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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
MILLIONAIRE.COM
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(Name of Small Business Issuer in Its Charter)
Nevada 23-2970840
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(State or Other Jurisdiction (I.R.S. Employer Identification Number)
of Incorporation or Organization)
18 Plantation Park Drive, Bluffton, South Carolina 29910
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(Address of Principal Executive Offices) (Zip Code)
(843) 757-6600
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(Issuer's Telephone Number)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 per share
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(Title of Class)
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TABLE OF CONTENTS
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FORWARD LOOKING STATEMENTS............................................................................... 1
PART I................................................................................................... 1
Item 1. Description of Business....................................................................... 1
Item 2. Management's Discussion and Analysis or Plan of Operation..................................... 17
Item 3. Description of Property....................................................................... 23
Item 4. Security Ownership of Certain Beneficial Owners and Management................................ 24
Item 5. Directors, Executive Officers, Promoters and Control Persons.................................. 25
Item 6. Executive Compensation........................................................................ 27
Item 7. Certain Relationships and Related Transactions................................................ 32
Item 8. Description of Securities..................................................................... 34
PART II.................................................................................................. 35
Item 1. Market Price of and Dividends on the Registrant's Common Equity and Other Shareholder Matters. 35
Item 2. Legal Proceedings............................................................................. 36
Item 3. Recent Sales of Unregistered Securities....................................................... 37
Item 4. Indemnification of Directors and Officers..................................................... 38
PART F/S - INDEX TO FINANCIAL STATEMENTS................................................................. 40
PART III................................................................................................. 41
Item 1. Index to Exhibits............................................................................. 41
SIGNATURES............................................................................................... 42
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FORWARD LOOKING STATEMENTS
Many of the statements included in this Registration Statement on Form 10-
SB contain forward-looking statements and information relating to our company.
We generally identify forward-looking statements by the use of terminology such
as "may," "will," "expect," "intend," "plan," "estimate," "anticipate,"
"believe," or similar phrases. We base these statements on our beliefs as well
as assumptions we made using information currently available to us. Because
these statements reflect our current views concerning future events, these
statements involve risks, uncertainties and assumptions. Our actual future
performance could differ materially from these forward-looking statements. These
forward-looking statements involve a number of risks and uncertainties.
Important factors that could cause actual results to differ materially from our
expectations include matters not yet known to us or not currently considered
material by us.
We caution you not to place undue reliance on these forward-looking
statements. All written and oral forward-looking statements attributable to us
or persons acting on our behalf are qualified in their entirety by those
cautionary statements.
PART I
Item 1. Description of Business
Overview
We are a provider of luxury goods and services to the affluent through the
Internet, traditional print media and auctions. We offer our high-end customers
virtually any type of premium merchandise or service available worldwide. In
order to reach and serve our target audience effectively, we employ a variety of
distribution channels which provides opportunities for cross-promotional
marketing. Our business is based on four major components:
. Our Internet website located at www.millionaire.com, which currently
offers, among other things, a comprehensive set of luxury products and
services for sale, online auctions, information regarding real estate and
business opportunities, investment advice, and that will offer, circa
February 2000, an online version of our Millionaire magazine and
connections to various Internet search engines, all geared to fit our
affluent users' lifestyles;
. Our Millionaire magazine, a monthly lifestyle publication for the
affluent that is available to our subscribers in a hard copy format and
will be available in February 2000, via our website;
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. Our auction marketplaces, which are held live periodically at our auction
venue in South Carolina, the Global Emporium, and online on our website;
and
. Our Global Clearinghouse concept, that we are developing and plan to
launch in the first quarter of 2000, and which will combine our website
and technical capabilities with our background in the art and antiques
industry to assist other dealers and auction houses expand their
businesses into the Internet through online advertisements, e-commerce
and online auctions.
We believe we are positioned to capitalize on the growth of the Internet.
By combining the power and reach of the Internet with traditional publishing,
advertising, auctions and luxury retail, we are able to offer our customers
consolidated, comprehensive and user friendly access to the fragmented multi-
billion dollar marketplace for luxury goods and services.
Our Strategy
We are positioning ourselves to be a leading provider of luxury products
and services to affluent people worldwide. Our objective is to satisfy the
growth in the market for luxury products and services in conjunction with the
exponential growth of online shopping. The key elements of our strategy
include:
. offering our customers a website that contains a comprehensive array of
luxury products and services;
. providing an e-commerce infrastructure to traditional providers of luxury
products and services;
. offering our products and services through a variety of distribution
channels including traditional print media, actual physical auction sites
and the Internet; and
. taking advantage of the cross-promotional opportunities that these varied
distribution channels provide for marketing our products and services.
Our History and Headquarters
We were incorporated on February 15, 1995 under the laws of the State of
Florida as World Circle Trust Fund, Inc. On November 3, 1995, we changed our
name to Charter Investor Relations of North America, Inc. On November 24, 1998,
we changed our jurisdiction of incorporation to Nevada and we changed our name
to Millionaire.com. On December 15, 1998, we acquired Life Style Media
Acquisition Corp. ("LMAC"), a Pennsylvania corporation, which
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publishes magazines, including Millionaire magazine and Billionaire magazine.
Life Style Media Acquisition's subsidiary, Life Style Media Properties, Inc.
("LMPI") is a Delaware corporation which holds the trademarks for "Millionaire"
and "Billionaire." Prior to the purchase of LMAC, we did not conduct any
business.
On July 20, 1998, we formed U.S. Auctions, Inc. a Delaware corporation and
wholly-owned subsidiary.
Our headquarters are located at 18 Plantation Park Drive, Bluffton, South
Carolina, 29910, and our telephone number at that office is (843) 757-6600. Our
website is located at www.millionaire.com. Information contained on our website
does not constitute a part of this Registration Statement.
PRODUCTS AND SERVICES
Our Internet Site: www.millionaire.com
The centerpiece of our business is our website which is currently available
on the Internet at www.millionaire.com and is expected to be completed in
February 2000 with regular updates of features thereafter.
Our website is multi-functional, and offers an array of features and
services to attract our target market, including the following:
. Editorial content geared toward our affluent users' lifestyles;
. Excerpts from Millionaire magazine which we make available to non-
subscribers;
. An online merchandise catalog of our own products, as well as those of
third party merchants; and
. The complete auction catalog for our periodic auctions at the Global
Emporium.
Upon completion of our website, the following features and services will be
available:
. A complete copy of the current issue of Millionaire magazine, available to
current users and members of our Millionaire.com Club, including easy
access to back issues;
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. Monthly real-time broadcasts of our Global Emporium auctions with audio
and video capabilities providing users with the excitement and real-time
momentum of our live auctions;
. Online person-to-person auctions of high quality, but reasonably priced,
merchandise, which are both our own products as well as those consigned by
third parties;
. An auction venue for dealers and regional/niche auction houses to conduct
their own auctions on our website as part of our Global Clearinghouse
concept;
. Consumer advertising geared to the upscale buyer, including hyperlinks to
websites of individual advertisers, allowing potential buyers to view
additional offerings of such advertisers, make e-mail inquiries, and
complete purchases in real time; and
. Other useful tools and services for our users, including e-mail, news,
financial information, stock quotes, classifieds, business opportunities,
online chat rooms, newsletters, Millionaire.com forums and other services
and features designed exclusively for our users by experts in their
fields.
E-Commerce. In addition to the sale of our own products, our website will
provide a venue for other merchants, galleries and dealers to sell their luxury
products to our users. Other merchants may access our user base by either
placing a link to their own website on www.millionaire.com or by setting up
their retail catalog directly on our website.
Advertising. Our website also features banner and other advertisements and
will have the ability, through hyperlinks, to transport our customers directly
to the websites of our advertisers.
On-line Auctions. We hold periodic auctions live at our auction venue, the
Global Emporium, which is located just outside of Hilton Head in South Carolina.
These live auctions will also be available to our website users in real-time on
the Internet through an audio/video arrangement which allows the absentee bidder
to become a part of the auction.
In addition to the auctions we hold at the Global Emporium, we will hold
other online auctions on our website. We believe our approach of selling
premium products and services will differentiate Millionaire.com from the many
websites dedicated to facilitating the sale of low value personal items. Our
online auctions will feature our own merchandise and will give our advertisers
and other dealers and auction galleries the ability to place individual items
into online auctions.
We will also assist other dealers and regional auction galleries in holding
their own auctions over the Internet. Auctions will be co-branded, but the
dealer or gallery will operate as
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a separate entity, managing their own auctions. We also have the ability to
manage an entire auction for smaller dealers and auction galleries.
Technology. We currently use only state-of-the-art hardware and software,
emphasizing important issues such as ease of use, transparent linkage to
advertisers, speed of downloading and security. Our auction technology is
provided by Ibuy.com.au. We will use the SSL security system which is widely
used in the e-commerce industry. Technology advances will be evaluated in a
timely fashion and will be incorporated into the site if a cost/benefit analysis
warrants their introduction.
Our Millionaire Magazine
Through our wholly-owned subsidiary Life Styles Media Acquisitions, we own
Millionaire magazine, a lifestyle publication for the affluent. We acquired
Millionaire in an effort to accelerate our entry into the market as a provider
of luxury goods and services. At the time of purchase, the magazine was a
quarterly publication, sold only through newsstands. It had a circulation of
approximately 52,000, plus a pass-on readership of approximately three times
that number, and had an advertising base of approximately 120 companies.
Our strategy has been to grow the magazine and increase its profitability
while continuing to offer our readers "The Best the World Has to Offer." Since
the acquisition, we have converted the magazine into a premium "magalog,"
dedicating approximately 75% of its pages to advertising. We believe that the
increased number of pages of upscale advertising offers our readers the broadest
selection of prestige gift and personal luxury items and services available for
purchase anywhere in the world. Since the acquisition, we have:
. increased the number of issues published during 1999 to result in a
monthly publication;
. significantly increased our distribution channels;
. increased our readership; and
. more than tripled our advertising base.
At the same time, we continue to provide entertaining and informative editorial
content to the reader who leads or aspires to a luxury lifestyle. Our articles
focus primarily on the lifestyles of successful people. We have also broadened
the editorial content to include new features of interest including investment
strategies, fashion, fitness, technology and collectibles. The magazine also
serves as a venue for the sale of luxury products that we have acquired at
favorable prices or through barter arrangements. In addition, our auction
catalogs are included as part of the subscription and the magazine heavily
promotes our auctions and our website.
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Design. Millionaire's design conveys a luxury image. It is a bound, four
color book, printed on the finest 70 pound enamel interior stock and 100 pound
glossy cover stock. Quality of production and design are key elements of the
new Millionaire. The number of pages has been increased to almost 300 to
accommodate additional editorial features and advertising pages.
Editorial Content. Millionaire has traditionally been written as a guide
for enjoying a luxury lifestyle. Though we have maintained many features and
departments of the magazine's editorial content, we are expanding such content
to cover people-based stories, rather than the traditional place or product-
based approach. We are featuring articles about the backgrounds and lifestyles
of the owners, operators, and managers of major businesses. These articles
describe entrepreneurs' road to success, for instance, and their luxurious
lifestyles. We are continuing to feature our travel and resorts sections, and
have added new departments covering investment information, financial advice,
fashion, food, wine, health, fitness, technology, antiques, and many other
popular categories. Each article references how to access the products or
services described. Most feature writers are freelancers located around the
world. Articles are approximately 600 words and include photographs.
In addition, Millionaire magazine posts and promotes various events of
interest in advance, whether such events are sponsored by Millionaire.com or
other organizations. Our Global Emporium auctions have a high profile in both
the magazine's editorial content and advertising. The magazine also provides
recommendations regarding little-known services available around the world.
We plan to produce several special issues throughout the year, including
the holiday edition, Millionaire, the World's Best Catalog, and a once-a-year
supplement, Billionaire, Wealth in America, in the spring. Billionaire will
feature mostly company-owned products, which sales may allow us to realize
significantly higher margins.
Most advertisements are four color, full-page ads. The magazine offers
nine advertisement sizes, ranging from two page spreads to a 1/6th of a page ad
which is specifically targeted to "for-sale-by-owner" advertisements where
readers can present their own homes, cars, boats, planes, and antiques. We have
been offering discounted introductory rates to all first time advertisers in
order to more rapidly increase the number of advertising pages. There will also
be special incentives for advertisers who pay up-front. We believe
Millionaire's advertising rates to be relatively low compared to other
advertising rates in the luxury magazine segment; however, we expect that the
demographics of Millionaire will translate into premium rate advertising over
time. Currently, the cost of a full page in color advertisement in Millionaire
runs under $10,000, compared to $13,000 for Robb Report and $69,000 for Vogue.
We believe this disparity in cost gives us latitude to increase rates without
depressing demand for space. Current Millionaire advertisers will be converted
to a new rate schedule at the time of contract renewal.
Subscriptions/Memberships. We target a highly selective subscriber base by
providing them with a broad range of luxury products and services. We have 2100
paid subscribers.
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Subscriptions to our magazine are available at $75 per year for 12 issues.
In addition to our regular magazine subscriptions, we offer membership in our
Millionaire Club at an annual premium of $100 per year or a lifetime membership
priced at $500. Club members receive subscriptions to our Millionaire magazine
in addition to access to a wide range of perquisites such as front row seating
at our Global Emporium auctions, access to the entire millionaire.com website,
placement on advertisers' lists for special mailings and promotions, and premium
services such as prearranged "no wait" service in exclusive restaurants. Our
goal is to reach a customer base comprised of 80% Millionaire Club members and
20% subscribers.
We generate subscription and membership sales through public relations
efforts, the media, the return of magazine inserts from single copy sales ("blow
in" cards), direct mail targeted at our proprietary mailing list, advertising in
other upscale periodicals often through barter arrangements on a no-cash cost
basis, selected television and radio advertising, advertising on the Internet
both through our own website and through other upscale websites, often utilizing
barter arrangements with these other sites.
Newsstand Distribution. We also distribute Millionaire magazine through
newsstand sales, which also serve as an important marketing tool. We have
improved our approach to newsstand distributions by focusing on newsstand sites
located in affluent areas and places where the affluent tend to gather such as
in upscale bookstores like Barnes & Noble and Borders, upscale gift shops, hotel
lobbies and airports.
In order to expand circulation, we have entered into a distribution
agreement with Warner Communications for promotional displays of Millionaire in
select upscale newsstands throughout the United States. A direct mail campaign
is providing Millionaire free-of-charge to a database of approximately 450,000
individuals in the United States with net worth in excess of $9 Million and/or
net income in excess of $1 Million. Mailings are being made in segments over
the course of a year until we have converted 200,000 of our target audience into
paid subscribers. Once that level is achieved, we intend to replicate this
effort overseas. This mailing will provide a dual benefit. We believe this
strategy will build the subscription base and create awareness of our website
and auction activities. We also believe it will attract new advertisers, which
may result in increased advertising rates.
Circulation. We estimate that our magazine's current circulation profile
includes the following distribution:
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Total Circulation 100,000
Controlled Circulation 50,000
Newsstand Distribution 50,000
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Sales and Marketing. The magazine employs an in-house sales staff as well
as regional salespersons employed under incentivized partnership arrangements.
The Millionaire magazine
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portion of our business employs ten in-house salespersons, of which seven are
based at our headquarters in Bluffton, South Carolina, two are in New York, and
one is in Hawaii. Each in-house salesperson is assigned a specific category of
advertising, rather than a geographic area, and their quotas are based on the
area of specialization. Four in-house salespeople are dedicated to major
advertisers in fashion, sports, real estate, and jewelry. Our representative in
Hawaii specializes in hideaway resorts. Sales personnel also solicit Internet-
related advertising.
The magazine plans on opening approximately ten field sales offices located
in geographical areas that are not easily reachable by telemarketing. These
offices will focus on selling 1/6th page advertising from readers in certain
pre-selected categories of products. A partnership arrangement has been
designed to incentivize field sales personnel. Under this arrangement sales
personnel could evolve into partners within a branch operation, eventually
owning up to a 51% interest in such branch. As sales quotas are met,
individually set, pre-determined buyout levels would be triggered; buyout costs
could be as little as $30,000-$50,000. Millionaire.com would, in each case,
continue to own 49% of the business. We believe this arrangement will serve as
an attractive incentive to field sales personnel.
Product Sales. We plan to offer wholly-owned products for sale through the
magazine in a section known as the "White Pages." We believe that this
opportunity to participate as a principal in sales transactions will
substantially increase our overall profits, especially because we will realize a
substantial mark-up on the items offered through this section. Any merchandise
which does not sell through the magazine will be offered through our online
auctions, Internet advertising, or our retail and auction galleries located in
resort areas like Hilton Head.
Our Auction Marketplaces
Our retail outlet and auction gallery, the Global Emporium, is a 19,840
square feet facility located just outside of Hilton Head, South Carolina. We
hold live auctions at the Global Emporium for the sale of luxury merchandise and
limited reproductions either owned by Millionaire.com or on consignment to us by
third party merchants. We offer a 15% buyer's premium on all items we own which
are sold at auction and charge a 15% seller's premium to consignors for items
sold at the Global Emporium. The site also operates as a retail showroom; the
items to be auctioned are displayed at the Global Emporium for one month prior
to the auction and are available for sale to our walk-in customers at the full
retail price. Each auction features a wide variety of items, including
architectural antiques, furnishings, decorative accessories, cars, boats,
planes, sports and advertising collectibles, jewelry and art.
Auction catalogs are mailed in advance to our Millionaire Club Members and
to our Millionaire magazine subscribers along with each monthly edition. The
auction catalogs are also featured in their entirety on our website and are
available to all users. The live Global Emporium auctions are planned to be
broadcast on our website in real time. Those attending our auctions over the
Internet will be able to call in their bids. As added bandwidth becomes more
widely available, we plan to offer real time bidding in our auctions over the
Internet.
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Auctions are held on Saturdays and Sundays and each auction is preceded by
a preview party held the prior Friday evening. The Global Emporium location is
open six days a week. Millionaire.com anticipates opening similar
auction/retail facilities in other upscale resort areas in the future, since
resorts comparable to Hilton Head generally attract the affluent, vacationers
and permanent retirees throughout the year.
In the future, Millionaire.com plans to provide its Members and subscribers
with a very personalized service at the Global Emporium called "Let Us Find It
For You," by which we will locate specific goods and merchandise for customers.
Our Global Clearinghouse Concept
We plan to create a global clearinghouse of dealers and auction firms
having outstanding regional reputations or expertise in certain niche product
areas. The dealer and regional auction gallery market is highly fragmented,
made up of thousands of small, often undercapitalized, local and regional firms.
Many of these firms have the ability to source product, but lack sufficient
distribution capabilities. We will select the most attractive dealers and
auction galleries to showcase in our global clearinghouse location on the
Millionaire.com Internet site.
In response to the lack of online activity by most other auction houses,
galleries, dealers and specialty retailers who sell high-end art, antiques and
collectibles, our Global Clearinghouse concept would combine our technical
resources with our background in the art and antiques industry to assist these
merchants in expanding their businesses via the Internet. Our website offers
these merchants a venue to promote their product offerings and to broaden their
potential customer base through online advertisements, e-commerce and online
auctions. If these dealers and galleries lack the technology to conduct
business over the Internet, Millionaire.com will, for a fee, provide them with a
variety of software products to retail their products or to conduct online
auctions on Millionaire.com's website.
Our Competitors
The market for our services is highly competitive. Our competitors fall
into three categories: publishing companies, Internet companies catering to the
high-end customer base and auction companies.
Publishing Companies. Millionaire magazine is one of the market leaders in
subscriptions and circulation of magazines catering to the affluent. Other such
publications include the Robb Report, Vogue and Cigar Aficionado.
Internet Companies. Other Internet companies catering to the affluent
include www.foofoo.com, www.luxuryfinder.com, designersdirect.com and
netsgoods.com. Unlike these companies, Millionaire.com has an established brand
name and a substantial pool of regular
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advertising customers. We believe that our website is significantly ahead of the
other competitors in terms of brand awareness, content and number of daily
users.
Auction Companies. Auction companies generally fall into two categories:
online and offline auctions. We compete with both types of auctions companies.
Although auction houses such as Sotheby's and Christie's offer consistently high
quality goods and services to the affluent, we plan to distinguish ourselves by
providing in the online auction arena premium luxury products and services.
Our Employees
We currently have 38 employees. Management considers its relations with
our employees to be good.
Research and Development
We plan to devote significant resources to continued research of the luxury
services and products market and to further development of our current channels
of distribution. Research and development expenditures totalled $140,623 during
our past two fiscal years.
RISK FACTORS
Ownership of our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
Form 10-SB before investing in our common stock. The risks described below are
not the only risks we face. Other risks that we are aware of or that we
currently believe are immaterial may become important factors that affect our
business. If any of the following risks occur, or if others occur, our
business, operating results and financial condition could decline and you may
lose all or part of your investment.
A start-up business is difficult to evaluate
The Millionaire and Billionaire trademarks and Millionaire magazine were
acquired in our acquisition of our wholly-owned subsidiary Lifestyle Media
Acquisition Corporation on December 15, 1998. The first issue of the magazine
published under current management was shipped in February 1999. Accordingly,
there is a limited operating history upon which to evaluate our prospects. In
May 1999, the magazine format was changed to monthly from quarterly, increasing
the amount of available advertising revenue pages. We do not know whether the
number of pages can be consistently sold. Our first auction was held in March,
1999, with the second being held in July, 1999, so we have no historical basis
on which to evaluate our prospects for long-term success. Our business must be
considered with the risks, expenses and difficulties of start-up businesses in
mind. Our business plan calls for the transition
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of both the magazine and auction house to the Internet. As a result, risks
associated with electronic commerce should be included in the evaluation of our
business.
We may be unable to further develop our website and to deliver compelling
products and services that will attract consumers with demographic
characteristics necessary for the success of our business. The market for
online services is characterized by rapidly changing technology, emerging
industry standards and consumer requirements that are subject to rapid change
and frequent new service introductions. These characteristics are exacerbated
by the expectation that many companies may introduce new internet products and
services addressing our targeted market in the near future. There can be no
assurance that we will be successful in developing our website to deliver the
comprehensive services and products we plan to offer our customers on a timely
basis, or that such products and services will effectively address consumer
requirements and achieve market acceptance. Our failure, for technological or
other reasons, to develop and enhance our website in a manner compatible with
emerging industry standards that allows us to attract, retain and expand a
consumer base possessing demographic characteristics necessary for our success,
would have a material adverse effect on our business, financial condition and
results of operations.
We may not successfully implement any or all of our business plan. We may
not be able to address those risks inherent in a new venture. Failure to do so
could harm the business. Also, as a result of transitioning the magazine and
the auction house to the Internet, and as a result of the evolving nature of our
business, period to period comparisons of our financial results are not
necessarily meaningful and should not be relied upon as an indication of future
performance.
We expect net losses to occur
We incurred substantial net losses in 1998 and for the first nine months of
1999, and we expect to continue experiencing substantial losses through at least
the first half of 2000. This is based upon the following:
. we expect the development of the infrastructure for the Internet to
increase operating expenses;
. we expect the marketing and promotional expenses related to the magazine
itself, as well as the auction gallery and launch of the revised Internet
site to increase operating expenses; and
. we expect the payment for consigned inventory to sell through our auction
gallery to continue as a high percentage of sales in an effort to attract
unusual merchandise, resulting in lower gross margins.
To the extent that increases in operating expenses are not matched by
increased revenue, our business, operating results and financial condition will
be harmed. We cannot guarantee that we can attract the number of new customers
necessary to offset these operating expenses.
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We are in a highly competitive and evolving market
Many of our existing and potential competitors have substantially greater
financial, technical, marketing and distribution resources than we do.
Additionally, many of these companies have greater name recognition and more
established relationships with our target customers. Furthermore, these
competitors may be able to adopt more aggressive pricing policies and offer
customers more attractive terms than we can.
Electronic commerce is characterized by low cost of entry. Some of our
competitors have or may establish relationships with and among themselves that
could emerge and rapidly acquire marketshare. Accordingly, we cannot assure you
that we will be able to maintain or increase our revenues or increase our
Internet site traffic. If this occurs and our other business plan efforts are
not successful, the business will be harmed.
Our operating results fluctuate and are difficult to predict
The rapidly evolving market for purchase of on-line luxury items, services
and auctions makes it difficult to predict our operating results. Our
profitability depends on a variety of factors including the following:
. The ability to maintain current users and attract new users to the
magazine, the auction house and to the Internet site;
. The ability to manage the inventory mix being offered at the auction
house as well as on the Internet site;
. The ability to increase gross margins by increasing the amount of owned
inventory being offered at auction;
. The ability to attract merchandise and the pricing related to that
merchandise;
. The cost and availability of advertising for the magazine as well as the
Internet site;
. Delays in revenue recognition at the end of a reporting period;
. Delays in shipping or other logistical problems; and
. General economic conditions that may affect advertising revenues or
electronic commerce.
Due to the factors discussed above and elsewhere in this Form 10-SB, our
operating results in any fiscal reporting period may not meet the expectations
of securities analysts and investors, and accordingly the price of our common
stock may decline.
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We must build brand loyalty
It is our belief that development and awareness of the "Millionaire" brand,
for the magazine and the Internet is critical to our success. The importance of
brand loyalty will become more important as Internet websites proliferate. If
we are unsuccessful in continuing to build strong brand loyalty, our business
will be harmed.
In order to attract and retain users and advertisers, and to promote and
maintain the "Millionaire" brand, we intend to increase our spending for
marketing and advertising, which will include television media as well as
printed and electronic. Despite our efforts, we cannot assure you that
consumers or advertisers will perceive our products or website as superior to
those of our competitors.
Risks of Expansion
We may seek to expand through acquisition if acquisition candidates present
opportunities to provide a reliable source of merchandise to our auction house
and to our Internet site. There are risks related to expansion by acquisition,
as has already been experienced resulting in our unsuccessful acquisition of The
Great Gatsby's Auction Gallery, Inc. There are certain risks inherent in
acquiring other businesses such as the general risk that we may invest time and
money into such acquisition or expansion without success. The integration of
these businesses into our business and website would also increase operating
expenses. We cannot guarantee that the historical revenues generated by the
business acquired would continue.
Risks Associated With Rescission of the Merger with The Great Gatsby's
Auction Gallery, Inc.
We have entered into an agreement to rescind our merger and acquisition of
The Great Gatsby's Auction Gallery, Inc. The Agreement to Rescind requires,
among other things, the shareholder's of Great Gatsby's who received shares of
our common stock in the merger to return all of our shares and these shares have
been cancelled by resolution of our Board of Directors. Some of these shares
were transferred to third parties who are not signatories to the Agreement to
Rescind and who may not return our shares. If all of our shares are not
returned, up to 440,000 shares of our common stock will be owned by persons who
did not pay any consideration for such shares.
Risks associated with an increased investment in inventory
We presently purchase merchandise from individuals, estates and dealers.
We also consign inventory for sale and collect a corresponding commission for
the sale of that item. Our present plans include increasing the amount of
purchased inventory as a percentage of items sold in an effort to increase our
gross margins. Inherent in the increased purchases of inventory are
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<PAGE>
the risks associated with carrying inventory. These risks include but are not
limited to the following:
. Potential declines in the market value of the merchandise being purchase
and sold;
. The management of customer returns and credits associated with sold
merchandise being returned;
. Shrinkage resulting from theft or loss of inventory;
. Unpredictable sale prices due to the nature of the auction process; and
. The reliance on third parties of verifying authenticity of rare and
expensive items.
In addition, our auction business relies on the availability of antique and
unique items, purchased both domestically and internationally. Consequently, we
cannot guarantee the availability of the quantity of those items necessary to
maintain or increase our revenues. Should sources of these items be adversely
affected by events out of our control, our business would be harmed.
Risks associated with online companies
We currently depend and are increasing our dependence on our agreements
with other online companies for advertising, promotion and sponsorships. This
could result in the uncertainty of whether significant spending on these
relationships will have the desired increase in revenues. The possibility
exists that space on websites may increase in price or cease to be available. A
competitor could purchase exclusive rights to critical spaces that we rely upon.
We depend upon third parties for the operation of our website
We presently rely on a third party to support and maintain our Internet
gateway. We also rely on third party operating systems, as well as the internal
network system being used. Our credit card processing is conducted through one
company and is our sole credit card processor. If we are unable to develop and
maintain relationships with such third parties on a basis acceptable to us, or
if the quality of the product being provided to us does not maintain the
required standards, our business could be harmed.
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<PAGE>
Online business may face increased government
regulation including a change in tax treatment or new
laws directly affecting Internet commerce
Internet access may also face changes in regulation which may affect
accessibility. Auctioneering laws are regulated on a state by state basis and
may be subject to interpretation for auctions held online.
Consequently, we may have to qualify to do business in other jurisdictions.
The secure transmission of confidential information over
public networks continues to be a significant barrier
to electronic commerce
We may be required to expend significant capital and other resources to
protect against the threat of security breaches. To the extent that these types
of security breaches occur either with us or a third party contractor, we could
be exposed to risk of loss or possible liability.
We are subject to the risks of system failure
Substantially all of our communications hardware and operating software is
located in Hickory, North Carolina. Our systems are vulnerable to damage from
hurricanes, fire, floods, loss of power, telecommunications failures, vandalism
and similar occurrences. Our servers are also vulnerable to computer viruses
and attempts by third parties to deliberately exceed the capacity of our
systems. Although we maintain insurance against these risks, our coverage
limits may not be adequate to compensate us for all losses that may occur.
We face litigation risks
In addition to intellectual property disputes, the sale of products online
at auction could result in product liability claims. Due to the nature and
uniqueness of some of the items auctioned, product liability insurance may not
be available in amounts adequate to fully compensate for substantial claims.
This could have a harmful effect on our business.
Legislation has been proposed that prohibits the transmission of certain
types of information over the Internet. The potential imposition of liability
on online companies for information carried on or through their services could
force a change in the method of conducting online auctions and could force us to
alter our offerings.
The electronic commerce industry is characterized by the
rapid change in technology, as well as industry standards
and consumer demands
Certain introductions of technology could render our existing website
technology obsolete, resulting in the possible write off of capital expenditures
as well as increased capital
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<PAGE>
expenditures to remain in compliance with the new
technology. Our future will depend upon our ability to respond to technological
changes in a timely manner.
The market for the sale of goods over the Internet,
particularly through online auctions, is still in the
development stage
Market acceptance for recently introduced products over the Internet is
subject to a high level of uncertainty. It is difficult to predict the size of
this market or its overall future growth rate. The success of our Internet
auctions and magazine will depend upon the continued growth of the Internet as a
medium for commerce.
We must manage our growth
We expect to continue to expand our operations and will face the challenge
of improving existing and implementing new operational, financial and inventory
system procedures and controls. We will also need to integrate new key
management into the existing management team. We will be required to train and
motivate the growing employee base.
The management of the risks associated with the increase in accounts
receivable will need to be addressed in terms of credit exposure and collection.
Our future performance depends upon members of our senior management and
other key personnel. Certain senior management have employee contracts with
significant pay out clauses.
We may be unable to protect our intellectual property
Our performance and ability to compete are dependent to a significant
degree upon our ability to protect and enforce our intellectual property rights.
Our registered trademarks and our domain name are critical to our success. We
rely on a combination of patent, trademark, regulations governing domain names
and other laws to protect our proprietary rights. We may not be able to protect
our proprietary rights or we may choose to litigate to protect our rights, which
could result in a significant cost of resources to us. We cannot ensure the
success in any such litigation that may be undertaken.
Third parties have a security interest in our trademarks
Our trademarks "Millionaire" and "Billionaire" were obtained through our
purchase of our wholly-owned subsidiary Life Styles Media Acquisition Corp.
("LMAC") on December 15, 1998. In August 1998, LMAC purchased the trademarks
from Life Style Media Corporation and Douglass and Jennifer Lambert in exchange
for the issuance of stock and a note in the amount of $1,674,595 of which
$300,000 was paid prior to closing of that acquisition on August 14, 1998. The
Lamberts have a security interest in the trademarks to insure payment of
outstanding amounts due under the note. If we are unable to meet our
obligations under the note, we may be
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<PAGE>
required to transfer ownership of our trademarks to the Lamberts or other third
parties. If we lose ownership of our trademarks, it could have a harmful effect
on our business.
Our stock price is volatile
The market price of the shares of our common stock has been, and is likely
to be, highly volatile and subject to fluctuation. Fluctuations may occur in
response to actual or anticipated variations in results of operations or various
announcements directly by us or in conjunction with the Internet and e-commerce
industries. Prices of technology related stocks have experienced extreme price
and volume fluctuations that typically have been unrelated or disproportionate
to the operating performance of the underlying businesses. Market conditions,
as well as general economic and political climates may adversely affect the
price of our stock. In the past, stockholders have instituted securities class
action litigation against several companies following periods of volatility in
the market price of their securities. Such litigation, if instituted against
us, could result in the diversion of our management's attention and resources
and result in substantial financial costs to our business.
Because we intend to expand internationally, we will be
subject to risks of conducting business in foreign
countries.
If, as we anticipate, we expand our operations outside the United States,
we will be subject to the risks of conducting business in foreign countries,
including:
. our inability to adapt our products and services to local cultural traits,
customs and mobile user preferences;
. our inability to locate qualified local employees, partners and suppliers;
. the potential burdens of complying with a variety of foreign laws, trade
standards and regulatory requirements, including the regulation of e-
commerce and the Internet and uncertainty regarding liability for
information retrieved and replicated in foreign countries; and
. general geopolitical risks, such as political and economic instability and
changes in diplomatic and trade relationships.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion of our financial condition and results of
operations should be read together with the financial statements and the related
notes included in another part of this Form 10-SB and which are deemed to be
incorporated into this section. This discussion contains forward-looking
statements that involve risks and uncertainties.
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<PAGE>
General
We publish magazines under the trademarks "Millionaire" and "Billionaire".
We also operate an auction gallery located in Bluffton, South Carolina. The
magazine and auction gallery also conduct business on the Internet at
www.millionaire.com.
- -------------------
Millionaire Magazine. The magazine is a stylish coffee table publication
that is an extensive source of luxury goods and services targeted for the
upscale reader. The magazine also includes editorial content of interest to the
targeted audience. Approximately 75% of the magazine pages are sold as
advertising, with the remaining 25% containing editorial content. Circulation
includes a mix of approximately 50% news stand sales and 50% controlled
circulation to targeted mailing lists. Presently, "Billionaire" is an enhanced
annual issue of the monthly "Millionaire" magazine.
Global Auction Emporium. The auction gallery is located on the only major
highway leading to Hilton Head, South Carolina, a popular upscale resort. The
gallery is available to retail traffic as well as conducting auctions of unique
and investment quality merchandise. The merchandise is either owned by us or
held on consignment and sold for the owner with a commission being paid to us
for the sale. Traditionally, there is a 15% buyer's premium charged for all
items sold through an auction. Buyer's premiums for classic cars and antique
vehicles typically are 5% to 10%. From time to time the we will arrange for a
one time sale to the public at the request of a specific person or estate, which
results in commissions and buyer's premiums at agreed upon percentages of the
gross sales.
For the period from the inception of the business in February 1995 through
December 15, 1998 we did not conduct any business. From December 15, 1998 to
the present, our operating activities have consisted primarily of recruiting
personnel, purchasing operating assets, establishing vendor relationships and
developing the infrastructure required to support the businesses that we are
engaged in, including development of the computer systems required to conduct
business over the Internet. As a result of these activities, net losses have
been incurred. We expect to expand our operations including increasing our
staffing and marketing efforts to increase the "Millionaire" brand loyalty.
Accordingly, we expect to experience net losses through at least the first half
of 2000.
On January 14, 1999 the we merged with an auction house in Chamblee,
Georgia. A change in control of the Board of Directors resulted from the
merger. Accordingly, delays related to the design and implementation of the
website occurred. Costs and expenses related to the integration of the
businesses were also incurred. Subsequent to the merger agreement, situations
arose which resulted in a determination to unwind the merger. As of September
27, 1999, we and the shareholders of the acquired company agreed to rescind the
merger. The Agreement to Rescind allows the parties to restore, to the extent
possible, their respective positions prior to the merger including cancellation
of 4,300,000 shares of our stock that was issued to the shareholders of the
auction house, our release from our obligation to pay the
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<PAGE>
$1,000,000 promissory note executed at the time of merger and our release and
the release of Robert L. White from the guarantee of a 1,750,000 line of credit
for the auction house.
Results of Operations
Revenue
Revenues for the magazine are generated from the sale of advertising as
well as the sale of the magazines themselves through subscriptions, news stand
distribution and controlled mailing list circulation. Revenues for the auction
house are generated by auction sales held on the premises and auctions held on
the Internet as well as retail trade.
Advertising revenues for the nine month periods ending September 30, 1999
and 1998, and the year ended December 31, 1998 amounted to $1,809,477, $342,956
and $344,316 respectively. From the nine month period ended September 30, 1998
to the nine month period ended September 30, 1999, revenue increased $1,466,521
or 428%. Magazine sales for the nine month periods ending September 30, 1999 and
1998, and the year ended December 31, 1998 amounted to $189,757, $80,049 and
$100,737, respectively. The increase in revenue when comparing the nine month
period ended September 30, 1999 to the nine month period ended September 30,
1998 amounted to $109,708 or 137%. Revenues from inventory sales increased from
$1,422 for the year ended December 31, 1998 to $636,813 for the nine months
ended September 30, 1999. The increase in revenue can be attributed to
management's emphasis on promoting our business and attempting to create a
recurring clientele.
Revenues for the auction house are reported net of consignments paid
reflecting only the commission or fee received for items that were sold but not
owned by us.
During the nine-month period ended September 30, 1999, the Company
exchanged magazine advertisements for goods and services. These non-monetary
transactions have been accounted for under APB Opinion No. 29, Accounting for
Nonmonetary Transactions and EITF issue No. 93-11, Accounting for Barter
Transactions Involving Barter Credits. The non-monetary transactions were
accounted for based on the fair value of the goods exchanged. An impairment of
the non-monetary asset exchanged is recognized prior to recording the exchange
if the fair value of that asset is less than its carrying amount. The impairment
is measured as the amount by which the carrying amount of the asset exceeds its
fair value. There was no net revenue from the $726,864 in bartering
transactions. Accordingly, the accompanying financial statements reflect only
cash transactions.
Sources of Revenue Growth. Beginning with the July 1999 issue, the
magazine was changed to a monthly format from the quarterly format begun in
1998. The "Billionaire" issue is presently a supplemental annual issue.
Additionally, certain issues contain a larger page count, resulting in increased
advertising revenues.
The auction house held two auctions in the first nine months of 1999,
which, along with retail sales, resulted in net revenues of $ 636,813.
Constraints on Revenue Growth. Delays in the development of the company
website resulted in less advertisement sales and fewer on line auctions being
conducted.
Gross Profit
The cost of magazine publishing consists primarily of printing and
distribution costs as well as commissions related to advertising sales. Gross
profit dollars amounted to $43,323, $130,193 and $151,458, or 1.6%, 30.8% and
33.9% of sales, for the nine months ended September 30, 1999 and 1998, and the
year ended December 31, 1998, respectively. The gross profits were attributed
primarily to the publication of the magazine. Gross profit dollars generated by
the magazine were $98,868, $130,193 and $153,523 for the nine month periods
ended September 30, 1999 and 1998 and the year ended December 31, 1998,
respectively. Gross profit (loss) dollars generated by the auction
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<PAGE>
house amounted to $(56,545), $0 and $335 for the nine months ended September 30,
1999 and 1998 and the year ended December 31, 1998, respectively. The gross
profit (loss) results reflect promotional pricing related to the start up of
both the magazine and the auction house, as well as high commission costs to
induce sales.
Operating Expenses
Operating expenses increased significantly reflecting the recruiting of
personnel, development of the computer infrastructure and increased efforts to
expand and market the "Millionaire" brand and auction services. Operating
expenses will continue to increase as the expansion of the website
infrastructure continues and the magazine and auction house operations are
expanded. Total operating expenses for the nine month periods ended September
30, 1999 and 1998 and the year ended December 31, 1998, amounted to $3,661,291,
$283,596 and $874,909, or 138.9%, 67.0% and 196.0% of total net revenues,
respectively.
Marketing and Advertising. These expenses consist primarily of advertising
and marketing the magazine and auction house to our identified customer base.
These expenses amounted to $525,807, $4,102 and $90,100, or 19.9%, 1.0% and
20.2% of net sales for the nine month periods ended September 30, 1999 and 1998
and the year ended December 31, 1998, respectively. Marketing and advertising
were incurred with a primary emphasis to launch the magazine and the auction
house. Expenditures in 2000 will also be made to build the subscription base for
the magazine, as well as the auction catalog and the website. Accordingly, it is
anticipated that these expenses will continue to increase.
General and Administrative. General and administrative expenses consist
primarily of payroll and related expenses for executive, accounting and
logistical personnel, bad debt expense, facilities expenses, recruiting and
professional fees, as well as other general corporate expenses.
General and administrative expenses amounted to $3,090,484, $279,494 and
$824,809, or 117.2%, 66.1% and 185.9% of net sales for the nine month periods
ended September 30, 1999 and 1998 and the year ended December 31, 1998,
respectively. The increase in general and administrative expenses in total
dollars was due to increases in salaries and related costs resulting from the
hiring of additional personnel, additional professional fees required of a
publicly held company and expenses related to reserves established in
connection to accounts receivable and inventory. We expect the dollar amount of
general and administrative expenses to increase in 2000, as we increase our
operations and expand our Internet capabilities.
Agreement to Rescind Merger. As of September 30,1999, approximately
$288,000 of direct legal and other expenses can be attributed to the merger and
the agreement to rescind. As part of the agreement, both parties have agreed to
arbitration in an effort to reimburse each other
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for fees and expenses incurred. We do not anticipate incurring any additional
fees related to the arbitration.
Interest Income (Expense) and Other Income, Net
Interest and other income, net, was $86,322, $30 and $2,357, for the nine
month periods ended September 30, 1999 and 1998 and the year ended December 31,
1999, respectively. The increase is attributed primarily to the interest earned
on the cash and certificate of deposits resulting from the cash received from
offerings during 1998. Interest expense was $113,631, $9,521 and $30,957 for the
nine month period ended September 30, 1999 and 1998 and the year ended December
31, 1998, respectively. Interest expense is primarily related to the note
payable to the former shareholders of Lifestyle Media Corporation which, in
part, financed the acquisition of the Millionaire and Billionaire trademarks and
Millionaire magazine.
Income Taxes
We had net losses of $3,601,277, $162,894 and $797,051 for the nine month
periods ended September 30, 1999 and 1998 and the year ended December 31, 1998.
There were no current or deferred provisions for income taxes. At September 30,
1999 and 1998, and December 31, 1998 we had net deferred tax assets related
primarily to net operating losses in the amount of $1,740,433, $335,793 and
$28,474, respectively. The net deferred tax assets were fully reserved with a
valuation allowance. The net operating losses begin expiring in 2016.
We anticipate that the Agreement to Rescind will be held as a non-taxable
event and accordingly have not provided for taxes related to that transaction.
Liquidity and Capital Resources
Cash Inflows and Outflows
Financing Activities. Our operations have been financed primarily through
the sale of common stock in a Section 504, Regulation D offering in 1998 that
netted proceeds of approximately $945,000 and a private placement begun in 1998
and completed in January, 1999, that netted proceeds of approximately
$4,500,000.
Operating Activities. Net cash used in operating activities was $3,065,472,
$395,021 and $689,877 for the nine month periods ended September 30, 1999 and
1998 and the year ended December 31, 1998, respectively. The net cash used in
operations was primarily attributable to the net losses from operations of
$3,601,277, $162,894 and $797,051, for the respective periods indicated above.
Cash used in operations for the nine months ended September 30, 1999 reflect an
increase in inventory of $475,283, an increase in accounts receivable of
$816,104 and a partial offset by an increase in accounts payable of $1,009,236.
Investing Activities. Net cash used in investing activities of $1,261,304,
$11,278 and $76,783 for the nine month period ended September 30, 1999 and 1998
and the year ended December 31, 1998, reflects purchases of office
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equipment and furniture, purchases of hardware and software related to the
development of our Internet business, and the purchase of a certificate of
deposit.
Cash and Cash Equivalents. As of the nine months ended September 30, 1999,
we had approximately $109,869 of cash and cash equivalents. The certificate of
deposit has a maturity which is greater than three months, accordingly it is not
classified as a cash equivalent.
Commitments. As of December 31, 1998, our principal commitment was a lease
obligation of approximately $3,219,042 in future minimum lease payments for the
auction house, magazine and corporate offices. As of January 1, 2000, additional
space for the magazine offices will commence resulting in an additional
commitment of $ 65,124 expiring in December, 2000. We are currently committed to
guarantying a $1,750,000 line of credit for The Great Gatsby's Auction Gallery,
Inc. We anticipate being released from this commitment under the terms of the
Agreement to Rescind.
As of October, 1999, we engaged International Strategies to launch a new
website resulting in various hardware and software commitments that we believe
will amount to approximately $500,000.
We routinely enter into promotional and sponsorship agreements on a
bartered basis, resulting in the trade of magazine advertising for the
participation in the sponsored products. At September 30, 1999, that amount
obligated was approximately $ 192,744.
We anticipate requiring additional cash to support the anticipated growth
in accounts receivable and inventory. We expect our operating expenses to
increase as we continue to expand the "Millionaire" brand by increasing our
staffing, marketing and Internet infrastructure. We expect to incur losses
through the first half of 2000 and as a result we may need to raise additional
cash to finance the increased inventory, accounts receivable, capital
expenditures and operating expenses. We have made a commitment to issue to
Aldare Investments Ltd. approximately 1,050,000 shares or approximately 10% of
our outstanding shares and to pay staff which Aldare provides to us
approximately $15,000 per month for consulting services they have provided and
continue to provide in connection with development of our business plan, website
and obtaining of future financing. Accordingly, we may consider alternative
financing, such as the issuance of additional equity or debt securities or
obtaining further credit facilities. The sale of additional equity or
convertible debt securities could result in further dilution to present
stockholders. We cannot assure you that adequate financing will be available to
us in the amounts or on terms acceptable to us.
Quantitative and Qualitative Disclosures about Market Risk.
Our exposure to market risk, for changes in interest rates, relates
primarily to our long term debt, which has a fixed rate of interest of 6% and
matures in 2003, and to our cash holdings, which are in interest bearing
commercial bank accounts yielding annualized returns of 5.15% to 5.75%,
compounded monthly.
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Year 2000 Compliance Issue
Many currently installed computer systems and software products are coded
to accept or recognize only two digits rather than four digits to define the
year in the date code field. These systems and software products will need to
accept four digit year entries to distinguish 21st century dates from 20th
century dates. Systems and products that are not corrected to do this could
cause a disruption of operations including a temporary inability to deliver
messages, process transaction, send invoices or engage in other normal business
activities.
We have completed assessments of all internal systems, including our
existing business and accounting systems, as well as our security system and
telephone equipment and deem them to be Year 2000 compliant. We continue to
seek assurances from our vendors and other parties with which we do business
that they are working toward or are in compliance.
Most of our system purchases have been made within the period during which
the Year 2000 problem was already identified. Accordingly, we expect our total
cost for ensuring Year 2000 compliance to be minimal. We are developing a
contingency plan to address situations that may result from external forces that
might generally affect industry and business, such as power, telephone or
transportation failures. We make no guarantees with respect to these external
forces and their impact on our ability to operate.
New Accounting Pronouncements
In 1998, the AICPA issued SOP 98-1, which provides guidance for determining
whether computer software is internal use software and on accounting for the
proceeds of computer software originally developed or obtained for internal use
and then subsequently sold to the public. It also provides guidance on
capitalization of the costs incurred for computer software developed or obtained
for internal use. We adopted SOP 98-1 as of January 1, 1998.
Also in 1998, the AICPA issued SOP 98-5, which provides guidance on the
reporting of start-up costs and organization costs. It requires the costs
associated with start-up activities and organization costs to be expensed as
incurred. We adopted SOP 98-5 as of January 1, 1998.
Item 3. Description of Property.
We currently operate from leased premises located at 18 Plantation Park
Drive, Bluffton, South Carolina, 29910. The 19,840 square feet property is
leased to our wholly-owned subsidiary, U.S. Auctions, Inc., by D1D2, LLC for a
term of 10 years, which commenced on July 24, 1998. Millionaire.com currently
makes monthly rental payments of $26,444 plus monthly CAM payments of $4,000,
for an aggregate of $33,444 per month.
Our principal offices will be housed in 3,625 square feet of office space
at 7 Plantation Park Drive, Bluffton, South Carolina, 29910, pursuant to a
Commercial Space Lease dated
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November 19, 1999 by and between Millionaire.com and Carolina Office Park, LLC.
The lease is for a team of 1 year and shall commence as of completion of
improvements to the space as set forth in the lease.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding ownership of
Millionaire.com's common stock as of December 21, 1999 by:
(i) each person known to us to own beneficially more than 5% of our
outstanding common stock;
(ii) each director of Millionaire.com;
(iii) each executive officer named in the summary compensation table;
and
(iv) all directors and executive officers of Millionaire.com as a
group.
Share ownership is based on 9,055,095 shares of common stock outstanding
on December 21, 1999. Unless otherwise noted, the address for each stockholder
is c/o Millionaire.com, 18 Plantation Park Drive, Bluffton, South Carolina,
29910.
<TABLE>
<CAPTION>
Percent of Shares
Name and Address of Beneficial Owner Number of Shares Beneficially Owned
- ---------------------------------------------------- --------------------------- ----------------------
<S> <C> <C>
W. Kenneth Costanzo 12,000 0.13%
112 Meilland Drive
Greer, SC 29650
Lynn Dixon 459,800 5.10%
311 S. State Street
Salt Lake City, UT 84111
Douglas Lambert and Jenny Lambert 530,000 5.87%
1924 Bay Hill Drive
Las Vegas, NV 89117
Lancer Offshore Inc. / Lancer Voyager Fund 2,000,000 22.19%
c/o 375 Park Avenue, Suite 2006
New York, NY 10152
Frank Osborne 20,000 (1) 0.22%
Richard Seibert 50,000 0.55%
David Strong 20,000 (2) 0.22%
</TABLE>
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<TABLE>
<CAPTION>
Percent of Shares
Name and Address of Beneficial Owner Number of Shares Beneficially Owned
- ---------------------------------------------------- --------------------------- ----------------------
<S> <C> <C>
Robert L. White 1,766,000 (3) 19.58%
All Directors and Executive Officers as a Group 1,868,000 (4) 20.72%
(6 persons)
</TABLE>
- ----------------------------
(1) Includes 20,000 shares issuable upon exercise of currently exercisable
options by Mr. Osborne.
(2) Includes 20,000 shares issuable upon exercise of currently exercisable
options by Mr. Strong.
(3) Includes 30,000 shares issuable upon exercise of currently exercisable
options by Mr. White and 8,000 shares issuable upon exercise of currently
exercisable options by Mr. White's wife.
(4) Includes shares issuable upon the exercise of options referenced in notes
(1) through (3) above.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Directors and Executive Officers
The following table sets forth information regarding the directors and
executive officers of Millionaire.com as of December 17, 1999. A description of
their respective backgrounds follows below.
<TABLE>
<CAPTION>
Name Age Position
- ----------------------------------------- ------- -----------------------------------------------------
<S> <C> <C>
Robert L. White 54 Chief Executive Officer, President and Director
Richard Seibert 43 Chief Financial Officer and Director
David Strong 56 Senior Vice President of Marketing, Secretary and
Director
Frank Osborne 52 Vice President, General Manager and Director
Dean Echols 54 Director
W. Kenneth Costanzo 46 Director
</TABLE>
All of the officers identified above serve at the discretion of the Board
of Directors of Millionaire.com.
Robert L. White. Mr. White has served as the Chief Executive Officer and
Chairman of the Board of Directors of Millionaire.com since November 24, 1998
and President of Millionaire since December 15, 1998. Mr. White has worked in
the publishing, antique and collectible industry for over 30 years. In 1968,
Mr. White founded the Robb Report, a monthly lifestyle magazine for the
affluent, which he sold in 1983. From 1991 through August 1998, Mr. White was a
self-employed appraiser, buyer and seller of fine art, automobiles, antiques and
high-end collectibles. Through these activities, Mr. White developed a broad
network of relationships with art and auction galleries and dealers, as well as
luxury product manufacturers and retailers.
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<PAGE>
In addition, Mr. White served as the Chairman of American Heritage Archives in
Atlanta, Georgia from 1992 through 1997.
Richard Seibert. Mr. Seibert has served as the Chief Financial Officer and
a Director of Millionaire.com since October, 1999. Prior to Millionaire.com,
Mr. Seibert served as the Controller of The Great Gatsby's Auction Gallery,
Inc., an auction gallery, from April 1999 to August 1999, as Vice President of
Finance of Biscayne Apparel International, Inc., Varon Division, an apparel
manufacturer, from March 1997 to March 1999, as Controller of Activewear
Corporation of America, Inc., an apparel manufacturer, from June 1996 to March
1997 and Chief Financial Officer of VHC, Ltd., a holding company, from June 1995
to March 1996. His responsibilities in those positions included financial
reporting, international banking, as well as management information systems and
other operational management.
David Strong. Mr. Strong has served as the Senior Vice President of
Marketing and a Director of Millionaire.com since November, 1998. From 1993 to
1998, Mr. Strong was a Real Estate Broker with Prudential Commercial Services.
Frank Osborne. Mr. Osborne has served as the Vice President, General
Manager and a Director of Millionaire.com since November, 1998. Mr. Osborne has
significant experience in sales, marketing and general management. From
October 1997 to April 1998, Mr. Osborne served as Senior Vice President of Sales
and Marketing of Mother Oil Remediation Products. From May 1997 to September
1997, Mr. Osborne served as the Vice President of Sales of ISP Alliance. From
December 1995 to April 1997, Mr. Osborne gained direct experience in the auction
marketplace while serving as the Vice President of Sales of American Heritage
Equities, a retail and wholesale antiques and auction business.
Dean Echols. Mr. Echols has served as a Director of Millionaire.com since
November, 1998. For more than a decade, Mr. Echols has been serving as the
President and a Director of Manheim Government Auction Services, an auction
company that sells over 6,000,000 units (valued at $30 Billion) from 80 auction
locations annually.
W. Kenneth Costanzo. Mr. Costanzo has served as a Director of
Millionaire.com since March 10, 1999. In September, 1998, Mr. Costanzo founded
and is President of Executive Solutions, Inc., which develops, manages and
provides worldwide marketing and executive search consulting services to various
Fortune 500 and new public companies. Prior to Executive Solutions, Inc., Mr.
Costanzo was employed by W.R. Grace & Co., where he served as the Vice President
of Global Marketing & Business Development for the Cryovac Division from May
1997 to September 1998, as the Vice President of Ventures and New Operations for
the Cryovac Division from January 1996 to June 1997 and as Vice President of
Global Human Resources from January 1994 to January 1996.
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Director Compensation
We have no established compensation arrangements with our directors but
directors may be reimbursed for their reasonable expenses incurred in connection
with the attendance at board and committee meetings. Directors are eligible to
receive options to purchase common stock under our option plans.
Involvement in Certain Legal Proceedings
On August 26, 1997, Robert White filed for personal bankruptcy under
Chapter 7 in the United States Bankruptcy Court for the Northern District of
Georgia. On March 17, 1998, Mr. White was discharged of all of his debts.
On March 30, 1999, while Richard Seibert was serving as the Vice President
of Finance, Biscayne Apparel International, Inc. filed for bankruptcy under
Chapter 7 with United States Bankruptcy Court for the Southern District of New
York.
Item 6. Executive Compensation.
The following table sets forth information for the fiscal year ended
December 31, 1998 concerning the compensation paid and awarded to our Chief
Executive Officer and all other executive officers whose total annual salary and
bonus exceeded $100,000 during such period.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
------------------------ ---------------------------------
Other Securities
Name and Fiscal Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
- ------------------------- ---------- ------------ ------------ -------------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. White 1998 $180,000 $90,000 $84,064(1) 150,000 ----
Chief Executive
Officer
and President
Glen Ulmer 1998 ---- ---- ---- ---- ----
David Cohen 1998 ---- ---- ---- ---- ----
Michael Derrick 1996-1998 ---- ---- ---- ---- ----
</TABLE>
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__________________
(1) Includes (a) $50,000 paid to Mr. White for the purchase of an automobile to
be used for business purposes, (b) $26,064 of premium payments made by
Millionaire.com on behalf of Mr. White for his personal and family life
insurance coverage, and (c) six pages per month in Millionaire.com's
magazine, which pages have a value of $8,000.
Option Grants in 1998
The following table sets forth grants of stock options for the year ended
December 31, 1998 to our executive officers named in the Summary Compensation
Table. The percentage of total options granted to employees in the last fiscal
year is based on options to purchase an aggregate of 970,000 shares of common
stock granted to our directors, officers, employees and consultants in the last
fiscal year.
Option Grants in Last Fiscal Year
(Individual Grants)
<TABLE>
<CAPTION>
Percent of Total
Number of Securities Options Granted to
Underlying Options Employees in Exercise of Expiration
Name Granted Fiscal Year Base Price Date
---- ------------------ ------------------- ------------- ---------------
<S> <C> <C> <C> <C>
Robert L. White 150,000 0.15% $1.00 12/15/03
</TABLE>
Year-End Option Values
The following table provides some information about stock options held as
of December 31, 1998 by our executive officers. No options were exercised by
any officer or director during the fiscal year ended December 31, 1998. The
potential realizable value is calculated based on the term of the option at its
time of grant. It is calculated assuming that the fair market value of common
stock on the date of grant appreciates at the indicated annual rate compounded
annually for the entire term of the option and that the option is exercised and
sold on the last day of its term for the appreciated stock price. These numbers
are calculated based on the requirements of the Securities and Exchange
Commission and do not reflect our estimate of future stock price growth.
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<PAGE>
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Number of
Securities Value of Securities Value of
Underlying Unexercised Underlying Unexercised
Unexercised In-the-Money Unexercised In-the-Money
Options at Fiscal Options at Options at Fiscal Options at
Year End Fiscal Year End Year End Fiscal Year End
Name Exercisable Exercisable Unexercisable Unexercisable
------ ------------------ ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Robert L. White 30,000 540,000 120,000 2,160,000
Frank Osborne 20,000 360,000 80,000 1,440,000
David Strong 20,000 360,000 80,000 1,440,000
</TABLE>
Stock Option Plan
General. We adopted a Stock Option Plan on November 24, 1998. The plan
authorizes options to purchase up to 1,500,000 shares of our common stock. If
options granted under the plan expire or are terminated for any reason without
being exercised, the shares of common stock underlying such grant will again be
available for purposes of the plan.
Eligibility for Participation. Grants may be made to any of our employees
and consultants.
Administration of the Plan. A Stock Option Committee comprised of Robert
L. White and Richard F. Seibert administers and interprets the plan. Such
committee has the sole authority to:
. determine the employees, officers, directors or consultants to whom grants
will be made under the plan,
. determine the type, size and terms of the grants to be made to each
optionee,
. determine the time when the grants will be made, the vesting period and
the duration of any applicable exercise or restriction period, including
the criteria for vesting, and
. deal with any other matters arising under the plan.
Types of Grants. Grants under the plan may consist of:
. options intended to qualify as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code and
. nonqualified stock options that are not intended to so qualify.
Exercise Price of Options. Generally, the exercise price of common stock
underlying an option shall be the fair market value per share of our common
stock on the date of grant, provided that the exercise price of an incentive
stock option granted to an employee who owns
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more than 10% of the common stock may not be less than 110% of the fair market
value of the underlying shares of common stock on the date of grant. In order to
exercise any option, the participant must pay the exercise price in cash.
Term of Options. The Stock Option Committee will determine the term of
each option which may be up to a maximum of ten years from the date of grant,
except that the term of an incentive stock option granted to an employee who
owns more than 10% of the common stock may not exceed five years from the date
of grant.
Vesting of Options. Unless otherwise provided by the Stock Option
Committee, the options granted are exercisable immediately. The Stock Option
Plan generally provides that options granted under the plan vest in accordance
with the following vesting schedule: 20% shall vest on the first anniversary of
the grant date and an additional 20% shall vest every year thereafter,
contingent upon continued employment. In the event of termination, incentive
stock options must be exercised within 30 days of termination of employment.
Non-transferability of Options. An incentive stock option granted under
the plan shall not be transferable otherwise than by will or by the laws of
descent and distribution, and may be exercised during the lifetime of the
optionee only by him.
Amendment and Termination of the Plan. The Stock Option Committee may
amend or terminate the plan at any time; except that it may not make any
amendment without stockholder approval that:
. increases the maximum number of shares as to which options may be granted
under the plan,
. changes the class of persons eligible to receive options under the plan or
. materially increases the benefits accruing to the optionees under the
plan.
The plan will terminate on the 10th anniversary of its effective date,
unless the Board of Directors terminates the plan earlier or extends it with
approval of the stockholders.
Tax Consequences. The following description of the tax consequences of
awards under the Stock Option Plan is based on present federal tax laws and does
not purport to be a complete description of the tax consequences of the Stock
Option Plan. There are generally no federal tax consequences as to the optionee
or to us upon the grant of an option. On the exercise of an incentive stock
option, the optionee will not recognize any income, and we will not be entitled
to a deduction for tax purposes, although such exercise may give rise to
liability for the optionee under the alternative minimum tax provisions of the
Internal Revenue Code. However, if the optionee disposes of shares acquired upon
the exercise of an incentive stock option within two years of the date of grant
or one year of the date of exercise, the optionee will recognize ordinary
income, and we will be entitled to a deduction for tax purposes in the amount of
the excess of the
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fair market value of the shares of common stock on the date of
exercise over the option exercise price (or the gain on sale, if less); the
remainder of any gain, and any loss, to the optionee will be treated as capital
gain or loss to the optionee. On the exercise of a nonqualified stock option,
the amount by which the fair market value of common stock on the date of the
exercise exceeds the option exercise price will generally be taxable to the
optionee as ordinary income and will generally be deductible for tax purposes by
us. The disposition of shares acquired upon exercise of a non-qualified option,
or an incentive stock option, if after the one year and two year periods
described above, will generally result in capital gain or loss to the optionee
but will have no tax consequences to us.
Section 162(m). Under Section 162(m) of the Internal Revenue Code, we may
be precluded from claiming a federal income tax deduction for total remuneration
in excess of $1,000,000 paid to the chief executive officer or to any of the
other four most highly compensated officers in any one year. Total remuneration
would include amounts received upon the exercise of stock options. An exception
exists, however, for "performance-based compensation," including amounts
received upon the exercise of stock options pursuant to a plan approved by
stockholders that meets certain requirements. The plan has been approved by
stockholders and it is intended that grants of options thereunder meet the
requirements of "performance-based compensation."
Employment Agreements
Millionaire.com entered into an Employment Agreement with Robert L. White
on December 23, 1998. The Agreement was amended on February 12, 1999 and on
August 27, 1999. The employment agreement terminates on December 22, 2003, but
automatically renews for additional five-year periods unless otherwise
terminated under the terms of the agreement. Pursuant to the employment
agreement, as amended, Mr. White is employed as Chairman of the Board, Chief
Executive Officer and President at an annual base salary of $180,000 plus an
annual bonus based on monthly auction sales and subscriptions/memberships, which
bonus shall not be less than $60,000 nor more than $180,000 per year. Mr. White
receives reimbursements for business-related expenses and is entitled to
participate in our benefit plans. In addition, Millionaire.com has agreed to
pay or reimburse Mr. White up to a maximum of $50,000 for an automobile. The
automobile belongs to Millionaire.com and Mr. White must return the automobile
upon termination of his employment. Mr. White is entitled to four weeks of paid
vacation per year. The agreement may be terminated by either Mr. White or
Millionaire.com at any time. If the agreement is terminated as a result of Mr.
White's death we must continue to pay his salary to his spouse for a period
which is the greater of (i) two years and (ii) the remainder of the term. If
the agreement is terminated as a result of Mr. White's disability, we must
continue to pay his salary for a period of not less than five years less by the
amount of any disability payments received by Mr. White. If we terminate the
agreement without cause, we must pay to Mr. White within five days after such
termination a lump sum payment equal to five times the sum of his then annual
base salary and maximum annual bonus or immediately enter into a ten-year
consulting agreement with him. If Mr. White is terminated by us upon a "change
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of control", other than for cause, death or disability, or if he voluntarily
terminates such employment within six months subsequent to a "triggering event"
(as defined below), then we must pay him for a period of five years thereafter a
severance payment of his annual salary, maximum annual bonus and benefits.
Each of David Strong and Frank Osborne are parties to Employment Agreements
with Millionaire.com. expiring on February 27, 2002. Pursuant to their
respective agreements, David Strong is employed as Senior Vice President of
Marketing at an annual salary of $120,000 and Frank Osborne is employed as Vice
President and General Manager at an annual salary of $140,000. The other terms
of their employment agreements are identical. Messrs. Strong and Osborne each
receive four weeks of paid vacation per year and each receives reimbursements
for business-related expenses and is entitled to participate in our benefit
plans. Each agreement may be terminated by either party. If we do so without
cause, we must continue to pay salary and benefits for the remainder of the
term.
Item 7. Certain Relationships and Related Transactions.
There was a change in control in Millionaire.com on June 5, 1998, when
David Cohen paid us $150,000 for 9,000,000 shares of our common stock and was
appointed as our sole officer and director. The $150,000 was used to pay legal
fees and a finder's fee to persons who introduced us to Mr. Cohen. The
9,000,000 shares were subsequently sold to other persons at Mr. Cohen's cost.
Mr. Cohen resigned as the sole officer and director on September 1, 1998, after
appointing Glen Ulmer of Salt Lake City, Utah to fill the vacancies created by
his resignation.
Lynn Dixon, Salt Lake City, Utah, was the principal purchaser of the
9,000,000 shares from Mr. Cohen and cancelled all but 100,000 of those shares in
connection with the acquisition of LMAC. 100,000 shares became 300,000 shares
after the 3 to 1 forward split which took place on November 24, 1998, 150,000 of
which are owned by Mr. Dixon and 150,000 which are owned by an entity controlled
by Mr. Dixon.
During July-August 1998, one of our shareholders, who had served as an
officer and director sold 942,000 shares of his stock for $100,000 to various
persons. Lynn Dixon was a purchaser of a portion of this stock along with Mr.
Abraham Salaman of Philadelphia, Pennsylvania, and persons introduced by them.
Mr. Dixon and Mr. Salaman were key in locating LMAC as an acquisition
candidate and in negotiating the terms of the acquisition.
On December 15, 1998, we granted to the following executive officers and/or
directors of Millionaire.com options to purchase the following amounts of shares
of Millionaire.com's common stock at an exercise price of $1.00 per share:
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. 150,000 options to Robert White who serves as our Chairman of the Board,
Chief Executive Officer, President and as one of our directors,
. 40,000 options to Robin White, the wife of Robert White,
. 100,000 options to Frank Osborne who serves as our Vice President, General
Manager and as one of our directors,
. 100,000 options to David Strong who serves as our Senior Vice President of
Marketing, Secretary and as one of our directors,
. 100,000 options to Dean Echols who serves as one of our directors.
The above options vest in equal installments over 5 years, subject to
continued employment.
On January 14, 1999, Millionaire.com entered into an Agreement and Plan of
Merger and Reorganization (the "Merger Agreement") and related ancillary
documents with Auction Acquisition, Inc., a Georgia corporation, The Great
Gatsby's Auction Gallery, Inc., a Georgia corporation, A.J. Nassar, Ted
Tzavaras, Robert Slack and Robert White. Pursuant to the Merger Agreement,
Millionaire.com's wholly-owned subsidiary, Auction Acquisition, Inc., merged
with and into Great Gatsby's, with Great Gatsby's being the surviving
corporation. Under the terms of the Merger Agreement, the Great Gatsby's
shareholders received, among other things, an aggregate of 4,300,000 shares of
common stock of Millionaire.com in exchange for 100% of the issued and
outstanding capital stock of Great Gatsby's.
Following the merger transaction on, June 8, 1999 Millionaire.com and its
Chief Executive Officer, Robert L. White agreed to guaranty a certain
NationsBank Line of Credit of Great Gatsby's in the original principal amount of
$1,750,000. On September 27, 1999, however, the parties entered into an
Agreement to Rescind all of the transactions contemplated under the Merger
Agreement. Pursuant to the Agreement to Rescind, the parties agreed, among
other things, (a) that the 4,300,000 shares of Millionaire.com's common stock
issued to the Great Gatsby's shareholders are deemed cancelled, as if never
issued and (b) Great Gatsby's shall secure from NationsBank the release of the
guarantees provided by Millionaire.com and Mr. White for the Line of Credit.
Each of the Great Gatsby's shareholders have agreed to return the certificates
representing the 4,300,000 shares of Millionaire.com to be cancelled and
Millionaire.com has agreed to return the certificates representing the Great
Gatsby's shares. The parties are currently in the process of collecting such
certificates and obtaining the release of
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<PAGE>
guarantees.* All other conditions precedent in the Agreement to Rescind have
been satisfied by the parties thereto. The parties agreed to submit to
arbitration the expenses and legal fees related to the transition. Arbitration
is scheduled to be concluded by December 31, 1999.
Item 8. Description of Securities.
General
Our authorized capital stock consists of 50,000,000 shares of common stock,
$0.001 par value per share, of which 9,015,095 shares were issued and
outstanding on December 15, 1999 and 5,000,000 shares of Preferred Stock, $0.001
par value per share, none of which are issued and outstanding immediately prior
to the filing of this Form 10-SB.
Common Stock
The holders of our common stock are entitled to equal dividends and
distributions per share with respect to the common stock when, as and if
declared by the Board of Directors from funds legally available therefor. No
holder of any shares of common stock has pre-emptive right to subscribe for any
additional shares of common or preferred stock, nor are any common shares
subject to redemption or convertible into other securities. Upon liquidation,
dissolution or winding up, and after we pay our creditors and preferred
stockholders, if any, the assets will be divided pro-rata on a share-for-share
basis among the holders of the share of common stock. All shares of common
stock now outstanding are fully paid, validly issued and non-assessable. Each
share of common stock is entitled to one vote with respect to the election of
any director or any other matter upon which shareholders are required or
permitted to vote. Holders of our common stock do not have cumulative voting
rights, so the holders of more than 50% of the combined shares voting for the
election of directors may elect all of the directors if they choose to do so,
and, in that event, the holders of the remaining shares will not be able to
elect any members to the Board of Directors.
Blank Check Preferred Stock
We are authorized to issue up to 5,000,000 shares of preferred stock.
Under the our Articles of Incorporation, the Board of Directors has the power,
without further action by the holders of the common stock, to designate the
relative rights and preferences of the preferred
- ------------------------
/*/ There is a risk that 440,000 of these shares may not be returned to us.
See "Risks Associated with Rescission of the Merger with The Great Gatsby's
Auction Gallery, Inc." at page 13 in the Risk Factors section.
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<PAGE>
stock, and to issue the preferred stock in one or more series as designated by
the Board of Directors. The designation of rights and preferences could include
preferences as to liquidation, redemption and conversion rights, voting rights,
dividends or other preferences, any of which may be dilutive of the interest of
the holders of the common stock or the preferred stock of any other series. The
issuance of preferred stock may have the effect of delaying or preventing a
change in control without further shareholder action and may adversely affect
their rights and powers, including voting rights, of the holders of common
stock. In certain circumstances, the issuance of preferred stock could depress
the market price of the common stock. The Board of Directors effects a
designation of each series of preferred stock by filing with the Nevada
Secretary of State a Certificate of Designation defining the rights and
preferences of each such series. These documents are matters of public record
and may be examined in accordance with procedures of the Nevada Secretary of
State, or copies thereof may obtained from of us.
Stock Options
To date, we have granted an aggregate of 970,000 options to our employees
and consultants. The options are evidenced by agreements between
Millionaire.com and the individual optionees. Unless otherwise provided by the
Stock Option Committee, the options have a 5-year term and are exercisable at a
price of $1.00 per share pursuant to the following vesting schedule: 20% vest
on the first anniversary of the grant date and an additional 20% vest every year
thereafter, contingent upon continued employment of the optionee.
Transfer Agent
Our transfer agent is Interwest Transfer Co., Inc., 1981 East 4800 South,
Salt Lake City, Utah 84117, (801) 272-9294.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
On May 6, 1998, our common stock was approved for trading on the Nasdaq OTC
Bulletin Board under the trading symbol "CRNA." We changed our trading symbol
to "MLRE" on December 15, 1998. The following table sets forth, for the periods
indicated, the range of the high and low bid quotations (as reported by Nasdaq).
The bid quotations set forth below reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not reflect actual transactions:
<TABLE>
<CAPTION>
Period High Low
- ------ ---- ---
<S> <C> <C>
Fiscal Year 1999
----------------
First Quarter 18.87 2.00
Second Quarter 6.25 2.13
Third Quarter 3.06 1.38
Fourth Quarter (through December 13, 1999) 2.90 1.25
Fiscal Year Ended December 31, 1998
-----------------------------------
Fourth Quarter (ended December 31, 1998) 26.50 0.00
Third Quarter
Second Quarter (from May 6, 1999)
</TABLE>
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As of December 21, 1999, there are approximately 93 holders of record of
Millionaire's common stock.
We have never declared or paid cash dividends on our common stock. We
intend to retain our earnings for use in the operation of our business and do
not anticipate paying any cash dividends on our common stock in the foreseeable
future.
Item 2. Legal Proceedings.
St. Ives, Inc. v. Millionaire.com. The plaintiff, Millionaire magazine's
former printer, brought an action against Millionaire.com alleging that amounts
were due under certain printing bills. The plaintiff seeks $552,873.82.
Millionaire.com counterclaimed, alleging that the printer caused substantial
problems on numerous occasions and requests an offset of damages in excess of
such amount. This case is pending in Broward County, Florida.
Annelise Kolde, et. al. v. Millionaire.com. Kolde, a former independent
contractor/salesperson for Millionaire magazine, has sued Millionaire.com for
alleged commissions owed and seeks to invoke certain stock options. The
plaintiff seeks general damages in an undetermined amount, special damages in an
amount exceeding $15,000, punitive damages, pre-judgment and post-judgment
interest, pre-judgment garnishment and declaratory relief, injunctive relief,
attorneys' fees and other costs as the court deems justified. This case is
pending in Kauai, Hawaii.
Luxury Media Corp. and Robb Report, Inc. v. Millionaire.com. Plaintiffs
recently brought this action, alleging that Millionaire.com has violated a non-
competition covenant and has infringed upon the Robb Report trademark. This
case is pending in the Unites States District Court for the District of
Massachusetts.
In the Matter of Millionaire.com. In March 1999, we received a subpoena
from the Securities and Exchange Commission in connection with an investigation
the SEC has begun into Millionaire.com. We have provided the SEC documents in
response to the subpoena and some of our employees have provided testimony. We
are continuing to cooperate fully with the SEC in this matter.
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Item 3. Recent Sales of Unregistered Securities
The following securities were issued by us within the past three years and
were not registered under the Securities Act of 1933, as amended (the "Act").
On June 5, 1998, we issued 9,000,000 restricted shares of our common stock
to David Cohen for $150,000.
On December 15, 1998, we issued 2,400,000 restricted shares of our common
stock in exchange for all the issued and outstanding shares of Lifestyles Media
Acquisition Corporation.
On December 15, 1998, we issued 1,000,000 unrestricted shares of our common
stock to certain purchasers in a private offering.
On December 15, 1998, we granted options to purchase an aggregate of
970,000 shares of common stock at an exercise price of $1.00 per share to
certain employees and consultants for services rendered pursuant to Rule 701 of
the Act.
On December 30, 1998 we issued 1,200,000 restricted shares of our common
stock to certain purchasers in a private offering.
On January 6, 1999, we issued 25,000 restricted shares of our common stock
to Fortune Marketing and Capital for services rendered.
On January 6, 1999, we issued 15,000 restricted shares of our common stock
to Merchants T&F in repayment of a bridge loan made to us in December 1998.
On January 14, 1999, we issued 600,095 restricted shares of our common
stock to certain purchasers in a private offering.
On March 5, 1999, we issued 25,000 restricted shares of our common stock to
Fortune Marketing and Capital for services rendered.
On April 13, 1999, we issued 4,300,000 restricted shares of our common
stock in exchange for all the issued and outstanding shares of The Great
Gatsby's Auction Gallery, Inc.
On November 29, 1999, we issued 50,000 restricted shares of our common
stock to Richard Seibert for services rendered.
The sale and issuance of securities in the transactions described set forth
above were exempt from registration under the Securities Act in reliance on
Section 4(2) of the Securities Act, Regulation D or Regulation S promulgated
thereunder as transactions by an issuer not involving a public offering where
the purchasers were sophisticated investors who represented their intention to
acquire securities for investment only and not with a view to distribution and
received or had access to adequate information about Millionaire.com.
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The sale and issuance of the options described above were exempt from
registration under the Securities Act in reliance on Rule 701 as transactions
under a written compensatory benefit plan established by Millionaire.com for the
participation of its employees, directors, officers, consultants and advisors.
No underwriters were employed in any of the above transactions.
Item 4. Indemnification of Directors and Officers.
Pursuant to the Articles of Incorporation, Millionaire.com is required to
indemnify, and advance expenses as they are incurred by, any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
officer of Millionaire.com, or who is serving at the request or direction of
Millionaire.com as a director or officer of another corporation or other
enterprise, against expenses including attorneys' fees, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by such person in
connection with the action, suit or proceeding, to the full extent permitted by
Nevada law.
Millionaire.com entered into Indemnification Agreements, dated as of
October 28, 1999, with each of Robert L. White, Frank Osborne, David Strong,
Rick Seibert, W. Kenneth Costanzo and Dean Echols. The Indemnification
Agreements provide that Millionaire.com shall indemnify each of them if he was,
is, or is threatened to be made to become involved in any "proceeding" (as
defined below) against any and all expenses (including attorneys' fees) and any
and all judgments, fines, and penalties entered or assessed against him, and any
and all amount reasonably paid or payable in settlement by him, incurred with
respect to such proceeding, so long as he (i) acted in good faith and (ii) he
reasonably believed (A) in the case of conduct in his official capacity, that
such conduct was in the best interests of Millionaire.com, (B) in all other
cases, that such conduct was at least not opposed to the best interests of
Millionaire.com and (C) in the case of a proceeding of a criminal nature, in
addition, that he had no reasonable cause to believe that his conduct was
unlawful. The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, be determinative that the person did not meet this standard of conduct.
A "proceeding" means any threatened, pending or completed investigation,
claim, action, suit or proceeding, whether of a civil, criminal, administrative,
arbitrative, or investigative nature (including, without limitation, any action,
suit or proceeding by or in the right of the corporation to procure a judgment
in its favor, whether formal or informal, in which he may be or may have been or
may be threatened to be made to become involved in any manner (including,
without limitation, as a party or a witness), by reason of the fact that he is
or was a director, officer, employee or agent of Millionaire.com, or is or was
serving at the request of the Board of Directors or an officer of
Millionaire.com as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee
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benefit plan, or other enterprise (whether or not for profit), or by
reason of anything actually or allegedly done or not done by him in any such
capacity, whether or not he is serving in such capacity at the time any
liability or expense is incurred for with indemnification or reimbursement can
be provided under the Indemnification Agreement.
Notwithstanding, anything to the contrary, the Indemnification Agreements
also provide that Millionaire.com shall indemnify each of these directors and/or
officers against all expenses incurred in connection with the defense of any
proceeding or any claim, issue or matter therein to the extent that such person
has been successful on the merits or otherwise, including the dismissal of an
action without prejudice. The termination of any proceeding by judgment, order
of court, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith, in a manner which he reasonably believed to be in the best
interests of Millionaire.com, or with respect to any proceeding of a criminal
nature, that such person had reasonable cause to believe that his conduct was
unlawful.
Any such indemnification shall be made by Millionaire.com only as
authorized in the specific case upon a determination that indemnification is
proper in the circumstances because the person has met the applicable standard
of conduct. Such determination shall be made:
. by the Board of Directors, (A) when there are two or more disinterested
directors, by a majority vote of all of the disinterested directors or by
a majority of the members of a committee of two or more disinterested
directors appointed by such a vote, or (B) when there are fewer than two
disinterested directors, then by the affirmative vote of a majority of
directors present, in the presence of a quorum, unless the vote of a
greater number of directors is required for action by the board and in
which authorization directors who do not qualify as disinterested
directors may participate, or
. by the stockholders, but the shares owned or voted under the control of
the person to be indemnified may not be voted on the authorization.
-39-
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
AND REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Millionaire.com
September 30, 1999, December 31, 1998 and 1997
<PAGE>
C O N T E N T S
<TABLE>
<CAPTION>
Page
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 3
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 4
CONSOLIDATED STATEMENT OF OPERATIONS 6
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) 7
CONSOLIDATED STATEMENT OF CASH FLOWS 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9
</TABLE>
2
<PAGE>
Report of Independent Certified Public Accountants
--------------------------------------------------
To the Board of Directors
Millionaire.com
We did not audit the accompanying financial statements as of September 30, 1999
and for the nine month periods ended September 30, 1999 and 1998, and
accordingly, we do not express an opinion on them.
We have audited the accompanying consolidated balance sheets of Millionaire.com
and subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of stockholders' equity for the years then ended, and the related
consolidated statements of operations and cash flows for the year ended December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Millionaire.com and subsidiaries as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for the year ended
December 31, 1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $797,051 and cash used in operating
activities of $689,877 during the year ended December 31, 1998. These factors,
among others, as discussed in Note B to the financial statements, raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note B.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Atlanta, Georgia
November 18, 1999
3
<PAGE>
Millionaire.com
CONSOLIDATED BALANCE SHEETS
December 31,
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
---------------------
1999 1998 1997
-------------- ----------- -------
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash (Note A-3) $ 109,869 $3,226,634 $40,508
Certificate of deposit 1,038,928 - -
Accounts receivable - trade, less allowance
for doubtful accounts of $250,000, $49,603 and
$0 for 1999, 1998 and 1997, respectively (Note A-7) 878,649 62,545 10,983
Inventories (Note A-6) 479,174 3,891 -
Prepaid expenses 174,823 23,133 -
---------- ---------- -------
Total current assets 2,681,443 3,316,203 51,491
EQUIPMENT AND SOFTWARE
(Notes A-4, C and G)
Equipment 158,136 21,554 499
Software 140,623 54,829 -
---------- ---------- -------
298,759 76,383 499
Less accumulated depreciation 26,737 1,545 249
---------- ---------- -------
272,022 74,838 250
OTHER ASSETS
Deposits 5,439 54,539 -
Trademarks, net of accumulated amortization
of $120,943 and $37,213 in 1999 and 1998,
respectively (Notes A-9 and C) 1,553,652 1,637,382 -
---------- ---------- -------
1,559,091 1,691,921 -
---------- ---------- -------
$4,512,556 $5,082,962 $51,741
========== ========== =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
September 30, December 31,
--------------------------
1999 1998 1997
-------------- ----------- -------------
(unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,115,626 $ 106,390 $ 47,465
Due to related parties (Note D) 22,536 - 57,500
Accrued expenses 48,368 93,545 -
Deferred revenue 382,421 45,620 -
Notes payable (Note E) 7,812 232,812 -
Current portion of long-term note (Note F) 92,775 87,524 -
----------- ---------- ------------
Total current liabilities 1,669,538 565,891 104,965
LONG-TERM DEBT (Note F) 1,194,295 1,287,071 -
COMMITMENTS AND CONTINGENCIES
(Note G) - - -
STOCKHOLDERS' EQUITY (DEFICIT)
(Note H)
Common stock, authorized, 50,000,000 shares
of $.001 par value, 8,565,000, 7,900,000 and
3,000,000 shares issued and outstanding,
respectively 8,565 7,900 3,000
Preferred stock, authorized 5,000,000 shares of
$.001 par value, no issued and outstanding
shares - - -
Additional paid-in capital 6,111,710 4,092,375 17,000
Retained earnings (deficit) (4,471,552) (870,275) (73,224)
----------- ---------- ------------
Total stockholders' equity (deficit) 1,648,723 3,233,000 (53,224)
----------- ---------- ------------
$ 4,512,556 $5,082,962 $ 51,741
=========== ========== ============
</TABLE>
5
<PAGE>
Millionaire.com
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, December 31,
--------------------------- -------------
1999 1998 1998
-------------- ----------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Net sales (Note A-2)
Magazine sales $ 189,757 $ 80,049 $ 100,737
Advertising sales 1,809,477 342,956 344,316
Inventory sales 636,813 - 1,422
----------- ---------- ----------
2,636,047 423,005 446,475
Cost of sales
Publishing costs 1,900,366 292,812 291,530
Inventory cost of sales 693,358 - 1,087
----------- ---------- ----------
2,593,724 292,812 295,017
----------- ---------- ----------
Gross profit 42,323 130,193 151,458
Operating expenses 3,616,291 283,596 919,909
----------- ---------- ----------
Loss from operations (3,573,968) (153,403) (768,451)
Other income (expenses)
Interest income 65,746 30 30
Interest expense (113,631) (9,521) (30,957)
Other income 20,576 - 2,327
----------- ---------- ----------
(27,309) (9,491) (28,600)
----------- ---------- ----------
Net loss before provision for income taxes (3,601,277) (162,894) (797,051)
Income tax expense (Note I) - - -
----------- ---------- ----------
Net loss $(3,601,277) $ (162,894) $ (797,051)
=========== ========== ==========
Net loss per common share (Note A-13) $(0.42) $(0.05) $(0.22)
=========== ========== ==========
Weighted average number of shares
Basic 8,540,566 3,139,956 3,699,935
=========== ========== ==========
Diluted 9,350,070 3,139,956 4,105,982
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
Millionaire.com
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Years ended December 31, 1998 and 1997 and
nine months ended September 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Retained
--------------------- paid-in Earnings
Shares Amount capital (Deficit) Total
----------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 3,000,000 $ 3,000 $ 17,000 $ (73,224) $ (53,224)
Issuance of common shares 9,000,000 9,000 141,000 - 150,000
Cancellation of common shares (8,700,000) (8,700) - - (8,700)
Merger transaction 2,400,000 2,400 - - 2,400
Issuance of common shares to
purchasers in private offering, net
of issuance costs of $63,425 1,000,000 1,000 935,575 - 936,575
Issuance of common shares 1,200,000 1,200 2,998,800 - 3,000,000
Net loss - - - (797,051) (797,051)
---------- ------- ---------- ----------- -----------
Balance, December 31, 1998 7,900,000 7,900 4,092,375 (870,275) 3,230,000
Issuance of common shares 600,095 600 1,499,400 - 1,500,000
Issuance of common shares
for services 15,000 15 44,985 - 45,000
Issuance of common shares
for services 25,000 25 137,475 - 137,500
Issuance of common shares
for services 25,000 25 337,475 - 337,500
Net loss - - - (3,601,277) (3,601,277)
---------- ------- ---------- ----------- -----------
Balance, September 30, 1999
(unaudited) 8,565,095 $ 8,565 $6,111,710 $(4,471,552) $ 1,648,723
========== ======= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
7
<PAGE>
Millionaire.com
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended
--------------------------- December 31,
1999 1998 1998
-------------- ----------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating
activities
Net loss $(3,601,277) $(162,894) $ (797,051)
Adjustments to reconcile net
loss to net cash
Provided by operating
activities:
Depreciation and amortization 108,922 12,648 42,209
Issuance of common stock for
services rendered 520,000 - -
Changes in operating assets
and liabilities:
Increase in accounts
receivable (816,104) (163,673) (51,562)
Increase in inventories (475,283) (1,101) (3,891)
Increase in prepaid
expenses and deposits (102,590) (56,388) (77,672)
Increase (decrease) in
accounts payable 1,009,236 (39,531) 58,925
Increase (decrease) in
accrued expenses (45,177) 15,918 93,545
Increase in deferred revenue 336,801 - 45,620
----------- --------- ----------
Net cash used in operating
activities (3,065,472) (395,021) (689,877)
Cash flows from investing
activities:
Purchase of equipment and
software (222,378) (11,278) (76,783)
Purchase of certificate of
deposit (1,038,926) - -
----------- --------- ----------
Net cash used in investing
activities (1,261,304) (11,278) (76,783)
Cash flows from financing
activities:
Proceeds from notes payable - 46,000 271,000
Principal payments on notes
payable (225,000) - (38,188)
Net proceeds from (payments) to
related parties 22,536 (35,000) (57,500)
Proceeds from common stock
offering, net 1,500,000 825,000 4,077,474
Principal payments on long-term
debt (87,525) (300,000) (300,000)
----------- --------- ----------
Net cash provided by
financing activities 1,210,011 536,000 3,952,786
----------- --------- ----------
Net increase in cash and cash
equivalents (3,116,765) 129,701 3,186,126
Cash and cash equivalents at
beginning of year 3,226,634 40,508 40,508
----------- --------- ----------
Cash and cash equivalents at end
of year $ 109,869 $ 170,209 $3,226,634
=========== ========= ==========
Supplemental disclosure
- -----------------------
Interest paid $ 89,982 $ - $ -
=========== ========= ==========
Income taxes paid $ - $ - $ -
=========== ========= ==========
</TABLE>
8
<PAGE>
Millionaire.com
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Supplemental Disclosure of Non-cash Transactions
- ------------------------------------------------
Year ended December 31, 1998
----------------------------
The Company issued a $1,674,595 note payable acquire the stock and the
trademarks of Lifestyle Media Corporation (see Note H).
Nine-Months Ended September 30, 1999 (Unaudited)
------------------------------------
The Company bartered approximately $725,000 of magazine advertisements for
goods and services.
The Company issued 50,000 shares of common stock for investor relations
services.
The Company issued 15,000 shares of common stock to obtain short-term
financing.
The accompanying notes are an integral part of these statements.
9
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999, December 31, 1998 and 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows:
1. Nature of Operations
--------------------
Millionaire.com (the Company) is a magazine publisher and an auction gallery
engaged in the business of buying and selling antiques and other luxury goods.
2. Principles of Consolidation and Basis of Financial Statement Presentation
-------------------------------------------------------------------------
The consolidated financial statements include the Company's wholly-owned
subsidiaries. Significant intercompany accounts and transactions have been
eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
3. Revenue Recognition
-------------------
The Company derives revenues from the sale of magazine subscriptions and
advertising as well as auction sales and related commissions. Magazine
revenues are recognized over the term of the subscription. Advertising revenue
is recognized over the advertising term. Auction revenues are recognized at
the conclusion of the bidding process.
Bartering (Unaudited)
- ---------------------
During the nine-month period ended September 30, 1999, the Company exchanged
magazine advertisements for goods and services. These non-monetary
transactions have been accounted for under APB Opinion NO. 29, Accounting for
Nonmonetary Transactions and EITF issue No. 93-11, Accounting for Barter
Transactions Involving Barter Credits. The non-monetary transactions were
accounted for based on the fair value of the goods exchanged. An impairment of
the non-monetary asset exchanged is recognized prior to recording the exchange
if the fair value of that asset is less than its carrying amount. The
impairment is measured as the amount by which the carrying amount of the asset
exceeds its fair value.
4. Cash and Cash Equivalents
-------------------------
For the purposes of financial reporting, the Company considers all highly
liquid investments purchased with original maturities of less than three months
to be cash equivalents.
10
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
5. Property and Equipment
----------------------
Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives. Leased
property under capital leases is amortized over the lives of the respective
leases or over the service lives of the assets for those leases, which
substantially transfer ownership. Depreciation for property and equipment is
calculated using the declining balance method and buildings are depreciated
under the straight-line method over the following estimated lives:
Property and equipment 5-7 years
6. Income Taxes
------------
The Company accounts for income taxes using the asset and liability method in
accordance with Statement of Financial Accounting Standards Number 109 (SFAS
109), Accounting for Income Taxes. Under the asset and liability method,
deferred income taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities. A valuation allowance is provided
for deferred tax assets when it is more likely than not that the assets will
not be realized.
7. Inventories
-----------
Inventories are comprised solely of antiques and other luxury goods.
Inventories are stated at the lower of cost or market; cost is determined using
the specific identification method.
8. Allowance for Doubtful Accounts
-------------------------------
The Company maintains an allowance for doubtful accounts based upon the
expected collectibility of accounts receivable. When amounts are determined to
be uncollectible, they will be charged to operations when that determination is
made.
9. Trademarks
----------
Trademarks are stated on the basis of cost basis. Amortization is calculated
using the straight-line method over 15 years. Trademarks are periodically
reviewed for impairment of carrying amount as compared to the fair value of the
assets.
10. Fair Value of Financial Instruments
-----------------------------------
The Company's financial instruments include cash, notes payable and long-term
debt. The carrying value of notes payable approximates fair value due to the
relatively short period to maturity. Carrying value of the long-term debt
approximates fair value.
11
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
11. Use of Estimates
----------------
In preparing the Company's financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
12. Concentration of Credit Risk
----------------------------
The Company maintains its cash balances in financial institutions, which at
times may exceed federally insured limits. The Company has not experienced any
losses in such accounts and believes it is not exposed to any significant
credit risk on cash and cash equivalents.
13. Loss Per Common Share
---------------------
Basic loss per common share has been calculated using the weighted average
number of shares of common stock outstanding during each period as adjusted for
the forward stock split as discussed in Note H. Diluted loss per common share
is not disclosed because the effect of the exchange or exercise of common stock
equivalents would be antidilutive.
14. Advertising Costs
-----------------
Advertising costs are charged to expense as incurred. Advertising expense was
approximately $37,000 for the year ended December 31, 1998.
15. Stock Options
-------------
Stock options have been accounted for under APB Opinion 25 and related
interpretations and Statement of Financial Accounting Standards No. 123. No
compensation cost has been reflected in the accompanying financial statements.
The pro forma effect of compensation costs have been disclosed in Note M.
NOTE B - REALIZATION OF ASSETS
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company, as a going concern. However, the Company has sustained a net loss of
$797,051 for the year ended December 31, 1998. The Company has used, rather
than provided, cash in its operations for the year ended December 31, 1998.
12
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE B - REALIZATION OF ASSETS - Continued
In view of the matters described in the preceding paragraph, recoverability of
a major portion of the recorded asset amounts show in the accompanying balance
sheet is dependent upon continued operations of the Company, which in turn is
dependent upon the Company's ability to meet its operating cash requirements
and to succeed in its future operations. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue in existence.
In response to the matters described in the preceding paragraphs, management is
pursuing additional equity financing. Management believes that this additional
financing will allow the Company to rigorously pursue its expansion efforts in
the upcoming year and that this expansion will strengthen the Company's cash
flow position to provide the Company with the ability to continue in existence.
NOTE C - TRADEMARKS AND ACQUISITION
On August 14, 1998, the Life Style Media Acquisition Corporation (LMAC)
purchased all the outstanding common shares of Life Style Media Corporation
("LMC") and the trademarks Millionaire and Billionaire. The purchase price
consisted of a $1,674,575 note payable. The total purchase price of $1,674,575
was assigned to the trademarks.
NOTE D - RELATED PARTY TRANSACTIONS
At December 31, 1997, $57,500 was due to shareholders for advances to the
Company. The advances were payable on demand, unsecured and non-interest
bearing. These advances were repaid during 1998.
13
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE E - NOTES PAYABLE
The notes payable balance of $232,812 consisted of two notes payable at
December 31, 1998. There were no notes payable at December 31, 1997. The two
notes payable at December 31, 1998 consisted of :
A note payable to a financing company in the amount of $225,000 at December 31,
1998. The note carried interest at approximately 40%, is unsecured and is
payable in full by February 18, 1999. As an additional cost of obtaining the
loan, the Company issued 15,000 shares of the Company's common stock to the
financing company. In the event that the financing company is unable to sell
the shares of the Company's common stock within one year from the date of the
loan, the Company has guaranteed to repurchase the shares at $3.00 per share.
There were no loan covenants associated with the note.
A note payable to a finance company in the amount of $7,812 at December 31,
1998. The note accrues interest at 9%, is unsecured and is payable in full by
February 18, 1999. There were no loan covenants associated with the note.
NOTE F - LONG-TERM DEBT
As described in Note C, the company's wholly-owned subsidiary, Life Style Media
Acquisition Corporation ("LMAC"), purchased the trademarks and all of the
outstanding shares of LMC. As part of the purchase price of the trademarks,
LMAC entered into a long-term debt agreement with the shareholders of LMC.
The long-term debt consisted of an initial balance of $1,674,595, of which
$300,000 was paid prior to closing the acquisition of LMC. The long-term debt is
secured by the trademarks "Millionaire" and "Billionaire". There are no
covenants associated with this long-term debt. The remaining principal portion
of the long-term debt, $1,374,595, accrues interest at 6% and is due in five
annual installments on the anniversary date of the note as indicated below:
<TABLE>
<S> <C>
Due on August 14,
1999 $ 87,524
2000 92,776
2001 268,342
2002 284,443
2003 641,510
----------
$1,374,595
==========
</TABLE>
NOTE G - COMMITMENTS AND CONTINGENCIES
Litigation
- ----------
The Company is engaged in various pending or threatened lawsuits, either as
plaintiff or defendant, involving alleged violations of non-compete covenants,
disagreements with its former employees and breach of contract. In the opinion
of management, based upon advice of counsel, the ultimate outcome of these
lawsuits will not have a material impact on the Company's consolidated
financial statements.
14
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE G - COMMITMENTS AND CONTINGENCIES - Continued
Litigation - Continued
- ----------------------
Legal proceedings involving the Company include, but may not be limited to:
St. Ives, Inc. v. Millionaire. com. The plaintiff, Millionaire magazine's
former printer, brought an action against Millioniare.com alleging that amounts
were due under certain printing bills. The plaintiff seeks $552,984.
Millionaire.com counterclaimed, alleging that the printer caused substantial
problems on numerous occasions and requests an offset of damages in excess of
such amount. This case is pending in Broward County, Florida. The Company has
accrued these costs in accounts payable at September 30, 1999 (unaudited).
Annelise Koalde, et. Al. v. Millionaire.com. Kolde, a former independent
contractor/salesperson for Millionaire magazine, has sued Millionaire.com for
alleged commissions owed and seeks to invoke certain stock options. The
plaintiff seeks general damages in an undetermined amount, special damages in
an amount exceeding $15,000 punitive damages, pre-judgment and post-judgment
interest, pre-judgment garnishment and declaratory relief, injunctive relief,
attorneys' fees and other costs as the court deems justified. This case is
pending in Kauai, Hawaii.
Luxury Media Corp. and Robb Report, Inc. v Millionaire.com. Plaintiffs
recently brought this action, alleging that Millionaire.com has violated a non-
competition covenant and has infringed upon the Robb Report trademark. This
case is pending the United States District Court for the District of
Massachusetts..
In March 1999, the Company received a subpoena from the Securities and Exchange
Commission. In connection with an investigation the SEC has begun into
Millionaire.com. The Company has provided the SEC documents in response to the
subpoena and some of our employees have provided testimony. Management intends
to cooperate fully with the SEC in this matter.
15
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE G - COMMITMENTS AND CONTINGENCIES - Continued
Leases
- ------
The Company is obligated under the terms of various lease arrangements for its
operating facility and various equipment.
The minimum operating lease commitments of the operating facility as of
December 31, 1998 are due as follows:
For the year ending
December 31, Amount
- ------------------------ ------
1999 $ 274,619
2000 304,131
2001 309,091
2002 314,051
2003 319,011
Thereafter 1,698,139
----------
$3,219,042
==========
The minimum operating lease commitments for various equipment is minimal and
not included in the above schedule. Rent expense for 1999 totaled
approximately $330,000.
Proposed Public Offering
- ------------------------
In 1999, the Company's Board of Directors approved the filing of a registration
statement under the Securities Act of 1934, for a public offering of up to $10
million of the Company's common stock. The Company intends to use
approximately $2 million of the proceeds to acquire prospective auction
galleries and the remainder for general corporate purposes.
Guarantee of Debt
- -----------------
The Company and an officer of the Company have guaranteed a $1,750,000 line of
credit (see Note J).
Repurchase of Common Stock
- ---------------------------
The Company has issued 15,000 shares of common stock to a financial institution
as additional costs of obtaining a loan (see Note E). In the event the
financial institution is unable to sell the shares of common stock within one
year from the date of the loan, the Company has guaranteed to repurchase the
shares at $3.00 per share. Accordingly, additional interest expense of $45,000
was recognized in the accompanying financial statements.
16
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE H - STOCKHOLDERS' EQUITY
The Company was organized in the State of Florida on February 15, 1995 under
the name of World Circle Trust Fund, Inc. In November, 1995, the Company
changed its name to Charter Investor Relations of North America, Inc. The
Company later changed its name to Millionaire.com (the "Company") and changed
its corporate domicile to the State of Nevada.
In 1995, the Company issued 3,000,000 shares of common stock, retroactively
adjusted for the 3 for 1 forward split. The 3,000,000 shares were issued for
services rendered at an aggregate value of $10,000. There were no further
common stock transactions until 1998.
The Company has two types of stock, common stock and preferred stock. There
are 50,000,000 shares of authorized $.001 par value common stock of which
7,900,000 and 3,000,000 were outstanding at December 31, 1998 and 1997,
respectively. The 1997 amounts are adjusted for a 3 for 1 forward split and a
change in par value from $1.00 per share to $.001 per share. There are
5,000,000 shares of authorized $.001 par value preferred stock. As of December
31, 1998 and 1997 there were no outstanding shares of preferred stock.
During 1998, the Company sold 9,000,000 shares for $150,000. The $150,000 was
subsequently used for legal and administrative matters. Subsequently, a
shareholder agreed to cancel 8,700,000 shares of common stock.
During 1998, the Company issued 2,400,000 common shares to acquire all of the
outstanding shares of Life Style Media Acquisition Corporation ("LMAC"). LMAC
was formed in 1998 and shortly after its formation issued $1,000,000 of notes
payable, solely to accredited investors, which were convertible into shares of
the Company. Following the issuance of the $1,000,000 in notes payable, LMAC
acquired all of the outstanding shares of Life Style Media Corporation ("LMC")
and its trademarks, Millionaire and Billionaire (See Note C).
In December 1998, the Company began a private placement to sell an additional
1,800,000 shares of $.001 par value common stock for a price of $2.50 per
share. As of December 31, 1998, the Company had collected $3,000,000 in
offering proceeds. Subsequent to December 31, 1998, the Company collected an
additional $1,500,000 in offering proceeds.
During 1999, the Company issued 15,000 shares to a financing company as an
inducement to extend credit to the Company. All shares were recorded at fair
market value at the date of issuance. The Company recognized $45,000 in expense
for services rendered. The Company also issued 50,000 shares to an investor
relations firm which resulted in $475,000 of expense recognition for the
services.
17
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE I - INCOME TAXES
Following is a summary of the significant components of the Company's deferred
tax assets and liabilities at:
<TABLE>
<CAPTION>
Nine months
ended
September 30, Year ended December 31,
-------------- ------------------------
1999 1998 1997
-------------- ---------- ---------
(unaudited)
<S> <C> <C> <C>
Deferred tax assets (liabilities):
Allowance for bad debts $ 98,750 $ 19,296 $ -
Operating loss carryforwards 1,487,117 293,661 28,474
Depreciation (2,325) (745) -
Deferred revenue 151,056 17,746 -
Other 5,835 5,835 -
Valuation allowance (1,740,433) (335,793) (28,474)
----------- --------- ----------
$ - $ - $ -
=========== ========= ==========
September 30, December 31,
----------- -----------------------
1999 1998 1997
----------- --------- ----------
Long-term asset $ 1,490,627 $ 298,751 $ 28,474
Short-term asset 249,806 37,042 -
----------- --------- ----------
Valuation allowance (1,740,433) (335,793) (28,474)
----------- --------- ----------
$ - $ - $ -
=========== ========= ==========
</TABLE>
At December 31, 1998, the Company had net operating loss carryforwards for tax
reporting purposes of approximately $750,000. These net operating loss
carryforwards will begin expiring in the year 2010.
The income tax provision for the year ended December 31, 1998 differs from the
amount determined by applying the applicable U.S. statutory federal income tax
rate to pretax results of operations. This difference is a result of applying
valuation allowances against the deferred tax assets.
Reconciliation of statutory Federal tax rates to the effective tax rate for the
year ended December 31, 1998 is as follows:
Income tax benefit at applicable Federal rate of 34% $ 270,997
State tax benefit, net of Federal income tax effect 39,056
Other (2,734)
--------
307,319
Increase in deferred income tax asset valuation allowance 307,319
--------
Net income tax benefit $ -
========
18
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
NOTE J - SUBSEQUENT EVENTS
On January 14, 1999 the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with an auction house (the "Acquiree") located in
Chamblee, Georgia. The Merger was consummated on February 12, 1999. The
Acquiree is in the business of selling antiques and unique collectibles. The
Merger Agreement called for the wholly-owned subsidiary of the Company to merge
with the Acquiree. Under the terms of the Merger Agreement, the shareholders
of the Acquiree received, among other things, an aggregate of 4,300,000 shares
of common stock of the Company in exchange for 100% of the issued and
outstanding shares of the Acquiree. Subsequent to the Merger Agreement,
situations arose which prevented the continuation of the Merger Agreement as
previously agreed upon.
The Company and the Acquiree agreed, as of September 27, 1999 to rescind the
Merger Agreement. Accordingly, the Agreement to Rescind enables the two
parties to restore, to the extent possible, the Company and the Acquiree to
their respective positions prior to the Merger Agreement. The Agreement to
Rescind canceled the 4,300,000 common shares of the Company previously issued
to the Acquiree's shareholders. The shares of the Acquiree were returned to
the shareholders of the Acquiree. In addition to the returning of shares, the
Company will no longer be obligated to fulfill the $1,000,000 Promissory Note
executed at the time of Merger. The Company and an officer of the Company may
be released from their respective guarantees of a $1,750,000 line of credit.
As of November 18, 1999, the Company and the officer of the Company have not
been released from their guarantees.
As part of the Agreement to Rescind, the Acquiree and the Company have agreed
to reimburse the other for fees and expenses incurred during the time of the
merged company. Fees and expenses to be reimbursed relate primarily to legal
services, cost of sales and administrative costs. The net liability or
receivable of the Company relating to the reimbursable costs has not yet been
determined. None of the transactions of the Acquiree have been reflected in
the accompanying financial statements. Management believes that no additional
contingent liabilities exist with respect to the Agreement to Rescind.
The Agreement to Rescind requires, among other things, the shareholders of the
Acquiree who received shares of the Company's common stock in the merger to
return all of the Company's shares and these shares have been cancelled by
resolution of the Company's Board of Directors. Some of these shares were
transferred to third parties who are not signatories to the Agreement to Rescind
and who may not return the Company's shares. If all of the Company's shares are
not returned, up to 400,000 shares of the Company's common stock will be owned
by persons who did not pay any consideration for such shares. Unfavorable tax
consequences may result should the rescission not be fully completed.
NOTE K - YEAR 2000 ISSUE
The Year 2000 issue related to limitation in computer systems and applications
that may prevent proper recognition of the Year 2000. The potential effect of
the Year 2000 issues on the Company and its business partners will not be fully
determinable until the Year 2000 and thereafter. If Year 2000 modifications
are not properly completed either by the Company or entities with which the
Company conducts business, the Company's revenues and financial condition could
be adversely impacted.
19
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE L - SEGMENT INFORMATION
The Company has two reportable segments: magazine publishing and auction sales.
The accounting policies used to develop segment information correspond to those
described in the summary of accounting policies. In addition, the Company does
not allocate certain corporate expenses to its segments. Segment profit or
loss is based on profit or loss from operations before income taxes. There
were no sales or transfers between segments. The reportable segments are
distinct business units operating in different industries. They are separately
managed, with separate marketing and distribution systems.
Reportable Segment Information
- ------------------------------
Magazine Auction
1998 Publishing Sales Totals
---- ----------- --------- -----------
Revenues from external customers $ 445,053 $ 1,422 $ 446,475
Interest expense 30,957 - 30,957
Depreciation and amortization 42,209 - 42,209
Segment profit (loss) (646,422) (60,631) (707,053)
Segment assets, net 1,852,437 3,891 1,856,328
Magazine Auction
1997 Publishing Sales Totals
---- ---------- -------- ----------
Segment assets, net $ 51,741 $ - $ 51,741
Reconciliation to Consolidated Amounts
- --------------------------------------
Revenues 1998
-------- ---------
Total external revenues for reportable segments $ 446,475
--------
Total consolidated revenues $ 446,475
========
Loss
----
Total loss for reportable segments $(707,053)
Unallocated amounts
Corporate expense (89,998)
--------
Consolidated loss before income taxes $(797,051)
========
20
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE L - SEGMENT INFORMATION - Continued
Assets
------
1998 1997
--------- ---------
Total assets for reportable segments $1,856,328 $ 51,741
Other unallocated assets 3,226,634 -
--------- ---------
Total consolidated assets $5,082,962 $ 51,741
========= =========
Geographic Information
----------------------
Operations and sales are currently concentrated in the southeast United States.
NOTE M - EMPLOYEE STOCK OPTION PLAN
The Board of Directors has adopted and the stockholders of the Company have
approved a Stock Option Plan ( the Plan). The Plan is accounted for under APB
Opinion 25 and related interpretations. The Plan provides for the issuance up
to an aggregate of 1,500,000 shares of Common Stock. As of December 31, 1998,
the Company has reserved 1,500,000 shares of common stock for issuance under
the Plan. The option exercise for shares will be the average market price on
the day the option is granted. However, the exercise price for a ten percent
or greater owner of the combined voting power of all classes of stock shall not
be less than 110% of the average market price on the day the option is granted.
Options currently outstanding, all granted on December 15, 1998, vest 20% on the
first anniversary of the grant date and 20% shall vest every year thereafter
contingent upon continued employment and expire five years from the grant date.
The options are exercisable at not less than the market value of the Company's
stock on the date of the grant. No compensation cost has been recognized for
options issued under the plan. The Company uses the intrinsic value method in
accounting for its stock option plan. Had compensation cost for the Company's
stock option plan been determined based on the fair value of the stock option at
the grant date, the Company's net loss and net loss per share would have
resulted in the pro forma amounts indicated below:
December 31, 1998
-----------------
Net loss As reported $(797,051)
Pro forma (797,051)
Net loss per common share As reported $ (0.22)
basic Pro forma (0.22)
21
<PAGE>
Millionaire.com
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999, December 31, 1998 and 1997
NOTE M - EMPLOYEE STOCK OPTION PLAN - Continued
The fair value of each option grant is estimated on the date of grant using the
fair value method with the following weighted-average assumptions used for
grants in 1999, expected dividend yield of zero percent; expected risk-free
interest rate of 6 percent; expected volatility of 300%; and expected life of
5.0 years.
A summary of the status of the Company's fixed stock option plan as of December
31, 1998 and changes during the year ended is presented below:
1998
-------------------------
Weighted
Average
Shares Exercise
(000) Price
------- --------
Outstanding at beginning of year - $ -
Granted 970,000 1.00
Exercised - -
Expired - -
Forfeited - -
------- -------
Outstanding at end of year 970,000 $ 1.00
======= =======
Options exercisable at year 970,000
Weighted-average fair value of options
granted during the year $ 1.00
=======
The following table summarized information concerning options outstanding at
December 31, 1998:
Weighted-average
remaining
Range of Number contractual life Weighted-average
exercise prices outstanding (years) exercise price
--------------- ----------- ---------------- ----------------
$1.00 970,000 5.0 $1.00
22
<PAGE>
PART III
<TABLE>
<CAPTION>
Item 1. Index to Exhibits.
Exhibit No. Description of Exhibit
- ------------ ----------------------
<S> <C>
(3)(i) Articles of Incorporation filed in New York on November 24, 1998.
(3)(ii) By-Laws
(4) (a) Stock Option Plan
(10) a. Lease by and between Millionaire.com and Carolina Office Park, LLC, dated
November 19, 1999 for the premises located at #7 Plantation Park Drive,
Plantation Business Park, Bluffton, South Carolina, 29910
b. Lease by and between D1D2, LLC and U.S.Auctions, Inc., dated July 24, 1998,
for the premises located at 18 Plantation Park Drive, Bluffton, South Carolina
29910.
c. Frank Osborne Employment Agreement, dated February 28, 1999.
d. David Strong Employment Agreement, dated February 28, 1999.
e. Robin White Employment Agreement, dated December 23, 1998.
f. Robert White Employment Agreement, dated December 23, 1998.
g. First Amendment to the Robert White Employment Agreement, dated February
12, 1999.
h. Second Amendment to Robert White Employment Agreement, dated August 27,
1999.
i. Form of Indemnity Agreement.
j. Stock Option Agreement with Robert L. White, dated December 15, 1998.
(21) Subsidiaries of the Registrant
(23) Consent of Grant Thornton LLP
(27) Financial Data Schedule (9-mos)
(27.1) Financial Data Schedule (Year)
</TABLE>
iii
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934,
the registrant caused this Form 10-SB to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: _______________, 1999
MILLIONAIRE.COM
By: /s/
----------------------------------------
Robert L. White
Chief Executive Officer
By: /s/
----------------------------------------
Richard Seibert
Chief Financial Officer
<PAGE>
Exhibit 3(i)
ARTICLES OF INCORPORATION
OF
MILLIONAIRE.COM
THE UNDERSIGNED, acting as incorporator of a corporation under the
Nevada Business Corporation Act, adopts the following Articles of Incorporation
for such corporation (the "Corporation").
ARTICLE I - NAME
----------------
The name of the Corporation is MILLIONAIRE.COM
ARTICLE II - INITIAL OFFICE AND RESIDENT AGENT
----------------------------------------------
The Corporation Trust Company of Nevada
One East First Street
Reno, Nevada 89501
ARTICLE III - STOCK
-------------------
The aggregate number of shares which the Corporation shall have
authority to issue is 50,000,000 shares of Common Stock having a par value of
$.001 per share and 1,000,000 shares of Preferred Stock having a par value of
$.001 per share. All Common Stock of the Corporation shall be of the same class,
and shall have the same rights and preferences. The Corporation shall have
authority to issue the shares of Preferred Stock in one or more series with such
rights, preferences and designations as determined by the Board of Directors of
the Corporation. Fully paid stock of the Corporation shall not be liable to any
further call or assessment.
ARTICLE IV - DIRECTORS
----------------------
Members of the governing board of the Corporation are directors and
the number of directors constituting the initial Board of Directors of the
Corporation is one. The name and address of each person who will serve as
director until the first annual meeting of stockholders or until any successor
is elected and qualifies, is:
<PAGE>
NAME ADDRESS
---- -------
Glen Ulmer 2508 So. 1300 East
Salt Lake City, Utah 84106
ARTICLE V - INCORPORATORS
-------------------------
The name and address of each incorporator is:
NAME ADDRESS
---- -------
Thomas G. Kimble 311 So State Street, #440
Salt Lake City, Utah 84111
ARTICLE VI
----------
LIABILITY OF DIRECTORS AND OFFICERS
-----------------------------------
No director or officer shall be personally liable to the Corporation
or its stockholders for monetary damages for any breach of fiduciary duty by
such person as a director or officer, except to the extent provided by
applicable law.
ARTICLE VII - CONTROL SHARE ACQUISITIONS
----------------------------------------
The provisions of NRS 78.378 to 78.3793 regarding control share acquisitions
do not apply to the Corporation.
ARTICLE VIII COMBINATIONS WITH INTERESTED STOCKHOLDERS
------------------------------------------------------
The provisions of NRS 78.411 to 78.444 regarding combinations with
Interested stockholders do not apply to the Corporation.
ARTICLE IX - INDEMNIFICATION OF DIRECTORS AND OFFICERS
------------------------------------------------------
The Corporation shall Indemnify, and advance expenses as they are
incurred to any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was a director or officer of the Corporation, or who is
-2-
<PAGE>
serving at the request or direction of the Corporation as a director or officer
of another Corporation or other enterprise, against expenses including
attorneys' fees, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by such person in connection with the action, suit or
proceeding, to the full extent permitted by Nevada law.
Under penalties of perjury, I declare that these Articles of
Incorporation have been examined by me and are, to the best of my knowledge and
belief, true, correct and complete.
DATED this 23rd day of November, 1998.
/s/ Thomas G. Kimble
--------------------------------------------
Thomas G. Kimble, Incorporator
-3-
<PAGE>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the 23rd day of November, 1998 personally appeared before me, Thomas G.
Kimble, who duly acknowledged to me that he signed the foregoing Articles of
Incorporation.
/s/ Diane I. Holbrook
--------------------------------------------
NOTARY PUBLIC
Residing at Salt Lake County
My Commission Expires:
5/13/2000
- ----------------------
-4-
<PAGE>
Exhibit 3(ii)
BY-LAWS
OF
MILLIONAIRE.COM
ARTICLE I - OFFICES
--------------------
The principal office of the corporation in the State of Nevada shall be
located in the City of Reno, County of Washoe. The corporation may have such
other offices, either within or without the State of Incorporation as the board
of directors may designate or as the business of the corporation may from time
to time require.
ARTICLE II - STOCKHOLDERS
--------------------------
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on such date as is
determined by the Board of Directors for the purpose of electing directors and
for the transaction of such other business as may come before the meeting.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders of
not less than ten per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten nor more than thirty days before
the date of the meeting, either personally or by mail, by or at the direction of
the
<PAGE>
president, or the secretary, or the officer or persons calling the meeting, to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon pre-paid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, thirty days. If the stock transfer books shall
be closed for the purpose of determining stockholders entitled to notice of or
to vote at a meeting of stockholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the directors may fix in advance a date as the record date for
any such determination of stockholders, such date in any case to be not more
than thirty days and, in case of a meeting of stockholders, not less than ten
days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in this section,
such determination shall apply to any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, at least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the principal office of
the corporation or transfer agent and shall be subject to inspection by any
stockholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
stockholders entitled to examine such list or transfer books or to vote at the
meeting of stockholders.
BY-LAWS
Page 2
<PAGE>
7. QUORUM.
Unless otherwise provided by law, at any meeting of stockholders one-third
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. If
less than said number of the outstanding shares are represented at a meeting, a
majority of the shares so represented may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The stockholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the time
of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such stockholders. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
BY-LAWS
Page 3
<PAGE>
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by the same percentage of all
of the shareholders entitled to vote with respect to the subject matter thereof
as would be required to take such action at a meeting.
ARTICLE III - BOARD OF DIRECTORS
---------------------------------
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall as established by the
board of directors, but shall be no less than one. Each director shall hold
office until the next annual meeting of stockholders and until his successor
shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than
this by-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
the holding of additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any director. The person or persons authorized to call special
meetings of the directors may fix the place for holding any special meeting of
the directors called by them. A director may attend any meeting by telephonic
participation at the meeting.
BY-LAWS
Page 4
<PAGE>
5. NOTICE.
Notice of any special meeting shall be given at least two days previously
thereto by written notice delivered personally, or by telegram or mailed to each
director at his business address. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed to
be delivered when the telegram is delivered to the telegraph company. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
6. QUORUM.
At any meeting of the directors a majority shall constitute a quorum for
the transaction of business, but if less than said number is present at a
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
BY-LAWS
Page 5
<PAGE>
10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of three or more directors.
Each such committee shall serve at the pleasure of the board.
ARTICLE IV - OFFICERS
----------------------
1. NUMBER.
The officers of the corporation shall be a president, a secretary and a
treasurer, each of whom shall be elected by the directors. Such other officers
and assistant officers as may be deemed necessary may be elected or appointed by
the directors.
BY-LAWS
Page 6
<PAGE>
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the directors or by these
by-laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, a vice-president may perform the duties of the president, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. A vice-president shall perform such other
duties as from time to time may be assigned to him by the President or by the
directors.
BY-LAWS
Page 7
<PAGE>
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
--------------------------------------------------
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
BY-LAWS
Page 8
<PAGE>
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositaries as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
--------------------------------------------------------
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law
and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
BY-LAWS
Page 9
<PAGE>
ARTICLE VII - FISCAL YEAR
--------------------------
The fiscal year of the corporation shall end on the last day of such month
in each year as the directors may prescribe.
ARTICLE VIII - DIVIDENDS
--------------------------
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
-------------------
The directors may, in their discretion, provide a corporate seal which
shall have inscribed thereon the name of the corporation, the state of
incorporation, and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
------------------------------
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
-------------------------
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by action of the Board of Directors.
November 25, 1998 /s/Glen Ulmer
- --------------------------- ----------------------------
Date Secretary
BY-LAWS
Page 10
<PAGE>
Exhibit 4(a)
MILLIONAIRE.COM
STOCK OPTION PLAN
Millionaire.Com a corporation organized and existing under the laws of
the State of Nevada (hereinafter referred to as the "Company"), hereby adopts
the following Stock Option Plan for certain of its employees and outside
consultants:
1. Purpose.
-------
This Stock Option Plan (heroin referred to as the "Plan") is intended
to advance the interests of the Company by providing employees and outside
consultants having substantial responsibility for the direction and management
of the Company or its subsidiaries with an opportunity to acquire a proprietary
interest in the Company and an additional incentive to promote its success and
to encourage them to remain in the employ of the Company. The Plan is intended
to permit stock options granted to employees under the Plan to qualify as
incentive stock options, herein referred to as "Incentive Stock Options," under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"). All options granted under the plan which are not intended to
qualify as Incentive Stock Option shall herein be referred to as "Non-Statutory
Options." All options granted under the Plan, including Incentive Stock
Options, and Non-Statutory Options are referred to as "Options."
2. Administration of Plan.
----------------------
The Plan shall be administered by a Stock Option Committee (the
"Committee") of two directors of the Company who shall be appointed by its Board
of Directors. The
-1-
<PAGE>
Committee may adopt rules and regulations from time to time for carrying out the
Plan. The interpretation and construction of any provision of the Plan by the
Committee shall be final and conclusive. The Committee may consult with counsel,
who may be counsel to the Company, and shall not incur any liability for any
action taken in good faith in reliance upon the advice of counsel.
3. Eligibility.
-----------
All employees of the Company and all outside consultants providing
services to the Company shall be eligible to have options granted to them. The
Committee shall grant Options only to employees of the Company and Company
outside consultants of the Company who perform services of major importance in
the management, operation and development of the business of the Company, and it
shall determine the number of shares to be allocated to each Option. The
Company shall effect the grant of Options under the Plan in accordance with
determinations made by the Committee pursuant to the provisions of the Plan by
execution and delivery of written instruments in a form approved by the
Committee. All persons to whom Incentive Stock Options are grunted must be
employees of the Company.
4. Stock.
-----
The Company has authorized the Committee to appropriate and to grant
Options for and to issue and sell for the purpose of the Plan an aggregate of
1,600,000 shares of the common stock of the Company. Options to purchase any
shares issued pursuant to the Plan that, for any reason expire or are terminated
unexercised may be reissued under the Plan. The Company shall not be required
to issue or deliver any certificate for shares of its stock purchased upon the
exercise of any part of an Option before (i) completion of any registration or
other
-2-
<PAGE>
qualification of such shares under any state or federal law or ruling or
regulation of any governmental regulatory body that the Company shall, in its
sole discretion, determine is necessary or advisable, or (ii) the Board of
Directors shall have been advised by counsel that the issuance of such shares is
exempted from any such registration or qualification of such shares. In this
regard the Committee shall be able to require the execution of an "investment
letter" in standard form prior to the issuance of any shares purchased upon the
exercise of any part of an Option. Before the granting of any Option hereunder,
Optionee must agree that no share of stock transferred to him pursuant to this
Plan may be disposed of by him within two (2) years from the date of the
granting of the Option nor within one (1) year after the transfer of such share
to said Optionee or such Option will not be qualified as an Incentive Stock
Option.
5. Tax Character of Options.
------------------------
The Committee shall have discretion to designate whether Options shall
be Incentive Stock Options or Non-Statutory Options. Subject to the limitations
described in Sections 4, 11, 16 and 17, all Options granted to employees of
Company shall be Incentive Stock Options, unless the Committee determines
otherwise.
6. Price.
-----
Except as to Options to which the provisions of paragraph 18 and 17
apply, the purchase price of each share of stock covered by an Option granted
hereunder shall be equal to the fair market value per share of the Company's
common stock on the date the Option is granted. As to Options to which the
provisions of paragraph 16 apply the purchase price of each share of stock
covered by such Option granted hereunder shall be at least one hundred ten
percent (110%) of the fair market value per share of the Company's common stack
on the date
-3-
<PAGE>
the Option is granted. If the stock is traded in the over-the-counter market,
such fair market value shall be deemed to be the mean between the asked and the
bid prices on such day as reported by NASDAQ. If the stock is traded on an
exchange, such fair market value shall be deemed to be the mean of the high and
low prices at which it is quoted or traded on such day on the exchange on which
it generally has the greatest trading volume. If the stock is not traded on
either an over-the-counter market or on an exchange, the fair market value shall
be set by the Committee in good faith based upon all relevant facts and
circumstances pursuant to any and all regulations issued by the Internal Revenue
Service.
7. Duration and Exercise of Options.
--------------------------------
A. Except as to Options to which the provisions of paragraph 16 and
17 hereof apply, the Option period shall be ten (10) yours or less from the date
the Option is granted, and as to Options to which the provisions of paragraph 16
apply, the Option period shall be five (5) years or less from the date the
Option is granted, except that either such period shall be reduced with respect
to any Option as outlined below in the event of death or termination of
employment or retirement of the Optionee; provided that the Committee may, in
the case of merger, consolidation, dissolution or liquidation, accelerate the
expiration date and the dates on which any part of the Option shall be
exercisable for all of the shares covered thereby, but the effectiveness of such
acceleration, and any exercise of the Option pursuant thereto in excess of the
number of shares for which it would have been exercisable in the absence of such
acceleration, shall be conditioned upon the consummation of the merger,
consolidation, dissolution or liquidation.
-4-
<PAGE>
B. The exercise of any Option and delivery of the optioned shares
shall be contingent upon receipt by the Company of the full purchase price in
cash.
C. No Incentive Stock Option may be exercised more thin thirty (30)
days after termination of employment of the Optionee except as hereinafter
provided.
D. Except as otherwise provided herein, or unless otherwise
determined by the Committee, every Option granted hereunder shall, upon its
grant, be immediately exercisable. The Committee shall hare the right to set
any vesting schedule or delay of exercisability it deems appropriate.
E. Incentive Stock Options granted under the Plan may be exercised,
if otherwise timely, (i) within three (3) months after retirement, other then
retirement by reason of disability, of the Optionee at or after the age of
sixty-five (65) years, if such retirement occurs on or after one year following
the grant of any Incentive Stock Option hereunder, and (ii) within three (3)
months alter retirement occurring at any age by reason of disability. In any
such case, the Incentive Stock Option may not be exercised for more than the
number of shares, if any, as to which it was exercisable by the Optionee
immediately before such retirement; provided that if such retirement was by
reason of disability, said Option shall in any case be exercisable for at least
fifty percent (50%) of the shares covered thereby; and provided further that if
such retirement occurred when or after the Optionee attained the age of sixty-
five (65) years, said Option shall be exercisable for all of the shares covered
thereby.
F. If an Optionee shall die while employed by Ins Company or within
three (3) months after retirement, such Incentive Stock Option may be exercised
(to the extent that the Optionee would have been entitled to do so at the date
of this death) by the legatees, personal
-5-
<PAGE>
representative or distributees of the Optionee during the balance of the term
thereof or within one year of the date of the Optionee's death, whichever is
shorter.
G. If Optionee is at the time of exercise, a person who is regularly
required to report his ownership and changes of ownership of the common stock of
the Company to the Securities and Exchange Commission and is subject to short
swing profit liability under the provisions of Section 18(b) of the Securities
Exchange Act of 1934 as the same, or any replacement rule, now exists, or may,
from time to time, be amended, then the Optionee may only exercise Options and
Release Rights during the period beginning on the third business day and ending
on the twelfth business day following the release for publication of quarterly
or annual summary statements of sales and earnings. This condition shall be
deemed to be satisfied if the specified financial data appears (i) on a wire
service, (ii) in a financial news service, (iii) in a newspaper of general
circulation, or (iv) is otherwise made publicly available, and shall remain in
effect so long as it does not violate the law or any rule or regulation adopted
by appropriate governmental authority.
H. Options may be exercised in whole or in part, but only with
respect to whole shares of stock. The Committee shall have the right to set any
minimum amount on the number of shares which must be exercised at any one time
as it deems appropriate.
8. Non-transferability of Options.
------------------------------
An Incentive Stock Option, by its terms shall not be transferable
otherwise than by will or by the laws of descent and distribution and an
Incentive Stock Option may be exercised during the lifetime of the Optionee only
by him.
-6-
<PAGE>
9. Effect of Stock Dividends, etc.
-------------------------------
The Committee shall make appropriate adjustments in the price of the
shares and the number allotted or subject to allotment if there are any changes
in the common stock of the Company by reason of stock dividends, stock splits,
reverse stock splits, recapitalizations, mergers or consolidations.
10. Reorganization.
--------------
If (a) the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, (b) all or substantially all
of the property is acquired by another corporation, or (c) the Company is
reorganized, then the Company, or the corporation assuming the obligations of
the Company, shall by action of its Board of Directors either:
(i) make equitable provisions so that the excess of the aggregate
fair market value of the shares subject to the Stock Options over the
option price of such shares immediately after the merger, consolidation or
reorganization of the Company, is equivalent to the excess of the aggregate
fair market value of the shares subject to such Stock Options over the
option price of such shares immediately before such merger, consolidation
or reorganization of the Company, or
(ii) give written notice to the employee that the Options shall be
terminated if they are not exercised within a prescribed period after the
date of such notice.
-7-
<PAGE>
11. Limitations on Incentive Stock Options.
--------------------------------------
Notwithstanding anything in this Plan to the contrary, the aggregate
fair market value (determined at the time of grant) of stock for which an
employee may exercise Incentive Stack Options under all plans of the Company
shall not exceed $100,000 per calendar year. If any employee shall have the
right to exercise any Options in excess of $100,000 during any calendar year,
the options in excess of $100,000 shall be deemed not to be Incentive Stock
Options.
12. Expiration and Termination of the Plan.
--------------------------------------
Options may be granted under the Plan at any time until the Plan is
terminated by the Board of Directors of the Company or until such earlier date
when termination of the Plan shall be required by applicable law. If not sooner
terminated, the Plan shall terminate automatically on that date which is ten
years from the earlier of the date on which the Plan was originally approved by
the shareholders of the Company or the date on which this Plan was adopted.
13. Amendments.
----------
The Board of Directors of the Company may from time to time make such
changes in and additions to the Plan as it may deem proper; provided that no
change shall be made that increases (except pursuant to Section 9) the total
number of shares covered by the Plan or effects any change in who may receive
Options under the Plan or materially increases the benefits accruing to
Optionees hereunder unless such change is authorized by the holders of the
common stock of the Company. Notwithstanding the foregoing, the Board of
Directors of the
-8-
<PAGE>
Company may amend the Plan, without stockholder approval, to the extent
necessary to cause Incentive Stock Options granted under the Plan to meet the
requirements of Section 422 of the Internal Revenue Code.
14. Interpretation.
--------------
The terms of this Plan concerning Incentive Stock Options are subject
to all present and future regulations and rulings of the Secretary of the
Treasury or his delegate relating to the qualification of Incentive Stock
Options under Section 422 of the Internal Revenue Code. If any provision of the
Plan conflicts with any such regulation or ruling, then that provision of the
Plan shall be void and of no effect.
15. Effective Date of Plan.
----------------------
This Plan shall nor become effective until adopted by the Board of
Directors, Company and shall not be effective unless it is approved by the
stockholders of the Company within twelve (12) months from the date of such
adoption.
16. Ten Percent or Greater Shareholders.
-----------------------------------
Anything to the contrary contained herein notwithstanding, no
Incentive Stock Option shill be granted hereunder to any individual, if at the
time such Incentive Stock Option is granted, such individual owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of Company or its parent or subsidiary corporations, unless at
the time such option is granted the option price is at least one hundred ten
percent (110%) of the fair market value of the stock subject to the option and
such option by its terms is not exercisable after the expiration of five (5)
years or less from the date of such option
-9-
<PAGE>
is granted. Any option which does not comply with the terms of this paragraph
shall be deemed not to be an Incentive Stock Option.
17. Non-Statutory Options.
---------------------
The Committee shall have the right to determine, subject to approval
of the Board of Directors, the rights and terms of all Non-Statutory Options,
including price, duration, transferability and limitations on exercise.
MlLLlONAIRE.COM
By: /s/ Glen R. Ulmer
------------------------
Glen Ulmer, President
12/15/98
-10-
<PAGE>
Exhibit 10(a)
STATE OF SOUTH CAROLINA ) COMMERCIAL SPACE LEASE
) PLANTATION BUSINESS PARK
COUNTY OF BEAUFORT )
THIS LEASE, made as of November 19/th/, 1999 by and between Carolina Office
---------------
Park, LLC, owners of #7 Plantation Park Drive, Plantation Business Park,
Bluffton, South Carolina, 29910, (hereinafter referred to as the "Landlord") and
Millionaire.com, d.b.a., Millionaire Magazine (hereinafter referred to as the
"Tenant").
WHEREAS, Landlord is the owner of #7 Plantation Park Drive desires to lease
to Tenant and Tenant desires to lease from Landlord certain office space:
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter specified, the parties agree as follows:
ARTICLE I
GRANT AND TERM
--------------
1.01 The Landlord hereby leases to the Tenant and the Tenant hereby takes
and rents from the Landlord: Office space consisting of approximately 3625
square feet within #7 Plantation Park Drive, Plantation Business Park, Bluffton,
South Carolina 29910 (hereinafter referred to as the "Leased Premises"). It is
expressly acknowledged and agreed by the Tenant that Tenant has inspected the
Leased Premises and has agreed and desires to lease the space as shown, and that
it is not relying on the stated square footage above, which may be approximate.
See Schedule A (2 parts, attached).
----------
1.02 The commencement date of this lease is upon completion of attached
---------------------------
improvements (Schedule C) or tenant's occupancy, whichever comes first.
- ----------------------------------------------------------------------
Actual date: ______________. Initials ______ / ______.
1.03 The termination date of this lease is one calendar year from date of
commencement of this lease as stated in paragraph 1.02.
1.04 Tenant shall be permitted to perform the following previously
approved tenant improvements.
a) Installation of "mini-kitchen" area including necessary plumbing at
Tenant's expense up to a $4000 maximum cost.
b) Installation of necessary communication lines at Tenant's expense. Site
plan for installation must be submitted to Landlord and approved in writing to
Tenant prior to installation. Reasonable easement will be granted with the
understanding there will be no permanent damage to site. Any temporary damage to
site must be restored to its original state within a reasonable amount of time.
Upon termination or expiration of lease, Landlord may, at it's discretion,
require lines be removed and site restored to its original state at the expense
of Tenant.
-1-
<PAGE>
ARTICLE II
RENT
----
2.01 (a) The Tenant shall pay the Landlord rent for the initial term of
the lease on a monthly basis on the following schedule:
BASE RENT $13 per square foot, $3927.00 per month, during the first
calendar year after inception of lease as stated in paragraph 1.02.
CAMTIM: Will be billed pro-rata based on square footage leased in
the building for those items described in paragraph 2.03. Tenant's leased space
is equal to 32% of total space.
(b) Base rents thereafter will increase as follows (if left blank,
increase will be 5% per year):
2/nd/ year Base rent will be $3927.00 per month.
3/rd/ year Base rent will be $4123.00 per month
4/th/ year Base rent will be $4227.00 per month.
2.02 Tenant has three (3) one-year renewal options upon all the same terms
and conditions hereof, at a rental rate to be negotiated and agreed to between
the parties hereto. Tenant shall deliver in writing to Landlord at the above
address a notice to renew no later than ninety (90) days prior to the
termination of the initial lease term or each renewal term. Failure to exercise
said options shall result in the expiration thereof.
2.03 It is the intention of the Landlord and the Tenant that the rent
herein specified shall be net to the Landlord in each year during the term of
the lease. All costs, expenses and obligations of every kind relating to the
Leased Premises, including but not limited to a proportionate share (based on
square footage) of indoor and outdoor common area and building maintenance and
repair, utilities, real estate taxes, fees and assessments, insurance, trash,
any waste disposal, reasonable management and accounting fees and other expenses
reasonably related to leased space at #7 Plantation Park Drive (hereinafter
referred to a "CAMTIM"), which may arise or come due during the terms of this
Lease, shall be paid by the TENANT, and the Landlord shall be indemnified by the
Tenant against such costs, expenses and obligations.
Tenant shall be responsible during the Lease term and any renewals thereof
for the payment of utility charges and other services that are billed directly
in the Tenant's name.
2.04 The said base rent and CAMTIM shall be paid to the Landlord on the
first (1/st/) day of every month at the address indicated above, without notice
or demand abatement, deduction, counterclaim or setoff. The rent shall be paid
in equal monthly installments in advance on the first day of each calendar month
during the term of this Lease. Rents not paid by 5 p.m. on the tenth (10th) day
of the month will be subject to a ten percent (10%) late payment penalty,
assessed per month for each late payment.
2.05 In the event of default by Tenant under this Lease, Landlord shall
have the right, in its sole discretion, to pay or perform any of the
requirements and duties of the Tenant hereunder, in which event Tenant shall
immediately reimburse Landlord for any such sums actually expended by Landlord.
-2-
<PAGE>
2.06 [PARAGRAPH WAIVED] Tenant, concurrently (or previously) with the
execution of this Lease, has deposited with Landlord the sum of $___________
(the "Security Deposit") as security for the full and faithful performance of
every provision of this Lease to be performed by Tenant. If Tenant defaults with
respect to any provision of the Lease, including but not limited to the
provisions relating to the payment of rent, landlord may use, apply or retain
the Security Deposit against all or any other sum in default, or for the payment
of any other amount which Landlord may spend or become obligated to spend by
reason of Tenant's default. If any portion of the Security Deposit is so used or
applied, Tenant shall within five (5) days after written demand, deposit cash
with landlord in an amount sufficient to restore the Security Deposit to its
original amount. Landlord shall not be required to keep the Security Deposit
separate from its general funds and Tenant shall not be entitled to interest on
such deposit. If Tenant shall fully and faithfully perform each provision of
this Lease to be performed by it, the Security Deposit or any balance thereof
shall be returned to Tenant (or at Landlord's option, to the last assignee of
Tenant's interest hereunder) at the expiration of the lease term and upon
Tenant's vacating the premises.
ARTICLE III
USE AND OCCUPATION
------------------
3.01 During the term of this Lease, or any renewal thereof, the Leased
Premises shall be used and occupied as office space. The Tenant shall not use
the Leased Premises for any other purpose or in violation of any law, municipal
ordinance or regulation.
3.02 If Landlord is unable to give possession of the Leased Premises on
the date of commencement of the term because of the holding-over or retention of
possession of any tenant, undertenant or occupant, Landlord shall not be subject
to any liability for failure to give possession. The lease shall not be
impaired, but the rent shall be abated, provided the Tenant is not responsible
for the inability to obtain possession, until the Leased Premises is ready for
Tenant's occupation.
3.03 The Landlord has not conveyed to the Tenant any right in or to the
outer side of the outside walls of the building of which the leased property
forms a part, or to any windows, doors, or interior walls. The Tenant shall not
display or erect any lettering, sign, advertisement, awning or other projection
in or on the Leased Premises, or in or on the building of which it forms a part,
without the prior written consent of the Landlord.
3.04 Tenant and its employees who work within the Leased Premises shall
have the right to park a reasonable number of cars in the #7 Plantation Park
Drive parking lot. Tenant shall not be allowed to otherwise use said parking lot
without the express written consent of Landlord except as provided in Section
3.05.
3.05 After normal business hours Monday through Friday, and on weekends,
Tenant shall be allowed to utilize extra parking space to conduct business as
needed without prior consent of Landlord. Tenant is responsible for leaving
premises in a clean condition after such use at Tenant's own cost and expense.
Furthermore, Tenant agrees to hold Landlord harmless from all responsibility
that may arise from such use.
-3-
<PAGE>
3.06 Tenant agrees to faithfully observe and strictly comply with rules
and regulations as stated in Schedule B attached. Landlord may also adopt
further regulations from time to time concerning the preservation of the Leased
Premises, building and adjoining property. The Rules and Regulations are made a
part of this lease.
ARTICLE IV
MAINTENANCE
-----------
4.01 It is mutually agreed between the parties that the Tenant is to keep
the interior of the Leased Premises in repair at its own cost and expense;
including, but not limited to, such items as housekeeping, window cleaning,
replacement of light bulbs, ballasts, etc. and any necessary repainting. Tenant
is responsible to maintain and keep in good repair all plumbing fixtures within
the Leased Premises. Tenant hereby agrees to maintain the interior of the Leased
Premises in a reasonable manner and return the same to the Landlord at the
expiration of this Lease in a like condition, normal wear and tear excepted.
4.02 In the event of failure in or damage to the physical plant, the
Landlord shall use due diligence to relieve the situation in as short a time as
reasonably possible.
4.03 The Tenant, in maintaining the Leased Premises, shall keep and
maintain it in a clean, sanitary and safe condition in accordance with the laws
of the State of South Carolina, in accordance with all directions, rules, and
regulations of the Health Officer, Fire Marshall, Building Inspector, or other
official person of governmental agencies having jurisdiction over the property.
ARTICLE V
ALTERATIONS
-----------
5.01 Except as provided for in Section 1.04 of this Lease, the Tenant
shall not have the right to make alterations or improvements to the Leased
Premises, including the remodeling of the building, without obtaining prior
written approval of the Landlord.
5.02 All alterations, decorations, additions and improvements made by the
Tenant, whose removal would substantially and materially (i.e. repair cost
exceeds $100.00 overall) damage the Leased Premises, shall become the property
of the Landlord.
5.03 Permanently constructed improvements in place at time of occupancy
are and will remain the property of the Landlord. Changes can be made only with
the Landlord's consent.
ARTICLE VI
INDEMNITY AND INSURANCE
-----------------------
6.01 The Tenant shall indemnify the Landlord and save it harmless from and
against any and all claims, common actions, damages, liabilities, and expenses
except as caused in whole or in part by accident or negligence of the Landlord,
in connection with loss of life, personal injury and/or damage to the property
arising from or out of any occurrence in or at the Leased
-4-
<PAGE>
Premises, or from the occupancy or use by the Tenant of the Leased Premises or
any part thereof, or occasioned wholly or in part by any act or omission of the
Tenant, or agents of the Tenant. The Tenant shall also pay all costs, expenses
and reasonable attorney fees that may be incurred or paid by the Landlord in
enforcing the covenants and agreements of this Lease.
6.02 During the term of this lease, the Tenant shall keep its personal
property in the Leased Premises insured, at its sole cost and expenses, against
claims, fire and other risks in a broad form coverage and for personal injury
under a policy of general public liability insurance with a limit of at least
Five Hundred Thousand ($500,000.00) Dollars. Such policy shall name the Landlord
as an additional insured. Within thirty (30) days after a request by the
Landlord, the Tenant shall deliver to the Landlord proof that such insurance has
been purchased and is in full force and effect. Both the Landlord and any
mortgages holding a security interest in the real property shall have the
reasonable right to specify insurance company or carriers, which shall carry the
policies. Failure to pay premiums or deliver certificates as stated shall permit
Landlord, at its option, to procure such insurance and pay the required
premiums, which payment shall be due immediately to the Landlord, or to
terminate the lease.
6.03 The Landlord and all mortgagees shall be additional named insured on
all policies.
ARTICLE VII
UTILITIES AND TAXES
-------------------
7.01 The Landlord shall not be liable or responsible for any interruption
of any utility or other service, including but not limited to the heating and
air conditioning system, or interruption in connection with the making of
repairs, on the building or on the Leased Premises.
7.02 Tenant shall pay all personal property taxes and assessments on its
property in the Leased Premises, as well as all utility services in its name.
ARTICLE VIII
ASSIGNING AND SUBLETTING
------------------------
a) The Tenant does not have the right to assign or sublet this Lease in
whole or in part without the express written consent of the Landlord, which
consent may be withheld for any reason, at the sole discretion of the Landlord.
ARTICLE IX
DESTRUCTION OF THE LEASED PREMISES
----------------------------------
9.01 Should the Leased Premises be so damaged by fire or other cause that
rebuilding or repairs cannot be completed within sixty (60) days from the date
of the fire or other cause of damage, then either the Landlord or Tenant may
terminate this Lease, in which event rent shall be abated from the date of such
damage or destruction. However, if the damage or destruction is such that
rebuilding or repairs can be completed within sixty (60) days, then Landlord
covenants and agrees to make such repairs with reasonable promptness and
dispatch, and to allow Tenant
-5-
<PAGE>
an abatement in the rent for such time as the building is unusable or
proportionately for such portion of the Leased Premises as shall be unusable and
the Tenant covenants and agrees that the terms of this Lease shall not be
otherwise affected. Landlord shall not be liable for any damages, compensation
and claims, inconvenience, loss of business or annoyance arising from any repair
or restoration of any portion of the Leased Premises.
ARTICLE X
EMINENT DOMAIN
--------------
10.01 If the whole of the Leased Premises shall be taken by public
authority under the power of Eminent Domain, or sold under threat of such
proceedings to condemn, then this Lease shall cease from the time when
possession is taken by such public authority and the rent shall be paid up to
that date. The Landlord shall make proportionate refund of such rent as may have
been paid in advance. If any part of the Leased Premises shall be so taken as to
render the remainder thereof unusable for the purposes for which the Leased
Premises were leased, then the Landlord and the Tenant shall each have the right
to terminate this Lease on thirty (30) days notice to be given the other within
ninety (90) days after the date of such taking.
10.02 All compensation awarded or paid upon such a total or partial taking
of the Leased Premises as shall be attributable to the Leased Premises owned by
the Landlord shall belong to and be the property of the Landlord without any
participation by the Tenant; provided, however, that nothing contained herein
shall be construed to preclude the Tenant from prosecuting any claim directly
against the condemning authority in such condemnation proceeding for loss or
damage to, or cost of removal of, or the value of stock, trade fixtures,
furniture, belonging to the Tenant.
ARTICLE XI
DEFAULT OF TENANT
-----------------
11.01 In addition to all rights under law and equity available to
Landlord, Landlord shall have the immediate right to declare this Lease
terminated and shall have the immediate right of re-entry and may remove all
persons and property from the Leased Premises and such property may be removed
and stored in a public warehouse or elsewhere at a cost, and for the account of
the Tenant, without evidence of notice or resort to legal process and without
being deemed guilty of trespass or becoming liable for any loss or damages which
may be occasioned thereby.
11.02 Upon a declaration of default, as set forth above, the Landlord
shall have the right to accelerate the rental payments due hereunder, so that
all unpaid rents shall become immediately due and payable.
11.03 The rights set forth above are collective in nature and are not
mutually exclusive of any other remedy contained herein or at law.
11.04 Landlord shall be entitled to collect from the Tenant reasonable
attorney fees and costs in any litigation enforcing the terms and provisions of
this Lease. Landlord shall be entitled to collect reasonable attorney fees and
costs from Tenant in connection with any litigation in which the Landlord is
named a party as a result of some action or inaction of the Tenant. In the
-6-
<PAGE>
event of a default by the Landlord, the Tenant shall have all remedies available
under law or equity.
11.05 Prior to default occurring under the terms of this Lease, the non-
defaulting party must give a written notice of the right to cure the default to
the defaulting party. Said notice must provide the nature of the default, the
action necessary to cure the default, and ten (10) days to cure same. If the
default, other than monetary default, is of a nature that cannot be cured within
ten (10) days, a reasonable period of time shall be allowed to cure said default
if the defaulting party, with all due diligence, proceeds to cure same.
11.06 The failure on the part of the Landlord to re-enter or repossess the
Leased Premises, or to exercise any of its rights hereunder upon any default,
shall not be deemed a waiver of any subsequent default or defaults. All of
Landlord's rights shall be cumulative and shall not preclude Landlord from
exercising any other rights which he may have under law.
ARTICLE XII
ACCESS BY LANDLORD
------------------
12.01 The Landlord or Landlord's agent shall have the right to enter the
Leased Premises at all reasonable times to examine the same and show them to
prospective purchasers or tenants so long as such entry by Landlord shall not
unreasonably interfere with Tenant's business. In addition, the Landlord or
Landlord's agent shall have the right to enter the Leased Premises upon the
Tenant's failure to comply with its covenants.
ARTICLE XIII
QUIET ENJOYMENT
---------------
13.01 The Tenant shall peaceably and quietly hold and enjoy the Leased
Premises for the Term herein stated without hindrance or interruption by the
Landlord or any other person or persons lawfully or equitably claiming by,
through or under the Landlord, subject, nevertheless, to the terms and
conditions of this Lease.
ARTICLE XIV
SURRENDER UPON TERMINATION
--------------------------
14.01 Upon vacating the Premises, Tenant shall leave all portions thereof,
the maintenance for which Tenant is responsible pursuant to this Lease, in good
order and repair, ordinary wear and tear and reasonable use and damage by the
elements excepted, and shall remove all of Tenant's property so that the
Landlord can repossess the Leased Premises not later than noon on the day upon
which the Lease or any extensions thereof ends, whether upon notice or by
holdover or otherwise. The Landlord shall have the same rights to enforce this
covenant by an ejection action or eviction action and for damages or otherwise
as for the breach or any other condition or covenant of this lease. The Tenant
may at any time prior to or upon the termination of this Lease, or any renewal
or extension thereof, remove from the Leased Premises all materials, equipment
and property of every other sort or nature installed by the Tenant thereon,
-7-
<PAGE>
provided that such property is removed without substantial or material injury
(i.e. cost to repair does not exceed $100.00 overall) to the Leased Premises.
14.02 In the event Tenant continues to occupy the Leased Premises after
the last day of the Lease term, or after the last day of any extension of said
term, with Landlord's acquiescence and without any express agreement of the
parties, Tenant shall be a Tenant at will at a monthly rate equal to one hundred
and fifty percent (150%) of the current annual rent and there shall be no
renewal of this Lease by operation of law.
ARTICLE XV
SUBORDINATION
-------------
15.01 This Lease shall be subject and subordinate at all times to any
existing or future Mortgage, secured by the premises. Although no instrument or
act on the part of the Tenant shall be necessary to effectuate such
subordination, the Tenant will, nevertheless, execute and deliver such further
instruments requested by the Mortgagee or Landlord. The Landlord and Tenant
agree that the Landlord may cause this Lease or a copy thereof, to be recorded
in the Office of the Clerk of Court for Beaufort County, South Carolina.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
------------------------
16.01 This Lease shall be governed by, construed, and enforced in
accordance with the laws of the State of South Carolina.
16.02 The covenants, terms, conditions, provisions, and understandings in
this Lease or in any renewal thereof, shall extend to and be binding upon the
successors and assigns, heirs and executors, of the respective parties hereto,
as if they were in every case named and expressed and shall be construed as
covenants running with the land; and wherever reference is made to either of the
parties hereto, it shall be held to include and apply to all the successors and
assigns of such parties, as if each and every case so expressed.
16.03 The parties agree to execute and deliver any instruments in writing
necessary to carry out any agreement, terms, conditions, or assurance in this
Lease whenever occasion shall arise and request for such instrument shall be
made, including a "short form lease" for recording purposes to evidence the
understandings of the parties.
16.04 This agreement contains the entire agreement and understanding
between the parties. There are no oral understandings, terms or conditions, and
neither party has relied upon any representation, express or implied, not
contained in this Lease or the simultaneous writings heretofore referred to. All
prior understandings, terms, or conditions are deemed to be merged in this
Lease. No subsequent alteration, amendment or conditions to this Lease shall be
binding upon the Landlord or the Tenant unless reduced to writing and signed by
each party.
16.05 If any provision of this Lease shall be declared invalid or
unenforceable, the remainder of the Lease shall continue in full force and
effect.
-8-
<PAGE>
16.06 Time is of the essence of this Lease.
16.07 The Landlord shall not be liable for injury or damage to person or
property occurring within the Leased Premises, unless caused by or resulting
from the negligence of the Landlord or any of the Landlord's agents, servants,
or employees in the operation or maintenance of the leased Premises or the
building containing the Leased Premises.
16.08 No failure of Landlord to exercise any power given by Landlord
hereunder or to insist upon absolute and strict compliance by Tenant with
Tenant's obligations hereunder shall constitute a waiver of Landlord's right to
demand exact compliance with the terms hereof.
16.09 The Landlord shall have the right without notice to Tenant to sell
or assign his interest in this Lease.
16.10 In the event that the Town, or any other governmental body or
authority requires any inspections, fees, or modifications to the Leased
Premises, or any utilities servicing same as a result of the business operations
of the Tenant, the Tenant agrees to pay for any such modification, fee, or
inspection. An example of such item would be the requirement to install a back-
flow preventer.
16.11 Any notice hereunder shall be deemed to have been given by
depositing in the first-class mail, return receipt requested, to the following:
Carolina Office Park, LLC, c/o Robert Glover, Post Office Box 23049, Hilton
Head, SC 29925 and to Russell P. Patterson, Attorney for Carolina Office Park,
LLC, P.O. Drawer 7049, Hilton Head, SC 29938.
(blank space)
16.12 WAIVER OF JURY TRIAL -- The parties to this Lease Agreement hereby
expressly waive any right to request a jury trial in connection with any dispute
or matter under this Lease Agreement.
IN WITNESS WHEREOF, the parties have executed this Lease Agreement the date
and year first written above.
WITNESSES: LANDLORD:
________________________________ CAROLINA OFFICE PARK, LLC
________________________________
By /s/
---------------------------------
Its Member
________________________________ TENANT:
________________________________ By /s/
---------------------------------
Its Vice President
-9-
<PAGE>
SCHEDULE A-1
Architectural drawing of office space for Millionaire.com for 3,625 square feet
within #7 Plantation Park Drive, Plantation Business Park, Bluffton, South
Carolina, 29910.
<PAGE>
SCHEDULE A-2
Continuation of architectural drawing of office space for Millionaire.com for
3,625 square feet within #7 Plantation Park Drive, Plantation Business Park,
Bluffton, South Carolina, 29910.
<PAGE>
SCHEDULE "B"
Attached to and made part of Lease, dated November 19/th/, 1999 between Carolina
--------------- --------
Office Park, LLC, and Millionaire.com.
- ----------------
Tenant agrees for itself, its employees, agents, clients, customers, invitees
and guests, to comply fully with the following rules and regulations and with
such reasonable modification thereof and additions thereto as Landlord may make
for the building:
a) Any sign, lettering, picture, notice or advertisement installed within the
Premises which is visible from the public corridors within the Building
shall be installed in such manner and be of such character and style as
Landlord shall approve in writing. No sign, lettering, picture, notice or
advertisement shall be placed on any outside window or in a position to be
visible from outside the Building.
b) Tenant shall not use the name of the Building for any purpose other than
that of the business address of Tenant, and shall not use any picture or
likeness of the Building in any circulars, notices, advertisements or
correspondence.
c) Tenant shall not obstruct sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways in or about the
Building, nor shall Tenant place objects against glass partitions, doors or
windows which would be unsightly from the Building's corridors, or from the
exterior of the Building.
d) No animals or pets or bicycles or other vehicles shall be brought or
permitted to be in the Building or the Premises.
e) Tenant shall not make excessive noises, cause disturbances or vibrations,
or use or operate any musical electrical or electronic devices or other
devices that emit loud sounds or air waves which may disturb or annoy other
tenants or occupants of the building.
f) Tenant shall not make any room-to-room canvass to solicit business from
other tenants of the building and shall cooperate to prevent same.
g) Tenants shall not create any odors which may be offensive to other tenants
or occupants of the Building.
h) Tenant shall not waste electricity, water or air-conditioning, and shall
cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air-conditioning. Tenant shall not adjust any
controls other than room thermostats installed for Tenant's use. Tenant
shall not tie, wedge or otherwise fasten open any water faucet or outlet.
Tenant shall keep all corridor doors closed.
i) No additional locks or similar devices shall be attached to any door and no
locks shall be changed except by Landlord. Upon termination of this Lease
of Tenant's possession of the Premises, Tenant shall surrender all keys for
door locks and other locks in or about the
<PAGE>
Premises and shall make known to Landlord the combination of all locks,
safes, cabinets and vaults which are not removed by Tenant.
j) Tenant assumes full responsibility for protecting the Premises from theft,
robbery, and pilferage. Except during Tenant's normal business hours,
Tenant shall keep all doors to the premises locked and other means of entry
to the Premises closed and secured.
k) Tenant shall not install or operate any machinery or mechanical devices of
a nature not directly related to Tenant's ordinary use of the Premises.
l) Tenant shall not employ any person to perform any cleaning, repairing,
janitorial, decorating, painting or other services or work in or about the
Premises, except with the approval of Landlord, which approval shall not be
unreasonably withheld.
m) Tenant shall ascertain from Landlord the maximum amount of electrical
current which can safely be used in the Premises, taking into account the
capacity of the electric wiring in the Building and the Premises and the
needs of other tenants, and shall not use more than such safe capacity.
Landlord's consent to the installation of electric equipment shall not
relieve Tenant from the obligation not to use more electricity than such
safe capacity.
n) Tenant shall not overload any floor and shall not install any heavy
objects, safes, business machines, files or other equipment without having
received Landlord's prior written consent as to size, maximum weight,
routing and location thereof. Safes, furniture, equipment, machines and
other large or bulky articles shall be brought through the Building and
into and out of the Premises at such times and in such a manner as the
Landlord shall direct (including the designation of elevator) and at
Tenant's sole risk and responsibility. Prior to Tenant's removal of any
such articles from the Building, Tenant shall obtain written authorization
therefor at the Office of the Building and shall present such writing to a
designated employee.
o) Tenant shall not in any manner deface or damage the Building.
p) Tenant shall not bring into the Building or Premises inflammables such as
gasoline, kerosene, naptha and bezine, or explosives or any other articles
of an intrinsically dangerous nature.
q) Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by Lessee of any merchandise or materials other than
hand-delivered packages, which requires the use of elevators or stairways
or movement through the building entrances or lobby, shall be restricted to
the hours designated by Landlord and in a manner agreed upon between Tenant
and Landlord by pre-arrangement before performance. Tenant assumes all risk
of damage to any and all articles so moves, as well as injury to any person
or property in such movement, and hereby agrees to indemnify Landlord
against any loss resulting therefrom.
<PAGE>
r) Landlord shall not be responsible for any lost or stolen property,
equipment, money or jewelry from the leased premises or the public areas of
the building regardless of whether such loss occurs when the leased
premises are locked or not.
s) No food shall be prepared or cooked in the demised premises, and the
premises shall not be used for housing, lodging, sleeping or for any
immoral or illegal purpose. Nothing contained in this clause, however,
shall be construed to prohibit to Tenant's operation of employee coffee
lounge facilities in the demised premises.
t) Tenant will refer all contractors/installation technicians rendering any
service for Tenant for supervision and approval before performance of any
contractual services. Tenant will not permit any mechanic's liens to be
placed against the premises and that any contract Tenant enters into for
work to be performed on the premises will contain a waiver of mechanic's
lien.
Tenant shall be responsible for the observance of all of the foregoing rules and
regulations by Tenant's employees, agents, clients, customers, invitees and
guests. Landlord shall not be responsible for any violation of the foregoing
rules and regulations by other tenants of the Building and shall have no
obligation to enforce the same against other tenants.
Approved by Tenant:
/s/ Vice President
-----------------------------------------
Name
11/19/99
------------------------------------------
Date
<PAGE>
SCHEDULE C
PRICING NOTES
MILLIONAIRE.COM
PREPARED BY: J. BANKS DESIGN GROUP
DATE: OCTOBER 25, 1999
General Notes
The attached space plan is located within Coastal Concrete's new building at 7
Plantation Park Drive, Bluffton, SC. The design intent is that all construction
standards and codes match the original build-out. All sub-contractors are
expected to visit the space prior to submitting estimates. We anticipate that
the Landlord will be able to obtain preliminary pricing from the sub-contractors
to proceed with lease agreements etc.
SPACE#'S 40, 41, 41A 41B, 45
Space #41, 41a and 41b are partially built-out. Space #'s 40, 45 are totally
built out and require only minor modification. The 2 x 2 acoustical ceiling, 2x
4 fluorescent fixtures, light switches, painted "exterior walls" and several
duplex/communication outlets are existing. Existing outlets are noted as "ex".
1. Anticipate providing a 6 foot plastic laminate base cabinet with sink and
wall cabinets. Price millwork separately from the plumbing. Provide water
line for coffee maker and icemaker in full height refrigerator. Contractor to
provide and install refrigerator.
2. Provide approximately 70 lineal feet of adjustable shelving in Closet #41b.
3. Relocate approximately 7-2 x 4 fluorescent fixtures. Add 4 paracube lenses to
fluorescent fixtures in conference room.
4. Add outlets as noted on plan. Existing are noted as "ex".
5. Price providing and installing C-2 carpet, direct glue down. Dimension
Carpet, Pattern: Aiken, Color: Barley, 36 oz. cut pile carpet. Rubber cove
base to match existing.
6. Office #40 is built-out and requires no additional work. Locks to be changed
out.
7. Cut in new door and frame in Office #45. Remove hardware from existing door
and lock off from Corridor #48. Add new wall switch. Add blank cover plate to
existing switch.
8. Remove existing door and frame from door in corridor #02. Add new hollow
metal cased opening frame. Add new partition, door, lockset and frame in
corridor #42,
SPACE#'s 50, 51, 52, 53, and 54
1. Build new partitions dividing offices as noted. Half wall to be 66" high x
8'-6" long. Add sound attenuation blanket between all private offices and 2
feet either side of partition above tile.
2. Install HVAC, ceiling tile, and other items required by code in new build-
out.
3. Estimate installing 15 new 2 x 4 fluorescent fixtures in open area #15; add
switch at front entry. Estimate installing 13 incandescent downlights in
private offices, add dimmer switch
<PAGE>
in each office. Price out as separate option installing paracube lenses in
open area in lieu of acrylic lens.
4. Add two Wiremold power/data poles at locations noted.
5. Add electrical voice/data outlets as noted.
6. Price installing same C-2 carpet and base.
7. All walls to by painted P-I. Sherwin Williams Roasted Almond SW1 143. All
doors and frames to be painted P-3, Sherwin Williams Bayberry #2205.
<PAGE>
STATE OF SOUTH CAROLINA )
)
COUNTY OF BEAUFORT )
Sworn to before me this ______
day of ______________, _______
______________________________
Notary Public for South Carolina
My Commission Expires: ______________
<PAGE>
Exhibit 10(b)
. Lease on building and land located at 18 Plantation Park Drive, Bluffton
South Carolina 29910.
. No other real property.
<PAGE>
THIS LEASE dated this 24/th/ day of July 1998, by and between D1D2, LLC
("Landlord") and U.S. Auctions, Inc. ("Tenant") hereinafter designated in
Section 1.4 hereof.
ARTICLE 1
---------
BASIC LEASE TERMS
-----------------
<TABLE>
<S> <C>
1.1 Landlord: D1D2, LLC
1.2 Landlord's Address: 140 C Beach City Road
Hilton Head Island, South Carolina 29926
Attn: Mr. David Paxton
1.3 Landlord's Telephone Number: (843) 689-3400
1.4 Tenant: U.S. Auctions, Inc.
P.O. Box 242
Natrona Heights, PA 15065
1.6 Tenant's Telephone Number: (412) 577-2963
1.7 Tenant's Premises Name: U.S. Auctions, Inc.
1.8 Permitted Use: Retail/auctions
1.9 General Location or Retail Center: Highway 278 at Plantation Business Park
Bluffton, South Carolina
1.10 Size of Premises: 19,840 Square Feet
1.11 Location of Premises: Entire One (1) story building
1.12 Lease Term: Ten (10) years, to commence and terminate
as set forth in Article 3.
1.13 Minimum Guaranteed Rental Rate Paid in Advance at the Beginning of Each
Year:
</TABLE>
Year 1: $281,926.00 Annual Rent
Year 2: $286,886.00 Annual Rent
Year 3: $291,846.00 Annual Rent
Year 4: $296,806.00 Annual Rent
Year 5 $301,766.00 Annual Rent
Year 6: $306,726.00 Annual Rent
Year 7: $311,686.00 Annual Rent
Year 8: $316,646.00 Annual Rent
Year 9: $321,606.00 Annual Rent
Year 10: $326,566.00 Annual Rent
2
<PAGE>
1.14 Tennant pays the following as additional rent on a monthly basis:
(a) Pro rata share of real estate taxes as set forth in Article 6.
(b) Pro rata share of Common Area Maintenance Costs (including
insurance) as set forth in Article 9
(c) Any applicable sales tax on the above
1.15 Tenant's percentage of pro-rata share of real estate taxes, building
insurance and common area maintenance costs: One hundred (100%) percent
(of a total of 19,840 square feet) of the retail building and sixty-five
(65%) percent (19,840 square feet out of a total of 30,718 square feet)
of the entire complex. Breakdown of percentages shall be defined in
Article 9.
1.16 Contents of Lease:
Pages 1 through 19
Articles 1-32
EXHIBITS:
A. Office Building Layout and Floor Plan
B. General Rules and Regulations
This Article 1 is intended as a summary of certain of the terms of this
Lease, which terms are more fully set forth in subsequent Articles
hereof.
ARTICLE 2
---------
PREMISES
--------
2.1 Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, a portion of a building located as generally described in
Section 1.9 and as shown on Exhibit A hereto (hereinafter referred to as
the "Retail Center"). Exhibit B sets forth the general layout of the
Retail Center. Exhibit B attached represents Tenant's required build-out
to be performed by Landlord. The minimum guaranteed rental rate
reflected in 1.13 includes a One Hundred Eighty Thousand and no/100
($180,000.00) Dollars construction allowance required by the Landlord to
build-out Tenant's space as identified in Exhibit B.
2.2 Landlord provides that the HVAC shall provide a temperature not to
exceed seventy-five (75) degrees in the summer months in the auction
area. This temperature shall be based at six (6) feet above floor
elevation. Should the existing system not be sufficient to maintain that
temperature level, the Landlord agrees to add additional air
conditioning to achieve the 75 degree temperature at Landlord's expense.
Should the Tenant require a temperature lower than 75 degrees, any
expense shall be Tenant's responsibility.
2.3 The Demised Premises (hereinafter referred to as the "Premises") is
delineated on the floor plan attached hereto as Exhibit A and is the
size specified in Section 1.10 hereof.
2.4 Leasable Area shall be measured on the sides from center of partition to
center of partition, but including the full width of any end wall; and
on the front and rear, said measurement shall include the full width of
the walls. In computing the leasable area of the office center no
deductions shall be made for columns, partitions, stairs or other
structures or equipment.
3
<PAGE>
ARTICLE 3
---------
LEASE TERMS
-----------
3.1 The term of this lease shall commence upon issuance of a certificate of
occupancy by the County of Beaufort for the improvements of the Tenant's
Premises, which shall occur on or before October 1, 1998.
3.2 This Lease shall terminate on the last day of the month in which the
tenth (10/th/) anniversary of the commencement date shall fall upon the
completion of Tenant's space or upon termination of any option period.
ARTICLE 4
---------
RENT
----
4.1 During the term of this Lease, Tenant shall pay to Landlord Minimum
Guaranteed Rental as specified in Section 1.13. This rental shall be
payable in advance on or before the first (1/st/) day of each calendar
year during the term. If said rent is not received on or before the
eight (8/th/) day in the calendar year, Tenant must pay a late charge of
One Thousand and no/100 ($1000.00) Dollars. For each additional day the
rent is late, Tenant shall pay an additional charge of Two Hundred Fifty
and no/100 ($250.00) Dollars. Tenant shall deposit with Prudential
Commercial Services, to be held in escrow, Twenty-five Thousand and
no/100 ($25,000.00) Dollars upon execution of the lease by all parties.
This deposit shall be non-refundable to Tenant and be applied towards
the first year's annual rental payment due upon receipt of the
Certificate of Occupancy fifteen (15) days after the execution of the
Lease by all parties an additional Twenty-five Thousand and no/100
($25,000.00) Dollars shall be deposited in escrow with Prudential
Commercial Services, which shall also be non-refundable to the Tenant
and applied towards the first year's annual rental payment. The balance
of the first year's annual rent will be paid by Tenant upon receipt of
the Certificate of Occupancy by the County of Beaufort for the
improvements of Tenant's Premises, which shall occur on or before
October 15, 1998.
ARTICLE 5
---------
TAXES
-----
5.1 As part of the Tenant's Minimum Guaranteed Rental, Tenant agrees to pay
Landlord, Tenant's pro rata share of all real estate taxes or other
forms of taxes, which may be levied or assessed against the land,
buildings and all other improvements in the complex. Tenant shall pay
its pro rata share of taxes only during the months leased and such
payment shall be part of the Tenant's monthly common area maintenance
charge.
5.2 Tenant agrees to pay, prior to delinquency, any and all taxes and
assessments levied or assessed during the term hereof upon or against:
(a) all furniture, fixtures, equipment and any other personal property
located within the Premises;
(b) all alterations or improvements of whatsoever kind, made by the
Tenant to the Premises; and
(c) the rentals or any other payments payable hereunder by Tenant to
Landlord
4
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(other than Landlord's federal and state income taxes thereon),
whether the obligation for the payment of such taxes shall be upon
Landlord or Tenant.
5.3 Should any governmental authority require that a tax, other than the
taxes above mentioned, be paid by Tenant, but collected by Landlord, for
and on behalf of said governmental authority, and forwarded by Landlord
to said governmental authority, the same shall be paid be Tenant to
Landlord, and be collectible by Landlord, and payment thereof enforced
in the same fashion as provided for the enforcement of payment of rent
hereunder, only for purpose of this Lease Agreement and payable as
billed.
5.4 Landlord shall have the unrestricted right, but not the obligation to
contest the validity or amount of any property tax by appropriate
proceedings, and if Landlord shall institute any such contest,
proceeding, or action upon whatever terms Landlord may determine. In the
event Landlord receives any refund of such taxes (and provided Tenant is
not then in default of any of the terms of this lease), Landlord shall
credit such proportion of such refund as shall be allocable to payments
of taxes actually made by Tenant (less costs, expenses and attorney's
fees) against the next succeeding payments of rent.
ARTICLE 6
---------
INSURANCE
---------
6.1 Tenant agrees to secure and keep in force from the date Landlord shall
deliver possession of the Premises to Tenant and throughout the term of
this Lease, at Tenant's own expense:
(i) Comprehensive General Liability Insurance on an occurrence basis
with minimum limits of liability in an amount of Five Hundred
Thousand ($500,000.00) Dollars for bodily injury, personal injury
or death to any one person, and One Million ($1,000,000.00)
Dollars for bodily energy, personal injury or death to more than
one person and One Hundred Thousand ($100,000.00) Dollars with
respect to damage to property, including water damage and
sprinkler leakage legal liability, if any;
(ii) Fire Insurance, with extended coverage and vandalism and
malicious mischief endorsements, in an amount adequate to cover
the full replacement value of all fixtures and contents in the
Premises in the event of fire or other casualty; and
(iii) Plate Glass Insurance covering all plate glass in the Premises.
6.2 All Comprehensive General Liability Insurance to be procured by Tenant
in pursuance of the section shall be insured in the names of and for the
benefit of Tenant and Landlord, and its designee(s), by one or more
responsible insurance companies satisfactory to Landlord and licensed to
do business in the state where the Retail Center is located; and at
Tenant's option, such insurance may be carried under a blanket policy
covering the Premises and any other of Tenant's Premises.
All policies of insurance mentioned in this section shall contain the
following endorsements: (a) that such insurance may not be cancelled or
amended with respect to Landlord except upon fifteen (15) days prior
written notice from insurance company to Landlord sent by certified or
registered mail; (b) that Tenant shall be solely responsible for the
payment of all premiums under such policy and that Landlord shall have
no obligation for the payment thereof.
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6.3 As part of Tenant's Minimum Guaranteed Rental, Tenant agrees to pay to
Landlord Tenant's pro rata share of all insurance premiums, including
but not limited to fire insurance and extended coverage, and liability
insurance, that may be carried by Landlord covering the Retail Center.
Such payment shall be part of Tenant's monthly common area maintenance
charge.
6.4 Tenant shall not suffer anything to be or remain upon or about the
Premises, nor carry on nor permit in the Premises any trade or
occupation, or suffer to be done anything which may render an increased
or extra premium payable for the insurance of the Premises or the Retail
Center against fire, or other perils included under standard extended
coverage insurance, unless Landlord shall consent in writing, and if
such consent is given, Tenant shall pay such increased or extra premium
ten (10) days after Tenant shall have been advised of the amount
thereof.
ARTICLE 7
---------
REPAIRS
-------
7.1 Landlord will make necessary repairs to roof, roof structure, gutters,
downspouts, exterior walls (not including glass) and foundation walls of
the Retail Center during the original or any extended term of this Lease
after receiving notice from Tenant of the need for said repairs and
where said repairs are not in any way occasioned through the misuse or
neglect of Tenant or otherwise out of the occupancy of the Premises.
Where such repairs are occasioned through the misuse or neglect of the
Tenant or otherwise arise out of the occupancy of the Premises by
Tenant, its employees and invitees, same shall be made promptly by
Tenant, at its expense.
7.2 All repairs within the Premises, including storefronts, plate glass, and
entry doors, shall be the responsibility of Tenant. Tenant shall keep
the interior of the Premises together with all electrical, heating, air
conditioning, and other mechanical installations and equipment used by
or in connection with the Premises, in good order and replacement and
repair. Tenant will not overload the electrical wiring and will not
install any additional electrical wiring or plumbing unless it has first
obtained Landlord's written consent thereto, and, if such consent is
given, Tenant will install them at its own cost and expense. In
furtherance of the above, Tenant covenants and agrees to obtain a
maintenance, repair and service contract on the HVAC system, unless such
maintenance service and repair are covered by a comprehensive
maintenance, repair and replacement contract through Landlord, Tenant
agrees, within two (2) weeks of Landlord's request of evidence of such
contract covering units in Tenant's Premises, the either; enter into an
equivalent contract; or to enter into Landlord's comprehensive contract.
In the event that Tenant fails to do this, Landlord is hereby authorized
to provide such services on Tenant's units on a quarterly basis, and
Tenant agrees to promptly pay Landlord's standard contract charges for
such work. Notwithstanding the above, all repairs and replacements
within the Premises shall be the responsibility of the Landlord during
the initial twelve (12) months of the lease term.
7.3 If Tenant does not proceed to make repairs imposed upon it within seven
(7) days after receiving written notice from Landlord, or after
receiving notice by telephone in the event of emergencies, then Landlord
may, at its option enter the Premises and do the things specified in
said notice, without liability on the part of Landlord; and Tenant
agrees to pay promptly upon demand any reasonable cost or expense
incurred by
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Landlord in doing such work. Landlord agrees, after written notice from
Tenant, to make such repairs of which it is required and perform its
obligations hereunder as promptly as reasonably possible under the
circumstances.
ARTICLE 8
---------
COMMON AREAS
------------
8.1 All common areas and other common facilities (hereinafter collectively
called "Common Areas") made available by Landlord in or about the Retail
Center shall be subject to the exclusive control and management of
Landlord, expressly reserving unto Landlord, without limitation, the
right to erect and install within the parking areas, and other common
areas, planters, pools, sculpture, or otherwise. "Common Areas" shall
mean all areas, space, facilities, equipment, sidewalks, parking areas,
driveways, landscaped areas, loading docks, if any, signs and special
services form time to time made available by Landlord for the common and
joint use and benefit Landlord, the Premises in and/or adjoining the
Retail Center, Tenant, and other Tenant's of the Retail Center, Tenant
and their respective employees, customers and other invitees. Landlord
hereby expressly reserves the right, from time to time: to change the
area, and arrangement of the parking areas and other facilities and
other facilities forming a part of said Common Areas; to close
temporarily all or any portion of the Common Areas for the purpose of
making repairs or changes thereto and to discourage non-customer parking
and to establish, modify and enforce reasonable rules and regulations
with respect to the Common Areas and the use to be made, hereof.
Landlord shall operate, manage, equip, light and maintain the common
areas in such manner as Landlord, in its sole discretion may from time
to time determine, and Landlord shall have the sole right to employ and
discharge all personnel with respect thereto. Tenant is hereby given a
license (in common with all others to whom Landlord has or may hereafter
grant rights) to use, during the term of this Lease, the Common Areas of
the Retail Center; provided, however that if the size, location or
arrangement of such Common Areas, or the type of facilities at any time
forming a part thereof, be changed or diminished, Landlord shall not be
subject to any liability therefore, nor shall Tenant be entitled to any
compensation or diminution of such areas to be deemed a constructive or
actual eviction.
8.2 Landlord shall not be responsible for any merchandise; cash or any other
valuables left in Common Areas at any time (before, during or after
hours of operation).
ARTICLE 9
---------
COMMON AREA MAINTENANCE COSTS
-----------------------------
9.1 Landlord shall maintain the Common Areas in good order, clean condition
and repair. As part of Tenant's Minimum Guaranteed Rental, Tenant agrees
to pay Landlord, Tenant's pro rata share of costs of the building and
complex of the Common Area Maintenance Costs. "Common Area Maintenance
Costs" shall mean the total costs and expenses incurred in operating,
maintaining and repairing the Common Areas. Tenant shall be responsible
for one hundred (100%) percent of the Common Area Maintenance Costs for
the Retail Building and sixty-five (65%) percent of the Common Area
Maintenance Costs for the complex with the exception of the elevator
maintenance contract for which the office tenants shall be one hundred
(100%) percent responsible.
The Common Area Maintenance Costs for the office building shall include:
1. Dumpster
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2. Sprinkler alarm monitoring, if necessary
3. Interior pest control
4. Repairs and/or replacements in the office building
The Common Area Maintenance Costs for the complex shall include:
1. Real Estate Taxes
2. Building insurance
3. Management
4. Landscaping
5. Water and sewer
6. Exterior utility charges
7. Any other charges not noted above
8. Repairs or replacements on the exterior of the complex
ARTICLE 10
----------
UTILITIES
---------
11.1 Tenant shall pay directly to local utility companies the total cost of
electricity, fuel and other special fees, including required deposits
for utilities or services used in or for the Premises. Water and sewer
charges will be included in the common area maintenance with the
exception of extraordinarily high users, who will be individually
metered. Landlord shall not be liable for any interruption in the supply
of any utility services to the Premises, nor shall any such interruption
in the supply of any utility services to the Premises, nor shall any
such interruption constitute any ground for an abatement of any other
rents reserved hereunder, unless caused by Landlord. Tenant shall not at
any time overburden or exceed the capacity of the mains, feeders, ducts,
conduits or other facilities by which utilities are supplied to the
Premises.
ARTICLE 12
----------
DESTRUCTION
-----------
12.1 If the Premises shall be partially damaged by any casualty insurable
under the Landlord's insurance policy, Landlord shall, upon receipt of
the insurance proceeds, repair the same, and the minimum rent shall be
abated proportionately as to that portion of the Premises rendered
untenable. If the Premises (a) by reason of such occurrence is rendered
wholly untenable, or (b) should be damaged as a result of a risk which
is not covered by Landlord's insurance, or (c) should be damaged in
whole or in part during the last two (2) years of the term, Tenants
shall vacate and surrender the Premises to Landlord, upon Landlord's
request. Tenant's liability for rent upon the termination of this Lease
shall cease as of the day following the event of damage. In the event
Landlord elects to repair the damage insurable under Landlord's
policies, any abatement of rent shall end five (5) days after notice by
Landlord to Tenant that the Premises has been repaired. Nothing in this
section shall be construed to abate percentage rent; but in the event
Tenant's minimum rent shall have been abated pursuant to this Section
16.1, that amount of Gross Sales after which percentage rent shall be
paid, as set forth in Section 1.14 hereof, shall be reduced by a
percentage equal to the percentage of the Lease Year during which
minimum rent was abated. If the damage is caused by the negligence of
the Tenant, it's employees, agents or concessionaires; there shall be no
abatement of rent. Unless this lease is terminated by Landlord, Tenant
shall repair and refixture the interior of the Premises in a manner and
to at least a condition equal to that existing prior to its destruction
or casualty and the proceeds of all insurance carried by
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Tenant on its property and improvements shall be held in trust by Tenant
for the purpose of said repair or replacement.
ARTICLE 13
----------
CONDEMNATION
------------
13.1 If the whole of the Premises shall be acquired or taken by eminent
domain, then this Lease shall terminate as of the date Tenant is no
longer permitted to use the Premises.
13.2 If any part of the Premises shall be taken rendering the remaining
portion unsuitable for the business of the Tenant, then this Lease shall
terminate as aforesaid. If such partial taking is not extensive enough
to render the Premises unsuitable for the business of the Tenant, then
this Lease shall continue in effect except that the minimum rent shall
be reduced in the same proportion that the floor area of the Premises
taken bears to the original floor area thereof.
13.3 If this Lease is terminated as provided in this Article, rent shall be
paid up to the day that Tenant is no longer permitted to use the
Premises and Landlord shall make an equitable refund of any rent paid by
Tenant in advance.
13.4 Tenant shall not be entitled to and expressly waives all claims to any
condemnation award for any taking, whether whole or partial, and whether
for diminution in value of the leasehold or to the fee; provided,
however, Tenant shall have the right to the extent that the same shall
not reduce Landlord's award, to claim from the condemnor, but not from
Landlord, such compensation as may be recoverable by Tenant in it's own
right for damage to Tenant's business and fixtures, if such claim can be
made separate and apart from any award to Landlord, and without
prejudice to Landlord's award.
ARTICLE 14
----------
MECHANIC'S LIENS
----------------
14.1 Should any mechanic's, materialmen's, or any other lien be filed against
the Premises, the Office Center or any part thereof for any reason
whatsoever by reason of Tenant's acts or omissions or because of a claim
against Tenant, Tenant shall cause the same to be cancelled or
discharged of record by bond or otherwise within ten (10) days after
notice by Landlord.
ARTICLE 15
----------
LIABILITY
---------
15.1 Tenant shall indemnify Landlord and save it harmless from suits,
actions, damages, liability and expense in connection with loss of life,
bodily or personal injury or property damage arising from or out of the
use or occupancy of the Premises or any part thereof, or occasioned
wholly or in part by any act or omission of Tenant, its agents,
contractors, employees, servants, invitees, licensees or
concessionaires.
15.2 Tenant shall give prompt notice to Landlord in case of fire or accidents
in the Premises or in the building of which the Premises is a part, or
of defects therein or any fixtures or equipment.
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ARTICLE 16
----------
QUIET ENJOYMENT
---------------
16.1 Tenant, upon paying the rent and performing all of the terms on its part
to be performed, shall peaceably and quietly enjoy the Premises,
subject, nevertheless to the terms of this lease and to any mortgage,
ground lease or agreements to which this Lease is subordinated.
ARTICLE 17
----------
ACCESS TO PREMISES
------------------
17.1 Landlord shall have the right to place, maintain and repair all utility
equipment of any kind, upon or under the Premises as may be necessary
for the servicing of the Premises and other portions of the Office
Center. Landlord shall also have the right to enter the Premises to
inspect or exhibit the same to prospective purchasers and mortgagees.
If, in an emergency only, the Tenant shall not be present to permit
entry into the space, Landlord may enter the same by use of reasonable
force without incurring liability therefore and without in any manner
affecting the obligations of this Lease. The Provisions of this article
shall in no wise be construed to impose upon Landlord any obligation
whatsoever for the maintenance or repair of the building or any part
thereof, except as otherwise herein provided.
ARTICLE 18
----------
DEFAULT
-------
18.1 The following events shall at the option of the Landlord be deemed to be
events of default by Tenant under this Lease:
(a) Tenant shall fail to pay any rents, or other charges and such
failure shall continue for ten (10) days upon receipt of notice
from Landlord;
(b) Tenant shall fail to comply with any provision of this Lease other
that the payments of rent, and shall not cure such failure within
thirty (30) days after written notice to Tenant;
(c) Tenant shall be the subject of any action or proceeding relating to
bankruptcy or insolvency as set forth in Article 21 hereof.
18.2 If Tenant should desert or abandon the Premises and/or cease operation as
a going concern prior to expiration of the term of this Lease, then in
any such event and in addition to all other rights and remedies it may
have according to this Lease or provided by law, then Landlord, at its
option may declare the term of this Lease ended, re-enter the Premises,
and recover from Tenant the balance of any rent due and all future rents
due under the current lease term and any reasonable expenses, including
attorney's fees, incurred in connection with the recovery of the Premises
and any rent due. Notwithstanding the above, Landlord shall use its
reasonable efforts to lease the Premises if Tenant becomes in default.
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ARTICLE 19
----------
BANKRUPTCY OR INSOLVENCY
------------------------
19.1 If at any time after the date of this Lease (whether prior to the
commencement of or during the term of this Lease), any of the following
shall occur:
(a) The institution of any proceedings in bankruptcy, insolvency or
reorganization against Tenant pursuant to any federal or state law
now or hereafter enacted, or the appointment of any receiver or
trustee for all or any portion of Tenant's business or property or
against the leasehold estate created hereby, and any such
proceedings, process or appointment be not discharged and dismissed
within thirty (30) days from the date of such filing, appointment
or issuance; or
(b) The entry of decree or order for relief by a court having
jurisdiction in the Premises in respect of Tenant in an involuntary
case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Tenant or for any substantial part of its property, or
ordering the winding up or liquidation of its affairs and the
continuance of any such decree or order unstayed and in effect for
a period of thirty (30) consecutive days; or
(c) The commencement by Tenant of a voluntary case under the federal
bankruptcy laws, as nor constituted or hereafter amended, or any
other applicable federal or state bankruptcy, insolvency, or other
similar law, or the consent by it to the appointment of or taking
possession by a receiver, liquidator, assigned, trustee, custodian,
sequestrator (or similar official) of Tenant or for any substantial
part of its property, or the making by it of any assignments for
the benefit of creditors, or the failure of Tenant generally to pay
its debts as such debts become due, or the taking of action by
Tenant in preparation for in furtherance of any of the foregoing;
shall be deemed to constitute and shall be construed as a
repudiation by Tenant's obligations hereunder and shall cause this
Lease ipso facto to be canceled and terminated, without thereby
----------
releasing Tenant; and upon such termination, Landlord shall have
the immediate right to re-enter the Premises and to remove all
persons and properties therefrom and this Lease shall not be
treated as an asset of the Tenant's estate and neither the Tenant
nor anyone claiming by, through or under Tenant by virtue of any
law or any order of any court, shall be entitled to the possession
of the Premises or to remain in the possession thereof. Upon the
termination of this Lease, as aforesaid, Landlord shall have the
right to retain as partial damages, and not as a penalty any
prepaid rents and any security deposited by Tenant hereunder and
Landlord shall also be entitled to exercise such rights and
remedies to recover from Tenant damages, unless any statute or rule
of law governing the proceedings in which such damages are to be
proved shall lawfully limit the amount of such claims capable of
being so proved, in which case Landlord shall be entitled to
recover, as for and liquidated damages, the maximum amount which
may be allowed under any such statute or rule or law. As used in
this Article, the term "Tenant" shall be deemed to include Tenant
and its successors and assigns, and the guarantor of Tenant's
obligations under this Lease, if any.
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ARTICLE 20
----------
ATTORNEY'S FEES
---------------
20.1 In the event that either party hereto brings legal action against the
other arising out of this Lease, both parties agree to arbitration as
the source of resolving the issue.
ARTICLE 21
----------
SUBORDINATION AND NOTICE TO MORTGAGEE
-------------------------------------
21.1 The Tenant's interest in this Lease is subordinate to any mortgage liens
on the Office Center, and Tenant shall, upon Landlord's request,
subordinate this Lease to any lien placed by Landlord upon the Office
Center of which the Premises forms a part, with an insurance company,
bank, or any other institutional lender, provided that such lender
agrees that if Tenant is not then in default under this Lease, this
Lease shall not terminate as a result of the foreclosure of such lien,
and Tenant's rights under this Lease shall continue in full force and
effect and Tenant's possession be undisturbed except in accordance with
the provisions of this Lease. Tenant will, upon request of such
lienholders, be a party to such an agreement, and will agree that if
such lienholder succeeds to the interest of Landlord, Tenant will
recognize said lienholder (or successor-in-interest of the lienholder)
as its Landlord under the terms of this Lease. Tenant agrees that in the
event that such institutional lender shall request that the Lease be
modified as a condition precedent to its making a loan on the Office
Center of which the Premises forms a part, Tenant shall consent to the
making of such modifications as such institutional lender shall
reasonably request. In the event that Tenant shall refuse to make any
such changes requested by such institutional lender, Landlord shall have
the option of canceling this Lease, in which event it shall become null
and void and neither party hereto shall have any further obligation to
the other. Landlord shall also have the right to subordinate this Lease
to existing other leases in the Office Center.
21.2 Anything in this lease to the contrary not withstanding Tenant agrees
that it will not terminate this Lease because of Landlord's default in
the performance hereof until Tenant has first given written notice to
Landlord and to the holder of any mortgage provided Tenant has been
notified of such mortgagee's name and address) specifying the nature of
any such default by Landlord and allowing Landlord and such mortgage
holder, or either of them, thirty (30) days after the date of such
notice to cure such default or a reasonable period of time in addition
thereto if circumstances are such that said default cannot reasonably be
cured within said thirty (30) day period.
ARTICLE 22
----------
ASSIGNMENT AND SUBLETTING
-------------------------
22.1 Tenant shall not assign this Lease in whole or part or sublet all or any
part of the Premises, nor permit other persons to occupy the Premises or
any part thereof, nor grant any license or concession for all or any of
the Premises, without the written consent of Landlord, which shall not
be unreasonably withheld.
Any consent by Landlord to an assignment or subletting of this Lease
shall not constitute a waiver of the necessity of such consent for
subsequent assignment or subletting and shall not relieve Tenant of
liability hereunder. An assignment for the benefit of Tenant's creditors
of otherwise by operation of law shall not be effective to
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transfer or assign Tenant's interest under this Lease unless Landlord
shall have first consent thereto in writing. Notwithstanding the above,
it is understood and agreed that Tenant may assign this Lease without
Landlord's consent, at any time during the term of this Lease to any
parent corporation or wholly owned subsidiary corporation of Tenant or
to the surviving corporation in connection with a merger or
consolidation or a reorganization or sale between Tenant and any of its
subsidiaries, provided, however, Tenant shall notify Landlord of any
such assignment. Approval to assign this Lease or sublet all or a part
of the Premises, shall not be unreasonably withheld by Landlord and such
assignment shall not relieve original Tenant (assignor) of all terms and
conditions of this Lease.
ARTICLE 23
----------
TENANT'S IMPROVEMENTS, INSTALLATIONS AND ALTERATIONS
----------------------------------------------------
23.1 The obligations of Landlord and Tenant relative to the initial design
and construction of the Premises (and the building in which the Premises
is located) are as set forth in Exhibit C attached hereto.
23.2 Tenant shall fully equip the Premises with all trade fixtures and
equipment, lighting fixtures, furniture, furnishings and floor
coverings, and any other fixtures and equipment necessary for the proper
operation of Tenant's business.
23.3 In the event Tenant engages in the preparation of food or baked goods,
Tenant agrees at the Tenant's own expense: (a) to install dry chemical
extinguishing devices (such as ansul) approved by the local fire
insurance rating organization and Landlord's insurance carriers, and to
keep such devices in good working order and repair and regularly
serviced under a maintenance agreement as may be required by Landlord or
by such fire insurance rating organization or carriers; (b) to keep and
maintain all exhaust dusts and filters in a clean condition; (c) to
place and Premises Tenant's garbage and refuse; and (d) to install
within or without the Premises, as may be required by governing codes, a
grease trap of a pattern and make approved in writing by Landlord, and
to keep and maintain the same in a clean and sanitary condition and in
good working order and repair. In the event Tenant engages in the use,
sale or storing of flammable or combustible materials, Tenant agrees to
install and maintain similar chemical extinguishing devises referred to
in subdivision (a) above. In the event gas is used in the Premises,
Tenant agrees to install a proper gas cut-off valve. If Tenant shall
fail to install any such devices referred to in this Article and/or to
subscribe to the servicing thereof, Landlord shall have the right to
enter the Premises to make such necessary installations and charge the
cost of same and/or the servicing thereof to Tenant, as additional rent
hereunder.
23.4 Tenant may make nonstructural alterations or improvements to the
interior of the Premises in a good and workmanlike manner in conformity
with all the law, ordinances and regulation of public authorities having
jurisdiction thereof. Tenants shall not make any alterations to the
foundation, roof, exterior, walls, gutters and downspouts, or any
structural portions of the Premises without first obtaining the written
consent of Landlord. Any installations and improvements made by Tenant
in or about the Premises shall remain the property of Tenant during the
term of this Lease; provided, however, that any and all such
installations and improvements shall become the property of Landlord
and shall remain upon and be surrendered with the Premises as a part
thereof at termination of this Lease.
23.5 If during the term of this Lease, or at the termination thereof, Tenant
removes any
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equipment or trade fixtures, Tenant, at its expense, will repair any
structural damages, including walls, floors or roof and wall secure any
gas, electrical or water hook-ups to the satisfaction of Landlord.
ARTICLE 24
----------
DELIVERY AT END OF LEASE
------------------------
24.1 Any holding over after the expiration of this term or any renewal term
shall be construed to be a tenancy from month to month at the rents
herein specified, and shall otherwise be on the terms herein specified
so far as applicable. However, in the event Tenant continues on a month
to month term after the expiration of the Lease, then Tenant shall
notify Landlord in writing six (6) months prior of its intention to
remain on a month to month basis. Notwithstanding the above, Landlord
shall have reasonable access to the Premises during such month to month
tenancy.
ARTICLE 25
----------
FORCE MAJEURE
-------------
25.1 Landlord and/or Tenant, as the case may be, shall be excused for the
period of any delay in the performance of any obligations hereunder when
prevented from so doing by acts of God, but only to the extent that such
events occur prior to the commencement date of this Lease.
ARTICLE 26
----------
BROKER'S COMMISSION
-------------------
26.1 Tenant represents and warrants that there are no claims for broker's
commissions or finder's fees in connection with the execution of this
Lease, except for The Marlis Company, Inc., and Prudential Commercial
Services agrees to indemnify Landlord against and hold it harmless from
all liabilities arising from any such claim, including any attorney's
fees incurred by Landlord.
ARTICLE 27
----------
CORPORATE TENANTS
-----------------
27.1 If Tenant is or will be a corporation, the persons executing this Lease
on behalf of Tenant hereby covenant and warrant that Tenant is a duly
incorporated or duly qualified corporation and is authorized to do
business in the State in which the Office Center is located, and that
person or persons executing this Lease on behalf of Tenant is an office
or are the officers of such Tenant, and that he or they as such officers
are duly authorized to sign and execute this Lease.
ARTICLE 28
----------
RECORDING
---------
28.1 Tenant shall not record this Lease, but will at the request of Landlord,
execute a memorandum thereof in recordable form specifying the date of
commencement and expiration of the term of this Lease and other
information required by statue. Either Landlord or Tenant may then
record said memorandum of Lease.
14
<PAGE>
ARTICLE 29
----------
NOTICES
-------
29.1 Any notice to be given or served in connection with this Lease shall be
in writing and may be served by personal delivery upon the party, or
upon a corporate officer thereof, or may be served by certified mail
addressed as specified in Sections 1.2 and 1.5 hereof, as appropriate,
or to such other addresses as requested by either party in writing.
Notices served by mail shall be presumed to have been received three (3)
days after mailing. All rent and other payments shall be sent to
Landlord's address set forth in Section 1.2 unless Landlord shall direct
Tenant otherwise in writing.
ARTICLE 30
----------
GENERAL CONDITIONS
------------------
30.1 Any sum accruing to Landlord and Tenant under the provisions of this
Lease which shall not be paid when due shall bear interest at a rate of
ten (10%) percent from the date written notice specifying such non-
payment is served upon the defaulting party until paid.
30.2 If any term, covenant, condition or restriction of this Lease is held by
a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the provisions hereof shall remain in full force and
effect and shall in no way be affected thereby.
30.3 Nothing contained in this Lease shall be deemed or construed by the
parties hereto or by any third person to create the relationship of
principal and agent, or of partnership, or of joint venture, or of any
other association between the parties other than that of Landlord and
Tenant.
30.4 All reference to the term of this Lease shall include any extension of
such term.
30.5 Time is of the essence in the performance of each provision of this
Lease.
30.6 The waiver of performance of any covenant, term or condition of this
Lease by Landlord or Tenant shall not be construed as a waiver of any
subsequent breach of the same covenant, term or condition.
30.7 Any reference to pro rata share contained in this Lease shall be defined
as the gross leaseable area of the Premises divided by the gross
leaseable area of the Office Center, as shown in Exhibit A, excluding
any expansions to the Office Center.
30.8 This Lease, including the Exhibits, Riders and/or Addenda, if any
attached hereto, sets forth the entire agreement between the parties
hereto or their representatives are merged herein.
ARTICLE 31
----------
SIGNAGE
-------
31.1 All signage must be approved in writing by the Landlord prior to
installation; such approval shall not be unreasonably withheld. All cost
shall be at Tenant's sole costs
15
<PAGE>
and expense. Tenant shall be granted major identity of its company name
subject to approval by any regulatory agency.
ARTICLE 32
----------
INTERIOR IMPROVEMENTS
---------------------
32.1 Landlord shall construct and improve the Premises at Landlord's sole
cost and expense as detailed on Exhibit "A".
IN WiTNESS WHEREOF, the Landlord and Tenant have caused this Lease to be signed
as of the day and year first above written.
LANDLORD:
WITNESS TO LANDLORD: D1D2, LLC
/s/ Member
- --------------------------------- ------------------------------------
/s/ Member
- --------------------------------- ------------------------------------
WITNESS TO TENANT: TENANT:
/s/ Lisa A. Smith U.S.Auctions, Inc.
- ---------------------------------
/s/ President
_________________________________ ------------------------------------
_________________________________ ____________________________________
16
<PAGE>
EXHIBIT A
---------
Architectural drawing by Michael Griffin, Architect,
of the proposed New Office Tenant Space at Rte. 278,
Blufften, Beaufert, S.C., in the Plantation Business Park,
dated 10/2/97
17
<PAGE>
EXHIBIT B
---------
GENERAL RULES AND REGULATIONS
-----------------------------
1. The sidewalks, entrances, passages, courts, vestibules, corridors,
halls, delivery alleys and courtyards shall not be obstructed or
encumbered by any Tenant or used for any purpose other than ingress and
egress to and from the respective Premises (with the exception of
authorized "kiosks"), without the prior written consent of Landlord.
2. No awnings or other projections shall be attached to the outside walls
of the building without the prior written consent of Landlord. No
curtains, blinds, shades or screens shall be attached to or hung in, or
used in connection with any window or door of the respective Premises,
without prior written consent of Landlord.
3. No sign, signal, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of
the outside of the respective Premises, without the prior written
consent of Landlord. In the event of the violation of the foregoing by
any Tenant, Landlord may remove same without any liability and may
charge any expense incurred in such removal to the Tenants violating
this rule.
4. The sashes, sash doors, skylights, windows and doors that reflect or
admit light and air shall not be covered or obstructed by any Tenant,
nor shall any bottles, parcels or other articles by placed on the
windowsills.
5. No show cases, sales tables, merchandise displays, signs or other
articles shall be put in front of or affixed to any part of the exterior
of the building, nor placed in the halls, common passageways, corridors
or vestibules without prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not be used
for any purpose other than those for which they were constructed and no
sweepings, rubbish, rags or other substances shall be thrown therein.
All damages resulting from any misuse of the fixtures shall be borne by
the Tenant who (or whose servants, employees, agents, visitors or
licensees) shall have caused the same.
7. No Tenant shall cause or permit any unusual or objectionable odors to be
produced upon or released from the respective Premises.
8. No Tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the Office Center or
those having businesses within them, whether by the use of any musical
instrument, amplified sound, unmusical noise, whistling, or singing, or
in any other way. No Tenant shall throw anything out of the doors,
windows or skylights down the passageways.
9. No Tenant, nor any of Tenant's servants, employees, agents, visitors or
licensees, shall at any time bring or keep in the respective Premises
any flammable, combustible or explosive fluid, chemical or substance.
10. Each Tenant must, upon the termination of his tenancy, restore to
Landlord all keys of Premises, offices, and toilet rooms either
furnished to or otherwise procured by Tenant, and in the event safes,
closets and other lockable permanent fixtures are installed in the
respective Premises, give all keys or combinations thereto to Landlord
at the termination of the Lease.
18
<PAGE>
11. The respective Premises shall not be used for lodging or sleeping or for
any immoral or illegal purpose.
12. All boxes must be broken down before being placed in dumpsters. All
plastic bags, wrapping paper, loose materials, etc. must be secured in
boxes or tied in bags prior to emptying into dumpster.
13. The requirements of each Tenant will be attended to only upon
application to the Landlord or operations manager. Landlord's employees
shall not perform any work or do anything outside of their regular
duties, unless under special instructions from Landlord or operations
manager.
14. Canvassing, soliciting and distribution of handbills other than in the
respective Premises is prohibited and each Tenant shall cooperate to
prevent the same.
15. There shall not be used in any space, or in the public halls of the
building, either by any Tenant or by jobbers or others, in the delivery
or receipt of merchandise, any hand trucks, except those equipped with
rubber tires.
19
<PAGE>
STATE OF SOUTH CAROLINA )
LEASE MODIFICATION AGREEMENT
COUNTY OF BEAUFORT )
THIS AGREEMENT, made and entered into this 24/th/ day of July 1998 by and
between D1D2, LLC (hereinafter referred to as "Landlord"); and U.S.Auctions,
Inc. (hereinafter referred to as "Tenant").
WHEREAS, Landlord and Tenant entered into a Lease on the 24/th/ day of
July, 1998; and
WHEREAS, Tenant currently leases 19,840 square feet of space on lots 8-10,
Plantation Business Park, Bluffton, SC; and
WHEREAS, said Lease Agreement between Landlord and Tenant shall be modified
upon the full execution of this agreement by both parties; and
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, it is agreed as follows:
1. Tenant shall have the option to terminate the Lease anytime after the
sixtieth (60/th/) month of the lease term by giving the Landlord three
months written notice of said termination. In the event Tenant elects to
terminate the Lease, then Tenant hereby agrees to pay Landlord a fee
equivalent to three (3) months of it's existing minimum base rental
(including Tenant's pro-rata share of common area maintenance, real estate
taxes and insurance) at the time of delivering such written notice to
Landlord.
THIS LEASE MODIFICATION AGREEMENT contains the entire agreement between the
parties and cannot be changed or terminated except by a written instrument
subsequently executed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Termination Agreement
the day and year first above written.
LANDLORD:
WITNESSES: D1D2, LLC
/s/ Member
___________________________ -----------------------------------
/s/ Member
___________________________ -----------------------------------
WITNESSES: TENANT:
/s/ Lisa A. Smith U.S.Auctions, Inc.
- ---------------------------
/s/ President
___________________________ -----------------------------------
___________________________ ___________________________________
20
<PAGE>
STATE OF SOUTH CAROLINA )
) LEASE MODIFICATION AGREEMENT
COUNTY OF BEAUFORT )
THIS LEASE MODIFICATION AGREEMENT ("Agreement"), is made and entered
into this 19/th/ day of July, 1999 by and between D1D2, LLC ("Landlord"); and
U.S. AUCTIONS, INC. ("Tenant").
WHEREAS, Landlord and Tenant entered into a Lease on the 24th day of
July, 1998; in which Landlord let, and Tenant leased, 19,840 square feet of
space on lots 8-10, Plantation Business Park, Bluffton, South Carolina
("Lease"); and
WHEREAS, the Landlord and Tenant wish to amend the Lease as set forth
below; and
NOW THEREFORE, for valuable consideration, the receipt and legal
sufficiency of which is hereby acknowledged by both parties, it is agreed as
follows:
1. Incorporation of Lease - All terms, conditions, and obligations of
----------------------
the Lease are incorporated herein as restated. All capitalized terms herein
shall have the meanings defined in the Lease. In the event of any conflict
between the lease and this Agreement, the terms of this Agreement shall prevail.
The parties hereby ratify and reaffirm the Lease as amended by this Agreement.
2. Rent Modification - Section 1.13 of the Lease sets forth the
-----------------
Minimum Guaranteed Rental Rate. The Minimum Guaranteed Rental Rate for the Lease
Term is revised as follows:
Year 1: $299,584.00 Annual Rent
Year 2: $334,998.40 Annual Rent
Year 3: $340,454.40 Annual Rent
Year 4: $345,910.40 Annual Rent
Year 5: $351,366.40 Annual Rent
Year 6: $356,822.40 Annual Rent
Year 7: $362,278.40 Annual Rent
Year 8: $367,734.40 Annual Rent
Year 9: $373,190.40 Annual Rent
Year 10: $378,646.40 Annual Rent
21
<PAGE>
Additionally, Section 4.1 of the Lease is hereby deleted and substituted
with the following text:
The Minimum Guaranteed Rental Rate set forth in Section 1.13 shall be
payable in equal monthly installments in advance on the first day of
each full calendar month during the Lease Term without any setoff,
deduction or prior demand whatsoever. If Tenant fails to pay any
rental monthly installment within ten (10) days after said installment
Is due, Tenant shall be obligated to pay a late payment charge equal
to ten percent (10%) of said monthly rental installment. In addition,
any monthly rental installment which is not paid within ten (10) days
after the same is due shall bear interest at the rate of twelve
percent (12%) from the first day due until paid.
Not withstanding the preceding, the monthly rental installments due
from July, 1999 through December, 2000, inclusive, shall be
$22,771.91. Said monthly rental installment is equal to the $74,896.00
balance owed to Landlord for calendar year 1999 rent plus the amount
owed for calendar year 2000 Annual Rent divided by eighteen.
3. Security Deposit - The following text shall be added to the Lease as a
----------------
new Article 31:
Security Deposit - Tenant shall deposit with Landlord the sum of
TWENTY-TWO THOUSAND SEVEN HUNDRED SEVENTY ONE 91/100 DOLLARS
(22771.91) as a security deposit ("Security Deposit"). The Security
Deposit shall not bear interest to Tenant and shall be security for
the payment and performance of the obligations, covenants, conditions
and agreements in this Lease. The Security Deposit shall not
constitute an advance payment of any amounts owed by Tenant under this
Lease, or a measure of damages to which Landlord shall be entitled
upon a breach of this Lease by Tenant or upon termination of this
Lease. Landlord may without prejudice to any other remedy, use the
Security Deposit to the extent necessary to remedy any default in the
payment of any Rent installment or any other amounts due to Landlord
under this Lease, or to satisfy any other obligation of Tenant. In the
event Landlord uses any or all of the Security Deposit to remedy any
Tenant default, Tenant shall promptly restore the Security Deposit to
its original amount. If Landlord transfers its interest in the leased
premises during the Term, Landlord may assign the Security Deposit to
Its transferee who shall become obligated to the tenant for its return
pursuant to the terms of this Lease, and thereafter Landlord shall
have no further liability for the return of the Security Deposit. So
long as Tenant is not in default of any of the provisions of this
Lease, Landlord agrees to accept the payment of the Security Deposit
in six (6) equal monthly installments of FOUR THOUSAND ONE HUNDRED
SIXTY 80/100 DOLLARS ($4,160.89) each, due on the first day of each
calendar month beginning July, 1999 through December, 1999.
4. Application of Rents After Tenant Default - The following shall be
-----------------------------------------
added to the Lease as a new Section 18.3:
All rents received by Landlord in any reletting after Tenant's default
shall be
22
<PAGE>
applied first to payment of such expenses as Landlord may have
incurred in recovering possession of the Leased Premises and in
reletting the same, including brokerage fees, second to the payment of
any costs and expenses incurred by Landlord either for making the
necessary repairs to fit the Leased Premises for reletting or in
curing a default on the part of the Tenant of any covenant or
condition herein. The remaining rent shall then be applied toward the
payment of the Minimum Guaranteed Rental Rate for the remaining term
of this Lease, together with interest and penalties as set forth
above, and Tenant expressly agrees to pay any deficiency then
remaining. Landlord shall in no event be liable in way whatsoever for
Landlord's failure to relet the Lease Premises and Landlord, at its
option, may refrain from terminating Tenant's right of possession, and
in such case may enforce against Tenant the provisions of this Lease
for the fall Lease Term.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day set forth above.
LANDLORD:
WITNESSES: D1D2, LLC
__________________________________ By:______________________________
Its: Member
__________________________________ -----------------------------
WITNESSES: TENANT:
U.S.Auctions, Inc.
__________________________________ By:______________________________
Its: Secretary
__________________________________ -----------------------------
23
<PAGE>
GUARANTY OF LEASE
-----------------
THIS GUARANTY OF LEASE ("Guaranty") made this 19/th/ day of July, 1999, by
MILLIONAIRE.COM, INC. a Nevada corporation ("Guarantor") in favor of D1D2, LLC a
South Carolina Limited Liability Company, ("Landlord").
WITNESSETH:
WHEREAS, Landlord has entered into a Lease Agreement ("Lease") dated July
25, 1998 as amended, with U.S. Auctions, Inc. ("Tenant"), which Lease demises
certain Leased Premises known as Lots 8 and 10, mailing address 18 Plantation
Business Park Drive, Plantation Business Park, Bluffton, South Carolina 29910
located in the County of Beaufort, State of South Carolina ("Shopping Center");
WHEREAS, Guarantor has a financial interest in Tenant, and Landlord agreed
to amend the Lease in partial consideration of the execution and delivery of
this Guaranty; and
WHEREAS, Guarantor has examined the Lease and is fully cognizant of the
covenants, conditions, and agreements contained in it, and its obligations under
this Guaranty with respect to the Lease.
NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS that in consideration of
the premises and the sum of One Dollar and No/100 ($1.00) paid by Landlord to
Guarantor, the receipt and legal sufficiency of which is hereby acknowledged,
Guarantor agrees as follows:
I. Guaranty. Guarantor hereby unconditionally guarantees to Landlord the full
--------
and prompt performance and observance of all covenants, conditions, and
agreements provided in the Lease to be performed and observed by Tenant, its
successors and assigns.
2. No Release By Waiver. Guarantor agrees that its obligations under this
--------------------
Guaranty shall not be terminated, reduced, or affected in any way by reason
of the assertion by Landlord against Tenant of any right or remedy for the
enforcement of the obligations of Tenant under the Lease, or by reason of the
waiver by Landlord of, or its failure to enforce, any of the terms,
covenants, or conditions of the Lease, or the granting of any indulgence or
extension of time to Tenant. Guarantor waives notice of any of the foregoing
and of default by Tenant in payment of rent, and any other sum of money
required to be paid under the Lease, and breach by Tenant of any covenant,
condition, or agreement contained in the Lease. Guarantor further agrees that
its obligations hereunder shall apply with full force and effect to any
amendment, renewal, or extension of the Lease, even though made without
notice thereof to Guarantor.
3. Primary Obligation. Guarantor agrees that its liability under this Guaranty
------------------
shall be primary. Regarding any right of action which shall accrue to
Landlord under the Lease, Landlord may at its option proceed against
Guarantor without having commenced any action or having obtained any judgment
against Tenant. Guarantor waives any and all defenses available to it in
connection with the enforcement of the Guaranty, including, but not limited
to, the right
24
<PAGE>
to require pursuit of any remedies against Tenant, or any other person, or
that resort be had to any security or to any balance of any account or
credit, before pursuit against Guarantor under this Guaranty.
4. Binding Effect. This Guaranty shall be binding upon Guarantor, its successors
--------------
and assigns, and shall inure to the benefit of Landlord, its successors and
assigns.
5. Severability. Should any provision of this Lease be void or become
-----------
unenforceable at law or in equity, the remaining provisions hereof shall
remain in full force and effect.
6. Governing Law. This Lease shall be governed by the laws of the State of
-------------
South Carolina.
7. Legal Costs. Tenant and Landlord agree that all costs, including reasonable
-----------
attorney's fees, of any legal action or suit in law or equity arising out of
the mutual covenants, promises and agreements of this Lease, shall be paid by
the unsuccessful party to such legal action.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day set
forth above.
LANDLORD:
WITNESSES: D1D2, LLC
/s/ By: /s/
- -------------------------------- -----------------------------------
/s/ Its: Member
- -------------------------------- ----------------------------------
GUARANTOR
WITNESSES: MILLIONAIRE.COM, INC.
/s/ By: /s/
- -------------------------------- -----------------------------------
/s/ Its: Secretary
- -------------------------------- ----------------------------------
25
<PAGE>
Exhibit 10(c)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is made this 28/th/ day of February, 1999 by and
between MILLIONAIRE.COM, a Nevada corporation (the "Employer"), and FRANK
OSBORNE (the "Employee").
PREAMBLE
The Employee has been serving as Vice President of the Employer and General
Manager of the Employer's Millionaire Magazine, and the Employer and the
Employee desire to enter into a formalized Employment Agreement containing,
among other things, certain restrictive covenants and, in connection therewith,
the Employer has agreed to provide certain additional benefits to the Employee.
The Employer and the Employee have agreed to execute and deliver this
Agreement in consideration of the Employee's employment by the Employer and in
further consideration, among other things, of (i) the access the Employee has
had and will continue to have to confidential or proprietary information of the
Employer, (ii) the willingness of the Employer to make valuable benefits
available hereafter to the Employee, and (iii) the Employee's receipt of
compensation, including valuable stock options, from time to time by the
Employer.
NOW, THEREFORE, intending to be legally bound, the Employer agrees to
employ the Employee, and the Employee hereby agrees to be employed by the
Employer, upon the following terms and conditions:
1. Employment. Employer hereby employs Employee and Employee hereby
----------
accepts employment as Employer's Vice President and General Manager of
Millionaire Magazine on the terms and subject to the conditions hereinafter set
forth. Employee shall perform such duties, and have such powers, authority and
responsibilities for Employer as may be assigned to him from time to time by
Employer's Chief Executive Officer.
2. Term. Subject to the terms and provisions of Section 4 hereof,
----
Employee's employment under this Agreement shall commence on the date hereof and
continue for a term of three years, unless terminated earlier pursuant to the
provisions hereof.
<PAGE>
3. Compensation.
------------
(a) Base Salary. For all services rendered by Employee while employed
-----------
hereunder, Employer agrees to pay Employee a base salary at the initial rate of
$140,000 per annum (the "Base Salary"), which shall be payable in the intervals
consistent with Employer's normal payroll schedules.
(b) Bonus. The Employee shall be entitled to receive from the
-----
Employer a bonus determined in accordance with the Bonus Plan described on
Exhibit A hereto, provided that the Employee's aggregate annual bonus shall not
exceed $70,000.
(c) Employee Benefits. During the term of Employee's employment
-----------------
hereunder (i) Employer shall, at its cost and expense, provide Employee and his
immediate family with medical and dental insurance, and (ii) Employee shall be
eligible to participate in all other benefit plans or programs generally
available to executive employees of Employer, including without limitation, if
and when available, disability insurance, pension, profit sharing and stock
option plans.
(d) Holidays and Vacation. The Employee shall be entitled to the same
---------------------
paid holidays as other employees of the Employer. In addition, the Employee
shall be entitled to 20 days of paid vacation per calendar year. If the Employee
is employed hereunder for only a portion of any calendar year, then such number
of vacation days shall be reduced pro rate based upon the actual number of days
in such calendar year during which the Employee is employed hereunder. Vacation
days are not cumulative and must be taken during the calendar year in which they
accrue. The Employee shall not be entitled to any cash payment in lieu of taking
any vacation days. The Employee shall arrange his vacation so as not to conflict
with the needs of the Employer.
(e) Reimbursement of Expenses. During the term of the Employee's
-------------------------
employment hereunder, the Employer shall reimburse the Employee for all
reasonable out-of-pocket expenses incurred by the Employee in the lawful and
ordinary course of Employer's business and reported to Employer in accordance
with its accounting procedures, including expenses for meals, entertainment,
hotel and air travel, telephone, automobile, dues, club expenses, fees and
similar items.
(f) Other Facilities. Employer shall provide Employee with office
----------------
space, furnishings and facilities, secretarial and administrative assistance,
supplies and equipment commensurate with Employee's position.
-2-
<PAGE>
4. Termination.
-----------
(a) Illness, Incapacity. Subject to the Employer's compliance with
-------------------
applicable laws, if during the term of Employee's employment hereunder the
Employee shall be prevented, in the good faith judgment of the Board of
Directors of the Employer, from effectively performing his duties hereunder, for
a period of the lesser of (a) 90 days or (b) the number of days after which
benefits would begin to accrue under the applicable disability insurance policy,
by reason of illness or disability, then the Employer may, by written notice to
the Employee, terminate the Employee's employment hereunder. Upon delivery to
the Employee of such notice, together with payment of any compensation set forth
in Section 3 of this Agreement and benefits accrued under this Agreement, the
Employee's employment and all obligations of the Employer under Section 3 hereof
shall forthwith terminate. Such termination is without prejudice to any rights
Employee may thereafter have against insurance carriers under the employee
benefit plans or programs referred to in Section 3(c). The obligations of
Employee under Sections 5 and 6 hereof shall continue notwithstanding
termination of Employee's employment pursuant to this Section 4(a).
(b) Death. If the Employee dies during the term of his employment
-----
hereunder, the Employee's employment hereunder shall terminate and all
obligations of the Employer hereunder shall forthwith terminate.
(c) Employer Termination.
--------------------
(i) For Cause. Employee's employment hereunder may be terminated
---------
at any time by the Employer for cause. Termination shall be deemed for cause if
among the reasons therefor are the Employee's dishonesty, disloyalty, willful
misconduct, gross negligence or refusal or unwillingness to perform his duties
hereunder in good faith and to the best of his ability. Payment of all
compensation and provision of all benefits to the Employee hereunder shall cease
effective as of the date of any such termination, except that the Employee will
be entitled to all compensation and benefits accrued as of the date of
termination. The obligations of Employee under Sections 5 and 6 hereof shall
continue notwithstanding termination of the Employee's employment pursuant to
this Section 4(c)(i).
(ii) Without Cause. The Employee's employment hereunder may be
-------------
terminated at any time by the Employer without cause, provided that upon any
such termination without cause the Employer shall pay the Employee, subject to
the Employee's compliance with all of his obligations hereunder, his full Base
Salary plus employee benefits for the remainder of the term of this Agreement.
The obligations of the Employee under Sections 5 and 6 hereof shall continue
notwithstanding termination of the Employee's employment pursuant to this
Section 4(c)(ii).
-3-
<PAGE>
(d) Employee Termination. The Employee agrees to give the Employer
--------------------
two months prior written notice of the termination of his employment with the
Employer. Simultaneously with such notice, Employee shall inform the Employer in
writing as to his employment plans following the termination of his employment
with the Employer. The obligations of the Employee under Sections 5 and 6 hereof
shall continue notwithstanding termination of the Employee's employment pursuant
to this Section 4(d).
5. Covenant Not to Compete.
-----------------------
(a) Employee agrees that at all times during the term of his
employment hereunder and for a period of two years after the termination of his
employment hereunder, he will not, within the United States, as principal,
agent, partner, employee, consultant, distributor, dealer, contractor, broker or
trustee or through the agency of any corporation, partnership, association or
agent or agency, engage directly or indirectly, in any business competitive with
any material business engaged in by Employer; and Employee shall not be the
owner of more than five percent of the outstanding capital stock of any
corporation (other than Employer), or an officer, director or employee of any
corporation (other than Employer or a corporation affiliated with Employer), or
a member or employee of any partnership, or an owner, investor, lender, agent,
consultant, distributor, dealer, contractor, broker or employee of any other
business which conducts a business described herein, within the territory
described above.
(b) Employee agrees that during the term of his employment under this
Agreement and for a period of two years after the termination of Employee's
employment hereunder, he will not directly or indirectly: (i) induce any
customers of Employer or corporations affiliated with Employer to patronize any
similar business that competes with any material business of Employer; (ii)
solicit any similar business from any customer of Employer or corporations
affiliated with Employer; (iii) request or advise any customers of Employer or
corporations affiliated with Employer to withdraw, curtail or cancel such
customer's business with Employer; or (iv) disclose to any other person, firm or
corporation the names or addresses of any of the customers of Employer or
corporations affiliated with Employer.
(c) If the provisions of this Section 5 are violated, in whole or in
part, Employer shall be entitled, upon application to any court of proper
jurisdiction, to a temporary restraining order or preliminary injunction to
refrain and enjoin Employee from such violation without prejudice to any other
remedies Employer may have at law or in equity. Further, in the event that the
provisions of this Section 5 should be deemed to exceed the time, geographic or
occupational limitations permitted by applicable law, Employee and Employer
agree that such provisions shall be and are hereby reformed in the maximum time,
geographic or occupational limitations permitted by the applicable law.
-4-
<PAGE>
6. Confidential Information.
------------------------
(a) Employee recognizes and acknowledges that he has had and
will continue to have access to confidential and proprietary information
concerning Employer and corporations affiliated with Employer of a special and
unique value which may include, without limitation: (i) books and records
relating to operation, finance, accounting, sales, personnel and management;
(ii) policies and matters relating particularly to operations such as customer
service requirements, costs of providing service and equipment, operating costs
and pricing matters; and (iii) various trade or business secrets, including
business opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial data and
the like (collectively, the "Protected Information"). Notwithstanding the
foregoing, Protected Information shall not include (A) information which is or
becomes generally known to the public through no act or omission of Employee and
(B) information which has been or hereafter is lawfully obtained by Employee
from a source other than Employer or any of its affiliates (or their respective
officers, directors, employees, equity holders or agents) so long as, in the
case of information obtained from a third party, such third party was or is not,
directly or indirectly, subject to an obligation of confidentiality owed to
Employer or any of its affiliates at the time such Protected Information was or
is disclosed to Employee.
(b) Employee agrees that he will not at any time, either while
employed by Employer or after termination of employment hereunder, knowingly
make any independent use of, or knowingly disclose to any other person or
organization (except as authorized by Employer) any of the Protected
Information.
(c) Notwithstanding clause (b) above, Employee shall be
permitted to disclose Protected Information to the extent, but only to the
extent, (i) reasonably necessary for Employee to perform his duties hereunder or
(ii) required by law; provided, that prior to making any disclosure of Protected
Information required by law, Employee shall notify Employer of his intent to
make such disclosure, and Employer shall have the right to participate with
Employee in determining the amount and type of Protected Information, if any,
which must be disclosed in order to comply with applicable law.
(d) In the event of a breach or threatened breach by Employee of
the provisions of this Section 6, Employee agrees that Employer shall be
entitled to a temporary restraining order or a preliminary injunction
restraining Employee from using or disclosing, in whole or in part, such
Protected Information.
(e) Promptly after termination of the Employee's employment
hereunder for any reason, the Employee or his personal representative shall
return to the Employer any Protected Information which is in tangible form and
which is then in his possession.
-5-
<PAGE>
7. Severability. In case any one or more of the provisions of this
------------
Agreement shall, for any reason, be held or found by final judgment of a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect: (a) such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and (b) this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein (except that this Section 7 shall not prohibit any modification
allowed under Section 5 above).
8. Binding Effect and Entire Agreement. This Agreement shall be binding
-----------------------------------
upon and shall inure to the benefit of the parties hereto and their heirs,
personal representatives, executors, administrators, successors and assigns.
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter contained herein, and supersedes all prior and
contemporaneous oral and written communications and agreements with respect
thereto.
9. Assignment and Termination. Employee may designate one or more
--------------------------
beneficiaries to receive any amount that may be payable hereunder after his
death. Except as set forth in the preceding sentence, this Agreement may not be
assigned, partitioned, pledged, or hypothecated in whole or in part without the
express prior written consent of Employee and Employer.
10. Amendment and Waiver. This Agreement may be amended and any provision
--------------------
hereof waived only in a writing signed by the party against whom an amendment or
waiver is sought to be enforced. The parties hereto shall have the right at all
times to enforce the provisions of this Agreement in strict accordance with the
terms hereof, notwithstanding any conduct or custom on the part of either party
in refraining from so doing at any time or times. The failure of either party at
any time to enforce its rights under such provisions strictly in accordance with
the same shall not be construed as having created a custom in any way or manner
contrary to specific provisions of this Agreement or as having in any way or
manner modified or waived the same.
11. Headings. Headings of sections shall be deemed to be included for
--------
purposes of convenience only and shall not affect the interpretation of this
Agreement.
12. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of South Carolina. The state courts of
South Carolina and the federal courts in South Carolina shall have sole and
exclusive jurisdiction over any dispute or controversy arising from or relating
to this Agreement.
13. Notices. Except as provided herein to the contrary, any notices or
-------
consents required or permitted by this Agreement shall be in writing and shall
be deemed delivered if sent by certified mail, postage prepaid, return receipt
requested, or
-6-
<PAGE>
overnight delivery service, or facsimile, as follows, unless such address is
changed by written notice hereunder:
-7-
<PAGE>
If to Employer: Millionaire.Com
The Professional Building
Suite 203
New Orleans Road
Hilton Head, SC 29928
If to Employee: Frank Osborne
_______________________________
_______________________________
_______________________________
Any notice sent by mail shall be deemed given three (3) days after
----
deposited with the United States Postal Service; any notice sent by overnight
delivery service shall be deemed given the day after deposited with the delivery
service; any notice sent by facsimile shall be deemed given when transmitted.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MILLIONAIRE.COM
By /s/
---------------------------------
Title President, CEO
------------------------------
/s/ Frank Osborne
------------------------------------
Frank Osborne
-8-
<PAGE>
Exhibit 10(d)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is made this 28th day of February, 1999 by and
between MILLIONAIRE.COM, a Nevada corporation (the "Employer"), and DAVID STRONG
(the "Employee").
PREAMBLE
The Employee has been serving as the Employer's Senior Vice President-
Marketing for Millionaire Magazine, and the Employer and the Employee desire to
enter into a formalized Employment Agreement containing, among other things,
certain restrictive covenants and, in connection therewith, the Employer has
agreed to provide certain additional benefits to the Employee.
The Employer and the Employee have agreed to execute and deliver this
Agreement in consideration of the Employee's employment by the Employer and in
further consideration, among other things, of (i) the access the Employee has
had and will continue to have to confidential or proprietary information of the
Employer, (ii) the willingness of the Employer to make valuable benefits
available hereafter to the Employee, and (iii) the Employee's receipt of
compensation, including valuable stock options, from time to time by the
Employer.
NOW, THEREFORE, intending to be legally bound, the Employer agrees to employ
the Employee, and the Employee hereby agrees to be employed by the Employer,
upon the following terms and conditions:
1. Employment. Employer hereby employs Employee and Employee hereby
----------
accepts employment as Employer's Senior Vice President--Marketing for
Millionaire Magazine on the terms and subject to the conditions hereinafter set
forth. Employee shall perform such duties, and have such powers, authority and
responsibilities for Employer as may be assigned to him from time to time by
Employer's Chief Executive Officer.
2. Term. Subject to the terms and provisions of Section 4 hereof,
----
Employee's employment under this Agreement shall commence on the date hereof and
continue for a term of three years, unless terminated earlier pursuant to the
provisions hereof.
3. Compensation.
------------
(a) Base Salary. For all services rendered by Employee while employed
-----------
hereunder, Employer agrees to pay Employee a base salary at the initial rate of
$120,000 per
<PAGE>
annum (the "Base Salary"), which shall be payable in the intervals consistent
with Employer's normal payroll schedules.
(b) Bonus. The Employee shall be entitled to receive from the Employer
-----
a bonus determined in accordance with the Bonus Plan described on Exhibit A
---------
hereto, provided that the Employee's aggregate annual bonus shall not be less
than $60,000 nor exceed $120,000.
(c) Employee Benefits. During the term of Employee's employment
-----------------
hereunder (i) Employer shall, at its cost and expense, provide Employee and his
immediate family with medical and dental insurance, and (ii) Employee shall be
eligible to participate in all other benefit plans or programs generally
available to executive employees of Employer, including without limitation, if
and when available, disability insurance, pension, profit sharing and stock
option plans.
(d) Holidays and Vacation. The Employee shall be entitled to the same
---------------------
paid holidays as other employees of the Employer. In addition, the Employee
shall be entitled to 20 days of paid vacation per calendar year. If the Employee
is employed hereunder for only a portion of any calendar year, then such number
of vacation days shall be reduced pro rata based upon the actual number of days
in such calendar year during which the Employee is employed hereunder. Vacation
days are not cumulative and must be taken during the calendar year in which they
accrue. The Employee shall not be entitled to any cash payment in lieu of
taking any vacation days. The Employee shall arrange his vacation so as not to
conflict with the needs of the Employer.
(e) Reimbursement of Expenses. During the term of the Employee's
-------------------------
employment hereunder, the Employer shall reimburse the Employee for all
reasonable out-of-pocket expenses incurred by the Employee in the lawful and
ordinary course of Employer's business and reported to Employer in accordance
with its accounting procedures, including expenses for meals, entertainment,
hotel and air travel, telephone, automobile dues, club expenses, fees and
similar items.
(f) Other Facilities. Employer shall provide Employee with office
----------------
space, furnishings and facilities, secretarial and administrative assistance,
supplies and equipment commensurate with Employee's position.
4. Termination.
-----------
(a) Illness, Incapacity. Subject to the Employer's compliance with
-------------------
applicable laws, if during the term of Employee's employment hereunder the
Employee shall be prevented, in the good faith judgment of the Board of
Directors of the Employer, from effectively performing his duties hereunder, for
a period of the lesser of (a) 90 days or (b) the number of days after which
benefits would begin to accrue under the applicable disability insurance policy,
-2-
<PAGE>
by reason of illness or disability, then the Employer may, by written notice to
the Employee, terminate the Employee's employment hereunder. Upon delivery to
the Employee of such notice, together with payment of any compensation set forth
in Section 3 of this Agreement and benefits accrued under this Agreement, the
Employee's employment and all obligations of the Employer under Section 3 hereof
shall forthwith terminate. Such termination is without prejudice to any rights
Employee may thereafter have against insurance carriers under the employee
benefit plans or programs referred to in Section 3(c). The obligations of
Employee under Sections 5 and 6 hereof shall continue notwithstanding
termination of Employee's employment pursuant to this Section 4(a).
(b) Death. If the Employee dies during the term of his employment
-----
hereunder, the Employee's employment hereunder shall terminate and all
obligations of the Employer hereunder shall forthwith terminate.
(c) Employer Termination.
--------------------
(i) For Cause. Employee's employment hereunder may be terminated
---------
at any time by the Employer for cause. Termination shall be deemed for cause if
among the reasons therefor are the Employee's dishonesty, disloyalty, willful
misconduct, gross negligence or refusal or unwillingness to perform his duties
hereunder in good faith and to the best of his ability. Payment of all
compensation and provision of all benefits to the Employee hereunder shall cease
effective as of the date of any such termination, except that the Employee will
be entitled to all compensation and benefits accrued as of the date of
termination. The obligations of Employee under Sections 5 and 6 hereof shall
continue notwithstanding termination of the Employee's employment pursuant to
this Section 4(c)(i).
(ii) Without Cause. The Employee's employment hereunder may be
-------------
terminated at any time by the Employer without cause, provided that upon any
such termination without cause the Employer shall pay the Employee, subject to
the Employee's compliance with all of his obligations hereunder, his full Base
Salary plus employee benefits for the remainder of the term of this Agreement.
The obligations of the Employee under Sections 5 and 6 hereof shall continue
notwithstanding termination of the Employee's employment pursuant to this
Section 4(c)(ii).
(d) Employee Termination. The Employee agrees to give the Employer two
--------------------
months prior written notice of the termination of his employment with the
Employer. Simultaneously with such notice, Employee shall inform the Employer in
writing as to his employment plans following the termination of his employment
with the Employer. The obligations of the Employee under Sections 5 and 6
hereof shall continue notwithstanding termination of the Employee's employment
pursuant to this Section 4(d).
5. Covenant Not to Compete.
-----------------------
-3-
<PAGE>
(a) Employee agrees that at all times during the term of his employment
hereunder and for a period of two years after the termination of his employment
hereunder, he will not, within the United States, as principal, agent, partner,
employee, consultant, distributor, dealer, contractor, broker or trustee or
through the agency of any corporation, partnership, association or agent or
agency, engage directly or indirectly, in any business competitive with any
material business engaged in by Employer; and Employee shall not be the owner of
more than five percent of the outstanding capital stock of any corporation
(other than Employer), or an officer, director or employee of any corporation
(other than Employer or a corporation affiliated with Employer), or a member or
employee of any partnership, or an owner, investor, lender, agent, consultant,
distributor, dealer, contractor, broker or employee of any other business which
conducts a business described herein, within the territory described above.
(b) Employee agrees that during the term of his employment under this
Agreement and for a period of two years after the termination of Employee's
employment hereunder he will not directly or indirectly: (i) induce any
customers of Employer or corporations affiliated with Employer to patronize any
similar business that competes with any material business of Employer; (ii)
solicit any similar business from any customer of Employer or corporations
affiliated with Employer; (iii) request or advise any customers of Employer or
corporations affiliated with Employer to withdraw, curtail or cancel such
customer's business with Employer; or (iv) disclose to any other person, firm or
corporation the names or addresses of any of the customers of Employer or
corporations affiliated with Employer.
(c) If the provisions of this Section 5 are violated, in whole or in
part, Employer shall be entitled, upon application to any court of proper
jurisdiction, to a temporary restraining order or preliminary injunction to
refrain and enjoin Employee from such violation without prejudice to any other
remedies Employer may have at law or in equity. Further, in the event that the
provisions of this Section 5 should be deemed to exceed the time, geographic or
occupational limitations permitted by applicable law, Employee and Employer
agree that such provisions shall be and are hereby reformed in the maximum time,
geographic or occupational limitations permitted by the applicable law.
6. Confidential Information.
------------------------
(a) Employee recognizes and acknowledges that he has had and will
continue to have access to confidential and proprietary information concerning
Employer and corporations affiliated with Employer of a special and unique value
which may include, without limitation: (i) books and records relating to
operation, finance, accounting, sales, personnel and management; (ii) policies
and matters relating particularly to operations such as customer service
requirements, costs of providing service and equipment, operating costs and
pricing matters; and (iii) various trade or business secrets, including business
opportunities, marketing or business diversification plans, business development
and bidding techniques, methods and processes, financial data and the like
(collectively, the "Protected Information"). Notwithstanding the foregoing,
Protected
-4-
<PAGE>
Information shall not include (A) information which is or becomes generally
known to the public through no act or omission of Employee and (B) information
which has been or hereafter is lawfully obtained by Employee from a source other
than Employer or any of its affiliates (or their respective officers, directors,
employees, equity holders or agents) so long as, in the case of information
obtained from a third party, such third party was or is not, directly or
indirectly, subject to an obligation of confidentiality owed to Employer or any
of its affiliates at the time such Protected Information was or is disclosed to
Employee.
(b) Employee agrees that he will not at any time, either while employed
by Employer or after termination of employment hereunder, knowingly make any
independent use of, or knowingly disclose to any other person or organization
(except as authorized by Employer) any of the Protected Information.
(c) Notwithstanding clause (b) above, Employee shall be permitted to
disclose Protected Information to the extent, but only to the extent, (i)
reasonably necessary for Employee to perform his duties hereunder or (ii)
required by law; provided, that prior to making any disclosure of Protected
Information required by law, Employee shall notify Employer of his intent to
make such disclosure, and Employer shall have the right to participate with
Employee in determining the amount and type of Protected Information, if any,
which must be disclosed in order to comply with applicable law.
(d) In the event of a breach or threatened breach by Employee of the
provisions of this Section 6, Employee agrees that Employer shall be entitled to
a temporary restraining order or a preliminary injunction restraining Employee
from using or disclosing, in whole or in part, such Protected Information.
(e) Promptly after termination of the Employee's employment hereunder
for any reason, the Employee or his personal representative shall return to the
Employer any Protected Information which is in tangible form and which is then
in his possession.
7. Severability. In case any one or more of the provisions of this
------------
Agreement shall, for any reason, be held or found by final judgment of a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect: (a) such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and (b) this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein (except that this Section 7 shall not prohibit any modification
allowed under Section 5 above).
8. Binding Effect and Entire Agreement. This Agreement shall be binding
-----------------------------------
upon and shall inure to the benefit of the parties hereto and their heirs,
personal representatives, executors, administrators, successors and assigns.
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter contained herein, and
-5-
<PAGE>
supersedes all prior and contemporaneous oral and written communications and
agreements with respect thereto.
9. Assignment and Termination. Employee may designate one or more
--------------------------
beneficiaries to receive any amount that may be payable hereunder after his
death. Except as set forth in the preceding sentence, this Agreement may not be
assigned, partitioned, pledged, or hypothecated in whole or in part without the
express prior written consent of Employee and Employer.
10. Amendment and Waiver. This Agreement may be amended and any provision
--------------------
hereof waived only in a writing signed by the party against whom an amendment or
waiver is sought to be enforced. The parties hereto shall have the right at all
times to enforce the provisions of this Agreement in strict accordance with the
terms hereof, notwithstanding any conduct or custom on the part of either party
in refraining from so doing at any time or times. The failure of either party
at any time to enforce its rights under such provisions strictly in accordance
with the same shall not be construed as having created a custom in any way or
manner contrary to specific provisions of this Agreement or as having in any way
or manner modified or waived the same.
11. Headings. Headings of sections shall be deemed to be included for
--------
purposes of convenience only and shall not affect the interpretation of this
Agreement.
12. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of South Carolina. The state courts of
South Carolina and the federal courts in South Carolina shall have sole and
exclusive jurisdiction over any dispute or controversy arising from or relating
to this Agreement.
13. Notices. Except as provided herein to the contrary, any notices or
-------
consents required or permitted by this Agreement shall be in writing and shall
be deemed delivered if sent by certified mail, postage prepaid, return receipt
requested, or overnight delivery service, or facsimile, as follows, unless such
address is changed by written notice hereunder:
If to Employer: Millionaire.Com
The Professional Building
Suite 203
New Orleans Road
Hilton Head, SC 29928
If to Employee: David Strong
______________________
______________________
______________________
-6-
<PAGE>
Any notice sent by mail shall be deemed given three (3) days after deposited
----
with the United States Postal Service; any notice sent by overnight delivery
service shall be deemed given the day after deposited with the delivery service;
any notice sent by facsimile shall be deemed given when transmitted.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MILLIONAIRE.COM
By: /s/
-------------------------------
Title: President, CEO
-------------------------------
/s/ David Strong
-------------------------------
David Strong
-7-
<PAGE>
Exhibit 10(e)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is made this 23/rd/ day of December, 1998 by and
between MILLIONAIRE.COM, a Nevada corporation (the "Employer"), and ROBIN WHITE
(the "Employee").
PREAMBLE
--------
Employer desires to employ Employee as Creative Director of Employer, and
Employee desires to be so employed, under the terms and conditions set forth
herein.
THEREFORE the parties agree as follows with the intent to be legally bound:
1. Employment. Employer hereby employs Employee and Employee hereby
----------
accepts employment as Employer's Creative director on the terms and subject to
the conditions hereinafter set forth. Employee shall perform such duties, and
have such powers, authority and responsibilities for Employer as may be assigned
to her from time to time by Employer's Chief Executive Officer.
2. Term. Except as provided herein to the contrary, the term of
----
Employee's employment under this Agreement shall be for a continually renewing
term of five years without any further action by either Employer or Employee, it
being the intention of the parties that there shall be continuously a term of
five years' duration of Employee's employment under this Agreement until an
event has occurred terminating such employment as provided herein.
3. Compensation.
------------
(a) Base Salary. For all services rendered by Employee while employed
-----------
hereunder, Employer agrees to pay Employee a base salary at the initial rate of
$33,000 per annum (the "Base Salary"), which shall be payable in the intervals
consistent with Employer's normal payroll schedules. The Base Salary may be
increased (but not decreased) in the discretion of the Chief Executive Officer
or Board of Directors of Employer.
(b) Employee Benefits. During the term of Employee's employment
-----------------
hereunder and, with respect to the benefits described in (i) and (ii) below, for
a period of five years following the termination of Employee's employment for
any reason other than pursuant to Section 4(a), Section 4(c) or Section 5 hereof
(i) Employer shall, at its cost and expense, provide Employee and her immediate
family with medical and dental insurance, (ii) Employee shall be eligible to
participate in all other benefit plans or programs generally available to
executive employees of Employer, including without limitation, if and when
available, disability insurance, pension, profit sharing and stock option plans,
and (iii) Employer shall, at its cost and expense, purchase and maintain $2.0
million of term life insurance on Employee's life naming as beneficiaries (A)
Employer for $1.0 million of the insurance amount and (B) Employee's husband or,
if he is not living, then Employee's children or, if there are no living
children, then Employee's surviving parents, for $1.0 million of the insurance
amount.
<PAGE>
(d) Holidays and Vacation. The Employee shall be entitled to the same
---------------------
paid holidays as other employees of the Employer. In addition, the Employee
shall be entitled to 20 days of paid vacation per calendar year. If the Employee
is employed hereunder for only a portion of any calendar year, then such number
of vacation days shall be reduced pro rata based upon the actual number of days
in such calendar year during which the Employee is employed hereunder. Vacation
days are not cumulative and must be taken during the calendar year in which they
accrue. The Employee shall not be entitled to any cash payment in lieu of taking
any vacation days. The Employee shall arrange her vacation so as not to conflict
with the needs of Employer.
(e) Reimbursement of Expenses. During the term of the Employee's
-------------------------
employment hereunder, the Employer shall reimburse the Employee for all
reasonable out-of-pocket expenses incurred by the Employee in the lawful and
ordinary course of Employer's business and reported to Employer in accordance
with its accounting procedures, including expenses for meals, entertainment,
hotel and air travel, telephone, automobile, dues, club expenses, fees and
similar items.
(g) Other Facilities. Employer shall provide Employee with office
----------------
space, furnishings and facilities, secretarial and administrative assistance,
supplies and equipment commensurate with Employee's position.
4. Termination.
-----------
(a) Termination By Employer. The employment of Employee under this
-----------------------
Agreement may be terminated by Employer as follows:
(i) For cause in the event of Employee's deliberate and
intentional continuing refusal to substantially perform her duties and
obligations under this Agreement (except by reason of incapacity due to
disability or illness), if she shall have either failed to remedy such alleged
breach within 45 days after his receipt of written notice from Employer
demanding that he remedy such alleged breach, or shall have failed to take
reasonable steps in good faith to that end during such 45 day period and shall
continue diligently to take such steps; provided that Employer has delivered to
Employee a further notice after the end of such 45 day period asserting that
Employee has failed to comply with the remedy provisions of this Section
4(a)(i), and specifying the particulars thereof in detail, and provided further
that Employee thereafter receives a certified copy of a resolution of the Board
adopted by the affirmative vote of not less than 75% of the entire Board at a
meeting called and held for that purpose and at which Employee was given an
opportunity to be heard, finding that Employee exhibited conduct set forth in
this Section and that Employee failed to take reasonable steps in good faith to
remedy such alleged breach and specifying the particulars thereof in detail; or
(ii) For cause in the event that Employee has engaged in willful
fraud or defalcation involving material funds or other assets of Employer.
(b) Termination Payment in Event of Termination for Cause. In the
-----------------------------------------------------
event of termination of Employee's employment under this Agreement by Employer
under Section 4(a), Employee shall only be entitled to receive the Base Salary
being paid at the time of such termination, and, if applicable, other
compensation, due hereunder, computed on a pro rata basis, up to the effective
date of such termination.
-2-
<PAGE>
(c) Termination by Employee. Employee shall have the right at any
-----------------------
time, by giving written notice to Employer, to terminate Employee's employment
hereunder effective 90 days after the date on which such notice is given by
Employee. In the event Employee shall make such election under this Section
4.3(c) Employee shall, in addition to all other reimbursements, payments or
other allowances required to be paid under this Agreement or under any other
plan, agreement or policy which survives the termination of this Agreement, be
entitled to be paid, in addition to the Base Salary payable during such 90 day
period, a lump sum payment, payable by delivery of Employer's cashier's check
within five business days after the end of such 90 day period, in an amount
equal to three monthly installments of the Base Salary (less required tax
withholding) in effect at the time Employee makes such election. Thereupon, this
Agreement shall terminate and Employee shall have no further rights under or be
entitled to any other benefits of this Agreement.
(d) Termination Payment. In the event Employee's employment hereunder
-------------------
is terminated for any reason other than as set forth in Sections 4(a), 4(c), 5
or 6, Employer shall pay to Employee an amount equal to five times Employee's
then current annual Base Salary. Such payment shall be made within ten days
after the termination of Employee's employment triggering such payment
obligation. Thereupon, Employee shall have no further rights under or be
entitled to any other benefits of this Agreement.
5. Death of Employee. In the event of Employee's death during the term of
-----------------
his employment hereunder, Employer shall pay to Employee's surviving spouse or
to the executor or administrator of Employee's estate (if her spouse shall not
survive her) an amount equal to the installments of her Base Salary then payable
pursuant to Section 3(a) for the month in which he dies, for the greater of: (a)
the balance of the term remaining under this Agreement; or (b) two years.
6. Disability of Employee. Employee shall be covered by Employer's
----------------------
disability benefit plan as such plan may from time to time exist. In the event
that, due to physical or mental illness or personal injury, Employee shall
become disabled such that he is unable to perform, and in all reasonable medical
likelihood, will continue indefinitely to be unable to perform, her normal
duties in his regular manner, as determined by independent competent medical
authority, then Employer may elect (but shall not be obligated) to terminate
Employee's employment under this Agreement on a date which is not less than five
years after the date on which written notice of such termination is received by
Employee, and Employer shall pay to Employee the Base Salary payable pursuant to
Section 3(a) for a period of not less than five years thereafter. The foregoing
payment obligations shall be reduced by the amount of any payment made to such
Employee under the coverage then afforded to Employee by Employer's disability
benefit plan in effect at the time such disability determination is made.
Employee shall, during such disability and until the effective date of the
termination of this Agreement and of payments hereunder by Employer to Employee,
continue to enjoy all other applicable benefits of employment that would
otherwise pertain to continued employment pursuant to this Agreement.
7. Covenant Not to Compete.
-----------------------
(a) Employee agrees that at all times during the term of her
employment hereunder and for a period of two years after the termination of his
employment hereunder pursuant to Sections 4(a) or 4(c), she will not, within 100
miles of:
-3-
<PAGE>
(i) Employer's principal place of business; or
(ii) any other geographical location in which Employee has
specifically represented the interests of Employer during the 12 months prior to
the termination of this Agreement;
as principal, agent, partner, employee, consultant, distributor, dealer,
contractor, broker or trustee or through the agency of any corporation,
partnership, association or agent or agency, engage directly or indirectly, in
any business competitive with any material business engaged in by Employer; and
Employee shall not be the owner of more than five percent of the outstanding
capital stock of any corporation (other' than Employer), or an officer,.
director or employee of any corporation (other than Employer or a corporation
affiliated with Employer), or a member or employee of any partnership, or an
owner, investor, lender, agent, consultant, distributor, dealer, contractor,
broker or employee of any other business which conducts a business described
herein, within the territory described above.
(b) Employee agrees that during the term of her employment under this
Agreement and for a period of two years after the termination of Employee's
employment hereunder pursuant to Sections 4(a) or 4(c), she will not directly or
indirectly: (i) induce any customers of Employer or corporations affiliated with
Employer to patronize any similar business that competes with any material
business of Employer; (ii) solicit any similar business from any customer of
Employer or corporations affiliated with Employer; (iii) request or advise any
customers of Employer or corporations affiliated with Employer to withdraw,
curtail or cancel such customer's business with Employer; or (iv) disclose to
any other person, firm or corporation the names or addresses of any of the
customers of Employer or corporations affiliated with Employer.
(c) If the provisions of this Section 7 are violated, in whole or in
part, Employer shall be entitled, upon application to any court of proper
jurisdiction, to a temporary restraining order or preliminary injunction to
refrain and enjoin Employee from such violation without prejudice to any other
remedies Employer may have at law or in equity. Further, in the event that the
provisions of this Section 7 should be deemed to exceed the time, geographic or
occupational limitations permitted by applicable law, Employee and Employer
agree that such provisions shall be and are hereby reformed in the maximum time,
geographic or occupational limitations permitted by the applicable law.
8. Confidential Information.
------------------------
(a) Employee recognizes and acknowledges that she has had and will
continue to have access to confidential and proprietary information concerning
Employer and corporations affiliated with Employer of a special and unique value
which may include, without limitation: (i) books and records relating to
operation, finance, accounting, sales, personnel and management; (ii) policies
and matters relating particularly to operations such as customer service
requirements, costs of providing service and equipment, operating costs and
pricing matters; and (iii) various trade or business secrets, including business
opportunities, marketing or business diversification plans, business development
and bidding techniques, methods and processes, financial data and the like
(collectively, the "Protected Information"). Notwithstanding the foregoing,
Protected Information shall not include (A) information which is or becomes
generally known to the public through no act or omission of Employee and (B)
information which has been or hereafter is
-4-
<PAGE>
lawfully obtained by Employee from a source other than Employer or any of its
affiliates (or their respective officers, directors, employees, equity holders
or agents) so long as, in the case of information obtained from a third party,
such third party was or is not, directly or indirectly, subject to an obligation
of confidentiality owed to Employer or any of its affiliates at the time such
Protected Information was or is disclosed to Employee.
(b) Employee agrees that she will not at any time, either while
employed by Employer or after termination of employment hereunder, knowingly
make any independent use of, or knowingly disclose to any other person or
organization (except as authorized by Employer) any of the Protected
Information.
(c) Notwithstanding clause (b) above, Employee shall be permitted to
disclose Protected Information to the extent, but only to the extent, (i)
reasonably necessary for Employee to perform her duties hereunder or (ii)
required by law; provided, that prior to making any disclosure of Protected
Information required by law, Employee shall notify Employer of his intent to
make such disclosure, and Employer shall have the right to participate with
Employee in determining the amount and type of Protected Information, if any,
which must be disclosed in order to comply with applicable law.
(d) In the event of a breach or threatened breach by Employee of the
provisions of this Section 8, Employee agrees that Employer shall be entitled to
a temporary restraining order or a preliminary injunction restraining Employee
from using or disclosing, in whole or in part, such Protected Information.
(e) Promptly after termination of the Employee's employment hereunder
for any reason, the Employee or her personal representative shall return to the
Employer any Confidential Information which is in tangible form and which is
then in her possession.
9. Reimbursement of Expenses. Employer and Employer's successors and
-------------------------
assigns shall reimburse Employee, or advance to Employee, upon Employee's
request, all reasonable legal, accounting and other advisory fees incurred by
Employee, whether or not incurred during the period of time in which Employee is
an employee of Employer, in connection with:
(a) Defending the validity of this Agreement;
(b) Contesting any determinations by Employer concerning the amounts
payable (or reimbursable) by Employer to Employee under this Agreement; or
(c) Preparing responses to Internal Revenue Service audits of, and to
otherwise defend, her personal income tax return or an adverse determination,
administrative proceedings or civil litigation arising therefrom that is
occasioned by or related to an audit by the Internal Revenue Service of
Employer's income tax return.
10. Severability. In case any one or more of the provisions of this
------------
Agreement shall, for any reason, be held or found by final judgment of a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect: (a) such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, (b) this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein (except that this Section 10 shall not prohibit any modification allowed
under Section 7 above); and (c) if the
-5-
<PAGE>
effect of a holding or finding that any such provision is either invalid,
illegal or unenforceable is to modify to Employee's detriment, reduce or
eliminate any compensation, reimbursement, payment, allowance or other benefit
to Employee intended by Employer and Employee in entering into this Agreement,
Employer shall promptly negotiate and enter into an agreement with Employee
containing alternative provisions (reasonably acceptable to Employee), that will
restore to Employee (to the extent lawfully permissive) substantially the same
economic, substantive and income tax benefits to Employee would have enjoyed had
any such provision of this Agreement been upheld as legal, valid and
enforceable.
11. Disputes: Payment of Attorneys' Fees. If at any time during or after
------------------------------------
the term of this Agreement there should arise any dispute as to the validity,
interpretation or application of any terms or condition of this Agreement,
Employer shall, upon written demand by Employee, promptly provide sums
sufficient to pay on a current basis, either directly or by reimbursing
Employee, Employee's costs and reasonable attorney's fees incurred by Employee
in connection with any such dispute or any litigation: (a) provided that
Employee shall repay any such amounts paid or advanced if Employee is not the
prevailing party with respect to any dispute or litigation arising under Section
7 or 8; and (b) regardless of whether Employee is the prevailing party in a
dispute or in litigation involving any other provision of this Agreement,
provided that the court in which such litigation is first initiated determines
with respect to this obligation, upon application of either party hereto,
Employee did not initiate frivolously such litigation. Under no circumstances
shall Employee be obligated to pay or reimburse Employer for any attorney's
fees, costs or expenses incurred by Employer. The provisions of this Section 11
shall survive the expiration or termination of this Agreement and of Employee's'
employment hereunder. Employee shall be entitled, upon application to any court
of competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling Employer to carry
out the provisions of this Section 11.
12. Binding Effect and Entire Agreement. This Agreement shall be binding
-----------------------------------
upon and shall inure to the benefit of the parties hereto and their heirs,
personal representatives, executors, administrators, successors and assigns.
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter contained herein, and supersedes all prior and
contemporaneous oral and written communications and agreements with respect
thereto.
13. Assignment and Termination. Employee may designate one or more
--------------------------
beneficiaries to receive any amount that may be payable hereunder after her
death. Except as set forth in the preceding sentence, this Agreement may not be
assigned, partitioned, pledged, or hypothecated in whole or in part without the
express prior written consent of Employee and Employer. This Agreement shall not
be terminated either by the voluntary or involuntary dissolution or the winding
up of the affairs of Employer, or by any merger or consolidation wherein
Employer is not the surviving corporation, or by any transfer of all or
substantially all of Employer's assets on a consolidated basis. In the event of
any such merger, consolidation or transfer of assets, the provisions of this
Agreement shall be binding upon and shall inure to the benefit of the surviving
corporation to which such assets shall be transferred.
14. No Right of Set-Off. Employer shall have no right of set-off or
-------------------
counterclaim in respect of any debt or other obligation of Employee to Employer
against any payment or other
-6-
<PAGE>
obligation of Employer to Employee provided for in this Agreement or pursuant to
any other plan, agreement or policy.
15. Amendment and Waiver. This Agreement may be amended and any provision
--------------------
hereof waived only in a writing signed by the party against whom an amendment or
waiver is sought to be enforced. The parties hereto shall have the right at all
times to enforce the provisions of this Agreement in strict accordance with the
terms hereof, notwithstanding any conduct or custom on the part of either party
in refraining from so doing at any time or times. The failure of either party at
any time to enforce its rights under such provisions strictly in accordance with
the same shall not be construed as having created a custom in any way or manner
contrary to specific provisions of this Agreement or as having in any way or
manner modified or waived the same.
16. Headings. Headings of sections shall be deemed to be included for
--------
purposes of convenience only and shall not affect the interpretation of this
Agreement.
17. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of South Carolina. The state courts of
South Carolina and the federal courts in South Carolina shall have sole and
exclusive jurisdiction over any dispute or controversy arising from or relating
to this Agreement.
18. Notices. Except as provided herein to the contrary, any notices or
-------
consents required or permitted by this Agreement shall be in writing and shall
be deemed delivered if sent by certified mail, postage prepaid, return receipt
requested, or overnight delivery service, or facsimile, as follows, unless such
address is changed by written notice hereunder:
If to Employer: Millionaire.Com
The Professional Building
Suite 203
New Orleans Road
Hilton Head, SC 29928
If to Employee: Robin White
Rose Hill Plantation House
199 Rose Hill Way
Bluffton, SC 29910
Any notice sent by mail shall be deemed given three (3) days after
deposited with the United States Postal Service; any notice sent by overnight
delivery service shall be deemed given the day after deposited with the delivery
service; any notice sent by facsimile shall be deemed given when transmitted.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MILLIONAIRE.COM
By: /s/
---------------------------------
Title: Secretary
/s/ Robin White
-------------------------------------
Robin White
-8-
<PAGE>
Exhibit 10(f)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is made this 23rd day of December, 1998 by and
between MILLIONAIRE.COM, a Nevada corporation (the "Employer"), and ROBERT L.
WHITE (the "Employee").
PREAMBLE
Employer desires to employ Employee as the Chairman of the Board and Chief
Executive Officer of Employer, and Employee desires to be so employed, under the
terms and conditions set forth herein.
THEREFORE the parties agree as follows with the intent to be legally bound:
1. Employment. Employer hereby employs Employee and Employee hereby
----------
accepts employment as Employer's Chairman of the Board and Chief Executive
Officer on the terms and subject to the conditions hereinafter set forth.
Employee shall perform such duties, and have such powers, authority and
responsibilities for Employer as are provided in Employer's Bylaws and otherwise
as may be assigned to him from time to time by Employer's Board of Directors.
2. Term. Except as provided herein to the contrary, the term of
----
Employee's employment under this Agreement shall be for a continually renewing
term of five years without any further action by either Employer or Employee, it
being the intention of the parties that there shall be continuously a term of
five years' duration of Employee's employment under this Agreement until an
event has occurred terminating such employment as provided herein.
3. Compensation. For all services rendered by Employee while employed
------------
hereunder, Employer agrees to compensate Employee as follows:
(a) Base Salary. Employee shall be paid a base salary at the initial
-----------
rate of $180,000 per annum (the "Base Salary"), which shall be payable in the
intervals consistent with Employer's normal payroll schedules. The Base Salary
may be increased (but not decreased) in the discretion of the Board of
Directors, and shall, if necessary, be increased from time to time during the
term of this Agreement to ensure that Employer's aggregate annual cash
compensation is not less than that of the most highly compensated employee of
the Employer.
(b) Incentive Compensation. Employee shall be paid a monthly bonus in
----------------------
an amount equal to the sum of (i) 13% of the buyer's premium received by
Employer from sales at its Bluffton Auction Facility during the prior month and
(ii) 5% of amounts received by Employer for subscriptions or memberships during
the prior month. Notwithstanding the foregoing, Employee's aggregate annual
bonus shall not be less than $60,000, nor more than
1
<PAGE>
$180,000. The monthly bonus amounts paid to Employee with respect to each
calendar year shall be computed within 60 days after the end of such year. If
the aggregate bonus paid to Employee for such year is less than $60,000,
Employer will promptly pay to Employee the difference. Employee shall also be
entitled to participate in any incentive or supplemental compensation plans or
arrangements instituted by Employer and covering its principal executive
officers, and shall be entitled to receive additional compensation as Employer
may pay to Employer's principal executive officers generally.
(c) Employee Benefits. During the term of Employee's employment
-----------------
hereunder and for a period of five years following its termination for any
reason other than pursuant to Section 4(a), Section 4(c) or Section 5 hereof (i)
Employer shall, at its cost and expense, provide Employee and his immediate
family with medical and dental insurance, (ii) Employee shall be eligible to
participate in all other benefit plans or programs generally available to
executive employees of Employer, including without limitation, if and when
available, disability insurance, pension, profit sharing and stock option plans,
and (iii) Employer shall, at its cost and expense, purchase and maintain $2.0
million of term life insurance on Employee's life naming as beneficiaries (A)
Employer for $1.0 million of the insurance amount and (B) Employee's wife or, if
she is not living, then Employee's children or, if there are no living children,
then Employee's surviving next of kin including Employee's father, mother and
sister, for $1.0 million of the Insurance amount.
(d) Holidays and Vacation. The Employee shall be entitled to the same
---------------------
paid holidays as other employees of the Employer. In addition, the Employee
shall be entitled to 20 days of paid vacation per calendar year. If the Employee
is employed hereunder for only a portion of any calendar year, then such number
of vacation days shall be reduced pro rata based upon the actual number of days
in such calendar year during which the Employee is employed hereunder. Vacation
days are not cumulative and must be taken during the calendar year in which they
accrue. The Employee shall not be entitled to any cash payment in lieu of taking
any vacation days. The Employee shall arrange his vacation so as not to conflict
with the needs of Employer.
(e) Reimbursement of Expenses. During the term of the Employee's
-------------------------
employment hereunder, the Employer shall reimburse the Employee for all
reasonable out-of-pocket expenses incurred by the Employee in the lawful and
ordinary course of Employer's business and reported to Employer in accordance
with its accounting procedures, including expenses for meals, entertainment,
hotel and air travel, telephone, automobile, dues, club expenses, fees and
similar items.
(f) Automobile. Employer shall furnish the Employee with an
----------
automobile suitable to his status for business use in accordance with Employer's
policy, but in no event shall the automobile have a purchase price in excess of
$50,000. The automobile shall belong to Employer, and Employer shall be
responsible for all expenses relating to the automobile except that the Employee
shall be responsible for gasoline and oil expenses incurred in connection with
his personal use of the automobile. The automobile is intended for business use,
and the Employee shall return it to Employer at the request of Employer when his
services are no longer
2
<PAGE>
used by Employer. The Employee shall submit reports to Employer with respect to
his use of the automobile in sufficient detail to enable Employer to comply with
all relevant Federal and state income and employment tax laws.
(g) Other Facilities. Employer shall provide Employee with office
----------------
space, furnishings and facilities, secretarial and administrative assistance,
supplies and equipment commensurate with the size and quality of that which is
provided from time to time to Employer's principal executive officers.
(h) Options. Employer will issue to Employee options (the "Options")
-------
to purchase 150,000 shares of common stock of Employer at an exercise price
equal to $1.00 per share. The Options shall vest in accordance with Employer's
stock option program as approved by Employer's Board of Directors and shall be
exercisable for, a period of ten years from the date of grant.
(i) Advertising. During the term of Employee's employment hereunder
-----------
and for a period of two years thereafter, Employee shall have the right to place
up to six pages of advertising in each edition of Millionaire Magazine and
--------------------
Billionaire Magazine without charge to Employee.
- --------------------
4. Termination.
-----------
(a) Termination By Employer. The employment of Employee under this
-----------------------
Agreement may be terminated by Employer for cause in the event of Employee's
deliberate and intentional continuing refusal to substantially perform his
duties and obligations under this Agreement (except by reason of incapacity due
to disability or illness), if he shall have either failed to remedy such alleged
breach within 45 days after his receipt of written notice from Employer
demanding that he remedy such alleged breach, or shall have failed to take
reasonable steps in good faith to that end during such 45 day period and shall
continue diligently to take such steps; provided that Employer has delivered to
Employee a further notice after the end of such 45 day period asserting that
Employee has failed to comply with the remedy provisions of this Section
4(a)(i), and specifying the particulars thereof in detail, and provided further
that Employee thereafter receives a certified copy of a resolution of the Board
adopted by the affirmative vote of not less than 75% of the entire Board at a
meeting called and held for that purpose and at which Employee was given an
opportunity to be heard, finding that Employee exhibited conduct set forth in
this Section and that Employee failed to take reasonable steps in good faith to
remedy such alleged breach and specifying the particulars thereof in detail.
(b) Termination Payment in Event of Termination for Cause. In the
-----------------------------------------------------
event of termination of Employee's employment under this Agreement by Employer
under Section 4(a), Employee shall only be entitled to receive the Base Salary
being paid at the time of such termination, and, if applicable, other
compensation, due hereunder, computed on a pro rata basis, up to the effective
date of such termination.
3
<PAGE>
(c) Termination by Employee. Employee shall have the right at any
-----------------------
time, by giving written notice to Employer, to terminate Employee's employment
hereunder effective 90 days after the date on which such notice is given by
Employee. In the event Employee shall make such election under this Section 4(c)
Employee shall, in addition to all other reimbursements, payments or other
allowances required to be paid under this Agreement or under any other plan,
agreement or policy which survives the termination of this Agreement, be
entitled to be paid, in addition to the Base Salary payable during such 90 day
period, a lump sum payment, payable by delivery of Employer's cashier's check
within five business days after the end of such 90 day period, in an amount
equal to six monthly installments of the Base Salary and Bonus (less required
tax withholding) in effect at the time Employee makes such election. Thereupon,
this Agreement shall terminate and Employee shall have no further rights under
or be entitled to any other benefits of this Agreement.
5. Death of Employee. In the event of Employee's death during the term of
-----------------
his employment hereunder, Employer shall pay to Employee's surviving spouse or
to the executor or administrator of Employee's estate (if his spouse shall not
survive him) an amount equal to the installments of his Base Salary then payable
pursuant to Section 3(a) for the month in which he dies, for the greater of: (a)
the balance of the term remaining under this Agreement; or (b) two years.
6. Disability of Employee. Employee shall be covered by Employer's
----------------------
disability benefit plan as such plan may from time to time exist. In the event
that, due to physical or mental illness or personal injury, Employee shall
become disabled such that he is unable to perform, and in all reasonable medical
likelihood, will continue indefinitely to be unable to perform, his normal
duties in his regular manner, as determined by independent competent medical
authority, then Employer may elect (but shall not be obligated) to terminate
Employee's employment under this Agreement on a date which is not less than five
years after the date on which written notice of such termination is received by
Employee, and Employer shall pay to Employee the Base Salary payable pursuant to
Section 3(a) for a period of not less than five years thereafter. The foregoing
payment obligations shall be reduced by the amount of any payment made to such
Employee under the coverage then afforded to Employee by Employer's disability
benefit plan in effect at the time such disability determination is made.
Employee shall, during such disability and until the effective date of the
termination of this Agreement and of payments hereunder by Employer to Employee,
continue to enjoy all other applicable benefits of employment that would
otherwise pertain to continued employment pursuant to this Agreement.
7. Change of Position. Notwithstanding anything to the contrary set forth
------------------
herein, in the event that Employee ever ceases to be Chief Executive Officer or
a Director of Employer for any reason other than termination pursuant to Section
4(a) or the death or disability (as described in Section 6) of Employee (the
"Change Event"), then Employee, at his option, may require Employer to either
(a) pay to Employee, within five days after such Change Event, an amount equal
to five times the sum of Employee's annual Base Salary and maximum annual bonus
as of the day immediately prior to the date of the Change Event, or (b)
immediately enter into a ten year Consulting Agreement with Employee in the form
of Exhibit A hereto. In addition, upon
---------
4
<PAGE>
the occurrence of a Change Event, and notwithstanding anything to the contrary
set forth herein or in any stock option plan of Employer or stock option
agreement between Employer and Employee, all of Employee's Options shall
immediately vest and be exercisable by Employee a period equal to the longer of
(i) the remaining term of the Options or (ii) one year following the date of the
Change Event.
8. Change of Control.
-----------------
(a) Definition of Change in Control. A "Change in Control" is deemed
-------------------------------
to occur upon any of the following events:
(i) any individual, corporation, partnership, association,
trust or other entity becomes the beneficial owner (as defined in Rule 13(d)(3)
under the Securities Exchange Act of 1934), directly or indirectly, of
securities of the Employer representing 50% or more of the combined voting power
of the Employers then outstanding voting securities;
(ii) the individuals who as of the date of this Agreement are
members of the Board of Directors of the Employer (the "Incumbent Board"), cease
for any reason to constitute at least a majority of the Board of Directors of
the Employer (provided, however, that if the election, or nomination for
election by the Employer's shareholders, of any new director was approved by a
vote of a least a majority of the Incumbent Board, such new director will be
considered to be a member of the Incumbent Board);
(iii) an agreement by the Employer to consolidate or merge with
any other entity pursuant to which the Employer will not be the continuing or
surviving corporation or pursuant to which shares of the Common Stock of the
Employer would be converted into cash, securities or other property, other than
a merger of the Employer in which holders of the Common Stock of the Employer
immediately prior to the merger would have the same proportion of ownership of
Common Stock of the surviving corporation immediately after the merger;
(iv) an agreement of the Employer to sell, lease, exchange or
otherwise transfer in one transaction or a series of related transactions
substantially all the assets of the Employer;
(v) the adoption of any plan or proposal for a complete or
partial liquidation or dissolution of the Employer; or
(vi) an agreement to sell more than 50% of the outstanding
voting securities of the Employer in one or a series of related transactions
other than an initial public offering of voting securities registered with the
Securities and Exchange Commission.
(b) Definition of Triggering Event. A "Triggering Event" is deemed to
------------------------------
occur upon any of the following events:
5
<PAGE>
(i) The assignment to Employee of duties, responsibilities, or
status inconsistent with his duties, responsibilities and status prior to the
Change in Control, or a reduction or alteration in the nature or status of
Employee's duties and responsibilities from those in effect prior to the Change
in Control;
(ii) The failure by Employer to continue in effect Employer's
insurance, disability, stock option plan, or any other employee benefit plans,
policies, practices or arrangements in which Employee participates or the
failure of Employer to continue Employee's participation therein on
substantially the same basis, both in terms of the amount of benefits provided
and the level of Employee's participation relative to other participants, as
existed prior to the Change in Control;
(iii) The failure of Employer to obtain a satisfactory agreement
from a successor to Employer to assume and agree to perform this Agreement; or
(iv) A material diminution by Employer in Employee's salary,
benefits or incentive or other forms of compensation, all as in effect on the
day prior to the date of a Change in Control.
(c) Severance Payment. If on or after the date of a Change in
-----------------
Control, Employer, for any reason, terminates Employee's employment, or within
six months following a Triggering Event Employee resigns, then the Employer
shall pay to Employee within five days following the date of termination or date
of resignation: (i) Employee's salary and benefits through the termination date
or resignation date, both as in effect on the date prior to the date of the
Change in Control; and (ii) the amount of any bonus payable to Employee for the
year in which the Change in Control occurred, pro rated to take into account the
number of days that have elapsed in such year prior to the termination date or
the resignation date. In addition, for a period of five years following the
termination or resignation date, the Employer shall continue to pay to Employee
his annual salary and maximum annual bonus, as in effect on the day prior to the
date of the Change in Control, on the dates when such salary and bonus would
have been payable had Employee remained employed by the Company and shall
continue to provide to Employee during such period, at no cost to Employee, the
benefits Employee was receiving on the day prior to the date of the Change in
Control or benefits substantially similar thereto. If the termination date or
resignation date referred to in this Section 7(c) occurs on or after the second
anniversary of the date of this Agreement, the aggregate annual salary and
minimum annual bonus payable to Employee pursuant to the preceding sentence
shall, at the option of Employee, be paid ratably over a period of two and one-
half years following the termination or resignation date.
9. Covenant Not to Compete.
-----------------------
(a) Employee agrees that at all times during the term of his
employment hereunder and for a period of two years after the termination of his
employment hereunder pursuant to Sections 4(a) or 4(c), he will not, within 100
miles of:
6
<PAGE>
(i) Employer's principal place of business; or
(ii) any other geographical location in which Employee has
specifically represented the interests of Employer during the 12 months prior to
the termination of this Agreement;
as principal, agent, partner, employee, consultant, distributor, dealer,
contractor, broker or trustee or through the agency of any corporation,
partnership, association or agent or agency, engage directly or indirectly, in
any business competitive with any material business engaged in by Employer; and
Employee shall not be the owner of more than five percent of the outstanding
capital stock of any corporation (other than Employer),or an officer, director
or employee of any corporation (other than Employer or a corporation affiliated
with Employer), or a member or employee of any partnership, or an owner,
investor, lender, agent, consultant, distributor, dealer, contractor, broker or
employee of any other business which conducts a business described herein,
within the territory described above.
(b) Employee agrees that during the term of his employment under this
Agreement and for a period of two years after the termination of Employee's
employment hereunder pursuant to Sections 4(a) or 4(c), he will not directly or
indirectly: (i) induce any customers of Employer or corporations affiliated with
Employer to patronize any similar business that competes with any material
business of Employer; (ii) solicit any similar business from any customer of
Employer or corporations affiliated with Employer; (iii) request or advise any
customers of Employer or corporations affiliated with Employer to withdraw,
curtail or cancel such customer's business with Employer; or (iv) disclose to
any other person, firm or corporation the names or addresses of any of the
customers of Employer or corporations affiliated with Employer.
(c) If the provisions of this Section 9 are violated, in whole or in
part, Employer shall be entitled, upon application to any court of proper
jurisdiction, to a temporary restraining order or preliminary injunction to
refrain and enjoin Employee from such violation without prejudice to any other
remedies Employer may have at law or in equity. Further, in the event that the
provisions of this Section 9 should be deemed to exceed the time, geographic or
occupational limitations permitted by applicable law, Employee and Employer
agree that such provisions shall be and are hereby reformed in the maximum time,
geographic or occupational limitations permitted by the applicable law.
(d) Nothing contained in this Section 9 shall prohibit Employee from
buying and selling antiques and collectibles.
10. Confidential Information.
------------------------
(a) Employee recognizes and acknowledges that he has had and will
continue to have access to confidential and proprietary information concerning
Employer and corporations affiliated with Employer of a special and unique value
which may include, without limitation: (i) books and records relating to
operation, finance, accounting, sales, personnel and management;
7
<PAGE>
(ii) policies and matters relating particularly to operations such as customer
service requirements, costs of providing service and equipment, operating costs
and pricing matters; and (iii) various trade or business secrets, including
business opportunities, marketing or business diversification plans, business
development and bidding techniques, methods and processes, financial data and
the like (collectively, the "Protected Information"). Notwithstanding the
foregoing, Protected Information shall not include (A) information which is or
becomes generally known to the public through no act or omission of Employee and
(B) information which has been or hereafter is lawfully obtained by Employee
from a source other than Employer or any of its affiliates (or their respective
officers, directors, employees, equity holders or agents) so long as, in the
case of information obtained from a third party, such third party was or is not,
directly or indirectly, subject to an obligation of confidentiality owed to
Employer or any of its affiliates at the time such Protected Information was or
is disclosed to Employee.
(b) Employee agrees that he will not at any time, either while
employed by Employer or after termination of employment hereunder, knowingly
make any independent use of, or knowingly disclose to any other person or
organization (except as authorized by Employer) any of the Protected
Information.
(c) Notwithstanding clause (b) above, Employee shall be permitted to
disclose Protected Information to the extent, but only to the extent, (i)
reasonably necessary for Employee to perform his duties hereunder or (ii)
required by law; provided, that prior to making any disclosure of Protected
information required by law; provided, that prior to making any disclosure of
Protected Information required by law, Employee shall notify Employer of his
intent to make such disclosure, and Employer shall have the right to participate
with Employee in determining the amount and type of Protected Information, if
any, which must be disclosed in order to comply with applicable law.
(d) In the event of a breach or threatened breach by Employee of the
provisions of this Section 10, Employee agrees that Employer shall be entitled
to a temporary restraining order or a preliminary injunction restraining
Employee from using or disclosing, in whole or in part, such Protected
Information.
(e) Promptly after termination of the Employee's employment hereunder
for any reason, the Employee or his personal representative shall return to the
Employer any Confidential Information which is in tangible form and which is
then in his possession.
11. Reimbursement of Expenses. Employer and Employer's successors and
-------------------------
assigns shall reimburse Employee, or advance to Employee, upon Employee's
request, all reasonable legal, accounting and other advisory fees incurred by
Employee, whether or not incurred during the period of time in which Employee is
an employee of Employer, in connection with:
(a) Defending the validity of this Agreement;
8
<PAGE>
(b) Contesting any determinations by Employer concerning the amounts
payable (or reimbursable) by Employer to Employee under this Agreement;
(c) Determining the tax consequences to Employee of any amounts
payable (or reimbursable) under Sections 7 and 8 above; or
(d) Preparing responses to Internal Revenue Service audits of, and to
otherwise defend, his personal income tax return or an adverse determination,
administrative proceedings or civil litigation arising therefrom that is
occasioned by or related to an audit by the Internal Revenue Service of
Employer's income tax return.
12. Severability. In case any one or more of the provisions of this
------------
Agreement shall, for any reason, be held or found by final judgment of a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect: (a) such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, (b) this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein (except that this Section 12 shall not prohibit any modification allowed
under Section 9 above); and (c) if the effect of a holding or finding that any
such provision is either invalid, illegal or unenforceable is to modify to
Employee's detriment, reduce or eliminate any compensation, reimbursement,
payment, allowance or other benefit to Employee intended by Employer and
Employee in entering into this Agreement, Employer shall promptly negotiate and
enter into an agreement with Employee containing alternative provisions
(reasonably acceptable to Employee), that will restore to Employee (to the
extent lawfully permissive) substantially the same economic, substantive and
income tax benefits to Employee would have enjoyed had any such provision of
this Agreement been upheld as legal, valid and enforceable.
13. Disputes: Payment of Attorneys' Fees. If at any time during or after
------------------------------------
the term of this Agreement there should arise any dispute as to the validity,
interpretation or application of any terms or condition of this Agreement,
Employer shall, upon written demand by Employee, promptly provide sums
sufficient to pay on a current basis, either directly or by reimbursing
Employee, Employee's costs and reasonable attorney's fees incurred by Employee
in connection with any such dispute or any litigation: (a) provided that
Employee shall repay any such amounts paid or advanced if Employee is not the
prevailing party with respect to any dispute or litigation arising under Section
9 or 10; and (b) regardless of whether Employee is the prevailing party in a
dispute or in litigation involving any other provision of this Agreement,
provided that the court in which such litigation is first initiated determines
with respect to this obligation, upon application of either party hereto,
Employee did not initiate frivolously such litigation. Under no circumstances
shall Employee be obligated to pay or reimburse Employer for any attorney's
fees, costs or expenses incurred by Employer. The provisions of this Section 13
shall survive the expiration or termination of this Agreement and of Employee's
employment hereunder. Employee shall be entitled, upon application to any court
of competent jurisdiction, to the entry of a mandatory injunction, without the
necessity of posting any bond with respect thereto, compelling Employer to carry
out the provisions of this Section 13.
9
<PAGE>
14. Binding Effect and Entire Agreement. This Agreement shall be binding
-----------------------------------
upon and shall inure to the benefit of the parties hereto and their heirs,
personal representatives, executors, administrators, successors and assigns.
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter contained herein, and supersedes all prior and
contemporaneous oral and written communications and agreements with respect
thereto.
15. Assignment and Termination. Employee may designate one or more
--------------------------
beneficiaries to receive any amount that may be payable hereunder after his
death. Except as set forth in the preceding sentence, this Agreement may not be
assigned, partitioned, pledged, or hypothecated in whole or in part without the
express prior written consent of Employee and Employer. This Agreement shall not
be terminated either by the voluntary or involuntary dissolution or the winding
up of the affairs of Employer, or by any merger or consolidation wherein
Employer is not the surviving corporation, or by any transfer of all or
substantially all of Employer's assets on a consolidated basis. In the event of
any such merger, consolidation or transfer of assets, the provisions of this
Agreement shall be binding upon and shall inure to the benefit of the surviving
corporation to which such assets shall be transferred.
16. No Right of Set-Off. Employer shall have no right of set-off or
-------------------
counterclaim in respect of any debt or other obligation of Employee to Employer
against any payment or other obligation of Employer to Employee provided for in
this Agreement or pursuant to any other plan, agreement or policy.
17. Amendment and Waiver. This Agreement may be amended and any provision
--------------------
hereof waived only in a writing signed by the party against whom an amendment or
waiver is sought to be enforced. The parties hereto shall have the right at all
times to enforce the provisions of this Agreement in strict accordance with the
terms hereof, notwithstanding any conduct or custom on the part of either party
in refraining from so doing at any time or times. The failure of either party at
any time to enforce its rights under such provisions strictly in accordance with
the same shall not be construed as having created a custom in any way or manner
contrary to specific provisions of this Agreement or as having in any way or
manner modified or waived the same.
18. Headings. Headings of sections shall be deemed to be included for
--------
purposes of convenience only and shall not affect the interpretation of this
Agreement.
19. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of South Carolina. The state courts of
South Carolina and the federal courts in South Carolina shall have sole and
exclusive jurisdiction over any dispute or controversy arising from or relating
to this Agreement.
20. Notices. Except as provided herein to the contrary, any notices or
-------
consents required or permitted by this Agreement shall be in writing and shall
be deemed delivered if sent
10
<PAGE>
by certified mail, postage prepaid, return receipt requested, or overnight
delivery service, or facsimile, as follows, unless such address is changed by
written notice hereunder:
If to Employer: Millionaire.Com
The Professional Building
Suite 203
New Orleans Road
Hilton Head, SC 29928
If to Employee: Robert L. White
Rose Hill Plantation House
199 Rose Hill Way
Bluffton, SC 29910
Any notice sent by mail shall be deemed given three (3) days after
deposited with the United States Postal Service; any notice sent by overnight
delivery service shall be deemed given the day after deposited with the delivery
service; any notice sent by facsimile shall be deemed given when transmitted.
21. Registration Rights. Employer covenants and agrees that it will use
-------------------
its best efforts to cause not less than 1,000,000 shares of Employer's common
stock held by Employee to be registered under the Securities Act of 1933, as
amended (the "1933 Act"), and applicable state securities laws, for sale to the
public on or prior to May 1, 1999. Promptly following the execution and delivery
of this Agreement, Employer shall commence preparation of, and as soon as
reasonably practicable file with the Securities and Exchange Commission, a
registration statement covering such shares of common stock. Employee's shares
may be registered alone or with shares to be sold by Employer and/or other
shareholders of Employer, provided that in no event will Employee be required to
reduce the number of shares to be sold by him to less than the number set forth
above. Employer shall pay all costs and expenses (other than underwriting
discounts and commissions with respect to the sale of shares by Employee)
relating to such registration. In connection with such registration, Employer
and Employee shall provide each other and any underwriter with standard and
customary agreements including representations, warranties, indemnities and
other covenants not inconsistent with the foregoing provisions. If Employer
registers under the 1993 Act any shares of its common stock held by any other
shareholder of Employer, then, as part of such registration, Employer shall also
register all shares of common stock of Employer held by Employee.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MILLIONAIRE.COM
By: /s/
-------------------------
Title: Secretary
/s/ Robert L. White
----------------------------
Robert L. White
12
<PAGE>
Exhibit 10(g)
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT (this "First Amendment")
by and between MILLIONAIRE.COM, a Nevada corporation ("Employer"), and ROBERT L.
WHITE, an individual resident of the State of South Carolina ("Employee"), is
made and entered into as of the 12th day of February, 1999.
W I T N E S S E T H:
-------------------
WHEREAS, the parties hereto have entered into that certain Employment
Agreement, dated as of December 23, 1998 (the "Employment Agreement"); and
WHEREAS, the parties desire to amend the Employment Agreement in the manner
more fully set forth hereinbelow;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as follows:
1. Definitions. Capitalized terms used herein, unless otherwise defined,
-----------
shall have the meanings given to them in the Employment Agreement.
2. Amendments to the Employment Agreement. The Employment Agreement is
--------------------------------------
hereby amended as follows:
(i) By deleting Paragraph 1 in its entirety and substituting the
following in lieu thereof:
1. Employment. For the term of employment, Employer agrees to
----------
employ Employee and Employee agrees to accept such employment and to
perform such duties and functions as the Board of Directors of
Employer may assign to Employee from time to time. Employee agrees to
devote his full time and energy to the business of Employer, and shall
perform his duties in a trustworthy and businesslike manner, all for
the purpose of advancing the interests of Employer. Initially,
Employee shall serve as Chief Executive Officer of Employer.
(ii) By deleting the phrase "Chief Executive Officer" from the first
sentence of Paragraph 7 and substituting the following in lieu thereof:
"employed as an executive officer"; and
(iii) By deleting Paragraph 8 in its entirety.
<PAGE>
3. Effective Date: Ratification. This First Amendment shall be effective
----------------------------
as of the date first above written. Except as amended pursuant to this First
Amendment, the Employment Agreement remains in full force and effect and is
hereby ratified and confirmed and incorporated herein in all respects by the
parties to this First Amendment.
4. Headings. The headings contained herein are for convenience of
--------
reference only and are not intended to define, limit, expand or describe the
scope or intent of any provision of this First Amendment.
5. Counterparts. This First Amendment may be executed and delivered in
------------
two or more counterparts, each of which, when executed and delivered, shall be
deemed more counterparts, each of which, when executed and delivered, shall be
deemed an original, but all parts together shall constitute one instrument.
6. Amendments. The Employment Agreement and this First Amendment may not
----------
be further modified or amended except by a written agreement specifically
referring to the Employment Agreement signed by each party hereto.
[SIGNATURES ON FOLLOWING PAGE]
2
<PAGE>
IN WITNESS WHEREOF, the undersigned parties hereto have executed this First
Amendment as of the day and the year first above written.
"EMPLOYER" "EMPLOYEE"
MILLIONAIRE.COM ROBERT L. WHITE
a Nevada corporation
By: /s/ /s/ Robert L. White
---------------------------- --------------------------------
Title: CEO Robert L. White
3
<PAGE>
Exhibit 10(h)
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO THE EMPLOYMENT AGREEMENT (this "Second Amendment")
by and between MILLIONARE.COM, a Nevada corporation ("Employer"), and ROBERT L.
WHITE, an individual resident of the State of South Carolina ("Employee"), is
made and entered into as of the 27th day of August, 1999.
WITNESSETH:
----------
WHEREAS, the parties hereto have entered into that certain Employment
Agreement, dated as December 23, 1998 (the "Employment Agreement"); and
WHEREAS, the parties have entered into a First Amendment to the Employment
Agreement dated the 12th day of February, 1999 (First Amendment); and
WHEREAS, the parties desire to amend the Employment Agreement rescinding
the charges made by the First Amendment;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as follows:
1. Definitions. Capitalized terms used herein, unless otherwise defined,
-----------
shall have the meanings given to them in the Employment Agreement.
2. Amendments to the Employment Agreement. The Employment Agreement is
---------------------------------------
hereby amended as follows:
(i) By deleting Paragraph 1, added by the First Amendment to the
Employment Agreement, in its entirety and substituting the following
Paragraph 1
1. Employment. Employer hereby employs Employee and
----------
Employee hereby accepts employment as Employer's Chairman of the Board
and Chief Executive Officer on the terms and subject to the conditions
hereinafter set forth. Employee shall perform such duties and have
such powers, authority and responsibility for the Employer as are
provided in Employer's Bylaws and otherwise as may be assigned to him
from time to time by Employer's Board of Directors.
(ii) By deleting the phrase "employed as an Executive Officer" from
the first sentence of Paragraph 7 and substituting the following in lieu
thereof; "Chief Executive Officer"; and
<PAGE>
(iii) Including in the Agreement as Paragraph 8, the Paragraph 8
of the Employment Agreement as it was originally written before the First
Amendment.
3. Rescission of First Amendment. It is the purpose of this Second
-----------------------------
Amendment is to rescind all of the Amendments made to the Employment Agreements
by the First Amendment to the Employment Agreement.
4. Effective Date, Ratification. This Second Amendment shall be
----------------------------
effective as of the date first above written. Except as amended pursuant to this
Second Amendment, the Employment Agreement remains in full force and effect and
is hereby ratified and confirmed and incorporated herein in all respects by the
parties to this Second Amendment.
5. Headings. The headings contained herein are for convenience of
--------
reference only and are not intended to define, limit, expand or describe the
scope of intent of any provision of this Second Amendment.
6. Counterparts. This Second Amendment may be executed and delivered in
------------
two or more counterparts, each of which, when executed and delivered, shall be
deemed an original, but all parts together shall constitute one instrument.
7. Amendments. The Employment Agreement and this Second Amendment may
----------
not be further modified or amended except by a written agreement specifically
referring to the Employment Agreement signed by each party hereto.
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Second Amendment as of the day and the year first above written.
"EMPLOYER" "EMPLOYEE"
MILLIONAIRE.COM ROBERT L. WHITE
a Nevada corporation
By: /s/ /s/ Robert L. White
-------------------------- -----------------------------------
Title: Chief Executive Officer Robert L. White
<PAGE>
Exhibit 10(i)
FORM OF
INDEMNITY AGREEMENT
This Agreement is made as of the ___ day of _________________, 1999, by and
between MILLIONAIRE.COM, a Nevada corporation (the "Corporation"), and
[_________________], a resident of the State of South Carolina ("Indemnitee").
W I T N E S S E T H:
WHEREAS, the Corporation desires to retain and attract as directors and
officers the most capable persons available; and
WHEREAS, service as a director or officer of a corporation, particularly a
corporation the securities of which are or are to be publicly held, may subject
such individual to substantial litigation and other risks; and
WHEREAS, it is the express policy of the Corporation to provide its
directors and officers with the maximum indemnification protection permitted
under applicable law; and
WHEREAS, in spite of the broad indemnification protection provided for
under the Corporation's Articles of Incorporation, Indemnitee is unwilling to
serve as a director without the provision of further indemnification rights, and
to induce Indemnitee to serve in such capacity, the Corporation desires to
afford to Indemnitee indemnification protection to the fullest extent permitted
under applicable law.
NOW, THEREFORE, for and in consideration of the premises, agreements and
covenants contained herein, the services provided by Indemnitee as a director
and/or officer of the Corporation, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Agreement to Serve. Indemnitee agrees to serve or continue to serve as
------------------
a director and/or officer of the Corporation until his or her death,
resignation, disqualification, or removal from office, or the election or
appointment and qualification of his or her successor, whichever shall first
occur.
2. Definitions. As used in this Agreement:
-----------
(a) The term "Code" means the Nevada law pertaining to business
corporations, as in effect from time to time.
(b) The term "Proceeding" includes any threatened, pending or
completed investigation, claim, action, suit or proceeding, whether of a
civil, criminal, administrative, arbitrative, or investigative nature
(including, without limitation, any action, suit or
<PAGE>
proceeding by or in the right of the Corporation to procure a judgment in
its favor), whether formal or informal, in which Indemnitee may be or may
have been or may be threatened to be made to become involved in any manner
(including, without limitation, as a party or a witness) by reason of the
fact that Indemnitee is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Board of
Directors or an officer of the Corporation as a director, officer, partner,
trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other
enterprise (whether or not for profit), or by reason of anything actually
or allegedly done or not done by Indemnitee in any such capacity, whether
or not Indemnitee is serving in such capacity at the time any liability or
expense is incurred for which indemnification or reimbursement can be
provided under this Agreement.
(c) The term "Expenses" includes, without limitation, counsel fees
and disbursements and all other costs, expenses, and obligations actually
and reasonably incurred by Indemnitee in connection with (i) investigating,
defending, being a witness in or otherwise participating in, or preparing
to defend, be a witness in or participate in, any Proceeding, (ii)
establishing a right to indemnification under Section 6 of this Agreement
or (iii) obtaining recovery under any directors' and officers' liability or
similar insurance policy or policies purchased or maintained at any time by
the Corporation.
(d) The term "fines" includes any excise tax assessed with respect to
any employee benefit plan
3. Indemnity in Third-Party Proceedings. The Corporation shall indemnify
------------------------------------
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee
was, is, or is threatened to be made to become involved in any manner, including
without limitation as a party or witness, in any Proceeding against any and all
Expenses and any and all judgments, fines, and penalties entered or assessed
against Indemnitee, and any and all amounts reasonably paid or payable in
settlement by Indemnitee, incurred with respect to such Proceeding, but only if
(a) Indemnitee acted in good faith; and
(b) Indemnitee reasonably believed:
(i) in the case of conduct in his or her official capacity, that
such conduct was in the best interests of the Corporation;
(ii) in all other cases, that such conduct was at least not
opposed to the best interests of the Corporation; and
(iii) in the case of a Proceeding of a criminal nature, in
addition, that Indemnitee had no reasonable cause to believe that his
or her conduct was unlawful.
-2-
<PAGE>
Indemnitee's conduct with respect to an employee benefit plan for a purpose he
or she believed in good faith to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of item (ii)
of subsection (b) above. Further, the termination of a proceeding by judgment,
order, settlement, or conviction, or upon a plea of nolo contendere or its
equivalent shall not, of itself, be determinative that Indemnitee did not meet
the standard of conduct described in this Section 3. Notwithstanding anything
to the contrary in this Section 3, the Corporation shall not indemnify
Indemnitee under this Section 3 in connection with (A) a Proceeding by or in the
right of the Corporation, except for reasonable expenses incurred in connection
with the Proceeding if it is determined that Indemnitee has not met the relevant
standard of conduct under this Section 3, or (B) any other Proceeding with
respect to conduct for which Indemnitee was adjudged liable on the basis that a
personal benefit was improperly received by him or her, whether or not involving
action in his or her official capacity as a director and/or officer of the
Corporation.
4. Indemnification of Expenses of Successful Party; No Adverse
-----------------------------------------------------------
Presumption. Notwithstanding any other provisions of this Agreement, to the
- -----------
extent that Indemnitee has been successful on the merits or otherwise, in
defense of any Proceeding or in defense of any claim, issue or matter therein,
including the dismissal of an action without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith. The
termination of any Proceeding by judgment, order of court, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption for purposes of any provision of this Agreement
that Indemnitee did not act in good faith, in a manner which he or she
reasonably believed to be in the best interests of the Corporation, or with
respect to any Proceeding of a criminal nature, that such person had reasonable
cause to believe that his or her conduct was unlawful.
5. Advances of Expenses.
--------------------
(a) Before the final disposition of any Proceeding, the Corporation
shall advance funds to pay for or reimburse the reasonable expenses
incurred by Indemnitee, if Indemnitee is a party to that Proceeding because
he or she is a director and/or officer of the Corporation, if Indemnitee
delivers to the Corporation:
(i) A written affirmation of his or her good faith belief that
he or she has met the relevant standard of conduct described in Section
3 above; and
(ii) Indemnitee's written undertaking to repay any funds
advanced if it is ultimately determined that Indemnitee is not entitled
to indemnification under the provisions of the Code or under this
Agreement. No security for the performance of any such undertaking shall
be required, and any such undertaking shall be accepted by the
Corporation without regard to the financial capacity of Indemnitee to
perform his or her obligations thereunder.
(b) Authorizations under subsection (a) above shall be made:
-3-
<PAGE>
(i) by the Board of Directors,
(A) when there are two or more Disinterested Directors (as
such term is defined in the Code), by a majority vote of all of
the Disinterested Directors (a majority of whom shall for such
purpose constitute a quorum) or by a majority of the members of a
committee of two or more Disinterested Directors appointed by such
a vote; or
(B) when there are fewer than two Disinterested Directors,
then by the affirmative vote of a majority of directors present,
in the presence of a quorum, unless the vote of a greater number
of directors is required for action by the board and in which
authorization directors who do not qualify as Disinterested
Directors may participate; or
(ii) by the shareholders, but the shares owned or voted under the
control of Indemnitee may not be voted on the authorization.
6. Right of Indemnitee to Indemnification Upon Application; Procedure Upon
-----------------------------------------------------------------------
Application. Without limiting the obligation of the Corporation to promptly
- -----------
make payments in respect of Expenses in accordance with Section 5, any
indemnification under Sections 3 and 4 shall be made no later than 30 days after
receipt by the Corporation of the written request of Indemnitee, provided a
determination has been made for a specific Proceeding that indemnification of
Indemnitee is permissible under the circumstances because Indemnitee has met the
relevant standard of conduct set forth in Section 3 or 4, as the case may be.
Such determination shall be made within said 30 days period:
(a) if there are two or more Disinterested Directors, by the Board of
Directors by a majority vote of all of the Disinterested Directors (a
majority of whom shall for such purpose constitute a quorum) or by a
majority of the members of a committee of two or more Disinterested
Directors appointed by such a vote;
(b) by special legal counsel selected (i) in the manner described in
subsection (a) of this Section or, (ii) if there are fewer than two
Disinterested Directors, selected by the Board of Directors (in which
selection directors who do not qualify as Disinterested Directors may
participate); or
(c) by the shareholders, but shares owned or voted under the control
of Indemnitee may not be voted on the determination.
The right to indemnification or advances as provided by this Agreement shall be
enforceable by Indemnitee in any court of competent jurisdiction. The burden of
proving that indemnification is not appropriate shall be on the Corporation.
Indemnitee's Expenses incurred in connection with
-4-
<PAGE>
successfully establishing his or her right to indemnification, in whole or in
part, in any such Proceeding shall also be indemnified by the Corporation.
7. Indemnification Hereunder Not Exclusive. The indemnification provided
---------------------------------------
by this Agreement shall not be deemed exclusive of any other rights to which
Indemnitee may be entitled under the Code or the Articles of Incorporation or
Bylaws of the Corporation, any other agreement, any vote of stockholders or
Disinterested Directors, or otherwise, either as to action in his or her
official capacity or as to action in any other capacity. To the extent that
Indemnitee otherwise would have any greater right to indemnification under any
provision of the Code or the Articles of Incorporation or Bylaws of the
Corporation as in effect on the date hereof, Indemnitee will be deemed to have
such greater right hereunder, and, to the extent that any change is made to the
Code (whether by legislative action or judicial decision) or the Articles of
Incorporation or Bylaws of the Corporation, which permits any greater right to
indemnification than that provided under this Agreement as of the date hereof,
Indemnitee will be deemed to have such greater right thereunder. The
Corporation will not adopt any amendment to the Articles of Incorporation or
Bylaws of the Corporation, the effect of which would be to deny, diminish or
encumber Indemnitee's right to indemnification under the Code or the Articles of
Incorporation or Bylaws of the Corporation, or otherwise, as applied to anything
actually or allegedly done or failed to be done in whole or in part prior to the
date upon which the amendment was approved by the Corporation's Board of
Directors, its shareholders, or both, as the case may be.
The rights to indemnification and advancement of expenses under this
Agreement shall continue as to Indemnitee even though he or she may have ceased
to be a director and/or officer, or to serve in any capacity for or on behalf of
the Corporation or any other enterprise, and shall inure to the benefit of the
heirs, executors, administrators or estate of Indemnitee.
8. Partial Indemnification. In the event that Indemnitee is entitled
-----------------------
under any provision of this Agreement to indemnification by the Corporation for
a portion, but less than the entire amount of any Expenses, judgments, fines,
penalties or amounts paid or payable in settlement, the Corporation shall fully
indemnify Indemnitee in accordance with the applicable provisions of this
Agreement for such portion of such Expenses, judgments, fines, penalties, or
amounts paid in settlement.
9. Liability Insurance and Funding. To the extent the Corporation
-------------------------------
purchases or maintains any insurance policy or policies providing directors' and
officers' liability or similar insurance, Indemnitee shall be covered by such
policy or policies, in accordance with its or their terms, to the maximum extent
of the coverage available for any director of officer of the Corporation.
Indemnitee's Expenses in connection with successfully obtaining any recovery
under any such directors' and officers' liability insurance or similar policy
shall also be indemnified by the Corporation. The Corporation may, but shall
not be required to, create a trust fund, grant a security interest, or use other
means (including, without limitation, procuring one or more letters of credit)
to ensure the payment of such amounts as may be necessary to satisfy its
obligations to provide indemnification and advance Expenses pursuant to this
Agreement.
-5-
<PAGE>
10. Subrogation. In the event that the Corporation provides any
-----------
indemnification or makes any payment to Indemnitee in respect of any matter in
respect of which indemnification or the advancement of expenses is provided for
herein (regardless of whether such indemnification or payment is provided or
made under the provisions of this Agreement, the Code, Articles of
Incorporation, or Bylaws of the Corporation, or otherwise), the Corporation
shall be subrogated to the extent of such indemnification or other payment to
all of the related rights of recovery of Indemnitee against other persons or
entities. Indemnitee shall execute all papers reasonably required and shall do
everything that may be reasonably necessary to secure such rights and enable the
Corporation effectively to bring suit to enforce such rights (with all of
Indemnitee's Expenses to be reimbursed by or, at the option of Indemnitee,
advanced by the Corporation).
11. No Duplication of Payments. The Corporation shall not be obligated
--------------------------
under this Agreement to provide any indemnification or make any payment to which
Indemnitee is otherwise entitled hereunder to the extent, but only to the
extent, that such indemnification or payment hereunder would be duplicative of
any amount actually received by Indemnitee pursuant to any insurance policy, the
Code or the Articles of Incorporation or Bylaws of the Corporation, or
otherwise.
12. Saving Clause. If any provision of this Agreement or the application
-------------
of any provision hereof to any circumstance is held to be illegal, invalid, or
otherwise unenforceable, the remainder of this Agreement and the application of
such provision to any other circumstance shall not be affected, and the
provision so held to be illegal, invalid, or otherwise unenforceable shall be
reformed to the extent (but only to the extent) necessary to make it legal,
valid, and enforceable.
13. Notice. Indemnitee shall give to the Corporation notice in writing as
------
soon as practicable of any claim made against him or her for which
indemnification will or could be sought under this Agreement; provided, however,
that any failure to give such notice to the Corporation will relieve the
Corporation from its obligations hereunder only if, and to the extent that, such
failure results in the forfeiture of substantial rights and defenses. Notice to
the Corporation shall be directed to the Corporation (to the attention of the
President) at its principal executive office or such other address as the
Corporation shall designate in writing to Indemnitee. Notice shall be deemed
received when hand delivered or dispatched by electronic facsimile transmission
(with receipt thereof orally confirmed), or three calendar days after having
been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or one business day after having been sent for next-
day delivery by a nationally recognized overnight courier. In addition,
Indemnitee shall give the Corporation such information and cooperation as it may
reasonably require.
14. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute one and the same instrument.
-6-
<PAGE>
15. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Nevada, without giving effect to the
principles of conflicts of law thereof.
16. Successors. This Agreement shall be binding upon the Corporation and
----------
its successors, including without limitation any person acquiring directly or
indirectly all or substantially all of the business or assets of the Corporation
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor will thereafter be deemed the "Corporation" for purposes of this
Agreement), but will not otherwise be assignable, transferable or delegatable by
the Corporation. The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization, or otherwise) to
all or substantially all of the business or assets of the Corporation, to assume
and agree in writing to perform this Agreement, expressly for the benefit of
Indemnitee, in the same manner and to the same extent the Corporation would be
required to perform if no such succession had taken place.
[SIGNATURES ON FOLLOWING PAGE]
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and sealed as of the date and year first above written.
MILLIONAIRE.COM
By:__________________________________
Title:_______________________________
[SEAL]
[_____________________________________]
[SEAL]
_______________________________________
Name
-8-
<PAGE>
Exhibit 10(j)
ROBERT L. WHITE
MILLIONAIRE.COM
STOCK OPTION AGREEMENT
This Stock Option Agreement is entered into this 15th day of December,
1998, between Millionaire.Com, a Nevada corporation, (hereinafter called
"Optionor"), and Robert L. White, the undersigned optionee, (hereinafter called
"Optionee") pursuant to the Stock Option Plan of Millionaire.Com, (hereinafter
the "Plan"). In consideration of good and valuable consideration, the receipt,
adequacy and legal sufficiency of which are hereby acknowledged, the parties
agree as follows:
1. Grant.
-----
Optionor hereby grants to Optionee an option to purchase 150,000 shares of
common stock of Optionor. If Optionee is an employee it is intended the Option
qualify as an incentive stock option ("Incentive Stock Option") under Section
422 of the Internal Revenue Code of 1986.
2. Price.
-----
The price of the shares of the common stock to be paid by Optionee to
Optionor upon the exercise of the option hereby granted shall be $1.00 per
share. This price has been set pursuant to paragraph 6 of the Plan.
3. Duration and Exercise of Options.
--------------------------------
A. The Option period shall be five years from the date hereof, or such
shorter period herein specified, except that such period shall be reduced with
respect to any Option as provided in the Plan in the event of death or
termination of employment or retirement of the Optionee, provided that the
Optionor may, in the case of merger, consolidation, dissolution or liquidation
of Optionor, accelerate the expiration date and the dates on which any part of
the Option shall be exercisable for all of the shares covered thereby, as
provided in the Plan.
<PAGE>
B. Anything to the contrary herein notwithstanding, if Optionee at the
time this Agreement is entered into owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of Optionor or
its parent or subsidiary corporations, the maximum base of option period
specified in paragraph 3.A. above shall be five (5) years.
C. The exercise of any Option and delivery of the optioned shares shall be
contingent upon receipt by Optionor of the full purchase price in cash.
D. No Incentive Stock Option may be exercised more than thirty (30) days
after termination of employment of the Optionee except as hereinafter provided.
E. Except as otherwise provided herein, or unless otherwise determined by
the Committee, every Option granted hereunder shall, upon its grant, be only
exercisable in accordance with the following vesting schedule: 20% after one
year and an additional 20% per year thereafter contingent upon continued
employment.
F. If Optionee is, at the time of exercise, a person who is regularly
required to report his ownership and changes of ownership of the common stock of
Optionor to the Securities and Exchange Commission and is subject to short swing
profit liability under the provisions of Section 16(b) of the Securities
Exchange Act of 1934 as the same, or any replacement rule, now exists, or may,
from time to time be amended, then the Optionee may only exercise Options and
Release Rights during the period beginning on the third business day and ending
on the twelfth business day following the release for publication of quarterly
or annual summary statements of sales and earnings. This condition shall be
deemed to be satisfied if the specified financial data appears (i) on a wire
service, (ii) in a financial news service, (iii) in a newspaper of general
circulation, or (iv) is otherwise made publicly available, and shall remain in
effect so long as it does not violate the law or any rule or regulation adopted
by appropriate governmental authority.
-2-
<PAGE>
G. Options may be exercised in whole or in part, but only with respect to
whole shares of stock.
H. Pursuant to Section 11 of the Plan the aggregate fair market value
(determined at the time of grant) of stock for which an employee may exercise
Incentive Stock Options under all plans of Company shall not exceed $100,000 per
calendar year. Any excess which may be exercised in any year shall be deemed
not to be Incentive Stock Options.
4. Non-Transferability.
-------------------
The option hereby granted shall not be transferable otherwise than by will
or by the laws of descent and distribution, and an Option may be exercised
during the lifetime of the Optionee only by him.
5. Purchase for Investment.
-----------------------
Optionee agrees that any shares of common stock purchased by him upon
exercise of the option hereby granted shall be purchased, taken and held by him
for his own account, for Investment and not with the Intention of resale or
distribution thereof at any fixed or determinable future time. Upon the exercise
of the option hereby granted, Optionee shall sign an "Investment Letter" in the
form and content acceptable to Optionor and Optionee agrees that a "stop
transfer order" shall be placed with the transfer agent of Optionor with respect
to such shares. Optionee agrees that no share of stock transferred to him
pursuant to this Agreement may be disposed of by Optionee within two (2) years
from the date of the granting of the Option nor within one (1) year after the
transfer of such share to said Optionee.
6. Anti-dilution.
-------------
In the event of a merger or consolidation of Optionor into or with any
other corporation or any stock dividend, stock split, recapitalization or other
transaction involving shares of common stock of Optionor, an appropriate
adjustment shall be made in the number of shares of common stock subject to this
Stock Option Agreement or in the purchase price payable in the event of exercise
of the option hereby granted in
-3-
<PAGE>
order to avoid dilution of the proportionate equity interest in Optionor
represented by the shares covered by the Stock Option Agreement or which may be
purchased for a specific sum upon exercise of the option hereby granted.
7. General.
-------
The following provisions are an integral part of this Stock Option
Agreement:
(a) This Agreement and the Option herein granted are expressly
subject to all the terms and conditions provided for in the Millionaire.Com
Stock Option Plan, the terms of which are incorporated herein by reference.
(b) This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of Optionor and the permitted
successors, permitted assigns, personal representatives, heirs and legatees
of the Optionee, and the entities, if any resulting from the
reorganization, consolidation or combination of the Optionor.
(c) If any provision of this Stock Option Agreement shall be found
to be void, voidable or unenforceable, the remaining provisions shall
nevertheless remain in force.
(d) This Agreement shall not be modified except as provided for in
the Plan or by an instrument in writing, signed by the parties hereto.
(e) The parties hereby agree that time is of the essence.
(f) If either party shall breach this Agreement, the defaulting
party shall pay reasonable attorney's fees and costs to the prevailing
party for the enforcement of this Agreement, whether or not legal process
is commenced.
(g) All notices required or permitted to be given hereunder shall
be duly given if hand delivered or mailed by registered or certified mail,
postage prepaid, addressed to the last known address of the party.
-4-
<PAGE>
EXECUTED effective the day and year first above written.
OPTIONOR:
MILLIONAIRE.COM
By: /s/
----------------------------------------------
OPTIONEE:
Robert L. White
-------------------------------------------------
Print Name Here
-5-
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
(1) U.S. Auctions, Inc., a Delaware corporation
(2) Life Style Media Acquisition Corp., a Pennsylvania corporation
<PAGE>
Exhibit 23
CONSENT OF GRANT THORNTON LLP
Millionaire.com
Bluffton, South Carolina
We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited interim financial
information of Millionaire.com for the periods ended September 30, 1999 and
1998. We did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above is being used in this
Registration Statement.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant within the meaning of Sections
7 and 11 of that Act.
/s/ GRANT THORNTON LLP
Atlanta, Georgia
December 21, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 109,869
<SECURITIES> 1,038,928
<RECEIVABLES> 1,128,649
<ALLOWANCES> 250,000
<INVENTORY> 479,174
<CURRENT-ASSETS> 2,681,443
<PP&E> 298,759
<DEPRECIATION> 26,737
<TOTAL-ASSETS> 4,512,556
<CURRENT-LIABILITIES> 1,669,538
<BONDS> 0
0
0
<COMMON> 8,565
<OTHER-SE> 6,111,710
<TOTAL-LIABILITY-AND-EQUITY> 4,512,556
<SALES> 2,636,047
<TOTAL-REVENUES> 2,636,047
<CGS> 2,593,724
<TOTAL-COSTS> 2,593,724
<OTHER-EXPENSES> 3,616,291
<LOSS-PROVISION> 200,397
<INTEREST-EXPENSE> 113,631
<INCOME-PRETAX> (3,601,277)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,601,277)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,601,277)
<EPS-BASIC> (0.42)
<EPS-DILUTED> (0.42)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 3,226,634
<SECURITIES> 0
<RECEIVABLES> 112,148
<ALLOWANCES> 49,603
<INVENTORY> 3,891
<CURRENT-ASSETS> 3,316,203
<PP&E> 76,838
<DEPRECIATION> 1,545
<TOTAL-ASSETS> 5,082,962
<CURRENT-LIABILITIES> 565,891
<BONDS> 0
0
0
<COMMON> 7,900
<OTHER-SE> 4,092,375
<TOTAL-LIABILITY-AND-EQUITY> 5,082,962
<SALES> 446,475
<TOTAL-REVENUES> 446,475
<CGS> 295,017
<TOTAL-COSTS> 295,017
<OTHER-EXPENSES> 919,909
<LOSS-PROVISION> 49,603
<INTEREST-EXPENSE> 30,957
<INCOME-PRETAX> (797,051)
<INCOME-TAX> 0
<INCOME-CONTINUING> (797,051)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (797,051)
<EPS-BASIC> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
