledgement of Rights by Licensee
Licensee acknowledges that all intellectual property rights in Licensed
Products and Master Print Material for which distribution rights are
granted by virtue of this Agreement are vested in Licensor except insofar
as assigned and transferred to Licensee hereunder.
5. Supplies
(a) Licensor agrees to deliver the Master Print Material hereunder by
supplying to Licensee, at Licensor's cost price, plus any actual expenses
incurred for packaging and shipping. Such material and contents shall be
of suitable quality for the use in the commercial manufacture for general
sale and shall be delivered to Licensee following the submission of
written orders thereof to Licensor.
(b) At the time of the delivery to Licensee of the Master Print Material,
Licensor shall supply to Licensee in writing the correct title(s) of the
recorded work(s), the name(s) of the author(s), composer(s) and original
publisher(s) thereof, together with any additional copyright information
known to Licensor, and the name(s) of the Artists(s) as Licensor displays
or intends to display them on the labels and jackets of the Licensed
Products marketed by Licensor.
(c) Licensor also agrees to supply to Licensee samples of its advertising and
publicity material. Upon request Licensee agrees to supply to Licensor
free of charge a sample of prints used by Licensor for the Licensed
Products.
(d) Licensor will advise the Licensed Product Supplier about the rights
granted to Licensee hereunder and shall furnish this supplier with content
material necessary for the Manufacture of Licensed Products. Licensee
shall source Licensed Products from such supplier on terms and conditions
to be agreed upon directly between Licensee
Initial Philips [ILLEGIBLE] Initial Kenwick [ILLEGIBLE]
----------- -----------
<PAGE>
and the Licensed Product Supplier. Licensor takes no responsibility as to
the performance of the Licensed Product Supplier.
(e) Should Licensee at their expense create adjunct material (such as Guide to
Parents in brochure form with translations into various languages) to be
sold with the material supplied by Licensor, this material can be made
available to Licensor with agreed payment toward defraying some of the
expenses.
6. Remuneration
In consideration of the rights granted hereunder, Licensee shall pay to
Licensor the royalties set forth in Annex I per each Licensed Product
purchased by Licensee with the Licensed Product Supplier.
Royalties are due upon delivery by the Licensed Product Supplier, and
payable to Licensor by the end of the month following the month of such
suppliers delivery, but late changes do not apply until a period of ten
days additonal time passes. At the end of each month, Licensee shall
submit a written statement to Licensor specifying the number Licensed
Products delivered during the precedent month together with a royalty
calculation.
Upon signing of this agreement Licensee shall pay to Licensor an advance
royalty of USD 5,000.00. A second advance royalty of USD 5,000.00 is due
upon 60 days following the signing. The advances shall be set off against
the first royalties payable by Licensee hereunder. Further Licensee
undertakes to a minimum royalty due after 6 months following the signing
of this Agreement equal to 1000 Licensed Products.
In the event of any late payment of any sums due hereunder Licensor shall
be entitled to charge Licensee, and Licensee shall pay promptly interest
at the London Inter Bank Offer Rate plus four percent (4%).
In the event that the Licensee provides opportunities for distribution of
the "Blip and Blap, The Language Explorers" Series outside the Territory a
reasonable and fair remuneration for the Licensee with the negotiations
and agreed based on the success of the presented opportunity.
7. Trademarks
(a) Licensor grants to Licensee for the Term the right to use the trademarks
owned or controlled by Licensor as will be indicated by Licensor from time
to time. Licensee shall use such trademarks only in conjunction with the
sale, marketing and distribution of Licensed Products, and only in
conformity with directions set forth by Licensor.
(b) Licensee acknowledges that this licence grants to Licensee no rights of
ownership of the trademarks used hereunder and it agrees that it shall not
claim any right in this respect whatsoever at any time during or after the
termination of this Agreement.
Initial Philips [ILLEGIBLE] Initial Kenwick [ILLEGIBLE]
----------- -----------
<PAGE>
months thereafter and at prices not less than those for which the Licensed
Products under this Agreement have been sold by Licensee in the Territory
during the preceding year, provided that Licensee shall have complied with
its obligations under sub-clauses (a) and (b) above.
Immediately after the end of such six (6) month period Licensee shall at
the direction of Licensor:-
(i) furnish Licensor a list setting forth in detail all remaining items
of Licensee's Inventories;
(ii) put at the disposal, sell or transfer all or part of Licensee's
Inventories to Licensor or to any third party designated by Licensor
at Licensee's manufacturing cost price; and/or
(iii) destroy all remaining Licensee's Inventories and render to Licensor
a sworn statement of an officer of Licensee that the same have been
destroyed.
(d) Termination of this Agreement shall not discharge Licensee from its
obligations under this Clause 9 or its obligations to account for and pay
all sums due as provided for under this Agreement.
10. Notice and Address
Notices hereunder may be sent by hand or by telex (where appropriate) or
by pre-paid post addressed to the address of the party to be served as
stated herein or last known to the party serving the notice and shall be
deemed to have arrived:
(a) within seven (7) days of posting in the case of letters; and
(b) in the case of delivery by hand on the date of delivery; and
(c) in the case of telex on the day when the recipients' machine acknowledges
receipt thereof.
A copy of each notice sent to either party shall be sent simultaneously
for the attention of such party's legal adviser.
11. Amendments and Miscellaneous
(a) This Agreement shall supersede and replace any licence agreement
heretofore concluded between the parties and effective as of the
Commencement Date any preceding licence agreement between the parties
hereto pertaining to rights as granted hereunder shall be regarded as
terminated.
Initial Philips [ILLEGIBLE] Initial Kenwick [ILLEGIBLE]
----------- -----------
<PAGE>
(b) If any provision of this Agreement should be invalid or unenforceable by
operation of law, such invalidity or unenforceability shall not affect the
remainder of the Agreement, and the parties agree to negotiate in good
faith for the purpose of substituting such invalid or unenforceable
provisions expressing the intention of the parties as closely as permitted
by law.
(c) Should, as a result of the advertising, publicity and distribution efforts
by the Licensee in the Territory, inquiries for supplies of Licensed
Products be made directly to Licensor and the origin of such inquiry is
reasonably known by Licensor, these inquiries will be forwarded to
Licensee.
12. Law and Jurisdiction
This Agreement and any variation or amendments hereto shall be governed by
the laws and procedures of The Netherlands under the exclusive
jurisdiction of the Civil Court of Amsterdam. Notwithstanding the
foregoing Licensor shall be entitled to institute any legal action before
any court having jurisdiction in the Territory.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first above written.
By /s/ [ILLEGIBLE]
----------------------------------------
For [ILLEGIBLE]
By /s/ [ILLEGIBLE]
----------------------------------------
For Philips Consumer Electronics B.V.
[ILLEGIBLE]
Initial Philips [ILLEGIBLE] Initial Kenwick [ILLEGIBLE]
----------- -----------
<PAGE>
ANNEX I
ROYALTY SCHEDULE: DATE: 1998-08-01
BLIP AND BLAB, THE LANGUAGE EXPLORERS SERIES
Royalty payable per Licensed Product:
o between 1 and 2,499 products U$39.00 per kit
o between 2,500 and 4,999 products U$37.00 per kit
o between 5,000 and 7,499 products U$35.00 per kit
o between 7,500 and 9,999 products U$32.00 per kit
o between 10,000 and 14,999 products U$29.00 per kit
o over 15,000 products U$26.00 per kit
Above mentioned quantities accumulated over a 12 months period commencing at the
month of first production.
Initial Philips [ILLEGIBLE] Initial Kenwick [ILLEGIBLE]
----------- -----------
----------
STOCK EXCHANGE AGREEMENT
by and among
KENWICK INDUSTRIES, INC.
as Acquiror
AUTOMAX INTERNATIONAL, INC.,
as Acquiree
AUTOMAX USA, INC.
as Acquiree
AUTOMAX USA FINANCE, INC.
as Acquiree
and
ANDREA PARKOFF
the Sole Shareholder of
AUTOMAX INTERNATIONAL, INC.
AUTOMAX USA, INC.
and
AUTOMAX USA FINANCE, INC.
as more particularly set forth herein
----------
August 20, 1998
DRAFT #3
August 20, 1998
<PAGE>
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (the "Agreement") is made and entered into
this 20th day of August, 1998 by and among KENWICK INDUSTRIES, INC., a Florida
corporation (hereinafter referred to as "KENWICK"), AUTOMAX USA, INC., a Florida
corporation (hereinafter referred to as "AUTO"), AUTOMAX INTERNATIONAL, INC., a
Florida corporation (hereinafter referred to as "INTERNATIONAL"), AUTOMAX USA
FINANCE, INC., a Florida corporation (hereinafter referred to as "FINANCE")
(collectively hereinafter referred to as "AUTOMAX"), and Andrea Parkoff, the
sole shareholder of AUTOMAX (hereinafter referred to as the "AUTOMAX
Shareholder").
RECITALS:
A. The AUTOMAX Shareholder owns all of the issued and outstanding shares
of the capital stock of AUTOMAX.
B. KENWICK is willing to acquire all of the issued and outstanding capital
stock of AUTOMAX, making AUTOMAX a wholly-owned subsidiary of KENWICK, and the
AUTOMAX Shareholders desire to exchange all of their shares of AUTOMAX's capital
stock for authorized but unissued shares of Common Stock, no par value (the
"Common Stock") of KENWICK as hereinafter provided.
C. It is the intention of the parties hereto that: (i) KENWICK shall
acquire all of the issued and outstanding capital stock of AUTOMAX in exchange
solely for the consideration set forth below (the "Exchange"); and (ii) the
Exchange shall qualify as a transaction in securities exempt from registration
or qualification under the Securities Act of 1933, as amended, and under the
applicable securities laws of each jurisdiction where the AUTOMAX Shareholders
reside.
D. It is the intention of the parties that the Exchange qualify as a
"tax-free" transaction within the meaning of Section 368 of the Internal Revenue
Code of 1986.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF SHARES
1.1 Acquisition of Shares. KENWICK and the AUTOMAX Shareholders hereby
agree that the AUTOMAX Shareholders shall, on the Closing Date (as hereinafter
defined), exchange all of the issued and outstanding shares of capital stock of
AUTOMAX (the "AUTOMAX Shares") and KENWICK shall issue to the AUTOMAX
Shareholders an aggregate of One Million (1,000,000) Shares of
DRAFT #3
August 20, 1998
<PAGE>
KENWICK's Common Stock (the "KENWICK Shares"). The allocation of the KENWICK
Shares to the AUTOMAX Shareholders is set forth on Exhibit A hereto.
1.2 Delivery of AUTOMAX Shares. On the Closing Date, the AUTOMAX
Shareholders will deliver to KENWICK the certificates representing the AUTOMAX
Shares, duly endorsed (or with executed stock powers) so as to make KENWICK the
sole owner thereof. Simultaneously, KENWICK will deliver certificates
representing the KENWICK Shares to the AUTOMAX Shareholders.
1.3 Investment Intent. The KENWICK Shares have not been registered under
the Securities Act of 1933, as Amended (the "Act"), and may not be resold unless
the KENWICK Shares are registered under the Act or an exemption from such
registration is available. The AUTOMAX Shareholders represent and warrant that
each of them is acquiring the KENWICK Shares for his, her or its own account,
for investment, and not with a view to the sale or distribution of the KENWICK
Shares. Each certificate representing the KENWICK Shares will have a legend
thereon incorporating language as follows:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"). The shares have been
acquired for investment and may not be sold or transferred in the absence
of an effective Registration Statement for the shares under the Act unless
in the opinion of counsel satisfactory to the Company, registration is not
required under the Act."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF AUTOMAX AND AUTOMAX SHAREHOLDERS
AUTOMAX and the AUTOMAX Shareholders hereby represent and warrant as
follows:
2.1 Organization and Good Standing. AUTOMAX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, and is entitled to own or lease its properties and to carry on its
business as and in the places where such properties are now owned, leased or
operated and such business is now conducted. AUTOMAX does not have any
subsidiaries. AUTOMAX is duly licensed or qualified and in good standing as a
Florida corporation where the character of the properties owned by AUTOMAX or
the nature of the business transacted by it make such license or qualification
necessary.
2.2 Ownership of AUTOMAX Shares. The AUTOMAX Shareholders represent as to
his, her or their respective ownership of AUTOMAX Shares, that he, she or they
are the owner of record and
DRAFT #3
2 August 20, 1998
<PAGE>
beneficially of all of the shares of capital stock of AUTOMAX listed in their
respective names on Exhibit A hereto, all of which shares are free and clear of
all rights, claims, liens and encumbrances, and have not been sold, pledged,
assigned or otherwise transferred except pursuant to this Agreement. There are
no outstanding subscriptions, rights, options, warrants or other agreements
obligating either AUTOMAX or the AUTOMAX Shareholders to issue, sell or transfer
any stock or other securities of AUTOMAX.
2.3 Financial Statements, Books and Records. The unaudited balance sheet
of AUTOMAX as at June 30, 1998, and statements of operations for the periods
then ended previously delivered to AUTOMAX were prepared in accordance with
generally accepted accounting principles applied on a consistent basis with
prior periods, and such financial statements fairly represent the financial
position of AUTOMAX as at such dates and the results of its operations for the
periods then ended. The unaudited balance sheet of AUTOMAX as at June 30, 1998,
and statements of operations for the periods then ended previously delivered to
AUTOMAX were compiled but were not prepared in accordance with generally
accepted accounting principles applied on a consistent basis with prior periods.
However, such compiled financial statements fairly represent the financial
position of AUTOMAX as at such dates and the results of its operations for the
periods then ended.
2.4 No Material Adverse Changes. Since the date of the Balance Sheet there
has not been:
(i) any material adverse change in the assets, operations, condition
(financial or otherwise) or prospective business of AUTOMAX;
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or otherwise)
of AUTOMAX, whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of AUTOMAX's capital
stock;
(iv) any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by AUTOMAX of any properties or assets; or
(v) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement.
2.5 Compliance with Laws. AUTOMAX has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees
DRAFT #3
3 August 20, 1998
<PAGE>
applicable to it or its business which, if not complied with, would materially
and adversely affect the business of AUTOMAX.
2.6 No Breach. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Charter or By-Laws of AUTOMAX;
(ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which AUTOMAX is a party or by or to which it or any of its assets or properties
may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon, AUTOMAX, or upon the properties or business of AUTOMAX; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein which could have a materially
adverse effect on the business or operations of AUTOMAX.
2.7 Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving AUTOMAX. There is no action, suit or
claim or legal, administrative or arbitral proceeding or (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending or threatened against or involving AUTOMAX or any of its properties or
assets.
2.8 Brokers or Finders. No broker's or finder's fee will be payable by
AUTOMAX in connection with the transaction contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions by AUTOMAX or the
AUTOMAX Shareholders.
2.9 Real Estate. Attached as Exhibit "B".
2.10 Tangible Assets. AUTOMAX has full title and interest in all
machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, owned or leased by AUTOMAX, any related capitalized items or other
tangible property material to the business of AUTOMAX (the "Tangible Assets").
AUTOMAX holds all
DRAFT #3
4 August 20, 1998
<PAGE>
rights, title and interest in all the Tangible Assets owned by it on the Balance
Sheet or acquired by it after the date of the Balance Sheet free and clear of
all liens, pledges, mortgages, security interests, conditional sales contracts
or any other encumbrances except as set forth on Schedule 2.10.
2.11 Liabilities. As of the Closing Date, AUTOMAX will not have any
Liabilities, other than Liabilities fully and adequately reflected on the
Balance Sheet, except for Liabilities incurred in the ordinary course of
business. AUTOMAX does not have any material direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, (all of the foregoing collectively
defined to as "Liabilities"), which were not fully, fairly and adequately
reflected on the Balance Sheet.
2.12 Operations of AUTOMAX. Except as set forth on Schedule 2.12, from the
date of the Balance Sheet and through the Closing Date hereof AUTOMAX has not:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock;
(iii) made any material loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
material loan or advance otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business, incurred or assumed
any material indebtedness or liability (whether or not currently due and
payable);
(v) disposed of any assets of AUTOMAX except in the ordinary course
of business; or
(vi) issued any equity securities or rights to acquire such equity
securities.
2.13 Capitalization. The authorized capital stock of AUTO consists of One
Thousand (1,000) shares of common stock of which zero (0) shares are presently
issued and outstanding. The authorized capital stock of INTERNATIONAL consists
of One Thousand (1,000) shares of common stock of which zero (0) are presently
issued and outstanding. The authorized capital stock of FINANCE consists of One
Thousand (1,000) shares of common stock of which zero (0) are presently issued
and outstanding. Neither AUTOMAX nor
DRAFT #3
5 August 20, 1998
<PAGE>
the AUTOMAX Shareholder has granted, issued or agreed to grant, issue or make
available any warrants, options, subscription rights or any other commitments of
any character relating to the issued or unissued shares of capital stock of
AUTOMAX.
2.14 Authority to Execute and Perform Agreements. AUTOMAX has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered and is the valid
and binding obligation of AUTOMAX enforceable in accordance with its terms,
except as may be limited by bankruptcy, moratorium, insolvency or other similar
laws generally affecting the enforcement of creditors' rights. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the performance by AUTOMAX of this Agreement, in accordance with its
respective terms and conditions will not:
(i) require the approval or consent of any governmental or
regulatory body, the shareholders of AUTOMAX, or the approval or consent of any
other person;
(ii) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute (or with any notice or lapse of time
or both would constitute) a default under, any order, judgment or decree
applicable to AUTOMAX, or any instrument, contract or other agreement to which
AUTOMAX is a party or by or to which AUTOMAX is bound or subject; or
(iii) result in the creation of any lien or other encumbrance on the
assets or properties of AUTOMAX.
2.15 Full Disclosure. No representation or warranty by AUTOMAX or the
AUTOMAX Shareholders in this Agreement or in any document or schedule to be
delivered by them pursuant hereto, and no written statement, certificate or
instrument furnished or to be furnished to KENWICK pursuant hereto or in
connection with the negotiation, execution or performance of this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state any fact necessary to make any statement herein or therein
not materially misleading or necessary to a complete and correct presentation of
all material aspects of the businesses of AUTOMAX. The AUTOMAX Shareholders
acknowledge that they have received and read a copy of the Company's
Confidential Private Offering Memorandum dated February 9, 1998.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF KENWICK
KENWICK hereby represents and warrants to AUTOMAX and the AUTOMAX
Shareholders as follows:
DRAFT #3
6 August 20, 1998
<PAGE>
3.1 Organization and Good Standing. KENWICK is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, and is entitled to own or lease its properties and to carry on its
business as and in the places where such properties are now owned, leased, or
operated and such business is now conducted. The authorized capital stock of
KENWICK consists of 2,904,965 shares of Common Stock issued and outstanding, of
which 223,736 shares are presently so-called free trading shares and not subject
to any investment restrictions. KENWICK is duly licensed or qualified and in
good standing as a Florida corporation where the character of the properties
owned by KENWICK or the nature of the business transacted by it make such
license or qualification necessary.
3.2 The KENWICK Shares. The KENWICK Shares to be issued to the AUTOMAX
Shareholders have been or will have been duly authorized by all necessary
corporate and shareholder actions and, when so issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and non-assessable.
3.3 Financial Statements, Books and Records. The audited balance sheet of
KENWICK as at December 31, 1997, and statements of operations for the periods
then ended previously delivered to AUTOMAX were prepared in accordance with
generally accepted accounting principles applied on a consistent basis with
prior periods, and such financial statements fairly represent the financial
position of KENWICK as at such dates and the results of its operations for the
periods then ended.
3.4 No Material Adverse Changes. Since the date of the Balance Sheet there
has not been:
(i) any material adverse change in the assets, operations, condition
(financial or otherwise) or prospective business of KENWICK;
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or otherwise)
of KENWICK, whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of KENWICK's capital
stock;
(iv) any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by KENWICK of any properties or assets; or
(v) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement.
DRAFT #3
7 August 20, 1998
<PAGE>
3.5 Compliance with Laws. KENWICK has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to their businesses which, if not
complied with, would materially and adversely affect the business of KENWICK or
the trading market for the shares of KENWICK's Common Stock.
3.6 No Breach. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of Incorporation or
By-Laws of KENWICK;
(ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which KENWICK is a party or by or to which it or any of its assets or properties
may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon, KENWICK or upon the securities properties or business of KENWICK; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
3.7 Actions and Proceedings. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving KENWICK. There is no action, suit or
claim or legal, administrative or arbitral proceeding or (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending or threatened against or involving KENWICK or any of its properties or
assets. Except as set forth on Schedule 3.7, there is no fact, event or
circumstances that may give rise to any suit, action, claim, investigation or
proceeding.
3.8 Brokers or Finders. No broker's or finder's fee will be payable by
KENWICK in connection with the transaction contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions by KENWICK.
3.9 Liabilities. KENWICK does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation,
DRAFT #3
8 August 20, 1998
<PAGE>
any liability on account of taxes, any other governmental charge or lawsuit (all
of the foregoing collectively defined to as "Liabilities"), which were not
fully, fairly and adequately reflected on the December 31, 1997 Balance Sheet.
As of the Closing Date, KENWICK will not have any Liabilities, other than
Liabilities fully and adequately reflected on the December 31, 1997 Balance
Sheet, except for Liabilities incurred in the ordinary course of business.
3.10 Listing of Shares. KENWICK's shares of Common Stock are traded on
over-the-counter Bulletin Board under the symbol "KWIN." KENWICK is not subject
to the periodic reporting responsibilities under the Securities Exchange Act of
1934.
3.11 Operations of KENWICK. Except as set forth on Schedule 3.11, since
December 31, 1997, and through the Closing Date hereof, KENWICK has not:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock;
(iii) made any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
loan or advance otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business, incurred or assumed
any indebtedness or liability (whether or not currently due and payable);
(v) disposed of any assets of KENWICK except in the ordinary course
of business; or
(vi) issued any equity securities or rights to acquire such equity
securities except as contemplated by the Stock Purchase Agreement.
3.12 Authority to Execute and Perform Agreements. KENWICK has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered and is the valid
and binding obligation of KENWICK enforceable in accordance with its terms,
except as may be limited by bankruptcy, moratorium, insolvency or other similar
laws generally affecting the enforcement of creditors' rights. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the performance by KENWICK
DRAFT #3
9 August 20, 1998
<PAGE>
of this Agreement, in accordance with its respective terms and conditions will
not:
(i) require the approval or consent of any governmental or
regulatory body, the shareholders of KENWICK, or the approval or consent of any
other person;
(ii) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute (or with any notice or lapse of time
or both would constitute) a default under, any order, judgment or decree
applicable to KENWICK, or any instrument, contract or other agreement to which
KENWICK is a party or by or to which KENWICK is bound or subject; or
(iii) result in the creation of any lien or other encumbrance on the
assets or properties of KENWICK.
3.13 Full Disclosure. No representation or warranty by KENWICK in this
Agreement or in any document or schedule to be delivered by it pursuant hereto,
and no written statement, certificate or instrument furnished or to be furnished
to AUTOMAX or the AUTOMAX Shareholders pursuant hereto or in connection with the
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the business
of KENWICK.
SECTION 4. COVENANTS
4.1 Corporate Examinations and Investigations. Prior to the Closing Date,
the parties acknowledge that they have been entitled, through their employees
and representatives, to make such investigation and verification of the assets,
properties, business and operations, books, records and financial condition of
the other, including communications with suppliers, vendors and customers, as
they each may reasonably require. No investigation by a party hereto shall,
however, diminish or waive in any way any of the representations, warranties,
covenants or agreements of the other party under this Agreement. Consummation of
this Agreement shall be subject to the fulfillment of due diligence procedures
to the reasonable satisfaction of each of the parties hereto and their
respective counsel.
4.2 Expenses. Each party hereto agrees to pay its own costs and expenses
incurred in negotiating this Agreement and consummating the transactions
described herein.
4.3 Further Assurances. The parties shall execute such documents and other
papers and take such further actions as may be
DRAFT #3
10 August 20, 1998
<PAGE>
reasonably required or desirable to carry out the provisions hereof and the
transactions contemplated hereby. Each such party shall use its best efforts to
fulfill or obtain the fulfillment of the conditions to the Closing, including,
without limitation, the execution and delivery of any documents or other papers,
the execution and delivery of which are necessary or appropriate to the Closing.
4.4 Confidentiality. In the event the transactions contemplated by this
Agreement are not consummated, each of the parties hereto agree to keep
confidential any information disclosed to each other in connection therewith for
a period of two (2) years from the date hereof; provided, however, such
obligation shall not apply to information which:
(i) at the time of disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge (except
due to the action of the receiving party); or
(iii) the receiving party had within its possession at the time of
disclosure.
4.5 Stock Certificates and Consideration. At the Closing, the AUTOMAX
Shareholders shall have delivered the certificates representing the AUTOMAX
Shares duly endorsed (or with executed stock powers) so as to make KENWICK the
sole owner thereof. At such Closing, KENWICK shall issue to the AUTOMAX
Shareholders the KENWICK Shares as provided herein.
4.6 Management of AUTOMAX On the Closing Date, Andrea Parkoff shall become
the President and director of AUTOMAX. Andrea Parkoff shall have sole control
over the day to day operation of AUTOMAX. Kenneth Wulwick shall become Secretary
and director of AUTOMAX.
SECTION 5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF KENWICK
Notwithstanding any right of AUTOMAX and the AUTOMAX Shareholders fully to
investigate the affairs of KENWICK, AUTOMAX and the AUTOMAX Shareholders shall
have the right to rely fully upon the representations, warranties, covenants and
agreements of KENWICK contained in this Agreement or in any document delivered
by KENWICK or any of its representatives, in connection with the transactions
contemplated by this Agreement. All such representations, warranties, covenants
and agreements shall survive the execution and delivery hereof and the Closing
Date hereunder for twelve (12) months following the Closing.
DRAFT #3
11 August 20, 1998
<PAGE>
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE AUTOMAX
SHAREHOLDERS
Notwithstanding any right of KENWICK fully to investigate the affairs of
AUTOMAX, KENWICK has the right to rely fully upon the representations,
warranties, covenants and agreements of AUTOMAX and the AUTOMAX Shareholders
contained in this Agreement or in any document delivered to KENWICK by the
latter or any of their representatives in connection with the transactions
contemplated by this Agreement. All such representations, warranties, covenants
and agreements shall survive the execution and delivery hereof and the Closing
Date hereunder for twelve (12) months following the Closing.
SECTION 7. INDEMNIFICATION
7.1 Obligation of KENWICK to Indemnify. Subject to the limitations on the
survival of representations and warranties contained in Section 5, KENWICK
hereby agrees to indemnify, defend and hold harmless AUTOMAX and the AUTOMAX
Shareholders from and against any losses, liabilities, damages, deficiencies,
costs or expenses (including interest, penalties and reasonable attorneys' fees
and disbursements) (a "Loss") based upon, arising out of or otherwise due to any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of KENWICK contained in this Agreement or in any document or other
writing delivered pursuant to this Agreement.
7.2 Obligation of AUTOMAX and the AUTOMAX Shareholders to Indemnify.
Subject to the limitations on the survival of representations and warranties
contained in Section 6, AUTOMAX and the AUTOMAX Shareholders agree to indemnify,
defend and hold harmless KENWICK to the extent provided for herein, from and
against any Loss, based upon, arising out of or otherwise due to any inaccuracy
in or any breach of any representation, warranty, covenant or agreement made by
any of them and contained in this Agreement or in any document or other writing
delivered pursuant to this Agreement.
SECTION 8. THE CLOSING
The Closing shall take place simultaneously with the execution hereof. At
the Closing, the parties shall provide each other with such documents as may be
necessary or appropriate and customary in transactions of this sort in order to
consummate the transactions contemplated hereby including evidence of due
authorization of the Agreement and the transactions contemplated hereby.
DRAFT #3
12 August 20, 1998
<PAGE>
SECTION 9. MISCELLANEOUS
9.1 Waivers. The waiver of a breach of this Agreement or the failure of
any party hereto to exercise any right under this Agreement shall in no event
constitute waiver as to any future breach whether similar or dissimilar in
nature or as to the exercise of any further right under this Agreement.
9.2 Amendment. This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
9.3 Assignment. This Agreement is not assignable except by operation of
law.
9.4 Notices. Until otherwise specified in writing, the mailing addresses
of both parties of this Agreement shall be as follows:
AUTOMAX: AUTOMAX USA, INC.
2172 N Millitary Trail
W. Palm Beach, FL 33409
AUTOMAX Shareholders: Andrea Parkoff, President
7101 Lion Head Lane
Boca Raton, FL 33496
KENWICK: KENWICK INDUSTRIES, INC.
2455 E. Sunrise Boulevard, Suite 512
Fort Lauderdale, FL 33304
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
9.5 Governing Law. This Agreement shall be construed, and the legal
relations be the parties determined, in accordance with the laws of the State of
Florida, thereby precluding any choice of law rules which may direct the
application of the laws of any other jurisdiction.
9.6 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance thereof by the other party.
9.7 Entire Agreement. This Agreement (including the Exhibits and Schedules
hereto) and the collateral agreements executed in
DRAFT #3
13 August 20, 1998
<PAGE>
connection with the consummation of the transactions contemplated herein contain
the entire agreement among the parties with respect to the purchase and issuance
of the AUTOMAX Shares and the KENWICK Shares and related transactions, and
supersede all prior agreements, written or oral, with respect thereto.
9.8 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
9.9 Severability of Provisions. The invalidity or unenforceability of any
term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
AUTOMAX INTERNATIONAL, INC. KENWICK INDUSTRIES, INC.
By: /s/ Andrea Parkoff By: /s/ Kenneth Wulwick
-------------------------------- ------------------------------------
Andrea Parkoff, President Kenneth Wulwick, President
Shareholder:
/s/ Andrea Parkoff
- ------------------------------------
Andrea Parkoff
AUTOMAX USA FINANCE, INC. AUTOMAX USA, INC.
By: /s/ Andrea Parkoff By: /s/ Andrea Parkoff
-------------------------------- ------------------------------------
Andrea Parkoff, President Andrea Parkoff, President
Shareholder: Shareholder
/s/ Andrea Parkoff /s/ Andrea Parkoff
- ------------------------------------ ----------------------------------------
Andrea Parkoff Andrea Parkoff, President
DRAFT #3
14 August 20, 1998
<PAGE>
EXHIBIT A - 1
EXCHANGE WITH AUTOMAX USA, INC.
Shares of Shares of
Name of AUTOMAX to be KENWICK to
Shareholder Exchanged be Received
- ----------- --------- -----------
Andrea Parkoff 1000 1,000,000
Grand Total 1000
DRAFT #3
August 20, 1998
<PAGE>
EXHIBIT A - 3
EXCHANGE WITH AUTOMAX INTERNATIONAL, INC.
Shares of Shares of
Name of AUTOMAX to be KENWICK to
Shareholder Exchanged be Received
- ----------- --------- -----------
Andrea Parkoff 1000 see exhibit A-1
Grand Total 1000
DRAFT #3
17 August 20, 1998
<PAGE>
FLORIDA ATLANTIC STOCK TRANSFER, INC.
7130 NOB HILL ROAD
TAMARAC, FL 33321
(954) 726-4954
February 19, 1999
TRANSFER SHEET NO: 56680
Attn: Transfer Dept.
RE: KENWICK INDUSTRIES INC COMMON STOCK
KENWICK INDUSTRIES INC Account: KENW0l
2455 E SUNRISE BLVD
SUITE 512
FT LAUDERDALE, FL 33304
NR
Per your instructions, we have:
CANCELLED:
========== --------------------------
Total Cancelled -- 0 Certificates.. 0 Shares
ISSUED:
=======
Certificate # -1215 Issued 02/19/99 R 1,000,000 Shares
PARKOFF, ANDREA TAX ID: ###-##-####
--------------------------
Total Issued -- 1 Certificates.. 1,000,000 Shares
Transfer Fee Due: 1 Certificates @ $10.00 each = Total $10.00
***** THESE SHARES HAVE BEEN ISSUED IN ACCORDANCE WITH INSTRUCTIONS
FROM THE COMPANY *****
Exhibit 6.5
LEASE AGREEMENT
This LEASE dated the 7th day of June, 1997 between DAVID P. COSTAKOS,
hereinafter called "Lessor" of 392-H Golfview Road, North Palm Beach, FL 33408,
627-0330 and AUTOMAX USA Inc., a Florida Corporation hereinafter collectively
called "Lessee".
IT IS AGREED THAT Lessor, in consideration of payment of the rents and
performance of all of the terms and agreements herein, does hereby lease and
demise unto said Lessee the promises consisting of the commercial building
containing approximately 500 square feet of space and the parking area around it
as shown on Exhibit "A" located at 2172 North Military Trail, in the City of
West Palm Beach, 33409, County of Palm Beach, State of Florida.
1. Term of Lease: Said premises are Leased for a term of one year commencing on
June 7, 1997 (the "Commencement Date") and ending June 6, 1998 with an option to
renew this lease for an additional five year period as provided Paragraph 32
herein.
2. Rent: (a) Lessee agrees to pay Lessor Monthly Rental as follows beginning
with the Commencement Date.
YEAR ONE 6/7/97 to 6/6/98 $3500/mo for 12 months=$42,000+6% sales=$3710
OPTION YEARS
TWO 6/7/98 to 6/6/1999 $3600/mo for 12 months=$43,200 + sales tax
THREE 6/7/99 to 6/6/2000 $3700/mo for 12 months=$44,000 + sales tax
FOUR 6/7/00 to 6/6/2001 $3800/mo for 12 months= 45,600 + sales tax
FIVE 6/7/01 to 6/6/2002 $3900/mo for 12 months= 46,800 + sales tax
SIX 6/7/02 to 6/6/2003 $4000/mo for 12 months= 48,000 + sales tax
(b) The above rental is payable monthly in advance for each and every calendar
month of the term of this Lease, without any demand, notice, offset or deduction
whatsoever, in lawful (legal tender for public or private debts) money of the
United States of America, at the office of Lessor or elsewhere as designated
from time to time by Lessor's with written notice to Lessee.
(c) In addition to the rent, Lessee shall and hereby agrees to pay to Lessor
each month a sum equal to any sales tax on rent based upon the amount of rent
collected hereunder. As of the date of this Lease, the aforementioned Florida
Sates Tax of 6% of the annual base rental. Nothing herein shall, however, be
taken to require Lessee to pay any part of any Federal and State Taxes on income
imposed upon Lessor.
<PAGE>
33. Brokerage: The parties hereto represent and warrant to each other that they
have dealt with no broker, finder or agent.
34. Personal Guaranty- This lease is subject to Lessee signing the personal
guaranty attached to this Lease and said guaranty being in full force and effect
until the lease is terminated.
35. Radon Gas Disclosure Language: The following is set forth pursuant to
Chapter 88-285 Laws of Florida.
Radon is naturally occurring radioactive gas that, when it has accumulated in a
building in sufficient quantities, may present health risks to persons who are
exposed to it over time. Levels of radon that exceed federal and state
guidelines have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county public health
unit.
Signed, sealed and delivered
in the presence of:
Lessee:
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ----------------------------- -------------------------------------
Automax, USA, Inc., it's V. President
/s/ Sandra [ILLEGIBLE] ------------
- -----------------------------
/s/ [ILLEGIBLE] /s/ Michael Parkoff
- ----------------------------- -------------------------------------
Michael Parkoff
/s/ Sandra [ILLEGIBLE]
- -----------------------------
/s/ [ILLEGIBLE] /s/ Fred Shapiro
- ----------------------------- -------------------------------------
Fred Shapiro
- -----------------------------
/s/ [ILLEGIBLE] /s/ Gerry Shapiro
- ----------------------------- -------------------------------------
Gerry Shapiro
/s/ Sandra [ILLEGIBLE]
- -----------------------------
Lessor:
/s/ [ILLEGIBLE] /s/ David P. Costakos
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David P. Costakos
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<PAGE>
PERSONAL GUARANTY
For $10.00 and other valuable consideration the receipt of which is here
acknowledged, the undersigned ("Guarantors") jointly and severally for
themselves, representatives, successors and assigns, hereby unconditionally
guarantee to David P. Costakos, ("Lessor"), and its successors, participants,
endorses or assigns, the due performance and full and prompt payment, whether at
maturity or by acceleration or other-wise, any and all of the obligations and
indebtedness of Michael Parkoff, Fred Shapiro, Gerry Shapiro, and Auto Max, Inc
('Lessee'), to Lessor, by Lessee, dated June 7, 1997, ('Lease').
The undersigned, jointly and severally, (a) hereby become surety to the Lessor
of the within lease, its successor, endorsees, and assigns, for the payment of
the within lease, and hereby unconditionally guaranty the full and prompt
performance of all of the obligations of Lessee under the Lease, including, but
not limited to the obligations relating to environmental matters and restoration
of the premises, and all extensions or renewals thereof and all sums payable
under or by virtue thereto, including, without limitations, all amounts of
rental and additional rental payments and all expenses (including attorney's fee
through the appellate level) incurred in the collection thereof, the enforcement
of rights thereunder with respect to any security therefore and the enforcement
hereof and waive presentment, demand, notice of dishonor, protest and all other
notices whatsoever; and (b) consent and agree (1) that all or any of the
collateral, if any, may be exchanged, related, surrendered or sold from time to
time, (2) that the payment of the lease, or any of the liabilities of the maker
thereof, may be extended or renewed any number of times and for any period
(whether or not longer than the original term of said lease), (3) that the
holder of said lease may grant any releases, compromises or indulgences with
respect to said lease or any extensions or renewals thereof of any security
therefore or to any party liable thereunder or hereunder (including, but not
limited to, failure or refusal to exercise one or more of the rights or remedies
provided by said lease), and (4) that any of the provisions of said lease may be
modified; all without notice to or consent of any, without affecting the
liability of the undersigned as endorsers and sureties, and further consent and
agree that any of the undersigned may be sued by the holder hereof with or
without first or contemporaneously suing any such other person, or otherwise
seeking or proceeding to collect from them or any of them, and without first or
contemporaneously undertaking to enforce any rights with respect to any
security.
In Witness Whereof, the undersigned has caused this Guaranty to be properly
executed this 7th day of June, 1997
Signed, sealed and delivered
in the presence of: GUARANTORS:
/s/ [ILLEGIBLE] /s/ Michael Parkoff
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Michael Parkoff
/s/ Sandra [ILLEGIBLE]
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/s/ [ILLEGIBLE] /s/ Fred Shapiro
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Fred Shapiro
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/s/ [ILLEGIBLE] /s/ Gerry Shapiro
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Gerry Shapiro
/s/ Sandra [ILLEGIBLE]
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COMMERCIAL LEASE AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of August, 1999, by and
between ROBERT M. ORESKY (hereinafter called "Lessor") whose mailing address is
726 Presidential Drive, Boynton Beach, Florida 33435; and Andrea Parkoff and
Michael Parkoff (hereinafter called "Lessee") whose mailing address is 2483 N.W.
66th Drive, Boca Raton, FL. 33487
WITNESSETH:
1. Premises:
Subject to the terms and conditions, and for the term set forth in
this lease, the Lessor hereby leases to the Lessee, and the Lessee hereby leases
from the Lessor, the property (hereinafter referred to as the "Demised
Premises") located at 216 North Military Trail, West Palm Beach, Florida 33415,
and legally described as:
See Exhibit "A" attached hereto.
2. Term:
A) The term of this lease shall be for three (3) years (thirty-six
(36) months) commencing on the second (12nd) day of August, 1999, (hereinafter
referred to as the "Commencement Date"), and ending on the 1st day of August,
2002, (hereinafter referred to as the "Termination Date"), both dates inclusive,
unless sooner terminated as herein provided (such time period being hereinafter
referred to as the "Term").
B) Lessee is granted an inspection period to his satisfaction.
Lessor makes no warranties or representations, express or implied as to
zoning, concurrency, [ILLEGIBLE], availability of utilities, soil tests,
drainage; accessibility, use limitations, master land use plans or restrictions,
drainage district requirements, record dedication requirements or platting
requirements or restrictions, environmental matters or any other factors, facts
or conditions affecting use and development of the subject property.
C) The Lessee represents that it has had an opportunity to examine
the demised premises, the structures thereon, the sidewalks and parking area and
structures adjoining same, including any and all real and personal property
which are part of the demised premises, and accepts same AS IS; as to the lease
and, including the option to purchase provisions of this agreement. All property
which is part of this agreement is, leased, demised or to be conveyed (through
the option) AS IS; with no warranties or representations of any kind or nature
relied upon by Lessee or part of the consideration for this agreement.
3. Rent:
During the term of this lease, Lessee covenants and agrees to pay to
the Lessor rent as hereinafter provided, in lawful money of the United States of
America at the time of payment, in advance on the first (1st) day of each month,
at the office of the Lessor, or at such other place as Lessor shall designate,
without any offset or deduction whatsoever, except that the Lessee shall pay the
first (1st) and last (36th) months rent simultaneously with the execution
hereof.
The agreed rental for the three (3) year lease shall be $288,000.00
plus state sales tax, payable as follows: Commencing August 2, 1999, through and
inclusive of rent for the month of July, 2002, and ending August 1, 2002, the
rent shall be $8,000.00 per month, plus sales tax.
If Lessee's possession commences on other than the first (1st) day
of the month, only the prorata portion of the monthly rent for said month shall
be paid. Lessee also covenants and agrees to pay a Late Charge for any payment
of monthly rent due hereunder, not received by Lessor on or before the tenth
(10th) day of each month, and for any other payment due Lessor pursuant to the
terms and conditions hereof.
Said Late Charge shall be the greater of Twenty Five and 00/100
Dollars ($25.00) or a sum equal to the highest interest rate permitted to be
charged under the usury laws of the State of Florida; said interest computation
to be computed and assessed from the first day of the month, in the case of
monthly rent and, after five (5) days from the date of demand or request in the
case of additional rent, other sums, debts or amounts due hereunder, until paid.
A service charge of Thirty Five ($35.00) will be assessed for handling of any
returned check. The First (1st) Lease Year shall be the twelve (12)month period
of time following the Commencement Date, and each twelve (12) month period of
time thereafter shall be deemed a Lease Year. In the event Lessee shall dispute
any sums due under this Lease, by way of rent, additional rent, or any other
charges or sums, Lessee shall pay such rent, additional rent, or any other
charges or sums, Lessee shall pay such sums to
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Lessor in a timely fashion pending resolution of such dispute(s).
The Lessee does not intend or expect to pay, nor does Lessor or its
agent intend to charge, accept, or collect any rent penalty payments which
collectively would be greater than the highest legal rate of interest which may
be charged under the laws of the State of Florida. The provisions of this
section shall not be construed to extend the date for payment of any sums
required to be made by Lessee hereunder or to relieve Lessee of its obligations
to pay all such sums or items at the time or times hereunder stipulated.
It is the intention of Lessor and Lessee that the rental payments
herein provided shall be net to Lessor in each year during the term hereof and
that all costs, expenses and obligations of every kind relating to the leased
premises, except as otherwise specifically provided in this agreement, which may
arise or become due during the term hereof, shall be paid by the Lessee and
Lessor shall be indemnified and held harmless by Lessee against each and every
such cause, expense or obligation.
The Lessee agrees that it will pay all charges for utilities
supplied to the demised premises, including but not limited to water,
electricity, telephone and trash removal, and should such utilities be turned
off or discontinued, the Lessor may, at its option, pay those charges and take
such actions to maintain service. Any such payments by Lessor shall constitute
additional rent due pursuant to the terms of this agreement and shall be due
within five (5) days from receipt by Lessee of a statement for same from Lessor
or with the next installment of rent becoming due, whichever is earlier.
At the expiration and/or earlier termination of the term of this
agreement, the Lessee shall surrender to Lessor the demised premises and
fixtures and leasehold improvements including any additions or alterations made
thereto in as good condition as at the commencement of the lease term or
addition, alteration or improvement, reasonable wear and tear excepted.
In the event Lessor shall pay or be compelled to pay any sum of
money or do any act which shall require the expenditure or payment of any sum by
reason of the failure of Lessee, after such notice, if any, as the Lessee by the
terms of this agreement may be entitled to , to perform one (1) or more of the
terms, covenants, conditions, or agreements herein contained, the Lessee shall
immediately repay the same to Lessor upon demand, or as otherwise provided for
herein, and in default thereof, the sum or sums so paid by Lessor, together with
interest at the highest legal rate permitted by law, costs, and damages, shall
or may be added as additional sums to the next installment of rent to become due
on the next rent day or on any subsequent rent day fixed by this agreement, and
shall for all purposes whatsoever be deemed to be rent due and payable on such
rent day, or on any subsequent rent day, as Lessor may, at its option, elect,
and shall be payable as such, failure to do so constituting a default hereunder.
Payment by Lessor of any such sums of money or the doing of any such acts, shall
not be deemed to waive or release the default in the payment or doing thereof by
the Lessee, or the right of Lessor to recover possession, at its option, of the
demised premises by reason of the default of the Lessee with respect to any such
payment or act.
4. sales and Use Tax:
The Lessee hereby covenants and agrees to pay monthly, along with
the payment of rent and any additional rent, any sales, use or other tax,
excluding State and/or Federal income tax, now or hereafter imposed upon rents
by the United States of America, the State, or any political subdivisions
thereof, notwithstanding the fact that such statute, ordinance or enactment
imposing the same may endeavor to impose the tax on the Lessor.
5. Indemnification:
The Lessor shall not be liable for any damage or injury to any
person or property whether it be the person or property of the Lessee, the
Lessee's employees, agents, guests, invitees or otherwise by reason of Lessee's
occupancy of the Demised Premises, any condition of the Demised Premises or the
property of which it is a part, or both, or because of fire, flood, windstorm,
casualty, act of God, or for any other reason whatsoever, including, but not
limited to, negligence on the part of the Lessor. The Lessee agrees to, and does
hereby, indemnify and save harmless the Lessor from and against any and all
actions, losses, damages, claims, demands, liabilities and expenses (including
reasonable attorneys' fees and court costs, at both trial and appellate levels)
in connection with loss of life; personal injury, damage to property, or any or
all of the foregoing, which may arise or be claimed to have arisen as a result
of the occupancy of use of the Demised Premises by the Lessee or by reason
thereof or in connection therewith, or in any way arising on account of any
injury or damage caused to any person or property on or in the Demised Premises,
or by reason of Lessee's breach of any term, covenant, condition or agreement
contained in this lease. In case Lessor shall, without fault on its part, be
made a party to any litigation commenced by or against Lessee, then Lessee shall
protect and hold Lessor harmless and shall pay all costs, expenses and
reasonable attorneys fees (at both trial and appellate levels) incurred or paid
by Lessor in connection with such litigation. Lessee agrees to pay all
attorney's fees (at both trial and appellate levels) that may be incurred or
paid by Lessor, whether suit be brought or not, in enforcing or defending any of
the terms, covenants, conditions or agreements in this lease.
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6. Alterations:
Lessee covenants and agrees that it will not make any alterations,
improvements or additions to the Demised Premises during the term of this lease
or any renewal thereof that would adversely effect, jeopardize or contravene any
zoning or special exception requirements or otherwise be in violation of any
governmental law, regulation, or rule. Lessee covenants and agrees that it will
not make any alterations, improvements or additions to the Demised Premises
during the term of this lease or any renewal thereof without first delivering to
Lessor copies of written plans, drawings, specifications, governmental filings,
and permits and, further acknowledging in writing to the Lessor that said
actions will not adversely effect, jeopardize or contravene any zoning or
special exception requirements or otherwise be in violation of any zoning or
special exception requirements or otherwise be in violation of any governmental
law, regulation, or rule. Lessee will not cut or drill into, or secure any
fixture, apparatus or equipment of any kind to any part of the Demised Premises
without first complying with this paragraph. All alterations, improvements and
additions made by Lessee as aforesaid shall remain upon the Demised at the
expiration or earlier termination of this lease and shall become the property of
Lessor unless Lessor shall, prior to the termination of this lease, have given
written notice to Lessee to remove the same, in which event Lessee shall remove
such alterations, improvements and additions and restore the Demised Premises to
the same good order and condition in which it was at the commencement of the
lease, at Lessee's sole cost and expense. Should Lessee fail so to do, Lessor
may do so, collecting, at Lessor's option, the cost and expense thereof from the
Lessee. The Lessee shall comply with all governmental rules, regulations and
ordinances in the making of any such alterations, improvements or additions
approved by Lessor. Lessee further agrees that Lessee will prevent any lien,
charge or obligation from being created against the Demised Premises and/or the
property of which it is a part, and will pay all liens of contractors,
mechanics, laborers, materialmen, and other items of like character forthwith.
Notwithstanding the foregoing, if any mechanics lien is filed against the
Demised Premises or the building of which it is a part, for work claimed to have
been done for, or material furnished to, Lessee, whether or not done pursuant to
this article, the same shall be discharged by Lessee forthwith, at Lessee's
expense, by transferring the lien to security pursuant to section 713.24 Florida
Statutes or other applicable provisions of the Florida Mechanics Lien Laws. Any
such alterations shall be made at such times and in such manner, as not to
unreasonably interfere with the occupation, use and enjoyment of the adjacent
property owners so as to constitute a nuisance. If any such alterations,
improvements or additions shall effect the concrete surface or drainage on the
property the new work or changes shall result in the same or better quality
surface and/or drainage.
Before any such changes, improvements, additions or alterations are
commenced the Lessee shall furnish to Lessor a sufficient bond conditioned that
it will save Lessor harmless from the payment of any claims, either by way of
damages or liens, and to deliver to Lessor written plans and specifications for
all such work.
Notwithstanding anything contained to the contrary herein, Lessee
shall, before making any approved alterations, additions, installations or
improvements, at its expense, obtain all permits, approvals and certificates
required by all governmental and quasi governmental bodies and upon completion
certificates of final approval thereof, and shall deliver promptly duplicates of
all such permits, approvals and certificates to Lessor. Lessee further agrees to
carry workmens' compensation, general liability, personal and property damage
insurance as Lessor may require. It is stipulated that no work shall be
commenced unless certificates of insurance are in possession of the Lessor and
have been approved by Lessor.
7. Events of Default:
The occurrence of any of the following shall constitute an event of
default hereunder: (a) discontinuance by Lessee of the conduct of its business
in the Demised Premises for a period of two consecutive weeks; (b) the filing of
a petition by or against Lessee for adjudication as a bankrupt or insolvent, or
for its reorganization or for the appointment of a receiver or trustee of
Lessee's property; an assignment by Lessee for the benefit of creditors; or the
taking possession of the property of Lessee by any governmental office or agency
pursuant to statutory authority for the dissolution or liquidation of Lessee;
(c) failure of Lessee to pay when due any installment of rent hereunder or any
other sums herein required to be paid by Lessee if any installment of rent,
additional rent, or any other sums required to be paid by Lessee hereunder, or
any part thereof, shall at any time be in arrears and unpaid for three (3) days
after written demand therefor; (d) vacation, abandonment or desertion of the
Demised Premises or permitting the same to be empty and unoccupied for three (3)
consecutive days; (e) Lessee's removal or attempt to remove or manifesting an
intention to remove Lessee's goods or party from or out of the Demised Premises
otherwise than in the ordinary and usual course of business without having first
paid and satisfied Lessor all rent and other sums which may become due during
the entire term of this lease; (f) failure of Lessee to perform or abide by any
term, covenant, agreement or condition of this lease agreement; (g) Lessee is
generally not paying its debts as they become due adversely effecting the
maintenance of the Demised Premises; (h) The insolvency of the Lessee;
insolvency defined as having a financial condition such that the sum of Lessee's
debts is greater than all Lessee's property, at fair valuation, exclusive of
property transferred, concealed, or removed with intent to hinder, delay or
defraud Lessee's creditors.
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If there be any default on the part of Lessee, other than for non-payment
of rent or monies owed under this lease (see above), in the observance or
performance of any of the other covenants, agreements or conditions of this
lease on the part of Lessee to be kept and performed; or any of the Rules and
Regulations set forth pursuant to this lease, and as they may be reasonably
amended from time to time, so long as amendments do not interfere with Lessee's
rights hereunder or rightful use of the premises; and said default shall not be
cured within seven (7) days after written notice thereof from Lessor to Lessee;
unless such default cannot reasonably be cured within seven (7) days due to
causes or circumstances beyond the control of Lessee and Lessee shall have in
good faith commenced or tried to commence to cure said default within said seven
(7) days (after written notice) and continue diligently to pursue the curing of
same as quickly as reasonably possible. If there be any default on the part of
Lessee relating to lack of insurance coverage required under this lease the
Lessee shall immediately upon knowledge of said lack of coverage cure same;
unless such default cannot reasonably be cured immediately due to causes or
circumstances beyond the control of Lessee then, if Lessee shall have commenced
to cure said default and shall due so within five (5) days.
If at any time during the term hereof, any lien, chattel mortgage,
conditional bill of sale or security interest shall be filed against the demised
premises or any part thereof, the Lessee shall, at its own cost and expense,
cause same to be satisfied by payment, bond or otherwise, as provided by law
immediately, or not later than five (5) days after receipt of notice whether
from Lessor or otherwise that the same are filed, but nothing herein contained
shall in anyway prejudice the rights of Lessee to contest to final judgment or
decree such lien. The Lessee, upon reasonable notice and request in writing from
Lessor, shall also defend for Lessor, at Lessee's sole cost and expense, any
action suit or proceeding which may be brought on or for enforcement of any such
lien, chattel mortgage, conditional bill of sale or security interest and will
pay the damages and satisfy and discharge any judgment entered in such action,
suit or proceeding, and indemnify and hold harmless the Lessor from any
liability, claim or damages resulting therefrom, except for such liens as may be
caused by Lessor. In default of the payment by the Lessee as aforesaid of any
such lien. chattel mortgage, conditional bill of sale or security interest,
Lessor may, without further notice, cause the discharge thereof by bonding or
payment, or otherwise, and all costs and expenses by which Lessor may be put in
obtaining such discharge shall be paid by Lessee to Lessor as additional rent in
accordance with the provisions of this agreement.
3. Rights of Lessor Upon Default by Lessee:
If the Lessee is in default as defined above then the Lessor, in
addition to all the rights and remedies granted under the laws of the State of
Florida, shall have any one or more or all of the following rights: (i) to
re-enter and remove all persons and property from the Demised Premises and such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Lessee, all without service of notice or resort
to legal process and without Lessor being deemed guilty of trespass, or becoming
liable for any loss or damage which may be occasioned thereby; (ii) elect to
declare the entire rent and all other sums due hereunder for the balance of the
Initial Term and all renewal terms due and payable forthwith; (iii) terminate
the lease and relet the Demised Premises for the account of Lessor or, within
the sole discretion of Lessor, the Demised Premises may be re-let for the
account of the Lessee; (iv) except as to default under sub section (b) and (h)
of Article 7, Lessor shall have the right, at its option, to collect not only
the rent and all other sums herein provided but additional rent for each day of
default equal to 1/30 of the monthly rent, said additional rent being
compensation to the Lessor for expenses incurred as the result of Lessee's
default. Said additional rent shall be paid by Lessee weekly as the same occurs.
Lessee hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Lessee being
evicted or dispossessed for any cause, or in the event of Lessor obtaining
possession of the Demised Premises by reason of the violation by Lessee of any
of the terms, covenants or conditions of this lease, or otherwise.
In the event Lessee seeks relief under the U.S. Bankruptcy Code and
further seeks to assume this Lease, Lessor is entitled to adequate assurances of
future performances as defined herein. Such assurances of future performance
shall include, but are not limited to, the following:
1. a security deposit of not less than three (3) months average rent
pursuant to the terms and conditions of this Lease, and
2. all attorney fees and costs incurred by Lessor.
Upon assumption of this Lease by the Trustee, Debtor in Possession,
or any other party, Lessee must cure all defaults both monetary and
non-monetary, pay all attorney fees and costs incurred by Lessor and give
adequate assurances of future performance as described above.
9. Financing Agreement:
Lessee hereby pledges and assigns to Lessor all of the buildings,
improvements, attachments and fixtures making up the Demised Premises of Lessee
which are or will be a part of the Demised Premises as security for the payment
of all sums by Lessee to Lessor as provided for herein.
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and as security for the performance of all the terms, covenants and conditions
of this lease. Lessee agrees not to enter into, execute or deliver any financing
agreement that can be considered as a priority to Lessor's statutory lien for
the above-described buildings, improvements, attachments and fixtures making up
the Demised Premises of Lessee which are or will be a part of the Demised
Premises, and, in the event Lessee does so execute or deliver such financing
agreement (as to the described items only), such action on the part of Lessee
shall be considered a breach of the terms and conditions of this lease entitling
Lessor to such remedies as are provided for herein and by law. Further, at any
time or times hereafter, upon request of Lessor. Lessee agrees to execute and
deliver to Lessor a UCC-l Financing Statement, in a form and content as required
by Lessor's attorney, in order to perfect Lessor's lien on the above-described
property of Lessee.
10. Destruction of Premises:
A. Except within the last eight (8) months of the term of this lease
or the termination of this lease, unless the Lessee elects to purchase the
Demised Premises under the "Option to Purchase" herein, if the Demised Premises
are totally or partially damaged by fire or other casualty, then the Lessor
shall cause the Demised Premises, excluding personalty or personal property of
Lessee, to be restored to a kind and quality substantially similar to that
immediately prior to such destruction or damage. Said restoration shall be
commenced within a reasonable time after collection by Lessor of the insurance
proceeds and completed without delay on the part of the Lessor as soon as
reasonably possible from the date of Lessor's collection of the insurance
proceeds. Lessee shall complete any restoration work required hereunder to be
done by Lessee within one-hundred twenty (120) days following the completion of
the work required to be done hereunder by Lessor. The Lessor shall not be liable
for any inconvenience or interruption of business of the Lessee occasioned by
fire or other casualty, restoration of the Demised Premises, or failure to
restore, nor responsible to Lessee for any destruction or damage to any property
belonging to Lessee. Nothing herein shall be construed so as to require the
Lessor to restore the Demised Premises except as specifically provided herein
where insurance proceeds are available for same and, in the event the Lessor
elects not to cause the Demised Premises to be restored, then the Lessor shall,
within a reasonable period of time after receipt of insurance proceeds, notify
Lessee in writing of said election and this lease shall and as of the date of
such notice and the parties hereto shall be relieved of all further obligations
hereunder except for Lessee's exercise of the "Option to Purchase" stated in
sub-section B below.
B. If the Lessor undertakes to restore, rebuild or repair the
Demised Premises as aforesaid, and such restoration, rebuilding or repair is not
accomplished within said three hundred sixty five (365) days from the date
Lessor receives the insurance proceeds, and such failure does not result from
causes beyond the control of Lessor, the Lessee shall have the right 1) to
terminate this lease by written notice to the Lessor within thirty (30) days
after the expiration of said three hundred sixty five (365) day period, or 2)
purchase the property by at the time of closing making all payments due under
this lease to Lessor and exercising the "Option to Purchase" herein, which
remedies shall be the sole and exclusive remedy of Lessee.
C. Lessor shall not be liable to carry fire, casualty or extended
coverage insurance on any of the property of the Lessee which may now or
hereafter be placed in the Demised Premises by Lessee, and on the Demised
Premises, and the obtaining of such insurance shall be the sole responsibility
of Lessee. Lessor shall have no liability for any damage or destruction to any
of Lessee's property.
11. Eminent Domain:
A. Entire or Substantial Taking:
If the entire Demised Premises shall be taken under the power
of eminent domain, this lease shall automatically terminate as of the date on
which the condemning authority takes possession. Lessor shall not be separately
or independently liable to the Lessee for the termination of Lessee's leasehold
interest in said proceeding. The Lessee shall pay all rent and other sums due,
and perform all of the covenants hereof up to the time when this lease shall
terminate.
B. Partial Taking:
In the event of any raking under the power of eminent domain
which does nor so result in a termination of this lease, the rental payable
hereunder shall be reduced effective as of the date on which the condemning
authority takes possession, in the same proportion which the floor area of the
portion of the Demised Premises taken bears to the floor area of the entire
Demised Premises prior to the taking. Lessor shall promptly, at its expense,
restore the portion of the Demised Premises (less and except the interior
finishes of the Demised Premises) not so taken to as near its time thereafter,
and this lease shall continue in full force and effect. Lessee shall, its cost
and expense, restore the interior finishes of the Demised Premises to as near
its former condition as is reasonably possible within thirty (30) days after
completion of the work to be done by Lessor. Lessor shall not be liable for any
inconvenience or interruption of business of the Lessee occasioned by such
condemnation proceeding, restoration of the Demised Premises nor failure
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to restore the Demised Premises, or for loss or damage to any property of the
Lessee on the Demised Premises.
C. Awards:
Any award for any taking of all or any part of the Demised
Premises under the power of eminent domain shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the
Demised Premises or for taking of the fee. Nothing contained herein, however,
shall be deemed to preclude Lessee from obtaining, or to give Lessor any
interest in, any award to Lessee for loss of or damage for cessation or
interruption of Lessee's business.
D. Sale Under Threat of Condemnation:
A sale by Lessor to any authority having the power of eminent
domain, either under threat of condemnation or while condemnation proceedings
are pending, shall be deemed a taking under the power of eminent domain for all
purposes under this paragraph.
12. A. Offset Statement:
Within ten (10) days after request therefor by Lessor, or in
the event that upon any sale, assignment or hypothecation of the Demised
Premises and/or the land thereunder by Lessor, an offset statement shall be
required from Lessee, Lessee agrees to deliver in recordable form a certificate
to any proposed mortgagee or purchaser or to Lessor certifying that the lease is
in full force and effect or, if not, stating the reasons why not; that the lease
is unmodified or stating any known modifications; that the Lessor is not in
default hereunder or stating any known default(s); and that there are no
defenses or offsets against the rent payable hereunder or stating those claimed
by Lessee. Failure to give such statement within said period of time shall be
conclusive evidence that this lease is in full force and effect, is unmodified,
that Lessee has no defenses or offsets against the rent payable hereunder, and
that Lessor is not in default hereunder, and Lessee shall be estopped from
asserting any defaults, modifications, offsets and defenses known to it at that
time. Notwithstanding the foregoing, failure of the Lessee to provide such
certificate within such period of time shall not relieve the Lessee of its
obligation to provide such certificate and, in addition to all other remedies
provided for by law and herein, in the event Lessee fails to timely deliver such
certificate Lessor may, at Lessor's option, cancel this lease without incurring
any liability on account thereof and the term hereby granted is expressly
limited accordingly.
B. Attornment:
Lessee shall, in the event any proceedings are brought for the
foreclosure of, or in the event of exercise of the power of sale under any
mortgage made by the Lessor covering the Demised Premises, attorn to the
purchaser upon any such foreclosure or sale and recognize such purchaser as the
lessor under this lease.
C. Subordination:
Upon request of the Lessor, Lessee will subordinate its rights
hereunder to the lien of any mortgage or mortgages, or the lien resulting from
any other method of financing or [ILLEGIBLE], now or hereafter in force against
the land and/or buildings of which the Demised Premises are a part, or against
any buildings hereafter placed upon the land of which the Demised Premises are a
part, and to all advances made or hereafter to be made upon the security
thereof. This lease is subject to any lien(s), mortgage(s), ground or underlying
lease(s), now or hereafter placed by Lessor upon or affecting the land,
buildings or Demised Premises. Lessor will make a good faith efforts to obtain a
non-disturbance provision for this lease in any mortgage it applies for pledging
as collateral the demised premises; but, no mortgage shall be contingent upon
such a provision being contained therein and, if not approved by the lending
party no such provisions is effective and no mortgage shall be invalid or
subordinate to this lease unless specifically stated therein.
D. Attorney-in-Fact:
The Lessee, upon request of any part-in-interest, shall
execute promptly such instruments or certificates to carry out the intent of
articles 12 A and 12 C above as shall be requested by Lessor. The Lessee hereby
irrevocably appoints the Lessor as attorney-in-fact for the Lessee with full
power and authority to execute and deliver in the name of the Lessee any such
instruments or certificates. If within ten (10) days after the date of a written
request by Lessor to execute such instruments Lessee shall not have executed and
delivered the same back to the Lessor, the Lessor may, at its option, cancel
this lease without incurring any liability on account thereof, and the term
hereby granted is expressly limited accordingly.
13. (a) RECEIPT OF DEPOSIT. Lessee has this day deposited with Lessor, the
additional sum of $8,000.00, receipt of which is hereby acknowledged by Lessor,
as security for the full and faithful performance by Lessee of any and all of
the terms, conditions and covenants of this lease
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on Lessee's part to be performed and kept by Lessee, including past due rent,
and/or for the cost of any trash removal, house cleaning, and repair or
correction of damages in excess of normal wear and tear.
(b) RENT. If at any time during the term hereof Lessee shall be in
default in the payment of the rent herein reserved or any portion thereof, or
any other sums expressly constituting rent due hereunder, Lessor may appropriate
and apply any portion of the security deposit as may be necessary to the payment
of the overdue rent or other sums due under this lease.
(c) REPAIRS. If at any time during the term of this lease Lessee
should fail to repair any damage to the premises that Lessee is required to
repair pursuant to the terms hereof, Lessor may appropriate and apply any
portion of the security deposit as may be reasonably necessary to make such
repairs.
(d) CLEANING. If on the termination of this tenancy for any reason
Lessee does not leave the leased premises in reasonably clean condition, then
Lessor may appropriate and apply any portion of the security deposit as may be
reasonably necessary to put the premises in such clean condition.
(e) If Lessor uses the security deposit pursuant to this section
during the term of this lease the Lessee upon written notice shall within five
(5) days of such notice pay such sum to Lessor as is required to maintain the
full security deposit required hereunder. Failure of Tenant to pay the full
required security deposit hereunder will constitute a default.
14. Holding Over:
If the Lessee retains possession of the Demised Premises or any part
thereof after the termination of the term or any renewal thereof, the Lessee
shall pay to the Lessor rent at double the amount payable for the month
immediately preceding said holdover. The provisions of this paragraph do not
waive the Lessor's rights of re-entry or any other rights or remedies hereunder
but are in addition to any other rights and remedies of Lessor. Any retention
of the Demised Premises or part thereof after the termination of this lease or
any extension thereof shall be considered as a month-to-month holdover unless
otherwise agreed to in writing by both parties. Holding over for one (1) day
makes the Lessee liable for rent (at double the amount payable for the month
immediately preceding the holdover) for the entire month.
15. Personal Property Taxes:
Lessee shall pay before any lien attaches or is placed upon the
Demised Premises all property taxes and assessments on the furniture, fixtures,
equipment and other property of Lessee located in the Demised Premises and on
additions and improvements in the Demised Premises made by Lessee.
16. Insurance:
Lessee shall at all times during the term hereof, and at its cost
and expense, maintain in effect workmens' compensation insurance and bodily
injury liability and property damage liability insurance adequate to protect
Lessor and naming Lessor as an insured in the liability contract against
liability for injury to or death of any person in connection with the use,
operation and condition of the Demised Premises in an amount not less than Two
Million Dollars ($2,000,000.00) for injury to or death of one person in any one
accident or occurrence, and in an amount not less than One Million Dollars
($1,000,000.00) for injury to or death of one person in any one accident or
occurrence, and against damage to Leasehold, betterments and improvements in the
amount of Five Hundred Thousand Dollars ($500,000.00) for each accident or
occurrence. Said insurance shall at the option of the Lessor be the primary
insurance as respects Lessor and not participating with any other available
insurance.
During the term hereof, the Lessee shall, at its own cost and
expense, provide the following insurance coverage in such companies as it may
select, with the approval of Lessor;
A) Fire and Extended Coverage Insurance. The Lessee shall keep all
buildings and improvements, including equipment, furnishings and fixtures, on,
in or appurtenant to the premises insured against loss or damage by fire and all
standard extended coverage in an amount equivalent to one hundred percent (100%)
of the full replacement cost of the buildings and other improvements on the
demised premises and the contents therein, which said policy or policies shall
contain the so-called special coverage all risk endorsement, and the full
replacement endorsement.
B) Public Liability Insurance. The Lessee shall provide and keep in
full force and effect general public liability insurance protecting Lessor
against any and all liability in an amount not less than Two Million Dollars
($2,000,000.00) for bodily injury in respect to any one accident or disaster and
in the amount of not less than One Million Dollars ($1,000,000.00) in respect to
injuries to any one (1) person and Five Hundred Thousand Dollars ($500,000.00)
for
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property damage. The amount of such coverage shall be subject to Lessor's review
and shall be subject to increase, so that such amount shall be at least equal to
the amounts carried by prudent owners and operators of properties similar to the
demised premises in the same geographic area.
C) Plate Glass Insurance. The Lessee shall provide and keep in full
force and effect for the benefit of Lessor plate and other glass insurance
covering glass in the demised premises.
D) Flood Insurance. The Lessee shall secure the Federally sponsored
flood insurance in the maximum coverage available or private insurance for the
value of improvements to the premises unless not available.
E) Hazardous Materials Coverage. Lessee shall at all times during
the term hereof, and at its cost and expense, maintain in effect environmental
and hazardous substances insurance adequate to protect Lessor and naming Lessor
as an insured in the liability contract against liability for injury, damage,
claim, loss, liability, or expense in connection with the demised premises in an
amount not less than Ten Million Dollars ($10,000,000.00). Said insurance shall
at the option of the Lessor be the primary insurance as respects Lessor and not
participating with any other available insurance. In no event shall the limits
of said policies be considered as limiting the liability of the Lessee under
this lease.
F) Premiums. All premiums and charges for all of the aforementioned
insurance policies shall be paid by the Lessee and if the Lessee shall fail to
make any such payments when due, or carry any such policy, Lessor may, at its
option, make any such payments when due, or carry such policy, Lessor may, at
its option, make such payment or carry such policy, and the amounts paid by
Lessor with interest at the highest legal rate permitted by law thereon, shall
be paid to Lessor by the Lessee on demand and all such amounts so repayable
shall be considered as additional rent hereunder for the collection of which
Lessor shall have all of the rights and remedies provided herein or by law
provided for the collection of rent. Payment by Lessor of any such premiums or
the maintaining by Lessor of any such policy shall not be deemed to waive or
release the default of the Lessee with respect thereto.
G) Renewal. Thirty (30) days prior to the expiration of each such
policy, the Lessee shall deliver to the Lessor a binder evidencing a renewal of
such policy, which said binder shall provide for a minimum of thirty (30) days
written notice by the insurance company to Lessor of any change and/or
cancellation thereof. The Lessee shall promptly pay the premiums for the renewal
insurance and deliver to Lessor the original policy and duplicate receipt
evidencing payment thereof.
H) Compliance with Insurance Company Requirements. The Lessee shall
not violate or permit to be violated any of the conditions or provisions of any
such insurance policy provided for herein, and it shall so perform and satisfy
the requirements of the various companies writing such policies that at all
times companies of good standing satisfactory to Lessor shall be willing to
write and/or continue such insurance.
I) Collection of Proceeds. The Lessee and the Lessor shall cooperate
with each other in connection with the collection of any proceeds that may
become due in the event of loss and the Lessee shall execute and deliver to
Lessor such proofs of loss and other instruments which may be required for such
purpose or to expedite such purpose.
K) Prior to the commencement of the term hereof, the Lessee shall
furnish to the Lessor a binder or binders as evidence that the insurance
required of it to be provided is in effect as of the commencement date of the
term of this agreement. The Lessor shall be entitled to cancel the existing
policies on the demised premises as of said date. Should the Lessee fail to
deliver the binder or binders as aforesaid, any expense to Lessor in maintaining
its current policies in order to protect itself and the demised premises shall
be born by the Lessee.
L) The Lessor may pay in the first instance the premiums required to
be paid under any multi peril hazard insurance policies (including but not
limited to coverage for loss of rents) which Lessor may now have or hereafter
obtains from time to time in connection with the building and appurtenances
thereto of which the Demised Premises are a part. If the cost of any such
insurance premiums shall exceed in any lease year the cost thereof for the year
1995, Lessee shall pay such excess insurance premiums to Lessor (without any
proration thereof) forthwith upon demand.
M) Lessor at Lessor' option, may also require Leasee to procure any
other insurance which Lessor reasonably deems appropriate in connection with the
building and appurtenances thereto of which the Demised Premises is a part, and
Lessee shall pay the cost and expenses thereof. Lessor, at any time and from
time to time, shall have the right to increase the amount of insurance coverage
which Lessee is required to carry hereunder, and Lessee shall, at Lessee's sole
cost and expense cause such insurance policies to be amended within ten (10)
days from date of request by Lessor. In no event shall the limits of said
policies be considered as limiting the liability of Lessee under this lease.
N) Coverage of Liability Policies. The general public liability
insurance policy specified in Sub-paragraph C hereof shall include the entire
building and premises, together with
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the sidewalks in front of or adjacent to the demised premises.
0) General Provisions. The coverages and/or policies described
herein shall name both parties (and such other parties as are requested by
Lessor) as payees as their interests may appear. All other such policies of
insurance shall name Lessor, the Lessee and such other parties as Lessor
requests as insureds, as their respective interests may appear, and, to the
extent obtainable, shall contain an agreement that any loss payable to Lessor or
to such other parties as Lessor requests, notwithstanding any act or negligence
of the Lessee which might otherwise result in forfeiture of such insurance and
that such policy shall not be canceled except upon a minimum of ten (10) days
prior written notice to Lessor and to such other parties as Lessor requests.
Lessor shall have no right of action against the Lessee with regard to any such
loss or damage from fire and extended coverage, provided such loss is fully
covered by insurance and provided this waiver does not invalidate any insurance
policy. Should the Lessee desire to provide any insurance required by this
agreement in the form of a blanket policy, it shall furnish satisfactory proof
that such blanket policy complies in all respects with the provisions hereof,
and that the coverage thereunder is at least equivalent to the coverage which
would be provided under a separate policy insuring only the demised premises.
P) Insurance Polices. All insurance required to be carried by Lessee
hereunder shall be companies, on forms, and with loss payable clauses,
satisfactory to Lessor and the policies of such insurance shall be delivered to
Lessor by Lessee. No such policy shall be cancelable except after ten (10) days'
written notice to Lessor. Lessee shall furnish such policies annually.
17. Insurance Proceeds:
Except within the last eight (8) months of the term of this lease or
the termination of this lease, unless the Lessee elects to purchase the Demised
Premises under the "Option to Purchase" herein, if the Demised Premises are
totally or partially damaged by fire or other casualty, then the Lessor shall
cause the Demised Premises, excluding personalty or personal property of Lessee,
to be restored to a kind and quality substantially similar to that immediately
prior to such destruction or damage. In the event of damage to or destruction of
any building on the demised premises or of any of the personalty or personal
property not covered by insurance proceeds, used in the operation and
maintenance thereof, by fire or otherwise, the Lessee shall at such time and
upon the conditions hereinafter set forth, restore, repair, replace, rebuild or
alter the personalty or personal property not covered by insurance as nearly as
possible to the condition such property was in immediately prior to such damage
or destruction. Such restoration, repair, replacement, rebuilding or alteration
shall be commenced as soon as practicable and, after such work has been
commenced, it shall be persecuted with reasonable diligence; provided, however,
in the event of total destruction of the improvements within the last eight (8)
months of the term of this lease or the termination of this lease, Lessor may,
at its option terminate the lease term of this agreement (not option) and Lessee
may purchase the property by notifying Lessor of its election of the said option
and, at the time of closing making all payments due under this lease to Lessor
and exercising the terms of the "Option to Purchase" herein, which remedies
shall be the sole and exclusive remedy of Lessee who shall then retain all
insurance proceeds payable for repair of the demised premises and not used
pursuant to the terms of this agreement for that purpose.
Unless provided otherwise do to the exercise of an option to
purchase by Lessee or other provisions of this lease, all insurance proceeds
received by Lessor or such other parties as Lessor requests on account of such
damage or destruction, less the cost, if any, of such recovery, shall be paid by
Lessor to the payment of the cost of such restoration, repair, replacement,
rebuilding or alteration (hereinafter referred to as "the work") including
expenditures made for temporary repairs or for the protection of property
pending the completion of permanent restoration, repair, replacement, rebuilding
or alteration to the demised premises, and shall be paid out, as hereinafter
provided, from time to time, as such work progresses, upon the written request
of the Lessee which shall be accompanied by the following:
A) Prior to the first payment, Lessee shall provide Lessor with a
set of the final plans and specifications pursuant to which the restoration or
rebuilding shall be done.
B) A certificate of the architect, engineer or general contractor in
charge of the work, dated not more than thirty (30) days prior to such request,
setting forth that the sum then requested either has been paid by the Lessee or
is justly due to contractors, sub-contractors, materialmen, engineers,
architects or other persons whose names and addresses shall be stated who have
rendered services or furnished materials for certain work. Such certificate
shall give a brief description of such services and materials and shall list the
several amounts so paid due to each of such persons, shall state the fair value
of such work at the date of the requisition and shall state that no part of such
expenditures has been or is being made the basis for any other request for
payment. Such certificate shall state also that except for the amounts listed
therein there is no outstanding indebtedness known to such architect, engineer
or general contractor, after due inquiry, which is then due for labor, wages,
materials, supplies or services in connection with such work which, if unpaid,
might become the basis of any lien under the lien law of the State of Florida as
it exists at that time upon such work or upon the demised premises.
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C) An affidavit sworn to by an authorized officer of the Lessee that
all materials and all property constituting the work described in such
certificate of the architect, engineer or general contractor are free and clear
of all security interests, liens, charges or encumbrances, except encumbrances,
if any, securing indebtedness due to persons specified in such certificate which
are to be discharged upon payment of such indebtedness.
Upon compliance with the foregoing provisions, Lessor, only out of
such insurance proceeds, and upon the request of the Lessee, shall pay to the
persons named in such certificate the respective amounts stated therein to be
due to them, or shall pay to the Lessee the amount stated in such certificate to
have been paid by it; provided, however, that such payment shall not exceed in
amount the fair value as stated in such certificate of the relevant work. In the
event the insurance proceeds in the hands of the Lessor exceed the amount
required to pay the cost of such work, Lessor shall be entitled to retain such
excess.
The Lessee's obligation to pay the basic rent, taxes and insurance
and all other charges and to perform all other terms of this agreement shall not
be effected by such damage to or destruction of any building on the demised
premises or of the furniture, fixtures and equipment used in the operation and
maintenance thereof, and the Lessee does hereby waive the provisions of any
statute or law now or hereafter in effect contrary to such obligation of the
Lessee as herein set forth or which releases the Lessee therefrom.
Notwithstanding the foregoing provisions of this section, any
insurance proceeds in the hand of Lessor or its mortgagee, shall not be required
to be paid out if, at the time of the request for payment, the Lessee is in
default in the performance of any term hereof as to which notice of default has
been given and which has not been remedied within the time limit specified in
this agreement. Nothing in this agreement shall require the Lessor to pay more
than any applicable insurance proceeds for any temporary repairs or for the
protection of property pending the completion of permanent restoration, repair,
replacement, rebuilding or alteration to the demised premises, or for permanent
restoration, repair, replacement, rebuilding or alteration to the demised
premises. If insurance proceeds are not sufficient to complete any work needed
or desired the Lessee shall have the option of paying the balance needed or
choosing not to have said work done.
18. Utility Services:
Lessee shall pay for all utility services supplied to the Demised
Premises, including but not limited to electricity, water, sewer, garbage
collection, and gas. No interruption or the stoppage of any utility services
supplied to the Demised Premises shall abate the rent payable hereunder, or
impose any liability upon the Lessor. Failure of Lessee to maintain utilities
for the demised premises, unless due to circumstances beyond its control, shall
constitute a default under this Lease. In the event Lessee desires hot water,
Lessee, at its cost and expense shall maintain the hot water heater and system.
Lessee shall also clean and maintain any cesspool or septic tank or lift station
installed for the use of the Demised Premises.
19. Maintenance and Repair:
The Lessee shall throughout the term of this Lease, at its own cost
and expense, put, keep and maintain the Demised Premises in good, substantial
and sufficient condition (including but not limited to replacements when
necessary), repair and order, both inside and outside, structural and
non-structural, and the yards, areas, railing, fences, sidewalks, coal holes,
roofs, vaults, parking lot, and curbs thereon or adjoining the Demised Premises
and all connections with the street, steam, water, electric, gas mains and
sewers, air conditioning apparatus, boilers and machinery and such other
fixtures used in connection with the operation of the building on the Demised
Premises including without limitation any and all replacements made by Lessee.
In addition to any indemnities contained in this Lease, the Lessee shall
indemnify and save the Lessor harmless from and against any and all costs,
expenses, claims, losses, damages, fines, or penalties, including reasonable
counsel fees at both trial and appellate levels, because of or due to the
Lessee's failure to comply with the foregoing, and the Lessee shall not call
upon the Lessor for any disbursement or outlay of money whatsoever, and hereby
expressly releases and discharges the Lessor of and from any liability or
responsibility whatsoever in connection therewith.
20. Real Estate Taxes:
Lessee shall pay to Lessor forthwith upon demand any real estate
taxes, and any other publicly authorized imposition, however styled, levied
against the Demised Premises (including, without limitation, all improvements
thereon) for the year 1999 (there shall be proration for 1999 taxes based upon
the Lessee's possession of the subject property during said year) and for each
year of the term of this lease. In addition to any other remedies available to
Lessor, Lessor shall have all of the remedies for the collection of said taxes
as are provided Lessor under the terms of this lease for the collection of rent.
The parties recognize that the term of this lease ends on July 31, 2002, and
accordingly agree that on the last day of the term of this lease lessee shall
pay to Lessor the Lessee's prorata share of all real estate taxes and other
publicly authorized impositions levied against the Demised Premises based upon
the prior years tax. Within ninety (90) days after Lessor's receipt of the real
estate tax bill from the appropriate governmental authority, or such
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other reasonable time thereafter, as determined by Lessor in its sole and
absolute discretion, Lessor will certify to Lessee the amount of actual taxes
due and payable on the premises, taking into account all applicable discounts
for early payment of the taxes, and if the amount of estimated taxes paid by the
Lessee is less than the actual amount of real estate taxes, the Lessee shall
remit the balance due Lessor within ten (10) days of such billing. If the Lessee
has overpaid its share of taxes, the Lessor shall credit such overpayment to the
Lessee's tax billing for the following year. The failure of Lessor to provide
such certification within the time prescribed above shall not relieve the Lessee
of its obligations generally or for the specific year in which any such failure
occurs.
For the tax year in which the term of the agreement commences or
terminates, and for the tax year in which any extension term, if any, terminates
the above provisions relating to real estate taxes shall apply, but Lessee's
liability for real estate taxes for such year shall be subject to prorata
adjustment based upon the number of days of such tax year falling within the
term during which the Lessee occupies the premises.
For the purposes of the Article, the term "real estate taxes" shall
be interpreted in its broadest sense and shall include but not be limited to
public impositions not in existence during the year of the Commencement Date of
this Lease but hereafter come into existence.
The Lessor shall furnish the Lessee with copies of real estate tax
bills.
The Lessee shall, at its own costs and charges, bear, pay and
discharge all taxes, assessments, whether general or special, ordinary or
extraordinary, for public betterments or improvements or otherwise, water and
sewer taxes, water and sewer rates and/or meter charges, charges for setting,
resetting, replacing or repairing meters in any building ow standing upon or
which may hereafter be erected upon the demised premises or any part thereof and
any and all other sums, payments or licenses laid, levied, assessed, charged or
imposed upon or growing due and payable out of liens upon, or for or by reason
of, said demised premises or any part thereof, including personalty located
therein, the leasehold estate hereby created, and the sidewalks and streets in
front of or appurtenant to the same by virtue of any present or future law,
order or ordinance of any applicable taxing district, and each and every other
sum or sums of money which in any event or upon any contingency herein mentioned
or provided for or pursuant to any covenant or provision hereof. The Lessee
shall from time to time, upon reasonable request, exhibit vouchers and receipts
for all such payments to Lessor, except with respect to payment of real estate
taxes, the method of payment for which is provided in this agreement. Upon
default of any such sums by the Lessee for fifteen (15) days after any such sums
shall have become payable, Lessor may, upon five (5) days written notice to
Lessee, pay the same and the provisions set forth herein pertaining to default
and/or reimbursement shall be immediately applicable; provided, however, that
should any such item be payable without penalty or interest for more than thirty
(30) days after the same becomes payable, then the time in which the Lessee may
pay the same shall expire five (5) days prior to the last day on which such
payment may be made without interest or penalty.
The Lessee shall have the right in good faith to contest or review
by legal proceedings or in such other manner as they deem suitable, which
proceedings, if instituted, shall be conducted promptly at the Lessee's sole
expense and cost and free of expense or cost to Lessor, any such taxes,
assessments or other charges required by the terms hereof to be paid by the
Lessee, provided that Lessee makes all such contested payments and provides such
security as Lessor may require.
The Lessee shall pay as additional rent to Lessor during the term of
this agreement all real estate taxes levied or assessed against the premises by
any lawful authority, in equal monthly installments in such amounts as are
estimated and billed each year by Lessor, plus sales tax thereon, each such
installment being due on the first day of each month.
21. Exemption of Lessor:
Lessor and Lessor's agents, employees and contractors shall not be
liable for, and Lessee hereby releases all claims for, any injury or damage
which may be sustained by the person, goods, wares, merchandise or property of
Lessee, its employees, invitees or customers, or any person claiming through
Lessee, or any other person in or about the Demised Premises caused or resulting
from fire, steam, electricity, gas, water or rain which may leak or flow from or
into any part of the Demised Premises, or from the breakage, leakage,
obstruction or other defects of the pipes, elevators, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures of the same, whether
the said damage or injury resulting from conditions arising upon the Demised
Premises or upon other portions of the building of which the Demised Premises
are a part, or from other sources. Lessor shall not be liable for any damages
arising from any act or neglect of any other tenant in the building of which the
Demised Premises are a part. Neither Lessor nor Lessor's agents shall be liable
for any damages to property of Lessee entrusted to employees or agents of the
Lessor, nor for any damage or loss of any property of Lessee by theft or
otherwise.
Cleanliness, Waste, and Nuisance: Lessee shall keep the Demised
Premises at all times in a neat, clean and sanitary condition, shall neither
commit nor permit any waste, pollution,
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hazardous, chemicals or substances, except as specifically allowed pursuant to
this lease hereinafter, or nuisance thereon, and shall keep the walks adjacent
thereto free from waste or debris.
Termites: In the event the Demised Premises should become infested
with termites, Lessee agrees, at its cost and expense, to remedy such condition,
and remove therefrom all of its property which may be damaged as a result of the
extermination of the building. Lessor has no liability to Lessee for said
condition, for damage or theft of Lessee's property or for injury to Lessee's
person. Further, the lease shall continue in full force and effect and rent
shall not abate during the period of time lessee is remedying such condition.
The term "termites" as used herein shall be deemed to mean all wood destroying
organisms.
Damage to Person or Personal Property: The Lessee covenants that all
personal property placed on the premises shall be at the risk of the Lessee or
the owner thereof, and Lessor shall not be liable for any damage to any property
or person at any time in or on the leased premises or in said buildings from
gas, electricity, water, rain, wind or other source, whether they may leak into,
issue or flow from any part of said building, or from the pipes or plumbing
works of the same, or from any other place or quarter, or, irrespective of the
foregoing, for any damage from any cause, whether or not any such damage may
result from any act of omission or commission by any of Lessor's agents,
employees, servants or contractors. The Lessee shall give Lessor or to its
agents, prompt written notice of any accident or incident to, defect in, the
water pipes, gas pipes, warming or cooling apparatus or electric wires, and the
same will be remedied by the Lessee with due diligence.
No destruction to any building or improvement upon the demised
premises by fire, windstorm or other casualty shall entitle the Lessee to
surrender possession of the demised premises, to terminate this agreement, to
violate any of the provisions hereof or to cause any rebate or abatement in the
rent due or thereafter becoming due hereunder.
22. Affirmative Covenants of Lessee:
In addition to any other affirmative covenants of Lessee herein,
Lessee agrees (i) to comply with any and all requirements of any of the
constituted public authorities, and with the terms of any State or Federal
Statute or local ordinance or regulation applicable to Lessee or its use of the
Demised Premises, and save Lessor harmless from penalties, fines, costs,
expenses or damages resulting from failure to do so; (ii) to give to Lessor
prompt written notice of any accident, fire or damage occurring on or to the
Demised Premises; (iii) trailers and trucks shall not be permitted to remain
parked overnight in the sidewalk or pedestrian walkway area of the Demised
Premises; (iv) to keep all garbage and refuse in a proper container and to place
the same outside of the Demised Premises prepared for collection in the manner,
at the times and places, and in accordance with all municipal, county and state
regulations; (v) to keep the Demised Premises clean, orderly, sanitary and free
from objectionable odors and from insects; (vi) to conduct its business in the
Demised Premises in all respects in a dignified manner and in accordance with
the legal standards for the operation of an motor vehicle sales and rental
facility; (vii) Lessee shall not commit or suffer to be committed any waste upon
the Demised Premises or any nuisance; (viii) Lessee shall use, at Lessee's cost,
a pest extermination contractor at such intervals as may be necessary to keep
the Demised Premises free of pests; Lessee shall annually furnish to Lessor a
copy of a pest control contract complying with the foregoing; (ix) that all
mechanical apparatus, machinery and equipment shall be kept free of vibrations
and noise which may be transmitted beyond the Demised Premises, and no
objectionable odors shall be permitted to emanate or be dispelled from the
Demised Premises; (x) Lessee, at its expense, and shall install such fire
extinguishers and other safety equipment as required by law; (xi) to repair or
replace, at Lessee's sole cost and expense, any property of the Lessor, the
Demised Premises and the building of which it is a part, or any one or more of
the foregoing, damaged or destroyed by fire, other casualty, act or omission of
the Lessee, its agents, guests, invitees, contractors, successors and assigns,
or any of the foregoing; (xii) except for the making of mortgage payments, to
comply in all respects with the terms of any mortgages now or hereafter
encumbering the Demised Premises, so as not to place Lessor in default
thereunder.
The Lessee shall maintain all portions of the demised premises and
adjoining areas in a clean and orderly condition, free of dirt, rubbish and
unlawful obstructions. The Lessor shall not be required to furnish any services
or facilities or to make any repairs or alterations in or to the demised
premises or adjoining areas. The necessity for and adequacy of repairs to the
demised premises and adjoining areas pursuant hereto shall be measured by the
standard which is appropriate for improvements of similar construction and
class, provided that the Lessee shall in any event make all repairs necessary to
avoid any structural damage or injury to the building or parking areas.
The Lessor and its agent and other representatives do hereby reserve
the right to enter into and upon the demised premises or any part thereof at all
reasonable hours and days for the purpose of examining the same or making such
repairs or alterations as may be necessary for the safety and preservation
thereof. In case of the neglect or default of the Lessee in making the same,
Lessor may do so after reasonable notice to the Lessee, except that no such
notice shall be required in case of emergencies, and all costs and expenses
incident thereto with interest thereon at the highest legal rate permitted by
law shall be repaid by Lessee to Lessor as additional rent as provided for
hereafter. Lessor shall make every effort in the exercise of its rights under
this paragraph so as not to disrupt the business of Lessee.
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This section shall have the same force and effect at all times
during the term of this agreement as it has on the first day hereof. The Lessee
shall not be relieved of any duty hereunder by virtue of the fact that the term
hereof is close to expiration. If the requirement for making repairs or
replacements is imposed by any governmental authority, then such requirement for
repairs or replacement shall be complied with by the Lessee. Any repairs,
replacements, improvements, alterations or additions made by the Lessee must
conform to applicable governmental, building, zoning and health codes then in
effect.
The Lessor or its agents, shall have the right to enter upon the
demised premises at all reasonable times and days in order to examine it, and,
after the expiration date in sub-section 2 of section 35, if the option is not
exercised, to show it to prospective purchasers or lessees. During the last six
(6) months next preceding the expiration of the term hereof the Lessor or its
agents shall have the right, if the option is not exercised, to place notices on
the front of said premises or any portion thereof, except that said notices
shall not cover any windows in the building offering the premises "To Let" or
"For Sale" or otherwise as appropriate and the Lessee shall permit same to
remain thereon without hindrance or molestation.
If, during the last month of the term hereof the Lessee shall have
removed all, or substantially all of its personal property therefrom, the Lessor
may immediately enter and alter, renovate and redecorate the demised premises,
without elimination or abatement of rent and without liability to the Lessee for
any compensation, and such acts shall have no effect upon this agreement.
Lessee shall replace at the expense of Lessee any and all plate and
other glass damaged or broken from any cause whatsoever in and about the demised
premises for and in the name of Lessor during the term of this Lease.
23. Negative Covenants of Lessee:
In addition to any other negative covenants of Lessee herein, Lessee
agrees that it will not do any of the following without the prior consent in
writing of the Lessor; (a) use or operate any mechanical apparatus, equipment or
machinery that is causing harm to the building or illegally disturbing to
others; nor shall Lessee use any loud speakers, televisions phonographs, radios
or other devices in a manner not permitted by applicable law, regulation or
rule, nor display merchandise on the exterior of the Demised Premises either for
sale or for promotion purposes other than as permitted by applicable law, rule
or regulation; (b) do or suffer to be done any act, manner or thing
objectionable to the fire insurance companies whereby the fire insurance or any
other insurance now in force or hereafter to be placed on the Demised Premises
or any part thereof, or on the building of which the Demised Premises may be a
part, shall become void or suspended, or whereby the same shall be rated as a
more hazardous risk than at the date the Lessee received possession hereunder;
(c) cause any default to occur under any mortgages now or hereafter encumbering
the Demised Premises as a result of Lessee's occupancy or use of the Demised
Premises.
The Lessee shall not at any time occupy the demised premises in
violation of the certificate of occupancy issued therefor, and in the event any
governmental authority having jurisdiction thereof shall at any time contend or
declare by notice, violation order or in any other manner whatsoever, that the
conduct upon the demised premises is inconsistent with any law, regulation or
certificate of occupancy, the Lessee shall immediately cease and desist or cause
such conduct to be immediately abated until such time as a court having
competent jurisdiction rules that same is proper. The Lessee shall not use or
permit the use of the demised premises for any purpose which, in the reasonable
opinion of the Lessee, would adversely affect its value other than as a motor
vehicle sales, rental and repair facility.
24. Signs:
Lessee will not place or suffer to be placed or maintained at the
Demised Premises any sign, awning, or canopy, without written notification
having first been sent to Lessor. At the termination of this lease all permitted
signs, awnings, canopies and advertising materials shall be removed by Lessee
and the surface upon which same were affixed shall be restored to its original
condition, all at Lessee's sole cost and expense. Those items put on new
construction do not have to be removed, but remain a part of the Demised
Premises.
25. Rights of Lessor:
In addition to any other rights reserved to Lessor herein, Lessor
reserves the following additional rights with respect to the Demised Premises:
(a) upon reasonable notice, and from time to time during normal business hours,
by itself or its duly authorized agents, to go upon and inspect the Demised
Premises and every part thereof; (b) in an emergency to go upon and inspect the
Demised Premises and every part thereof, and at its option to make repairs,
alterations and additions to the Demised Premises or the building of which the
Demised Premises are a part; (b) after notice from either party of intention to
terminate this lease, or at any time after expiration date has passed and the
Lessee has not exercised the option to purchase in section 35, a "For Rent"
sign, "For Sale" sign, or both "For Rent and "For Sale" signs, and all of said
signs shall be placed upon
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such part of the Demised Premises and the building of which the Demised Premises
are a part, or either, as Lessor shall require, except on door or doors leading
into the Demised Premises. Prospective purchasers or tenants authorized by
Lessor may inspect the Demised Premises at reasonable hours at any time, and
from time to time after notice from either party of intention to terminate this
lease, or at any time after expiration date has passed and the Lessee has not
exercised the option to purchase in section 35; (c) in an emergency, as needed,
to install or place upon, or affix to, the roof and exterior walls of the
Demised Premises or the building of which the Demised Premises are a part
equipment, signs, displays, antennae, and any other object or structure of any
kind; (d) in an emergency to make alterations or additions to buildings of or
the grounds in which the Demised Premises are contained; (e) if, at any time
after expiration date has passed and the Lessee has not exercised the option to
purchase in section 35 (whether the Initial Term or a Renewal Term), Lessee
shall have removed all or substantially all of Lessee's property from the
Demised Premises, Lessor may immediately reenter the Demised Premises and
commence preparation of it for any future tenant, furthermore, the Lessor may
allow such future tenant to occupy all or any portion of the Demised Premises;
and these acts shall have no effect on Lessee's obligations under this Lease and
Lessee shall be entitled to no abatement or diminution of rent, as a result
thereof; and (f) to retain a pass key to the Demised Premises, and to enter the
Demised Premises at any time, and from time to time, in the event of a happening
which the Lessor deems to be an emergency, for the purpose of removing additions
or alterations made by the Lessee to the Demised Premises without the consent of
Lessor, and for such other reason as Lessor deems appropriate.
26. Assignment and Subletting:
A. Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise encumber all or any part of Lessee's interest in
this lease, the Lessee's fixtures in the Demised Premises, and shall not sublet
all or any part of the Demised Premises, and, if Lessee is a corporation, shall
not permit a transfer of effective voting control of Lessee without the prior
written consent of Lessor in each instance, and any attempted assignment,
transfer, mortgage, encumbrance or subletting without such consent shall, at the
option of Lessor, constitute grounds for termination of this lease or an event
of default under section 7 of this lease. If it shall be determined that
Lessor's consent be unreasonably withheld, Lessor shall in no event be liable
for any money judgment by reason thereof. Any assignment or sub-letting of this
lease, without the written consent of Lessor, shall constitute a breach of this
agreement.
B. No Release of Tenant: No subletting or assignment, even with the
consent of Lessor, shall relieve Lessee of its obligation to pay the rent and to
perform all of the other obligations to be performed by Lessee hereunder. The
acceptance of rent by Lessor from any other person shall not be deemed to be a
waiver by Lessor of any provision of this lease or to be a consent to any
assignment of subletting.
C. Written Instrument: Each subletting or assignment to which Lessor has
consented shall be by an instrument in writing in form satisfactory to Lessor,
and shall be executed by the sublessor or assignor and by the sublease or
assignee in each instance, as the case may be, and each sublessee or assignee
shall agree in writing for the benefit of the Lessor herein to assume, to be
bound by, and to perform the terms, covenants and conditions of this lease to be
done, kept and performed by the Lessee. One executed copy of such written
instrument shall be delivered to the Lessor.
27. Performance of Lessee's Covenants:
A. Lessee covenants and agrees that it will perform all agreements
herein expressed on its part to be performed, and that it will promptly upon
receipt of written notice of non-performance thereof, comply with the
requirements of such notice, and, further, that if Lessee shall not comply with
such notice to the satisfaction of Lessor within forty eight (48) hours after
delivery thereof (or if such compliance cannot reasonably be completed within
forty eight (48) hours, if Lessee shall not commence to comply within such
period and thereafter proceed to completion with due diligence) Lessor may, at
its option, do or cause to be done any or all of the things specified in said
notice, and in so doing Lessor shall have the right to cause its agents,
employees and contractors to enter upon the Demised Premises and, in such event,
shall have no liability to Lessee for any loss or damage resulting in any way
from such action, and Lessee agrees to pay promptly upon demand any expense
incurred by Lessor in taking such action, any such sum to be collectible from
Lessee as additional rent hereunder, and shall be paid by Lessee to Lessor
forthwith upon demand.
B. The Lessee shall pay as additional rent all sums of money or charges
required to be paid by Lessee under this lease, whether or not the name be
designated additional rent. If such amounts or charges are not paid at the time
provided in this lease, they shall, nevertheless, if not paid when due, be
collectible as additional rent forthwith upon demand of Lessor, but nothing
herein contained shall be deemed to suspend or delay the payment of any amount
of money or charge at the time the same becomes due and payable hereunder, or
limit any other remedy of the Lessor.
28. Notices:
Wherever in this lease it shall be required or permitted that notice
or demand be
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given or served by the Lessee to the Lessor, such notice or demand shall not be
deemed to have been duly given or served unless same is in writing, and mailed
certified mail, return receipt requested, postage prepaid, and deposited in the
United States mail, addressed to Lessor at the address set forth on page one of
this lease. Such notice shall not be deemed to be received until actually
received by Lessor. The address of Lessor may be changed from time to time by
Lessor serving notice to Lessee as above provided.
In each instance where it shall be required or permitted that notice
or demand be given or served upon Lessee, any such notice or demand may be
served upon Lessee by personally serving same on Lessee, or any employee of
Lessee, found at or upon the Demised Premises, or by mailing same in an envelope
or wrapper properly addressed to Lessee in care of the Demised Premises, with
postage thereon fully prepaid, or by posting same on the front door of the
Demised Premises, or by any other method permitted by law.
29. Limitation of Liability:
The parties do hereby agree that if there shall at any time be or
arise any liability on the part of Lessor by virtue of this lease or because of
the relation hereby established, whether due to the negligence, breach or
default of Lessor, or otherwise, such liability of Lessor is and shall be
limited to a sum not to exceed the monthly rental payment required to be made
hereunder during the first two months of the term of this lease, or Lessee's
actual damage, whichever is less, which sum shall be paid by Lessor and received
by Lessee as agreed and liquidated damages. Such liability as herein set forth
is fixed as agreed and liquidated damages and not as a penalty and this
liability shall be complete and exclusive.
30. Default by Lessor:
Lessee agrees, in the event of any act or omission by Lessor which
would give Lessee the right to terminate this lease or to claim a partial or
total eviction, or to declare the Lessor in default hereunder, not to exercise
such right (i) until Lessee has notified in writing the Lessor such act or
omission; (ii) until a reasonable period, not exceeding thirty (30) days, shall
have elapsed following the giving of such notice; and (iii) unless Lessor shall
not have so commenced within such thirty (30) day period to remedy such act or
omission or to cause the same to be remedied. During the period between the
giving of such notice and the remedying of such act or omission, the rental
herein recited shall not be abated.
31. Miscellaneous:
A. Acceptance of Demised Premises: The Lessee acknowledges that the
building at the Demised Premises was in existence at the commencement of this
lease. Therefore, it accepts (i) the design and construction of the building at
the Demised Premises are a part; (iii) the existing parking and access areas;
and (iv) the other areas, as satisfactory. In addition to the aforestated, the
Lessee acknowledges it has inspected the Demised Premises, has had access to all
materials requested regarding the Demised Premises and accepts the said premises
in its existing condition "as is."
B. Accord and satisfaction: No payment by Lessee or receipt by
Lessor of a lesser amount than the rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent nor shall any endorsement
or statement on any check or any letter be deemed an accord and satisfaction,
and Lessor may accept such check or payment without prejudice to Lessor's right
to recover the balance of such rent or pursue any other remedies in this
Agreement or as provided by law, or both of the foregoing. No receipt of money
by the Lessor from the Lessee after the termination of this Lease or after the
service of any notice or after the commencement of any suit, or after final
judgment for possession of the Demised Premises shall reinstate, continue or
extend the term of this lease or affect any such notice, demand or suit.
C. Brokers: Lessee represents and warrants that there are no claims
for brokerage commission or finder's fee in connection with the execution of
this lease and agrees to indemnify Lessor against and hold harmless from all
liabilities arising from any such claim, including attorneys' fees at both trial
and appellate levels.
D. Exculpation: Notwithstanding anything to the contrary in this
lease contained (each and every term, covenant, condition and provisions of this
article) Lessee agrees that it shall look solely to the estate and property of
the Lessor in the land and building comprising the building of which the Demised
Premises are a part for the collection of any judgment (or other judicial
process) requiring the payment of money by Lessor in the event of any default or
breach by Lessor with respect to any of the terms, covenants and conditions of
this lease to be observed and performed by Lessor and no other property or
estates of Lessor shall be subject to levy, execution or other enforcement
procedures for the satisfaction of Lessee's remedies.
E. Waiver: The waiver by Lessor of any breach of any term, covenant
or condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The
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subsequent acceptance of rent hereunder by Lessor shall not be deemed to be a
waiver of any preceding breach by Lessee of any term, covenant or condition of
this lease, other than the failure of Lessee to pay the particular rental so
accepted, regardless of Lessor's knowledge of such preceding breach at the time
of acceptance of such rent. No covenant, term or condition of this lease shall
be deemed to have been waived by Lessor, unless such waiver be in writing by
Lessor. The Lessor's failure to exercise any of the rights given Lessor
hereunder shall not operate to forfeit any of the said rights.
F. Construction: This Lease Agreement, and any documents or
instruments delivered pursuant thereto, shall be construed without regard to the
identity of the person who drafted the various provisions hereof. Moreover, each
and every provision of this Lease Agreement, and such other related documents or
instruments delivered pursuant thereto, shall be construed without regard to the
identity of the person who drafted the various provisions hereof. Moreover, each
and every provision of this Lease Agreement, and such other related documents
and instruments, shall be construed as though all parties hereto participated
equally in the drafting thereof. As a result of the foregoing, any rule or
construction that a document is to be construed against the drafting party shall
not be applicable. The terms "Lease" "Lease Agreement" or "Agreement" shall be
inclusive of each other, also to include renewals, extensions or modifications
of this Lease. Words of any gender used in this Lease shall be held to include
any other gender and words in the singular shall be held to include the plural
and the plural to include the singular when the sense requires.
G. Waiver of Jury Trial and Counterclaims: The parties hereto waive
trial by jury in connection with proceedings or counterclaims brought by either
of the parties hereto against the other. In the event of suit by the Lessor to
collect rent, Lessee shall not interpose any counterclaim in such proceeding;
provided, however, Lessee may assert such counterclaim in a separate action
brought by Lessee.
H. Captions and Paragraph Numbers: The captions, paragraph numbers,
subparagraph numbers and index appearing in this lease are inserted only as a
matter of convenience and in no way define, limit, construe or describe the
scope of intent of such paragraphs or sub-paragraphs of the lease nor in any way
affect this lease.
I. Transfer of Lessor's Interest: In the event of any transfer or
transfers of Lessor's interest in the Demised Premises, the transferor shall be
automatically relieved and freed of any and all future obligations and
liabilities on the part of Lessor accruing from and after the date of such
transfer, and Lessee agrees to look solely to the grantee of the fee interest
for the performance of all of the terms, covenants, conditions, agreements and
obligations contained in this Agreement, from the date of the transfer of the
Demised Premises.
J. Separability: If any one or more of the provisions of this lease,
or the applicability of any such provision to a specific situation, shall be
held invalid or unenforceable such provision shall be modified to the minimum
extent necessary and in accordance with the intent of such provision to make it
or its application valid and enforceable, and the validity and enforceability of
all other provisions of this lease and all other applications of such provision
shall not be affected thereby; however, if such provision or the applicability
of any such provision to a specific situation cannot be made valid and
enforceable, and in accordance with the intent of such provision by such minimal
modification, then such provision shall be stricken from this lease and the
remaining provisions contained herein shall remain in full force and effect.
K. Use: Lessee shall use and occupy the Demised Premises only for
use as motor vehicle sales and rental.
Lessee shall not at any time use, suffer, occupy or permit the
Demised Premises to be used or occupied in any manner which would in any way
violate any term, covenant, provision or agreement contained in this lease,
violate any certificate of occupancy issued for the building of which the
Demised Premises form a part, and shall not use, suffer or permit the Demised
premises to be used or occupied in whole or in part in a manner which may
violate the laws, orders, ordinances, rules, regulations or requirements of any
department of the federal, state or municipal governments or of any department,
subdivision, bureau or office thereof. Lessor makes no representation that the
use permitted or to be made by the Lessee of the Demised Premises is lawfully
permitted, and in the event such use is not lawfully permitted rent shall not
abate hereunder. No motor vehicle repair or engine cleaning or cleaning using
environmentally hazardous materials shall be done.
L. Time of Essence: Time is of the essence with respect to the
performance of every provision of this lease in which time of performance is a
factor.
M. Recording: The Lessor shall have the right to record this lease
and, at the request of the Lessor, the Lessee agrees to execute the necessary
acknowledgment required to record the lease, in either short form or long form.
Lessee shall not record this lease without the written consent of Lessor, and,
in the event of such recording without written consent of Lessor, Lessor shall
have the right to bring an action to expunge this lease from the public records
and shall be
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entitled to damages, costs, injury to said contents, leasehold improvements or
personal property whether by way of subrogation, assignment or claims or
otherwise. Pursuant to Section 713.10, Florida Statutes, 1995, the parties shall
record a memorandum limiting Lessor's liability to the full extent of the law.
32. Environment:
Both the Lessee and the Demised Premises shall remain in compliance
with all applicable laws, ordinances, and regulations (including consent decrees
and administrative orders) relating to public health and safety and protection
of the environment, including, but not limited to, those statutes, laws,
regulations, and ordinances identified herein, all as amended and modified from
time to time (collectively, "environmental laws"). All governmental permits
relating to the use or operation of the premises required by applicable
environmental laws are and will remain in effect, and Lessee will comply with
them.
Notwithstanding the general prohibition contained in this section
the Lessee, to the extent necessary to carry on the motor vehicle preparation
and repair which is a part of its business, but only to the extent allowed by
and in compliance with the law, after receiving any necessary permits,
certificates or approvals, the Lessee may store, use, transport, treat and
dispose of hazardous materials as allowed by law, in the quantities and form
allowed by law, on the Demised Premises. Prior to and during such materials
being on the Demised Premises the Lessee shall have the equipment and
procedures, including any safety or emergency equipment and procedures, for
using, storing, transporting, treating, caring for, and disposing of said
materials reviewed and approved by a qualified engineer(s) with recognized
expertise in contamination assessment, and control and use of hazardous
materials, acceptable to the Lessor; so as to protect against the improper
handling of said materials and adhere to the highest standards recognized for
the handling of such materials and safeguarding of the Demised Premises.
Said engineer(s) shall, during the term of this lease, continually
supervise the equipment and procedures for handling all "hazardous material" for
Lessee. The use of such an engineer is an essential term of this lease. The
Lessee and its engineer(s) shall, upon receipt of a written request, provide to
Lessor any information or materials requested regarding "hazardous materials" on
or effecting the Demised Premises. Recognizing that the safe and secure
handling, use, transportation, disposal and storage of hazardous materials on
the Demised Premises is the complete responsibility of the Lessee, the Lessee
shall comply with the highest recognized standards for safeguarding the Demised
Premises. Any problems with hazardous materials on the Demised Premises shall be
an emergency for purposes of allowing the Lessor access to the Demised Premises
under the provisions of this lease.
Except as explicitly stated above, the Lessee will not permit to
occur any release, generation, manufacture, storage, treatment, transportation,
or disposal of "hazardous material", as that term is defined in any paragraph
herein, on, in under, or from the premises. Lessee will promptly notify Lessor,
in writing, if Lessee has or acquired notice or knowledge that any hazardous
material has been or is threatened to be released, discharged, disposed of,
transported, or stored on, in, under, or from the premises; and if any hazardous
material is found on the demised premises, Lessee, at its own expense and cost,
will immediately take such action as is necessary to detain the spread of and
remove the hazardous material to the complete satisfaction of the Lessor and the
appropriate governmental authorities or entities.
Lessee will immediately notify landlord and provide copies upon
receipt of all written complaints, claims, citations, demands, inquiries,
reports, or notices of any kind or nature, relating to the condition of the
demised premises or compliance with environmental laws. Lessee will promptly
cure and have dismissed with prejudice any of those actions and proceedings to
the satisfaction of the Lessor. Lessee will keep the premises free of any lien
imposed pursuant to environmental laws.
Lessor will have the right at all reasonable times and from time to
time to conduct environmental audits of the Demised Premises, and Lessee will
cooperate in the conduct of those audits. The audits will be conducted by a
consultant of Lessor's choosing, and, if any hazardous material not allowed or
improperly or unsafely handled is detected or if a violation of any of the
warranties, representations, requirements or covenants contained in this section
is discovered, the fees and expenses of such consultant will be paid by Lessee
and will be paid as additional rent under this agreement on demand of Lessor.
If Lessee fails to comply with any of the foregoing warranties,
requirements, provisions, representations, and covenants, Lessor may cause the
material to be removed from the premises or take such other remedial and
protective action as is necessary. The costs of hazardous material removal and
any other cleanup (including transportation and storage costs) will be
additional rent under this agreement, whether or not a court has order the
cleanup and those cost will become due and payable on demand by Lessor. Lessee
will give Lessor, its agents, and employees, access to the premises to remove or
otherwise clean up any hazardous, dangerous or contaminated material. Lessor,
however, has no affirmative obligation to remove or otherwise clean up any
hazardous, dangerous or contaminate material.
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Lessee agrees to indemnify, defend (with counsel reasonably
acceptable to Lessor and at Lessee's sole cost and expense), and hold Lessor and
Lessor's affiliates, shareholders, directors, officers, employees, and agents
free and harmless from and against all losses, liabilities, obligations,
penalties, claims, litigation, demands, defenses, costs judgments, suits,
proceeding damages (including but not limited to, consequential damages),
disbursements, or expenses and fees incurred in investigating, defending, or
prosecuting any litigation, claim, or proceeding) that may at any time be
imposed upon, incurred by, or asserted or awarded against Lessor any of them in
connection with or arising from or out of:
(a) any hazardous material, on, in, under, or affecting all or
any portion of the devised premises;
(b) any misrepresentation, inaccuracy, or breach of any
warranty, covenant, or agreement contained or referred to in this section;
(c) any violation or claim of violation by Lessee of any
environmental law; or
(d) the imposition of any lien for the recovery of any costs
for environmental clean up or other response costs relating to the release or
threatened release of hazardous material.
This indemnification is the personal obligation of Lessee and will
survive termination of this agreement or the exercise of the option to purchase
in this agreement. Lessee, its successors, and assigns waive, release, and agree
not to make any claim or bring any cost recovery action against Lessor under
CERCLA, as that term is defined in this section, or any state equivalent or any
similar law now existing or enacted after this date. To the extent that Lessor
is strictly liable under any such law, regulation, ordinance, or requirement,
Lessee's obligation to Lessor under this indemnity will also be without regard
to fault on the part of lessee with respect to the violation or condition that
results in liability to Lessor.
For purposes of this agreement, "hazardous material" means:
(1) "hazardous substances" or "toxic substances" as those
terms are defined by the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA), 42 U.S.C. Section 9601, et seq., or the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1802, both as amended to this
date and as amended after this date;
(2) "hazardous wastes," as that term is defined by the
Resource Conservation and Recovery Act (RCRA), 42 U.S.C. Section 6902, et seq.,
as amended to this date and as amended after this date;
(3) any pollutant, contaminant, or hazardous, dangerous, or
toxic chemical, material, or substance within the meaning of any other
applicable federal, state, or local law, regulation, ordinance, or requirement
(including consent decrees and administrative orders) relating to or imposing
liability or standards of conduct concerning any hazardous, toxic, or dangerous
waste substance or material, all as amended to this date or as amended after
this date;
(4) crude oil or any fraction of it that is liquid as standard
conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds
per square inch absolute);
(5) any radioactive material, including any source, special
nuclear, or by-product material as defined by 42 U.S.C. Section 2011, et seq.,
as amended to this date or as amended after this date;
(6) asbestos in any form or condition; and
(7) polychlorinated bipehenyls (PCB's) or substances or
compounds containing PCB'S.
33. Lessee's Resources:
Lessee's sole recourse against Lessor, and any successor to the
interest of Lessor in the premises, is to the interest of Lessor, and any
successor, in the premises; including the right to seek specific performance of
the option to purchase in section 35. Lessees will not have any right to satisfy
any judgment which it may have against Lessor, or any successor, from any other
assets of Lessor, or any successor.
In this Section the terms "Lessor" and "successor" include the
shareholders, venturers, and partners of Lessor and successor and the officers,
directors, and employees of Lessor and successor.
34. Effective Date: The effective date of this Lease shall be the date it
is last signed
18
<PAGE>
by the Lessor by Lessee. Submission of this instrument for examination and
consideration does not constitute a reservation of or option for the Demised
Premises, The instrument becomes effective as a lease only upon execution and
delivery both Lessor and Lessee.
35. OPTION TO PURCHASE: The Option, granted by Lessor (the "Optionor"), to
Lessee, (the "Optionee") is as follows:
1. GRANT OF OPTION: In consideration of the sum of One and 00/100
Dollars ($1.00) paid by the Optionee to the Optionor on the date this instrument
is executed by both parties, the Optionor grants to Optionee the exclusive
option to purchase the Demised Premises for $980,000.00 in accordance with the
terms and conditions set forth herein and in the annexed form of Contract for
Sale and Purchase (see Exhibit "B" attached hereto) to be closed on July 31,
2002.
2. EXPIRATION DATE: This option shall expire at midnight on July 31,
2002, (the "Expiration Date"). Except that this option shall expire earlier in
the event that the Lessee defaults under the lease agreement set forth above. In
the event of a default by the Lessee under the lease agreement this option shall
expire on the date that the Lessor exercises its right and option to terminate
the lease.
3. NOTICE OF EXERCISE: This option may be exercised at any time
prior to the Expiration Date with the closing to take place on or before July
31, 2002. The option may only be exercised by Optionee giving written notice to
Optionor sent by registered or certified mail. The option will not be
effectively exercised unless and until the Optionor has actually received the
written notice of the exercise of the option and the deposit described herein.
Also, in order for this Option to Purchase to be effectively exercised the
Optionee shall simultaneously with the giving of written notice to Optionor,
deposit with Robert J. Bogdanoff, Esquire's Trust Account, by local cashiers
check, the sum of Ten Thousand and/ 00/100 Dollars ($10,000.00) as deposit under
the option.
4. CONTRACT FOR SALE AND PURCHASE: (1) If the Optionee has given
proper and timely notice of the exercise of the option to Contract for Sale and
Purchase attached hereto as Exhibit "B" shall be applicable to the Optionee's
purchase of the Demised Premises. It shall not be necessary for either Optionee
or Optionor to sign the Contract for Sale and Purchase since Optionor and
Optionee are executing this option to purchase and have agreed herein that on
the proper and timely exercise by Optionee of the option, the Contract for Sale
and Purchase shall become effective.
(2) (a) If the Optionee elects in the timely notice the
Optionor will grant a purchase money mortgage, see attached Exhibit "B" for
additional terms, in the amount of $630,000.00 with interest at the rate of ten
percent (10%) per annum amortized over thirty (30) years and the balance due,
balloon payment due, in ten (10) years. If the said note is prepaid prior to the
second year then a prepayment penalty in the amount of eight percent (8%) shall
be paid in addition to the full amount of interest due for the first year. (b)
The said mortgage shall contain clauses prohibiting on the subject property any
mechanical repair work to any motor vehicles, parts thereof, machinery or
equipment, prohibiting engine or parts cleaning, other than exterior washing of
motor vehicles with non-toxic or other hazardous or dangerous materials or
equipment, and prohibiting any and all activity that could cause or may result
in any possible environmental contamination of any kind. (c) The said mortgage
shall also contain clauses requiring Optionee to abide by and comply with any
and all applicable requirements of the State of Florida, Palm Beach County, Palm
Beach County Building and Zoning Department and to affirmatively maintain the
current zoning uses, including special exception and site plan requirements and
terms and allow for injunctive relief in favor of Optionor in the event of any
breach or threatened breach of this paragraph so irreparable harm may not occur.
(d) The option rights may be assigned only to a corporation in which the
Optionee is the sole owners. (e) The subject property is being sold in "As Is"
condition only. Purchaser having had ample time to conduct any and all
investigation and enquiry prior to exercising the option rights. No warranties
or representations regarding the subject property, if any, shall survive the
closing. (f) If the option is exercised and the Seller/Optionor desires to have
the transaction performed as a tax free exchange or reduced tax transfer under
Federal tax law, then, in that event, the Buyer/Optionee shall execute and/all
documents, perform all actions, and so conduct the transaction so as to
effectuate the intended transfer as a tax free exchange or reduced tax transfer
under Federal tax law for Seller/Optionor.
5. FAILURE TO EXERCISE OPTION: If the Optionee does not properly
exercise this option, or if it terminates because of a default of the Lessee
under the lease, the sum of Ten and 00/100 Dollars ($10,000.00) paid by the
Optionee shall be retained by the Optionor as consideration for the grant of the
option free of all claims of the Optionee and neither party shall have any
further rights or claims under the option.
6. COMPLETE AGREEMENT: No prior or present agreements or
representations shall be binding upon Optionor or Optionee relating to the
subject matter of this Option to Purchase unless included in this option and
which are not fully expressed herein. This Option to Purchase cannot be changed
or terminated orally or in any manner other than by a written agreement executed
by both parties to the option.
19
<PAGE>
7. ACQUISITION 0F TITLE BY OPTIONEE TO THE PREMISES PURSUANT TO THIS
OPTION TERMINATES OBLIGATIONS OF THE PARTIES UNDER THE LEASE EXCEPT AS SPECIFIED
HEREIN: In the event that the Optionee properly and timely exercises its option
to purchase and acquires the fee simple title to the Demised Premises in
accordance with the attached Contract for Sale and Purchase, then upon the
closing of the acquisition, the obligations of the Lessor and Lessee under this
Lease shall terminate. Except that the obligations of Lessee under paragraph 5,
16, 20, 21 and 32 of the Lease shall survive closing and shall survive
expiration or termination of the Lease.
8. BINDING EFFECT: Subject to the provisions herein contained, the
covenants and conditions herein contained shall apply to and bind the heirs,
legal representatives, and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals.
WITNESSES: LESSOR:
/s/ [ILLEGIBLE] /s/ Robert M. Oresky
- ------------------------------ ------------------------------
ROBERT M. ORESKY
/s/ [ILLEGIBLE]
- ------------------------------
WITNESSES: LESSEE:
/s/ [ILLEGIBLE] /s/ Andrea Parkoff
- ------------------------------ ------------------------------
Andrea Parkoff
/s/ [ILLEGIBLE]
- ------------------------------
LESSEE:
/s/ [ILLEGIBLE] /s/ Michael Parkoff
- ------------------------------ ------------------------------
Michael Parkoff
/s/ [ILLEGIBLE]
- ------------------------------
20
<PAGE>
LEGAL DESCRIPTION:
PARCEL I
BEGINNING AT THE NORTHWEST CORNER OF TRACT 68, HENRY'S MILITARY TRAIL ADDITION,
A SUBDIVISION RECORDED IN THE OFFICE OF THE CLERK OF THE CIRCUIT COURT, IN AND
FOR THE COUNTY OF PALM BEACH, FLORIDA, IN PLAT BOOK 21, PAGE 39, THENCE
SOUTHERLY 120' ON THE WEST LINE OF SAID TRACT 68 TO A POINT, THENCE EASTERLY
151.4' ON A LINE PARALLEL TO THE NORTH LINE OF SAID TRACT TO A POINT, THENCE
NORTHERLY 120' ON A LINE PARALLEL TO THE WEST LINE OF SAID TRACT 68 TO THE NORTH
LINE OF SAID TRACT 68, THENCE WESTERLY ALONG THE NORTH LINE 151.4' TO THE POINT
OF BEGINNING. (AS IN DEED BOOK 1008, PAGE 690, GROOMS TO MILLER)
LESS:
THE WEST 3 FEET OF THE WEST 151.4 FEET OF THE NORTH 120 FEET OF TRACT 68 OF
HENRY'S MILITARY TRAIL ADDITION, LYING IN SECTION 36, TOWNSHIP 43 SOUTH, RANGE
42 EAST, ACCORDING TO THE PLAT THEREOF AS RECORDED IN PLAT BOOK 21 AT PAGE 39 OF
THE PUBLIC RECORDS OF PALM BEACH COUNTY, FLORIDA, CONTAINING 360 SQUARE FEET,
MORE OR LESS. (AS IN OFFICIAL RECORD BOOK 540, PAGE 707, MILLER TO STATE OF
FLORIDA) AND
LESS:
THE NORTH 15 FEET (OF PARCEL I) AS IN OFFICIAL RECORD BOOK 1916, PAGE 755
(MILLER TO PALM BEACH COUNTY).
PARCEL II
BEGINNING AT A STAKE MARKING THE NORTHEAST CORNER OF THE JEAN A. PRICE LAND,
WHICH STAKE IS ON THE NORTH LINE OF AND 151.4 FEET EAST OF THE NORTHWEST CORNER
OF LOT 68 OF HENRYS MILITARY TRAIL ADDITION AS RECORDED IN PLAT BOOK 21 AT PAGE
39, IN THE OFFICE OF THE CLERK OF THE CIRCUIT COURT OF PALM BEACH COUNTY,
FLORIDA; THENCE SOUTH PARALLEL TO THE WEST LINE OF SAID LOT 68, ON THE EAST LINE
OF JEAN A. PRICE, 190 FEET TO AN IRON PIPE ON THE NORTH LINE OF MANCHESTER LANE;
THENCE EAST PARALLEL TO THE NORTH LINE OF SAID LOT 68 AND ON THE NORTH LINE OF
MANCHESTER LANE AND ITS PROJECTION 90 FEET TO AN IRON PIPE; THENCE NORTH
PARALLEL TO THE FIRST DESCRIBED COURSE 190 FEET TO AN IRON PIPE IN THE NORTH
LINE OF SAID LOT 68; THENCE WEST ON SAID NORTH LINE, 90 FEET TO THE POINT OF
BEGINNING. (AS IN DEED BOOK 860 PAGE 209, HENRY TO MILLER (6/11/49).
LESS:
THE NORTH 15 FEET (OF PARCEL II) AS IN OFFICIAL RECORD BOOK 1916, PAGE 755
(MILLER TO PALM BEACH COUNTY).
AS TO BOTH PARCELS:
SUBJECT TO A DECLARATION OF TAKING IN FAVOR OF THE UNITED STATES OF AMERICA AS
RECORDED IN JUDGEMENT LIEN BOOK 3 AT PAGE 11 (AVIGATION EASEMENT).
PARCEL III
THE EAST 148.4 FEET OF THE WEST 151.4 FEET OF THE SOUTH 70 FEET OF THE NORTH 190
FEET OF LOT 68, OF HENRY'S MILITARY TRAIL ADDITION, ACCORDING TO THE PLAT
THEREOF ON FILE IN THE OFFICE OF THE CLERK OF THE CIRCUIT COURT IN AND FOR PALM
BEACH COUNTY, FLORIDA, IN PLAT BOOK 21, PAGE 39.
<PAGE>
- --------------------------------------------------------------------------------
Contract for Sale and Purchase
FLORIDA ASSOCIATION OF REALTORS(R) AND THE FLORIDA BAR
- --------------------------------------------------------------------------------
PARTIES Robert M. Oresky ("Seller"),
-------------------------------------------------------------
of (Phone)
-------------------------------------------------- -------------------
and Andrea Parkoff and Michael Parkoff ("Buyer")
---------------------------------------------------------------
of (Phone)
-------------------------------------------------- -------------------
hereby agree that Seller shall sell and Buyer shall buy the following described
Real Property and Personal Property (collectively "Property") upon the following
terms and conditions, which include Standards for Real Estate Transactions
("Standards") on the reverse side hereof or attached hereto and riders and
addenda to this Contract for Sale and Purchase ("Contract")
I. DESCRIPTION.
(a) Legal description of the Real Property located in Palm Beach County.
Florida
--------------------------------------------------------------------------
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(b) Street address, city, zip of the Property is 216 North Military Trail,
West Palm Beach, FL 33415
(c) Personal Property--None
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--------------------------------------------------------------------------
II. PURCHASE PRICE: $980,000.00
--------------
PAYMENT.
(a) Deposit held in escrow by: Robert J. Boydinoff, Esq. in the amount of
$ 10,000.00
--------------
(b) Additional escrow deposit to be made within ____ days after Effective
Date (as defined in Paragraph III) in the amount of $
--------------
(c) Subject to AND assumption of existing mortgage in good standing in
favor of ___________________________ having an approximate present
principal balance of $
--------------
(d) Purchase money mortgage and note to Seller (see addendum) in the
amount of $
--------------
(e) Other purchase money mortgage $630,000.00
--------------
(f) Balance to close by U S cash LOCALLY DRAWN certified or cashier's
check or third-party loan, subject to adjustments or prorations
$340,000.00
--------------
III. TIME FOR ACCEPTANCE OF OFFER; EFFECTIVE DATE; FACSIMILE. If this offer is
not executed by and delivered to all parties OR FACT OF EXECUTION communicated
in writing between the parties on or before N/A the deposit(s) will, at Buyer's
option, be returned and this offer withdrawn. The date of Contract ("Effective
Date") will be the date when the last one of the Buyer and Seller has signed
this offer. A facsimile copy of this Contract and any signatures hereon shall be
considered for all purposes as originals.
IV. FINANCING
(a) If the Purchase Price or any part of it is to be financed by a third
party, this Contract is conditioned on Buyer obtaining a written
commitment within ___ days after Effective Date for (CHECK ONLY ONE) |_| a
fixed, |_| an adjustable, or |_| a fixed or adjustable rate loan in the
principal amount of $ ______ at an initial interest rate not to exceed
___% discount and origination fees not to exceed ___% of principal amount
and for a term of ____ years. Buyer will make application within ___ days
after Effective Date and use reasonable diligence to obtain a loan
commitment and, thereafter, to satisfy terms and conditions of the
commitment and close the loan. Buyer shall pay all loan expenses if Buyer
fails to obtain a commitment or fails to waive Buyer's rights under this
subparagraph within the time for obtaining a commitment or after diligent
effort, fails to meet the terms and conditions of the commitment, then
either party thereafter, by written notice to the other, may cancel this
Contract and buyer shall be refunded the deposit(s) or
(b) The existing mortgage described in Paragraph II(c) above has, (CHECK
ONLY ONE) |_|a variable interest rate or fixed interest rate of ___% per
annum at time of title transfer, some fixed interest rates are subject to
increase, if increased, the rate shall not exceed ___% per annum. Seller
shall, within ___days after Effective Date, furnish a statement from each
mortgagee stating the principal balance method of payment, interest rate
and status of mortgage. If Buyer has agreed to assume a mortgage which
requires approval of Buyer by the mortgagee for assumption, then Buyer
shall promptly obtain the necessary application and diligently complete
and return it to the mortgagee. Any mortgageee charge(s) not to exceed
$__________ shall be paid by Buyer. If Buyer is not accepted by mortgagee
or the requirements for assumption are not in accordance with the terms of
this Contract or mortgagee makes a charge in excess of the stated amount,
Seller or Buyer may rescind this Contract by written notice to the other
party unless either elects to pay the increase in interest rate or excess
mortgage charges.
V. TITLE EVIDENCE: At least 10 days before closing date, but no earlier than
20 days after Seller receives written notification that Buyer has obtained the
loan commitment or has been approved for the loan assumption as provided in
Paragraphs IV(a) or (b) above, or if applicable, waived the financing
requirements. (CHECK ONLY ONE) |X| Seller shall, at Seller's expense, deliver to
Buyer or Buyer's attorney. or |_| Buyer shall at Buyer's expense obtain (CHECK
ONLY ONE) |_|abstract of title, or |X| title insurance commitment (with legible
copies of instruments listed as exceptions attached hereto) and after closing an
owner's policy of title insurance.
VI. CLOSING DATE: This transaction shall be closed and the deed and other
closing papers delivered on [see option] unless modified by other provisions of
this Contract.
VII. RESTRICTIONS; EASEMENTS; LIMITATIONS: Buyer shall take title subject to
comprehensive land use plans, zoning restrictions, prohibitions and other
requirements imposed by governmental authority, restrictions and matters
appearing on the plat or otherwise common to the subdivision, public utility
easements of record, (easements are to be located contiguous to Real Property
lines and not more than 10 feet in width as to the rear or front lines and 7 1/2
feet in width as to the side lines, unless otherwise abated herein) taxes for
year or closing and subsequent years, assumed mortgages and purchase money
mortgages. if any (if additional items, see addendum); provided that there
exists at closing no violation of the foregoing and none prevent use of the
Property for ____________________________ purpose(s).
VIII. OCCUPANCY: Seller warrants that there are no parties in occupancy other
than Seller, but if Property is intended to be rented or occupied beyond closing
the fact and terms thereof and the tenant(s) or occupants shall be disclosed
pursuant to Standard F. Seller shall deliver occupancy of Property to Buyer at
time of closing unless otherwise stated herein. If occupancy is to be delivered
before closing, Buyer assumes all risks of loss to Property from date of
occupancy, shall be responsible and liable for maintenance from that date and
shall be deemed to have accepted Property in its existing condition as of time
of taking occupancy unless otherwise stated herein
IX. TYPEWRITTEN OR HANDWRITTEN PROVISIONS: Typewritten or handwritten
provisions riders and addenda shall control all printed provisions of this
Contract in conflict with them.
X. RIDERS: (CHECK those riders which are applicable AND are attached to this
Contract):
(a) |_| COASTAL CONSTRUCTION CONTROL LINE
(b) |_| CONDOMINIUM
(c) |_| FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT
(d) |_| VA/FHA
(e) |_| INSULATION
(f) |X| "AS IS"
(g) |_| HOMEOWNERS' ASSOCIATION DISCLOSURE
(h) |_| RESIDENTIAL LEAD-BASED HAZARD DISCLOSURE
(i) |_| _______________________________________
XI. ASSIGNABILITY: (CHECK ONLY ONE) Buyer |_| may assign and hereby be
released from any further liability under this Contract, |_| may assign but not
be released from liability under this Contract, or |X| may not assign this
Contract.
XII. DISCLOSURES:
(a) Radon is a naturally occurring radioactive gas that when accumulated
in a building in sufficient quantities may present health risks to persons
who are exposed to it over time. Levels of radon that exceed federal and
state guidelines have been found in buildings in Florida. Additional
information regarding Radon or Radon testing may be obtained from your
County Public Health unit.
(b) Buyer may have determined the energy efficiency rating of the
residential building, if any is located on the Real Property.
(c) If the Real Property includes pre-1978 residential housing then
Paragraph X (h) is mandatory
XIII. MAXIMUM REPAIR COSTS: Seller shall not be responsible for payments in
excess of
(a) $___0___ for treatment and repair under Standard D (if blank, then 2%
of the Purchase Price)
(b) $___0___ for repair and replacement under Standard N (if blank, then
3% of the Purchase Price)
XIV. SPECIAL CLAUSES, ADDENDA: If additional terms are to be provided, attach
addendum and CHECK HERE |_|
THIS IS INTENDED TO BE A LEGALLY BINDING CONTRACT. IF NOT FULLY
UNDERSTOOD, SEEK THE ADVICE OF AN ATTORNEY PRIOR TO SIGNING. THIS FORM
HAS BEEN APPROVED BY THE FLORIDA ASSOCIATION OF REALTORS AND THE FLORIDA BAR
Approval does not constitute an opinion that any of the terms and
conditions in this Contract should be accepted by the parties in a
particular transaction. Terms and conditions should
be negotiated based upon the respective interests, objectives and
bargaining positions of all interested persons
COPYRIGHT 1995 BY THE FLORIDA BAR AND THE FLORIDA ASSOCIATION OF REALTORS
- ------------------------- -------- --------------------------- ---------
(Buyer) (Date) (Seller) (Date)
Social Security or Tax ID # Social Security or Tax ID #
----------- -----------
- ------------------------- -------- --------------------------- ---------
(Buyer) (Date) (Seller) (Date)
Social Security or Tax ID # Social Security or Tax ID #
----------- -----------
Deposit under Paragraph II (a) received, IF OTHER THAN CASH, THEN SUBJECT
TO CLEARANCE_____________________________ (Escrow Agent)
BROKER'S FEE: The brokers named below, including [ILLEGIBLE]
<PAGE>
STANDARDS FOR REAL ESTATE TRANSACTIONS
[ILLEGIBLE] EVIDENCE OF TITLE: An abstract of title prepared or brought current
by a reputable and existing abstract firm (if not existing then certified as
correct by an existing firm) purporting to be an accurate synopsis of the
instruments affecting title to the Real Property recorded in the public records
of the county wherein the Real Property is located through Effective Date. It
shall commence with the earliest public records, or such later date as may be
customary in the county. Upon closing of the Contract, the abstract shall become
the property of Buyer, subject to the right of retention thereof by first
mortgagee until fully paid. (2) A title insurance commitment issued by a Florida
licensed title insurer agreeing to issue Buyer, upon recording of the
[ILLEGIBLE] to Buyer an owner's policy of title insurance in the amount of the
purchase price, insuring Buyer's title to the Real Property, subject only to
liens, encumbrances, exceptions or qualifications provided in the Contract and
those to be discharged by Seller at or before closing. Seller shall convey
marketable title subject only to liens, encumbrances, exceptions or
qualifications provided in the Contract. Marketable title shall be determined
according to applicable Title Standards adopted by authority of the Florida Bar
and in accordance with law. Buyer shall have 30 days, if abstract, or 5 days, if
title commitment, from date of receiving evidence of title to examine it. If
title is found defective, Buyer shall within 3 days thereafter, notify Seller
[ILLEGIBLE] writing specifying the defect(s). If defect(s) render title
unmarketable, Seller will have 30 days from receipt of notice to remove the
defects, failing which Buyer shall, within five (5) days [ILLEGIBLE] expiration
of the thirty (30) day period, deliver written notice to Seller either: (1)
extending the time for a reasonable period not to exceed 120 days within which
Seller shall use diligent [ILLEGIBLE] to remove the defects, or (2) requesting a
refund of deposit(s) paid which shall be immediately returned to Buyer. If Buyer
fails to so notify Seller, Buyer shall be deemed to have [ILLEGIBLE] the title
as it then is. Seller shall, if title is found unmarketable, use diligent effort
to correct defect(s) within the time provided therefor. If Seller is unable to
timely correct the defects Buyer shall either waive the defects, or receive a
refund of deposit(s), thereby releasing Buyer and Seller from all further
obligation under this Contract.
[ILLEGIBLE] PURCHASE MONEY MORTGAGE; SECURITY AGREEMENT TO SELLER: A purchase
money mortgage and mortgage note to Seller shall provide for a 15 (Fifteen) day
grace period in the event of default if a first mortgage and a 15-day grace
period if a second or lesser mortgage; shall provide for right of prepayment in
whole or in part with penalty, shall permit acceleration [ILLEGIBLE] event of
transfer of the Real Property, shall require all prior liens and encumbrances to
be kept in good standing and forbid modification of or future advances under
prior mortgage(s). [ILLEGIBLE] shall require Buyer to maintain policies of
insurance containing a standard mortgagee clause covering all improvements
located on the Real Property against fire and all perils included within
[ILLEGIBLE] term "extended coverage endorsements" and such other risks and
perils as Seller may reasonable require, in an amount equal to their highest
insurable value; and the mortgage, note [ILLEGIBLE] security agreement shall be
otherwise in form and content required by Seller; but Seller may only require
clauses and coverage customarily found in mortgages, mortgage notes and security
agreements generally utilized by savings and loan institutions or state or
national banks located in the county wherein the Real Property is located. All
Personal Property and leases [ILLEGIBLE] conveyed or assigned will, at Seller's
option, be subject to the lien of a security agreement evidenced by recorded
financing statements. If a balloon mortgage, the final payment will exceed the
periodic payments thereon.
SURVEY: Buyer, at Buyer's expense, within time allowed to deliver evidence of
title and to examine same, may have the Real Property surveyed and certified by
a registered Florida Surveyor. If the survey discloses encroachments on the Real
Property or that improvements located thereon encroach on setback lines,
easements, lands of others or violate any restrictions contract covenants or
applicable governmental regulation, the same shall constitute a title defect.
TERMITES: Buyer, at Buyer's expense, within the time allowed to deliver evidence
of title, may have the Property inspected by a Florida Certified Pest Control
Operator ("Operator") to determine if there is any visible active termite
infestation or visible damage from termite infestation in the Property. If
either or both are found, Buyer shall have 4 days from date of written notice
thereof within which to have cost of treatment, if required, estimated by the
Operator and all damage inspected and estimated by a licensed builder or general
contractor. Seller shall [ILLEGIBLE] valid costs of treatment and repair of all
damage up to the amount provided in Paragraph XIII(a). If estimated costs exceed
that amount, Buyer shall have the option of canceling this contract within 5
days after receipt of contractor's repair estimate by giving written notice to
Seller or Buyer may elect to proceed with the transaction, and receive a credit
at closing on the [ILLEGIBLE] provided in Paragraph XIII(a). "Termites" shall be
deemed to include all wood destroying organisms required to be reported under
the Florida Pest Control Act, as amended
INGRESS AND EGRESS: Seller warrants and represents that there is ingress and
egress to the Real Property sufficient for its intended use as described in
Paragraph VII hereof, title to such is in accordance with Standard A
LEASES: Seller shall, not less than 15 days before closing, furnish to Buyer
copies of all written leases and estoppel letter from each tenant specifying the
nature and duration of the [ILLEGIBLE] occupancy, rental rates, advanced rent
and security deposits paid by tenant. If Seller is unable to obtain such letter
from each tenant, the same information shall be furnished by [ILLEGIBLE] to
Buyer within that time period in the form of a Seller's affidavit, and Buyer may
thereafter contact tenants to confirm such information. Seller shall, at
closing, deliver and assign all [ILLEGIBLE] leases to Buyer.
LIENS: Seller shall furnish to Buyer at time of closing an affidavit attesting
to the absence, unless otherwise provided for herein, of any financing
statement, claims of lien or potential [ILLEGIBLE] known to Seller and further
attesting that there have been no improvements or repairs to the Real Property
for 90 days immediately preceding date of closing. If the Real Property
[ILLEGIBLE] been improved or repaired within that time, Seller shall deliver
releases or waivers of construction liens executed by all general contractors,
subcontractors, suppliers and materialmen [ILLEGIBLE] addition to Seller's lien
affidavit selling forth the names of all such general contractors,
subcontractors, suppliers and materialmen, further affirming that all charges
for improvements or [ILLEGIBLE] which could serve as a basis for a construction
lien or a claim for damages have been paid or will be paid at the closing of
this Contract
PLACE OF CLOSING: Closing shall be held in the county wherein the Real Property
is located at the office of the attorney or other closing agent designated by
Seller
TIME: In computing time periods of less than six (6) days, Saturdays, Sundays
and state or national legal holidays shall be excluded. Any time periods
provided for herein which shall end [ILLEGIBLE] a Saturday, Sunday, or a legal
holiday shall extend to 5:00 p.m. of the next business day. Time is of the
essence in this Contract.
DOCUMENTS FOR CLOSING: Seller shall furnish the deed, bill of sale, construction
lien affidavit, owner's possession affidavit, assignments of leases, tenant and
mortgagee estoppel [ILLEGIBLE] and corrective instruments. Buyer shall furnish
closing statement, mortgage, mortgage note, security agreement and financing
statements.
EXPENSES: Documentary stamps on the deed and recording of corrective instruments
shall be paid by Seller. Documentary stamps and intangible tax on the purchase
money mortgage [ILLEGIBLE] any mortgage assumed, and recording of purchase money
mortgage to Seller, deed and financing statements shall be paid by the Buyer.
Unless otherwise provided by law or rider to [ILLEGIBLE] Contract, charges for
the following related title services, namely title or abstract charge, title
examination, and settlement and closing fee, shall be paid by the party
responsible for [ILLEGIBLE] the title evidence in accordance with Paragraph V.
PRORATIONS; CREDITS: Taxes, assessments, rent, interest, insurance and other
expenses of the Property shall be prorated through the day before closing. Buyer
shall have the option [ILLEGIBLE] taking over existing policies of insurance, if
assumable, in which event premiums shall be prorated. Cash at closing shall be
increased or decreased as may be required by prorations to [ILLEGIBLE] made
through day prior to closing or occupancy if occupancy occurs before closing.
Advance rent and security deposits will be credited to Buyer. Escrow deposits
held by mortgagee will [ILLEGIBLE] to Seller. Taxes shall be prorated based on
the current year's tax with due allowance made for maximum allowable discount,
homestead and other exemptions. If closing occurs [ILLEGIBLE] a date when the
current year's millage is not fixed and current year's assessment is available,
taxes will be prorated based upon such assessment and prior year's millage. If
current year's assessment is not available, then taxes will be prorated on prior
year's tax. If there are completed improvements on the Real Property by January
1st of year of closing, which improvements [ILLEGIBLE] not in existence on
January 1st of prior year, then taxes shall be prorated based upon prior year's
millage and at an equitable assessment to be agreed upon between the parties.
[ILLEGIBLE] which request shall be made to the County Property Appraiser for an
informal assessment taking into account available exceptions. A tax proration
based on an estimate shall, at [ILLEGIBLE] of either party, be readjusted upon
receipt of tax bill on condition that a statement to that effect is signed at
closing.
SPECIAL ASSESSMENT LIENS: Certified, confirmed and ratified special assessment
liens as of date of closing (not as of Effective Date) are to be paid by Seller.
Pending liens as of [ILLEGIBLE] of closing shall be assumed by Buyer. If the
improvement has been substantially completed as of Effective Day, any pending
lien shall be considered certified, confirmed or ratified and [ILLEGIBLE] shall,
at closing, be charged an amount equal to the last estimate or assessment of the
improvement by the public body.
INSPECTION, REPAIR AND MAINTENANCE: Seller warrants that, as of 10 days prior to
closing, the ceiling, roof (including the fascia and soffits) and exterior and
interior walls [ILLEGIBLE] seawalls (or equivalent) and dockage do not have any
VISIBLE EVIDENCE of leaks, water damage or structural damage and that the septic
tank, pool, all appliances, mechanical [ILLEGIBLE] heating, cooling, electrical,
plumbing systems, and machinery are in WORKING CONDITION. The foregoing warranty
shall be limited to the items specified unless otherwise provided in addendum.
Buyer may, at Buyer's expense, have inspection made of those items by a firm or
individual specializing in home inspection and holding an occupational license
of such [ILLEGIBLE] (if required) or by an appropriately licensed Florida
contractor. Buyer shall, prior to Buyer's occupancy or not less than 10 days
prior to closing, whichever occurs first, report in writing Seller such items
that do not meet the above standards as to defects. Unless Buyer timely reports
such defects, Buyer shall be deemed to have waived Seller's warranties as to
defects reported. If repairs or replacements are required to comply with this
Standard, Seller shall cause them to be made and shall pay up to the amount
provided in Paragraph XIII(b). Seller [ILLEGIBLE] required to make repairs or
replacements of a cosmetic nature unless caused by a defect Seller is
responsible to repair or replace. If the cost for such repair or replacement
exceeds amount provided in Paragraph XIII(b), Buyer or Seller may elect to pay
such excess, failing which either party may cancel this Contract. If Seller is
unable to correct the defects prior to [ILLEGIBLE], the cost thereof shall be
paid into escrow at closing. Seller shall, upon reasonable notice provide
utilities service and access to the Property for inspections, including a
walk-through [ILLEGIBLE] to closing, to confirm that all items of Personal
Property are on the Real Property and, subject to the foregoing, that all
required repairs and replacements have been made and that Property, including,
but not limited to, lawn, shrubbery and pool, if any, has been maintained in the
condition existing as of Effective Date, ordinary wear and tear excepted.
RISK OF LOSS: If the Property is damaged by fire or other casualty before
closing and cost of restoration does not exceed 3% of the assessed valuation of
the Property so damaged [ILLEGIBLE] of restoration shall be an obligation of the
Seller and closing shall proceed pursuant to the terms of this Contract with
restoration costs escrowed at closing. If the cost of restoration exceeds 3% of
the assessed valuation of the Property so damaged, Buyer shall have the option
of either taking the Property as is, together with either the 3% or any
insurance proceeds [ILLEGIBLE] by virtue of such loss or damage, or of canceling
this Contract and receiving return of the deposit(s).
PROCEEDS OF SALE; CLOSING PROCEDURE: The deed shall be recorded upon clearance
of funds. If an abstract of title has been furnished, evidence of title shall be
continued at Buyer's expense to show title in Buyer, without any encumbrances or
change which would render Seller's title unmarketable from the date of the last
evidence. All closing proceeds shall be [ILLEGIBLE] in escrow by Seller's
attorney or other mutually acceptable escrow agent for a period of not more than
5 days after closing date. If Seller's title is rendered unmarketable, through
no [ILLEGIBLE] of Buyer, Buyer shall, within the 5-day period, notify Seller in
writing of the defect and Seller shall have 30 days from date of receipt of such
notification to cure the defect. If Seller fails [ILLEGIBLE] cure the defect,
all deposits(s) and closing funds shall, upon written demand by Buyer and within
5 days after demand, be returned to Buyer and, simultaneously with such
repayment, [ILLEGIBLE] shall return the Personal Property, vacate the Real
Property and reconvey the Property to Seller by special warranty deed and bill
of sale. If Buyer fails to make timely demand for [ILLEGIBLE] Buyer shall take
title as is, waiving all rights against Seller as to any intervening defect
except as may be available to Buyer by virtue of warranties contained in the
deed or bill of [ILLEGIBLE] If a portion of the purchase price is to be derived
from institutional financing or refinancing, requirements of the lending
institution as to place, time of day and procedures for closing, [ILLEGIBLE] for
this disbursement of mortgage proceeds shall control over contrary provision in
this Contract. Seller shall have the right to require from the lending
institution a written commitment that [ILLEGIBLE] not withhold disbursement of
mortgage proceeds as a result of any title defect attributable to
Buyer-mortgagor. The escrow and closing procedure required by this Standard
shall be [ILLEGIBLE] if the title agent insures adverse matters pursuant to
Section 627.7841, F.S., as amended.
ESCROW: Any escrow agent ("Agent") receiving funds or equivalent is authorized
and agrees by acceptance of them to deposit them promptly, hold same in escrow
and, subject to [ILLEGIBLE] disburse them in accordance with terms and
conditions of this Contract. Failure of funds to clear shall not excuse Buyer's
performance. If in doubt as to Agent's duties or liabilities [ILLEGIBLE] the
provisions of this Contract, Agent may, at Agent's option, continue to hold the
subject matter of the escrow until the parties hereto agree to its disbursement
or until a judgement [ILLEGIBLE] court of competent jurisdiction shall determine
the rights of the parties, or Agent may deposit same with the clerk of the
circuit court having jurisdiction of the dispute. Upon notifying all [ILLEGIBLE]
concerned of such action, all liability on the part of Agent shall fully
terminate, except to the extent of accounting for any items previously delivered
out of escrow. If a licensed real estate broker, Agent will comply with
provision of Chapter 475, F.S., as amended. Any suit between Buyer and Seller
wherein Agent is made a party because of acting as Agent hereunder. [ILLEGIBLE]
any suit wherein Agent interpleads the subject matter of the escrow, Agent shall
recover reasonable attorney's fees and costs incurred with these amounts to be
paid from and out of escrowed funds or equivalent and charged and awarded as
court costs in favor of the prevailing party. The Agent shall not be liable to
any party or person for misdelivery to Buyer or [ILLEGIBLE] of items subject to
the escrow, unless such misdelivery is due to willful breach of the provision of
the Contract or gross negligence of Agent.
ATTORNEY'S FEES; COSTS: In any litigation, including breach, enforcement or
interpretation, arising out of this Contract, the prevailing party in such
litigation, which, for purposes of [ILLEGIBLE] Standard, shall include Seller,
Buyer and any brokers acting in agency or nonagency relationships authorized by
Chapter 475. FS., as amended, shall be entitled to recover from the prevailing
party reasonable attorney's fees, costs and expenses.
FAILURE OF PERFORMANCE: If Buyer fails to perform this Contract within the time
specified, including payment of all deposits, the deposit(s) paid by Buyer and
deposit(s) agreed to [ILLEGIBLE] may be recovered and retained by and for the
account of Seller as agreed upon liquidated damages, consideration for the
execution of this Contract and in full settlement of any [ILLEGIBLE] whereupon,
Buyer and Seller shall be relieved of all obligations under this Contract; or
Seller; at Seller's option, may proceed in equity to enforce Seller's rights
under this Contract [ILLEGIBLE] any reason other than failure of Seller to make
Seller's title marketable after diligent effort, Seller fails, neglects or
refuses to perform this Contract, the Buyer may seek specific [ILLEGIBLE] or
elect to receive the return of Buyer's deposit(s) without thereby waiving any
action for damages resulting from Seller's breach.
CONTRACT NOT RECORDABLE; PERSONS BOUND; NOTICE: Neither this Contract nor any
notice of it shall be recorded in any public records. This Contract shall bind
and inure to benefit of the parties and their successors in interest. Whenever
the context permits, singular shall include plural and one gender shall include
all. Notice given by or to the attorney for party shall be as effective as if
given by or to that party.
CONVEYANCE: Seller shall convey title to the Real Property by statutory
warranty, trustee's, personal representative's or guardian's deed, as
appropriate to the status of Seller, subject to matters contained in Paragraph
VII and those otherwise accepted by Buyer. Personal Property shall, at the
request of the Buyer, be transferred by an absolute bill of sale with warranty
[ILLEGIBLE] subject only to such matters as may be otherwise provided for
herein.
OTHER AGREEMENTS: No prior or present agreement or representations shall be
binding upon Buyer or Seller unless included in this Contract. No modification
to or change in this [ILLEGIBLE] shall be valid or binding upon the parties
unless in writing and executed by the party or parties intended to be bound by
it.
WARRANTY: Seller warrants that there are no facts known to Seller materially
affecting the value of the Property which are not readily observable by Buyer or
which have not bee closed by Buyer.
<PAGE>
- --------------------------------------------------------------------------------
"AS IS" RIDER TO [ILLEGIBLE] BAR CONTRACT FOR SALE AND PURCHASE
- --------------------------------------------------------------------------------
This "As Is" Rider ("Rider") shall amend, modify and be a part of that certain
Contract For Sale and Purchase ("Contract") by and between Robert M. Oresky, as
Seller and Andrea and Michael Parkoff, as Buyer dated _____________; to which
this Rider is attached.
Buyer and Seller agree as follows:
1. Sellers Warranties and Representations; Obligation With Respect to
Residential Real Property; Limitations.
A. Clauses D and N of the Contract are hereby deleted.
B Seller acknowledges that the use of this Rider does not relieve Seller
of Seller's responsibility to disclose latent defects materially affecting
the value or desirability of residential real property. Except as set
forth below and in Standard W of the Contact, Seller makes no warranty of
any type, either express or implied, as to the physical condition of the
Property (including but not limited to, the roof and other structural
components and improvements, and the items of personal property). Seller
has received no notice from any governmental agency as to a currently
uncorrected building or safety code violation. Buyer expressly waives any
claims against Seller or Seller's agent, including the broker, for any
unknown defects or other damage which may exist or be discovered by Buyer.
2. Determination and Inspection Period.
Buyer shall have 0 - inspection prior to entries - days ("Inspection Period")
from the Effective Date in which to have such inspections of the Property
performed as Buyer shall desire.
A. Buyer shall be responsible for repair of damage or restoration of the
Property required as a result of any inspections.
B. If Buyer determines, in Buyer's sole discretion, that the condition of
the Property is not acceptable to Buyer, Buyer may cancel this Contract by
delivering written notice of such election to Seller within the Inspection
Period. The deposit(s) paid shall be immediately returned to Buyer;
thereupon, Buyer and Seller shall be released of all further obligations
under the Contract.
3. Maintenance.
Seller shall maintain the Property, including, but not limited to, the lawn,
shrubbery and pool, if any, in the condition existing as of the Effective Date,
ordinary wear and tear excepted. Buyer shall be permitted access to the Property
prior to the closing for a walk-through to ensure that all items of Personal
Property are on the Property; all required repairs and replacements, if any,
have been made and the Property, including, but not limited to, the lawn,
shrubbery, and pool, if any, has been maintained in the condition existing as of
either the Effective Date, date of inspection, or date of repair, whichever may
be applicable.
- ---------------------------------- ----------------------------------------
- ---------------------------------- ----------------------------------------
("Buyer") ("Seller")
Dated:
--------------
SUBLEASE
THIS AGREEMENT, MADE AND ENTERED INTO THIS 1st DAY OF AUGUST, 1999, BY AND
BETWEEN SUBLESSEE AUTOMAX USA, INC. WHOSE ADDRESS IS 813 NORTH MILITARY TRAIL,
WEST PALM BEACH, FL 33415, AND LESSEE MICHAEL PARKOFF AND ANDREA PARKOFF WHOSE
ADDRESS IS 3100 SOUTH OCEAN AVE., PALM BEACH, FL 33480.
WITNESSETH:
SUBLESSEE LEASES FROM THE LESSEE TUE PREMISES LOCATED A7 216 NORTH
MILITARY TRAIL, WEST PALM BEACH, FLORIDA 33415 UNDER THE SAME TERMS AND
CONDITIONS AS SET FORTH IN THE MASTER LEASE DATED AUGUST 1, 1999, A COPY OF
WHICH IS ATTACHED AS SCHEDULE A.
/s/ Kenneth Wulwick
- ---------------------- --------------------------
WITNESS KENNETH WULWICK, PRESIDENT
AUTOMAX USA, INC
- ----------------------
WITNESS
/s/ Andrea Parkoff
- ---------------------- --------------------------
WITNESS ANDREA PARKOFF
/s/ Michael Parkoff
- ---------------------- --------------------------
WITNESS MICHAEL PARKOFF
- ----------------------
WITNESS
KENWICK, INC.
STOCK OPTION PLAN
1. Purpose. The purpose of this 1997 Stock Option Plan (the "Plan") is to
advance the interests of Kenwick, Inc., a Florida corporation and each
"Subsidiary," (collectively referred to as the "Corporation"), by providing an
additional incentive to attract and retain qualified and competent persons who
are key employees, consultants, representatives, officers and directors of the
Corporation upon whose efforts and judgment the success of the Corporation is
largely dependent, through the encouragement of stock ownership in the
Corporation, by such persons. "Subsidiary" shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations beginning with the
Corporation if, at the time the Option, as hereinafter defined, is granted, each
of the corporations other than the last corporation in the unbroken chain owns
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
2. Grant of Options; Generally. In accordance with the provisions
hereinafter set forth in this Plan, the Board of Directors (the "Board") or the
Option Committee (the "Option Committee"), if any, of the Corporation is hereby
authorized to issue from time to time on the Corporation's behalf to any one or
more Eligible Persons, as hereinafter defined, options ("Options") to acquire
shares of the Corporation's $.001 par value common stock (the "Stock").
3. Type of Options. The Board or the Option Committee is authorized to
issue Options which meet the requirements of Section ss.422 of the Internal
Revenue Code of 1986, as amended (the "Code"), which Options are hereinafter
referred to collectively as ISOs, or singularly as an ISO. The Board or the
Option Committee is also, in its discretion, authorized to issue Options which
are not ISOs, which Options are hereinafter referred to collectively as NSOs, or
singularly as an NSO. The Board or the Option Committee is also authorized to
issue "Reload Options" in accordance with Paragraph 9 herein, which Options are
hereinafter referred to collectively as Reload Options, or singularly as a
Reload Option. Except where the context indicates to the contrary, the term
"Option" or "Options" means ISOs, NSOs and Reload Options.
4. Amount of Stock. The aggregate number of shares of Stock which may be
issued pursuant to the exercise of Options shall be 500,000 shares. Of this
amount, the Board or the Option Committee shall have the power and authority to
designate whether any Options so issued shall be ISOs or NSOs, subject to the
restrictions on ISOs contained elsewhere herein. If an Option ceases to be
exercisable, in whole or in part, the shares of Stock underlying such Option
shall continue to be available under this Plan. Further, if shares of Stock are
delivered to the Corporation as payment for shares of Stock purchased by the
exercise of an Option granted under this Plan, such shares of Stock shall also
be available under this Plan. If there is any change in the number of shares of
Stock on account of the declaration of stock dividends, recapitalization
<PAGE>
resulting in stock split-ups, or combinations or exchanges of shares of Stock,
or otherwise, the number of shares of Stock available for purchase upon the
exercise of Options, the shares of Stock subject to any Option and the exercise
price of any outstanding Option shall be appropriately adjusted by the Board or
the Option Committee. The Board or the Option Committee shall give notice of any
adjustments to each Eligible Person granted an Option under this Plan, and such
adjustments shall be effective and binding on all Eligible Persons. If because
of one or more recapitalizations, reorganizations or other corporate events, the
holders of outstanding Stock receive something other than shares of Stock then,
upon exercise of an Option, the Eligible Person will receive what the holder
would have owned if the holder had exercised the Option immediately before the
first such corporate event and not disposed of anything the holder received as a
result of the corporate event.
5. Eligible Persons.
(a) With respect to ISOs, an Eligible Person means any individual who
has been employed by the Corporation or its predecessors in interest for a
continuous period of at least sixty (60) days.
(b) With respect to NSOs, an Eligible Person means (i) any individual
who has been employed by the Corporation or its predecessors in interest for a
continuous period of at least sixty (60) days, (ii) any director of the
Corporation or by any Subsidiary or (iii) any consultant or representative of
the Corporation or by any Subsidiary.
6. Grant of Options. The Board or the Option Committee has the right to
issue the Options established by this Plan to Eligible Persons. The Board or the
Option Committee shall follow the procedures prescribed for it elsewhere in this
Plan. A grant of Options shall be set forth in a writing signed on behalf of the
Corporation or by a majority of the members of the Option Committee. The writing
shall identify whether the Option being granted is an ISO or an NSO and shall
set forth the terms which govern the Option. The terms shall be determined by
the Board or the Option Committee, and may include, among other terms, the
number of shares of Stock that may be acquired pursuant to the exercise of the
Options, when the Options may be exercised, the period for which the Option is
granted and including the expiration date, the effect on the Options if the
Eligible Person terminates employment and whether the Eligible Person may
deliver shares of Stock to pay for the shares of Stock to be purchased by the
exercise of the Option. However, no term shall be set forth in the writing which
is inconsistent with any of the terms of this Plan. The terms of an Option
granted to an Eligible Person may differ from the terms of an Option granted to
another Eligible Person, and may differ from the terms of an earlier Option
granted to the same Eligible Person.
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<PAGE>
7. Option Price. The option price per share shall be determined by the
Board or the Option Committee at the time any Option is granted, and shall be
not less than (i) in the case of an ISO, the fair market value, (ii) in the case
of an ISO granted to a ten percent or greater stockholder, 110 percent of the
fair market value, or (iii) in the case of an NSO, not less than 75% of the fair
market value (but in no event less than the par value) of one share of Stock on
the date the Option is granted, as determined by the Board or the Option
Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or
over-the-counter market, the mean between the high and low sales prices of Stock
on such exchange or over-the-counter market on which such shares shall be traded
on that date, or if such exchange or over-the-counter market is closed or if no
shares shall have traded on such date, on the last preceding date on which such
shares shall have traded.
(b) If shares of Stock shall not be traded on an exchange or
over-the-counter market, the value as determined by a recognized appraiser as
selected by the Board or the Option Committee.
8. Purchase of Shares.
(a) An Option shall be exercised by the tender to the Corporation of
the full purchase price of the Stock with respect to which the Option is
exercised and written notice of the exercise. The purchase price of the Stock
shall be in United States dollars, payable in cash or by check, or in property
or the Corporation's stock, if so permitted by the Board or the Option Committee
in accordance with the discretion granted in Paragraph 6 hereof, having a value
equal to such purchase price.
(b) At any time during the Option term, the Optionee may, at its
option, exchange the Option, in whole or in part (an "Option Exchange"), into
the number of shares of Common Stock determined in accordance with this Section
8(b), by surrendering the Option at the principal office of the Corporation,
accompanied by a notice stating such Optionee's intent to effect such exchange,
the number of shares of Common Stock to be exchanged and the date on which the
Optionee requests that such Option Exchange occur (the "Notice of Exchange").
The Option Exchange shall take place on the date specified in the Notice of
Exchange or, if later, the date the Notice of Exchange is received by the
Corporation (the "Exchange Date"). Certificates for the shares of Common Stock
issuable upon such Option Exchange and, if applicable, a new option of like
tenor evidencing the balance of the shares of Common Stock remaining subject to
this Option shall be issued as of the Exchange Date and delivered to the
Optionee within three (3) days following the Exchange Date. In connection with
any Option Exchange, the Option shall represent the right to subscribe for and
acquire without any cash outlay the number of shares of Common Stock (rounded to
the next highest integer) equal to (A) the number of shares of Common Stock
specified by the Optionee in its Notice of Exchange (the "Total Share Number")
less (B) the number of
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<PAGE>
shares of Common Stock equal to the quotient obtained by dividing (i) the
product of the Total Share Number and the existing Exercise Price (as
hereinafter defined) by (ii) the Market Price (as hereinafter defined) of a
share of Common Stock. "Market Price" at any date shall be deemed to be the last
reported sale price, or, in case no such reported sale takes place on such day,
the average of the last reported sale prices for the last three trading days, in
either case as officially reported by the principal securities exchange on which
the Common Stock is listed or admitted to trading or as reported in the NASDAQ
System, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the NASDAQ, the average of the last
highest reported bid and lowest reported asked price as furnished by the
National Association of Securities Dealers, Inc. through the OTC Bulletin Board
or similar organization if NASDAQ is no longer reporting such information, or if
not available, the fair market price as determined by the Board or Option
Committee.
(c) The Corporation shall not be required to issue or deliver any
certificates for shares of Stock purchased upon the exercise of an Option prior
to (i) if requested by the Corporation, the filing with the Corporation by the
Eligible Person of a representation in writing that it is the Eligible Person's
then present intention to acquire the Stock being purchased for investment and
not for resale, and/or (ii) the completion of any registration or other
qualification of such shares under any government regulatory body, which the
Corporation shall determine to be necessary or advisable.
9. Grant of Reload Options. In granting an Option under this Plan, the
Board or the Option Committee may include a Reload Option provision therein,
subject to the provisions set forth in Paragraphs 21 and 22 herein. A Reload
Option provision provides that if the Eligible Person pays the exercise price of
shares of Stock to be purchased by the exercise of an ISO, NSO or another Reload
Option (the "Original Option") by delivering to the Corporation shares of Stock
already owned by the Eligible Person (the "Tendered Shares"), the Eligible
Person shall receive a Reload Option which shall be a new Option to purchase
shares of Stock equal in number to the tendered shares. The terms of any Reload
Option shall be determined by the Board or the Option Committee consistent with
the provisions of this Plan.
10. Option Committee. The Option Committee may be appointed from time to
time by the Corporation's Board of Directors. The Board may from time to time
remove members from or add members to the Option Committee. The Option Committee
shall be constituted so as to permit the Plan to comply in all respects with the
provisions set forth in Paragraph 21 herein. The members of the Option Committee
may elect one of its members as its chairman. The Option Committee shall hold
its meetings at such times and places as its chairman shall determine. A
majority of the Option Committee's members present in person shall constitute a
quorum for the transaction of business. All determinations of the Option
Committee will be made by the majority vote of the members constituting the
quorum. The members may participate in a meeting of the Option Committee by
conference telephone or similar
4
<PAGE>
communications equipment by means of which all members participating in the
meeting can hear each other. Participation in a meeting in that manner will
constitute presence in person at the meeting. Any decision or determination
reduced to writing and signed by all members of the Option Committee will be
effective as if it had been made by a majority vote of all members of the Option
Committee at a meeting which is duly called and held.
11. Administration of Plan. In addition to granting Options and to
exercising the authority granted to it elsewhere in this Plan, the Board or the
Option Committee is granted the full right and authority to interpret and
construe the provisions of this Plan, promulgate, amend and rescind rules and
procedures relating to the implementation of the Plan and to make all other
determinations necessary or advisable for the administration of the Plan,
consistent, however, with the intent of the Corporation that Options granted or
awarded pursuant to the Plan comply with the provisions of Paragraph 21 and 22
herein. All determinations made by the Board or the Option Committee shall be
final, binding and conclusive on all persons including the Eligible Person, the
Corporation and its stockholders, employees, officers and directors and
consultants. No member of the Board or the Option Committee will be liable for
any act or omission in connection with the administration of this Plan unless it
is attributable to that member's willful misconduct.
12. Provisions Applicable to ISOs. The following provisions shall apply to
all ISOs granted by the Board or the Option Committee and are incorporated by
reference into any writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from January 15,
1997, the date that this Plan was originally adopted by the Corporation's Board
of Directors.
(b) An ISO may not be exercised after the expiration of ten (10) years
from the date the ISO is granted.
(c) The option price may not be less than the fair market value of the
Stock at the time the ISO is granted.
(d) An ISO is not transferable by the Eligible Person to whom it is
granted except by will, or the laws of descent and distribution, and is
exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the time of the
grant stock possessing more than ten (10%) percent of the total combined voting
power of all classes of stock of the employer corporation or of its parent or
subsidiary corporation (as those terms are defined in the Code), then the option
price shall be at least 110% of the
5
<PAGE>
fair market value of the Stock, and the ISO shall not be exercisable after the
expiration of five (5) years from the date the ISO is granted.
(f) The aggregate fair market value (determined at the time the ISO is
granted) of the Stock with respect to which the ISO is first exercisable by the
Eligible Person during any calendar year (under this Plan and any other
incentive stock option plan of the Corporation) shall not exceed $100,000.
(g) Even if the shares of Stock which are issued upon exercise of an
ISO are sold within one year following the exercise of such ISO so that the sale
constitutes a disqualifying disposition for ISO treatment under the Code, no
provision of this Plan shall be construed as prohibiting such a sale.
(h) This Plan was adopted by the Corporation on January 15, 1997, by
virtue of its approval by the Corporation's Board of Directors and stockholders.
13. Determination of Fair Market Value. In granting ISOs under this Plan,
the Board or the Option Committee shall make a good faith determination as to
the fair market value of the Stock at the time of granting the ISO.
14. Restrictions on Issuance of Stock. The Corporation shall not be
obligated to sell or issue any shares of Stock pursuant to the exercise of an
Option unless the Stock with respect to which the Option is being exercised is
at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted in
accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such exercise
it is his or her then present intention to acquire the shares of Stock for
investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, "distribution" shall be defined to exclude distribution by will
or under the laws of descent and distribution. Prior to issuing any shares of
Stock pursuant to the exercise of an Option, the Corporation shall take such
steps as it deems necessary to satisfy any withholding tax obligations imposed
upon it by any level of government.
15. Exercise in the Event of Death or Termination of Employment.
(a) If an optionee shall die (i) while an employee of the Corporation
or a Subsidiary or (ii) within three months after termination of his employment
with the Corporation or a Subsidiary because of his disability, retirement, with
the consent of the Board or the Option Committee or involuntarily other than by
termination for cause, as defined herein, his Options may be exercised, to the
extent that the optionee shall have been entitled to do so on the date of his
death or such termination of employment, by the person or persons to whom the
optionee's right under the Option pass by will or
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<PAGE>
applicable law, or if no such person has such right, by his executors or
administrators, at any time, or from time to time. In the event of death, as
described in (i) and (ii) of this Paragraph, an optionee's Options may be
exercised not later than the expiration date specified in Paragraph 6 or one
year after the optionee's death, whichever date is earlier.
(b) If an optionee's employment by the Corporation or a Subsidiary
shall terminate because of his disability and such optionee has not died within
the following three months, he may exercise his Options, to the extent that he
shall have been entitled to do so at the date of the termination of his
employment, at any time, or from time to time, but not later than the expiration
date specified in Paragraph 6 hereof or one year after termination of
employment, whichever date is earlier.
(c) If an optionee's employment shall terminate by reason of his
retirement in accordance with the terms of the Corporation's tax-qualified
retirement plans or with the consent of the Board or the Option Committee or
involuntarily other than by termination for cause, and such optionee has not
died within the following three months, he may exercise his Option to the extent
he shall have been entitled to do so at the date of the termination of his
employment, at any time and from to time, but not later than the expiration date
specified in Paragraph 6 hereof or three (3) months after termination of
employment, whichever date is earlier. For purposes of this Paragraph 15,
termination for cause shall mean termination of employment by reason of the
optionee's commission of a felony, fraud or willful misconduct which has
resulted, or is likely to result, in substantial and material damage to the
Corporation or a Subsidiary, all as the Board or the Option Committee in its
sole discretion may determine.
(d) If an optionee's employment shall terminate for cause, all right to
exercise his Option shall terminate at the date of such termination of
employment.
16. Corporate Events. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and each
such Eligible Person shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Option as to all or any part of the
shares of Stock covered thereby, including shares of Stock as to which such
Option would not otherwise be exercisable. Nothing set forth herein shall extend
the term set for purchasing the shares of Stock set forth in the Option.
17. No Guarantee of Employment. Nothing in this Plan or in any writing
granting an Option will confer upon any Eligible Person the right to continue in
the employ of the Eligible Person's employer, or will interfere with or restrict
in any way the
7
<PAGE>
right of the Eligible Person's employer to discharge such Eligible Person at any
time for any reason whatsoever, with or without cause.
18. Nontransferability. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by him.
19. No Rights as Stockholder. No optionee shall have any rights as a
stockholder with respect to any shares subject to his Option prior to the date
of issuance to him of a certificate or certificates for such shares.
20. Amendment and Discontinuance of Plan. The Corporation's Board of
Directors may amend, suspend or discontinue this Plan at any time. However, no
such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan. Further, no amendment to this Plan
which has the effect of (a) increasing the aggregate number of shares of Stock
subject to this Plan (except for adjustments pursuant to Paragraph 3 herein), or
(b) changing the definition of Eligible Person under this Plan, may be effective
unless and until approval of the stockholders of the Corporation is obtained in
the same manner as approval of this Plan is required. The Corporation's Board of
Directors is authorized to seek the approval of the Corporation's stockholders
for any other changes it proposes to make to this Plan which require such
approval, however, the Board of Directors may modify the Plan, as necessary, to
effectuate the intent of the Plan as a result of any changes in the tax,
accounting or securities laws treatment of Eligible Persons and the Plan,
subject to the provisions set forth in this Paragraph 20, and Paragraphs 21 and
22.
21. Compliance with Rule 16b-3. This Plan is intended to comply in all
respects with Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to participants who are subject to Section 16 of
the Exchange Act, and any provision(s) herein that is/are contrary to Rule
16b-3 shall be deemed null and void to the extent appropriate by either the
Option Committee or the Corporation's Board of Directors.
22. Compliance with Code. The aspects of this Plan on ISOs is intended to
comply in every respect with Section 422 of the Code and the regulations
promulgated thereunder. In the event any future statute or regulation shall
modify the existing statute, the aspects of this Plan on ISOs shall be deemed to
incorporate by reference such modification. Any stock option agreement relating
to any Option granted pursuant to this Plan outstanding and unexercised at the
time any modifying statute or regulation becomes effective shall also be deemed
to incorporate by reference such modification and no notice of such modification
need be given to optionee.
8
<PAGE>
If any provision of the aspects of this Plan on ISOs is determined to
disqualify the shares purchasable pursuant to the Options granted under this
Plan from the special tax treatment provided by Code Section 422, such provision
shall be deemed null and void and to incorporate by reference the modification
required to qualify the shares for said tax treatment.
23. Compliance With Other Laws and Regulations. The Plan, the grant and
exercise of Options thereunder, and the obligation of the Corporation to sell
and deliver Stock under such options, shall be subject to all applicable federal
and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Corporation shall not be required
to issue or deliver any certificates for shares of Stock prior to (a) the
listing of such shares on any stock exchange or over-the-counter market on which
the Stock may then be listed and (b) the completion of any registration or
qualification of such shares under any federal or state law, or any ruling or
regulation of any government body which the Corporation shall, in its sole
discretion, determine to be necessary or advisable. Moreover, no Option may be
exercised if its exercise or the receipt of Stock pursuant thereto would be
contrary to applicable laws.
24. Disposition of Shares. In the event any share of Stock acquired by an
exercise of an Option granted under the Plan shall be transferable other than by
will or by the laws of descent and distribution within two years of the date
such Option was granted or within one year after the transfer of such Stock
pursuant to such exercise, the optionee shall give prompt written notice thereof
to the Corporation or the Option Committee.
25. Name. The Plan shall be known as the "Kenwick, Inc. Stock Option
Plan."
26. Notices. Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to the
Corporation shall be sent to it at its office 3909 N.E. 163rd Street, Suite 308,
N. Miami Beach, Florida 33160 and when addressed to the Committee shall be sent
to it at 3909 N.E. 163rd Street, Suite 308, N. Miami Beach, Florida 33160,
subject to the right of either party to designate at any time hereafter in
writing some other address, facsimile number or person to whose attention such
notice shall be sent.
27. Headings. The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.
9
<PAGE>
28. Effective Date. This Plan was adopted by the Board of Directors and
stockholder of the Corporation on January 15, 1997. The effective date of the
Plan shall be the same date.
Dated as of January 15, 1997.
KENWICK, INC.
By: /s/ Kenneth S. Wulwick
-----------------------------
Kenneth S. Wulwick, President
10
LANDLORD'S CONSENT TO SUBLEASE AND
SUBLESSEE'S OPTION TO BECOME TENANT
This Agreement made and entered into as of the 28th day of December, 1999 by,
between and among SPRING LAKE PARTNERS, a Florida general partnership, of 1111
Lincoln Road, Suite 800, Miami Beach, FL 33139 (hereafter "Landlord"), KENWICK,
INC., a Florida corporation, doing business as AMERICAN VIDEO LANGUAGE
INSTITUTE, of 2455 E. Sunrise Blvd., Fort Lauderdale, FL 33304 (hereafter
"Tenant"), FISHER ISLAND LANGUAGE, INC., a Florida corporation, doing business
as INLINGUA LANGUAGE INSTITUTE, Inc., of 2455 E. Sunrise Blvd., Fort Lauderdale,
FL 33304 (hereafter "Subtenant" and "New Tenant"), and DONALD TUCK, of 2455 E.
Sunrise Blvd., Fort Lauderdale, FL 33304 (hereafter "Guarantor").
WITNESSETH:
WHEREAS, Landlord and Tenant have entered into a lease dated April 21, 1987 for
premises known as Suite 512, International Building, 2455 E. Sunrise Blvd., Fort
Lauderdale, FL 33304 (hereafter the "Building") the lease hereafter being
referred to as the "Lease"; and
WHEREAS, Tenant desires to sublease to Subtenant and Subtenant desires to
sublease from Tenant the Premises (hereafter the "Sublease") and Landlord's
consent to the Sublease is required pursuant to the terms of the Lease; and
WHEREAS, Landlord is willing to consent to the Sublease on the terms and
conditions contained in this Agreement, subject to New Tenant agreeing to the
provisions herein contained relating to an Option to enter into the New Lease
and Tuck executing and delivering to Landlord his Guaranty of New Tenant's
obligations under the New Lease in the form annexed hereto as Exhibit A, subject
to New Tenant's exercise of the Option; and
WHEREAS, as partial consideration for Subtenant's execution and delivery of this
Agreement and as an inducement to Landlord to consent to the Sublease, Landlord
and New Tenant agree that Landlord shall grant an Option to New Tenant to become
the Tenant of the Premises upon the termination of the Lease.
NOW THEREFORE, the parties hereto in consideration of their mutual promises
herein contained do hereby agree as follows:
1. The foregoing recitals are true and correct in all respects.
2. Attached hereto as Exhibit A is a copy of the Sublease between Tenant and
Subtenant which Tenant and Subtenant have executed and delivered subject
to Landlord's consent to such Sublease. In accordance with the provisions
of Section 13 of the Lease, Landlord hereby consents to the Sublease in
the form of Exhibit B.
Page 1 of 8
<PAGE>
3. Tenant agrees that the Lease shall expire on May 31, 2002 and that the
option granted to Tenant in the Lease to renew the Lease shall be and it
is hereby terminated.
4. The terms and provisions of the New Lease shall be the same as those in
the Lease (except for the Addendum to the Lease which shall be deleted
therefrom), except as follows: The Lease Term shall be five (5) years with
the Lease Commencement Date on June 1, 2002 and the Lease Expiration Date
on May 31, 2007. The Rent Commencement Date shall be June 1, 2002. The
Tenant under the New Lease shall be New Tenant and the Landlord under the
New Lease shall be Landlord. The Security Deposit under the New Lease
shall be $6,356.48 which shall be deposited by New Tenant with Landlord
together with New Tenant's written exercise of the Option. New Tenant
shall deliver to Landlord together with New Tenant's written exercise of
the Option the first month's rent as prepaid rent in the total amount of
$3,368.93, plus applicable Florida Sales Tax. The Base Rent for the
Premises shall be:
Year Annual Rent Monthly Rent
Year One $38,138.88 $3,178.24
Year Two $39,664.43 $3,305.37
Year Three $41,251.01 $3,437.58
Year Four $42,901.05 $3,575.09
Year Five $44,617.09 $3,718.09
The Base Year under the New Lease shall be 2002. Section 40 of the New
Lease shall be modified to recognize that the only broker involved with
the New Lease shall be Abood & Associates, Inc., Landlord's broker and The
Fitzgerald Group, New Tenant's broker, who shall be compensated by
Landlord in the event that this Option is exercised and a Lease Agreement
is fully executed between both parties. New Tenant shall deliver to
Landlord together with New Tenant's written exercise of the Option,
Guarantor's duly executed Guaranty in the form annexed hereto as Exhibit B
hereto. The Option must be exercised by New Tenant, if at all, (which
Option may not be assigned or transferred to any third party without
Landlord's prior written consent which may be withheld in Landlord's sole
discretion) in writing accompanied by the documents referred to herein, no
sooner than June 1, 2001 and no later than December 1, 2001, with time of
the essence. In the event that Subtenant has been in default of its
obligations under the Sublease beyond any applicable cure or grace
periods, if any, more than twice during the term of the Sublease, Landlord
may terminate the right of Subtenant/New Tenant to exercise this Option.
5. Tenant, Subtenant/New Tenant and Guarantor hereby confirm that the Lease
remains in full force and effect, that Landlord is in compliance with the
Lease provisions, that Landlord has not waived any of its rights under the
Lease, and that neither Tenant, Subtenant/New Tenant or Guarantor has any
defenses, claims or offsets against Landlord. As hereby modified, amended
and supplemented, the parties hereto do hereby agree that the Lease is
hereby confirmed and ratified in all respects.
Page 2 of 8
<PAGE>
N WITNESS WHEREOF, Landlord, Tenant, Subtenant/New Tenant and Guarantor have
duly executed this Agreement as of the day and year first set forth above, each
acknowledging receipt of an executed copy hereof
SIGNATURES FOLLOW
WITNESSES: LANDLORD:
NWT PARTNERS, LTD.,
/s/ Suanny Morales
- ------------------------------ By: /s/ David Garfinkle
Print Name: Suanny Morales -------------------------------------
David Garfinkle, as a General
/s/ Paul L. Feinsmith Partner
- ------------------------------
Print Name: Paul L. Feinsmith
/s/ D. Furrari TENANT: KENWICK, INC.
- ------------------------------ D/B/A American Video Lanaguage Institute
Print Name: D. Furrari
By: /s/ Shel Glickman
/s/ Suzanne Grossman ------------------------------------
- ------------------------------ Shel Glickman, as Senior Vice President
Print Name: Suzanne Grossman
/s/ D. Furrari SUBTENANT/NEW TENANT:
- ------------------------------ FISHER ISLAND LANGUAGE, INC.
Print Name: D. Furrari D/B/A Inlingua Language Center
/s/ Julio N. Garbalosa By: /s/ Donald Tuck
- ------------------------------ ------------------------------------
Print Name: Julio N. Garbalosa Donald Tuck, as President
/s/ D. Furrari GUARANTOR: DONALD TUCK
- ------------------------------
Print Name: D. Furrari /s/ Donald Tuck
----------------------------------------
/s/ Julio N. Garbalosa
- ------------------------------
Print Name: Julio N. Garbalosa
Page 3 of 8
<PAGE>
Exhibit A
Sublease Proposal
Lessor: Kenwick, Inc. d/b/a
American Video Language Institute
Lessee: Fisher Island Language, Inc. d/b/a
Inlingua Language Center
Signatories: Donald Tuck, President Leased
Premises: Approximately 1,990 square feet of office
Property
Address: 2455 E. Sunrise Boulevard
Suite 512
Fort Lauderdale, Fl 33304
Lease Term: Balance of term of the original lease
Expiring May 31, 2002.
Lease Rate: $2,825.00 monthly with 4% annual increases
Occupancy: January 24, 2000
Rent
Commencement: February 24, 2000
Deposits: First month, last month rental and security deposit to Jeff Klein,
Esquire
Use: Language Center
Tenant
Improvements: Lesser shall paint all offices prior to occupancy.
Rental
Adjustments: The base rent shall increase at a fixed rate of 4% per year.
Renewal
Options: One five year option at 4%
Page 4 of 8
<PAGE>
Brokerage
Commissions: The Fitzerald Group, Inc. shall be paid by Lesser through Allstar
Realty of Broward, Inc. a total brokerage commission equal to five (5%) percent
of the total lease amount upon execution of the Contract. THIS IS
NON-NEGOTIABLE!
The Lessee has reviewed and accepted all terms and conditions of the existing
lease and agrees to be bound thereby.
Agreed and accepted by:
/s/ Shel Glickman 12/28/99
- -------------------------- -------------------------
Lesser: Shel Glickman Date
/s/ Donald Tuck 12/28/99
- -------------------------- -------------------------
Lessee: Donald Tuck Date
/s/ David Garfinkle 1/11/00
- -------------------------- -------------------------
Landlord approval
Springlake Partners
Page 5 of 8
<PAGE>
EXHIBIT B
GUARANTY
In order to induce Spring Lake Partners, a Florida partnership ("Landlord") to
enter into that certain Lease (the "Lease") between Landlord and Fisher Island
Language, Inc. d/b/a Inlingua Language Center with respect to the Premises known
as Suite No. 512 of the building known as the International Building located at
2455 E. Sunrise Boulevard, Fort Lauderdale, Florida 33304, and for other
valuable consideration, Donald Tuck (the "Guarantor") agrees with the Landlord
as follows:
1. The Guarantor agrees to make the due and punctual payment of all Base
Rent, Additional Rent and other charges payable by the Tenant under the
Lease; to promptly and completely perform all of the other terms,
provisions, covenants, and agreements on the part of the Tenant to be
performed contained in the Lease; and to indemnify the Landlord from any
loss, costs or damages arising out of any failure to pay Base Rent,
Additional Rent or other charges under the Lease or the failure of the
Tenant to perform any of the terms, provisions, covenants and agreements
on the part of Tenant to be performed contained in the Lease.
2. The liability of Guarantor under this Guaranty of the Lease is primary and
this Guaranty is absolute, unconditional, continuing and irrevocable and
the obligation of the Guarantor will not be released by, or any way
affected by, any extensions of time, indulgences or modifications which
the Landlord may extend to or make with the Tenant under the Lease; or any
waiver by or failure of the Landlord to enforce any provision of the
Lease; or any assignment of the Lease by the Tenant or by any trustee,
receiver or liquidator; or by any consent which the Landlord may give to
any assignment.
3. The Guarantor waives any right to require the Landlord to proceed against
the Tenant, or pursue any rights or remedies under the Lease, or proceed
against any security of the Tenant held by the Landlord, or to pursue any
other remedy within the power of the Landlord.
4. The Guarantor waives notice of the acceptance of this Guaranty and any
notice of nonperformance, non-payment or non-observance on the part of the
Tenant of the terms, provisions, covenants and agreements in the Lease.
5. The liability of the Guarantor will not be considered to be waived or in
any way released by reason of the release or discharge of the Tenant under
the Lease in any receivership, bankruptcy, winding-up or other creditors'
proceedings or the rejection or disclaimer of the Lease in any such
proceeding. This Guaranty shall continue for the entire term and any
renewals of the Lease.
6. No action brought under this Guaranty and no recovery under this Guaranty
shall act as a bar or defense to any further action which might be brought
under this Guaranty by reason of any further default under the terms of
the Lease.
7. No modification of this Guaranty shall be effective unless made in
writing, properly executed by the Guarantor and the Landlord.
8. The Guarantor shall be bound by the Guaranty in the same manner as though
it were the Tenant named in the Lease. The obligations of the Tenant under
the Lease to execute and deliver estoppel statements and financial
statements, as therein provided, shall be deemed to also require the
Guarantor hereunder to do and provide the same statements relative to
Guarantor.
9. All of the terms and conditions of this Guaranty shall extend to and be
binding on the Guarantor, its successors and assigns, and shall inure to
the benefit of and may be enforced by
Page 6 of 8
<PAGE>
the Landlord and its successors in interest and assigns, as well as
successors in title to the property on which the leased premises are
located, including, without limitation, any mortgagee of all or any part
of such property.
10. Guarantor shall have no rights of subrogation against Tenant arising from
any payment or performance by Guarantor hereunder until all obligations of
Tenant to Landlord under the Lease have been satisfied and the Lease has
expired or been terminated by Landlord. The Guarantor does hereby
subrogate all existing or future indebtedness of Tenant to Guarantor to
the obligations owed to Landlord under the Lease and this Guaranty.
11. Guarantor shall pay all of Landlord's attorneys' fees (at all pre-trial,
trial, post-trial and appellate levels) and all costs incurred in any
collection or attempted collection or in any negotiations relative to the
obligations hereby guaranteed or in enforcing this Guaranty of Lease
against the Guarantor. If there are two or more guarantors of the Lease,
the obligations of each guarantor shall be joint and several and Landlord
may, at Landlord's option, proceed against Guarantor without proceeding
against any or all of the other guarantors.
12. GUARANTOR AND LANDLORD HEREBY MUTUALLY WAIVE ANY AND ALL RIGHT TO A JURY
TRIAL OF ANY ISSUE OR CONTROVERSY ARISING UNDER THIS GUARANTY. GUARANTOR
further agrees that it shall not interpose any counterclaims in a summary
proceeding or in any action based upon non-payment of rent or any other
obligation of Tenant under the Lease assumed hereunder by Guarantor. This
Guaranty is made and entered into and shall be construed in accordance
with and governed by the laws of the State of Florida.
Page 7 of 8
<PAGE>
IN WITNESS WHEREOF the Guarantor has executed the Guaranty under seal,
this 29 day of December, 1999.
WlTNESS: GUARANTOR: Donald Tuck
/s/ D. Furrari /s/ Donald Tuck
- -------------------------- -------------------------------
/s/ Julio N. Garbalosa
- -------------------------- SS No. ###-##-####
------------------------
Driver's License No. and State:
T200-197-36-123-0
-------------------------------
Home Address:
321 SW 187 Avenue
Pembroke Pines, FL
Page 8 of 8
Exhibit 10.10
LINTON INTERNATIONAL PLAZA STANDARD BUILDING LEASE
THIS LEASE AGREEMENT (hereinafter the "LEASE") effective the 7 day of
January 2000, by and between:
AUSTIN DELRAY REALTY, L.L.C.
39 Avenue C
P.O. Box 8
Bayonne, New Jersey 07002
(hereinafter called "LESSOR"),
-and-
KENWICK INDUSTRIES, INC.
8781 Southwest 8th Street
Plantation, Florida 33324
(hereinafter called "LESSEE"),
WITNESSETH:
1. LEASED PREMISES: Subject to and upon the terms, provisions, covenants and
conditions hereinafter set forth, and in consideration of the duties, covenants
and obligations of each party to the other party as hereinafter set forth, as
well as other good and valuable considerations, the receipt and sufficiency of
which is hereby acknowledged by the parties hereto, LESSEE does hereby lease,
demise and let from LESSOR and LESSOR does hereby lease, demise and let to
LESSEE those certain premises (hereinafter the "LEASED PREMISES") in that
certain building located at Suite #202), 660 Linton Boulevard, Delray Beach,
Palm Beach County, Florida, containing approximately 760 square feet, which is a
part of the Linton International Plaza and is more particularly described as
follows:
Suite #202 (Refer to Exhibit "B")
2. TERM: The LEASE term ("LEASE TERM" OR "TERM") shall be for a period of THREE
(3) YEARS commencing on the 1st day of February, 2000 and ending on the 31st day
of January, 2003.
3. BASE ANNUAL RENTAL: LESSEE agrees to pay LESSOR a Base Annual Rent ("BASE
ANNUAL RENTAL") in the amount of $10,640.00, PLUS STATE SALES TAX. Said BASE
ANNUAL RENT shall be due and payable in advance of the first day of each month
in equal monthly installments of $886.67 plus state sales tax for a total of
$939.87.
Each monthly installment of RENTAL shall be due and payable on the 1st day of
each and every calendar month of the TERM of this LEASE, commencing February 1,
2000, without any demand, notice, offset or deduction whatsoever, in lawful
money of the United States of America, at the office of LESSOR. LESSEE shall
take possession of the premises on January 15, 2000, provided that all funds
collected at lease execution clear; however, LESSEE's obligation to pay rent
shall commence on February 1, 2000.
4. The LESSOR will not be responsible for any LESSEE IMPROVEMENTS to the
leasehold space except the addition of a wall and door installation of new
carpet and painting the unit; also ceiling and lighting including electrical
outlets otherwise, the LESEEE accepts the RENTAL SPACE "AS IS", WHERE IS". These
alterations will be made and completed prior to the lease commencement date of
February 2000. Said alterations will commence any time after the execution of
this Lease. LESSEE hereby understands and agrees that should LESSEE fail to take
possession of the unit after LESSOR has made the above alterations to the unit,
LESSOR will retain LESEE's first month's rent and one month's security totaling
$1,879.74 as liquidated damages.
/s/ [ILLEGIBLE]
INITIAL
- --------------------------------------------------------------------------------
Page l of 18
/s/ ILLEGIBLE /s/ ILLEGIBLE
Lesee Initials
<PAGE>
Austin Delray Realty, LLC Lease Kenwick Industries, Inc.
- --------------------------------------------------------------------------------
5. SECURITY DEPOSIT AND LAST MONTH'S RENT: LESSOR acknowledges and agrees that
LESSEE has deposited with LESSOR the sum of $2,819.61 (the "FIRST MONTH'S RENT,
LAST MONTH'S RENT, ONE MONTH'S SECURITY DEPOSIT" plus applicable sales tax), the
receipt of which, subject to clearance, is hereby acknowledged by LESSOR. The
SECURITY DEPOSIT shall be retained by LESSOR as security for the payment by
LESSEE for this and all other costs and expenses due and payable hereunder by
LESSEE and for the faithful observance and performance by LESSEE of all of the
terms, provisions, covenants and conditions of this LEASE. It is agreed that
LESSOR, at LESSOR'S option, may at the time of any default by LESSEE under any
of the terms, provisions, covenants or conditions of this LEASE apply the
SECURITY DEPOSIT or any part thereof towards the payment of the RENTAL and/or
any and all other costs and expenses payable by LESSEE under this LEASE; that
same shall thereby be discharged only pro tanto; that LESSEE shall remain liable
for any and all amounts that the SECURITY DEPOSIT shall be insufficient to pay;
that LESSOR may exhaust any and all other rights and remedies LESSOR has against
LESSEE before resorting to the SECURITY DEPOSIT, but that nothing herein
contained shall require LESSOR to do same; that in the event the SECURITY
DEPOSIT shall not be utilized by and for such purposes, then such SECURITY
DEPOSIT (or any portion thereof remaining after payment of any of the foregoing)
shall be returned by LESSOR to LESSEE within thirty (30) days next after the
expiration of the TERM of this LEASE or the determination by LESSOR and the
payment by LESSEE of any and all amounts due under this LEASE, if any, whichever
last occurs. LESSOR shall not be required to pay LESSEE any interest on said
SECURITY DEPOSIT or to hold the SECURITY DEPOSIT in a separate account unless
required to do so by law.
6. REPAIRS, MAINTENANCE AND OPERATING COSTS: LESSEE shall all times during the
TERM of this LEASE, and at LESSEE'S sole cost and expense, put, keep, replace
and maintain in thorough repair and in good, safe and substantial order and
condition, all nonstructural improvements of the LEASED PREMISES existing at the
commencement of the TERM of the LEASE or thereafter erected, placed or otherwise
situate in or upon the LEASED PREMISES, or any part thereof, and all personalty,
furniture, equipment and fixtures located thereon or therein, whether or not
necessitated by wear, tear or defects, latent or otherwise, and LESSEE shall use
all reasonable precautions to prevent waste, damage or injury to the LEASES
PREMISES, any property located thereon, or any person situated therein. Upon the
termination of this LEASE, LESSEE agrees to restore and repair the LEASED
PREMISES to its original condition, normal wear and tear excepted, at LESSEE'S
cost and expense. During the term of this LEASE, LESSEE shall replace, at its
own expense, any and all broken glass caused by LESSEE in and about said LEASED
PREMISES or Linton International Plaza. Notwithstanding the foregoing, LESSEE
shall not be responsible for any damage caused by any negligent or intentional
act or omission of LESSOR, its agents, employees, guests or invitees. LESSOR
shall be responsible for the maintenance and operation of Linton International
Plaza, excluding those portions of the LEASED PREMISES to be maintained by
LESSEE. For the purposes of this LEASE, such maintenance and operating costs
("OPERATING EXPENSES") shall mean and include all costs and expenses incurred by
LESSOR in maintaining and operating Linton International Plaza and shall include
but not be limited to maintenance and repair of the foundations, exterior walls,
downspouts, gutters, roof, curbs, and roof penetrations, payment of all
utilities and management fees, air conditioning maintenance, pest control,
security expenses, wages and costs of engineers, superintendents, watchmen and
other employees, grounds maintenance, building(s) maintenance and repair
expense, supplies, fire line and fire sprinkler monitoring expenses, sanitation
pick-up, real estate taxes and property insurance and, in general, all costs and
expenses incurred by LESSOR in maintaining and operating Linton International
Plaza.
7.UTILITIES AND OTHER SERVICE: Additionally, and notwithstanding the foregoing,
LESSEE shall pay all charges and expenses for utilities and other services used
upon and in connection with the LEASED PREMISES, telephone service and shall
[ILLEGIBLE]
<PAGE>
Austin Delray Realty, LLC Lease Kenwick Industries, Inc.
- --------------------------------------------------------------------------------
deemed an eviction or disturbance of LESSEE'S use and possession of the LEASED
PREMISES or any part thereof or render the LESSOR liable to the LESSEE for
damages therefore or relieve the LESSEE from performance of the LESSEE'S
obligations under this LEASE, including but not limited to LESSEE'S obligation
to pay RENTAL, provided that LESSOR will make, at all times, reasonable efforts
to promptly remedy any situation which might interrupt such services.
8. USE: The LESSEE shall use and occupy the LEASED PREMISES for the following
use(s) and purpose(s) and for no other use or purpose whatsoever without the
prior written consent of LESSOR which may be given or withheld at LESSOR'S sole
discretion:
/s/ [ILLEGIBLE]
Initial
Marketing Company and Corporation Headquarters. LESSEE will not be allowed to
change its type of business without first obtaining the prior written consent of
the LESSOR.
9. lMPROVEMENTS: All improvements in or upon the LEASED PREMISES, as of the date
of this LEASE ("LEASEHOLD IMPROVEMENTS"), which shall include but not be limited
to fixed partitioning, approved window treatments, carpeting, etc. shall be the
property of the LESSOR throughout the TERM of this LEASE and shall remain the
property of the LESSOR upon termination of this LEASE.
10. LEASEHOLD IMPROVEMENTS: LESSEE acknowledges and agrees that all LEASEHOLD
IMPROVEMENTS in the LEASED PREMISES are satisfactory to LESSEE and that LESSOR
is not required under this LEASE to make any additional improvements to the
LEASED PREMISES except as set forth in the ADDENDUM attached hereto,
11. LESSEE'S RIGHTS AND RESTRICTIONS AS TO BUSINESS SIGNS: LESSEE may, at its
own expense, erect or place, of a style, quality and in a manner approved in
writing by LESSOR, and based on LESSOR'S building standards, signs concerning
LESSEE'S business on the entrance door of the LEASED PREMISES or as otherwise
designated or approved by LESSOR. Notwithstanding anything to the contrary
herein, the maintenance of all such signs shall be the sole obligation of LESSEE
and such signs shall at all times be kept in a good state of repair and
appearance and LESSEE shall repair any and all damage that may have been done to
the buildings and/or the LEASED PREMISES by the erection, existence, maintenance
or removal of such signs. At the end of the LEASE TERM, LESSEE shall remove all
of LESSEE'S signs at LESSEE'S sole expense. LESSEE acknowledges and agrees that
it is the intent of LESSOR to have uniform LESSEE signs throughout Linton
International Plaza. Except as provided above, no sign, notice or other
advertisement shall be inscribed, painted, affixed or displayed on any of the
windows or on the exterior of any of the doors of the LEASED PREMISES, nor
anywhere outside the LEASED PREMISES without the prior written consent of the
LESSOR or its agents, which consent may be granted or withheld in LESSOR'S sole
discretion. For the purposes of this LEASE, LESSOR agrees, at LESSOR'S expense,
to install LESSEE'S business name on the main entrance sign located at the
entranceway to the Linton International Plaza off of Linton Boulevard.
12. EVENTS OF DEFAULT/REMEDIES:
a) The following events shall be deemed to be events of default by
LESSEE under this LEASE:
(i) LESSEE shall fail to pay any rental or any other sums of money
due hereunder and such failure shall continue for a period of
three (3) days after the date upon which written notice of
such failure is sent by LESSOR;
(ii) [ILLEGIBLE]
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(iv) LESSEE shall fail to promptly move into, take possession of
and operate its business on the LEASED PREMISES when the
LEASED PREMISED are ready for occupancy or shall cease to do
business in or vacate or abandon any substantial portion of
the LEASED PREMISES or shall fail to use and occupy the LEASED
PREMISES for the uses and purposes set forth in Paragraph 8 of
this LEASE without the prior written consent of LESSOR or
shall remove from the LEASED PREMISES a major portion of the
goods, wares, equipment, or furnishings usually kept on the
LEASED PREMISES;
(v) LESSEE shall become insolvent or unable to pay its debts as
they become due, LESSEE files a petition in bankruptcy or for
reorganization under the bankruptcy laws or an admission,
answer or other responsive pleading, consenting to, or
requesting the relief afforded by the bankruptcy laws;
(vi) LESSEE makes an assignment for the benefit of creditors,
within the meaning of the bankruptcy laws or LESSEE consents
to the appointment of a receiver or custodian for all or a
substantial part of its property;
(vii) The filing against LESSEE of a petition in bankruptcy or for
reorganization under the bankruptcy laws, the adjudication of
LESSEE as a bankrupt, the entry of a court order appointing a
receiver, custodian or trustee for all or a substantial part
of its property without its consent or the assuming of custody
or sequestration by a courts of competent jurisdiction of all
or substantially all of LESSEE'S property, and within 30 days
thereafter such filing is not dismissed, or such court order
is not vacated or such assumption or sequestration is not
released; or
(viii) The adjudication of LESSEE as a bankrupt.
b) Upon the occurrence of any event or events of default, LESSOR shall
have the option to pursue any one or more of the following remedies:
(i) LESSOR shall have the right to cancel and terminate this LEASE
and dispossess LESSEE;
(ii) LESSOR shall have the right without terminating or canceling
this LEASE to declare all amounts and due under this LEASE for
the remainder of the existing term (and an applicable
extension or renewal thereof) to be immediately due and
payable, and thereupon all RENTALS and other charges due
hereunder to the of the initial terms and any renewal terms,
if applicable, shall be accelerated;
(iii) LESSOR may elect to enter and repossess the LEASED PREMISES
and re-let the LEASED PREMISES for LESSEE'S account, holding
LESSEE liable in damages for all expenses incurred in any such
re-letting and for any difference between the amount of RENTAL
received from such re-letting and the RENTAL due and payable
under the term of this LEASE; and
(iv) LESSOR may enter upon the LEASED PREMISES and do whatever
LESSEE is obligated to do under this LEASE (and LESSEE agrees
to reimburse LESSOR on demand for any expenses which LESSOR
may incur in effecting compliance with LESSEE'S obligations
under this LEASE and LESSEE further agrees that LESSOR shall
not be liable for any damages resulting to the LESSEE from
such action). All such remedies of LESSOR shall be cumulative
and not exclusive, and in addition, LESSOR may pursue any
other remedies that may be permitted by law or in equity.
Forbearance by LESSOR to enforce one or more of the remedies
herein provided upon an event of default shall not be deemed
or construed to [ILLEGIBLE]
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c) This Paragraph 12 shall be enforceable to the maximum extent
permissible by applicable law, and the unenforceability of any
portion hereof shall not thereby render unenforceable any other
portion.
d) LESSOR shall not be in default hereunder unless LESSOR has not begun
the cure of any failure of LESSOR to meet its obligations hereunder
within 30 days after the receipt by LESSOR of written notice from
LESSEE of the alleged failure to perform or thereafter does not
pursue the cure thereof with reasonable diligence. in no event shall
LESSEE have the right to terminate or rescind this LEASE as a result
of LESSOR'S default as to any covenant or agreement contained in
this LEASE or as a result of the breach of any promise or inducement
hereof, whether in this LEASE or elsewhere. LESSEE hereby waives
such remedies of termination and recision end hereby agrees that
LESSEE'S remedies for default hereunder and for breach of any
promise or inducement by LESSOR shall be limited to a suit for
damages and/or injunction.
13. QUIET POSSESSION: Upon payment by LESSEE of the RENTAL and the other sums
herein provided for and upon the observance and performance of all terms,
provisions, covenants and conditions on LESSEE'S part to be observed or
performed, LESSEE shall, subject to all of the terms, provisions, covenants and
conditions of this LEASE, peaceably end quietly hold and enjoy the LEASED
PREMISES for the TERM of this LEASE.
14. LESSEE ELECTRICAL: LESSEE shall use only standard equipment that operates on
the building's standard electrical circuits, but which in no event shall
overload the building's standard electric circuits from which the LESSEE obtains
electric current or which will, in the opinion of LESSOR, interfere with the
reasonable use of the building by LESSOR or the other LESSEE's or which shall
create a hazard within the building, the LEASED PREMISES or the other portions
of Linton International Plaza. LESSEE shall comply with all applicable
governmental mandates regarding temperature control.
15. CHARGES FOR SERVICE: It is understood and agreed by and between the parties
hereto that any charges by LESSOR for services to or for work done on the LEASED
PREMISES, by order of or on behalf of LESSEE, shall be due and payable to LESSOR
upon demand.
16. LATE CHARGE: LESSEE agrees that LESSEE shall promptly pay all RENTAL and any
other charge or expense at the times and places stated herein; that LESSEE shall
promptly pay all other charges for work performed for or on behalf of LESSEE,
and shall promptly pay any other charges that accrue under this LEASE that are
due and payable by LESSEE. LESSEE shall be required to pay LESSOR a late charge
equal to ten (10%) percent on any RENTAL or other charge or expense that remains
unpaid ten (10) days after same is due. Interest shall also accrue at the
highest rate permitted by law on all RENTAL and other costs and expenses not
paid when due and payable, said interest commencing as of the date same became
due and payable.
17. ALTERATIONS AND REPAIRS: LESSEE shall make no alterations additions or
improvements in or the LEASED PREMISES without the written consent of LESSOR
which consent shall not be unreasonably withheld, and all such alterations,
additions and improvements including, but not limited to, additional fixtures,
carpeting and wall covering, but specifically excluding office furniture and
equipment which shall be readily removable without damage to the LEASED
PREMISES, shall be and shall remain a part of the LEASED PREMISES at the
expiration of this LEASE.
18. LIENS: LESSEE further covenants and agrees that LESSEE shall timely pay all
claims, liens, judgments and/or other encumbrances of contractors,
subcontractors, mechanics, laborers, material men, or others, caused or
allegedly caused by and LESSEE shall indemnify, defend and hold LESSOR harmless
from and against same and from and against all expenses, costs and charges,
including but not limited to bond premiums for release of liens and judgments
and attorneys' fees and costs, reasonably incurred in discharging the LEASED
PREMISES or any part thereof or Linton International Plaza or any part thereof
from same. In the event any such claim, lien, judgment or other encumbrance
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shall be made or filed, LESSEE shall bond or discharge same within ten (10) days
after the same has been so made or filed. It is understood and agreed between
the parties hereto that any expenses, costs or charges above referred that are
paid by LESSOR (LESSOR shall have the right but not the obligation to pay any of
same) shall due and payable by LESSEE to LESSOR on demand. Notwithstanding
anything to the contrary herein, LESSEE shall not have any authority to create
any liens, claims, judgments and/or other encumbrances for labor or materials on
the LESSOR'S interest in the LEASED PREMISES or any other portion of Linton
International Plaza and all persons and other entities contracting with the
LESSEE or otherwise providing such labor and material for the destruction and
removal of any facilities or other improvements or for the erection,
installation, alteration, maintenance or repair of any facilities or other
improvements on or about the LEASED PREMISES, and all other material men,
contractors, mechanics, laborers and others, are hereby charged with notice that
they must look solely and only to the LESSEE'S interest in the LEASED PREMISES
to secure the payment for any work done or material furnished at the request or
instruction of LESSEE. LESSEE shall notify all persons and other entities
providing such labor or materials of the foregoing in accordance with section
713.10, Florida Statutes, as same may be amended from time to time. Such notice
shall be in writing and a copy of same shall be provided to LESSOR.
19. PARKING: LESSOR grants to LESSEE the right to use in common with the other
LESSEEs entitled to similar use thereof the parking areas for the parking of
automobiles of LESSEE'S customers, clients and invitees in the area designated
by LESSOR. LESSEE acknowledges and agrees that LESSOR may at any time and from
time to time assign specific parking spaces to other LESSEEs and/or others for
their parking and/or the parking of their customers, clients, guests, invitees
and employees. The location of any such parking spaces shall be at LESSOR'S sole
discretion. Number of parking spaces is estimated using four parking spaces per
1,000 rentable square feet on a non-allocated basis.
20. ESTOPPEL CERTIFICATE: LESSEE covenants and agrees that from time to time,
upon not less than five (5) days prior request by LESSOR, LESSEE shall deliver
to LESSOR a statement, in writing, certifying (a) that this LEASE is unmodified
and in full force and effect or, if there have been modifications, that the
LEASE, as modified, is in full force and effect and stating the modifications;
(b) the dates to which RENTAL and other expenses and charges have been paid; (c)
that LESSOR is not in default under any of the provisions of this LEASE, or if
in default, the nature thereof, in detail; and (d) that LESSEE is not in default
under any of the provisions of this LEASE, or if in default, the nature thereof,
in detail. LESSOR covenants and agrees that from time to time, upon not less
than five (5) days prior request by LESSEE, LESSOR shall deliver to LESSEE a
statement, in writing, certifying that (a) this LEASE is unmodified and in full
force and effect, or, if there have been modifications, that the LEASE, as
modified, is in full force and effect and stating the modification; (b) that the
dates to which RENTAL and other expenses and charges have been paid; (c) that
LESSEE is not in default under any of the provisions of this LEASE, or if in
default, the nature thereof, in detail; and (d) that LESSOR is not in default
under any of the provisions of this LEASE, or if in default, the nature thereof,
in detail.
21. LESSOR'S RIGHTS: At any time, and from time to time, throughout the TERM of
this LEASE, LESSOR may, at its option, mortgage, lien, pledge or otherwise
encumber LESSOR'S rights and interest in and to this LEASE, the LEASED PREMISES
and/or Linton International Plaza or any portion thereof. This LEASE and all of
LESSEE'S rights and interests hereunder are and shall at all times be subject to
and subordinate to any and all of same provided that, so long as the Lessee is
not in default under the Lease, said Mortgagee, lienor, pledgor or other
encumberer agrees to provide Lessee quiet enjoyment of the Leased Premises
without hindrance, reduction or obstruction to the Lessee or the Lessee's rights
under the Lease. The foregoing provisions shall be self-operative, LESSEE
covenants and agrees that LESSEE shall, on demand, execute, acknowledge and
deliver to LESSOR or LESSOR'S designee, any such instrument as is necessary to
verify and accomplish the foregoing subordination provided that, so long as the
Lessee is not in default under the Lease, the Mortgagee, Lienor, Pledgor or
other encumbrerer agree to provide the Lessee quiet enjoyment of the Leased
Premises without hindrance, reduction or obstruction to the Lessee or the
Lessee's rights under the Lease. If Lessee shall fail, neglect or refuse to
execute, acknowledge and deliver such instrument, Lessor, in addition to all
other rights and remedies may, as agent or attorney in fact of Lessee, execute,
acknowledge and deliver such
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instrument on Lessee's behalf and Lessee hereby irrevocably nominates,
constitutes and appoints Lessor as Lessee's proper and legal agent and attorney
in fact for the purpose of executing such instrument subject to the provisions
relating to quiet enjoyment. If LESSEE shall fail, neglect or refuse to execute,
acknowledge and deliver any such instrument, LESSOR, in addition to all other
rights and remedies, may, as agent or attorney-in-fact of LESSEE, execute,
acknowledge and deliver same on behalf of LESSEE and LESSEE hereby irrevocably
nominates, constitutes and appoints LESSOR as LESSEE'S proper and legal agent
and attorney-in-fact for such purposes. Additionally, this LEASE is freely
assignable by LESSOR, however, LESSOR shall give LESSEE written notice of any
such assignment within ten (10) days of the occurrence of same. If the interests
of LESSOR under this LEASE shall be transferred voluntarily or by reason of a
foreclosure or other proceedings for enforcement of any mortgage or other
security instrument on the LEASED PREMISES or any other portion of Linton
International Plaza (including but not limited to a deed in lieu of
foreclosure), LESSEE shall be bound to such transferee and any subsequent
successor or assignees of such transferee (herein collectively the "PURCHASER"),
for the balance of the TERM hereof remaining and any extensions or renewals
thereof which may be affected in accordance with the terms and provisions
hereof, with the same force and effect as if the PURCHASER were the original
LESSOR under this LEASE and LESSEE does hereby agree to attorn to the PURCHASER,
as its LESSOR, said attornment to be effective and self-operative without the
execution of any further instruments upon the PURCHASER succeeding to the
interest of the LESSOR under this LEASE. The respective rights and obligations
of LESSEE and the PURCHASER upon such attornment to the then remaining balance
of the TERM of this LEASE and any such extensions and renewals, shall be and are
the same as those set forth herein. In the event of such transfer of LESSOR'S
interest, LESSOR shall be released and relieved from all liability and
responsibilities thereafter accruing to LESSEE under this LEASE or otherwise and
the PURCHASER by acceptance of such transfer shall become liable and responsible
to LESSEE in respect to all obligations of the LESSOR under this LEASE arising
from and after the date of such transfer. Notwithstanding that the foregoing
provisions are self-operative, LESSEE covenants and agrees that LESSEE shall, on
demand, execute, acknowledge and deliver to LESSOR or LESSOR'S designee, any and
all instruments necessary to verify and/or accomplish the foregoing provided
that, so long as the Lessee is not in default under the Lease, the Mortgagee
Purchaser agree to provide the Lessee quiet enjoyment of the Leased Premises
with hindrance, reduction or obstruction to the Lessee and the Lessee's rights
under the Lease. If Lessee shall fail, neglect or refuse to execute, acknowledge
and deliver any such instruments, Lessor, in addition to all other rights and
remedies, and as agent or attorney-in-fact of Lessee, execute, acknowledge and
deliver same on behalf of Lessee and Lessee hereby irrevocably nominates,
constitutes and appoints Lessor as Lessee's proper and legal agent and
attorney-in-fact for such purposes subject to the proviso relating to quiet
enjoyment
22. ASSIGNMENT BY LESSEE: Without the written consent of LESSOR being first
obtained in each case, which consent shall not be unreasonably withheld, LESSEE
shall not assign, transfer, mortgage, pledge, or otherwise encumber or dispose
of this LEASE or the LEASED PREMISES or any part thereof or permit the LEASED
PREMISES or any part thereof to be occupied by any other person or entity other
than LESSEE. If this LEASE is assigned, or if the LEASED PREMISES or any part
thereof is sublet or occupied by any person or entity other than the LESSEE, the
LESSOR may, at its option, collector accept RENTAL and other sums due and
payable hereunder from the assignee, subtenant, or occupant and apply the net
amount collected or accepted to the RENTAL and other sums due and payable
hereunder from LESSEE, but no such collection or acceptance of same from the
assignee, subtenant or other occupant shall constitute a waiver of this covenant
or the acceptance of the assignee, subtenant, or occupant as LESSEE, nor shall
same be construed as, or implied to be, a release of the LESSEE from the further
observance and performance by the LESSEE of the terms, provisions, covenants and
conditions herein contained.
23. SUCCESSORS AND ASSIGNS/BINDING EFFECT: All terms, provisions, covenants and
conditions to be observed and performed by LESSEE shall be applicable to and
binding upon LESSEE'S heirs, administrators, executors, successors and assigns,
subject, however, the restrictions as to assignment, subletting, etc. by LESSEE
as provided herein. All of the terms, provisions and conditions of this LEASE
shall be deemed to be covenants running with the land.
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/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
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24. LESSEE'S INSURANCE:
a) From and after the date of delivery of the LEASED PREMISES from
LESSOR to LESSEE and continuing throughout the TERM of this LEASE,
LESSEE shall carry and maintain, at LESSEE'S sole cost and expense,
the following types of insurance in the amounts specified and in the
form hereinafter provided for:
(i) Comprehensive General Public Liability Insurance covering the
LEASED PREMISES and LESSEE'S use thereof against all claims
for bodily injury or death, personal injury and/or property
damage occurring upon, in or about the LEASED PREMISES
regardless of when such claims may be made. Such insurance
shall have a combined single limit of at least $1,000,000.00.
The insurance coverage required under this Paragraph 24 shall
include coverage for liability hazards as defined in the
policy forms and endorsements for premises and operations
liability, personal injury liability, broad form property
damage liability and contractual liability which shall extend
to any liability of LESSEE arising out of the indemnities
provided in this LEASE. Upon receipt of written notice from
LESSOR, LESSEE shall increase the limits of its comprehensive
general public liability insurance to reasonable amounts
customary for LESSORs of a commercial project similar to
Linton International Plaza.
(ii) Statutory Worker's Compensation Insurance to comply with the
applicable laws of the State of Florida.
(iii) All Risk Damage Insurance covering LESSEE'S trade fixtures,
merchandise and personal property in, on, or about the LEASED
PREMISES. Such insurance (a) shall be written on a replacement
cost basis in an amount equal to 100% of the replacement cost
of the insured property; and (b) shall provide protection
against the perils that are covered under standard insurance
industry practices within the classification of all risk
insurance, including, but not limited to, loss or damage, from
fire, lightning, windstorm, hail, explosion, riot, riot
attending a strike, civil commotion, aircraft, vehicles,
smoke, domestic water damage, collapse, sprinkler leakage,
vandalism, and malicious mischief.
b) All policies of insurance provided for in this Paragraph 24 shall be
issued in a form acceptable to LESSOR by insurance companies having
and maintaining at least an "A PLUS" rating in the most currently
available "BEST'S" Insurance Reports and qualified to do business in
the State of Florida. Each and every such policy:
(i) Shall be issued in the names of the LESSEE and LESSOR and any
other parties in interest from time to time designated in
writing by LESSOR or LESSEE;
(ii) Shall (or a certificate thereof shall) be delivered, together
with a paid receipt therefor, to LESSOR and any such other
parties in interest prior to the to LESSEE and thereafter at
least thirty (30) days prior to the expiration of each such
policy, and, as often as any such policy shall expire or
terminate, renewal or additional policies shall be procured
and maintained by LESSEE in like manner and to like extent,
and each certificate shall indicate specifically the form on
which the policy is written (occurrence or claims made), the
policy deductible and that the insurer has waived any right of
subrogation It would otherwise have against LESSOR;
(iii) Shall contain a provision that any misrepresentation or breach
of the policy conditions by one insured shall not invalidate
coverage for any other insured;
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(iv) Shall contain a provision that the insurer shall give to
LESSOR and any other designated parties in interest, at least
thirty (30) days notice, in writing, in advance of the
insurer's intention to cancel, refuse to renew or otherwise
terminate the policy, suspend or terminate any coverage,
reduce any policy limits, increase any policy deductibles or
otherwise alter any terms or conditions of the policy;
(v) Shall be written as a primary policy which does not contribute
to and is not in excess of coverage which LESSOR may carry,
notwithstanding the requirement that LESSOR may be named as an
additional insured and regardless of any other insurance that
LESSOR may elect to obtain;
(vi) Shall not provide for deductibles in excess of $5,000.00.
(vii) Shall provide that the full amount of any losses sustained
shall be payable for LESSOR'S benefit under the terms of this
LEASE, notwithstanding any act, omission or negligence of
LESSOR or LESSEE which might otherwise result in a forfeiture
of insurance coverage.
c) Any insurance provided for in this Paragraph 24 may be maintained by
means of a policy or policies of blanket insurance covering
additional items or locations of insured; provided, however, that:
(i) LESSOR and any other parties in interest from time to time
designated by LESSOR to LESSEE shall be named as an additional
insured thereunder as their interest may appear;
(ii) The coverage afforded LESSOR and any such other parties in
interest shall not be reduced or diminished by reason of the
use of such blanket policy of insurance;
(iii) Any such policy or policies (except any covering the risks as
referred to in this Paragraph 24) shall specify therein (or
LESSEE shall furnish LESSOR with a written statement from the
insurers under such policy) the amount of the total insurance
allocated to the improvements and fixtures more specifically
detailed in this Paragraph 24; and
(iv) The requirements set forth in this Paragraph 24 are otherwise
satisfied.
d) LESSEE agrees to permit LESSOR at all reasonable times to inspect
the original policies of insurance with respect to the LEASED
PREMISES or to require that possession of same be delivered to
LESSOR or LESSOR'S designee.
25. LESSOR'S INSURANCE:
a) Subject to reimbursement by LESSEE as herein provided, LESSOR shall
maintain in effect at all times during the TERM of this LEASE the
following types of insurance coverage in the amount specified and in
the form hereinafter provided for:
(i) Comprehensive General Public Liability Coverage covering the
common areas of Linton International Plaza ("COMMON AREAS")
against claims for bodily injury or death, personal injury and
property damage occurring upon, in or about the COMMON AREAS,
such insurance to afford protection to the Linton
International Plaza, which shall have a combined single limit
of at least $1,000,000.00 (One Million Dollars).
(ii) Property Insurance covering the building of which the LEASED
PREMISES constitutes a part, (including exterior walls,
downspouts, gutter and roof), and (at LESSOR'S option)
excluding all improvements, fixtures and other matters
required to be insured by LESSEE pursuant to this LEASE, in an
amount not less than ninety (90%) percent of full
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replacement cost (exclusive of the cost of excavations,
foundations and footings) providing protection against perils
that are covered under standard insurance industry practices
within the classifications of all risk insurance, including
but not limited to loss or damage from fire, lightning,
windstorm, hail, explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles, smoke, domestic water
damage, collapse, sprinkler damage, vandalism, malicious
mischief, and such other risks as LESSOR may from time to time
determine and with any such deductibles as LESSOR may from
time to time determine.
(iii) Loss of Rental Income Coverage to provide Rental Income in the
event of an insured loss to the building, of which the LEASED
PREMISES is a part, making the building or a portion thereof,
uninhabitable. The existence of any such insurance shall not
however relieve LESSEE of his obligation to pay RENTAL
hereunder.
b) Any insurance provided for in this Paragraph 25 may be maintained by
means of a policy or policies of blanket insurance, covering
additional items, actions or properties, provided, however, that the
requirements set forth in this Paragraph 25 are otherwise satisfied.
LESSOR may maintain, at its option, from time to time, such other
additional insurance coverage as LESSOR may deem appropriate for the
LEASED PREMISES and/or Linton International Plaza.
c) All of LESSOR'S insurance cost for maintaining the insurance
coverage required or permitted pursuant to this Paragraph 25 shall
be included in the .
d) Notwithstanding anything to the contrary herein, LESSEE shall be
solely responsible for any increase in LESSOR'S insurance premium
which are the result of activities of LESSEE, its agents,
contractors, employees or invitees.
26. WAIVER OF SUBROGATION: The insurance policies required by this LEASE shall
provide for waivers of any right of subrogation that the insurer of such party
may acquire against the other party hereto and, at LESSOR'S request, against any
other occupant with respect to any such losses which are required to be insured
against or which are actually insured against, even if the loss results from a
negligent act or omission.
27. INDEMNIFICATION: In consideration of the LEASED PREMISES being leased to
LESSEE in accordance with the terms and provisions of this LEASE, LESSEE agrees
that LESSEE, at all times (both during and after the TERM hereof), shall
indemnify, defend and hold LESSOR and its agents, servants, employees,
licensees, visitors' customers, patrons and invitees harmless from and against
any and all claims, demands, losses, damages, liabilities and expenses (in which
may arise or be claimed against LESSOR or its agents, servants, employees,
licensees, visitors, customers, patrons and invitees by any person, corporation
or other entity for any injury or damage to that person, corporation or other
entity or the property of that person, corporation or other entity, consequent
upon or arising out of the use or occupancy of the LEASEHOLD PREMISES, the
COMMON AREAS, or any other portion of Linton International Plaza by LESSEE, its
agents, servants, employees, licensees, visitors, customers, patrons or
invitees, or consequent upon or arising from any acts, omissions, neglect or
fault of LESSEE, its agents, servants, employees, licensees, visitors,
customers, patrons or invitees, or consequent upon or arising from LESSEE'S or
its agents, servants, employees, licensees, visitors, patrons or invitees
failure to comply with any and all applicable laws, statutes, ordinances, codes,
rules or regulations. LESSOR shall not be liable to LESSEE or LESSEE'S agents,
servants, employees, licensees, visitors, patrons or invitees for any claims,
demands, losses, damages or injuries to the persons or property of LESSEE or its
agents, servants, employees, licensees, visitors, customers, patrons and
invitees which may be caused by the acts, neglect, omissions or faults of any
person, corporation or other entity, except when same results from the
negligence of LESSOR or LESSOR'S agents or employees, and the LESSEE shall
indemnify, defend and hold LESSOR harmless from and against any and all claims'
demands, damages, liabilities, losses, injuries or damages to the person or
property of any such person, corporation or other entity where said injuries or
damages arose about or upon the LEASED PREMISES, the COMMON AREAS or the other
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portions of Linton International Plaza, as a result of the willful conduct or
negligence of LESSEE, its agents, employees, servants, licensees, visitors,
customers, patrons and invitees. Additionally, all personal property placed or
moved into the LEASED PREMISES shall be at the risk of LESSEE and the owners
thereof, and LESSOR shall not be liable to LESSEE for damages to said personal
property. LESSEE shall maintain at all times during the TERM of this LEASE an
insurance policy or policies, in an amount or amounts sufficient to indemnify,
defend and hold LESSOR harmless in accordance herewith. In case LESSOR or its
agents, servants, employees, licensees, visitors, patrons or invitees shall be
made a party to any litigation commenced by or against LESSEE or its agents,
servants, employees, licensees, visitors, patrons or invitees, then LESSEE shall
protect, defend and hold LESSOR harmless from and against same and shall pay all
costs and expenses including, but not limited to, reasonable attorneys' fees and
costs incurred or paid by LESSOR or its agents, servants, employees, licensees,
visitors, patrons or invitees in connection with such litigation.
Notwithstanding the foregoing or anything else herein to the contrary, Lessor
shall not indemnify Lessee for any claims, demands, losses, damages, liabilities
and/or expenses arising out of the Lessor's or its agents, servants, employees,
licensees, visitors, customers, patrons and invitees, breach of the Lease terms
and/or any litigation arising therefrom.
28. RELEASE BY LESSEE: LESSEE hereby releases LESSOR from any and all liability
for any and all loss or damage of any kind or for any injury to or death of any
person or any damage to property of LESSEE or any other person from any cause
whatsoever (including, without limitation, bursting pipes, water leaks, and
smoke) by reason of the construction, use and occupancy or enjoyment of the
LEASED PREMISES, the COMMON AREAS or the other portions of Linton International
Plaza by LESSEE or any person therein or holding under LESSEE unless same is due
to negligent acts of the LESSOR. LESSEE agrees to and hereby does defend,
indemnify and hold harmless LESSOR from any and all claims, actions, demands,
damages, costs and expenses and liability whatsoever, including reasonable
attorneys' fees, on account of any such real or claimed loss or damage or
liability and from all liens, claims and demands occurring in or at the LEASED
PREMISES, the COMMON AREAS or the other portions of Linton International Plaza
or arising out of the construction, use, occupancy or enjoyment of the LEASED
PREMISES, the COMMON AREAS or the other portions of Linton International Plaza
and occasioned in whole or in part by any act or omission of LESSEE, its agents,
contractors, servants, employees or invitees, unless caused by negligent acts of
the LESSOR. LESSEE shall not, however, be liable for damage, injury or other
liability occasioned by the sole active negligence or willful violations of this
LEASE by LESSOR or its agents, contractors, servants or employees, unless such
damage, injury or other liability arises from perils against which LESSEE is
required by this LEASE to insure against or which perils LESSEE actually carries
insurance (even though not required by this LEASE). LESSOR shall in no event be
liable to LESSEE or anyone claiming by, under or through LESSEE for any loss or
damage or liability resulting from the acts or omissions of other occupants of
the Linton International Plaza or by any other third person who was not acting
under the direction or control of LESSOR.
29. GOVERNMENTAL REGULATIONS: LESSEE shall faithfully observe in the use and
occupancy of the LEASED PREMISES, the COMMON AREAS and the other portions of
Linton International Plaza, all municipal and county ordinances and all
applicable state, local and federal statutes, laws, rules and regulations and
all other applicable governmental and quasi-governmental rules regulations and
requirements now in force or which may hereafter be in force.
30. FIRE OR CASUALTY: In the event the building containing the LEASED PREMISES
shall be destroyed, or so damaged, or injured by fire or other casualty during
the TERM of this LEASE, whereby the same shall be rendered untenantable, the
LESSOR shall have the right to render such building tenantable, by repairs,
within one hundred eighty (180) days therefrom. If same is not rendered
tenantable within said period of time, it shall be optional with either party
hereto to cancel this LEASE, and in the event of such cancellation, the RENTAL
and other sums due and payable shall be paid only to the date of such fire or
casualty. Said cancellation shall be in writing addressed to the other party as
herein provided. During any time that the LEASED PREMISES are untenantable due
to causes set forth in this Paragraph 30, the RENTAL and other sums due and
payable or a just and fair proportion thereof, shall be abated.
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31. EMINENT DOMAIN: If any part of the LEASED PREMISES shall be taken by
condemnation or eminent domain, the LESSEE may elect to continue this LEASE, and
the RENTAL and other sums due and payable shall be reduced in proportion to the
area of the LEASED PREMISES taken by such condemnation or eminent domain. All
sums awarded or agreed upon between LESSOR and the condemning authority for the
taking of the interest of LESSOR, whether as damages or as compensation, and
whether for partial or total condemnation, shall be the sole property of the
LESSOR. If this LEASE should be terminated under any provision of this Paragraph
31, RENTAL and other sums due and payable shall be payable up to the date that
possession is taken by the taxing authority, and LESSOR will refund to LESSEE
any prepaid unaccrued RENTAL and prepaid unaccrued additional sums due and
payable less any sum or amount then owed by LESSEE to LESSOR in accordance with
the terms and conditions hereof. All sums awarded or agreed upon between Lessor
and the condemning authority for the taking of the interest of Lessee, whether
as damages or compensation, and whether as partial or total condemnation, shall
be the sole property of the Lessee.
32. RIGHT OF ENTRY: LESSOR, or any of its agents or employees, shall have the
right (but not the obligation) to enter the LEASED PREMISES during all
reasonable hours, to examine same and/or to make such repairs, additions or
alterations as LESSOR may deem necessary for the safety, comfort or preservation
thereof, or of said building, or to exhibit said LEASED PREMISES at any time
within one hundred eighty (180) days prior to the expiration date of this LEASE.
Said right of entry shall likewise exist for the purpose of removing placards,
signs, fixtures, alterations or additions which do not conform to this LEASE.
33. NOTICES: Any notice provided for in this LEASE shall be sent by US mail,
certified, return receipt requested, or by hand delivery, addressed to LESSOR or
LESSEE as follows:
As to LESSOR: Austin Delray Realty, L.L.C.
39 Avenue C INITIAL
P.O. Box 8 /s/ [ILLEGIBLE]
Bayonne, New Jersey 07002
As to LESSEE: Kenneth Wulwick, As President and/or Kenwick Industries, Inc.
8781 Southwest 8th Street 660 Linton Boulevard, #202
Plantation, Florida 33324 Delray Beach, Florida
Either party, from time to time, by such notice, may specify another address to
which subsequent notices shall be sent. For the purposes of this LEASE, any such
notice, if sent by US mail, certified, return receipt requested, and if properly
addressed and with proper postage affixed, shall be deemed received on the date
of the mailing. Any such notice delivered by hand shall be deemed received on
the date of delivery or attempted delivery, if such delivery is refused.
Additionally, notices from LESSOR to LESSEE shall be deemed delivered and
received if posted in a conspicuous place on the LEASED PREMISES.
34. RULES AND REGULATIONS: LESSEE covenants and agrees to abide by all rules and
regulations ("RULES AND REGULATIONS") LESSOR may adopt from time to time for
operation of the LEASED PREMISES and the other portions of Linton International
Plaza which RULES AND REGULATIONS shall include but shall not be limited to
rules and regulations concerning parking facilities, other occupants of the
Linton International Plaza, and the COMMON AREAS of the Linton International
Plaza. The present RULES AND REGULATIONS with which LESSEE hereby covenants and
agrees to comply are attached hereto as Exhibit "A" and are incorporated into
this LEASE by referral. Any future RULES AND REGULATIONS shall become a part of
this LEASE and LESSEE hereby agrees to comply with the same upon delivery of a
copy thereof to LESSEE providing same do not deprive LESSEE of its substantial
rights established under this LEASE.
35. HAZARDOUS AND/OR INDUSTRIAL MATERIALS: LESSEE agrees that no hazardous
materials, hazardous waste or other hazardous substances shall be placed, stored
or maintained in or upon the LEASED PREMISES, the COMMON AREAS or any other
portion of Linton International Plaza without the prior written consent of
LESSOR, which consent may be held at LESSOR'S sole discretion. LESSEE agrees
that it will not discharge any
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permitted hazardous materials, hazardous waste or any other hazardous substances
into or upon the land, water or air of Linton International Plaza or the LEASED
PREMISES without the prior written consent of LESSOR, which consent may be
withheld at LESSOR'S sole discretion. Any and all permitted hazardous materials,
waste and other substances shall be stored and managed in a manner that will
prevent their release into the environment during use, fire, spillage or other
accidental occurrence. Permitted hazardous materials, waste and other substances
shall be transported to and from the Linton International Plaza and the LEASED
PREMISES in a manner consistent with the directives of local, state and federal
regulatory authorities. LESSEE further agrees that it will not discharge any
industrial waste water, hazardous material, hazardous waste or any other
hazardous substance regulated by local, state or federal authorities into any
sewer system servicing the LEASED PREMISES or Linton International Plaza.
36. RADON GAS: Radon is a naturally occurring gas that, when it has accumulated
in a building in sufficient quantities, may present health risks to persons who
are exposed to it. Levels of Radon that exceed Federal and State Guidelines have
been found in buildings in the State of Florida. Additional information
regarding Radon and Radon testing may be obtained from your County Public Health
Department.
37. SURRENDER OF PREMISES: LESSEE agrees to surrender to LESSOR at the end of
the TERM of this LEASE and/or upon any cancellation of this LEASE the LEASED
PREMISES in as good a condition as said LEASED PREMISES were at the beginning of
the TERM of this LEASE, ordinary wear and tear excepted. LESSEE agrees that if
LESSEE does not surrender said LEASED PREMISES to LESSOR at the end of the TERM
of this LEASE or upon such cancellation, then and upon the occurrence of such
event, LESSEE shall be required to pay to LESSOR two (2) times the monthly
RENTAL paid in the final month of LESSEE'S term hereunder for each and every
month that LESSEE holds over, unless said holdover is agreed to by LESSOR, which
agreement must be evidenced in writing. Additionally, LESSEE shall pay any and
all damages (including but not limited to attorneys fees and costs) that LESSOR
may suffer on account of LESSEE'S failure to so surrender to LESSOR possession
of said LEASED PREMISES and LESSEE shall indemnify and save LESSOR harmless from
and against all claims made by any succeeding LESSEE of said LEASED PREMISES or
any portion thereof against LESSOR on account of any delay of LESSOR in
delivering possession of said LEASED PREMISES or any portion thereof to said
succeeding LESSEE so far as such delay is occasioned by failure of LESSEE to or
surrender said LEASED PREMISES in accordance herewith. No receipt of money by
LESSOR from LESSEE after termination of this LEASE or the service of any notice
of commencement of any suit or any final judgment for possession shall
reinstate, continue or extend the TERM of this LEASE or affect any such notice,
demand, suit or judgment. No act or thing done by LESSOR or its agents during
the TERM hereby granted shall be deemed an acceptance or surrender of the LEASED
PREMISES and no agreement to accept a surrender of the LEASED PREMISES shall be
valid, unless it be made in writing by LESSOR.
38. WAIVER OF TRIAL BY JURY AND VENUE: It is mutually agreed by and between
LESSOR and LESSEE that the respective parties hereto shall and they hereby do
waive and relinquish their right to trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other on any
matter arising about, of or in any way connected with this LEASE, the
relationship of LESSOR and LESSEE and/or LESSEE'S use of or occupancy of the
LEASED PREMISES, the COMMON AREAS or any other portion of Linton International
Plaza including, but not limited to, issues of fact. The venue of any such
action shall be in Palm Beech County, Florida. LESSEE further covenants and
agrees that it shall not interpose any counterclaim in a summary proceeding or
in any other action based upon nonpayment of RENTAL, other sums due and payable
or any other payment required of LESSEE hereunder.
39. ATTORNEY'S FEES: In the event it should become necessary for either party
hereto to enforce any of its rights hereunder, the prevailing party shall be
entitled to recover reasonable attorney's fees, together with all costs
incurred, in all trial court, appellate court, and post-judgment proceedings.
40. OPERATING EXPENSES: Intentionally Omitted
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41. TAXES AND INSURANCE: For the purposes of this LEASE, the following words and
terms shall have the following meaning:
a) "Real Estate Taxes" shall mean all the real estate taxes and
assessments, general, special or otherwise, (including but not
limited to personal property and tangible/intangible property taxes)
levied, assessed or imposed by any federal, state or local
governments or any quasi-governmental agency or any utility company
against or upon Linton International Plaza and/or the LEASED
PREMISES. If due to a future change in the method of taxation, any
franchise, income, profit or other tax or assessment shall be levied
against LESSOR in substitution for or in lieu of any of the
foregoing, which would otherwise constitute a Real Estate Tax, such
franchise, income, profit and/or other tax or assessment shall be
deemed to be a Real Estate Tax for the purposes hereof.
b) "Insurance" shall mean all insurance policies of every nature
maintained by LESSOR on Linton International Plaza and/or the LEASED
PREMISES.
42. CHANGES TO LINTON INTERNATIONAL PLAZA: LESSOR shall have the right at any
time and from time to time to make or permit changes to Linton International
Plaza or any part thereof, including, without limitation, additions to, removal
from, rearrangements of, alterations of, modifications of or supplements to the
building areas, walkways, parking areas, driveways or other COMMON AREAS, to
construct, or permit to be constructed, other buildings or improvements on
Linton International Plaza, or to make alterations thereof or additions thereto,
and or to build additional stories on any buildings. LESSOR shall also have the
right to change the name of Linton International Plaza.
43. OTHER BUSINESSES: LESSEE acknowledges that, during the TERM of this LEASE,
LESSEE shall not operate, directly or indirectly, another business within two
(2) miles of Linton International Plaza, which business offers the same or
similar type of services as are intended and/or required to be offered on the
LEASED PREMISES, or operated under the same name as the LEASED PREMISES.
44. COMPLIANCE WITH LAWS: During the term of this LEASE, LESSEE shall comply
promptly, at LESSEE'S sole cost and expense, with all laws, ordinances, rules
and regulations of all federal, state, county and municipal governments now in
force or that may be enacted hereafter, and with all directions, rules and
regulations of the fire marshal, health officer, building inspector and other
officers of governmental and quasi-governmental agencies having jurisdiction
over the LEASED PREMISES, and with all standards established from time to time
by each insurance underwriter, inspection bureau and similar agency, which are
applicable to LESSEE'S use and occupancy of the LEASED PREMISES. Subject to the
provisions of this LEASE, LESSEE shall make, at LESSEE'S sole cost and expense,
all repairs and alterations to the LEASED PREMISES which are or hereafter may be
required in order to comply with the foregoing.
45. RELEASE: LESSEE hereby releases LESSOR from any and all liability for any
loss or damage should LESSEE'S use and occupancy of the LEASED PREMISES for the
purposes set forth in this LEASE, be prohibited or impaired by reason of any
zoning or other ordinances, or any other law, rule or regulation of any federal,
state, county or municipal governments or by reason of any act of any such
governmental or other public authority.
46. Upon execution of this lease, LESSEE will deliver to LESSOR the required
SECURITY DEPOSIT, FIRST AND LAST MONTHS RENT, PLUS SALES TAX in the combined
amount of $2,819.61 at lease signing, along with a certificate of insurance in
the amount described above, naming LESSOR as additionally insured.
47. LESSEE AGREES that all FIXTURES, TRADE FIXTURES, FURNITURE AND ALL OTHER
POSESSIONS present within the leasehold space prior to and at the time LESSEE
begins occupying said premises, are the possessions of the Landlord. LESSEE will
deliver a list of any and all trade fixtures to be installed by LESSEE prior to
their installation. LESSEE shall insure that all fixtures will be maintained and
repaired as necessary and be kept in a good state of repair at all times
throughout the term of this Lease. Upon termination of said
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Lease, all equipment and fixtures will be returned to the LESSOR in the same
condition as at the start of this Lease, taking normal wear and tear into
account.
48. RECORDATION: LESSEE agrees that neither this LEASE, nor any Memorandum or
other reference to this LEASE shall be recorded in any public records, unless
such recording is first approved in writing by LESSOR, and any such recordation
by LESSEE without such approval by LESSOR shall constitute a default hereunder.
49. NO PARTNERSHIP: Nothing contained in this LEASE shall be deemed or construed
by the parties or by any third party to create the relationship of principal and
agent or of partnership or of joint venture or of any association between LESSOR
and LESSEE, and neither the method of computation of RENTAL and/or other sums
due and payable nor any other provision contained in this LEASE nor any acts of
the parties hereto, shall be deemed to create any relationship between LESSOR
and LESSEE other than the relationship of LESSOR and LESSEE.
50. NO WAIVER: No waiver of any default hereunder shall be implied form any
omission by either party to take any action on account of such default. The
acceptance by LESSOR of RENTAL, other sums due and payable or other payments
with knowledge of the breach of any of the covenants, terms and conditions of
this LEASE by LESSEE shall not be deemed a waiver of any such breach. One or
more waivers of any breach of any covenant, term or condition of this LEASE
shall not be construed as a waiver of any subsequent breach of the same or any
other covenant, term or condition. The consent or approval by LESSOR to or of
any act by LESSEE requiring LESSOR'S consent or approval shall not be deemed to
waive or render unnecessary LESSOR'S consent or approval to any subsequent
similar acts by LESSEE. To be effective, any waiver hereunder must be express,
in writing and approved by the parties hereto.
51. LESSOR'S DUTIES: LESSOR'S agreement to operate and maintain the COMMON AREAS
as set forth in this LEASE, shall not make LESSOR liable for any damage to or
loss of property, including but not limited to, motor vehicles of LESSEE, its
employees, agents, customers or invitees, unless caused by the sole active
negligence of LESSOR and not otherwise covered by LESSEE'S insurance. If LESSOR
provides security and/or includes the costs of security services or devices in
other sums due and payable, such acts by LESSOR shall not make LESSOR liable for
any injury or loss to LESSEE, its employees, agents, customers or invitees; and
LESSEE, on behalf of itself, its agents, employees, customers and invitees,
waives any claims against LESSOR, whether known or unknown, based upon the
providing of security or performance of security guards. LESSOR shall have the
right to make such changes to the COMMON AREAS as LESSOR deems appropriate and
in the best interest of the Linton International Plaza, including but not
limited to, installation, removal and relocation of seats, trees, planters and
other amenities.
52. BROKERS: Each party represents to the other party that it has not dealt with
any real estate or broker other than DWV Investments, Inc., whose commission is
to be paid by Austin Delray Realty, L.L.C. LESSOR and LESSEE each agree to hold
the other harmless from and against any and all liability incurred by the other
party including, but not limited to, all costs and attorneys' fees incurred by
the other party, if the foregoing is not true.
53. TIME: It is understood and agreed between the parties hereto that time is of
the essence of all the terms, provisions, covenants and conditions of this
Lease.
54. CONSTRUCTION: This LEASE shall be construed in accordance with the laws of
the State of Florida, with venue arising in Palm Beach County, Florida only.
This LEASE shall not be construed more strictly against one party than against
the other merely by virtue of the fact it may have been prepared by counsel for
one of the parties, it being recognized that all parties have contributed
substantially and materially to the preparation of this LEASE.
55. LEASE VALIDITY: The submission of this LEASE for examination and/or
execution by LESEE does not constitute a reservation of or option for the LEASED
PREMISES for the benefit of LESSEE nor does it constitute an offer on the part
of LESSOR and this LEASE shall
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have no force or validity whatsoever unless and until duly executed by LESSOR
and delivered to LESSEE.
56. AMENDMENTS, ETC.: This LEASE may not be amended, modified, or terminated
(except in the event of default by LESSEE) except by written instrument signed
by both LESSOR and LESSEE.
57. LANDLORD MORTGAGES: This LEASE is subject to and subordinate to all
Mortgages and any renewal, modification, consolidation, replacement and
extension of any mortgage at any time affecting the LEASED PREMISES, and any
Assignments of Rents and Leases executed in connection therewith provided that
all mortgagees agree to permit Lessee its quiet enjoyment of the Leased Premises
and its continued operation under the terms of the Lease if Lessee is not in
default of the Lease. Further, no action to protect the interest of any
Mortgagee owning any Mortgage on the LEASED PREMISES, whether by foreclosure or
otherwise, shall result in the cancellation or termination of this LEASE or the
obligation of the LESSEE under this LEASE, and if no election is made to cancel
and terminate the LEASE, then the LESSEE shall attorn to the holder of the
Mortgage as the case may be.
58. OPTION-TO-EXTEND: Provided this LEASE is in good standing and LESSEE is not
adjudged to be in default of the terms and conditions of this LEASE, LESSOR
hereby grants to LESSEE, the option-to-extend the term of this LEASE for TWO (2)
2-YEAR options. LESSEE shall exercise its option-to-extend the term of this
LEASE by notifying LESSOR, in writing, on or before ninety (90) days prior to
the termination date of this LEASE. Failure of LESSEE to notify LESSOR, in
writing, shall be construed as LESSEE'S waiver of its rights under this
Paragraph 56. The rental rate for the option year(s) will be increased by 3% or
the CPI in the year renewing the lease, whichever is higher, per square foot
plus applicable sales tax.
INITIAL
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59. TERMINATION: It shall be a condition precedent to the effectiveness and
enforceability of this Lease, the Guaranty Agreement, and/or obligation arising
from the Lease, that the furnishings, fixtures, equipment and interior finishes
presently located in the Leased Premises, remain as part of the Leased Premises.
The parties acknowledge and agree said furnishings, fixtures, equipment and
interior finishes are currently in the possession of a Trustee in bankruptcy and
are to be sold by public auction by the Trustee in Bankruptcy. If LESSOR is
successful in purchasing all of the furnishings, fixtures, equipment and
interior finishes from the bankruptcy Trustee, the Lease and obligations arising
therefrom shall become operative in accordance with its terms. If LESSOR is
unsuccessful in purchasing all of the furnishings, fixtures, equipment and
interior finishes from the bankruptcy Trustee, the Lease and all obligations
arising therefrom shall be ineffective and unenforceable as if the Lease never
cam into being.
60. PERSONAL GUARANTY: No personal guaranty.
IN WITNESS WHEREOF, LESSOR AND LESSEE, AGREED AND ACCEPTED:
WITNESSES: LESSEE: Kenwick Industries, Inc.
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
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Kenneth Wulwick as President
/s/ [ILLEGIBLE] Date: 7 JAN 2000
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WITNESSES: LESSEE: AUSTIN DELRAY REALTY, L.L.C
/s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
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Date: 1/17/2000
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EXHIBIT "A"
LINTON INTERNATIONAL PLAZA
DELRAY BEACH, FLORIDA
RULES AND REGULATIONS
The following RULES AND REGULATIONS together with all modifications and
amendments thereto are considered to be a material part of the LEASE:
1. No sign, fixtures, advertisements or notice shall be displayed, inscribed,
painted and affixed by any LESSEE on any part of the outside or inside of Linton
International Plaza or on or about the Leased Premises of any LESSEE, without
written consent of the LESSOR, and then only in such color, size, style, and
material as shall be first specified by LESSOR. No showcase shall be placed in
front of or in the lobbies or corridors of Linton International Plaza, and
LESSOR reserves the right to remove all showcases so pieced and all signs other
than those above provided for, without notice, and at the expense of the LESSEE
responsible for the same.
2. The sidewalks, entrances, passages, elevators and staircases shall not be
obstructed or used for any other purpose than ingress and egress.
3. LESSEE identification on entrance doors will be by a standard signage as
specified by LESSOR and paid for by LESSEE. No LESSEE shall install or cause to
be installed without LESSOR's consent any shades or blinds or drapes and their
color, materials, shop, style and size shall be designated by LESSOR. No awning
or screen shall be installed by LESSEE, without the written consent of the
LESSOR. All draperies hung or installed by LESSEE shall be installed with a back
lining, the window side face of which shall be a color approved by LESSOR.
4. No additions to nor alterations of any part of Linton International Plaza
shall be made by any LESSEE, without the written consent of the LESSOR, and any
such additions or alterations shall be performed by the LESSOR, at the cost of
the LESSEE, if so approved.
5. LESSEE shall keep all glass, locks, trim and other property of the LESSOR, in
good working order and in good repair, and if any of same are broken by LESSEE,
such breaks shall be repaired at the LESSEE's expense.
6. If a LESSEE desires telegraphic or telephonic connections, the LESSOR will
direct the electricians and/or technicians as to where the wires are to be
introduced, and without such direction, no wiring or cutting for wires will be
permitted.
7. The LESSOR retains the power to prescribe the weight and proper position of
safes or any heavy equipment to be brought into the Leased Premises. LESSEE
shall be responsible for any and all damage to the walls, floors or other parts
of Linton International Plaza, or Common Areas caused by or connected with any
moving or caused by any safe, furniture, boxes and/or bulky/heavy articles of
LESSEE in Linton International Plaza.
8. LESSEE shall instruct its agents, employees and invitees not to use the
hallways, corridors or stairwells for loitering, lounging or gathering. Common
Area restrooms are for the convenience and use of the LESSEEs of Linton
International Plaza and for no other use.
9. The water closets and other apparatus shall not be used for any purpose other
than that for which they are constructed, and no sweeping, rubbish, rags or
other substances shall be thrown therein. Any damage resulting to them from such
use shall be borne by the LESSEE who shall cause same.
10. Nothing shall be thrown by the LESSEE, its agents, employees or invitees,
out of the windows, doors or passageways of Linton International Plaza.
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/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
Lessee Initials Lessor Initials
<PAGE>
Austin Delray Realty, LLC Lease Kenwick Industries, Inc.
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11. LESSEE, its agents, employees and invitees are not to injure or deface any
portion of Linton International Plaza nor the woodwork, walls, Common Areas, nor
to carry upon Linton International Plaza, obnoxious, noisy or offensive business
or conduct, nor create a nuisance, nor conduct any auction thereon or therein.
12. No room or rooms shall be occupied or used by any LESSEE as sleeping or
lodging apartments upon the Leased Premises, or Linton International Plaza.
13. Water shall not be wasted by tieing or wedging back faucets or otherwise.
14. LESSEE must not leave their windows and doors open when leaving the Leased
Premises at the close of business and shall close windows and lock doors and in
the event of any default of LESSEE of this provision, LESSEE shall be
responsible for any injury or damage sustained by other LESSEEs of Linton
International Plaza and by the LESSOR, which injury or damage resulted from
LESSEE's default or carelessness.
15. No bicycles or animals shall be allowed in any part of Linton International
Plaza without the written consent of LESSOR.
16. No LESSEE shall accumulate or store any materials in the Leased Premises, or
in or on Linton International Plaza of which the Leased Premises is a part,
which would create a fire hazard.
17. LESSOR retains the right to modify or amend these RULES AND REGULATIONS or
to waive these RULES AND REGULATIONS as to any LESSEE, at its sole discretion.
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/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
Lessee Initials Lessor Initials
<PAGE>
Addendum I
Re: Page 2 Para 7
The Lessor will supply utilities including electricity, water/sewer and
janitorial services twice weekly at no charge to LESSEE
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
/s/ [ILLEGIBLE]
