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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange
Act of 1934
GLOBAL DATATEL, INC.
(Exact name of Registrant in its charter)
NEVADA 87-0067813
(State of organization) (I.R.S. Employer Identification No.)
3333 CONGRESS AVENUE, SUITE 404, DELRAY BEACH, FLORIDA 33445
(Address of principal executive offices) (zip code)
Registrant's Telephone Number, including area code: (561) 276-8260
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act: Common Stock
You should not rely on forward-looking statements in this registration
statement. This registration statement contains forward-looking statements that
involve risks and uncertainties. We use words such as "anticipates," "believes,"
"plans," "expects," "future," "intends" and similar expressions to identify
these forward-looking statements. This registration statement also contains
forward-looking statements attributed to certain third parties relating to their
estimates regarding the growth of the Internet, Internet advertising and online
commerce markets and spending. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this registration
statement. Our actual results could differ materially from those anticipated in
these forward-looking statements for many reasons.
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PART I
ITEM 1. BUSINESS.
(a) DEVELOPMENT OF BUSINESS.
Global DataTel, Inc., was originally incorporated in the State of Utah in 1980,
as LaPlate Oil and Mining, Inc., and changed its name to Gold Coast Resources,
Inc. in 1982. The Company's state of incorporation was changed in December, 1996
to the State of Nevada. In December, 1998, the Company's name was changed to
Global DataTel, Inc. and the existing officers and directors of the Company
resigned, and new officers and directors were elected.
In 1998, a number of significant transactions took place. The Company, in
September 1998, acquired International Computer Resources, Inc. ("ICR"), a
Florida corporation, which does business as an IBM computer reseller, and
Mantenimiento Electronico de Systemas, Ltd. ("MES"), a Colombian corporation,
which does business as a computer integrator and service provider.
In November, 1998, Global acquired three additional Colombian corporations, Casa
Informatica, S.A., ("CASA"), DLR & CIA, Ltda., ("DLR") and Microstar, Ltda.
("MICRO"). CASA, an IBM computer reseller, was acquired for $849,000.00 in cash
and a promissory note (since paid) and 392,000 restricted shares of the
Company's common stock valued at $1,960,000. DLR, an IBM computer reseller and
system integrator, was acquired for a total consideration of $600,000, which was
paid $300,000 in cash and a promissory note (since partially paid) and 60,000
restricted shares of the Company's common stock valued at $300,000. The
remaining payments under the promissory note to DLR were placed in escrow while
the parties negotiate a settlement. The remaining balance on, MICRO, also a IBM
computer reseller and system integrator, was acquired for a total consideration
of $500,000, which was paid $150,000 in cash and a promissory note (since paid)
and 70,000 restricted shares of the Company's common stock valued at $350,000.
Global now has three wholly owned or controlled operating subsidiaries:
Global DataTel de Colombia, S.A. (GDC), a Colombian corporation which is
subsidiary, consisting of four
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acquired companies in Colombia, MES, CASA, DLR and MICRO. These companies
are involved in the computer system integration business. Global owns
94.9% of the capital stock of GDC, with 100% of the voting rights. Under
Colombian law, a foreign entity cannot own more than 94.9% of a Colombian
corporation.
On Line Latin America, S.A. (OLA), now known as ehola.com S.A., a
Colombian corporation, is in the Internet service business. Global owns
94.9% of the capital stock of OLA, with 100% of the voting rights.
eHOLA.com, Inc, (eHOLA), a Nevada corporation (formerly Electronic Latin
America On-Line, Inc.), a wholly owned subsidiary, is in the Internet
service business.
Global DataTel de Colombia was incorporated under the laws of Colombia on May
10, 1999, in Bogota, Colombia. The company was the combination of the 4
Colombian acquired companies, DLR, CASA, Microstar, and MES. OLA was
incorporated under the laws of Colombia on January 3, 1999, in Barranquilla,
Colombia, and subsequently changed its name to ehola.com S.A. The corporation
was a newly formed company. Ehola.com,Inc., formerly known as On Line Latin
America,Inc. was incorporated on December 31,1998, in Nevada. The corporation is
a newly formed company.
The operations of International Computer Resources, Inc. ("ICR") are now
conducted under Global DataTel, Inc., and form the North American component of
the Information Systems Division.
Gold Coast Resources prior to September 1998 was involved in the marketing of
the "Travel Agent's Hotel Guide", a publication that provided travel agents
exposure to Hotels and hotels around the world. Prior to that, Gold Coast
Resources was involved in oil, gas, mining and mineral investments.
On December 14, 1998, the Company sold its interest in a subsidiary, The Travel
Agent's Hotel Guide, Inc., a Nevada corporation, to Ameriresources Technologies,
Inc. in consideration for a convertible debenture in the face amount of
$3,350,000, bearing interest at the rate of seven (7%) percent per annum and
convertible in three years into common stock of Ameriresources. Gold Coast
Resources had acquired a 20% interest in the Travel Agent's Hotel Guide, Inc. on
August 17, 1998, by payment of 7,000,000 shares of Common Stock (subsequently
reverse split to 3,500,000) to David Newren, a
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former officer and director of the Company. The Company had previously acquired
an 80% interest.
At one time, Gold Coast Resources pursued mergers with Biostasis, Inc., Shoulder
Shade Products, Inc., Secure Bind, Inc., and Fox Broadcasting Inc., but
rescinded these transactions in August 1998, canceling the 1,000,000 shares of
preferred stock previously issued to each of these entities.
(b) NARRATIVE DESCRIPTION OF BUSINESS.
Global DataTel de Colombia, (GDC) is the largest operating subsidiary of Global,
with over 95% of its revenues and profits. This subsidiary is the South American
component of our Information Systems Division. The North American component of
our Information Systems Division presently accounts for approximately 5% of the
Company's revenues and profits. GDC is a midrange to large system integration
computer solution provider. In Colombia, GDC is authorized by various leading
high tech companies as a reseller. GDC represents such firms as IBM Corp.,
Compaq Computer, Microsoft, and Lotus. The GDC subsidiary has been authorized by
IBM de Colombia to resell midrange and personal computer systems and IBM's
operating system software and utilities in Colombia. We deal directly with IBM
de Colombia for order fulfillment. We are also authorized to resell Compaq Corp.
systems in Colombia. We can purchase directly or through their distributors as
best suits ours needs. The Microsoft Corp. has authorized GDC to be a Microsoft
Solution provider. The Lotus Corp., an IBM company, has authorized us to resell
their products. These products are primarily purchased through their authorized
distributors in Colombia. Global is also an authorized reseller in Colombia of
Global One telecommunications products and services. Global One is a corporation
owned jointly by Sprint, French Telecom, and Deutsche Telecom. They operate
Global One outside their primary markets. To date, we have had minimal success
in offering their services and products as a reseller.
The primary focus is to provide presale consulting to Colombia's largest
national, government, and international companies, to determine the best
solution to their particular information system requirements. Based upon this
analysis, GDC can provide clients with a fully integrated solution which may
include hardware, software and services from various sources. The products may
include an AS/400 mini-computer, which becomes the host system in a centric
computing architecture operating under
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IBM's proprietary OS/400 operating system. The applications suite that reside on
these hosts may include an ERP application such as JBA's System 21 product
localized and customized for each account. The Information Systems Division's
main business is to provide system consulting, resale of new micro, mini, or
mainframe hardware, as well as software and complementary contract services as
needed. These services may include help desk, contract programming, training,
and hardware/software maintenance contracts. Sale of new hardware typically may
include wintel based micro computers such as IBM desktops, IBM AS/400-RS/6000
mini computers, and IBMS/390 mainframes. A typical sales cycle begins with
either a sales lead from one of our suppliers such as IBM, or a direct outbound
sales call from one of our salespersons. We market primarily in Colombia , with
4 offices in the major cities. Our staff includes 170 employees, all full-time.
Customer support is determined by the product or service that has been supplied
to the account. In the case of new hardware, the supplier handles the warranty
directly and subsequently may sell an ongoing service agreement. Software
products may include Microsoft, Lotus, JBA, and several other complimentary
application software programs as may be deemed necessary in order to provide
satisfactory results. Services include various supplemental after sale products
such as executive training, employee implementation, and long term contractual
maintenance agreements.
Our largest order to date is from La Cachareria La Catorce a large supermarket
chain headquartered in Cali, Colombia. This order is primarily for IBM Point of
sale hardware and software. To date, we have fulfilled approximately 850,000 of
the contract rollout. The year 2000 should constitute $500,000 with the balance
subject to review.
The customer support for software and services, may reside with Global, with
certain levels of support accorded our company from the supplier. New product
developments include e-commerce solutions as well localization of some software
programs for our suppliers such as JBA Intl. At the moment we have no
intellectual property rights, or patents, and licenses.
The division operates across a broad horizontal marketplace and is not limited
to any single vertical market. We compete in a very competitive marketplace
against not only other integrators, but also manufacturers such as Sun
Microsystems, as well as IBM themselves in certain instances. Management
believes that Global is well positioned in the marketplace and has a good
reputation in fulfilling the client contracts. Our competitors however, may
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have greater resources or superior products, than our offerings. The competitive
nature of system integration requires a talented workforce to compete
effectively. The competition may have expertise in certain areas that would give
that company an edge in winning a contract and vice versa.
Because of our concentration of business in Colombia, we are dependent on the
laws of that country to offer our products and services. At present there is
substantially no known detrimental regulations concerning the products we sell,
such as IBM, Compaq and other computer manufacturers, as well the services we
provide as part of standard set of offering to the commercial sector in
Colombia. The Internet division has to date not been adversely effected by any
governmental rules or regulatory laws. It is possible legislation may be enacted
that could effect both divisions ability to conduct business in Colombia.
On Line Latin America, S.A. (now ehola.com S.A.), and eHOLA.com operate under
our On Line Services Division. This division's main business is to provide
dial-up Internet access in the USA, Central, and South America, which is
marketed under the eHOLA.com name. On line operations commenced April 22, 1999,
and are considered to be in the testing phase. The division is marketed to both
consumers and businesses in each of the geographic locations in which it
provides Internet access. We have only recently commenced advertising on our
portal, and at present revenues are negligible from subscriptions and
advertising. We presently offer Internet access in the following countries:
Argentina, Bolivia, Brazil, Chile, Colombia, El Salvador, Equador, Guatemala,
Mexico, Paraguay, Peru, U.S.A. and Venezuela. We are in testing phase, and are
actively seeking subscribers. eHOLA.com offers, for one basic yearly
subscription price per country, unlimited Internet access in the countries
listed above, the service also includes the world wide Web multilingual portal
www.ehola.com. The service also includes free e-mail and Microsoft Internet
Explorer browser. The eHOLA network is organized around 14 content specific
channels. eHOLA.com is a single point of entry to the eHOLA network of sites and
is updated daily to promote content and community, including channel highlights.
We currently have approximately 10 employees responsible for the content of our
channels.
The Internet in Latin America is still in its infancy as compared to the USA or
Europe as looked at from a population penetration percentage. Although the
market place is relatively new, competition is very fierce. The competitors
include local
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ISP's as well as newly formed multinational providers of both access and
content. The competitive environment in the consumer segment, which includes
household and small business dial-up monthly subscriptions, is dominated by the
large National telecom providers, such as Telmex in Mexico, and Telecom in
Colombia. With vastly greater resources both monetarily and through established
distribution channels, these nationals present a strong competitive entry to the
marketplace. EHOLA.com competes with these companies by building a reputation
for superior service and unique Internet offerings such as Internet broadcasting
of radio and video.
We currently have 333 Internet access subscribers. We have approx. 2,000
registered users. The subscriptions revenues to date are $13,842. Advertising
revenues to date are $5,000.
We are not dependent upon any major customer at the present time. Time to time
in our history we have had large contracts with government entities. Such large
government contracts are, in the opinion of management, an exception.
As we purchase products only in connection with our sales, we do not experience
backlogs.
The South American component of our Information Systems Division, GDC, accounts
for approximately 95% of the Company's revenues and profits The North American
component of our Information Systems Division presently accounts for
approximately 5% of the Company's revenues and profits. EHOLA has recorded
minimal revenues.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Except for historical information, the materials contained in this Management's
Discussion and Analysis or Plan of Operation is forward-looking (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) and involve a number of risks and uncertainties. These include the
Company's losses, lack of working capital, general economic downturns, economic,
social and political conditions in Colombia and other parts of Central and South
America, and other risks detailed from time to time in the Company's filings
with the Securities and Exchange Commission. Although forward-looking statements
in this Report reflect the good faith judgment of the Company's management, such
statements can only be based on facts and
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factors currently known by the Company. Consequently, forward-looking statements
are inherently subject to risks and uncertainties, actual results and outcomes
may differ materially from the results and outcomes discussed in the
forward-looking statements. Readers are urged to carefully review and consider
the various disclosures made by the Company in this Report, as an attempt to
advise interested parties of the risks and factors that may affect the Company's
business, financial condition and results of operations and prospects.
Year Ended December 30, 1999 as Compared to the Year Ended December 30, 1998
During 1998, the Company changed its focus, disposing of the
operations previously carried on by the Company (primarily related to the
publication of the Travel Agents Hotel Guide) and acquiring five companies
operating in the computer and electronics industry and a developing company in
the internet service business. As a result, comparison of the Company's
operations would not be meaningful. The following table summarizes the results
of operations for the acquired companies:
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
<S> <C> <C>
Net sales $13,836,785 $21,457,159
Cost of goods sold 8,411,701 15,620,783
Gross profit 5,425,084 5,836,376
Selling, general & administrative expenses 4,345,900 2,768,733
Payroll and related expenses 3,541,784 2,626,204
(Loss) profit from operations (2,462,600) 441,439
</TABLE>
Net sales for the year ended December 31, 1999 ("Fiscal 1999") decreased by
$7,620,374, or 36%, to $13,836,785, as compared to $21,457,159 for the year
ended December 31, 1998 ("Fiscal 1998"). This decrease was attributable
primarily to having the Company's main supplier sell directly to clients, with
the Company receiving a commission on the sale. In this way, the Company limited
its credit risk. Beginning during the first quarter of 2000, the Company
reinstituted the policy of purchasing equipment from this supplier.
The Company's gross profit for Fiscal 1999 decreased by $411,292, or 7%, to
$5,425,084, as compared to $5,836,376 for Fiscal 1998. The decrease in the gross
profit resulted primarily from the decrease in sales volume. The Company has
reduced the amount of inventory it keeps on hand and the related carrying
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costs as a result of the Company's main supplier selling directly to the
customer,
Selling, general and administrative expenses increased by $1,577,167, or 57% to
$4,345,900 in Fiscal 1999, as compared to $2,768,733 for Fiscal 1998. The
increase in these expenses relates to the costs associated with the commencing
of operations for ehola.
Payroll expenses increased by $915,580, or 35% to $3,541,784 in Fiscal 1999, as
compared to $2,626,204 in Fiscal 1998. The increase is due to the hiring of
additional staff such as marketing, design, and technical personnel. These
increases are primarily due to the Company's commitment towards increasing sales
and its related investment in internet e-commerce activities during the third
quarter of Fiscal 1999.
As a result of the above, the acquired companies on a proforma basis, had a loss
from operations totaling $2,462,600 in Fiscal 1999, as compared to income from
operations totaling $441,439 in Fiscal 1998.
Liquidity and Capital Resources [23, 26]
The Company's Current Ratio changed to 0.71 at December 31, 1999, as compared to
0.85 at December 31, 1998, as a result of an increase of other current assets,
accounts payable and accrued expenses. At December 31, 1999, the Company has a
working capital deficiency totaling $1,960,013. The deficiency primarily relates
to the funds expended for the purchase of Micro, DLR and Casa in 1998 and start
up costs relating to ehola. The Company incurred losses totaling $3,218,822
during Fiscal 1999, which it financed through increases in accounts payable,
accrued expenses, note payable from Surge Components, Inc and proceeds totaling
$300,000 from the issuance of stock.
As substantially all of the Company's operations are currently conducted in
Colombia, the Company is subject to special consideration and significant risks
not typically associated with Companies operating in North America and Western
Europe. These include risks associated with, among others, the political,
economic and legal environments and foreign currency exchange. The Company's
results may be adversely affected by changes in the political and social
conditions in Colombia, and by changes in governmental policies with respect to
laws and regulations, anti-inflationary measures, currency conversion,
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remittance abroad, and rates and methods of taxation among other things. Since
its working capital has been limited, obligations and commitments have gone
unfulfilled. The Company's current financial situation, as well as the ongoing
funding to support the initial operations of ehola, will require the Company to
obtain additional financing in order to meet its obligations during the next
twelve months.
The Company has had losses generated from operations for several years. These
losses have generally been financed through stockholder loans, proceeds from
stock issuances or the issuance of shares to pay for services rendered to the
Company. During 1998, Gold Coast issued 1,198,500 shares of its common stock to
officers, directors, employees and others for services rendered. The shares were
valued at $.20 per share. During 1998, Gold Coast issued 2,870,000 shares of its
common stock for cash at $.20 per share pursuant to rule 504 of Regulation D. On
February 5, 1999 the Company did an offering under Rule 504 of Regulation D for
100,000 shares of its common stock at $3.00 per share. The offering was
subscribed to in full by a related party.
On December 14, 1998, the Company sold its interest in a subsidiary, The Travel
Agent's Hotel Guide, Inc., a Nevada corporation, to Ameriresource Technologies,
Inc. in consideration for a convertible debenture in the face amount of
$3,350,000, bearing interest at the rate of seven (7%) percent per annum and
convertible in three years into common stock of Ameriresource. Gold Coast
Resources had acquired 20% interest in the Travel Agent's Hotel Guide, Inc.
company on August 17, 1998, by payment of 7,000,000 shares of Common Stock
shares to David Newren, a former officer and director of the Company. The
remaining 80% had previously been acquired by the issuance of 600,000 shares of
Gold Coast Resources common stock.
At one time, Gold Coast Resources pursued mergers with Biostasis, Inc., Shoulder
Shade Products, Inc., Secure Bind, Inc., and Fox Broadcasting Inc., but
rescinded these transactions in August 1998, canceling the shares of preferred
stock previously issued to each of these entities.
On September 30, 1998, the Company acquired all of the outstanding stock of ICR
in exchange for 105,000 shares of convertible preferred stock and 4,243,843
shares of common stock. The net assets acquired and liabilities assumed
approximated $90,000 and $190,000, respectively. The purchase has been reported
as a reverse acquisition.
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On September 30, 1998, the Company acquired MES for 357,143 common shares of the
Company's common stock, valued at the book value of MES. The net assets acquired
and liabilities assumed approximated $1,152,000 and $913,000, respectively.
On November 30, 1998, the Company acquired DLR for $300,000 ($100,000 due at
closing and five monthly installments of $40,000 thereafter, as defined) in
cash, and 60,000 shares of the Company's common stock, valued at $3.00 per
share. The net assets acquired and liabilities assumed approximated $3,527,000
and $1,786,000, respectively. The acquisition resulted in goodwill of
approximately $502,000. The Company did not make the payments as required and is
in default on the remaining obligation. In March 2000, the remaining payments
under the agreement were placed in escrow while the parties negotiate a
settlement.
On November 30, 1998, the Company acquired Micro for $150,000, payable in six
consecutive monthly payments from the date of closing, and 70,000 shares of the
Company's common stock, valued at $3.00 per share. The net assets acquired and
liabilities assumed approximated $890,000 and $748,000, respectively. The
purchase resulted in goodwill of approximately $218,000.
On November 30, 1998, the Company acquired Casa for $840,000, payable in 9
monthly payments of $93,333 commencing at the date of the closing and 392,000
shares of the Company's common stock, valued at $3 per share. The net assets
acquired and liabilities assumed approximated $3,300,000 and $1,800,000,
respectively. The purchase resulted in goodwill of approximately $512,000.
At December 31, 1998 the Company has only one class of common stock outstanding
and a Series A Convertible Preferred Stock. The Series A Convertible Preferred
Stock has a liquidating value of no less than $35,000,000 and has preference
over all other stock in a liquidation. The conversion value is based on the
liquidating value and a maximum share price of 111 shares of common stock for
one share of preferred stock. There are no arrearages in preferred dividends. On
June 25, 1999, the shares were converted into 13,000,000 shares of the Company's
common stock.
On March 14, 1996, DLR obtained a mortgage from a bank for the purchase of their
office facility in Bogota, Colombia. The mortgage expires on March 2012 and had
an initial principal balance of $99,400. The mortgage agreement allows for an
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increase in the outstanding principal balance due to monetary adjustments as
mandated by the Colombian Central Bank.
The Colombian subsidiaries obtain short-term financing from banks and financing
companies. Interest on such obligations range between 34% and 44% annually and
is determined by the financing source subsequent to the availability of funds.
Most of these obligations are personally guaranteed by officers of the companies
and the balance owed as of December 31, 1999 approximated $450,000.
ICR has available a $100,000 line of credit, at 10% interest, personally
guaranteed by the majority stockholder of the Company, for working capital
purposes. As of December 31, 1999, the balance owed on this line of credit was
approximately $95,000.
The Colombian subsidiaries have credit facilities from IBM for the purchase of
computer equipment which are guaranteed by certain shareholders and officers of
the Colombian subsidiaries. The credit facilities at December 31, 1999
approximated $1,200,000 for Casa, $600,000 for DLR, and $150,000 for Micro.
In December 1999, the Company entered into an asset purchase agreement with
Surge Components, Inc. ("Surge") whereby Surge would acquire the assets of the
Company in exchange for stock to be treated as a "tracking stock" covering the
assets sold by the Company. Among other conditions, the completion of the
acquisition is conditioned on the approval of both Companies' stockholders and
successful completion of due diligence. The Company issued 1,000,000 shares of
the Company's Common Stock for investment banking services in connection with
this transaction.
In October 1999, the Company issued a subordinated Convertible Promissory Note
(the "Note") in the amount of $1,000,000. The Note is due on June 1, 2000 and
accrues interest at the rate of 10% per annum. Upon the successful completion of
the asset purchase by Surge, the Note is canceled and all interest accrued to
date will be forgiven. If the asset purchase with Surge is not completed by
February 28, 2000 or is not approved by the shareholders of both companies,
Surge at its sole discretion may convert the Note into the common stock of the
Company at a conversion price equal to 90% of the average closing price of the
Company's common stock for the twenty previous trading days. In January 2000,
the Note was cancelled to Surge and replaced with a new note totaling
$4,100,000.
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In February 2000, the Company replaced the previous Subordinated Convertible
Promissory Note ("Convertible Note") with Surge totaling up to $6,250,000.
Through February 29, 2000, $2,165,876 has been loaned to Global, and the
remaining $4,084,124 may be loaned to Global, upon satisfaction of certain
conditions. The Convertible Note accrues interest at the rate of 10% per annum.
Upon completion of the Company's acquisition by Surge, the Convertible Note and
all accrued interest will be forgiven. If the acquisition does not occur by July
30, 2000, Surge, at its own discretion, may convert this note into the common
stock of the Company on a dollar for dollar basis at a conversion price equal to
90% of the average closing price of the Company's Common Stock for the preceding
20 trading days or Surge may demand repayment. The Convertible Note is secured
by the pledging of certain shares of stock owned by the President of the
Company.
In April 1999, the Company entered into an option agreement with a consultant,
in partial payment for services rendered. The agreement grants 250,000 shares of
the Company's common stock, at an exercise price of $5.75 per share. The options
are non-dilutive. To date, no options have been exercised.
INFLATION
The effects of inflation have lessened in recent years as indicated by the
average consumer price index, which has been below 3% in each of the past two
years. The Company has generally been able to offset the impact of rising costs
through purchase price reductions. As a result, inflation has not had, nor is it
expected to have, a significant impact on the Company's business. However,
inflation and changing interest rates have had a significant effect on the
economy in general and, therefore, could affect the Company's future operating
results.
YEAR 2000 ISSUES
The Company is in the ongoing process of evaluating the effect of the year 2000
on its computer systems. At the actual turn of the century, we did not
experience any year 2000 difficulties.
ITEM 3. PROPERTIES.
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The Company presently maintains the following facilities:
Information Systems Division - North America
(a) Warehouse and sales office totaling approximately 2,500 sq.
ft. and an office suite totaling approximately 2,000 sq. ft. in Delray Beach,
Florida, which is leased through the year 2001. The amount of rent is
$37,200.00. The building is a commercial technical center with approximately 5
individual companies located directly adjacent.
Information Systems Division - South America
Bogota, Colombia- One sales office totaling 6,000 sq. ft., which
is leased through May, 2000. The annual rent is $69,600.00.
One service office totaling 4,000 sq. ft., which is leased
through April, 2001. The annual rent is $19,200.00; and
One administration building totaling 5,000 sq. ft., which is a
standalone structure that is 75% utilized and has enough room for expected
growth. This building is owned by the Company without major encumbrances other
than a first mortgage.
Cali, Colombia- One sales/technical office totaling 1200 sq. ft.,
which leased through January, 2000. The annual rent is $10,200.00.
Medillen, Colombia- One sales/technical office totaling 95 sq.
meters, which is leased through December, 1999. The annual rent is $6,600.00.
Barranquilla, Colombia- One sales/technical office totaling 2,500
sq. ft., which is leased through August, 2000. The annual rent is $19,200.00.
We are considering relocating to a central facility in Bogota,
Colombia in early 2000, which would replace the two rental offices there.
On Line Services Division - North America
The On Line Services Division shares the Information Systems
Division offices.
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On Line Services Division - South America
One administrative/sales/technical office of 5,000 sq. ft. in
Barranquilla, Colombia, which is leased through January, 2001. The annual rent
is $43,200.00.
Our present annual lease obligations for 1999 totals approximately $205,000.00.
Renewable leases provide for rental increases of 5%-10%.
All corporate facilities are covered by general business insurance policies.
Present utilization of our facilities is at approximately 75%.
We also utilize our suppliers' in-country backbone facilities to allow access to
our network, thereby eliminating any need for additional offices in separate
countries.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information known to Global regarding the
beneficial ownership, as defined in applicable regulations, of our common stock
as of May 3, 2000 by the following individuals or groups: each person or entity
who is known by Global to own beneficially more than 5% of our outstanding
stock; each of the Executive Officers identified in the Summary Compensation
Table; each director of Global; and, all directors and executive officers as a
group. Except as otherwise indicated, and subject to applicable community
property laws, the persons named in the table below have sole voting and
investment power with respect to all shares of common stock held by them.
Applicable percentage ownership in the following table is based on 23,891,954
shares of common stock outstanding as of May 3, 2000 (1). Common stock is the
only outstanding class of voting security of Global.
15
<PAGE> 16
<TABLE>
<CAPTION>
Name/Address No. of Shares (2) Percentage
Owner Class Beneficially Owned of Class
- ----- ----- ------------------ --------
<S> <C> <C> <C>
Richard Baker(3)(4) Common 4,250,144 17.5%
Rafael Delgado(3)(5) Common 144,816 less than 1%
Mario Habib(3)(6) Common 922,800 3.8%
Antonio Serrato(3)(7) Common 388,000 1.6%
AVG Family Trust(3) Common 3,592,929 15.0%
Lynn Tanner(8)(9) Common 3,792,928 15.9%
Robert P. DePalo(10) Common 1,700,000 7.1%
Old Oak Fund, Inc.(11) Common 1,794,000 7.5%
Officers and Directors as a Group Common 5,705,760 22.9%
(4 persons)
</TABLE>
(1) Does not include 1,000,000 shares held by International Technology
Marketing, Inc. as to which a stop order has been imposed at the
request of the Company and which the Company is seeking to have
cancelled.
(2) Assumes the exercise of all options (identified below) held by
management exercisable within 60 days, which would increase the
outstanding common stock by 1,000,000.
(3) Address c/o Global DataTel, Inc.
(4) Includes options held, but not exercised, to acquire an additional
350,000 shares at $7.12 per share.
(5) Includes options held, but not exercised, to acquire an additional
100,000 shares $7.12 per share.
(6) Includes options held, but not exercised, to acquire an additional
350,000 shares $7.12 per share.
(7) Includes options held, but not exercised, to acquire an additional
200,000 shares $7.12 per share.
(8) Address c/o David Kagel, Esq. 1801 Century Park East, Suite 2500,
Los Angeles, CA 90067
(9) Includes 459,595 shares held by Dolphin Waves, Inc.; 1,111,111
shares held by Surrey Management Ltd.; 1,111,111 shares held by
Walcon Industries, Inc.; and 1,111,111 held by Willside
International, Inc.
(10) Address 208-16 38th Avenue, Bayside, New York 11361
(11) Address 488 Madison Avenue, 8th Fl., New York NY 10022
16
<PAGE> 17
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth certain information with respect to our executive
officers and directors as of December 31, 1999.
<TABLE>
<CAPTION>
Name Age Position Held
---- --- -------------
<S> <C> <C>
Richard Baker 41 President, CEO, Chairman of the Board
Antonio Serrato 65 Vice-President, COO, Director
German Ramirez 55 CFO
Jerre Daye 50 Director
GLOBAL DATATEL DE COLOMBIA
Rafael Delgado 50 President
ON LINE LATIN AMERICA, S.A
AND eHOLA.com, INC.
Mario Habib 42 President
</TABLE>
RICHARD BAKER, PRESIDENT, CEO, CHAIRMAN OF THE BOARD OF DIRECTORS. Mr. Baker has
been President, CEO and Chairman of the Board of Directors of Global since
December, 1998. Mr. Baker founded International Computer Resources, Inc. ("ICR")
in April of 1992. ICR is a U.S. IBM Business Partner specializing in the IBM
AS/400 and RS/6000 mid-range platforms, and now a wholly owned subsidiary of
Global. Mr. Baker was also an owner of Mantenimiento Electronic de Systemas,
Ltd. ("MES"), a company incorporated in 1986, and involved in the maintenance of
IBM midrange and mainframe computer systems throughout the country of Colombia,
now also a subsidiary of Global. Mr. Baker has approximately 10 years experience
in Latin America business operations. Mr. Baker attended Palm Beach Community
College from 1985 to 1987.
ANTONIO SERRATO, VICE-PRESIDENT, COO and SECRETARY. Mr. Serrato has been
Vice-President and COO of Global since December 14, 1998 and Secretary since
December, 1999. Prior to that time, and since 1993, Mr. Serrato was General
Manager of MES, now a wholly owned subsidiary of Global. Prior to his employment
with MES, Mr. Serrato was an IBM World Trade vice president, with responsibility
over an extensive sales force. Mr. Serrato has extensive experience in Latin
America computer sales and management. Mr. Serrato received an engineering
degree from the National University, Bogota, Columbia in 1959.
17
<PAGE> 18
GERMAN RAMIREZ, CFO - Mr. Ramirez has been CFO since August 1999. Mr. Ramirez
was formerly director of finance for IBM de Colombia, having been employed by
IBM de Colombia from 1970 to 1995, when he retired. Mr. Ramirez received a B.A.
from Universidad de LaGrande, Colombia.
JERRE DAYE, DIRECTOR - Mr. Daye has been Director of Global since December,
1998. Mr. Daye is the President, since 1992, of Bayou Terrabone Real Estate, a
licensed auction and real estate company in Louisiana.
SUBSIDIARIES: OFFICERS
GLOBAL DATATEL DE COLOMBIA
RAFAEL DELGADO, PRESIDENT - Mr. Delgado has been President of Global DataTel De
Colombia, S.A., ("GDC"), a subsidiary of Global, since December, 1998. Prior to
that, Mr. Delgado was the founder, in 1993, of Casa Informatica, an IBM Business
partner in Colombia, which was acquired by Global. Casas' principal business was
system integration projects for midsize to large clients in Colombia. Mr.
Delgado has extensive experience in computer sales and management.
ON LINE LATIN AMERICA, S.A. AND EHOLA.COM, INC.
MARIO HABIB, PRESIDENT - Mr. Habib has been President of On Line Latin America,
S.A. ("OLA") and eHOLA.com, Inc. ("eHOLA"), wholly owned subsidiaries of Global,
since December, 1998. From 1979 to 1998 Mr. Habib was the General Manager of
Yidi Industries, a manufacturing concern. Mr. Habib received a bachelor's degree
in mechanical engineering from Purdue University in 1979.
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE
The table below summarizes the compensation awarded to, earned by or paid to the
named executive officer for services rendered to Global in all capacities for
the fiscal years ended December 31, 1997 and December 31, 1998, by each person
serving as Global's Executive Officers in the fiscal years ended December 31,
1998 and December 31, 1999.
18
<PAGE> 19
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Awards
------------
Annual Securities
Compensation Underlying
--------------------------- Options/SARs
Name Year Salary($) Bonus($) (#)
- ---- ---- --------- --------
<S> <C> <C> <C> <C>
99 $200,000 0 0.
Richard Baker 98 $ 75,000 0 0
President & CEO 97 $ 75,000 0 0
96 $ 75,000 0 0
99 $150,000 0 0.
Antonio Serrato 98 $ 75,000 0 0
Vice-President, 97 $ 80,000 0 0
COO 96 $ 75,000 0 0
99 $105,000 0
Rafael Delgado 98 $105,000 0 0
President of 97 $ 90,000 0 0
GDC 96 $ 60,000 0 0
99 $180,000
Mario Habib 98 $135,000 0 0
President of OLA 97 0 0 0
and eHOLA 96 0 0 0
</TABLE>
The above table reflects annual salaries for positions held in 1996, 1997 and
1998 with what are now our subsidiaries.
As of June 1, 1999, we have entered into employment agreements with the
following executive officers and key personnel:
RICHARD BAKER: A 3 year employment agreement as the President and
CEO of Global DataTel, Inc. with a base salary of $200,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $1,000,000.
ANTONIO SERRATO: A 3 year employment agreement as Vice President
and COO of Global DataTel, Inc. with a base salary of $150,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
RAFAEL DELGADO: A 3 year employment agreement as the President of
Global DataTel de Colombia, with a base salary of $80,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
MARIO HABIB: A 3 year employment agreement as the President of
eHOLA.com and On Line Latin America, S.A., with a
19
<PAGE> 20
base salary of $180,000 per year, discretionary bonuses and reimbursement of
business expenses, and life insurance with a death benefit of $100,000.
The employment agreements discussed above contained grants of the following
options to purchase common stock, which options are immediately exercisable:
RICHARD BAKER 350,000 options @ $ 7.12 each
ANTONIO SERRATO 200,000 options @ $ 7.12 each
RAFAEL DELGADO 100,000 options @ $ 7.12 each
MARIO HABIB 350,000 options @ $ 7.12 each
None of these options have been exercised.
On December 29, 1999, Mario Habib was granted options to purchase 550,000 shares
of the Company's common stock at $.52 per share pursuant to the Company's 1999
Incentive and Non-Qualified Stock Option Plan. These options were exercised in
February, 2000 under the cashless exercise provisions of the Plan, resulting in
the issuance of 492,800 shares to Mr. Habib.
The Company also has employment agreements with the following individuals:
ANTONIO HABIB: A 3 year employment agreement as the Regional
Sales Manager of Global DataTel de Colombia, at an annual salary of $60,000 per
year, discretionary bonuses and reimbursement of business expenses, and life
insurance with a death benefit of $100,000.
CARLOS MEJIA: A 3 year employment agreement as the General
Manager of Global DataTel de Colombia, at an salary of $65,000 per year,
discretionary bonuses and reimbursement of business expenses, and life insurance
with a death benefit of $100,000.
The employment agreements for these individuals also grant the following
options:
CARLOS MEJIA 25,000 options @ $7.12 each
ANTONIO HABIB 15,000 options @ $7.12 each
Each of the above have also executed confidentiality, non-solicitation and
non-competition agreements, which restrict the individual's activities for one
year after they cease working for us.
The Company's directors currently serve without compensation.
20
<PAGE> 21
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On September 30, 1998, the Company purchased 100% of the shares of International
Computer Resources, Inc. ("ICR") and Mantenimiento Electronico de Systemas, Ltd.
("MES"). ICR was formerly owned 33.3% by Richard Baker, Global's President, CEO
and Chairman of the Board, 33.3% by Dolphin Waves, Inc. and 33.3% by AVG Family
Trust. The consideration paid by Global to the former ICR shareholders,
consisted of 4,243,843 restricted shares of Global Common Stock, and 105,000
shares of Global Convertible Preferred Stock. MES was formerly owned 51% by Mr.
Baker and 49% by Antonio Serrato, Global's Vice President, COO and Secretary.
The consideration paid by Global to the former MES shareholders consisted of
357,153 restricted shares of Global Common Stock. (See "Consolidated Financial
Statements" and Notes thereto) eHOLA.com, Inc., previously owned solely by Mr.
Baker, was also acquired by Global for $1.00. In addition to the shares of the
company's common stock and preferred stock received by Mr. Baker, he has the
right to vote all of the other issued shares of the company's Series A
Convertible Preferred Stock.
In November, 1998, Casa Informatica, S.A., ("CASA") was acquired from Rafael
Delgado, President of our subsidiary, Global DataTel De Colombia, S.A., for a
total consideration of $2,800,000, which was paid $840,000 in cash and 392,000
shares of restricted Global common stock valued at $1,960,000.
In November, 1998, D.L.R. y Cia, Ltd., ("DLR") was acquired from Daniel Lopez,
Sales Manager of Global DataTel de Colombia, for a total consideration of
$600,000, which was paid $300,000 in cash and 60,000 shares of restricted Global
common stock valued at $300,000.
In November, 1998, Microstar, Ltd., ("MICRO"), was acquired from Mario Habib,
the President of eHOLA.com and On Line Latin America, S.A. and Antonio Habib,
the Regional Sales Manager of Global DataTel de Colombia, for a total
consideration of $500,000, which was paid $150,000 in cash 40,000 shares of and
restricted Global common stock valued at $350,000.
During Global's last fiscal year, and prior to change of control to present
management, the Company issued 1,198,500 shares of the Company's common stock to
certain former officers, directors and shareholders. Also, during the same
period, the Company
21
<PAGE> 22
issued 3,500,000 shares (post split) of the Company's Common Stock to a former
officer, director and principal shareholder of the Company, David Newren, for
his minority interest in Travel Agent's Hotel Guide, Inc., a former subsidiary
of the Company. (See "Consolidated Financial Statements" and Notes thereto).
On February 5, 1999, Global sold 100,000 restricted shares of its Common Stock
to AJL Investments, Inc., for $3.00, per share. AJL Investments was at that time
a 5% shareholder of the Company.
In 1997, the Company engaged in various transactions wherein preferred stock was
issued. The Company issued approximately 4,500,00 shares of preferred stock in
connection with with Biostasis, Inc., Shoulder Shade Products, Inc., Secure
Bind, Inc., Fox Broadcasting Inc. and the acquisition of Travel Agents Hotel
Guide, Inc. These preferred stock transactions were reversed in August, 1998.
(See "Consolidated Financial Statements" and Notes thereto).
During 1997, Gold Coast acquired 135,751 shares of Synfuels Technology, Inc. by
issuing 1,585,040 shares of its restricted common stock. An additional 30,125
shares were acquired by issuing 500,000 shares of its common stock pursuant to
an exemption under Regulation D. These shares were exchanged for 17.2 acres of
land in Henderson, Nevada. This land was subsequently lost through repossession.
Gold Coast's former President was also an officer of Synfuels Technology, Inc.
ITEM 8 DESCRIPTION OF REGISTRANT'S SECURITIES.
Our Certificate of Incorporation authorizes 50,000,000 shares of $0.001 par
value common stock. As of June 30, 1999, there were issued and outstanding
22,495,623 shares of common stock, after giving effect to the conversion in
June, 1999 of all issued Class A Preferred Stock into 13,000,000 shares of
common stock. There is no longer any preferred shares issued or outstanding.
The holders of common stock are entitled to one vote for each share held of
record on all matters to be voted on by the shareholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50 percent of the shares have the ability to elect the
directors. The holders of common stock are entitled to receive dividends when,
as, and if declared by the Board of Directors out of funds legally available
therefor. The Company has not, however, previously paid any cash dividends and
does not
22
<PAGE> 23
anticipate paying any cash dividends in the foreseeable future. In the event of
liquidation, dissolution or winding up of the Company the holders of common
stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities and after provision has been
made for each class of stock, if any, having preference over the common stock.
Holders of shares of common stock, as such, have no conversion, preemptive or
other subscription rights, and there are no redemption provisions applicable to
the common stock. All of the outstanding shares of common stock are, when
issued, fully paid and nonassessable.
The Company's Transfer Agent is Signature Stock Transfer, Inc., 14675 Midway
Road, Suite 221, Dallas, TX 75244.
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Our common stock has had a limited market in the Over-The-Counter Bulletin Board
(OTC-BB), under the Symbols "GCRI", GCRID, "GDIS", "GDISD" and "GDISE". The
stock was removed from trading on the OTC-BB on December 2, 1999. The following
is a summary of the high and low bid for each quarter (with the volume traded in
that quarter) since commencement of trading in February, 1997, as provided by
NASDAQ Trading & Market Services and the National Quotation Bureau:
<TABLE>
<CAPTION>
HIGH/ASK LOW/BID
<S> <C> <C>
1997
Q2 18.0000 1.2500
Q3 6.5000 0.7500
Q4 6.0000 0.5000
1998
Q1 5.0000 2.0000
Q2 2.8750 1.1250
Q3 10.0000 0.0625
Q4 20.0000 1.0000
1999
Q1 13.1250 5.8125
Q2 17.3750 5.6875
Q3 11.0000 5.0000
Q4 7.0000 .004
</TABLE>
23
<PAGE> 24
The Company had approximately 519 shareholders of record as of April 17, 2000.
Over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual transactions.
The Company has never declared or paid any dividends on its common stock and
does not anticipate paying any dividends on its common stock in the foreseeable
future.
ITEM 2 LEGAL PROCEEDINGS.
The Company has been named by Seven Oaks Holdings as a third-party defendant in
litigation in connection with the reissuance of a stock certificate for
approximately 400,000 shares, with restrictive legend. A shareholder of the
Company had pledged the shares to Seven Oaks Holdings in connection with a loan
transaction. The Company believes that it has meritorious defenses to such
action.
On October 5, 1999, the United States Securities and Exchange Commission ("SEC")
issued a Formal Order Directing Private Investigation pursuant to Section 20(a)
of the Securities Act and Section 21(a) of the Exchange Act in the Matter of
Global DataTel, Inc., to determine if any acts or practices were in violation of
Sections 17(a) and 17(b) of the Securities Act and Section 10(b) of the Exchange
Act and Rule 10b-5 promulgated thereunder. The Company believes that the SEC's
investigation is focused on the accuracy of information published by the
Company. The Company has responded to all requests for documentary information
sought by the SEC in its investigation. The Staff has taken testimony in this
matter.
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES.
In December, 1998, the Company retained as auditors, Infante, Lago & Company, as
that firm was familiar with dealing with Latin American companies. Prior
thereto, the Company's auditors were Schvaneveldt & Company. The change was not
due to any disagreement in accounting principles or practices followed by the
Company. On December 2, 1999, the Registrant was informed by Jesus Lago, CPA,
the engagement partner responsible for Global
24
<PAGE> 25
DataTel, Inc.'s audit, that he had resigned from the firm of Infante, Lago &
Company and that the Registrant must retain (i) Roger Infante, CPA, (ii) Mr.
Lago's new firm, the DeCarlo group or (iii) a new accounting firm. On December
16, 1999, the registrant retained the firm of Seligson & Giannatasio as its new
auditors. A Form 8-K was filed with regard to this change on January 10, 2000.
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES.
In August, 1998, the Company, then known as Gold Coast Resources, Inc., issued
2,870,000 shares of common stock for cash at $0.10 per share pursuant to Rule
504 of Regulation D.
On February 5, 1999, the Company sold 100,000 restricted shares of its Common
Stock to AJL Investments, Inc., for $3.00, per share, pursuant to Rule 504 of
Regulation D. This placement did not involve public solicitation or
advertisement.
In March, 1999, the Company entered into a subscription agreement with Langsdale
Enterprise Ltd. for the sale of 43,750 restricted shares at $8.00 per share for
the total consideration of $350,000. This placement did not involve public
solicitation or advertisement.
Pursuant to Rule 504, the aggregate of the shares did not exceed $1,000,000 over
a twelve-month period.
Each purchaser of the securities described above has represented that he/she/it
understands that the securities acquired may not be sold or otherwise
transferred absent registration under the Securities Act or the availability of
an exemption from the registration requirements of the Securities Act, and each
certificate evidencing the securities owned by each purchaser bears or will bear
upon issuance a legend to that effect.
ITEM 5 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company's Bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the Securities Act
of 1933 (the "33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes
allow a company to indemnify its officers, directors, employees, and agents from
any threatened, pending, or completed action, suit,
25
<PAGE> 26
or proceeding, whether civil, criminal, administrative, or investigative, except
under certain circumstances. Indemnification may only occur if a determination
has been made that the officer, director, employee, or agent acted in good faith
and in a manner which such person believed to be in the best interests of the
company. A determination may be made by the shareholders; by a majority of the
directors who were not parties to the action, suit or proceeding confirmed by
opinion of independent legal counsel; or by opinion of independent legal counsel
in the event a quorum of directors who were not a party to such action, suit or
proceeding does not exist. Provided the terms and conditions of these provisions
under Nevada law are met, officers, directors, employees and agents of the
Company may be indemnified against any cost, loss, or expense arising out of any
liability under the '33 Act. Insofar as indemnification for liabilities arising
under the '33 Act may be permitted to directors, officers and controlling
persons of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification for violations of the
'33 Act is against public policy and is, therefore, unenforceable.
PART F/S
FINANCIAL STATEMENTS
Consolidated Financial Statements of Global DataTel, Inc. and its Subsidiaries:
Accountant's report of Seligson & Giannattasio LLP dated April
16, 2000.
Consolidated Balance Sheets as of December 31, 1999 and December
31, 1998
Consolidated Statements of Operations and Comprehensive Income
for the years ended December 31, 1999 and December 31, 1998.
Consolidated Statements of Shareholder's Deficiency
26
<PAGE> 27
Consolidated Statements of Cash Flows for the years ended
December 31, 1999 and December 31, 1998
Notes to Financial Statements
Financial Statements of Casa Informatica, S.A:
Accountant's report of Seligson & Giannattasio LLP dated April
14, 2000.
Balance Sheets as of November 30, 1998 and December 31, 1997
Statements of Operations and Comprehensive Income for the eleven
months ended November 30, 1998 and year ended December 31, 1997
Statements of Shareholder's Equity
Statements of Cash Flows for the eleven months ended November 30,
1998 and year ended December 31, 1997
Notes to Financial Statements
Financial Statements of Daniel Lopez R & Compania Ltda.:
Accountant's report of Seligson & Giannattasio LLP dated April
14, 2000.
Balance Sheets as of November 30, 1998 and December 31, 1997
Statements of Operations and Comprehensive Income for the eleven
months ended November 30, 1998 and year ended December 31, 1997
Statements of Shareholder's Deficiency
Statements of Cash Flows for the eleven months ended November 30,
1998 and year ended December 31, 1997
Notes to Financial Statements
Financial Statements of Micro Star Ltda.:
27
<PAGE> 28
Accountant's report of Seligson & Giannattasio LLP dated April
14, 2000.
Balance Sheets as of November 30, 1998 and December 31, 1997
Statements of Operations and Comprehensive Income for the eleven
months ended November 30, 1998 and year ended December 31, 1997
Statements of Shareholder's Equity
Statements of Cash Flows for the eleven months ended November 30,
1998 and year ended December 31, 1997
Notes to Financial Statements
Financial Statements of Mantenimiento Electronico De Sistemas Ltda.:
Accountant's report of Seligson & Giannattasio LLP dated April
14, 2000.
Balance Sheets as of September 30, 1998 and December 31, 1997
Statements of Operations and Comprehensive Income for the ten
months ended September 30, 1998 and year ended December 31, 1997
Statements of Shareholder's Equity
Statements of Cash Flows for the eleven months ended September
30, 1998 and year ended December 31, 1997
Notes to Financial Statements
Pro Forma Financial Statements of Global DataTel, Inc. and Subsidiaries
(UNAUDITED)
28
<PAGE> 29
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS
GLOBAL DATATEL, INC. AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheet of Global DataTel,
Inc. and Subsidiaries (the "Company") as of December 31, 1999, and the related
consolidated statements of operations and comprehensive income, cash flows and
changes in shareholders' deficiency for the two years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the 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 financial position of Global DataTel, Inc.
and Subsidiaries as of December 31, 1999, and the results of their operations
and their cash flows for the two years ended December 31, 1999, 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 discussed in Note 15 to the
financial statements, the Company's working capital deficiency raises
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Seligson & Giannattasio, LLP
N. White Plains, NY
April 16, 2000
<PAGE> 30
GLOBAL DATATEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
A S S E T S
<TABLE>
<S> <C> <C>
Current assets:
Cash $ 173,579
Accounts receivable, net of allowance
for doubtful accounts of $363,718 3,030,984
Inventories 948,724
Other current assets 604,301
-----------
Total current assets $4,757,588
Property, plant and equipment, net of
accumulated depreciation of $384,272 500,681
Other assets:
Goodwill, net of accumulated amortization
of $66,720 1,165,024
Deferred investment banking fees 2,000,000
Other assets 174,931
-----------
Total other assets 3,339,955
----------
Total assets $8,598,224
==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 31
GLOBAL DATATEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<TABLE>
<S> <C> <C>
Current liabilities:
Short term borrowings, banks $ 707,029
Note payable - Surge Components, Inc. 1,000,000
Deferred revenues 40,441
Accounts payable 2,948,700
Accrued expenses 1,359,764
Notes payable to shareholders 661,667
------------
Total current liabilities $6,717,601
Mortgage payable - bank 72,921
----------
Total liabilities 6,790,522
Commitments and contingencies
Stockholders' deficiency:
Preferred stock 25,000,000 shares
authorized, par value $.001, none
issued as of December 31, 1999 --
Common stock, 50,000,000 shares authorized
par value $.001, 23,280,124 issued and
outstanding as of December 31, 1999 23,280
Paid in capital 11,703,788
Accumulated deficit (10,019,715)
Foreign currency translation adjustment 100,349
------------
Total stockholders' deficiency 1,807,702
----------
Total liabilities and stockholders' deficiency $8,598,224
==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 32
GLOBAL DATATEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Year Ended
December 31,
1 9 9 9 1 9 9 8
------- -------
<S> <C> <C>
Net sales $ 13,836,785 $ 1,862,339
Costs of goods sold 8,411,701 728,140
------------ ------------
Gross profit 5,425,084 1,134,199
------------ ------------
Selling, general, and administrative expenses 3,659,896 757,429
Payroll and related expenses 3,541,784 1,383,821
Interest expense 686,004 18,663
------------ ------------
Total expenses 7,887,684 2,159,913
------------ ------------
Loss before provisions for income taxes (2,462,600) (1,025,714)
Provision for income taxes 193,152 134,839
------------ ------------
Loss from continuing operations (2,655,752) (1,160,553)
------------ ------------
Discontinued operations:
Loss from operations from subsidiary sold -- (625,473)
Loss on sale of subsidiary -- (1,910,431)
------------ ------------
Loss from discontinued operations -- (2,535,904)
------------ ------------
Net loss (2,655,752) (3,696,457)
Other comprehensive income (loss):
Foreign currency translation, net of tax 138,701 (38,352)
------------ ------------
Comprehensive loss $ (2,517,051) $ (3,734,809)
============ ============
Loss per share - Basic and diluted
Loss per share from continuing operations $ (.12) $ (.17)
Loss per share from discontinued operations -- (.37)
------------ ------------
Net loss per share - Basic and diluted $ (.12) $ (.54)
============ ============
Weighted average shares outstanding
Basic 22,352,926 6,836,755
Diluted 22,352,926 6,836,755
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 33
GLOBAL DATATEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
Additional
Preferred Stock Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
---------- -------- ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 4,500,000 $ 4,500 7,162 $ 7 $ 5,821,448 $ (3,667,506)
Rescinded preferred (4,500,000) (4,500) -- -- (271,895) --
Shares issued for services -- -- 1,198,500 1,199 198,001 --
Shares issued for cash -- -- 2,870,000 2,870 571,130 --
Shares tendered by stockholders -- -- (3,518,525) (3,519) 3,519 --
Shares issued to purchase subsidiaries 105,000 105 8,622,986 8,623 3,095,580 --
Foreign currency translation -- -- -- -- -- --
Net loss for the period -- -- -- -- -- (3,696,457)
---------- -------- ---------- -------- ------------ ------------
Balance at December 31, 1998 105,000 $ 105 9,180,123 $ 9,180 $ 9,417,783 $ (7,363,963)
Conversion of preferred shares (105,000) (105) 13,000,001 13,000 (12,895) --
Shares issued for cash -- -- 100,000 100 299,900 --
Shares issued for investment banking fees -- -- 1,000,000 1,000 1,999,000 --
Foreign currency translation -- -- -- -- -- --
Net loss for the period -- -- -- -- -- (2,655,752)
---------- -------- ---------- -------- ------------ ------------
Balance at December 31, 1999 -- $ -- 23,280,124 $ 23,280 $ 11,703,788 $(10,019,715)
========== ======== ========== ======== ============ ============
</TABLE>
<TABLE>
<CAPTION>
Foreign
Currency
Translation
Adjustments Total
------------ ------------
<S> <C> <C>
Balance at January 1, 1998 $ -- $ 2,158,449
Rescinded preferred -- (276,395)
Shares issued for services -- 199,200
Shares issued for cash -- 574,000
Shares tendered by stockholders -- --
Shares issued to purchase subsidiaries -- 3,104,308
Foreign currency translation (38,352) (38,352)
Net loss for the period -- (3,696,457)
------------ ------------
Balance at December 31, 1998 $ (38,352) $ 2,024,753
Conversion of preferred shares -- --
Shares issued for cash -- 300,000
Shares issued for investment banking fees -- 2,000,000
Foreign currency translation 138,701 138,701
Net loss for the period -- (2,655,752)
------------ ------------
Balance at December 31, 1999 $ 100,349 $ 1,807,702
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 34
GLOBAL DATATEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
December 31,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,655,752) $(3,696,457)
Adjustment to reconcile net loss to net
cash (used) provided by operations
Other losses, net -- 276,395
Loss on sale of division -- 1,910,431
Depreciation and amortization 136,527 37,425
Provision for bad debt expense 26,162 (249,295)
Changes in operating assets and liabilities:
Accounts receivable (137,478) 378,098
Inventories 178,887 (70,981)
Other assets 350,297 124,446
Accounts payable and accrued expenses 975,541 725,880
Deferred revenues (368,640) 171,722
----------- -----------
Net cash used in operating activities (1,494,456) (392,336)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (53,036) (2,601)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings of notes payable 684,314 (395,044)
Net advances from stockholders 464,380 388,009
Proceeds from issuance of common stock 300,000 574,000
----------- -----------
Net cash flows provided by financing activities 1,448,694 566,965
----------- -----------
Foreign currency effect on cash 138,701 (38,352)
----------- -----------
Net change in cash 39,903 133,676
Cash at beginning of year 133,676 --
----------- -----------
Cash at end of year $ 173,579 $ 133,676
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 35
GLOBAL DATATEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
December 31,
1999 1998
---- ----
<S> <C> <C>
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 661,004 $ 18,663
========== ==========
Income taxes $ 193,152 $ 134,839
========== ==========
Non-cash investing and financing transactions:
Preferred shares issued to purchase subsidiaries $ -- $ 105
Common shares issued for services -- 199,200
Common shares issued to purchase subsidiaries -- 2,654,455
---------- ----------
$ -- $2,853,760
========== ==========
Common shares issued for investment banking fees $2,000,000 $ --
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 36
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Global DataTel, Inc. ("the Company") was originally incorporated
under the laws of the State of Utah on April 17, 1980 as La Plate Oil and
Mining, Inc. On October 1,1982 the Company changed its name to Gold Coast
Resources, Inc. ("Gold Coast"). On September 30, 1998 Gold Coast purchased 100%
of the outstanding common stock of International Computer Resources ("ICR") (a
Florida corporation) and Mantenimiento Electronico de Sistemas Limited ("MES")
(a Colombian corporation). On December 2, 1998 the company changed its name to
Global DataTel, Inc.
On November 30, 1998, the Company purchased three unrelated companies in
Colombia, South America, DLR & CIA ("DLR"), Micro Star LTD. ("Micro"), and CASA
Informatica "("Casa"). The companies acquired are also in the business of
providing software and hardware solutions to companies in their markets. Prior
to the acquisition of ICR and MES, Gold Coast Resources was a development stage
company that, through a wholly-owned subsidiary The Travel Agents Hotel Guide,
Inc. ("Hotel"), was engaged in the business of developing a hotel guide selling
advertising space to the hotel and travel industry. Gold Coast sold Hotel on
December 14, 1998.
The Company currently engages primarily in the sale and distribution of medium
and high-end computer and software products, including Enterprise Resource
Planning (ERP) suites, as well as, providing information technology solutions
and support to medium and large business clients primarily in Central and South
America. The Company has distribution agreements with International Business
Machines ("IBM"), Lotus, Cisco Systems, and JBA.
During 1999, MES, DLR and Micro were merged into Casa. The combined entity then
changed its name to Global Datatel de Colombia, Inc. ("GDC"). In addition, the
Company commenced internet operations as an Internet service/content provider
through its wholly-owned subsidiary of ehola.com SA and ehola.com, Inc.
The following is summary of the significant policies followed in the preparation
of the consolidated financial statements.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Cash - For purposes of cash flows the company considers investments of three
months or less as cash equivalents.
<PAGE> 37
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition - Revenues from services are recognized as the services are
performed. Revenues from the sales and installation of hardware packages are
recognized when the installation is substantially completed and operational.
Change in Fiscal Year - Effective April 1, 1997, the Company changed its fiscal
year to end on December 31.
Inventories - Inventories are principally composed of finished goods and are
stated at the lower of cost (first-in, first-out method) or market.
Accounts Receivable - The Company periodically reviews the adequacy of the
allowance for doubtful accounts and maintains the allowance for doubtful
accounts at a level which management believes is sufficient to cover potential
credit losses.
Property, Plant and Equipment - Property, plant, and equipment is recorded at
cost. Depreciation is generally on a straight-line basis over the estimated
useful lives of the related assets as follows:
<TABLE>
<S> <C>
Building and improvements 20 years
Furniture and office equipment 5 - 10 years
Computer and EDP equipment 5 years
Transportation equipment 5 years
</TABLE>
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
Concentration of Credit Risk - Financial instruments that potentially subject
the Company to concentration of credit risk consists primarily of accounts
receivable and debt securities. Concentration of credit with respect to accounts
receivable as of December 31, 1998 was limited to an amount due from an agency
of the Colombian Government, which represented approximately 22% of the net
accounts receivable. Subsequent to year-end this balance was paid. As of
December 31, 1999, no one customer accounted for more than five percent of
outstanding accounts receivable. The Company provides for estimated credit
losses at the time of sale based upon factors surrounding the credit risk of
specific customers, historical trends and other information.
<PAGE> 38
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value - The Company has a number of financial instruments, none of which is
held for trading purposes. The Company estimates that the fair value of all
financial instruments at December 31, 1999 and 1998, does not differ materially
from the aggregate carrying values of these financial instruments recorded in
the accompanying balance sheets. The estimated fair value amounts have been
determined by the Company using available market information and appropriate
valuation methodologies. Considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value, and,
accordingly, the estimates are not necessarily indicative of the amounts that
the Company could realize in a current market exchange.
Investments - The Company utilizes Statement of Financial Accounting Standards
("SFAS") Number 115, "Accounting for Certain Investments in Debt and Equity
Securities" to account for its investments. The Company's investments consist
primarily of a convertible debenture from a publicly traded company and are
being reported as held to maturity securities. Held to maturity securities are
carried at amortized cost. Held to maturity securities declines in fair value
below amortized cost that are other than temporary, are included in earnings.
Goodwill - Goodwill, which represents the excess of acquisition costs over the
net assets acquired in the business combinations, is amortized on the
straight-line method over 20 years. The carrying amount of goodwill is reviewed
annually using estimated undiscounted cash flows for the businesses acquired
over the remaining amortization periods.
Loss Per Share - Loss per share for all periods was computed by dividing net
income by the weighted average number of common and common equivalent shares
outstanding and also is adjusted for the assumed conversion of shares issuable
upon exercise of options and other convertible securities. The Company had
losses in each of the years presented and, accordingly, common stock equivalents
are excluded as the effect would be anti-dilutive.
<PAGE> 39
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes - The Company and its U.S. subsidiaries file a consolidated income
tax return. Foreign subsidiaries are not consolidated. The Company has adopted
SFAS 109 and this pronouncement caused no material changes on the financial
statements. The provision for income taxes is primarily related to the
reconciliation of the taxes paid and owed by the foreign subsidiaries in
accordance with the taxing rules and regulation promulgated by the Colombian
government as of December 31, 1999. The Company has approximately $1,900,000 of
net operating loss carryforwards, which are subject to certain restrictions and
limitations based on the Company's ownership changes during 1998. The Company
also has approximately $1,300,000 in net operating losses subsequent to the
change in ownership, which may be used to offset income through 2019. A
valuation allowance has been provided against the benefits available from these
net operating losses due to the uncertainty regarding its realization.
Translation of Foreign Currency - The Company's Colombian subsidiaries are
translated in accordance with Statement of Financial Accounting Standards No. 52
(SFAS No. 52), which requires that foreign currency assets and liabilities be
translated using the exchange rates in effect at the balance sheet date. Results
of operations are translated using the average exchange rates prevailing during
the period. For purposes of SFAS No. 52, the Company considers the Colombian
Peso to be the functional currency. The effects of unrealized exchange
fluctuations on translating foreign currency assets and liabilities into U.S.
dollars are accumulated as the cumulative translation adjustment in
shareholders' equity. Realized gains and losses from foreign currency
transactions are included in the results of operation for the period.
Fluctuations arising from intercompany transactions are long term in nature and
are accumulated as cumulative translation adjustments.
Year 2000 Computer Readiness - Unaudited - The Company is in the process of
evaluating the effect of the year 2000 ("Y2K") on its computer systems. The
Company believes that the cost of upgrading its systems will not materially
affect the operations but will constitute the normal periodic ongoing cost of
maintaining and improving its computer system.
The Company has initiated communications with all of its significant suppliers
to determine the extent to which the Company's operations are vulnerable to
those third parties failure to remediate their own Y2K issues. There can be no
guarantee that the system of such companies or payors will be timely converted
and would not have an adverse impact on the Company. Additionally, general
problems such as electric power, water and sewer etc., are beyond the ability of
the Company to determine, and would affect most other companies in the
geographic area of Colombia. The Company experienced virtually no Y2K problems
in January 2000 and does not expect to incur any material costs.
<PAGE> 40
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Prior Period Adjustment - During the current year, certain errors were detected
in the previously reported goodwill resulting from the 1998 acquisitions of ICR
and MES. An adjustment of approximately $948,000 was made to reduce goodwill at
the beginning of the year. A corresponding adjustment was made to reduce the
previously reported amortization expense in 1998 by approximately $11,000. As
the result of current and previous losses, there is no resulting change in the
income tax provision for 1998.
Reclassifications - Certain prior year information has been reclassified to
conform to the current year's presentations.
NOTE 2 - BUSINESS ACQUISITIONS
All acquisitions have been accounted for under the purchase method. The results
of operations of the acquired businesses are included in the consolidated
financial statements from the dates of acquisition. In all of the acquisitions,
100% of the acquired companies were purchased.
ICR - On September 30, 1998, the Company acquired all of the outstanding stock
of ICR in exchange for 105,000 shares of convertible preferred stock valued at
$0.001 per share and 4,243,843 shares of common stock valued at $.20 per share.
The net assets acquired and liabilities assumed approximated $90,000 and
$190,000, respectively. The transaction has been recorded as a reverse
acquisition.
<PAGE> 41
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - BUSINESS ACQUISITIONS (Continued)
MES - On September 30, 1998, the Company acquired MES for 357,143 common shares
of the Company's common stock, valued at the book value of MES. The net assets
acquired and liabilities assumed approximated $1,152,000 and $913,000,
respectively.
DLR - On November 30, 1998, the Company acquired DLR for $300,000 ($100,000 due
at closing and five monthly installments of $40,000 thereafter, as defined) in
cash, and 60,000 shares of the Company's common stock, valued at $3.00 per
share. The net assets acquired and liabilities assumed approximated $3,527,000
and $1,786,000, respectively. The acquisition resulted in goodwill of $502,000.
The Company did not make the payments as required by the purchase agreement and
is in default on the remaining obligation. In March 2000, the remaining payments
under the agreement were placed in escrow while the parties negotiate a
settlement.
MICRO - On November 30, 1998, the Company acquired Micro for $150,000, payable
in six consecutive monthly payments from the date of closing, and 70,000 shares
of the Company's common stock, valued at $3.00 per share. The net assets
acquired and liabilities assumed approximated $890,000 and $748,000,
respectively. The purchase resulted in goodwill of $218,000. In March 2000, the
remaining payments under the agreement were made.
CASA - On November 30, 1998, the Company acquired Casa for $840,000, payable in
9 monthly payments of $93,333 commencing at the date of the closing and 392,000
shares of the Company's common stock, valued at $3 per share. The net assets
acquired and liabilities assumed approximated $3,300,000 and $1,800,000,
respectively. The purchase resulted in goodwill of approximately $512,000. In
March 2000, the remaining payments under the agreement were made.
The Company issued non-interest-bearing promissory notes to the shareholders of
DLR, Casa and Micro for the unpaid cash portion of the consideration for the
acquisitions. The terms of the notes for the individual companies acquired are
as presented in the preceding paragraphs and the amount due is reflected as
notes payable to stockholders in the accompanying consolidated balance sheet as
of December 31, 1998. The realization of a major portion of the assets in the
accompanying balance sheet as of December 31, 1998 is dependent upon continued
operations of the Company, and their ability to raise additional capital.
Management believes that actions presently taken to revise the Company's
operating and financial requirements will provide the opportunity for the
Company to continue as a going concern.
<PAGE> 42
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - BUSINESS ACQUISITIONS (Continued)
The following unaudited pro forma consolidated results of operations are
presented as if ICR, DLR, Casa, and Micro Star acquisitions had been made as of
January 1, 1998. The unaudited consolidated pro forma information is not
necessarily indicative of the combined results that would have occurred had the
acquisitions occurred on those dates, nor is it indicative of the results that
may occur in the future.
<TABLE>
<CAPTION>
Year ended
December 31,
1998
------------
(Unaudited)
<S> <C>
Net sales $ 21,457,159
Net loss from continuing operations $ (314,056)
Net loss per share $ (.01)
</TABLE>
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
The Company's property, plant, and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
1999
----
<S> <C>
Land $ 73,807
Buildings 184,653
Office equipment 185,597
EDP equipment 440,896
--------
Total property, plant, and equipment 884,953
Less: accumulated depreciation 384,272
--------
Property, plant and equipment, net $500,681
========
</TABLE>
Depreciation expense for the year ended December 31, 1999 and 1998 was $74,940
and $84,469, respectively. For the year ended December 31, 1998, depreciation is
included for the period from dates of acquisition to the end of the year (see
Note 2 acquisitions).
<PAGE> 43
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - CONVERTIBLE DEBENTURE
On December 14, 1998, the Company sold Hotel to Ameriresource Technologies, Inc.
in exchange for a convertible debenture totaling $3,350,000. The debenture
accrues interest at the rate of 7% per annum and is due December 15, 2001. The
Company accounts for the debenture pursuant to SFAS Number 115, "Accounting for
Certain Investments in Debt and Equity Securities". The Company has deemed these
securities to be "held-to-maturity" securities as defined by the standard and
account for the debenture at amortized cost. Although the debenture is
guaranteed by a third party, there are sufficient collectability and enforcement
concerns to cause a permanent reduction in its market value. This security has
therefore been totally reserved and charged against the gain associated with the
sale of Hotel.
NOTE 5 - SHORT TERM BORROWINGS, BANKS
The Colombian subsidiaries obtain short-term financing from banks and financing
companies. Interest on such obligations range between 34% and 44% annually and
is determined by the financing source subsequent to the availability of funds.
Most of these obligations are personally guaranteed by officers of the companies
and the balance owed as of December 31, 1999 approximated $450,000.
ICR has a $100,000 line of credit, at 10% interest, personally guaranteed by the
majority stockholder of the Company, for working capital purposes. As of
December 31, 1999, the balance owed on this line of credit was approximately
$94,711.
The Colombian subsidiaries have credit facilities from IBM for the purchase of
computer equipment which are guaranteed by certain shareholders and officers of
the Colombian subsidiaries. The credit facilities at December 31, 1999
approximated $1,200,000 for Casa, $600,000 for DLR, and $150,000 for Micro.
NOTE 6 - DEFERRED REVENUES
Deferred revenues are comprised mainly of customer deposits on orders. The
nature of the Colombian operations requires a delay between the time that an
order is placed and the completion of the contract. Consequently, the Company
requests deposits on such arrangements.
<PAGE> 44
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - MORTGAGE PAYABLE - BANK
On March 14, 1996, DLR obtained a mortgage from a bank for the purchase of their
office facility in Bogota, Colombia. The mortgage expires on March 2012 and had
an initial principal balance of $99,400. The mortgage agreement allows for an
increase in the outstanding principal balance due to monetary adjustments as
mandated by the Colombian Central Bank. Therefor, management of the Company can
not reasonably determine minimum future payments. Although payments are due
currently, the entire balance has been classified as long-term because
management cannot determine, at this time, the amount that is due and payable in
the current year.
NOTE 8 - CONVERTIBLE PROMISSORY NOTE
In October 1999, the Company issued a subordinated Convertible Promissory Note
(the "Note") in the amount of $1,000,000 to Surge. The Note is due on June 1,
2000 and accrues interest at the rate of 10% per annum. Upon the successful
completion of the asset purchase by Surge, the Note is canceled and all interest
accrued to date will be forgiven. If the asset purchase with Surge is not
completed by February 28, 2000 or is not approved by the shareholders of both
companies, Surge at its sole discretion may convert the Note into common stock
of the Company at a conversion price equal to 90% of the average closing price
of the Company's common stock for the twenty previous trading days. In January
2000, the Note was canceled and replaced with a new note totaling $4,100,000
(Note 9).
NOTE 9 - SUBORDINATED CONVERTIBLE PROMISSORY NOTE
In February 2000, the Company entered into a Subordinated Convertible Promissory
Note ("Convertible Note") with Surge for $4,100,000. The Convertible Note
accrues interest at the rate of 10% per annum. Upon completion of the Company's
acquisition by Surge, the Convertible Note and all accrued interest will be
forgiven. If the acquisition does not occur by July 31, 2000, Surge, at its own
discretion, may convert this note into the common stock of the Company on a
dollar for dollar basis at a conversion price equal to 90% of the average
closing price of the Company's Common Stock for the preceding 20 trading days or
Surge may demand repayment. The Convertible Note is secured by the pledge of
certain shares of stock owned by the President of the Company. In February 2000,
the Note was canceled and replaced with a new note totaling up to $6,250,000.
<PAGE> 45
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - COMMITMENTS AND CONTINGENCIES
On January 1, 1997, a subsidiary of the Company entered into a two-year lease
with an indefinite renewal option for office facilities in Bogota, Colombia. The
lease calls for an approximate negotiable increase of 18% at renewal. The lease
can be canceled by either party without prior notification.
On December 9, 1996, a subsidiary of the Company entered into a one-year lease
for office facilities in Medellin, Colombia. The lease is personally guaranteed
by one of the officers of the Company and a bond for approximately 50% of the
annual lease was submitted to the lessor. The lease can be terminated by either
party without prior notification and calls for negotiated annual increases.
On August 16, 1997, a subsidiary of the Company entered into a one-year lease
with an indefinite renewal option for office space in Cali, Colombia. The lease
is personally guaranteed by an officer of the Company. The lease calls for
negotiated annual increases and can be canceled by non-fulfillment of the lease
terms.
On May 4, 1998, a subsidiary of the Company entered into a six-month agreement
to rent office space in Medellin, Colombia. The lease calls for an indefinite
renewal with annual increases to be tied to the legal inflation rate. The lease
may be canceled upon non-fulfillment of the lease terms with three months prior
notification.
On March 1, 1993, a subsidiary of the Company entered into a lease agreement
expiring in April 2000 to rent office space in Bogota, Colombia. The lease calls
for an indefinite renewable option.
On January 1, 1999, a subsidiary of the Company entered into a three-year lease
for office and warehouse space in Delray Beach, Florida. The lease is renewable
for an additional three years with annual increases of 5%.
As of December 31, 1999, the minimum lease obligation for leases that management
can determine to have a minimum obligation is as follows:
<TABLE>
<CAPTION>
Year
<S> <C>
2000 $ 48,396
2001 44,796
--------
Total $ 93,192
========
</TABLE>
<PAGE> 46
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - CAPITAL STRUCTURE
Additional 1998 Common Stock Issuances - During 1998, Gold Coast issued
1,198,500 shares of its common stock to officers, directors, employees and
others for services rendered. The shares were valued at $.20 per share. During
1998, Gold Coast issued 2,870,000 shares of its common stock for cash at $.20
per share pursuant to Rule 504 of Regulation D. During 1998, Gold Coast issued
3,500,000 shares of its common stock to an officer/director/major shareholder
for his minority interest in the Travel Agent's Hotel Guide, Inc. The shares
were valued at $0.10.
Gold Coast issued 1,000,000 Class F Preferred shares for 80% of the outstanding
shares of Hotel. The Class F shares are redeemable for common stock based on the
performance guidelines established by the exchange agreement dated October 7,
1997. The Agreement specifies that for each $15,000 of earnings by Hotel, it may
redeem one share of class F preferred for 10 shares of common stock subject to
the rules and regulations of Rule 144. In the event that no earnings are
produced within a five-year period the preferred shares shall become
non-convertible.
On August 14, 1998, Gold Coast rescinded the mergers with the above subsidiaries
and canceled the preferred shares previously issued to each of these entities.
At December 31, 1998 the Company has only one class of common stock outstanding
and a Series A Convertible Preferred Stock. The Series A Convertible Preferred
Stock has a liquidating value of no less than $35,000,000 and has preference
over all other stock in a liquidation. The conversion value is based on the
liquidating value and a maximum share price of 111 shares of common stock for
one share of preferred stock. There are no arrearages in preferred dividends. On
June 25, 1999, the shares were converted into 13,000,001 shares of the Company's
common stock.
Additional 1999 Common Stock Issuances - On February 5, 1999 the Company
completed an offering under Rule 504 of Regulation D for 100,000 shares of its
common stock at $3.00 per share. The offering was subscribed to in full by a
related party, and the Form D was timely filed with the Securities and Exchange
Commission.
In December 1999, the Company issued 1,000,000 shares for investment banking
services provided in connection with the Company's acquisition by Surge
Components, Inc.
Stock Options - In April 1999, the Company entered into an option agreement with
a consultant, in partial payment for services rendered. The agreement grants
250,000 shares of the Company's common stock, at an exercise price of $5.75 per
share. The options are non-dilutive. To date, no options have been exercised.
<PAGE> 47
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - CAPITAL STRUCTURE (Continued)
1999 Incentive and Non-Qualified Stock Options Plan
In 1999, the Company adopted the 1999 Incentive and Non-Qualified Stock Option
Plan ("Option Plan"). The plan provides for the grant of options to employees of
the Company and its subsidiaries to purchase an aggregate of 2,650,000 common
shares.
Option Plan activity is summarized as follows:
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
------ ----------------
<S> <C> <C>
Options outstanding - January 1, 1999 -- --
Granted 1,000,000 $7.12
Exercised -- --
---------
Options outstanding - December 31, 1999 1,000,000 $7.12
---------
Options exercisable - December 31, 1999 1,000,000 $7.12
=========
</TABLE>
In March 2000, the Company granted options to purchase 550,000 shares of the
Company's Common Stock to an officer of the Company. The options are exercisable
for a three year period at an exercise price of $.52 per share. The options were
exercised in March 2000 using the cashless method into 492,800 shares of the
Company's common stock.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". The Company currently accounts for its stock-based compensation
plans using the accounting prescribed by Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees". Since the Company is not required
to adopt the fair value based recognition provisions prescribed under SFAS No.
123, it has elected only to comply with the disclosure requirements set forth in
the statement which includes disclosing pro forma net income and earnings per
share as if the fair value based method of accounting had been applied. The pro
forma net income and earnings per share for the year ended December 31, 1999
would have been $(7,683,907) and $(.37) had the new method been applied.
Compensation to non-employees is accounted for based on the fair value of the
consideration received or the fair market value of the equity instruments
issued, whichever is more reliably measurable.
<PAGE> 48
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - CAPITAL STRUCTURE (Continued)
The fair value of each option grant was estimated on the date of the grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions: expected volatility of 94.34% for awards granted in 1999; risk free
interest rate of 6.75%; and expected lives of 3 years.
The effects of applying SFAS 123 in the above pro forma disclosures are not
indicative of future amounts as they do not include the effects of awards
granted prior to 1997. Additionally, future amounts are likely to be affected by
the number of grants awarded since additional awards are generally expected to
be made at varying amounts.
NOTE 12 - INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS
The Company operates predominantly in one industry segment, computer systems
design and hardware sales. The Company has two geographic groups, the U.S.
subsidiary and the Colombian subsidiaries. The geographic distributions of the
Company's identifiable assets, operating income and revenues are summarized in
the following table.
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998
---- ----
<S> <C> <C>
Revenues from unrelated entities:
United States $ 577,630 $ 594,126
Colombia 13,259,155 1,268,213
------------ ------------
Total revenues $ 13,836,785 $ 1,862,339
============ ============
Operating loss:
United States $ (869,396) $ (527,102)
Colombia (1,593,204) (498,612)
------------ ------------
Total operating loss $ (2,462,600) $ (1,025,714)
============ ============
Assets:
United States $ 3,676,877 $ 4,902,609
Colombia 5,777,347 7,989,580
------------ ------------
Total identifiable assets 9,454,224 12,892,189
Less: Corporate eliminations 2,856,000 4,284,608
------------ ------------
Total assets $ 6,598,224 $ 8,607,581
============ ============
</TABLE>
<PAGE> 49
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 12 - INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS (Continued)
The Company has only one significant supplier, IBM de Colombia, which accounted
for approximately 60% of the total purchases made during 1999 and 1998.
NOTE 13 - SALE OF SUBSIDIARY
The Travel Agents Hotel Guide was a publication being developed by Gold Coast
and the former management of the Company for use by travel agents in order to
advertise and sell hotel rooms primarily throughout the United States. Gold
Coast acquired the publication rights, logo, client lists and business concept
from the former president of Hotel by issuing 3,500,000 shares of common stock
of Gold Coast.
On December 14, 1998, the Company sold Hotel for $3,350,000 in the form of a
convertible debenture issued by Ameriresources Technologies, Inc., a publicly
traded company, and guaranteed by Lexington Sales, Inc. (Note 4). The
accompanying statement of operations for the year ended December 31, 1998
reflect discontinued operations, the loss from operations of approximately
$629,000 and the gain on sale of the subsidiary of approximately $2,000,000,
less amount reserved of $3,350,000.
NOTE 14 - RELATED PARTY TRANSACTIONS
The Company is a member of a group of affiliated entities and, has extensive
transactions and relationships with members of the group. Because of these
relationships, it is possible that the terms of these transactions are not the
same as those that would result from transactions among wholly unrelated
parties.
NOTE 15 - OPERATING RISKS
As substantially all of the Company's operations are currently conducted in
Colombia, the Company is subject to special consideration and significant risks
not typically associated with Companies operating in North America and Western
Europe. These include risks associated with, among others, the political,
economic and legal environments and foreign currency exchange. The Company's
results may be adversely affected by changes in the political and social
conditions in Colombia, and by changes in governmental policies with respect to
laws and regulations, anti-inflationary measures, currency conversion,
remittance abroad, and rates and methods of taxation among other things. Since
its working capital has been limited, obligations and commitments have gone
unfulfilled.
<PAGE> 50
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 16 - SUBSEQUENT EVENTS
Proposed Debenture Offering - In February 1999, the Company signed a letter of
intent with Dirks & Company to act as the Managing Underwriter in connection
with a proposed offering of shares of Cumulative Convertible Debentures of the
Company. Dirks & Company intends to underwrite, on a firm commitment basis, such
number of Debentures which will result in gross proceeds of approximately $50
million. A firm commitment does not guarantee that the underwriter will fund the
proposed offering, since their commitment is not known until the twenty day
waiting period following the SEC approved registration has been filed. As of
this date no registration document relating to this proposed offering has been
filed and management has had no contact with the underwriter for several months.
Asset Purchase Agreement - In December 1999, the Company entered into an asset
purchase agreement with Surge Components, Inc. ("Surge") whereby Surge would
acquire the assets of the Company in exchange for stock to be treated as a
"tracking stock" covering the assets sold by the Company. Among other
conditions, the completion of the acquisition is conditioned on the approval of
both Companies' stockholders and successful completion of due diligence.
<PAGE> 51
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Casa Informatica S.A.
We have audited the accompanying balance sheets of Casa Informatica S.A. as of
November 30, 1998 and December 31, 1997 and the related statements of operations
and comprehensive income, changes in stockholders' equity and cash flows for the
eleven months ended November 30, 1998 and 1997 and for the years ended December
31, 1997 and 1996. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Casa Informatica S.A. as of
November 30, 1998 and December 31, 1997 and the results of their operations and
their cash flows for the eleven months ended November 30, 1998 and 1997 and for
the years ended December 31, 1997 and 1996 in conformity with generally accepted
accounting principles.
Seligson & Giannattasio, LLP
N. White Plains, New York
April 14, 2000
<PAGE> 52
CASA INFORMATICA S.A.
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash $ -- $ 38,609
Accounts Receivable 1,787,538 1,447,314
Prepaid expenses 581,902 235,464
Due from stockholders 39,958 7,056
Inventory 614,320 1,322,037
Other current assets -- 181,506
---------- ----------
Total current assets 3,023,718 3,231,986
Property, plant and equipment - net of accumulated
depreciation of $51,806 and $16,216, respectively 241,247 86,861
Other assets 65,328 --
---------- ----------
Total assets $3,330,293 $3,318,847
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 53
CASA INFORMATICA S.A.
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
------- -------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 62,404 $ 78,003
Accounts payable 1,423,918 2,088,579
Deferred revenue 232,223 16,609
Other accrued liabilities 108,146 605,109
----------- -----------
Total current liabilities 1,826,691 2,788,300
----------- -----------
Stockholders' equity:
Capital 512,548 398,736
Retained earnings 972,845 148,531
Foreign currency translation adjustment 18,209 (16,720)
----------- -----------
Total stockholders' equity 1,503,602 530,547
----------- -----------
Total liabilities and stockholders' equity $ 3,330,293 $ 3,318,847
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 54
CASA INFORMATICA S.A.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Eleven Months Ended Year Ended
November 30, December 31,
1 9 9 8 1 9 9 7 1 9 9 7 1 9 9 6
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales $10,590,870 $ 5,423,958 $ 5,916,830 $ 3,157,664
Cost of goods sold 6,684,320 2,937,918 3,204,885 1,706,593
----------- ----------- ----------- -----------
Gross profit 3,906,550 2,486,040 2,711,945 1,451,071
----------- ----------- ----------- -----------
Selling and administrative expenses 1,010,889 855,071 932,771 1,339,400
Payroll and related expenses 1,724,390 1,312,827 1,432,123 --
Interest expenses 82,753 59,383 64,779 --
Other expenses 21,339 7,969 8,693 16,325
----------- ----------- ----------- -----------
Total expenses 2,839,371 2,235,250 2,438,366 1,355,725
----------- ----------- ----------- -----------
Income before provision for income tax 1,067,179 250,790 273,579 95,346
Provision for income taxes 242,865 121,285 132,306 --
----------- ----------- ----------- -----------
Net income 824,314 129,505 141,273 95,346
Other comprehensive income (loss):
Income (loss) in foreign currency translation 34,929 (15,327) (23,376) 6,656
----------- ----------- ----------- -----------
Net comprehensive income $ 859,243 $ 114,178 $ 117,897 $ 102,002
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 55
CASA INFORMATICA S.A.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CURRENCY
RETAINED TRANSLATION
CAPITAL EARNINGS ADJUSTMENT TOTAL
------- -------- ----------- -----
<S> <C> <C> <C> <C>
Balance - January 1, 1996 $ 323,337 $ (88,088) $ -- $ 235,249
Net income -- 95,346 -- 95,346
Currency translation adjustment -- -- 6,656 6,656
----------- ----------- ----------- -----------
Balance - December 31, 1996 323,337 7,258 6,656 337,251
Additional contributed capital 185,230 -- -- 185,230
Return of capital (109,831) -- -- (109,831)
Net income -- 141,273 -- 141,273
Currency translation adjustment -- -- (23,376) (23,376)
----------- ----------- ----------- -----------
Balance - December 31, 1997 398,736 148,531 (16,720) 530,547
Additional contributed capital 113,812 -- -- 113,812
Net income -- 824,314 -- 824,314
Currency translation adjustment -- -- 34,929 34,929
----------- ----------- ----------- -----------
Balance - November 30, 1998 $ 512,548 $ 972,845 $ 18,209 $ 1,503,602
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 56
CASA INFORMATICA S.A.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Eleven Months Ended Year Ended
November 30, December 31,
1 9 9 8 1 9 9 7 1 9 9 7 1 9 9 6
------- ------- ------- -------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 824,314 $ 129,505 $ 141,273 $ 95,346
Adjustments to reconcile net income to net
cash (used) provided by operations:
Depreciation and amortization 35,590 1,209 1,314 1,264
Changes in assets and liabilities:
Accounts Receivable (340,224) (752,936) (818,409) 39,462
Inventory 707,717 (696,029) (756,553) 114,316
Other current assets (230,260) 192,418 213,807 81,973
Accounts Payable (664,661) 470,053 535,262 (117,728)
Deferred revenue 215,614 24,933 16,609 --
Other accrued liabilities (496,963) 416,391 449,531 (106,433)
--------- --------- --------- ---------
Net cash provided (used) by operating activities 51,127 (214,456) (217,166) 108,200
--------- --------- --------- ---------
CASH FLOW USED BY INVESTING ACTIVITIES:
Investment in fixed assets (189,976) (22,165) (23,155) (18,753)
--------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Additional capital contributed 113,812 185,230 185,230 --
Returned capital -- (109,831) (109,831) --
Net borrowings from notes payable (15,599) 78,003 78,003 --
Net advances from stockholders (32,902) 31,512 31,512 (27,516)
--------- --------- --------- ---------
Net cash provided (used) by financing activities 65,311 184,914 184,914 (27,516)
--------- --------- --------- ---------
(Decrease) increase in cash, prior to effect
of foreign currency translation adjustment (73,538) (51,707) (55,407) 61,931
Effect in cash of foreign currency translation 34,929 (14,716) (16,720) 6,656
--------- --------- --------- ---------
Net (decrease) increase in cash (38,609) (66,423) (72,127) 68,587
Cash at beginning of year 38,609 110,736 110,736 42,149
--------- --------- --------- ---------
Cash at end of year $ -- $ 44,313 $ 38,609 $ 110,736
========= ========= ========= =========
Supplemental cash flow information:
Interest paid $ 82,793 $ 59,383 $ 64,779 $ --
========= ========= ========= =========
Income taxes paid $ 242,865 $ 121,285 $ 132,306 $ --
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 57
CASA INFORMATICA S.A.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 1 - ORGANIZATION
The Company, was incorporated by way of public deed No 639 dated
February 23, 1993 at the Public Notary No 7 of Santafe de Bogota, under
the name of Casa Informatica S.A.
The principal corporate purpose is the purchase, sale, distribution and
representation of products and services related to the information
systems industry.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenues from services are recognized as the services are performed.
Revenues from the sales and installation of hardware packages are
recognized when the installation is substantially completed and
operational.
Inventories
Inventories are valued at the lower of cost (first-in first-out method)
or market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is
calculated using the straight line method over the estimated useful life
of the assets, at annual rates of 10% for office equipment and furniture
and fixture, 20% for vehicles and computing equipment and 5% for
buildings and improvements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
<PAGE> 58
CASA INFORMATICA S.A.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value
The Company has a number of financial instruments, none of which is held
for trading purposes. The Company estimates that the fair value of all
financial instruments at November 30, 1998 and December 31, 1997, does
not differ materially from the aggregate carrying values of these
financial instruments recorded in the accompanying balance sheets. The
estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies.
Considerable judgment is necessarily required in interpreting market
data to develop the estimates of fair value, and, accordingly, the
estimates are not necessarily indicative of the amounts that the Company
could realize in a current market exchange.
Investments
The Company utilizes Statement of Financial Accounting Standards
("SFAS") Number 115, "Accounting for Certain Investments in Debt and
Equity Securities" to account for its investments.
Income taxes
The tax effect on transactions is recorded in the same year the
transactions are recognized for accounting purposes. Deferred income
taxes relate to temporary differences resulting from recognition of
expenses for accounting purposes in periods other than those used for
tax purposes.
The nominal rate for income tax is 35% of taxable income.
<PAGE> 59
CASA INFORMATICA S.A.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Translation of Foreign Currency
The Company's financial statements are translated in accordance with
Statement of Financial Accounting Standards No. 52 (SFAS No. 52), which
requires that foreign currency assets and liabilities be translated
using the exchange rates in effect at the balance sheet date. Results of
operations are translated using the average exchange rates prevailing
during the period. For purposes of SFAS No. 52, the Company considers
the Colombian Peso to be the functional currency. The effects of
unrealized exchange fluctuations on translating foreign currency assets
and liabilities into U.S. dollars are accumulated as the cumulative
translation adjustment in shareholders' equity. Realized gains and
losses from foreign currency transactions are included in the results of
operation for the period. Fluctuations arising from intercompany
transactions are long term in nature and are accumulated as cumulative
translation adjustments.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment consist of:
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
------- -------
<S> <C> <C>
Furniture and fixture and office equipment $ 60,433 $ 36,833
Communications and computing equipment 232,620 66,244
-------- --------
Total cost 293,053 103,077
Less: accumulated depreciation 51,806 16,216
-------- --------
$241,247 $ 86,861
======== ========
</TABLE>
<PAGE> 60
CASA INFORMATICA S.A.
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 4 - SHORT-TERM BORROWING
Corresponds to short term loans borrowed from local banks, payable in
Colombian pesos in a term of one year or less, with interest rates
ranging from a 34% to 42% annual effective rate. These loans are
guaranteed by promissory notes signed by the Company and in some cases
by the stockholders. No assets are pledged for these loans.
NOTE 5 - DEFERRED REVENUES
Deferred revenues are comprised mainly of customer deposits on orders.
The nature of the Company's operations requires a delay between the time
that an order is placed and the completion of the contract.
Consequently, the Company requests deposits on such arrangements.
NOTE 6 - CREDIT FACILITIES
The Company has a credit facility from IBM for the purchase of computer
equipment which are guaranteed by certain officers and stockholders of
the Company. The credit facilities totaled approximately $1,200,000 at
November 30, 1998.
NOTE 7 - ACQUISITION BY GLOBAL DATATEL, INC.
On November 30, 1998, the Company was acquired by Global Datatel, Inc.
("Global") in exchange for $840,000 in cash and 392,000 shares of Global
common stock.
<PAGE> 61
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Daniel Lopez R & Compania LTDA
We have audited the accompanying balance sheets of Daniel Lopez R & Compania
LTDA as of November 30, 1998 and December 31, 1997 and the related statements of
operations and comprehensive income, changes in stockholders' deficiency and
cash flows for the eleven months ended November 30, 1998 and 1997 and for the
years ended December 31, 1997 and 1996. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Daniel Lopez R & Compania LTDA
as of November 30, 1998 and December 31, 1997 and the results of their
operations and their cash flows for the eleven months ended November 30, 1998
and 1997 and for the years ended December 31, 1997 and 1996 in conformity with
generally accepted accounting principles.
Seligson & Giannattasio, LLP
N. White Plains, New York
April 14, 2000
<PAGE> 62
DANIEL LOPEZ R & COMPANIA LTDA
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 17,112 $ 175,343
Accounts receivable 222,974 1,315,907
Prepaid expenses 208,105 805,524
Due from stockholders 699,252 197,323
Inventory 185,112 365,211
Other current assets 59,746 69,750
---------- ----------
Total current assets 1,392,301 2,929,058
Property, plant and equipment - net of
accumulated depreciation of $117,569
and $119,693, respectively 242,838 351,307
Other assets 64,082 --
---------- ----------
Total assets $1,699,221 $3,280,365
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 63
DANIEL LOPEZ R & COMPANIA LTDA
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
Current liabilities:
Loan payable to bank $ 369,464 $ 720,518
Accounts payable 1,189,163 1,868,234
Deferred revenue 5,136 184,062
Other accrued liabilities 60,023 227,621
----------- -----------
Total current liabilities 1,623,786 3,000,435
Mortgage payable 97,159 99,554
----------- -----------
Total liabilities 1,720,945 3,099,989
----------- -----------
Stockholders' (deficiency) equity:
Capital 90,531 125,269
Retained (deficit) earnings (160,260) 56,811
Foreign currency translation adjustment 48,005 (1,704)
----------- -----------
Total stockholders' (deficiency) equity (21,724) 180,376
----------- -----------
Total liabilities and stockholders' (deficiency) equity $ 1,699,221 $ 3,280,365
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 64
DANIEL LOPEZ R & COMPANIA LTDA
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Eleven Months Ended Year Ended
November 30, December 31,
1 9 9 8 1 9 9 7 1 9 9 7 1 9 9 6
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 4,885,733 $ 9,309,610 $ 10,155,569 $ 9,154,212
Cost of goods sold 3,469,293 7,373,377 8,043,391 7,637,753
------------ ------------ ------------ ------------
Gross profit 1,416,440 1,936,233 2,112,178 1,516,459
------------ ------------ ------------ ------------
Selling and administrative expenses 454,335 541,521 590,729 1,442,857
Payroll and related expenses 813,766 1,040,880 1,135,464 --
Interest expenses 299,593 248,733 271,335 --
Other expenses 24,545 4,596 5,014 255,924
------------ ------------ ------------ ------------
Total expenses 1,592,239 1,835,730 2,002,542 1,698,781
------------ ------------ ------------ ------------
(Loss) Income before provision for income tax (175,799) 100,503 109,636 (182,322)
Provision for income taxes 41,272 87,307 95,240 44,437
------------ ------------ ------------ ------------
Net (loss) income (217,071) 13,196 14,396 (226,759)
Other comprehensive income (loss):
Income (loss) in foreign currency translation 49,709 (1,562) (1,704) (15,829)
------------ ------------ ------------ ------------
Net comprehensive (loss) income $ (167,362) $ 11,634 $ 12,692 $ (242,588)
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 65
DANIEL LOPEZ R & COMPANIA LTDA
STATEMENT OF STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
CURRENCY
RETAINED TRANSLATION
CAPITAL EARNINGS ADJUSTMENT TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance - January 1, 1996 $ 439,642 $ 269,174 $ -- $ 708,816
Net loss -- (226,759) -- (226,759)
Currency translation adjustment -- -- (15,829) (15,829)
--------- --------- --------- ---------
Balance - December 31, 1996 439,642 42,415 (15,829) 466,228
Return of capital (314,373) -- -- (314,373)
Net income -- 14,396 -- 14,396
Currency translation adjustment -- -- 14,125 14,125
--------- --------- --------- ---------
Balance - December 31, 1997 125,269 56,811 (1,704) 180,376
Return of capital (34,738) -- -- (34,738)
Net loss -- (217,071) -- (217,071)
Currency translation adjustment -- -- 49,709 49,709
--------- --------- --------- ---------
Balance - November 30, 1998 $ 90,531 $(160,260) $ 48,005 $ (21,724)
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 66
DANIEL LOPEZ R & COMPANIA LTDA
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Eleven Months Ended Year Ended
November 30, December 31,
1 9 9 8 1 9 9 7 1 9 9 7 1 9 9 6
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ (217,071) $ 13,196 $ 14,396 $ (226,759)
Adjustments to reconcile net income to
net cash (used) provided by operations:
Loss on fixed assets sold 17,801 -- -- --
Depreciation and amortization 50,654 52,173 56,917 51,215
Changes in assets and liabilities:
Accounts receivable 1,107,802 550,653 600,712 (1,916,619)
Prepaid expenses 582,550 -- 344,691 (460,833)
Inventory 180,099 401,510 438,008 (803,219)
Other current assets 10,004 8,624 16,057 (85,807)
Other assets (64,082) -- -- --
Accounts payable (679,071) (967,125) (1,399,679) 3,180,560
Deferred revenue (178,926) 168,762 184,062 --
Other accrued liabilities (119,598) 98,080 106,997 120,624
----------- ----------- ----------- -----------
Net cash provided (used) by operating activities 690,162 325,873 362,161 (140,838)
----------- ----------- ----------- -----------
CASH FLOW USED BY INVESTING ACTIVITIES:
Investment in fixed assets (7,986) (95,262) (103,922) (98,326)
----------- ----------- ----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Returned capital (34,738) (314,373) (314,373) --
Mortgage payments (2,395) -- -- --
Net borrowings of notes payable (351,054) 200,918 200,918 497,000
Net advances from stockholders (501,929) (55,782) (55,782) (141,541)
----------- ----------- ----------- -----------
Net cash (used) provided by financing activities (890,116) (169,237) (169,237) 355,459
----------- ----------- ----------- -----------
(Decrease) increase in cash, prior to effect
of foreign currency translation adjustment (207,940) 61,374 89,002 116,295
Effect in cash of foreign currency translation 49,709 (1,326) 14,125 (15,829)
----------- ----------- ----------- -----------
Net (decrease) increase in cash (158,231) 60,048 74,877 100,466
Cash at beginning of year 175,343 100,466 100,466 --
----------- ----------- ----------- -----------
Cash at end of year $ 17,112 $ 160,514 $ 175,343 $ 100,466
=========== =========== =========== ===========
Supplemental cash flow information:
Interest paid $ 299,593 $ 248,733 $ 271,335 $ --
=========== =========== =========== ===========
Income taxes paid $ 41,272 $ 87,307 $ 95,240 $ 44,437
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 67
DANIEL LOPEZ R & COMPANIA LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 1 - ORGANIZATION
The Company was incorporated by way of public deed No 9120 dated December 29,
1987 at the Public Notary No 9 of Santafe de Bogota, under the name of Daniel
Lopez R. & Compania Limitada -Dlr & Cia Ltda.
The principal corporate purpose is the purchase, sale, distribution and
representation of products and services related to the information systems
industry.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
For purposes of cash flows, the Company considers highly liquid investments
purchased with a maturity of three months or less to be cash.
Revenue Recognition
Revenues from services are recognized as the services are performed. Revenues
from the sales and installation of hardware are recognized when the installation
is substantially complete.
Inventories
Inventories are valued at the lower of cost or market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is calculated
using the straight line method over the estimated useful life of the assets, at
annual rates of 10% for office equipment and furniture and fixture, 20% for
vehicles and computing equipment and 5% for buildings and improvements.
<PAGE> 68
DANIEL LOPEZ R & COMPANIA LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
Fair Value
The Company has a number of financial instruments, none of which is held for
trading purposes. The Company estimates that the fair value of all financial
instruments at November 30, 1998 and December 31, 1997, does not differ
materially from the aggregate carrying values of these financial instruments
recorded in the accompanying balance sheets. The estimated fair value amounts
have been determined by the Company using available market information and
appropriate valuation methodologies. Considerable judgment is necessarily
required in interpreting market data to develop the estimates of fair value,
and, accordingly, the estimates are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
Investments
The Company utilizes Statement of Financial Accounting Standards ("SFAS") Number
115, "Accounting for Certain Investments in Debt and Equity Securities" to
account for its investments.
<PAGE> 69
DANIEL LOPEZ R & COMPANIA LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes
The tax effect on transactions is recorded in the same year the transactions are
recognized for accounting purposes. Deferred income taxes relate to temporary
differences resulting from recognition of expenses for accounting purposes in
periods other than those used for tax purposes.
The nominal rate for income tax is 35% of taxable income.
Translation of Foreign Currency
The Company's financial statements are translated in accordance with Statement
of Financial Accounting Standards No. 52 (SFAS No. 52), which requires that
foreign currency assets and liabilities be translated using the exchange rates
in effect at the balance sheet date. Results of operations are translated using
the average exchange rates prevailing during the period. For purposes of SFAS
No. 52, the Company considers the Colombian Peso to be the functional currency.
The effects of unrealized exchange fluctuations on translating foreign currency
assets and liabilities into U.S. dollars are accumulated as the cumulative
translation adjustment in shareholders' equity. Realized gains and losses from
foreign currency transactions are included in the results of operation for the
period. Fluctuations arising from intercompany transactions are long term in
nature and are accumulated as cumulative translation adjustments.
<PAGE> 70
DANIEL LOPEZ R & COMPANIA LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment consist of:
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
-------- --------
<S> <C> <C>
Land $ 74,359 $ 90,926
Building 183,001 245,048
Furniture and fixtures and office equipment 53,704 54,558
Communications and computing equipment 48,345 55,310
Vehicles 998 25,158
-------- --------
Total cost 360,407 471,000
Less: accumulated depreciation 117,569 119,693
-------- --------
$242,838 $351,307
======== ========
</TABLE>
NOTE 4 - SHORT TERM BORROWING
Corresponds to short term loans borrowed from local banks, payable in Colombian
pesos in a term of one year or less, with interest rates ranging from a 34% to
42% annual effective rate. These loans are guaranteed by promissory notes signed
by the Company and in some cases by the stockholders. No assets are pledged for
these loans.
NOTE 5 - DEFERRED REVENUE
Deferred revenues are comprised mainly of customer deposits on orders. The
nature of the Company's operations requires a delay between the time that an
order is placed and the completion of the contract. Consequently, the Company
requests deposits on such arrangements.
<PAGE> 71
DANIEL LOPEZ R & COMPANIA LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 6 - MORTGAGE PAYABLE - BANK
On March 14, 1996, The Company obtained a mortgage from a bank for the purchase
of their office facility in Bogota, Colombia. The mortgage expires on March 2012
and had an initial principal balance of $99,400. The mortgage agreement allows
for an increase in the outstanding principal balance due to monetary adjustments
as mandated by the Colombian Central Bank. Therefor, management of the Company
can not reasonably determine minimum future payments. Although payments are due
currently, the entire balance has been classified as long-term because
management cannot determine, at this time, the amount that is due and payable in
the current year.
NOTE 7 - ACQUISITION BY GLOBAL DATATEL, INC.
On November 30, 1998, the Company was acquired by Global Datatel, Inc.
("Global") for $300,000 in cash and 60,000 shares of Global common stock.
<PAGE> 72
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Micro Star LTDA
We have audited the accompanying balance sheets of Micro Star LTDA as of
November 30, 1998 and December 31, 1997 and the related statements of operations
and comprehensive income, changes in stockholders' equity and cash flows for the
eleven months ended November 30, 1998 and 1997 and for the years ended December
31, 1997 and 1996. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Micro Star LTDA as of November
30, 1998 and December 31, 1997 and the results of their operations and their
cash flows for the eleven months ended November 30, 1998 and 1997 and for the
years ended December 31, 1997 and 1996 in conformity with generally accepted
accounting principles.
Seligson & Giannattasio, LLP
N. White Plains, New York
April 14, 2000
<PAGE> 73
MICRO STAR LTDA
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 576 $ 630
Accounts receivable 623,672 840,608
Prepaid expenses 88,813 85,639
Inventory 117,254 104,002
Other current assets 32,942 44,498
---------- ----------
Total current assets 863,257 1,075,377
Property, plant and equipment - net of
accumulated depreciation of $15,470 and
$9,102, respectively 20,525 18,910
Other assets 6,868 89,170
---------- ----------
Total assets $ 890,650 $1,183,457
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 74
MICRO STAR LTDA
BALANCE SHEETS
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Loan payable to bank $ 122,672 $ 351,475
Accounts payable 557,323 613,746
Other accrued liabilities 68,277 52,369
----------- -----------
Total current liabilities 748,272 1,017,590
----------- -----------
Stockholders' equity:
Capital 38,796 46,383
Retained earnings 94,613 124,836
Foreign currency translation adjustment 8,969 (5,352)
----------- -----------
Total stockholders' equity 142,378 165,867
----------- -----------
Total liabilities and stockholders' equity $ 890,650 $ 1,183,457
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 75
MICRO STAR LTDA
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Eleven Months Ended Year Ended
November 30, December 31,
1 9 9 8 1 9 9 7 1 9 9 7 1 9 9 6
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 2,125,238 $ 1,912,046 $ 2,085,792 $ 1,066,065
Cost of goods sold 1,529,556 1,481,370 1,615,981 829,537
----------- ----------- ----------- -----------
Gross profit 595,682 430,676 469,811 236,528
----------- ----------- ----------- -----------
Selling and administrative expenses 286,754 141,369 154,215 186,355
Payroll and related expenses 154,355 120,625 131,586 --
Interest expenses 150,444 94,720 103,327 --
Other expenses 5,539 427 466 45,925
----------- ----------- ----------- -----------
Total expenses 597,092 357,141 389,594 232,280
----------- ----------- ----------- -----------
(Loss) income before provision for income tax (1,410) 73,535 80,217 4,248
Provision for income taxes 28,813 28,263 30,831 14,380
----------- ----------- ----------- -----------
Net (loss) income (30,223) 45,272 49,386 (10,132)
Other comprehensive income (loss):
Income(loss) in foreign currency translation 14,321 (4,906) (5,352) (994)
----------- ----------- ----------- -----------
Net comprehensive (loss) income $ (15,902) $ 40,366 $ 44,034 $ (11,126)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 76
MICRO STAR LTDA
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CURRENCY
RETAINED TRANSLATION
CAPITAL EARNINGS ADJUSTMENT TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance - January 1, 1996 $ 69,635 $ 85,582 $ -- $ 155,217
Net loss -- (10,132) -- (10,132)
Currency translation adjustment -- -- (994) (994)
--------- --------- --------- ---------
Balance - December 31, 1996 69,635 75,450 (994) 144,091
Returned capital (23,252) -- -- (23,252)
Net income -- 49,386 -- 49,386
Currency translation adjustment -- -- (4,358) (4,358)
--------- --------- --------- ---------
Balance - December 31, 1997 46,383 124,836 (5,352) 165,867
Returned capital (7,587) -- -- (7,587)
Net loss -- (30,223) -- (30,223)
Currency translation adjustment -- -- 14,321 14,321
--------- --------- --------- ---------
Balance - November 30, 1998 $ 38,796 $ 94,613 $ 8,969 $ 142,378
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 77
MICRO STAR LTDA
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Eleven Months Ended Year Ended
November 30, December 31,
1 9 9 8 1 9 9 7 1 9 9 7 1 9 9 6
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (loss) income $ (30,223) $ 45,272 $ 49,386 $ (10,132)
Adjustments to reconcile net income to net
cash (used) provided by operations:
Depreciation and amortization 6,368 7,455 8,139 7,346
Changes in assets and liabilities:
Accounts Receivable 216,936 (38,467) (48,084) 39,216
Inventory (13,252) 36,024 39,156 (21,412)
Other assets 90,684 (119,359) (129,738) 15,416
Accounts Payable (56,423) (57,674) (39,932) 23,613
Other accrued liabilities 15,908 (60,143) (65,373) 43,967
--------- --------- --------- ---------
Net cash provided (used) by operating activities 229,998 (186,892) (186,446) 98,014
--------- --------- --------- ---------
CASH FLOW USED BY INVESTING ACTIVITIES:
Investment in fixed assets (7,983) (7,379) (7,379) (4,126)
--------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Return of capital (7,587) (23,252) (23,252) --
Net borrowings on notes payable (228,803) 222,717 222,717 (92,715)
--------- --------- --------- ---------
Net cash (used) provided by financing activities (236,390) 199,465 199,465 (92,715)
--------- --------- --------- ---------
(Decrease) increase in cash, prior to effect
of foreign currency translation adjustment (14,375) 5,194 5,640 1,173
Effect in cash of foreign currency translation 14,321 (4,926) (5,352) (994)
--------- --------- --------- ---------
Net (decrease) increase in cash (54) 268 288 (179)
Cash at beginning of year 630 342 342 521
--------- --------- --------- ---------
Cash at end of year $ 576 $ 610 $ 630 $ 342
--------- --------- --------- ---------
Supplemental cash flow information:
Interest paid $ 150,444 $ 94,720 $ 103,327 $ --
--------- --------- --------- ---------
Income taxes paid $ 28,813 $ 28,263 $ 30,831 $ 14,380
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 78
MICRO STAR LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 1 - ORGANIZATION
The Company was incorporated by way of public deed No 2271 dated July 28, 1988
at the Public Notary No 5 of Barranquilla, under the name of Micro Star
Limitada. The principal corporate purpose is the purchase, sale, distribution
and representation of products and services related to the information systems
industry throughout Colombia.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
For purposes of cash flows, the Company considers investments of three months or
less as cash equivalents.
Revenue Recognition
Revenues from services are recognized as the services are performed. Revenues
from the sales and installation of hardware packages are recognized when the
installation is substantially completed and operational.
Inventories
Inventories are valued at the lower of cost (first-in first-out method) or
market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is calculated
using the straight line method over the estimated useful life of the assets, at
annual rates of 10% for office equipment and furniture and fixture, 20% for
vehicles and computing equipment and 5% for buildings and improvements.
<PAGE> 79
MICRO STAR LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
Fair Value
The Company has a number of financial instruments, none of which is held for
trading purposes. The Company estimates that the fair value of all financial
instruments at November 30, 1998 and December 31, 1997, does not differ
materially from the aggregate carrying values of these financial instruments
recorded in the accompanying balance sheets. The estimated fair value amounts
have been determined by the Company using available market information and
appropriate valuation methodologies. Considerable judgment is necessarily
required in interpreting market data to develop the estimates of fair value,
and, accordingly, the estimates are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
Investments
The Company utilizes Statement of Financial Accounting Standards ("SFAS") Number
115, "Accounting for Certain Investments in Debt and Equity Securities" to
account for its investments.
<PAGE> 80
MICRO STAR LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes
The tax effect on transactions is recorded in the same year the transactions are
recognized for accounting purposes. Deferred income taxes relate to temporary
differences resulting from recognition of expenses for accounting purposes in
periods other than those used for tax purposes.
The nominal rate for income tax rate for corporations is 35% of their taxable
income.
Translation of Foreign Currency
The Company's financial statements are translated in accordance with Statement
of Financial Accounting Standards No. 52 (SFAS No. 52), which requires that
foreign currency assets and liabilities be translated using the exchange rates
in effect at the balance sheet date. Results of operations are translated using
the average exchange rates prevailing during the period. For purposes of SFAS
No. 52, the Company considers the Colombian Peso to be the functional currency.
The effects of unrealized exchange fluctuations on translating foreign currency
assets and liabilities into U.S. dollars are accumulated as the cumulative
translation adjustment in shareholders' equity. Realized gains and losses from
foreign currency transactions are included in the results of operation for the
period. Fluctuations arising from intercompany transactions are long term in
nature and are accumulated as cumulative translation adjustments.
<PAGE> 81
MICRO STAR LTDA
NOTES TO THE FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment consist of:
<TABLE>
<CAPTION>
November 30, December 31,
1 9 9 8 1 9 9 7
------- -------
<S> <C> <C>
Furniture and fixture and office equipment $26,769 $17,622
Communications and computing equipment 9,226 10,390
------- -------
Total cost 35,995 28,012
Less: accumulated depreciation 15,470 9,102
------- -------
$20,525 $18,910
======= =======
</TABLE>
NOTE 4 - LOAN PAYABLE TO BANK
Corresponds to short term loans borrowed from local banks, payable in Colombian
pesos in a term of one year or less, with interest rates ranging from a 34% to
42% annual effective rate. These loans are guaranteed by promissory notes signed
by the Company and in some cases by the stockholders. No assets are pledged for
these loans.
NOTE 5 - CREDIT FACILITIES
The Company has a credit facility from IBM for the purchase of computer
equipment, which is guaranteed by certain officers and shareholders of the
Company. At November 30, 1998, the credit facility totaled approximately
$150,000.
NOTE 6 - ACQUISITION BY GLOBAL DATATEL, INC.
On November 30, 1998, the Company was acquired by Global Datatel, Inc.
("Global") in exchange for $150,000 and 70,000 shares of Global common stock.
<PAGE> 82
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Mantenimiento Electronico De Sistemas Ltda
We have audited the accompanying balance sheets of Mantenimiento Electronico De
Sistemas Ltda as of September 30, 1998 and December 31, 1997 and the related
statements of operations and comprehensive income, changes in stockholders'
equity and cash flows for the nine months ended September 30, 1998 and 1997, and
for the years ended December 31, 1997 and 1996. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Mantenimiento Electronico De
Sistemas Ltda as of September 30, 1998 and December 31, 1997 and the results of
their operations and their cash flows for the nine months ended September 30,
1998 and 1997 and for the years ended December 31, 1997 and 1996 in conformity
with generally accepted accounting principles.
Seligson & Giannattasio, LLP
N. White Plains, New York
April 14, 2000
<PAGE> 83
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1 9 9 8 1 9 9 7
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ -- $ 3,135
Accounts Receivable 297,423 302,585
Prepaid expenses 497,241 327,700
Due from stockholders -- 127,642
Inventory 83,159 36,939
Other current assets 252,712 172,889
---------- ----------
Total current assets 1,130,535 970,890
Property, plant and equipment - net of accumulated
depreciation of $83,035 and $99,938, respectively 36,078 43,353
---------- ----------
Total assets $1,166,613 $1,014,243
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 84
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1 9 9 8 1 9 9 7
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Loan payable to bank $ 516,427 $ 275,005
Accounts payable 103,700 265,878
Deferred revenue -- 74,032
Other accrued liabilities 306,906 271,160
----------- -----------
Total current liabilities 927,033 886,075
----------- -----------
Stockholders' equity
Capital 96,345 217,095
Retained earnings (deficit) 110,078 (61,278)
Foreign currency translation adjustment 33,157 (27,649)
----------- -----------
Total stockholders' equity 239,580 128,168
----------- -----------
Total liabilities and stockholders' equity $ 1,166,613 $ 1,014,243
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 85
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1 9 9 8 1 9 9 7 1 9 9 7 1 9 9 6
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 1,183,298 $ 2,382,255 $ 3,176,340 $ 2,453,092
Cost of goods sold 132,552 1,660,234 2,213,645 1,784,302
----------- ----------- ----------- -----------
Gross profit 1,050,746 722,021 962,695 668,790
----------- ----------- ----------- -----------
Selling and administrative expenses 373,641 180,709 240,945 299,413
Payroll and related expenses 420,568 178,589 238,118 190,614
Interest expenses 63,492 113,364 151,152 114,230
----------- ----------- ----------- -----------
Total expenses 857,701 472,662 630,215 604,257
----------- ----------- ----------- -----------
Income before provision for income tax 193,045 249,359 332,480 64,533
Provision for income taxes 21,689 74,150 98,867 37,798
----------- ----------- ----------- -----------
Net income 171,356 175,209 233,613 26,735
Other comprehensive income (loss)
Gain (loss) in foreign currency translation 60,806 (20,737) (29,515) 1,866
----------- ----------- ----------- -----------
Net comprehensive income $ 232,162 $ 154,472 $ 204,098 $ 28,601
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 86
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CURRENCY
RETAINED TRANSLATION
CAPITAL EARNINGS ADJUSTMENT TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance - January 1, 1996 $ 246,634 $(321,626) $ -- $ (74,992)
Net income -- 26,735 -- 26,735
Currency translation adjustment -- -- 1,866 1,866
--------- --------- --------- ---------
Balance - December 31, 1996 246,634 (294,891) 1,866 (46,391)
Return of capital (29,539) -- -- (29,539)
Net income -- 233,613 -- 233,613
Currency translation adjustment -- -- (29,515) (29,515)
--------- --------- --------- ---------
Balance - December 31, 1997 217,095 (61,278) (27,649) 128,168
Return of capital (120,750) -- -- (120,750)
Net income -- 171,356 -- 171,356
Currency translation adjustment -- -- 60,806 60,806
--------- --------- --------- ---------
Balance - September 30, 1998 $ 96,345 $ 110,078 $ 33,157 $ 239,580
========= ========= ========= =========
</TABLE>
<PAGE> 87
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1 9 9 8 1 9 9 7 1 9 9 7 1 9 9 6
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 171,356 $ 175,209 $ 233,613 $ 26,735
Adjustments to reconcile net income to
net cash (used) provided by operations:
Depreciation and amortization 16,903 19,280 25,706 14,726
Changes in assets and liabilities:
Accounts receivable 5,162 181,120 248,194 (216,145)
Inventory (46,220) 220,340 247,573 (141,316)
Other current assets (249,364) 86,545 117,260 (106,519)
Accounts payable (162,178) (42,515) (55,942) (88,621)
Deferred revenue (74,032) (212,011) (226,021) 150,396
Other accrued liabilities 35,746 (182,656) (256,550) 131,418
--------- --------- --------- ---------
Net cash (used) provided by operating activities (302,627) 245,312 333,833 (229,326)
--------- --------- --------- ---------
CASH FLOW USED BY INVESTING ACTIVITIES:
Investment in fixed assets (9,628) (1,168) (1,168) (23,619)
--------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Additional capital contributions -- 39,958 39,958 --
Return of capital (120,750) (29,539) (29,539) --
Net borrowings on notes payable 241,422 (140,748) (187,666) 251,973
Net advances from stockholders 127,642 (92,715) (127,624) --
--------- --------- --------- ---------
Net cash provided (used) by financing activities 248,314 (223,044) (304,871) 251,973
--------- --------- --------- ---------
(Decrease) increase in cash, prior to effect
of foreign currency translation adjustment (63,941) 21,100 27,794 (972)
Effect in cash of foreign currency translation 60,806 (20,737) (29,515) 1,866
--------- --------- --------- ---------
Net (decrease) increase in cash (3,135) 363 (1,721) 894
Cash at beginning of year 3,135 4,856 4,856 3,962
--------- --------- --------- ---------
Cash at end of year $ -- $ 5,219 $ 3,135 $ 4,856
========= ========= ========= =========
Supplemental cash flow information:
Interest paid $ 63,492 $ 113,364 $ 151,152 $ 114,230
========= ========= ========= =========
Income taxes paid $ 21,689 $ 74,150 $ 98,867 $ 37,798
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 88
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
NOTE 1 - ORGANIZATION
The Company, was incorporated by way of public deed No 439 dated June 8, 1988 at
the Public Notary No 24 of Santafe de Bogota, under the name of Mantenimiento
Electronico De Sistemas Limitada- Mes Ltda.
The principal corporate purpose is to provide maintenance and repair to data
processing equipment, and sale supplies and accessories for this equipment.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
For purposes of cash flows, the Company considers investments of three months or
less as cash equivalents.
Revenue Recognition
Revenues from services are recognized as the services are performed. Revenues
from the sales and installation of hardware packages are recognized when the
installation is substantially completed and operational.
Inventories
Inventories are valued at the lower of cost (first-in first-out method) or
market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Major improvements to assets
are capitalized and maintenance and repair expenses not extending the assets
useful life are charged to expense as incurred. Depreciation is calculated using
the straight line method over the estimated useful life of the assets, at annual
rates of 10% for office equipment, furniture and fixture, 20% for vehicles and
computing equipment and 5% for buildings and improvements.
<PAGE> 89
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
Fair Value
The Company has a number of financial instruments, none of which is held for
trading purposes. The Company estimates that the fair value of all financial
instruments at September 30, 1998 and December 31, 1997, does not differ
materially from the aggregate carrying values of these financial instruments
recorded in the accompanying balance sheets. The estimated fair value amounts
have been determined by the Company using available market information and
appropriate valuation methodologies. Considerable judgment is necessarily
required in interpreting market data to develop the estimates of fair value,
and, accordingly, the estimates are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
Investments
The Company utilizes Statement of Financial Accounting Standards ("SFAS") Number
115, "Accounting for Certain Investments in Debt and Equity Securities" to
account for its investments.
<PAGE> 90
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes
The tax effect on transactions is recorded in the same year the transactions are
recognized for accounting purposes. Deferred income taxes relate to temporary
differences resulting from recognition of expenses for accounting purposes in
periods other than those used for tax purposes. The nominal rate for income tax
is 35% of taxable income.
Translation of Foreign Currency
The Company's financial statements are translated in accordance with Statement
of Financial Accounting Standards No. 52 (SFAS No. 52), which requires that
foreign currency assets and liabilities be translated using the exchange rates
in effect at the balance sheet date. Results of operations are translated using
the average exchange rates prevailing during the period. For purposes of SFAS
No. 52, the Company considers the Colombian Peso to be the functional currency.
The effects of unrealized exchange fluctuations on translating foreign currency
assets and liabilities into U.S. dollars are accumulated as the cumulative
translation adjustment in shareholders' equity. Realized gains and losses from
foreign currency transactions are included in the results of operation for the
period. Fluctuations arising from intercompany transactions are long term in
nature and are accumulated as cumulative translation adjustments.
<PAGE> 91
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment consist of:
<TABLE>
<CAPTION>
September 30, December 31,
1 9 9 8 1 9 9 7
-------- --------
<S> <C> <C>
Furniture and fixture, and office equipment $ 33,039 $ 39,695
Communications and computing equipment 86,074 103,596
-------- --------
Total cost 119,113 143,291
Less: accumulated depreciation 83,035 99,938
-------- --------
$ 36,078 $ 43,353
======== ========
</TABLE>
NOTE 4 - SHORT TERM BORROWING
Corresponds to short term loans borrowed from local banks, payable in Colombian
pesos in a term of one year or less, with interest rates ranging from a 34% to
42% annual effective rate. These loans are guaranteed by promissory notes signed
by the Company and in some cases by the stockholders. No assets are pledged for
these loans.
NOTE 5 - DEFERRED REVENUES
Deferred revenues are comprised mainly of customer deposits on orders. The
nature of the Colombian operations requires a delay between the time that an
order is placed and the completion of the contract. Consequently, the Company
requests deposits on such arrangements.
NOTE 6 - ACQUISITION BY GLOBAL DATATEL, INC.
On September 30, 1998, the Company was acquired by Global Datatel, Inc.
("Global") in exchange for 357,143 shares of Global common stock.
<PAGE> 92
GLOBAL DATATEL, INC. AND SUBSIDIARIES
INTRODUCTION TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma financial statements have been prepared based
upon certain pro forma adjustments to the historical financial statements of
Global DataTel, Inc. ("Global"), International Computer Resources ("ICR"),
Mantenimiento Electronico de Sistemas Limited ("MES"), DLR & CIA ("DLR"), Micro
Star LTDA ("MICRO") and CASA Informatica ("CASA") (collectively called the
"Company"). The pro forma financial statements should be read in conjunction
with the notes thereto and the historical financial statements of the Company.
The accompanying pro forma balance sheet has been presented as if the
acquisitions described below occurred at November 30, 1998. The accompanying pro
forma statement of operations has been prepared as if the acquisitions occurred
at the beginning of the year ended November 30, 1998. These pro forma financial
statements do not purport to be indicative of the results which would actually
have been obtained had the pro forma transactions been completed as of the
beginning of the year ended November 30, 1998. The pro forma transactions (see
Notes to Pro forma financial statements) are as follows:
The purchase of ICR in exchange for 105,000 shares of convertible
preferred stock valued at $0.001 per share and 4,243,843 shares of
common stock valued at $.20 per share.
The purchase of MES for 357,143 common shares of the Company's common
stock, valued at the book value of MES.
The purchase of DLR for $300,000 ($100,000 due at closing and five
monthly installments of $40,000 thereafter, as defined) in cash, and
60,000 shares of the Company's common stock, valued at $3.00 per share.
The purchase of Micro for $150,000, payable in six consecutive monthly
payments from the date of closing, and 70,000 shares of the Company's
common stock, valued at $3.00 per share.
The purchase of Casa for $840,000, payable in 9 monthly payments of
$93,333 commencing at the date of the closing and 392,000 shares of the
Company's common stock, valued at $3 per share.
<PAGE> 93
GLOBAL DATATEL, INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
NOVEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Historical
----------------------------------------------------------
Global MES ICR Casa
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $ 82 $ -- $ -- $ --
Due from Shareholder -- -- -- 39,958
Accounts receivable -- 297,423 31,850 1,787,538
Inventory -- 83,159 56,785 614,320
Prepaid expense -- 497,241 -- 581,902
Other current assets -- 252,712 -- --
---------- ---------- ---------- ----------
Total current assets 82 1,130,535 88,635 3,023,718
Fixed assets -- 36,078 4,257 241,247
Goodwill -- -- -- --
Other assets -- -- -- 65,328
---------- ---------- ---------- ----------
Total assets $ 82 $1,166,613 $ 92,892 $3,330,293
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Historical
--------------------------
DLR Micro Pro forma Adjustments Consolidated
---------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash $ 17,112 $ 576 $ 17,770
Due from Shareholder 699,252 -- 739,210
Accounts receivable 222,974 623,672 2,963,457
Inventory 185,112 117,254 1,056,630
Prepaid expense 208,105 88,813 1,376,061
Other current assets 59,746 32,942 345,400
---------- ---------- ----------
Total current assets 1,392,301 863,257 6,498,528
Fixed assets 242,838 20,525 544,945
Goodwill -- (3)501,724 (6)61,587 1,170,157
(4)217,622
(5)512,398
Other assets 64,082 6,868 136,278
---------- ---------- ----------
Total assets $1,699,221 $ 890,650 $8,349,908
========== ========== ==========
</TABLE>
See notes to pro forma consolidated financial statements.
<PAGE> 94
GLOBAL DATATEL, INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
NOVEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Historical
--------------------------------------------------------------------------
Global MES ICR Casa DLR
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Loan payable $ -- $ 516,427 $ 50,000 $ 62,404 $ 369,464
Accounts payable -- 103,700 54,064 1,423,918 1,189,163
Accrued expenses & taxes -- 306,906 6,502 108,146 60,023
Deferred revenue -- -- -- 232,223 5,136
----------- ----------- ----------- ----------- -----------
Total current liabilities -- 927,033 110,566 1,826,691 1,623,786
----------- ----------- ----------- ----------- -----------
Long term debt -- -- 81,898 -- 97,159
----------- ----------- ----------- ----------- -----------
Stockholders' equity:
Preferred stock -- -- -- -- --
Common stock 557 96,345 300 512,548 90,531
Additional paid-in-capital 6,315,165 -- 29,117 -- --
Other comprehensive income -- 33,157 -- 18,209 48,005
Retained (deficit) earnings (6,315,640) 110,078 (128,989) 972,845 (160,260)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity (deficit) 82 239,580 (99,572) 1,503,602 (21,724)
----------- ----------- ----------- ----------- -----------
Total liabilities and
stockholders' equity $ 82 $ 1,166,613 $ 92,892 $ 3,330,293 $ 1,699,221
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Historical
-----------
Micro Pro forma Adjustments Consolidated
----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Loan payable $ 122,672 (3) 300,000 $2,410,967
(4) 150,000
(5) 840,000
Accounts payable 557,323 3,328,168
Accrued expenses & taxes 68,277 549,854
Deferred revenue -- 237,359
----------- ----------
Total current liabilities 748,272 6,526,348
----------- ----------
Long term debt -- 179,057
----------- ----------
Stockholders' equity:
Preferred stock -- (1) 105 105
Common stock 38,796 (2) 96,345 (1) 4,244 5,980
(3) 90,531 (2) 357
(4) 38,796 (3) 60
(5)512,548 (4) 70
(5) 392
Additional paid-in-capital -- (1) 4,349 (3) 179,940 8,015,645
(1)128,989 (4) 209,930
(5)1,175,608
(2) 239,223
Other comprehensive income 8,969 (2) 33,157 --
(3) 48,005
(4) 8,969
(5) 18,209
Retained (deficit) earnings 94,613 (4) 94,613 (3) 160,260 (6,377,227)
----------- ----------
(5)972,845 (1) 128,989
(6) 61,587
(2)110,078
Total stockholders' equity (deficit) 142,378 1,644,503
----------- ----------
Total liabilities and
stockholders' equity $ 890,650 $8,349,908
=========== ==========
</TABLE>
See notes to pro forma consolidated financial statements.
<PAGE> 95
GLOBAL DATATEL, INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Historical
--------------------------------------------------------------------------------------
Global MES ICR Casa
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ -- $ 1,426,252 $ 1,409,433 $ 11,150,505
Cost of goods sold -- 892,263 1,008,644 9,233,939
General and
administrative expense 592,184 498,952 376,334 1,273,947
Amortization -- -- -- --
Interest expense -- 64,638 9,700 90,426
Income taxes -- 96,628 -- 255,137
------------ ------------ ------------ ------------
Net (loss) income from
Continuing operations $ (592,184) $ (126,229) $ 14,755 $ 297,066
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Historical
-------------------------------------
DLR Micro Pro forma Adjustments Consolidated
------------ ------------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 4,849,672 $ 2,187,678 $ 21,023,540
Cost of goods sold 4,021,693 1,705,006 16,861,545
General and
administrative expense 718,816 238,353 3,698,586
Amortization -- -- (6)61,587 61,587
Interest expense 288,707 168,078 621,549
Income taxes 48,815 38,209 438,789
------------ ------------ ------------
Net (loss) income from
Continuing operations $ (228,359) $ 38,032 $ (658,516)
============ ============ ============
</TABLE>
See notes to pro forma consolidated financial statements
<PAGE> 96
GLOBAL DATATEL, INC. AND SUBSIDIARIES
NOTES TO PROFORMA FINANCIAL STATEMENTS
AS OF NOVEMBER 30, 1998
(UNAUDITED)
Note 1 - To reflect the purchase of ICR in exchange for 105,000 shares of
convertible Preferred Stock and 4,243,843 shares of Common Stock.
Note 2 - To reflect purchase of MES in exchange for 357,143 shares of Common
Stock.
Note 3 - To reflect purchase of DLR in exchange for $300,000 in cash and 60,000
shares of common stock.
Note 4 - To reflect purchase of Micro in exchange for $150,000 in cash and
70,000 shares of Common Stock.
Note 5 - To reflect purchase of Casa in exchange for $840,000 in cash and
392,000 shares of common stock.
Note 6 - To reflect the amortization arising from the acquisitions, over a
twenty-year period.
<PAGE> 97
PART III
EXHIBITS:
3.1 Articles of Incorporation of Gold Coast Resources, Inc. a
Nevada corporation*
3.2 Amendment to Articles of Incorporation*
3.3 Amendment to Articles of Incorporation*
3.4 By-Laws*
4.1 1999 Incentive and Non-Qualified Stock Option Plan
6.1 Lease for 3333 South Congress Ave., Suite 404 and 2875 South
Congress Ave., Suite D, Delray Beach, Florida.
6.2 Lease for Calle 39, No. 18-A-11, Bogota, Colombia.
6.3 Lease for Carera 18, No. 90-11 and Calle 90, No. 18-16,
Bogota, Colombia.
6.4 Lease for Calle 90, No. 18-59, Bogota, Colombia.
10.1 Employment Agreement with Richard Baker*
10.2 Employment Agreement with Antonio Serrato*
10.3 Employment Agreement with Rafael Delgado*
10.4 Employment Agreement with Mario Habib*
10.5 Employment Agreement with Antonio Habib.
10.6 Employment Agreement with Carlos Mejia.
11 Computation of Earnings per Common Share
16.1 Letter of Schvaneveldt and Company re Change in Certifying
Accountant*
27 Financial Data Schedule
99.1 Correspondence (3) with Policia Nacional de Columbia.
99.2 Purchase Order and correspondence (7) concerning contract
with LA 14 S.A.
99.3 Correspondence from Microsoft Columbia confirming the
Company is an authorized Solution Provider.
99.4 Correspondence from Lotus, business partner status of the
Company.
99.5 Confirmation of the Company's authorizations to be a
reseller of Hewlett-Packard product.
99.6 Certification from Compaq Computer de Columbia S.A. of
authorized reseller status of the Company.
- -----------------
*Previously filed
29
<PAGE> 98
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Registrant: GLOBAL DATATEL, INC.
Date: May 8, 2000
By: /s/ Richard Baker
----------------------------------
Richard Baker, President & CEO
30
<PAGE> 1
GLOBAL DATATEL, INC.
1999 INCENTIVE AND
NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSES OF PLAN. The purposes of the Global DataTel, Inc. 1999 Incentive and
Non-Qualified Stock Option Plan (hereinafter referred to as the "Plan") are to
provide to employees of Global DataTel, Inc. (hereinafter referred to as the
"Corporation"), as well as employees subsidiary or parent corporations which may
currently exist or be formed or acquired in the future, an opportunity for
investment in the Corporation's common stock (hereinafter referred to as the
"Shares"), as an inducement for such individuals to remain with the Corporation,
and to encourage them to increase their efforts to make the Corporation's
business more successful.
2. EFFECTIVE DATE AND TERMINATION OF PLAN. The effective date of the Plan is
December 29, 1999, the date on which the Plan was adopted by the Board of
Directors of the Corporation. The Plan shall terminate on December 29, 2009, and
no option shall be granted hereunder, after December 29, 2009; provided,
however, that the Board of Directors may at any time prior to that date
terminate the Plan; and provided further that any option granted hereunder prior
to the termination of the Plan shall remain exercisable in accordance with its
terms as then in effect.
3. ADMINISTRATION OF PLAN. The Plan shall be administered by the Board of
Directors of the Corporation. The Board of Directors may, however, to the extent
permissible under the Corporation's Articles of Organization, By-laws and
applicable law, delegate any of its functions under this Plan to a committee of
the Board of Directors or any other committee. Wherever in this Plan the term
"Board of Directors" is used it shall be construed to mean such committee to the
extent that the Board of Directors may have delegated any of its functions to
said committee and only to the extent of any such delegation. The acts of a
majority of the members present at any meeting of the Board of Directors at
which a quorum is present, or acts approved in writing by a majority of the
entire Board, shall be the acts of the Board of Directors for purposes of the
Plan.
4. ELIGIBILITY AND GRANT OF OPTIONS. Subject to the provisions of the Plan, the
Board of Directors shall (i) authorize the granting of incentive stock options,
non-qualified stock options or a combination of incentive stock options and
non-qualified stock options (hereinafter collectively referred to as "options"
unless otherwise stated); (ii) determine and designate from time to time those
employees (from the group consisting of all employees of the Company) to whom
options are to be granted (such employees to whom options are granted being
referred to herein as an "Optionee") and the number of Shares to be optioned to
each employee; (iii) determine the number of Shares subject to each option; and
(iv) determine the time or times when and the manner in which each option shall
be exercisable and the duration of the exercise period. In determining the
eligibility of an individual to receive an option, as well as in determining the
number of Shares to be optioned to any individual, the Board of
1
<PAGE> 2
Directors shall consider the position and responsibilities of the employee, the
nature and value to the Corporation, parent or subsidiary of his services and
accomplishments, his present and potential contribution to the success of the
Corporation, parent or subsidiary, and such other factors as the Board may deem
relevant. To be eligible to receive an incentive stock option or non-qualified
stock option an individual must be an employee of the Corporation, parent or
subsidiary. A Director shall abstain from voting on the grant of any options to
himself, his spouse, his children, grandchildren and parents. The grant of each
option shall be confirmed by a Stock Option Agreement (in the form prescribed by
the Board of Directors) which shall be executed by the Corporation and the
Optionee as promptly as practicable after such grant. More than one option may
be granted to an individual.
Incentive stock options shall be those options which satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended and
which the Board of Directors has specifically identified as incentive stock
options in the Stock Option Agreement executed by the Corporation and the
Optionee. In the case of incentive stock options, for the tax treatment as such
under Section 422 of the Internal Revenue Code, the aggregate fair market value,
determined at the time incentive stock options are granted, of the stock with
respect to which the incentive stock options are exercisable for the first time
by such individual during any calendar year (under all such plans the
Corporation may adopt) shall not exceed one hundred thousand dollars
($100,000.00).
In the event that an incentive stock option granted pursuant to the
terms of this Plan is granted to an employee who, prior to the grant, holds more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation, its parent or a subsidiary ("10% shareholder") the
option price under such grant shall be at least one hundred and ten percent
(110%) of the fair market value, and such option, by its terms, shall not be
exercisable more than five (5) years from the date of grant.
Nothing in the Plan or in any option granted pursuant to the Plan shall
confer on any individual any right to continue in the employ of the Corporation
or any parent or subsidiary or interfere in any way with the right of the
Corporation to terminate his employment at any time.
5. NUMBER OF SHARES SUBJECT TO OPTIONS. The Board of Directors, prior to the
time options under the Plan become exercisable, shall reserve for the purposes
of the Plan a total of two million six hundred fifty thousand (2,650,000)
Shares, which Shares may be either authorized and unissued Shares, or previously
issued Shares held in the treasury of the Corporation, or both. Shares as to
which an option granted under the Plan shall remain unexercised at the
expiration or termination thereof, and Shares subject to options which are
cancelled, may be the subject of the grant of further options. Shares reserved
pursuant to this paragraph may be adjusted to reflect changes in the
Corporation's capital structure as discussed in paragraph 19 hereof.
6. OPTION PRICE. The option price per Share shall be determined in each case by
the Board of
2
<PAGE> 3
Directors and shall not be less than one hundred percent (100%) (or one hundred
ten percent (110%) in the case of an incentive stock option granted to a ten
percent (10%) Shareholder) of the fair market value thereof as determined by the
Board of Directors by any reasonable method using market quotations on the date
the option is granted.
7. PERIOD OF OPTION AND WHEN EXERCISABLE. No option may be granted under this
Plan whose exercise date is later than ten (10) years after the date of grant
(or five (5) years after the date of grant in the case of an incentive stock
option granted to a ten percent (10%) Shareholder. Generally, an option may be
exercised only by the Optionee and subject to the rules set forth below only if,
at all times during the period beginning on the date of the granting of such
option and ending with the date of exercise of such option, the Optionee is an
employee of the Corporation, its parent or a subsidiary.
(i) Except as otherwise provided herein, in the case of an employee who
terminates employment, incentive stock options which are vested but unexercised
as of the date of termination of employment must be exercised within three (3)
months of termination. In the case of an employee who is discharged for cause,
as determined in the sole discretion of the Board of Directors, all previously
vested but unexercised options shall be forfeited immediately.
(ii) In the case of an employee who dies during the three (3) month
period discussed in (i) above, options which are vested but unexercised as of
the date of termination of employment must be exercised within twelve (12)
months of death.
(iii) Options which are vested but unexercised as of the date of
termination of employment due to death, must be exercised within twelve (12)
months after the death of an Optionee.
(iv) In the event that the employee becomes disabled as defined in
Section 22(e) (3) of the Internal Revenue code of 1986, as amended, options
which are vested but unexercised as of the date of termination of employment due
to disability must be exercised within twelve (12) months following the date of
termination of the Optionee's said employment.
(v) In the event an Optionee's employment is terminated for any other
reason (including but not limited to, voluntary or involuntary termination or
termination resulting from the death or disability of the Optionee), all
unvested options shall be immediately forfeited.
Notwithstanding the foregoing, options may not be exercised after the
original five (5) or ten (10) year term, Options may be exercised on behalf of
the estate of a former employee by the person or persons entitled to do so under
the Optionee's Will or, if the Optionee shall have failed to make testamentary
disposition of such option or shall have died intestate, by the Optionee's legal
representative or representatives. Such person, persons, representative, or
representatives are hereinafter referred to as the "Successors of an Optionee."
8. VESTING. Options granted to a participant shall be exercisable at any time
after being
3
<PAGE> 4
granted.
9. EXERCISE OF OPTIONS. (a) Subject to Plan restrictions, an option may be
exercised, and payment in full of the option price made, by an Optionee only by
written notice (in the form prescribed by the Board of Directors) to the
Corporation specifying the number of Shares to be so purchased. Such notice
shall state that the option price will be paid in full in cash (which in the
discretion of the Board of Directors may be obtained through a loan from the
Corporation or from a third party and guaranteed by the Corporation) or other
property, in the discretion of the Corporation. If the Corporation accepts a
request to pay in stock of the Corporation in satisfaction of the exercise
price, the fair market value of said stock shall at least equal the option
price, and, in the case of incentive stock options, prior to such acceptance the
Corporation must be furnished with evidence that the acquisition of said stock
and its transfer in payment of the option price satisfies the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended and other
applicable law. As soon as practicable after receipt by the Corporation of such
notice and of payment in full of the option price of all the Shares with respect
to which an option has been exercised, a certificate or certificates
representing such Shares shall be registered (subject to the provisions of
paragraph 16 hereof) in the name of the Optionee or the Successors of an
Optionee as defined under this Plan and delivered to the Optionee or to the
Successors of an Optionee. The consideration to be paid for the Shares to be
issued upon exercise of an Option may also be the consideration received by the
Corporation under a cashless exercise under paragraph 9(b) below, or any
combination of the foregoing methods of payment.
(b) Cashless Exercise. An Optionee may, in lieu of payment of the exercise price
in the manners prescribed in paragraph 9(a) above, exercise an option without
payment of any other consideration by written notice to the Corporation's Chief
Financial Officer or Treasurer of the Optionee's intention to effect a cashless
exercise. In the event of a cashless exercise, the number of shares to be issued
will be computed by multiplying the number of shares to be issued for the
options exercised by a fraction, the numerator of which is the difference
between the Closing Bid Price (as hereinafter defined) and the Exercise Price
and the denominator of which is the Closing Bid Price. "Closing Bid Price" means
the closing bid price per share of the Corporation's common stock on the last
business day prior to exercise as reported on the principal national securities
exchange in the United States on which the common stock is listed or admitted to
trading or, if the common stock is not listed or admitted to trading on any such
national securities exchange, the average of the highest reported bid and the
lowest reported asked price, on such day, as furnished by NASDAQ through its
automated quotation system or a similar organization if NASDAQ is no longer
reporting the information.
10. MERGER OR ASSET SALE. In the event of a merger of the Company with or into
another corporation or the sale of substantially all of the assets of the
Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided
4
<PAGE> 5
in Section 7 hereof for so long as the Optionee serves as an employee of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as an employee is terminated other than upon a voluntary
resignation by the Optionee, the Option shall become fully vested and
exercisable in accordance with Section 7 above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10, an Option shall be considered assumed
if, following the merger or sale of assets, the Option confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Board may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
11. EMPLOYER WITHHOLDING. In the case of non-qualified stock options, the
Corporation shall be required to withhold additional income taxes attributable
to that amount which is considered compensation includible in the Optionee's
gross income by reason of the exercise of such options. The Corporation in its
discretion shall determine the method and amount of withholding.
12. EXERCISE BV SUCCESSORS AND PAYMENT IN FULL. An option may be exercised, and
payment in full of the option price made, by the Successors of an Optionee only
by written notice (in the form prescribed by the Board of Directors) to the
Corporation specifying the number of Shares to be purchased. Such notice shall
state that the option price will be paid in full in cash (which in the
discretion of the Board of Directors may be obtained through a loan from the
Corporation or from a third party and guaranteed by the Corporation), property
or stock of the Corporation in conformance with paragraph 9 hereof. As soon as
practicable after receipt by the Corporation of such notice and of payment in
full of the option price of all the Shares with respect to which an option has
been exercised, a certificate or certificates representing such Shares shall be
registered (subject to the provisions of paragraph 16 hereof) in the name or
names of such Successors of an Optionee and shall be delivered to him.
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<PAGE> 6
13. NON-TRANSFERABILITY OF OPTION. Each option granted under the Plan shall by
its terms be nontransferable by the Optionee except by will or the laws of
descent and distribution of the state wherein the Optionee is domiciled at the
time of his death. If the Board of Directors makes an Option transferable, such
Option shall contain such additional terms and conditions, as the Board of
Directors deems appropriate.
14. OTHER TERMS OF OPTION. Options granted pursuant to the Plan shall contain
such terms, provisions, and conditions not inconsistent herewith as shall be
determined by the Board of Directors.
15. REGISTRATION OF CERTIFICATES. Certificates representing Shares may be
registered either in the name of the Optionee or in the name or names of the
Successors of an Optionee. Designation of the appropriate form of registration
of certificates shall be made in the written notice given to the Corporation
upon exercise of an option.
16. LISTING AND REGISTRATION OF SHARES. If at any time the Board of Directors of
the Corporation shall determine, in its discretion, that the listing,
registration, or qualification of any of the Shares subject to options under the
Plan upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of or in connection with the granting of options or the
purchase or issue of Shares thereunder, no further options may be granted and
outstanding options may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors.
The Board of Directors shall have the authority to cause the Corporation at
its expense to take any action related to the Plan which may be required in
connection with such listing, registration, qualification, consent, or approval.
The Board of Directors may require that any person exercising an option
hereunder shall make such representations and agreements and furnish such
information as it deems appropriate to assure compliance with the foregoing or
any other applicable legal requirement.
17. INTERPRETATION AND AMENDMENTS. The Board of Directors may make such rules
and regulations and establish such procedures for the administration of the Plan
as it deems appropriate. In the event of any dispute or disagreements as to the
interpretation of this Plan or of any rule, regulation, or procedure, or as to
any question, right or obligation arising from or related to the Plan, the
decision of the Board of Directors shall be final and binding upon all persons.
The Board of Directors may amend this Plan as it shall deem advisable. However,
in no event shall any such amendment adversely affect the rights of an Optionee
under any existing stock option agreement without the consent of such Optionee.
In addition, no amendment may, without further approval of the shareholders of
the Company within twelve months before or after the date on which such
amendment was adopted, (a) increase the total number of shares which may be made
subject of options granted under the Plan, (b) change the manner
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<PAGE> 7
of determining the option price, (c) change the criteria of determining which
employees are eligible to receive options, (d) extend the period during which
options may be granted or exercised, or (e) withdraw the administration of the
Plan from the Board of Directors.
18. INDEMNIFICATION AND EXCULPATION.
(a) Each person who is or shall have been a member of the Board of
Directors shall be indemnified and held harmless by the Corporation against and
from any and all loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be or become a party or in which he
may be or become involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof (with the Corporation's written approval) or paid by him in satisfaction
of a judgment in any such action, suit, or proceeding, except a judgment in
favor of the Corporation based upon a finding of his lack of good faith;
subject, however, to the condition that upon the institution of any claim,
action, suit, or proceeding against him, he shall in writing give the
Corporation an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other right to which such
person may be entitled as a matter of law or otherwise, or any power that the
Corporation may have to indemnify him or hold him harmless.
(b) Each member of the Board of Directors, and each officer and employee of
the Corporation shall be fully justified in relying or acting in good faith upon
any information furnished in connection with the administration of the Plan by
any appropriate person or persons other than himself. In no event shall any
person who is or shall have been a member of the Board of Directors, or an
officer or employee of the Corporation be held liable for any determination made
or other action taken or any omission to act in reliance upon any such
information, or for any action (including the furnishing of information) taken
or any failure to act, if in good faith.
19. CHANGES IN CAPITAL STRUCTURE. In the event that a dividend shall be declared
upon the Shares payable in Shares, the number of shares then subject to any
option outstanding under the Plan and the number of Shares reserved for the
grant of options pursuant to the Plan but not yet subject to option shall be
adjusted by adding to each such Share the number of Shares which would be
distributable in respect thereof if such Shares had been outstanding on the date
fixed for determining the shareholders of the Corporation entitled to receive
such Share dividend. In the event that the outstanding Shares shall be changed
into or exchanged for a different number of Shares or other securities of the
Corporation or of another corporation, whether through reorganization,
recapitalization, split-up, combination of shares, merger, or consolidation,
then there shall be substituted for each Share subject to any such option and
for each Share reserved for the grant of options pursuant to the Plan but not
yet subject to option
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<PAGE> 8
the number and kind of Shares or other securities into which each outstanding
Share shall have been so changed or for which each such Share shall have been
exchanged. In the event there shall be any change, other than as specified above
in this paragraph, in the number or kind of outstanding Shares or of any shares
or other securities into which such Shares shall have been changed or for which
they shall have been exchanged, then if the Board of Directors shall in its sole
discretion determine that such change equitably requires an adjustment in the
number or kind of Shares theretofore reserved for the grant of options pursuant
to the Plan but not yet subject to option and of the Shares then subject to an
option or options. Such adjustments shall be made by the Board of Directors and
shall be effective and binding for all purposes of the Plan and of each option
outstanding thereunder. In the case of any such substitution or adjustment as
provided for in this paragraph, the aggregate option exercise price set forth
for all outstanding options for all Shares covered thereby prior to such
substitution or adjustment will be the option exercise price for all shares or
other securities which shall have been adjusted pursuant to this paragraph. No
adjustment or substitution provided for in this paragraph shall require the
Corporation to sell a fractional Share, and the total substitution or adjustment
with respect to each outstanding option shall be limited accordingly. Upon any
adjustment made pursuant to this paragraph, the Corporation will, upon request,
deliver to the Optionee or to his successors a certificate setting forth the
option price thereafter in effect and the number and kind of shares or other
securities thereafter purchasable on the exercise of the option.
20. NOTICES. All notices under the Plan shall be in writing, and if to the
Corporation, shall be delivered to the Treasurer of the Corporation or mailed to
its principal office, addressed to the attention of the Treasurer; and if to the
Optionee, shall be delivered personally or mailed to the Optionee at the address
appearing in the payroll records of the Corporation. Such addresses may be
changed at any time by written notice to the other party.
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<PAGE> 1
COMMERCIAL LEASE AGREEMENT
This Lease is made as of the 4th day of January 1998 by and between The
Cracchiolo Group having its principal office at Corporate Tech Center, 2915
South Congress Avenue, Suite H, Delray Beach FL 33445 ("Landlord"), and Global
DataTel Corporation, having its principal office at 3333 South Congress Avenue,
Suite 404, Delray Beach, FL 33445 ("Tenant").
Landlord and Tenant hereby covenant and agree as follows:
1. SPACE:
Landlord leases to Tenant, and Tenant leases from Landlord, the space as
described on Exhibit A (1) and substantially as outlined on the floor plan
and made a part hereof as Exhibit B (1) designated as Suite 404 in the
building commonly known as Corporate Tech Center, 3333 South Congress
Avenue, Suite 404, Delray Beach, FL 33445; as well as the space as
described on Exhibit A (2) and substantially as outlined on the floor plan
and made a part hereof as Exhibit B (2) designated as Suite D in the
building commonly known as Corporate Tech Center, 2875 South Congress
Avenue, Suite D, Delray Beach, FL 33445.
2. TERM:
The term of this Lease ("Term") shall be three (3) years and shall commence
on the earlier of the date Tenant takes occupancy of the Premises, on or
before Feb. 1, 1999 (the "Term Commencement Date") and shall expire at 6:00
p.m. on Jan. 31, 2001 (the "Expiration Date"), unless sooner terminated as
hereinafter provided.
3. RENT:
A. Tenant covenants and agrees to pay Landlord in lawful United States
currency, together with any and all sales and use taxes levied upon
the use and occupancy of the Premises, and without demand, set-off or
deduction, the following base rent and Pass Throughs payable in equal
monthly installments in advance, beginning on the first day of each
calendar month during the Term, plus such other sums of money as shall
become due and payable as additional rent hereunder:
Current Annual Rent Current Monthly Rent
- ------------------- --------------------
Base Rent = $44,855.00 Base Rent = $3,737.92
Pass Throughs = $13,195.00 Pass Throughs = $1,099.58
Sales Tax = $ 3,483.00 Sales Tax = $ 290.25
Total = $61,533.00 Total = $5,127.75
Base Rent for each subsequent year of the Term shall be calculated as set forth
in Article 7. All forms of rent due hereunder shall be paid to Landlord, at the
address set forth above, or at such other place as Landlord shall designate in
writing to Tenant. In the event that the Term Commencement Date is not the first
day of the month, Tenant shall pay the pro rata portion of the Base Rent as well
as all forms of additional rent due hereunder for said month.
B. In the event that any payment is not paid by Tenant within five (5)
business days of the date due, then, at the Landlord's option, a "late
charge" of the lesser of five percent (5%) of such payment of the
highest rate permitted by law, for such period and for each additional
period of thirty (30) days or any part thereof, shall become
immediately due and owing to the Landlord, as additional rent.
C. In the event that any check or other payment given by Tenant is
dishonored for any reason not attributable to Landlord, then Landlord
shall be entitled to make an administrative charge to Tenant of
twenty-five and NO/100 dollars ($25.00). In the event that Landlord is
required to give more than one written notice to Tenant with respect
to any single violation of this Lease, then Landlord shall be entitled
to make an administrative charge to Tenant of Fifty and NO/100 Dollars
($50.00) for each such notice in addition to the first.
D. Tenant recognizes and agrees that the charges set forth in Sections C
and D of this Article 3 represent, at the time this Lease is made, a
fair and reasonable estimate and liquidation of the costs of Landlord
resulting from the events described, which costs are not contemplated
or included in any rent or other charge otherwise required to be paid
by Tenant. Any charges becoming due under Sections C and D of this
Article 3 shall be deemed to be additional rent hereunder.
E. Landlord will not bill Tenant for the monthly rental payment. Tenant
is responsible for making sure that Landlord has received the rent by
the first (1st) day of every month. If Landlord has not received the
rent due and payable in this Lease by the fifth (5th) business day
before 2:00 p.,m., of any month, for the rent due that current month,
then the Tenant's rent will increase by an additional five percent
(5%) of the gross amount due and bear interest as provided in this
Lease, and the provisions of the default clause.
F. The parties comprising Tenant shall be jointly and severally liable
for all sums due from Tenant
<PAGE> 2
G. Acceleration of Rent: It is understood that, should the Tenant default
in the payment of any rent and not cure said default within the time
provided in this Lease, then the Landlord, at its option, shall have
the right to accelerate the remaining balance of scheduled rent for
the remainder of the Lease Term.
4. SECURITY DEPOSIT:
Tenant agrees to deposit with Landlord on the date hereof the sum of Seven
Thousand Two Hundred Fifty Six and 25/100 Dollars ($7,256.25), which sum shall
be held by Landlord, without obligation for interest, as security for the full,
timely, and faithful performance of Tenant's covenants and obligation under
this Lease, it being expressly agreed that such deposit is not an advance rental
deposit or a measure of Landlord's damages. Upon the occurrence of any event of
default by Tenant, Landlord may, from time to time, without prejudice to any
other remedy, and with written notice to the Tenant, use such funds to the
extent necessary to make good any arrears of rent or other payments due Landlord
hereunder, and any other damage, injury, expense, or liability caused by
Tenant's defaults; and Tenant shall pay to Landlord on demand the amount so
applied in order to restore the security deposit to its original amount.
Although the security deposit shall be deemed the property of Landlord, any
remaining balance of such deposit shall be returned by Landlord at such time
after termination of this Lease when Landlord shall have determined that all
Tenant's obligations under this Lease have been fulfilled. Subject to the other
terms and conditions contained in this Lease, if the Premises are conveyed by
Landlord, said deposit may be turned over to Landlord's grantee, and if so,
Tenant hereby released Landlord from any and all liability with respect to said
deposit and its application or return. Tenant cannot use the security deposit,
or any portion thereof, to pay for the last month's rent.
5. SALES AND USE TAX:
Tenant hereby covenants and agrees to pay monthly to Landlord, as additional
rent, any sales, use or other tax, excluding State and/or Federal income tax,
now or hereafter imposed upon rents by the United States of America, the State
of Florida, or any political subdivision thereof, notwithstanding the fact that
such statute, ordinance, or enactment imposing the same may endeavor to impose
the tax on the Landlord.
6. PERMITTED USE:
The premises shall be continuously used by Tenant for the sole purpose of
Computer Sales and Service, and for no other purpose. Also, Tenant agrees not
to disturb or infringe upon any other Tenants in the complex, and will operate
his business in compliance with all laws and ordinances enacted by any
governmental body, without creating any undue waste, nuisance, or hazards, and
conducting his business in a clean, orderly manner without excessive noise or
any offensive activity.
7. ANNUAL COST OF LIVING ADJUSTMENTS:
A. Annually, on each anniversary of the commencement of this Lease, the
rent shall be increased by Five Percent (5%).
B. In no event shall the Fixed Annual Rent under this Lease be reduced
by virtue of this Article 7.
C. Notwithstanding any expiration or sooner termination of this Lease
prior to the Expiration Date (except in the case of a cancellation
by mutual agreement), Tenant's obligation to pay rent as adjusted
under this Article 7 shall continue and shall cover all periods up to
the Expiration Date, and shall survive any such expiration or sooner
termination of this Lease.
8. COMPLIANCE WITH GOVERNMENTAL LAWS AND LANDLORD'S REGULATIONS:
Tenant shall comply with all governmental laws, ordinances, and regulations
applicable to the Premises, and shall promptly comply with all governmental
orders and directives including local and national fire codes for the
correction, prevention, and abatement of any violations or nuisances in or upon,
or connected with, the Premises, all at Tenant's sole expense.
9. COMPLIANCE WITH ENVIRONMENTAL LAWS:
Tenant agrees that it will comply with all local, state, and federal laws and
regulations concerning the storage, handling, transportation, and disposal of
solid and hazardous waste materials. Tenant agrees to indemnify, defend and
hold harmless Landlord against any and all claims made by any governmental or
private entity or person relating to the improper storage, handling,
transportation, or disposal of any solid or hazardous waste material, either on
or off the Premises.
10. OPERATING EXPENSE:
Tenant shall pay to Landlord, as additional rent, an amount representing
Tenant's pro rata share of Landlord's "Expenses" (as hereinafter defined)
associated with operating the "Building and Complex" (as hereinafter defined),
in accordance with the terms and provisions of this Article.
A. The pro rata share of expenses shall be calculated as follows:
(1) The terms "Building Complex", "Building", and/or "Complex"
shall mean the Building or Buildings as shown on Exhibit B(1)
and Exhibit B(2).
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<PAGE> 3
(2) The term "Pro Rata Share" shall mean the percentage of rentable
space as divided by the total square footage of the whole
Building or all Buildings' square footage that makeup the
Complex, as recorded on the Property Tax Bill or collective
Bills for the subject property.
(3) The term "Expenses" shall mean the sum of "Taxes", "Insurance",
and "Operating Expenses" (as hereinafter defined).
(4) The term "Taxes" shall mean the total of all real estate taxes
and special or other assessments levied, assessed or imposed at
any time by any governmental authority upon or against the
Building or Complex. If, due to a future change in the method of
taxation or in the taxing authority or for any other reason, a
franchisee, income, transit, profit, or other tax or governmental
imposition, however designated, shall be levied against Landlord
or any owner of the Building or the Complex in substitution, in
whole or in part, for the real estate taxes or assessments, then
such franchise, income, transit, profit, or other tax or
governmental imposition shall be deemed to be included within the
definition of "Taxes" for purposes hereof.
(5) The term "Insurance" shall mean the total of all costs and
expenses incurred, borne, or accrued by Landlord with respect
to the Building Complex for insurance for fire, extended
coverage, sprinkler apparatus, public liability and property
damage, rental, plate glass, and any other insurance deemed
necessary by Landlord or required by any mortgagee with respect
to the Building Complex.
(6) The term "Operating Expenses" shall mean the total of all the
costs and expenses incurred, borne, or accrued by Landlord with
respect to the ownership operation, maintenance, and use of the
Building Complex other than Taxes or Insurance, which, in
accordance with sound accounting and management principles
generally accepted with respect to the operation of first class
Building and/or Commercial Complex, would be construed as an
Operating Expense. Such expenses shall not include any for
which the Landlord has a right of reimbursement from others or
those occasioned by the act, omission, or violation of law by
Landlord, its agents, or its employees.
B. Beginning on the Commencement Date, Tenant shall pay to Landlord, as
additional rent, in the manner hereafter provided, an amount equal to
the Tenants pro rata share as defined in this Lease, within ten (10)
days of receiving a statement from Landlord requesting Tenant's pro
rata share as determined by Landlord.
C. Landlord shall render to Tenant a statement containing a computation
of additional rent due under this Article ("Landlord's Statement") at
any time and from time to time, as such becomes due. Within fifteen
(15) days after the rendition of the Landlord's Statement which shows
additional rent to be due and payable, Tenant shall pay to Landlord
the amount of such as additional rent. The obligations of Landlord
and Tenant under the provisions of this Article with respect to any
additional rent shall survive the expiration or any sooner
termination of this Lease.
11. ASSIGNMENT AND SUBLETTING:
Tenant, for itself, its successors, and assigns, expressly covenants that it
shall not assign, mortgage, or encumber this Lease, nor sublet the Premises or
any part thereof, or license or permit the Premises or any part thereof to be
used by others, without the prior written consent of the Landlord, which consent
shall not be unreasonably withheld.
12. DEFAULT:
A. The occurrence of any one or more of the following events shall
constitute a default hereunder by Tenant (an "Event of Default"): (a)
if rent or additional rent is not paid within five (5) days after it
is due and payable; or (b) if Tenant shall have failed to cure a
default in the performance of any terms, covenants or provisions of
this Lease (except the payment of rent) or any rule or regulation
hereinafter set forth within ten (10) days after written notice
thereof, or if such default is of a nature that it cannot be
completely remedied within said ten (10) day period, then Tenant shall
request from Landlord a reasonable extension, which extension Landlord
will not unreasonably withhold; or (c) if a petition in bankruptcy
shall be filed by or against Tenant or if Tenant shall make a general
assignment for the benefit of creditors, or receive the benefit of any
insolvency or reorganization act; or (d) if a receiver or trustee is
appointed for any portion of Tenant's property; or (e) if an execution
or attachment shall be issued under which the Premises shall be taken
or occupied or attempted to be taken or occupied by anyone other than
a Tenant; or (f) if the Premises become and remain vacant, deserted,
or abandoned for a period of thirty (30) consecutive days; or (g) if
the Premises are used for some purpose other than the use specifically
authorized herein.
B. If Tenant shall default in performing any covenant or condition of
this Lease, Landlord may perform the same of the account of Tenant,
and Tenant shall reimburse Landlord for any expense incurred therefor
as additional rent.
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<PAGE> 4
13. REMEDIES:
Upon the occurrence of an Event of Default:
A. Landlord may re-enter the Premises, by summary proceedings or
otherwise, and re-let the Premises, or any part thereof, as Tenant's
agent, in the name of Landlord, or otherwise, for a term shorter or
longer than the balance of the Term of this Lease, and may grant
concessions of free rent, make improvements to the Premises, and may
grant any other concessions in connection therewith as are necessary
to re-let the Premises. In computing the net amount of rents collected
through such re-letting, Landlord may deduct all reasonable expenses
incurred in obtaining possession or re-letting the Premises, including
rent concessions, attorney's fees, brokerage fees, the cost of
restoring or improving the Premises, and the cost of all alterations
and decorations deemed necessary by Landlord to effect re-letting. In
no event shall Tenant be entitled to a credit or repayment for
re-rental income that exceeds the sums payable by Tenant hereunder.
B. If Tenant shall default in performing any covenant or condition of
this Lease, Landlord may perform the same for the account of Tenant,
and Tenant shall reimburse Landlord for any expense incurred therefor
as additional rent.
14. TENANT IMPROVEMENTS:
Tenant shall perform the Tenant Improvements and Repairs set forth in Exhibit D
to this Lease, if any. Simultaneously upon signing this Lease, Tenant shall
deliver to Landlord the sum of Zero Dollars ($00.00) for the cost of such
Tenant Improvements.
15. LANDLORD'S REPAIRS AND MAINTENANCE:
Landlord shall be responsible for all structural repairs to the Premises and all
repairs and maintenance for all public areas and facilities, except such repairs
(whether structural or otherwise) and maintenance as may be necessitated by the
negligence, improper care, or use of the Premises and public areas by Tenant or
Tenant's agents, employees, licensees, or invitees, which shall be made by
Tenant, at Tenant's expense, as provided in Article 17 hereof.
16. PARKING AND DELIVERY AREAS:
A. Tenant shall have the right to use Ten (10) parking spaces for the
parking of automobiles of Tenant, its employees and invitees in the
parking area designated for Tenants of the Building as shown on
Exhibit C(1) and Six (6) parking spaces for the parking of automobiles
of Tenant, its employees and invitees in the parking area designated
for Tenants of the Building as shown on Exhibit C(2) (the "Building
Parking Area"), subject to the "Rules and Regulations" (as hereinafter
defined) now or hereafter adopted by Landlord. Tenant shall not permit
any of its officers, agents, invitees, employees, or common carrier
deliveries to park in any areas designated "No Parking or Loading",
nor occupy in excess of Tenant's allotted number of spaces therein.
Tenant and Tenant's employees and invitees are allowed to park in
designated parking spaces only. Any unauthorized vehicles or any
vehicles parked in non designated areas, spaces, or blocking
driveways, entrances, or doorways may be towed by the Landlord at the
Tenant's expense.
B. Tenant agrees that it will not permit agents, employees, vendors, or
suppliers to make deliveries to the Premises other than in areas
designated by the Landlord.
C. Landlord reserves the right to designate "No Parking Zones" or
"Loading Zones" and Landlord may designate parking for the exclusive
use of other Tenants or guests.
17. TENANT REPAIRS AND ALTERATIONS:
A. Tenant shall take good care of the Premises and, subject to the
provisions of Article 15 hereof, shall make, as and when needed, all
repairs in and about the Premises necessary to preserve them in good
order and condition, which repairs shall be in quality and class equal
to the original work. Tenant is responsible for repair and replacement
of all glass on all windows and doors regardless of how and why they
were damaged or broken. This replacement must be within fifteen (15)
days from the date that the glass breakage occurred, or ten (10) days
from notice of Landlord, whichever comes first. Tenant is also
responsible to repair or replace any frame that holds the glass, if
necessary. There shall be no allowances to Tenant for a diminution of
rental value and no liability on the part of Landlord by reason of
inconvenience, annoyance, or injury to business arising from Landlord,
Tenant or others making any repairs, alteration, additions, or
improvements in or to any fixtures, appurtenances, or equipment
thereof. Any repairs Tenant may be required to carry out pursuant to
the terms hereof may, at Landlord's option, be made by Landlord at the
expense of the Tenant, and the expenses thereof incurred by Landlord
shall be collectible as additional rent within ten (10) days of a bill
or statement therefor.
B. Tenant shall make no alterations or improvements to the Premises
without Landlord's prior written consent (which shall not be
unreasonably withheld). All installations or work done by or on behalf
of Tenant shall be done in a good and workman-like manner, and shall
at all times comply with all laws, rules, orders, and regulations of
all governmental authorities having or asserting jurisdiction
therewith; and with the Rules and Regulations of the Landlord. Tenant
shall obtain, at its expense, all necessary governmental approvals and
permits.
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<PAGE> 5
18. FIXTURES AND INSTALLATIONS:
All appurtenances, fixtures, improvements, additions, and other property
attached to or build into the Premises, whether by the Landlord or Tenant or
others, and whether at Landlord's expense or Tenant's expense, or the joint
expense of Landlord and Tenant, shall become and remain the property of the
Landlord, and shall remain upon and be surrendered with the Premises, unless
Landlord, by notice to Tenant no later than sixty (60) days prior to the date
fixed as the termination of this Lease, elects to have them removed by Tenant,
in which event the same shall be removed from the Premises by Tenant forthwith,
at Tenant's expense. Nothing in this Article shall be construed to prevent
Tenant's removal of trade fixtures but, upon removal of any such trade fixtures
from the Premises or upon removal of other installations as may be required by
Landlord, Tenant shall immediately, and at its expense, repair and restore the
Premises to the condition existing prior to installation and shall repair any
damage to the Premises to the Building due to such removal. All property
permitted or required to be removed by Tenant at the end of the Term that
remains in the Premises after Tenant's vacating the Premises shall be deemed
abandoned and may, at the election of the Landlord, either be retained as
Landlord's property or may be removed from the Premises at the Tenant's expense.
19. LIENS:
A. The Tenant herein shall not have any authority to create any liens for
labor or material on the Landlord's interest in the land, the
Building, or the Premises. All material-men, contractors, mechanics,
laborers, and all persons contracting with the Tenant are hereby
charged with notice that they must look only to the Tenant and the
Tenant's interests in the Premises to secure any payment. At
Landlord's request, Tenant agrees to obtain and deliver to Landlord
written and unconditional waivers and releases of any such liens.
B. Tenant agrees that Tenant will pay all charges of contractors,
subcontractors, mechanics, laborers, material-men, and other items of
like character incurred by Tenant with respect to the Leased Premises,
and will indemnify, defend, and hold Landlord harmless from and
against any and all expenses, costs, and charges, including bond
premiums, for release of liens and attorneys' fees reasonably incurred
in connection with the defense of any suit in discharging the said
Premises or any part thereof from any liens, judgements, or
encumbrances caused or suffered by tenant. In the event any such lien
shall be made or filed, Tenant shall bond against or discharge the
same within fifteen (15) days after the same has been made or filed.
It is understood and agreed between the parties hereto that the
expenses, costs and charges above referred to shall be considered as
additional rent and shall be included in any lien for rent.
20. COMPLIANCE:
A. Tenant shall, at its expense, comply with all Rules and Regulations
which may be adopted from time to time and with all laws, orders,
regulations of any governmental authority having or asserting
jurisdiction in connection with the Premises or the use or occupancy
thereof.
B. Tenant shall at no time use or occupy the Premises in violation of the
certificate of occupancy issued for the Building or Premises. Tenant
shall comply with all applicable building, zoning, and land use codes
throughout the Term of the Lease.
21. SIGNS:
Tenant shall not install any signs upon the Building or Development without
written consent of the Landlord. Landlord will provide, at Tenant's request and
cost, Landlord's standard identification sign, which sign shall be removed by
Tenant upon termination of this Lease, at which time Tenant will restore the
property to the same condition as prior to installation of said sign. Landlord
may, from time to time, require Tenant to change its signage to conform to a
revised standard for the Building, provided Landlord pays the cost of removing
and replacing such signs.
22. LANDLORD'S ACCESS TO PREMISES:
A. Landlord, and Landlord's agents and representatives, shall have the
right to enter and inspect the Premises at any reasonable time for the
following purposes: (a) to ascertain the condition of the Premises;
(b) to determine whether Tenant is diligently fulfilling Tenant's
responsibilities under this Lease; (c) to supply any service to be
provided by Landlord to Tenant hereunder; (d) to make sure repairs or
improvements as may be required or permitted to be made by Landlord
under the terms of this Lease (and may for that purpose, without
abatement of rent, erect, use, and maintain scaffolding, pipes,
conduits, and other necessary structures in, through, or on the
outside of the Building and Premises where reasonably required by the
character of the work to be preformed, provided entrance to the
Premises shall not be blocked thereby, and further provided that the
business of Tenant shall not be interfered with unreasonably); (e) to
show the Premises to prospective purchasers or mortgagees; (f) to do
any other act or thing which Landlord deems reasonable to preserve the
Premises and the Building. In the event that Landlord requires access
to any under-floor duct, Landlord's liability for carpet (or other
floor covering) replacement shall be limited to replacement of the
pieces removed. During the period that is six (6) months prior to the
end of the term and at any time Tenant is in default hereunder, and
such default has remained uncured for at least thirty (30) days,
Landlord and Landlord's agents and representatives shall have the
right to enter in the Premises at any reasonable time during business
hours for the
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purpose or showing the Premises and shall have the right to erect on
the Premises suitable signs indicating the Premises are available for
lease. Tenant shall give written notice to Landlord at least thirty
(30) days prior to vacating the Premises and shall arrange to meet
with Landlord for a joint inspection of the Premises prior to
vacating. If Tenant shall not be personally present to open and permit
an entry into the Premises, at any time when an entry shall be
necessary or permissible, then Landlord or Landlord's agents any enter
the same by a master key, without rendering Landlord or such agent
liable therefor.
B. Tenant herewith deposits with Landlord Fifty and NO/100 Dollars
($50.000), and covenants with Landlord not to change or re-key the
locks to the Premises in any manner that would deny Landlord access by
way of Landlord's master key; however, if Tenant does adjust the locks
in any way affecting the use of Landlord's master key, or does not
return to Landlord at the end of the Term of this Lease, the keys to
the Premises, then Tenant forfeits this deposit to Landlord.
Otherwise, the deposit will be returned to the Tenant within thirty
(30) days of the Tenant vacating.
23. INSURANCE:
A. Tenant agrees to maintain at Tenant's sole cost and expense,
comprehensive general public liability insurance in standard form in
favor of Landlord and Tenant against claims for bodily injury or death
or property damage occurring in or upon the Premises, effective as of
the date Tenant enters into possession of the Premises and throughout
the Lease Term. Such insurance shall be in the amount of not less than
One Million Dollars ($1,000,000.00) for injury to one person in one
accident occurrence or casualty, and not less than One Million Dollars
($1,000,000.00) for injuries to more than one person in one accident,
occurrence or casualty or, in lieu of the foregoing, a combined single
limit of not less than One Million Dollars ($1,000,000.00). Tenant
shall also carry property damage insurance in an amount of not less
than Five Hundred Thousand Dollars ($500,000.00) for damage to
property on any one occurrence. Any insurance policies required
hereunder shall name Landlord as an additional insured and shall
provide that they may not be modified or terminated without thirty
(30) days advance notice to Landlord. At or prior to possession,
Tenant shall furnish to Landlord evidence of such insurance coverage
by way of either a copy of the actual insurance policy and any
amendments and endorsements thereto or a certificate of insurance
clearly evidencing each coverage and provisions set forth in this
Section. Upon Tenant's default in obtaining or delivering the policy
or certificate for such insurance or Tenant's failure to pay the
charges therefor, Landlord may, but shall not be obligated, to procure
or pay the charges for any such policy or policies and charge the
Tenant therefor as additional rent.
B. Tenant shall not do anything, or permit anything to be done, in or
about the Premises which shall (a) invalidate or be in conflict with
the provisions of any fire or other insurance policies covering the
Building or any property located therein, or (b) result in a refusal
by fire insurance companies of good standing to insure the Building or
any such property in amounts reasonably satisfactory to Landlord, or
(c) subject Landlord to any liability or responsibility of injury to
any person or property by reason of any business operation being
conducted in the Premises, or (d) cause any increase in the fire
insurance rates applicable to the Building or property located therein
at the beginning of the Term or at any time thereafter. Tenant, at
Tenant's expense, shall comply with all rules, orders, regulations,
and requirements of the applicable Board of Fire Underwriters, and the
fire insurance rating organizations and any similar bodies. Tenant
shall pay all costs, expenses, fines, penalties, or damages which may
be imposed upon Landlord by reason of Tenant's failure to comply with
the provisions of Section B of this Article 23 and if, by reason of
such failure, the fire insurance rate at the beginning of this Lease
or at any time thereafter be higher than it otherwise would be, then
Tenant shall reimburse Landlord, as additional rent hereunder, for
that portion of all fire insurance premiums thereafter paid by
Landlord which shall have been charged because of such failure by
Tenant.
C. Any insurance herein required to be produced by Tenant shall contain
an express waiver of any right of subrogation by the insurance company
against Landlord. The original policy of all such insurance shall be
delivered to Landlord within ten (10) days of issuance of such policy
by the insurance company. The minimum limits of any insurance coverage
required herein shall not limit Tenant's liability.
24. DAMAGE OR DESTRUCTION:
A. If the Leased Premises shall be partially damaged by fire or other
casualty insured under Landlord's insurance policies, then upon
Landlord's receipt of the insurance proceeds, Landlord shall, except
as otherwise provided in the Lease, repair and restore the same
(exclusive of Tenant's trade fixtures, personal property, decorations,
signs and contents) substantially to the condition thereof immediately
prior to such damage or destruction, limited, however, to the extent
of the insurance proceeds received by Landlord therefor. If by reason
of such occurrences: (a) the Leased Premises are wholly untenantable,
or (b) the Leased Premises are damaged in whole or part as a result
of a risk which is not covered by Landlord's insurance policies, or
(c) the Leased Premises are damaged in whole or in part during the
last two (2) years of the term (or any renewal term) hereof, or (d)
the building of which the Leased Premises forms a part or all of the
buildings which then comprise the Complex is or are damaged (whether
or not the Leased Premises are damaged) to an extent of fifty percent
(50%) or more of the then replacement value thereof,
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Landlord may elect either to repair the damage as aforesaid, or to
cancel the Lease by written notice of cancellation given to Tenant
within one hundred eighty (180) days after the date of such
occurrences, and thereupon the Lease shall cease and terminate with
the same force and effect as though the date set forth in the
Landlord's said notice were the date herein fixed for the expiration
of the Term hereof and Tenant shall vacate and surrender the Leased
Premises to Landlord. Upon the termination of the Lease, as aforesaid,
Tenant's liability for the rents reserved hereunder shall cease as of
the effective date of the termination of this Lease, subject, however
to the provisions for the prior abatement of rent hereinafter set
forth. Unless the Lease is terminated by Landlord as aforesaid, the
Lease shall remain in full force and effect and the parties waive the
provisions of any law to the contrary, and Tenant shall repair,
restore, or replace Tenant's trade fixtures, personal property,
decorations, signs and contents in the Leased Premises in a manner and
to at least a condition equal to that existing prior to their damage
or destruction and the proceeds of all insurance carried by Tenant on
said property shall be held in trust by Tenant for the purpose of such
repair, restoration, or replacement.
B. If by reason of such fire or other casualty the Leased Premises is
rendered wholly untenantable the Fixed Minimum Rent shall be fully
abated, or if only partially damaged such rent shall be abated
proportionately as to that portion of the Leased Premises rendered
untenantable, in either event (unless Landlord shall elect to
terminate the Lease as aforesaid) until fifteen (15) days after notice
by Landlord to Tenant that the Leased Premises have been substantially
repaired and restored.
C. If such damage or other casualty shall be caused by the negligence of
Tenant or of Tenant's licensees, contractors or invitees or their
respective agents, or employees, there shall be no abatement in rent.
Tenant shall not be entitled to and hereby waives all claims against
Landlord for any compensation or damage for loss of use of the whole
or any part of the Leased Premises and/or for any inconvenience or
annoyance occasioned by any such damage, destruction, repair or
restoration. The provisions of any statute or other saw that may be in
effect at the time of the occurrence of any such damage or destruction
are hereby expressly waived by Tenant.
25. TENANT OBLIGATIONS:
A. Tenant shall at its own costs and expense keep and maintain all parts
of the premises and such portion of the Development within the control
of the Tenant in good condition promptly making all necessary repairs
and replacements, whether ordinary or extraordinary, with materials
and workmanship of the same character, kind, and quality as the
original, including but not limited to, windows, glass and plate
glass, doors, and special office entries, interior walls and finish
work, floors and floor coverings, heating and air conditioning
systems, electrical systems and fixtures, sprinkler systems, water
heaters, dock boards, truck boards, truck doors, dock bumpers, and
plumbing fixtures. Tenant, as part of its obligation hereunder, shall
keep the whole of the Premises in a clean and sanitary condition.
Tenant will as far as possible keep all such parts of the Premises
from deteriorating, ordinary wear and tear excepted, and from falling
temporarily out of repair, and upon termination of this Lease in any
way, Tenant will yield up the Premises to Landlord in good condition
and repair loss by fire or other casualty, where Tenant's insurance is
obligated to pay for the cost of such repairs and Tenant will promptly
make payment of the amount of the deductible. In any event, Tenant
will be responsible for damage as a result of Tenant's negligence or
as a result of any loss occurring within Tenant's Leased premises,
including damage to glass.
B. Tenant at its own cost and expense shall enter into a regularly
scheduled preventive maintenance/service contract with an A/C
contractor approved by the Landlord, for servicing all heating and air
conditioning systems and equipment servicing the Premises and an
executed copy of such contract shall be delivered to Landlord. This
service contract must include all services suggested by the equipment
manufacturer within the operations/maintenance manual and must become
effective within thirty (30) days of the date Tenant takes possession
of the Premises. Landlord may (but shall not be required to), upon
notice to Tenant, elect to enter into such a maintenance/service
contract on behalf of Tenant or perform the work itself and, in either
case, charge Tenant therefor, together with a reasonable charge for
overhead.
C. All obligations of Tenant not fully performed as of the expiration or
earlier termination of the Term of the Lease shall survive the
expiration or earlier termination of the Term, without limitation.
26. UTILITIES:
Tenant shall pay for all gas, heat, light, power, telephone and other utilities
and services used on or from the Premises, including without limitation,
Tenant's proportionate share as determined by Landlord for the use of any
central station signaling system installed in the Premises or the Building,
together with any taxes, penalties and surcharges or the like pertaining
thereto and any maintenance charges for utilities. Tenant shall furnish and
install all electric light bulbs, tubes and ballasts, other than those
originally provided to the Premises by the Landlord. Landlord shall in no event
be liable for any interruption or failure of utility service on or to the
Premises.
27. WAIVER OF SUBROGATION:
Landlord and Tenant and their successors or assigns hereby waive any and all
rights of action for negligence against the other party hereto which may
hereafter arise for damage to the Premises or to property therein resulting
from any
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fire or other casualty of the kind covered by standard fire insurance policies
with extended coverage, regardless of whether or not, or in what amounts, such
insurance is now or hereafter carried by the parties hereto, or either of them.
The foregoing release and waiver shall be in force only if both releasers'
insurance policies contain a clause providing that such a release shall not
invalidate the insurance and also provided that such a policy can be obtained
without additional premiums. Both parties agree to use their best efforts to
obtain and maintain a waiver of subrogation for their respective carriers.
28. LIABILITY:
Landlord shall not be liable to Tenant or Tenant's employees, agents, patrons,
or visitors, or to any person whomsoever, for any injury to person or damage to
property on or about the Premises, the Building, or the Complex, resulting from
and/or caused in part or in whole by the negligence or misconduct of Tenant, its
agents, servants, or employees, invitees, permittees, or of any other person
entering upon the Premises, or due to any cause whatsoever, and Tenant hereby
covenants and agrees that it will at all times indemnify and hold safe and
harmless, the Premises, the Landlord, and Landlord's agents and employees from
any loss, liability, claims, suits, costs, and expenses, including attorney's
fees and damages, both real and alleged, arising out of any such damage or
injury.
29. LANDLORD'S LIABILITY:
A. In no event shall Landlord's liability for any breach of this Lease
exceed the amount of rental then remaining unpaid for the then current
Term (exclusive of any renewal periods, which have not then actually
commenced). This provision is not intended to be a measure or agreed
amount of Landlord's liability with respect to any particular breach,
and shall not be utilized by any court or otherwise for the purpose of
determining any liability of Landlord hereunder, except only as a
maximum amount not to be exceeded in any event. In addition, it is
expressly understood and agreed that nothing in this Lease shall be
construed as creating any liability against Landlord or its successors
and assigns, personally and in particular without limiting the
generality of the foregoing, there shall be no personal liability to
pay any indebtedness accruing hereunder or to perform any covenant,
either express or implied, herein contained, and that all personal
liability of Landlord, or its successors and assigns, of every sort, if
any, is hereby expressly waived by Tenant, and that so far as Landlord,
or its successors and assigns, is concerned Tenant shall look solely to
the Building for the payment thereof.
B. Tenant shall look solely to Landlord's interest in the Leased Premises
for the satisfaction of any judgement or decree requiring the payment
of money by Landlord, based upon any default under this Lease, and no
other property or asset of Landlord shall be subject to levy, execution
or other enforcement procedure for the satisfaction of such judgement
or decree.
30. EMINENT DOMAIN:
A. In the event the Premises is lawfully condemned or taken for any public
or quasi-public use, this Lease shall forthwith cease and terminate as
of the date of vesting of title.
B. In the event that a part of the Premises or the Building shall be so
condemned or taken, resulting in Tenant's liability to use the
remainder of the Premises for the use permitted under this Lease, then
(a) Landlord may, at its option, terminate this Lease as of the date of
such vesting of title by notifying Tenant in writing of such
termination within ninety (90) days following the date on which
Landlord shall have received notice of vesting of title, and (b) Tenant
shall have the right, by delivery of notice in writing to Landlord
within ten (10) days following the date on which Tenant shall have
received notice of vesting of title, to terminate this Lease as of the
date of the vesting of title.
C. In the event that any partial condemnation or taking does not prevent
Tenant from using the Premises for the uses permitted under this Lease,
then the Lease shall remain unaffected by such condemnation or taking,
except that the rents due hereunder shall be abated in an amount
apportioned according to the part of the Premises so taken or
condemned. In the event that only a part of the Premises shall be so
condemned or taken and this Lease is not terminated, Landlord will, at
its expense, restore the remaining portion of the premises as nearly as
practicable to the same condition as it was in prior to such
condemnation or taking.
D. In the event of any condemnation or taking of all or a part of the
Building, Landlord shall be entitled to receive the entire award in the
condemnation proceeding, including any award made for the value of the
estate vested by this Lease in Tenant, and Tenant hereby expressly
assigns to Landlord any and all right, title, and interest of Tenant
now or hereafter arising in or to any such award or any part thereof,
and Tenant shall be entitled to receive no part of such award, except
that Tenant may file a claim for any taking of removable fixtures owned
by Tenant and for moving expenses incurred by Tenant.
31. RULES AND REGULATIONS:
Tenant and Tenant's agents, employees, visitors, and licensees shall faithfully
comply with the rules and regulations annexed hereto and made part hereof as
Exhibit E (the Rules and Regulations), and with such further reasonable Rules
and Regulations as Landlord, at any time and from time to time, may make and
communicate in writing to Tenant which, in Landlord's judgement, shall be
necessary for the reputation, maintenance of the Building, or the more useful
occupancy or comfort of the Tenants or others in the Building. Landlord shall
not be liable to Tenant
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for the violation of any of said Rules and Regulations, of the breach of any
covenant or condition of any Lease by any other Tenant in the Building.
32. FEASIBILITY:
Tenant is responsible for determining the suitability, practicality,
appropriate zoning for their intended use and the Landlord makes no
representation now or at any time in the future, that the permitted use
mentioned in this Lease is allowed by municipal authorities.
33. END OF TERM:
A. Upon the expiration or sooner termination of the term of this Lease,
Tenant shall quit and surrender to Landlord the Premises, broom clean
and in good order the condition, repair all damage to the Premises and
the Building occasioned by such removal. Any property not removed from
the Premises shall be deemed abandoned by Tenant and may be disposed
of in any manner appropriate by the Landlord. If the last day of the
Term of this Lease or any renewal hereof falls on Sunday or a legal
holiday, this Lease shall expire on the business day immediately
proceeding.
B. If Tenant does not immediately surrender the Premises on the
Expiration Date, Tenant shall owe Landlord twice the then current
monthly rent for each month the Tenant stays beyond the expiration
date, and if Tenant has not vacated within six (6) months of the
expiration date, the rent shall again double. This provision shall not
constitute a waiver by Landlord of any right of rental to Landlord's
right to terminate Lease; however, Tenant shall be bound by all other
terms and conditions set forth in this Lease.
34. QUIET ENJOYMENT:
Landlord covenants and agrees with Tenant that, upon Tenant paying the rent and
additional rent and observing and performing all of the terms, covenants and
conditions of this Lease on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the Premises during the term of this Lease,
without interference or molestation by Landlord, subject to the terms,
covenants, and conditions of this Lease.
35. PROPERTY LOSS, DAMAGE, REIMBURSEMENT:
Landlord or its agents shall not be liable for any damage to property or Tenant
or of others entrusted to employees of the Building, nor for the loss of or
damage to any property of Tenant by theft or otherwise. Landlord or its agents
shall not be liable for any injury or damage to persons or property resulting
from fire, explosion, falling plaster, steam, gas, electricity, electrical
disturbance, water, rain, or leaks from any part of the Building or from the
pipes, appliances, or plumbing works or from the roof, street or subsurface or
from any other place or by dampness or by any other cause of any nature, nor
shall Landlord or its agents be liable for any such damage caused by other
Tenants or persons in the Building or caused by operations in construction of
any private, public or quasi-public work; nor shall Landlord be liable for any
latent defect in the Premises in the Building. Tenant shall give immediate
notice to Landlord in case of fire or accidents in the Premises or in the
Building or of defects therein or in any fixtures or equipment.
36. INDEMNIFICATION:
Tenant shall indemnify and save harmless against any and all claims, suits,
demands, actions, fines, damages and liabilities and all costs and expenses
(including, without limitation, reasonable attorneys fees) arising out of
injury to persons (including death) or loss or damage to property, occurring
in, on or about, or arising out of the use of the Tenant, its agents,
contractors, employees, licensees or invitees, subtenants or assigns, and the
agents, contractors, employees, licensees, or invitees of any subtenant or
assignee of Tenant.
37. SUBORDINATION:
A. This Lease is subject and subordinate to all mortgages which may now
or hereafter be placed on the property of which the Premises form a
part, and to each advance under any such mortgages, and to all
renewals, modifications, consolidations, replacements and extensions
thereof and all substitutions therefor. Tenant shall promptly execute
and deliver any certificate requested confirming such subordination.
B. In the event that any mortgagee or its successors or assigns shall
succeed to the interest of Landlord, then, so long as Tenant is not in
default hereunder, this Lease shall continue in full force and effect
and Tenant shall and does hereby agree to attorn to such mortgagee or
its successors or assigns and to recognize such mortgagee or its
successors as its Landlord.
C. Each party shall, at any time and from time to time, upon not less
than five (5) business days prior to notice by the other party,
execute, acknowledge and deliver to the requesting party a statement
in writing certifying that this Lease is unmodified and in full force
and effect (or, if there have been modifications, that the same is in
full force and effect as modified and stating the modifications), and
the dates to which the rent, additional rent and other charges have
been paid in advance, if any, and stating whether or not to the best
knowledge of the signer of such certificate, the other party is in
default in performance of any covenant, agreement, term, provision or
condition contained in this Lease and, if so, specify each default,
it being intended that any such statement may be relied upon by any
prospective purchaser or Tenant of said real property,
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any mortgagee or prospective assignee, sub-lessee or mortgagee of
Tenant. If, in connection with obtaining financing or refinancing for
the Building and the land allocated to it, a banking, insurance, or
other recognized institutional lender shall request reasonable
modifications in this Lease as a condition to such financing, Tenant
agrees not to unreasonably withhold, delay, or defer its consent
thereto, provided that such modifications do not increase the
obligations of Tenant hereunder or materially adversely affect the
leasehold interest hereby created.
38. ATTORNEY-IN-FACT:
In confirmation of such subordination, however, Tenant shall execute promptly
any certificates that Landlord may request and Tenant hereby irrevocably
constitutes and appoints Landlord as Tenant's attorney-in-fact to execute any
such certificate or certificates for and on behalf of Tenant.
39. NO WAIVER:
Failure of Landlord to insist upon the strict performance of any provisions or
to exercise any option of any rules and regulations shall not be construed as a
waiver for the fixture of any provisions, ruse or option. The receipt by
Landlord of rent with knowledge of the breach of any provisions of this Lease
shall not be deemed a waiver of such breach. No provision of this Lease shall
be deemed to have been waived unless such waiver is in writing and signed by
Landlord. No payment by Tenant or receipt of a lesser amount than the monthly
rent shall be deemed to be other than on account of the earliest rent then
unpaid nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as rent to be deemed an accord and
satisfaction and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
in this Lease provided, and no waiver by Landlord in respect to one Tenant
shall constitute a waiver in favor of any other Tenant in the Complex.
40. TIME IS OF THE ESSENCE:
It is understood and agreed between parties hereto that time is of the essence
of this Lease, and this applies to all terms and conditions contained herein.
41. PARTIAL INVALIDITY:
If any provisions of this Lease or application thereof to any person or
circumstance to any extent be invalid, the remainder of this Lease or the
application of such provisions to persons or circumstances other than those as
to which it is held invalid shall not be affected thereby, and each provision
of this lease shall be valid and enforced to the fullest extent permitted by
law.
42. BROKER'S COMMISSIONS:
Tenant represents and warrants that there are no claims for brokerage
commissions or finder's fees in connection with the execution of this Lease and
Tenant agrees to indemnify Landlord against and hold Landlord harmless from all
liabilities arising from any such claims, including cost of counsel fees.
43. ENTIRE AGREEMENT:
This Lease and the Exhibits and Riders, if any attached, set forth the entire
agreement between the parties. Any prior conversations or writings are merged
herein and extinguished. No subsequent amendment to this Lease for examination
does not constitute an option for the Leased Premises and becomes effective as
a Lease only upon execution and delivery thereof by Landlord to Tenant for
examination does not constitute an option for the Leased Premises and becomes
effective as a Lease only upon execution and delivery thereof by Landlord to
Tenant. If any provision contained in a rider is inconsistent with the printed
provisions of this Lease, the provision contained in said Rider shall supersede
said printed provisions. The captions, numbers, and index appearing herein are
inserted only as a matter of convenience and are not intended to define, limit,
construe or describe the scope of intent of any paragraph, nor in any way
affect this Lease.
44. ESTOPPEL CERTIFICATE:
From time to time, within ten (10) days next following Landlord's request,
Tenant shall deliver to Landlord a written statement executed and acknowledged
by Tenant in a form satisfactory to Landlord (a) stating that this Lease is
then in full force and effect and has not been modified (or if modified,
setting forth all modifications), (b) setting forth the date to which the
Minimum Rent, additional rent, and other charges hereunder have been paid, (c)
stating whether or not, to the best knowledge of Tenant, Landlord is in default
under this Lease, and if Landlord is in default, setting forth any specific
nature of all such defaults, (d) certifying that Landlord has completed
construction of the Leased Premises, (e) certifying that Tenant has accepted
possession of the Leased Premises, and (f) as to any other matters requested by
Landlord.
45. INABILITY TO PERFORM:
A. If, by reason of strikes or other labor disputes, fires or other
casualty, accidents, orders or regulations of any governmental
authority, or any other cause beyond Landlord's or Tenant's
reasonable control, or in the event Landlord or Tenant is unable to
fulfill or is delayed in fulfilling such party's obligations under
this Lease, no such inability or delay shall constitute an actual or
constructive eviction, in whole or in part, or impose any liability
upon such party, or reason of inconvenience or annoyance to the other
party, or injury to or interruption of Tenant's business, or
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otherwise, nor shall any such delay or inability to perform on the part
of Landlord in any way affect this Lease and the obligation of Tenant
to pay rent hereunder and to perform all of the other covenants and
agreements to be performed by Tenant hereunder.
B. Landlord reserves the right to stop the services of the air
conditioning, elevator, plumbing, electrical or other mechanical
systems or facilities in the Building when necessary by reason of
accident or emergency, or for repairs, alteration, replacements, or
improvements which in the judgement of Landlord are desirable or
necessary, until such repairs alterations, replacements or improvements
shall have been completed. Landlord will try to minimize the time of
any stop of services, except where Tenant is in default. In no event
will rent abate.
46. RIGHTS RESERVED TO LANDLORD:
Landlord reserves and may exercise the following rights without affecting
Tenant's obligations hereunder:
A. To change the name or the street address of the Building or the
Complex;
B. To install and maintain a sign or signs on the exterior of the
Building;
C. To designate all sources furnishing sign painting and lettering, ice,
drinking water, towels, coffee cart service, and toilet supplies,
cleaning and maintenance, lamps and bulbs used on the Premises;
D. To retain at all times pass keys to the Premises;
E. To grant anyone the exclusive right to conduct any particular business
or undertaking in the Building or the Development;
F. To change the arrangement and/or location of entrances and corridors in
and to the Building and to add, remove, rename or modify buildings,
roadways, parking areas, walkways, landscape, lakes, dumpster
locations, grading and other improvements in or to the Complex.
G. Landlord may enter upon the Premises and may exercise any or all of the
foregoing rights hereby reserved without being deemed guilty of an
eviction or disturbance of Tenant's use and possession and without
liability in any manner to Tenant and without abatement of rent or
affecting any of Tenant's obligations hereunder.
H. No failure of (Landlord) Owner to enforce any term hereof shall be
deemed a waiver, nor shall any acceptance of a partial payment of rent
be deemed a waiver of (Landlord) Owner's right to the full amount
thereof.
47. RELOCATION OF PREMISES:
Landlord reserves the right to relocate Tenant during the Term to other premises
in the Building or another building within the Complex (the "New Premises"), in
which event the New Premises shall be deemed to be the Premises for all purposes
under this Lease, provided:
A. The New Premises shall be similar to the Premises in area and
appropriateness for use of Tenant's purposes:
B. If Tenant is then occupying the Premises, Landlord shall pay the
reasonable expense of moving Tenant, its property and equipment to the
New Premises and such moving shall be done at such time and in such
manner so as to cause the least inconvenience to Tenant; and
C. Landlord shall, at its sole cost, improve the New Premises with
improvements substantially similar to those located in the Premises.
48. LANDLORD'S LIEN:
In addition to any statutory lien for rent in Landlord's favor, Landlord shall
have, and Tenant hereby grants to Landlord, a continuing security interest for
all rentals and other sums of money becoming due hereunder from Tenant, upon all
goods, wares, equipment, fixtures, furniture, inventory, accounts, contract
rights, chattel paper and other personal property of Tenant situated on the
Premises, and such property shall not be removed therefrom without the consent
of Landlord until all arrearages in rent, as well as any and all other sums of
money due to Landlord hereunder, shall have been paid and discharged. In the
event of a default under this Lease, Landlord shall have, in addition to any
other remedies provided herein or by law, all rights and remedies under the
Uniform Commercial Code, including without limitation the right to sell the
property described in this Section at public sale upon five (5) days' notice to
Tenant. Tenant hereby agrees to execute such financing statements and other
instruments necessary or desirable in Landlord's discretion to perfect the
security interest hereby created.
49. HAZARDOUS SUBSTANCES:
Tenant agrees not to store any substances, which are now, or hereafter,
considered hazardous by federal, state, or local agencies, or any flammable
materials around the premises. Tenant further agrees to completely indemnify and
defend Landlord against any claims, loss, or liabilities which may occur in
connection with any substance that
11
<PAGE> 12
Tenant caused directly or indirectly to be present in or around the Premises,
which substances now or hereafter are found to be toxic, hazardous, or
flammable. This paragraph shall survive the expiration of this Lease.
50. WAIVER OF TRIAL BY JURY:
To the extent such waiver is permitted by law, Landlord and Tenant hereby waive
trial by jury in any action, proceeding, or counterclaim brought by Landlord or
Tenant against the other on any matter whatsoever arising out of or in any way
connected with this Lease. The provisions of the foregoing sentence shall
survive the expiration or any sooner termination of this Lease Term.
51. INVALIDITY:
If any clause, provision, or portion of this Lease, or the application thereof
shall be invalid or unenforceable under applicable law, such event shall not
effect the validity or enforceability of this Lease.
52. NO RESERVATION:
Submission of this Lease to any person or entity shall not be deemed to be a
reservation of the Premises. Landlord shall not be bound hereby, until Landlord
delivers to Tenant a fully executed copy of a signed Lease. In the event that
Landlord signs this Lease first, the Lease will not be considered valid until
Landlord receives a copy of the Lease, properly executed from the Tenant;
however, any situation is subject to prior Lease as evidenced by Landlord of
possession of a fully executed document by Landlord and Tenant.
53. MISCELLANEOUS:
A. Tenant's Taking Possession. It shall be conclusively deemed and
agreed that Landlord has performed all of its obligations hereunder
and that the Premises were in satisfactory condition as of the date of
such occupancy, unless, within five (5) days after such date Tenant
shall give written notice to Landlord specifying the respects in which
the same were not in such condition.
B. Successors, Assigns, Etc. The covenants, conditions and agreements
contained in this Lease shall bind and inure to the benefit of
Landlord and Tenant and their respective heirs, distributees,
executors, administrators, successors, and, except as otherwise
provided in this Lease, their respective assigns.
C. Attorney's Fees. In the event that Landlord should bring any action
for any relief against Tenant hereunder, or in the event that Tenant
shall bring any action for any relief against Landlord arising out of
this Lease, then all costs and expenses thereof, including reasonable
attorney's fees, incurred by the prevailing party shall be paid by the
other party. All references in this Lease to attorney's fees shall
include, but not be limited to, reasonable attorneys' and
paraprofessionals' fees at, before, and through all trial and
appellate levels and post judgement proceedings. Further, if Landlord
determines it reasonably prudent to hire legal council, without
bringing action or making any legal filings as a result of Tenant's
non-compliance with the Lease, threatened non-compliance with the
Lease, threatened legal action against the Landlord, or any situation
where Tenant is in non-compliance with the then current Rules and
Regulations, Tenant shall reimburse Landlord for all of Landlord's
legal and related costs as billed to Tenant by Landlord on a quarterly
basis.
D. Accord and Satisfaction. No payment by Tenant or receipt by Landlord
of a lesser amount than that stipulated herein for Base Rent,
additional rent or any other charge shall be deemed to be other than
on account of the Base Rent, additional rent or other charge then due
in accordance herewith, nor shall any endorsement or statement on a
check or letter accompanying any check or payment be deemed an accord
and satisfactory. Landlord may accept any such check or payment
without prejudice to Landlord's right to recover the balance of such
Base Rent, additional rent or other charge and may pursue any other
remedy in this Lease, at law or in equity.
E. Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument.
F. Applicable Law. This Lease shall be governed by and construed in
accordance with the laws of the State of Florida.
G. Radon Gas. Radon is a naturally occurring radioactive gas that, when
it has accumulated in a building in sufficient quantities may present
health risks to persons who are exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your county public health unit.
H. No Recording. Except with the prior written consent of the Landlord,
this Lease shall not be recorded and any attempted recordation shall
be deemed null and void.
12
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the
respective dates indicated below:
Witnesses The Cracchiolo Group
/s/ Sara Wuchevick /s/ Sam A. Cracchiolo, Jr.
- --------------------------------- ----------------------------------------
By: Sam A. Cracchiolo Jr., Vice President
Chesterfield Park Corporation
/s/ General Partner
- --------------------------------- Date: 1-4-99
-----------------
Global Datatel Corporation
/s/ Sara Wuchevick /s/ Richard Baker
- -------------------------------- ---------------------------------------
Richard Baker
Its: CEO
/s/ Date 1-4-99
- -------------------------------- --------------
<PAGE> 14
EXHIBIT A(2)
LEGAL DESCRIPTION:
CORPORATE TECH CENTER
ALL OF PLAT
P.B. 47 P 152
BUILDING 1
ADDRESS:
2875 SOUTH CONGRESS AVENUE
DELRAY BEACH, FL 33445
<PAGE> 15
Corporate Tech Center
3333 South Congress Ave.
Suite 404 1,960 Sq/Ft
EXHIBIT B(1)
[FLOORPLAN GRAPHIC]
offered by:
[THE CRACCHIOLO GROUP LOGO]
407-243-9800 Scale 1"=6'
<PAGE> 16
TYPICAL BUILDING PLAN - 20,000 SQ. FT.
(CUSTOM DESIGNS AVAILABLE)
Bays may be combined to fit your needs.
[Floor Plan Graphic]
SCALE 1/32" = 1'
[CORPORATE TECH CENTER LOGO]
<PAGE> 17
EXHIBIT C(1)
Site Plan
[SITE PLAN GRAPHIC] A UNIQUE COMBINATION
OF OFFICE AND LIGHT
INDUSTRIAL SPACE...
Corporate Tech Center was specifically
designed to fit your special needs. Our
two, four story office buildings offer
spacious units from 2,500 square feet
up to 43,000 square feet. Our five
office/bay combination buildings offer
space ranging from 2,500 square feet up
to 21,500 square feet. This unique
combination of office and industrial
space provides the ideal facility for a
corporate headquarters or a growing,
diversified business.
Corporate Tech Center management also
provides custom design and construction
to meet your special requirements. Our
in-house staff includes general
contracting, real estate sales, leasing
and property management capability to
help you complete your plans.
KEY:
A. Combination office/corporate
archive building, one level,
18,000 square feet.
B. Combination office/flexible bay
area with high ceilings, 2,500 to
20,000 square feet per building.
C. Combination office/flexible bay
area with high ceilings, one story
level. 2,500 to 21,500 square feet
per building.
D. Four story office building,
multiple office plans available to
fit need. 2,500 square feet up to
43,000 square feet.
E. One story, island building
suitable for restaurant to serve
the area. Ample parking engineered
into the master site plan.
F. Four story office building,
multiple office plans available to
fit need. 2,500 square feet up to
43,000 square feet.
- -------------------------------------------------------------------------------
<PAGE> 18
EXHIBIT C (2)
Site Plan
[SITE PLAN GRAPHIC]
A UNIQUE COMBINATION OF OFFICE AND LIGHT INDUSTRIAL SPACE . . .
Corporate Tech Center was specifically designed to fit your special needs. Our
two, four story office buildings offer spacious units from 2,500 square feet up
to 43,000 square feet. Our five office/bay combination buildings offer space
ranging from 2,500 square feet up to 21,500 square feet. This unique
combination of office and industrial space provides the ideal facility for a
corporate headquarters or a growing, diversified business.
Corporate Tech Center management also provides custom design and construction
to meet your special requirements. Our in-house staff includes general
contracting, real estate sales, leasing and property management capability to
help you complete your plans.
KEY:
A. Combination office/corporate archive building, one level, 18,000 square
feet.
B. Combination office/flexible bay area with high ceilings, 2,500 to 20,000
square feet per building.
C. Combination office/flexible bay area with high ceilings, one story level.
2,500 to 21,500 square feet per building.
D. Four story office building, multiple office plans available to fit need.
2,500 square feet up to 43,000 square feet.
E. One story, island building suitable for restaurant to serve the area. Ample
parking engineered into the master site plan.
F. Four story office building, multiple office plans available to fit need,
2,500 square feet up to 43,000 square feet.
<PAGE> 1
1
TRANSLATION OF A DOCUMENT WRITTEN IN SPANISH. JANUARY 26/2000.
MINERVA DOCUMENTAL PAPER LC - 1324350
4 - COMMERCIAL FACILITY LEASING CONTRACT
8 - CONTRACT PLACE AND DATE:
9 - LESSOR(S):
10 - Name INVERSIONES JORGE SOLANO Y CIA S. EN C. Identification NIT
890.110.003-3
11- Name Identification
12 - LESSEE(S): M.E.S. LTDA.
13 - Name GERARDO MURCIA GOMEZ Identification 19.113.620
14 - Name ANTONIO SERRATO SUAREZ Identification 164.149
15 - Real Estate Property's Address : CALLE 39 B # 18-A-11
16 - Price or Rent: TWO MILLION SIX HUNDRED THOUSAND PESOS. ($2.600.000)
17 - Due date: FIRST FIVE DAYS OF EACH MONTH
18 - Contract Duration term TWO (2) Year(s)
19 - Date of initiation of contract: Day: 1 (3) Month:
20 - Year: one thousand nine hundred NINETY EIGHT (1998)
21 - Date of ending of contract: Day: 29 (2) Month:
22 - Year: TWO THOUSAND (2000)
<PAGE> 2
2
23 - The Real estate Property has the following utilities: WATER, ELECTRICITY,
TELEPHONE
24 - The payment of which corresponds to:
25 - M.E.S. LTDA.
26 - In addition to the aforementioned stipulations, the parties - in common
understanding -, agree on the following clauses: FIRST.- OBJECT OF THE CONTRACT:
Through this present
27 - contract, THE LESSOR(S) grant(s) on a leasing basis to the LESSEE(S) the
use of the real
28 - estate property - (properties), whose limits are specified in the
seventeenth clause. The
29 - real estate property (properties) was/were handed over on the FIRST day,
along with the elements that make it up, in good preservation condition, as is
evidenced in the inventory,
30 - signed by the contracting parties and that makes part of this contract.
SECOND.- TIMELY
31 - PAYMENT AND PLACE: THE LESSEE(S) promise to pay to the LESSOR(S) the price
32 - agreed upon at the (place of payment) LESSOR'S OFFICE, AV. EL DORADO
# 97-35 --------
33 - within the first FIVE (5) days of each period
34 - FIXED PRICE FOR TWO YEARS ------ to the LESSOR(S), in due order. The price
shall be increased (on the ...) (period)
35 - --------------------, in an amount of -------------- percent (---- %). If
the amount were to be paid
36 - in check, it shall be understood that the payment has been made once the
Bank has
37 - made the deposit, as long as the check has been issued on time, to the Bank
for its
<PAGE> 3
3
payment.
THIRD.- USE: THE LESSEE(S) promise to use the real estate property
(properties) - which is/are the object of this contract for OFFICES, WITHOUT HIS
/ THEIR BEING AUTHORIZED
38 - TO CHANGE THE USE THAT WAS INTENDED FOR IT/THEM,
WITHOUT PREVIOUS PERMIT
39 - FROM THE LESSOR, and he promises not to use it / them for something
contrary to the
40 - 41 - law, the public order and the good habits.
FOURTH.- SUBLEASE AND TRANSFER:
42 - THE LESSEE(S) shall not be able to either - totally - sublease the real
estate property
43 - (properties), or to transfer the contract without previous authorization
from the lessor(s).
44 - FIFTH.- IMPROVEMENTS: The lessee(s) shall not be able to - without previous
written authorization from the lessor - perform improvements to the real estate
property (properties).
45 - In any case, at the end of the contract, the improvements shall become the
lessor's
46 - property.
SIXTH.- REPAIRS: THE LESSEE(S) promise to make the repairs pertinent to the
47 - leasing (locative), and those caused by actions of his or of his
subordinates. It will be on the lessor(s) the repairs to the real estate
property (properties) that may be necessary.
SEVENTH.- INSPECTION: THE LESSEE(S) shall allow the inspection visiting that,
at any time,
48 - THE LESSOR(S) or their representatives, may wish to pay, in order to verify
about the
49 - condition and keeping of the real estate property, or for any other
circumstances that they
50 - may be interested in.
EIGHTH.- INSURANCE: THE LESSEE(S) shall pay the difference for the amount that
results for the premises fire insurance, if the rate is modified on account of
<PAGE> 4
4
the
51 - use given to the real estate property (properties).
NINTH.- RESTITUTION: THE LESSEE(S)
52 - shall return the real estate property (properties) to the LESSOR(S) at the
ending of the contract, in the same condition in which he / they received it,
except for the natural deterioration
53 - caused by time and the reasonable use of it.
TENTH.- HANDING OVER: THE LESSOR(S)
54 - promise to hand over to the LESSEE(S) the real estate property (properties)
on the FIRST 55 - day (1) of MARCH year
one thousand nine hundred NINETY EIGHT (1998)
56 - along with the elements that make it up and that will be (listed) in detail
in a separate writ, signed by the contracting parties, which is considered
constituent part of this contract.
57 - ELEVENTH. - BREACH OF CONTRACT: The non-compliance or violation of any of
the
58 - obligations, on the part of the LESSEE(S), shall give the LESSOR(S) the
right to cancel the
59 - contract and to demand the immediate hand over of the real estate property,
without
60 - the need for eviction or the requirements provided by law. THE LESSEE(S)
renounce to oppose to the cessation of the leasing, through the guaranty
(surety) established in article
61 - 2035 of the Civil Code.
TWELFTH.- PENALTY CLAUSE: The default - on the part of the
62 - LESSEE(S) on any of the obligations of this contract, shall place him /
them under the
63 - condition of debtor before the other party, for the sum of
- -------------------------- ($ --------)
64 - minimum monthly salaries, as sanction, without damage to the collecting of
the rent and
65 - to the prejudices that may be caused as a result of the default.
THIRTEENTH. ENDING AND
<PAGE> 5
5
RENEWAL OF CONTRACT: This present -- end of front page of document in Spanish --
66 - contract ends through the expiry date of the stipulated term; nevertheless,
the contracting
67 - parties by mutual agreement -, shall be able to renew it for a period equal
the one
68 - originally agreed upon, by way of written communications, within a one -
month period - at least - before its ending. The aforesaid, without prejudice to
the right of renewal, stated in
69 - article 518 of the Commerce code.
FOURTEENTH.- TAXES AND FEES (RIGHTS): The
70 - taxes caused by this present document, shall be on THE LESSEE(S).
FIFTEENTH:
71 - COLESSEES: In order to guarantee to the LESSOR(S) (for) the default on his
/ their obligations, THE LESSEE(S) appoint as his / their colesse(s):
73-, 74, 75, 76 _____________
77 - _________ , of age and living in
78 - holder(s) of Identification: as it appears by his / their signature(s)
79 ... , who declare(s) that he / they commit himself /
themselves in
80 - solidarity with THE LESSEE(S) during the term of duration of the contract
and of its
81 - renewals, and for the period in which the real estate property
remains in their hands.
82 - SIXTEENTH.- The lessee(s) expressly empower the lessor(s) to fill in, in
this document,
83 - the blank space for the limits (boundary lines).
SEVENTEENTH.- In case of delay in the
84 - payment of the rent, the LESSOR(S) shall be empowered to collect - by the
executive
85 - means - the amount of rent owed, the sanction agreed upon here,
the utilities unpaid by
86 - THE LESSEE(S), and the indemnification for damages, being necessary only
the
<PAGE> 6
6
affirmation and the showing of this contract.
EIGHTEENTH. - LIMITS OF THE REAL ESTATE PROPERTY: 87, 88, 89, 90, 91, 92, 93,
94, 95
96 - ADDITIONAL CLAUSES:
97 - PROMISSORY NOTE VALUE: THE LESSEES EXPLICITLY RECOGNIZE IN THIS
98 - LEASING CONTRACT, A SECURITY "PROMISSORY NOTE" OF GRADUAL
99 - AMORTIZATION ACCORDING TO ARTICLES 621 AND 619 OF THE COMMERCE CODE,
100 - FOR THE NET AMOUNT OF MONEY RESULTING FROM DOING THE SIMPLE
101 - ARITHMETICAL OPERATION OF MULTIPLYING BY THE NUMBER OF MONTHS OR
102 - FRACTION OF THEM, OF CONTRACT DURATION AND ANY OF ITS RENEWALS, FOR
103 - THE AMOUNT OF "RENT" THAT MAY CORRESPOND, ACCORDING TO THE ABOVE CLAUSE.
104 - ADDITIONAL CLAUSE 2: THE PARTIES AGREE TO UNDO THE CONTRACT BEFORE
105 - THE TERM (BY) AGREEING UPON THE PAYMENT OF TWO (2) LEASING RENTS FOR EACH
YEAR OR FRACTION OF YEAR FALLING SHORT FOR THE TERMINATION OF THE
106 - CONTRACT.
107, 108, 109, 110, 111, 112, 113, 114
115 - As evidence of the aforesaid, it is signed by the parties on this
FIRST (1st) day
116 - of March year one thousand nine hundred NINETY EIGHT (19 ).
<PAGE> 7
7
117 - 118 - By THE LESSOR, (signed) ID. CC or NIT 71440973 Bogota; THE LESSEE
(signed) GERARDO MURCIA GOMEZ ID. CC or NIT 19.113.620; COLESSEE (signed) ID. CC
or NIT 8400604101; COLESSEE (signed) ID. CC or NIT 164149 Bogota. END of
document.
<PAGE> 1
LEASE CONTRACT
TO: OFFICE
PLACE AND DATE OF CONTRACT: SANTAFE DE BOGOTA, NOVEMBER 15, 1999
LESSOR: PROGRESO BIENES RAICES S.A.
LEGAL REP.: CECILIA SERRANO ORTIZ
C.C. # 41.610.399
LESSEE: GLOBAL DATAL DE COLOMBIA S.A.
LEGAL REP.: RAFAEL DELGADO CONTRERAS
C.C. # 19.097.295 SANTAFE DE BOGOTA
I. THE PARTIES:
The aforementioned parties are identified as appears below their respective
signatures. THE LESSEE shall be responsible for all the obligations contracted
in the present contract, as well as the ones imposed by Law, not only for the
principal term, but during such implied extensions and written renewals as are
agreed by one and/or by all until the date of the material return of the
property to the LESSEE.
II. STIPULATIONS:
The LESSOR and LESSEE have agreed to enter into the present Lease Contract by
which they acquire the rights and contract the obligations which this document
[illegible] imposes pursuant to the following clauses.
FIRST: PROPERTIES. THE LESSEE certifies that it has received the following
property in Lease: The BUILDING constructed on the lot of land located at
Carrera Dieciocho (18) number Ninety - Eleven (90 - 11) and Calle Noventa (90)
number Eighteen - Sixteen (18 - 16), of the "EL CHICO LTDA" district in the city
of Santafe de Bogota, with real property registration number 50N-00755377.
FIRST PARAGRAPH: The real property covered by this contract is delivered with
the telephone numbers listed in the attached document which forms an integral
part of this contract, with the telephone system being the LESSOR's
responsibility.
SECOND PARAGRAPH: The following boundaries correspond to the real property
covered by this contract, pursuant to certification clarification deed No. 9410
dated September first (1st) of nineteen hundred ninety-eight (1998): NORTH:
Along twenty meters (20 meters) with lot number four (4) of the same block
thirteen (13); SOUTH: One of its sides along a similar length of twenty meters
(20 meters) with Calle Noventa (90); EAST: Another of its sides along thirty-two
meters (32 meters) with Carrera Dieciocho (18) of the city plan. WEST: Along
thirty-two
<PAGE> 2
meters (32 meters) with lot number seven (7) of the same block thirteen (13).
SECOND: TERM AND ADVANCE NOTIFICATION. The term of duration of the present
contract is One (1) year calculated from November fifteenth (15th) of nineteen
hundred ninety-nine (1999).
FIRST PARAGRAPH: ADVANCE NOTIFICATION BY THE LESSOR. The lessor may terminate
the lease contract during any of its extensions, never during the initial
effective period of the contract, by means of advance notification to the
Lessees three (3) months in advance and the payment of indemnification
equivalent to three (3) months' rent. Once these conditions are met, the lessee
shall be obligated to return the property.
SECOND PARAGRAPH: ADVANCE NOTIFICATION BY THE LESSEE. If at the expiry of the
contract or of any of its extensions THE LESSEE desires not to continue it or to
extend it more, it shall give written notification to the LESSOR three (3)
months in advance and allow the property to be visited by the Lessor; but if it
does not give notification or prevents the visits, THE LESSEE shall be obligated
to pay all balances pending for lease payments and services, which it owes
through the initial expiration date of the contract or of its corresponding
extensions.
THIRD PARAGRAPH: If the parties do not give written notification of renewal
during the three (3) month period prior to the expiration of the contract, it
shall be renewed automatically, for the same period.
THIRD: PRICE AND DOMICILE. The price of the Lease is the amount equivalent to
the sum of TWENTY EIGHT MILLION PESOS CURRENT CURRENCY ($28,000,000), which THE
LESSEE undertakes to pay to the LESSOR in advance within the FIRST TEN (10)
CALENDAR DAYS OF THE RESPECTIVE MONTHLY PERIOD, during the entire effective
period of this contract or during any of its implied extensions or express
renewals. This contract shall be understood as in effect while any of the
LESSEES or their cause holders keep the property in their possession and a copy
of this document has been delivered to them with notification of cancellation by
the LESSOR. This Lease payment shall remain in effect during the year between
November fifteenth (15th) of the current year through November fifteenth (15th)
of the year two thousand, inclusive.
FIRST PARAGRAPH: ADJUSTMENT. From the expiration date of the principal term of
the present Contract and so successively every twelve (12) month period, the
price of the Lease shall be adjusted by ONE HUNDRED PERCENT (100%) of the
Consumer Price Index certified by DANE for the period from November first (1st)
of the preceding year to October thirty-first (31st) of the current year. THE
LESSEE undertakes to make the payments under the terms established in this
Clause without requirement of private or judicial demands which the LESSEE
expressly waives. The adjustment of the amount of the price will be in effect
during the implied extensions or renewals of the present Contract.
SECOND PARAGRAPH: NEW PRICE. The contracting parties reserve the right to agree
a new price if the Contract is renewed and in any case the adjustment herein
stipulated will be the minimum base which shall be used to determine the new
lease amount, such that appraisers shall be called and the verbal procedure
stipulated in Article 519
<PAGE> 3
of the Commercial Code shall be used only when in the opinion of the contracting
parties for the renewal period, a new payment above that herein stipulated
should be established inasmuch as for the other cases, the parties shall be
subject to the terms of the preceding clauses.
THIRD PARAGRAPH: CONTRACT NOVATION. The monthly modification of the lease
payment during the effective period of the extensions or renewals if they occur,
shall not be seen in any case as a novation of the present contract by the will
of the parties; likewise, the copy of the payment receipt issued by THE LESSOR
shall not be sufficient evidence.
FOURTH: TIMELY PAYMENT AND PLACE. The Lessee undertakes to pay the amount agreed
within the time frames established at CALLE 67 NORTE No. 6N-85-Urbanizacion
MENGA in the city of Cali or to the account in BANCO DE BOGOTA of the same city
No. 158-083733.
FIFTH: USE. The leased property shall be used only for the use indicated in the
heading of this contract, that is, for OFFICES.
SIXTH: IMPROVEMENTS AND REPAIRS. The LESSEE(S) shall be responsible for such
leasehold repairs as are cited in the Law (Articles 2028, 2029, 2030) of the
C.C. and may not perform works without written consent from the LESSOR. Such
improvements as THE LESSEE makes shall in any case remain the property of the
LESSOR without any right by THE LESSEE to recover them or to request
indemnification, compensation or any payment whatsoever therefor. If they make
such, they shall accrete to the property without prejudice to the LESSOR's
deciding that it accepts the material delivery of the property together which
the improvements made or that it may request the removal thereof. In this case,
THE LESSEE undertakes to deliver the property in the same state in which it was
received. THE LESSEE may not claim the right of retention for reason of
improvements, nor claim from the LESSOR indemnification of any nature for this
reason, even if THE LESSOR has authorized the improvements.
PARAGRAPH: The locks which THE LESSEE places on the doors, interior or exterior
windows of the property may not be removed by THE LESSEE, nor may it demand the
value thereof.
SEVENTH: SERVICES. The Water and Sewer, Electric Energy, Telephone, Trash
Removal and other Public service shall be borne exclusively by THE LESSEE, which
undertakes to give timely notice to the respective company of any deficiency or
of a suspension in the service. Also, THE LESSEE undertakes to respect the
regulations of public companies and not to make any modification to the
facilities without express written consent from the LESSOR. Furthermore, THE
LESSEE is responsible for such damage and fines as are caused by the improper
use of the public services and any resulting amount owed whatsoever for the
provision of services, fines or similar items, it shall be sufficient for the
LESSOR to present the respective payment vouchers for it to be assumed that
payment was made by it and to be able to demand by executory procedure jointly
and severally with THE LESSOR, the aforementioned amounts. If THE LESSEE does
not pay in a timely manner such services as correspond to it and as a result the
respective Public Companies suspend them and/or remove the corresponding meters,
this fact shall be understood as nonperformance of the contract and THE LESSOR
may demand the
<PAGE> 4
judicial return of the property. In this event and to demand via executory
procedure the payment of the amounts pending for services, reconnections and/or
reinstallations, the invoices or payment receipts produced by the respective
Public Companies and the statement of the LESSOR that they correspond to
services provided during the time in which the LESSEE occupied the property
shall be sufficient evidence.
FIRST PARAGRAPH: THE LESSEE states that the installations corresponding to the
complete services have been received in perfect working order and may not make
any modifications thereto without prior written consent from THE LESSOR and
without a request by the latter to the corresponding Company. THE LESSOR shall
not in any case be responsible for deficiencies in the services to which the
property has a right and which are serviced by the corresponding Public
Companies, or for the payment of excesses in the settlement thereof, but it
shall make its best effort to facilitate handling of the corresponding claims.
SECOND PARAGRAPH: In all the events herein stipulated on the nonpayment of
services, the LESSEE expressly waives private and/or judicial demands and states
that it owes all amounts THE LESSOR pays for this reason.
THIRD PARAGRAPH: The property shall not be received by THE LESSOR while THE
LESSEE does not show the originals of the latest receipts for public services,
duly paid.
FOURTH PARAGRAPH: The LESSOR states that on the signing of this contract all
public services are duly paid and settled with the corresponding local
companies.
EIGHTH: DELIVER AND STATE. THE LESSEE on signing the present document states
that it has received the properties covered by this contract in a good state,
together with the elements that comprise it and pursuant to the inventory which
is considered an integral part of this contract. The services, related
appurtenances and additional uses are contained in the inventory.
FIRST PARAGRAPH: THE LESSEE states that it is aware of the current state of the
property covered by this lease contract and it accepts it as received in the
condition in which it is found, with respect to its size as well as its
specifications.
SECOND PARAGRAPH: Given that the lessee can confirm the functioning of the
elements of the property by using them, it shall have 30 calendar days
calculated from the date of occupation thereof to make a statement with respect
to the inventory made by the Lessor, as well as on the state of the property.
Once the established period has elapsed, the inventory and the state of the
Property shall be understood as ratified.
NINTH: RETURN. The Lessee shall return the property to the lessor at the end of
the contract in the same state as it receives it in, except for normal
wear-and-tear derived from the legitimate use thereof.
TENTH: POSSESSION OF THE PROPERTY. If for any reason THE LESSEE abandons the
property for a period equal to or greater than three (3)
<PAGE> 5
calendar months and it is also in default in the performance of its obligations,
THE LESSOR is authorized to take possession thereof and to defend it before
third parties of any nature without THE LESSEE's obligations ceasing for that
sole reason.
ELEVENTH: NONPERFORMANCE AND DELAY. Mere delay in the payment of THREE (3) or
more monthly lease payments or a complete or partial violation of any of
contractual or legal obligations shall give the LESSOR a right to terminate the
contract and to demand the immediate delivery of the property, without eviction
or the notifications stipulated by Law being necessary. THE LESSEE hereafter
waives private and judicial notifications and giving the guarantee cited in
Article 2035 of the Civil Code, at the same time as it waives the right to
retention under any title granted to it by law.
PARAGRAPH: Mere tolerance by THE LESSOR in accepting payment of the price after
the first ten (10) days of each month shall not be understood as a desire to
modify the term established for payment.
TWELFTH: PENALTY. If THE LESSOR files suit for the return of the property, THE
LESSEE shall not only pay THE LEASE PAYMENTS for the contract term but for the
entire time it has the properties in its possession. In cases of nonperformance
by THE LESSEE of its contractual or legal obligations, it shall pay jointly and
severally to the LESSOR, as a penalty clause, a monthly fine equivalent to one
(1) lease payment pursuant to the monthly price of the last lease payment in
effect at the time the judicial action is taken, without any private or judicial
notification being required to demand such amount, which THE LESSEE expressly
waives, as well as Articles 2035 and 2007 of the C.C.; 408 and subsequent of the
Code of Civil Procedure, as well as the right to demand the cessation of the
lease by means of the guarantee cited in Art. 2035 of the C.C., in case of a
lawsuit to return the leased property and without prejudice to the other
contractual or legal indemnifications in favor of the LESSOR. Payment of this
fine does not release the LESSEE from any of its obligations. THE LESSEE shall
bear the expenses and costs for judicial or extrajudicial collection, including
Attorneys Fees and indemnification of damages.
FIRST PARAGRAPH: In case of delay in the payment of any Lease payment, THE
LESSEE undertakes to pay the LESSOR, as a penalty for such arrears, an amount
equal to the maximum legal arrears interest in effect at the time of the
arrears, payable over and above the rent for the month, months or fraction of a
month in arrears, as the case may be, without prejudice to the LESSOR's other
actions, plus the amount of the Fees for extrajudicial collection which shall be
assessed at Twenty (20%) of the amounts to be collected; this percentage may not
be deducted from such amount as the Lessee must pay in case of use of an
executory procedure or the summary leased property return procedure. Also, the
interest cited in this paragraph shall be paid from the first (1st) of each
month through the date of payment of the amounts owed by the Lessee.
<PAGE> 6
SECOND PARAGRAPH: This contract shall be sufficient proof for the collection of
this penalty, without need of judicial or private notifications, which THE
LESSEE expressly waives and shall give right of execution also to collect in
addition to the lease payment, any other amount owed by the LESSEE for which the
a mere statement made in THE LESSOR's litigation shall suffice, which may not be
disproved without presenting the respective payment receipts.
THIRD PARAGRAPH: The return of checks for unjustified reasons shall give the
LESSOR the right to collection 20% of the legal penalty.
THIRTEENTH: PAYMENT OF DAMAGES. The damages caused by culpability attributable
to THE LESSEE may be collected judicially or extrajudicially by THE LESSOR
notwithstanding collection of the penalty clause by executory procedure.
FOURTEENTH: REASONS FOR TERMINATION. The following shall be reasons for
terminating the lease contract, beyond those indicated by Law: a) A change in
the term stipulated in this contract; b) The use of the property for illegal
purposes or for purposes against good practices or which endanger the property
or the health of its inhabitants; c) The failure to pay for the public services
for which THE LESSEE is responsible. Such proof as is classified as summary
pursuant to the law shall be sufficient without need of notifications of any
type, which THE LESSEE expressly waives.
FIFTEENTH: INSPECTION. The LESSEE shall allow at any time such visits as the
LESSOR or its representatives deem necessary to certify the state and upkeep of
the property or such other circumstances as are in its interest, upon written
agreement by the parties.
SIXTEENTH: CESSATION OF THE LESSOR'S RIGHTS. At any time THE LESSOR may transfer
its rights to third parties. THE LESSEE undertakes to perform its obligations
with the assignee from the date on which it is notified of such act by telegraph
or by certified mail, at the property covered by the present contract. Once such
notification has been made in that manner, it shall be understood that it has
been made in person, by the wills of the parties and there shall be no need to
perform other procedures for that same purpose. The telegraphic notification
shall be valid legally and extrajudicially and shall have the effects stipulated
in Article 1960 of the C.C.
SEVENTEENTH: EXPENSES. The expenses caused as a result of this Contract,
including Stamp taxes, shall be borne by the contracting parties in equal parts.
EIGHTEENTH: UPDATING OF DATA. THE LESSEE undertakes to update annually and in
writing the data on its place of work, home address and such others as are
requested by THE LESSOR, which shall be incorporated into the Contract and shall
form an integral part of it.
TWENTY-FIRST: INSURANCE. The Lessee shall pay the difference in the amount that
occurs in the property's fire insurance, if the rate changes due to the change
in use thereof, after agreement by the parties.
TWENTY-SECOND: KNOWLEDGE OF THE CONTRACT. In this state, the LESSEE and THE
LESSOR state that they fully know the legal stipulations in the lease contract,
especially with respect
<PAGE> 7
to the lease payments and they accept in advance amendments derived from new or
current decrees or laws in effect in this regard.
In witness whereof it is signed by the parties and the co-debtors, by and before
witnesses, on the tenth (10th) day of the November of nineteen hundred
ninety-nine (1999), in two (2) copies of the same tenor, all valid for legal or
extrajudicial purposes.
THE LESSOR
[fingerprint]
[s. illegible]
PROGRESO BIENES RAICES S.A.
[hw:] 6CU LEGAL REP.: CECILIA SERRANO ORTIZ
C.C. # 41.610.399
ADDRESS: CRA. 14 No. 93B-15, 3rd Floor
TEL: 6221077
THE LESSEE
[fingerprint]
[s. illegible]
GLOBAL DATAL DE COLOMBIA S.A.
LEGAL REP.: RAFAEL DELGADO CONTRERAS
C.C. # 19.097.295 SANTAFE DE BOGOTA
ADDRESS:
TEL.:
WITNESSES
[s. illegible] [s. illegible]
LISETTE YAMHURE KATTAH [hw:] 29141446 Usaquen
C.C. # 35.465.661 OF USAQUEN Calle 19 #3-10 (1201)
BROKER Tel.: 2837770
ADDRESS: CALLE 81 NO. 11-88, SUITE 401 Joan Cristobal Perez Cabrera
TEL.: 6 18 47 88
<PAGE> 8
TELEPHONE LINES EDIFICIO PROGRESO
LEASING
<TABLE>
<S> <C> <C> <C> <C> <C>
6365018 - 6365007 - 6364992 - 6364962 - 6364939
6364903 - 6365029 - 6364875 - 6364834 - 6364823
6364852 - 6364905 - 6365108 - 6365085 - 6365019
6365129 - 6365107 - 6365084 - 6365062 - 6365151
6364812 - 6365173 - 6365141 - 6365140 - 6365119
6365118 - 6365096 - 6365074 - 6232561 - 6232562
6232568 - 6232567 - 6232565 - 6232564 - 6364937
6232563 - 6364836 - 6364825 - 6365185 - 6365184
6365165 - 6365163 - 6365052 - 6365036 - 6365025
6365014 - 6365008 - 6365003 - 6364981 - 6364958
6364928 - 6364892 - 6364867 - 6364842 - 6365164
6365142 - 6365130 - 6365097 - 6365095 - 6365073
6365063 - 6365041 - 6365040 - 6365030 - 6364993
6364831 - 6364824 - 6365162 - 6365143 - 6365121
6365098 - 6365076 - 6365054 - 6365038 - 6365027
6365016 - 6365005 - 6364983 - 6364960 - 6163125
</TABLE>
ADDRESS PROGRESO BIENES RAICES S.A.
CALLE 67 NORTE NO. 8N-85
URBANIZACION MENGA - CALI
<PAGE> 9
RIDER TO THE LEASE CONTRACT SIGNED BY THE UNDERSIGNED FOR THE BUILDING LOCATED
AT CARRERA 18 NO. 90-11 AND CALLE 90 NO. 18-16, SANTAFE DE BOGOTA
THE PARTIES BY COMMON ACCORD HAVE DECIDED TO AMEND THE LEASE CONTRACT IN THE
FOLLOWING REGARD:
FIRST: TERM AND ADVANCE NOTIFICATION: The contracting parties agree to modify
the initial effective period of the lease contract covered by this rider by
increasing the initially agreed term, from one (1) year to four (4) years. In
this regard Clause Second of such contract shall state thus: The term of
duration of the present contract is four (4) years calculated from November
fifteenth (15th) of nineteen hundred ninety-nine (1999) and its expiry date
shall be November fifteenth (15th) of the year two thousand three (2003).
FIRST PARAGRAPH: ADVANCE NOTIFICATION BY THE LESSOR. The lessor may terminate
the lease contract during any of its extensions, never during the first year of
effectiveness of the contract, by means of advance notification given to the
Lessees three (3) months in advance and the payment of indemnification
equivalent to three (3) months' rent. Once these conditions have been met, the
lessee shall be obligated to return the property.
SECOND PARAGRAPH: ADVANCE NOTIFICATION BY THE LESSEE. If at the expiry of the
contract or of any of its extensions, never during the first year of
effectiveness of the contract, THE LESSEE wishes not to continue with it or to
extend it further, it shall give written notification to THE LESSOR three (3)
months in advance and allow the property to be visited by the Lessor without
this giving rise to any penalty whatsoever for the lessee; but if such
notification is not given or if the visits are prevented, THE LESSEE shall be
obligated to pay all the pending balances for lease payments and services, which
it owes from the contract's expiry date or that of its corresponding extensions.
In case of termination in advance of the expiry date of the contract or of its
extensions, the lessee shall give written notification to the lessor ninety (90)
days in advance of the date of the future vacation of the property and it shall
pay indemnification equivalent to three (3) months' rent.
SECOND: EXTENSIONS. If the parties do not give written notification of renewal
within the three (3) month period in advance of the expiration of the contract,
it shall be renewed automatically for two (2) year periods calculated from the
initial expiry date of the contract.
THIRD: The parties agree that adjustment to the lease payments shall be annual
for the percentage established in Clause Third - First Paragraph of the lease
contract signed.
Finally, the Lessor and Lessee ratify the remaining conditions recorded in the
lease contract signed by them.
<PAGE> 10
In witness whereof it is signed by the parties and the co-debtors, by and before
witnesses, on the tenth (10th) day of the November of nineteen hundred
ninety-nine (1999), in two (2) copies of the same tenor, all valid for legal or
extrajudicial purposes.
THE LESSOR
[fingerprint]
[s. illegible]
PROGRESO BIENES RAICES S.A.
[hw:] 6CU LEGAL REP.: CECILIA SERRANO ORTIZ
C.C. # 41.610.399
ADDRESS: CRA. 14 No. 93B-15, 3rd Floor
TEL: 6221077
THE LESSEE
[fingerprint]
[s. illegible]
GLOBAL DATAL DE COLOMBIA S.A.
LEGAL REP.: RAFAEL DELGADO CONTRERAS
C.C. # 19.097.295 SANTAFE DE BOGOTA
ADDRESS:
TEL.:
WITNESSES
/s/ Lisette Yamhure Kattah C.C.#
- ---------------------------------------
LISETTE YAMHURE KATTAH ADD: [hw:] 29141446 Usaquen
C.C. # 35.465.661 OF USAQUEN Calle 19 #3-10 (1201)
BROKER TEL.:2837770
ADDRESS: CALLE 81 NO. 11-88, SUITE 401 Joan Cristobal Perez Cabrera
TEL.: 6 18 47 88
<PAGE> 1
1
TRANSLATION OF A DOCUMENT WRITTEN IN SPANISH. JANUARY 28/2000.
MINERVA DOCUMENTARY PAPER 7108015
1. COMMERCIAL LEASING CONTRACT.- Between the following undersigned: ERNESTO
GARCIA ACERO, of age, living in Santafe de Bogota, D.C., holder of
Identification: Citizenship Card No. 2.863590, issued in Bogota - in his
character as owner of the real estate property - to which this present
contract refers -, and that in its written text shall be named: THE LESSOR,
on one part - and on the other: RAFAEL JESUS DELGADO CONTRERAS, male sex,
of age, holder of Citizenship Card No. 19.097.295, issued in Bogota, who
acts in his character as MANAGER AND LEGAL REPRESENTATIVE of the CASA
INFORMATICA S.A. COMPANY, society established in Santafe de Bogota,
incorporated through Public Deed No. 639, issued at the Notary Public's
Office No. 7 of Santafe de Bogota, on February 23, 1993, registered on June
15, 1993, bearing number 409271, of Book IX, of the Chamber of Commerce of
Santafe de Bogota, whose powers for contracting - on behalf on the Company
-, as well as for its incorporation -, copies of which -duly legalized -,
are added to this document, who - for this present contract - shall be
called: THE LESSEE, the agreement stated in the clauses of this present
contract, has been signed, which is governed by the statutes of the
Colombian Commerce Code:
FIRST.- THE LESSOR hands over to the LESSEE - on a leasing basis -, and he
declares that he receives it as such, a real estate property whose location
and limits are stated as follows: a real estate property, constructed as a
two -story construction,
<PAGE> 2
2
located at calle 90 No. 18 - 59, and that includes the No. 89 - 36 one, on
carrera 19 - of the present urban nomenclature of Santafe de Bogota. This
real estate property includes a land lot, having the two (2) - story, first
quality construction -on it. The real estate property - which is the object
of this instrument - is located within the following limits of its own: On
the northern side, with calle 90; on the east side, with a property
belonging to - or that used to belong to - Ramon Fernandez Alvarez; on the
southern side, with a property belonging to - or that used to belong to -
German Fernandez Alvarez; and on the west side, with carrera 19, in this
city.
SECOND.- THE LESSEE declares that he is receiving all the property - here
stated -, in perfect condition, and with normal functioning, and that he
promises to keep them in perfect preservation and functioning condition,
and to give them back (return) to the LESSOR at the end of this contract.
THIRD.- The duration term of this contract is a twelve (12) - month one -
renewable by way of common agreement between the parties - counted from
January 1st, 1996 to December 31st, 1996.
FOURTH.- RATE OF RENTAL: THE LESSEE shall pay the sum of five million
pesos, legal currency ($5.000.000), for each monthly payment, during the
first twelve (12) months. The LESSEE explicitly promises to pay its total
amount and in advanced monthly payments, on the first calendar day of each
monthly period, the stated amount, being it explicitly established that the
monthly periods are indivisible. the LESSEE promises -- END OF FIRST PAGE
OF ORIGINAL DOCUMENT IN SPANISH -- to pay the rent amount, not only for the
stipulated terms, but also, during the whole time period that he
<PAGE> 3
3
keeps the real estate property in his hands, on any basis, and that the
same may not have been legally and fully returned to the LESSOR; this
handing over shall not be considered legally fulfilled until the LESSOR
issues a paid - up written evidence in which he declares that the LESSEE
does not owe any amount - on account of rent payment, utilities, repairs of
any kind they may be, and the industry and commerce tax. The monthly rent
payment shall be made by the LESSEE at the following address: Carrera 35
No. 89 - 21 in the city of Santafe de Bogota. In case of delay in payment,
the LESSEE shall accept and pay - during this period -, to the LESSOR,
commercial interest at the monthly rate of three point five percent (3.5%),
which shall be assessed on the unpaid sums, without prejudice to the other
actions of the creditor.
FIFTH.- The real estate property shall be used as office facilities for
CASA INFORMATICA S.A.. The LESSEE shall not be able, either to transfer
this present contract, or to sublease it; either totally, or in part,
without the previous written authorization from the LESSOR; being it
understood and agreed upon, that even though such authorization might be
granted, all the other obligations stipulated in this contract - and that
are on the LESSEE, shall continue in force.
SIXTH.- THE LESSEE declares that he has received the real estate property -
which is the object of this contract - in good condition, according to the
inventory which is signed by the parties - on a separate section -, and
that - for all legal matters -, makes part of it. He, nevertheless,
promises to keep it and to return it in the same condition in which he
received it; except for deterioration due to the normal use. THE LESSEE
shall
<PAGE> 4
4
pay for all the repairs - pertaining to the lease -, of any kind that there
might be, up to the date of the legal and full handing over of the real
estate property to the LESSOR.
SEVENTH.- THE LESSEE declares that he is receiving the real estate
property, along with all its complete, first quality fixtures (and
fittings) - and in perfect working condition and appearance - for the use
they are intended, such as: electricity, water, sewerage, telephone -
numbers: 6 16 72 86, 6 16 76 16, 6 16 89 07, 6 11 51 63, 6 16 31 98, 2 56
39 00, 2 36 11 93, long distance call service; being it explicitly agreed
upon, that the LESSEE shall pay to the respective companies, for those
services, up to the last full month in which the real estate property be
legally and completely received, according to the inventory, by the LESSOR.
If, for some reason, any of such services, fittings or fixings were to
become out - of - order, as far as their functioning, or if the utilities
were to be suspended on account of lack of timely payment, it shall be
exclusively on the LESSEE, the getting - on his own account - of their
quick and correct functioning. Therefore, the LESSOR shall not be
responsible - at all - for the correct -- END OF PG. 2 -- CA - 7108016--
Comes from page CA - 7108015 -- rendering of the enumerated utilities.
EIGHTH.- In case that - for any reason - the telephone receivers and their
lines were to be missing, the LESSEE promises to pay for the reinstallation
of the telephone lines, and for the reinstallation of the new telephone
receivers, functioning correctly; in any case, stating in the documents of
such reinstallation, that the service and the equipment shall be
reinstalled bearing the name of the LESSOR, owner of
<PAGE> 5
5
the real estate property. Without the fulfillment of this solidary
obligation and of all the others that have been agreed upon and stated in
this contract, the LESSOR shall be able to refuse receiving from the
LESSEE, the real estate property, along with its respective keys;
therefore, the payment of the rent agreed upon, shall keep on being on him,
up to the completion of the month in which the LESSEE may submit to the
LESSOR all the bills paid for the total amount of said utilities, taxes,
equipment and implements that are now incorporated to the rented real
estate property; until that full month, the LESSEE promises - through this
instrument - to be responsible before the LESSOR - and the respective
companies - for all damages, prejudices - that on this account, fault or
omission - were caused to the real estate property, to its related
installations and accessories; the LESSEE is not empowered to perform any
modification to the electric, telephone, or water (hydraulic)
installations, without the previous written permit from the LESSOR.
Likewise, it is agreed upon and understood, that any damage or
deterioration found at the time of the total and legal hand over of the
real estate property, shall be repaired and paid directly by the LESSEE, to
the entire satisfaction of the LESSOR; therefore, the LESSEE is with
solidarity obliged to use the real estate property with the necessary care
and good judgment, and to return it in the same perfect condition in which
he receives it.
NINTH.- THE LESSOR shall be able to visit, at any time, the rented real
estate property; and during the final three (3) months of the leasing, the
LESSEE is obliged to allow any person, or group of persons
<PAGE> 6
6
authorized by the LESSOR, to visit and know in detail the real estate
property, to take pictures of all, or part of it. During said months, the
LESSOR has the right to post FOR RENT signs at the real estate property.
TENTH.- THE LESSOR does not assume any responsibility for damages or
injuries that the LESSEE may suffer for causes imputable to third parties,
on account of robbery, burglary, nor for disasters caused by fire, riot or
flood.
ELEVENTH.- THE LESSEE explicitly renounces to the right of withholding of
the rented real estate property, that - on any basis -, or for any reason,
the laws may grant him.
TWELFTH.- All repairs, adaptations, variations and reforms of any kind that
the LESSEE might wish to carry out, shall be paid by him; and in order to
make them, -- end of pg. 3 = CA 7108016-- the previous written
authorization from the LESSOR is required, as well as his latter written
acceptance. Without the fulfillment of this obligation, the LESSOR shall be
able to demand from the LESSEE, the withdrawal of the works done, as well
as the repairs due to such works, all of them paid by the LESSEE.
Therefore, the LESSOR is - here by - exempted from paying such improvements
or reforms, or of indemnifying - in any manner - the LESSEE, even in the
cases in which he might have explicitly authorized him in writing;
nevertheless, the LESSOR may demand their withdrawal, in case they are not
in agreement with the guidelines set by him. It is understood and
explicitly stipulated, that any lock or additional item that the LESSEE may
install on the inside doors or windows, or outside the real estate
property, shall not be able to be withdrawn and shall remain the property
of the
<PAGE> 7
7
LESSOR, without there being opportunity to recognition of any sum of money
for this reason.
THIRTEENTH.- THE LESSEE shall not be able to post on the walls, doors or
windows of the real estate property, any sign - of any nature whatsoever -
without the written authorization from the LESSOR; neither shall he be able
to keep inside the real estate property explosive substances, or any other
element that may cause damage or harm to the real estate property itself or
to people.
FOURTEENTH.- THE LESSEE, in solidarity and explicitly obliges himself to
pay the LESSOR a monthly three point five percent (3.5%) interest on any
remnant sum that may appear owed by him/them, and on any basis, from the
date the payment ought to be made, until the month of the effective remedy.
These interests cannot - in any case - be interpreted as a second sanction.
FIFTEENTH.- THE LESSEE promises to pay the sanctions, cost and fines that
the Aqueduct, Electricity, and Telephone Companies, or any District
authority may charge during the force of this present contract, on account
of the respective infringement of the respective regulations, or for not
having paid such services on time; and shall indemnify the LESSOR for harms
on him, for such infringements or omissions, being part of such harm -
among others - the ones that may result from the loss of the aforementioned
services, their suspension, their reconnection, or reinstallation. It is
understood that the LESSOR may - if he considers it convenient - make the
respective payments in order to obtain the normalization of the
aforementioned utilities; likewise, he shall be able to pay for the
sanctions, taxes and fines - in these cases. Such cost ought to
<PAGE> 8
8
be reimbursed to him immediately, by the LESSEE, being it possible to
charge it by execution, by the simple issuance of the respective voucher,
without the need of any other requirement.
SIXTEENTH.- THE LESSEE authorizes the LESSOR to fill in - in this present
document - the blank spaces (not filled in) in this instrument. No
modification-- end of pg. 4 -- CA 7108017 -- Comes from page CA - 7108016
-- to the text (content) of this present contract shall be valid, if it is
lacking the legal written format, before Notary Public.
SEVENTEENTH.- Once expired the duration terms of leasing of this present
contract, the LESSEE promises to hand over the real estate property,
fulfilling all the solidary obligations, stated in this instrument.
EIGHTEENTH.- It is explicitly stipulated that for all effects of this
present contract, the LESSEE is solidary.
NINETEENTH.- In order to end this contract - on the part of the LESSEE - he
promises to give written and certified notice to the LESSOR with six (6)
months in advance to the date of expiry. If on expiry of the terms
stipulated as duration term of this present contract, the parties may wish
to renew such term, such renewal requires the explicit acceptance of them;
and it ought to be stipulated in writing with six (6) months in advance to
said expiry. If the aforementioned renewal were not explicitly agreed upon
in writing - within the term provided before, the tacit renewal dealt with
in article 2014 of the Civil Code, shall be limited to a one - month
period.
TWENTIETH.- The disagreements that may arise between the LESSOR and the
LESSEE, by virtue of, and in the development of this leasing contract,
shall be decided by the arbitrators appointed by the Chamber of
<PAGE> 9
9
Commerce of Bogota.
TWENTY FIRST.- THE LESSEE, explicitly accepts from now on, and without the
need for any notice, the following actions: a) Every transfer made by the
LESSOR in his position as owner of the real estate property, to a third
party, who taking over his rights and obligations, may substitute for him
in this contract, without there subsisting - on the LESSOR - any
responsibility; b) in case of sale of the real estate property by the
LESSOR, by this only fact, this present contract is understood to be ended,
without there remaining - on the LESSOR any responsibility.
TWENTY SECOND.- THE LESSEE shall pay for all the expenses caused by this
present contract, and for the ones due to its renewals - if it were the
case -, such as safety paper, stamp tax, acknowledgment of signatures
before competent authority, photocopies, and the expenses for the making of
this present contract.
TWENTY THIRD.- THE LESSEE submits himself to the jurisdiction of the
Santafe de Bogota judges, for all judicial effects of this contract.
TWENTY FOURTH.- THE LESSEE explicitly promises to watch over and to prevent
that the own landmarks that appear in this present contract, be perturbed,
or usurped by third parties; and it is also agreed upon, that immediate
notice ought to be given to the LESSOR in case such violations may happen.
TWENTY FIFTH.- THE LESSEE, at the same time that he legally and completely
hands over the real estate property -- end of page 4 = CA 7108017 -- to the
LESSOR, shall replace for new ones all the elements of everyday use that
may be blown or damaged, and to restore the whole amount of the things of
importance that may have been withdrawn from
<PAGE> 10
10
the real estate property, according to the inventory that makes part of
this present contract; to hand over the real estate property in a perfect
condition of general cleanness; to take care of the gardens, the drainage
downspouts, their racks, to the entire satisfaction of the LESSOR.
TWENTY SIXTH.- The mere delay in the rent payment, the total or partial
violation of any of the obligations agreed upon in this instrument, and
imposed by the legal regulations, give the LESSOR the right to demand from
the LESSEE and to - simultaneously - come into effect by execution as
sanction, the immediate payment of the sum of without
damage to his right to indemnification for damages; the collecting of the
amount for the rent agreed upon; the compensation for all damage, that on
account of deed, fault or omission, might have been caused to the real
estate property; and to the collection of the costs that judicially may be
assessed, if it were the case, - in which costs shall be included the
procurement in law for the lawyer who might establish any action arisen
from this contract. All of these may be simultaneously requested from the
LESSOR without the need for any requirement for declaring it in delay, or
for any other preliminary procedure appointed by law in such occasions, by
explicit renouncement that of said requirements, evictions, or other
preliminaries, previous to the establishment of the respective judicial
actions, makes in this document the LESSEE in favor of the LESSOR. It is,
hereby, expressly and clearly understood, by the contracting parties, that
in the eventuality being stated in this clause, the LESSOR shall also have
the right to consider ended or canceled this
<PAGE> 11
11
present contract, and to demand de immediate hand over of the real estate
property, along with the aforementioned particulars agreed upon about the
legal and contracting regime of this present contract, on account that it
is agreed upon that the LESSEE explicitly renounces to the requirements -
spoken of in articles 2035 and 2007 of the Civil Code - being made, and
also to the ones prescribed by the 2nd ordinal of article 434 of the Civil
Procedure Code. In order to be able to oppose to eviction lawsuit, the
LESSEE ought to deposit in advance the total amount of the rent owed, and
the utilities that have to be paid by him.
TWENTY SEVENTH.- for the legal matters (papers) provided in article 520 of
the Commerce Code, it shall be understood that the LESSOR has evicted the
LESSEE, simply by having handed in, to any person at the real estate
property - which is the object of this present contract -, the written
communication by which -- end of pg. 6 -- CA - 7108018 -- Comes from pg. CA
- 7108017 -- the corresponding eviction is carried out.
TWENTY EIGHTH.- It is explicitly understood by the LESSEE and accepted by
him, that any kind of improvements made to the rented real estate property,
shall automatically be in favor (the property) of the LESSOR, without there
being any right on the part of the LESSEE, to withdraw them - either
totally or partially -, neither to demand any indemnification or
reimbursement of their value.
TWENTY NINTH.- THE LESSEE shall not be able to dispose of any of the
elements that are listed in the inventory; and he shall be responsible for
the withdrawal of any of them; likewise, he promises to restitute them in
the same perfect conditions in which he receives them. For all legal
matters (effects) of this present contract, it shall be in
<PAGE> 12
12
force starting January 1st, 1996. In testimony of what has been said, this
present document is signed in Santafe de Bogota, D.C., on
__________________ (signed by): ERNESTO GARCIA ACERO ________________ ,
LESSOR (signed by): RAFAEL JESUS DELGADO CONTRERAS _____________ , LESSEE,
CASA INFORMATICA S.A., LEGAL REPRESENTATIVE --end of pg. 7 = CA 7108018
<PAGE> 13
13
TRANSLATION OF A DOCUMENT WRITTEN IN SPANISH. JANUARY 31/2000.
MINERVA DOCUMENTARY PAPER BA-7116267
COMMERCIAL LEASING RENEWAL CONTRACT.- Between the undersigned - that is :
ERNESTO GARCIA ACERO, male sex, of age, living in Santafe de Bogota, holder of
Identification: No.2.863.590, issued in Bogota, in his position as owner of the
real estate property to which this present contract is about, - on one part -,
who shall - from now on - be called the LESSOR, and on the other, RAFAEL JESUS
DELGADO CONTRERAS, male sex, of age, holder of Identification: citizenship card
No. 19.097.295, issued in Bogota, who acts in his position as Acting Manager and
Legal Representative of the CASA INFORMATICA S.A. COMPANY, society having
headquarters in Santafe de Bogota, incorporated through Public Deed No. 639,
granted at Notary Public's Office 7th of Bogota, on February 23, 1993,
registered on June 15, 1993, bearing number 409271 of Book IX, of the Chamber of
Commerce of Santafe de Bogota, duly authorized by the Board of Directors, as it
is evidenced in Minutes No. 007, corresponding to the meeting that took place on
December 20, 1996, on the other part, who shall - from now on - be called the
LESSEE, this present commercial leasing contract renewal, has been signed, for
the real estate property located at calle 90 No. 18 - 59, that includes No. 89 -
36 on carrera 19 of this city, whose limits are stated in the contract signed by
the same parties, on January 1st, 1996, which - from now on - shall be called
the Main Contract, and according to the stipulations of the following clauses:
FIRST: The parties agree to extending the duration
<PAGE> 14
14
term of leasing of the Main Contract in twelve (12) renewable months, counted
from January 1st, 1997, to December 31, 1997.
SECOND: The monthly leasing price is six million three hundred fifty thousand
pesos ($6.350.000), legal currency. The leasing price shall be paid by the
LESSEE, in every case, in legal currency, which the LESSEE explicitly promises
to pay in its total amount, by anticipated monthly payments, on the first
calendar day of each monthly period. Being it explicitly established that the
monthly periods are not to be divided. THE LESSEE, is obliged to pay the price
of the rent, not only during the stipulated terms, but also, during the time
period he keeps the real state property in his hands, on any basis, and while it
has not been legally and completely restituted to the LESSOR; this restitution
shall not be considered legally fulfilled, as long as the LESSOR has not issued
written evidence of its having been paid up, in which certification he declares
that the LESSEE owes nothing, on account of rent, utilities, repairs of any kind
they might be, as well as the Industry and Commerce tax. The price of the
leasing ought to be paid, on the part of the LESSEE, at the following address:
Cra. 35 No. 89 - 21 in this city.
FIRST PARAGRAPH: The modification in the leasing price, in no case -- end of 1st
page = BA - 7116267 -- BA - 7116268 -- Comes from page BA - 7116267 - NOTE FROM
THE TRANSLATOR: THERE SEEMS TO BE MISSING SOME LINES - THE TEXT DOES NOT
CORRESPOND -- ...clause, the LESSOR shall also have the right to end or cancel
this present contract; and to demand the immediate restitution of the real
estate property, along with all the other particulares agreed upon before, about
the legal and contractual regime of this
<PAGE> 15
15
present contract, due to the fact that its is agreed upon that the LESSEE
explicitly renounces to the requirements spoken of in articles 2007 and 2035 of
the Civil Code, being made, an to those prescribed by ordinal 2nd of article 434
of the Civil Procedure Code. In order to be able to oppose to the eviction
lawsuit, the LESSEE ought to have previously deposited the total amount of the
rent owed, and of all the utilities that have to be paid by him/them.
NINTH: LEGAL EFFECT OF THE STIPULATIONS: All the other stipulations of the Main
Contract, remain in force - those that are not contrary to what has been agreed
upon in this present Renewal Contract. In testimony of which, this present
contract is signed on ______________________________
(signed by):_______________________
ERNESTO GARCIA ACERO
THE LESSOR
(signed by): _______________________
RAFAEL JESUS DELGADO CONTRERAS
MANAGER AND LEGAL REPRESENTATIVE OF CASA INFORMATICA S.A.
END of document.
<PAGE> 16
16
TRANSLATION OF A DOCUMENT WRITTEN IN SPANISH. FEBRUARY 1ST//2000.
MINERVA DOCUMENTARY PAPER 7108019
COMMERCIAL LEASING RENEWAL CONTRACT.- Between the undersigned - that is :
ERNESTO GARCIA ACERO, male sex, of age, living in Santafe de Bogota, holder of
Identification: Citizenship card No.2.863.590, issued in Bogota, in his position
as owner of the real estate property to which this present contract is about, -
on one part -, who shall - from now on - be called the LESSOR, and on the other,
RAFAEL JESUS DELGADO CONTRERAS, male sex, of age, holder of Identification:
citizenship card No. 19.097.295, issued in Bogota, who acts in his position as
Acting General Manager and Legal Representative of the CASA INFORMATICA S.A.
COMPANY, society having headquarters in Santafe de Bogota, incorporated through
Public Deed No. 639, granted at Notary Public's Office 7th of Bogota, on
February 23, 1993, registered on June 15, 1993, bearing number 409271 of Book
IX, of the Chamber of Commerce of Santafe de Bogota, duly authorized by the
Board of Directors, as it is evidenced in Minutes No. 021, corresponding to the
meeting that took place on July 10, 1998, on the other part, who shall - from
now on - be called the LESSEE, this present commercial leasing contract renewal,
has been signed, for the real estate property located at calle 90 No. 18 - 59,
that includes No. 89 - 36 on carrera 19 of this city, whose limits are: On the
northern side, calle 90; on the east side, with property owned - or that used to
be owned - by Ramon Fernandez Alvarez; on the southern part, with property
belonging to - or that used to belong to - German
<PAGE> 17
17
Fernandez Alvarez; and on the west side, with carrera 19 in this city.
FIRST CLAUSE: The parties agree to extend the duration term of leasing of the
Renewal Contract - signed on January 1st, 1997-, in twenty four (24) renewable
months, counted from January 1st, 1998, to December 31, 1999.
SECOND CLAUSE: The leasing monthly price for the first twelve months, is seven
million six hundred thousand pesos ($7.600.000), legal currency. The leasing
monthly price - for the second twelve months -, is nine million pesos
($9.000.000), legal currency. These leasing prices shall be paid by the LESSEE,
in every case, in legal currency, which the LESSEE explicitly promises to pay in
its total amount, by anticipated monthly payments, on the first calendar day of
each monthly period. Being it explicitly established that the monthly periods
are not to be divided. THE LESSEE, is obliged to pay the prices of the rent, not
only during the stipulated terms, but also, during the whole time period he
keeps the real state property in his hands, on any basis, and while it has not
been legally and completely restituted to the LESSOR; this restitution shall not
be considered legally fulfilled, until the LESSOR has issued written evidence of
its having been paid up, in which certification he declares that the LESSEE owes
nothing, on account of rent, utilities, repairs of any kind they might be, as
well as the -- end of 1st page = 7108019 -- Industry and Commerce tax. The price
of the leasing ought to be paid, on the part of the LESSEE, at the following
address: Cra. 35 No. 89 - 21 in this city.
FIRST PARAGRAPH: The modification in the leasing price, in no case, shall be
considered as novation or existence of verbal leasing contract.
SECOND PARAGRAPH: In case of delay in the
<PAGE> 18
18
payment of the rent, the LESSEE shall admit it, and shall pay during this time,
to the LESSOR, commercial interest at the rate of 3.5% - monthly - which shall
be assessed on the basis of the unpaid sums, without damage to the other actions
of the creditor.
THIRD CLAUSE: It is explicitly stipulated that for all effects of this present
contract, the LESSEE (S) is/are solidary.-
FOURTH CLAUSE: THE LESSEE authorizes the LESSOR to fill in the blank spaces
there might remain in this document (Article 18 Law 46 of 1923).
FIFTH CLAUSE: THE LESSEE with solidarity and explicitly promises to pay to the
LESSOR, 3.5% monthly interest on any residual amount that might appear - on him
- -, and on any basis, from the date in which the payment ought to be made, until
the month in which effective remedy be given; such interests - in no case -
shall be interpreted as a second sanction.
SIXTH CLAUSE: It is explicitly agreed upon and accepted - on the part of the
LESSEE - that - in no case - he shall be able to directly request from the
EMPRESA DE TELECOMUNICACIONES of Santafe de Bogota, new telephone lines to be
installed in the rented real estate property; all the other request related to
such purpose, shall be through, and to the name of, the LESSOR - OWNER.
SEVENTH CLAUSE: It is explicitly stipulated that in no case, the LESSEE shall be
able to demand or exercise the right, or withholding action - for any reason -
arisen from this present contract.
EIGHTH CLAUSE: The sole delay in the payment of the monthly rent; the total or
partial violation of any of the obligations agreed upon in this instrument; and
imposed by the legal norms, give the LESSOR the right to demand from the LESSEE
and to - simultaneously -
<PAGE> 19
19
declare final - and on a sanction basis -, the immediate payment of:
__________________________________, without damage to his right to
indemnification for damages; the collecting of the rent amount, agreed upon; the
compensation for every damage that on account of fact, fault or omission, might
have been caused to the real estate property; and the collecting of the costs
that - judicially - would be assessed, if it were the case. In these costs it
shall be included the procuration in law of the lawyer that establishes any
action arisen from this contract; the LESSOR is entitled to simultaneously -
request all of this, without the need for any requirement - in order to place it
under delay, or for any other preliminary step appointed by law in such cases,
through the explicit renouncement, in this instrument on the part of the LESSEE
to these requirements, evictions, -- end of pg. 10 -- CA - 7108020 -- Comes from
page CA - 71 08019 -- and other preliminaries before the establishing of the
respective judicial actions, in favor of the LESSOR. It is explicitly agreed
upon, and it is clearly understood by the contracting parties, that in the event
- - spoken of in this clause, the LESSOR shall also have the right to end or
cancel this present contract; and to demand the immediate restitution of the
real estate property, along with all the other particulares agreed upon before,
about the legal and contractual regime of this present contract, due to the fact
that it is agreed upon that the LESSEE explicitly renounces to the requirements
spoken of in articles 2007 and 2035 of the Civil Code, being made, and to those
prescribed by ordinal 2nd of article 434 of the Civil Procedure Code. In order
to be able to oppose to the eviction lawsuit, the LESSEE ought to
<PAGE> 20
20
have previously deposited the total amount of the rent owed, and of all the
utilities that have to be paid by him/them.
NINTH CLAUSE: LEGAL EFFECT OF THE STIPULATIONS: All the other stipulations of
the Main Contract, from January 1st, 1996 and the ones of the Renewal Contract,
from January 1st, 1997, remain in force - those that are not contrary to what
has been agreed upon in this present Renewal Contract. In testimony of which,
this present contract is signed on
- ------------------------------
(signed by): _______________________
ERNESTO GARCIA ACERO
THE LESSOR
(signed by): _______________________
RAFAEL JESUS DELGADO CONTRERAS
GENERAL MANAGER AND LEGAL REPRESENTATIVE OF CASA INFORMATICA S.A.
- -- pg. 12 of original document in Spanish -- END of document.
<PAGE> 1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 1, 1999 among GLOBAL DATA TEL,
INC., a Nevada corporation (the "Company"), and Antonio Habib, an individual
(the "Employee").
WITNESSETH
WHEREAS, the Company desires, effective as of the date hereof, to
employ the Employee as The Regional Sales Manager of the Global Datatel de
Colombia subsidiary subject to the terms and conditions set forth here; and
WHEREAS, the Employee desires to accept such employment subject to such
terms and conditions.
NOW, THEREFORE, in consideration of the mutual provisions herein
contained, the Employee and the Company agree as follows:
AGREEMENT
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Agreement" "hereof" and "hereunder" and words of similar import refer
to this Employment Agreement, as it may be from time to time amended.
"Base Salary" has the meaning given such term in Section 5(a).
"Board" means the Board of Directors of the Company.
"Shares" means shares of the Common Stock of Company, par value .001
per share.
"Disability" shall mean a physical or mental incapacity of the Employee
which has prevented him from effectively performing his duties for ninety (90)
days, whether or not consecutive, out of any twelve (12) consecutive months.
"Expiration Date" has the meaning given such term in Section 3(a).
"Options" shall mean nonqualified stock options to purchase Shares
issued by the Company.
2. Employment. The Company hereby employs the Employee as
<PAGE> 2
President, or such other key office as the Board may elect, and the Employee
accepts such employment, upon the terms and subject to the conditions
hereinafter set forth.
3. Term.
(a) The Employee's employment pursuant to this Agreement ("Employment")
shall commence as of June 1, 1999 and shall continue through May 31, 2002 (such
date, or any later date through which this Agreement has been renewed, the
"Expiration Date"), subject to termination under Section 8 or Section 9.
(b) This Agreement and the Employee's employment shall automatically be
renewed for a two (2) year period upon the Expiration Date (and upon each
anniversary of the Expiration Date), unless at least 30 days prior to the
Expiration Date (or prior to such anniversary) (i) the Employee has notified the
Company in writing that the Employee elects not to renew this Agreement, or (ii)
the Company has notified the Employee in writing that it elects not to renew
this Agreement.
4. Capacity and Services.
(a) The Employee shall assume such responsibilities, perform such
duties and have such authority as befits his positions or may from time to time
be assigned or delegated by the Board. In performing his duties, the Employee
shall fully and faithfully perform services and discharge his duties for the
Company consistent with the position of President and Chief Executive Officer,
or such other similar office as the Board may designate.
(b) As an employee of the Company, substantially all of the Employee's
efforts and responsibilities shall relate to the operation of the business of
the Company. The Employee shall report to and work closely with such persons as
the Board may designate from time to time.
(c) During the Employee's employment hereunder, the Employee shall
serve, and the Employee agrees to serve, as a member of the Board.
(d) The Employee shall devote a substantial part of his business time
and energies to his duties hereunder and shall use his best efforts, skills and
abilities to promote the interests of the Company. The Employee shall not engage
in any business
-2-
<PAGE> 3
activities that are directly or indirectly competitive with any business
conducted by the Company or any of its affiliates. Without in any way limiting
the foregoing, the Employee shall not, without the prior written consent in each
instance of the Company, directly or indirectly perform services of a business,
professional or commercial nature for any person or entity, for compensation or
deferred compensation, which will in any way interfere with the Employee's
obligations under this Agreement.
5. Base Salary, Bonuses and Benefits. The Company shall pay and the
Employee shall accept for the services to be rendered hereunder compensation
consisting solely of the following:
(a) During the period of his employment, the Employee shall receive an
annual base salary (the "Base Salary") of $ 60,000.00.
(b) During the period of his employment, the Employee shall be entitled
to participate in the Company's group health insurance coverage and such other
fringe benefits as the Company generally provides from time to time to employees
with positions and responsibilities similar to those of the Employee such as the
Chief Operating Officer and the Chief Financial Officer. The Company reserves
the right to modify such group health insurance coverage or benefits for such
employees generally.
(c) Employee may receive bonuses as approved by the Board in the
Board's discretion.
(d) The Company shall purchase for the Employee a term life insurance
policy with a death benefit not less than $100,000, the beneficiaries of which
will be designated by the Employee.
(e) The Company will provide Employee with long-term disability
insurance in the event he cannot perform his job for any reason.
6. Options.
(a) In addition to any other options granted under any Stock Option
Plan which may adopted by the Company, on the date hereof the Company is issuing
to the Employee Options for the purchase of 15,000 shares of the Company's
common stock with an exercise price $ 7.12 per share, as provided in the Option
Agreement attached hereto as Exhibit A. Such Options shall vest
-3-
<PAGE> 4
immediately.
7. Certain Expenses Incident to Employment. The Company agrees to
reimburse the Employee:
(i) in accordance with its normal policy and practices, for all other
authorized, approved and reasonable travel or other expenses or
disbursements incurred or made by him in connection with the
performance of the Employee's duties under this Agreement;
(ii) up to $ 750.00, net of Federal income taxes, per month for
documented costs incurred by the Employee in acquiring and maintaining
one automobile, including the purchase of automobile insurance;
(iii) for the cost of one cellular telephone and related costs related
to performing his duties hereunder.
8. Death or Disability. Notwithstanding anything else in this
Agreement, the Employee's employment shall terminate upon the Employee's death.
The Company may elect to terminate the Employee's employment upon the Employee's
disability. In the event that the Employee's employment terminates by reason of
death or disability, the Company shall not have any further obligations or
responsibilities hereunder whatsoever except (i) with respect to Base Salary,
Bonuses and other benefits earned or accrued through the date of termination,
(ii) in the event of a termination by reason of disability, the Employee will be
entitled to receive his Base Salary for three months after his Employment is
terminated or until such time as the insurance provided for in Paragraph 5(d)
begins to pay such benefits.
9. Termination.
(a) The Company may terminate this Agreement and the Employee's
employment by giving ten (10) days written notice thereof to the Employee in the
event that the Board determines that the Employee has (i) materially breached
this Agreement, (ii) repeatedly refused to perform required and reasonable
services after written notice thereof, (iii) engaged in willful misconduct or
committed gross negligence in connection with his employment or the affairs of
the Company, (iv) violated in a material manner any fiduciary duty to the
Company, or (v) committed theft, fraud, embezzlement or dishonesty.
-4-
<PAGE> 5
(b) Either the Company or the Employee may, with or without cause or
reason therefor, terminate this Agreement at any time and for any reason upon
thirty (30) days advance written notice to the other party.
(c) If the Company terminates this Agreement under Section 9(a), the
Company shall not have any further obligations or responsibilities hereunder
except with respect to Base Salary, Bonuses and other benefits earned or accrued
through the date of termination.
(d) If the Company terminates this Agreement under Section 9(b), the
Company shall be obligated to pay the Employee all Base Salary, Bonuses and
other benefits earned or accrued through the date of termination, and a lump sum
equivalent to one-half of Employee's Base Salary.
(e) If the Employee terminates this Agreement for any reason, the
Company shall not have any further obligations or responsibilities hereunder
except with respect to (i) Base Salary, Bonuses and other benefits earned or
accrued through the date of termination and (ii) the Options described in
Section 6.
10. Confidentiality, Non-Solicitation and Non-Competition.
(a) Employee acknowledges that as further inducement to the Company to
enter into this Agreement, Employee has executed a Confidentiality,
Non-Solicitation and Non-Competition Agreement (the "Confidentiality
Agreement"), attached hereto as Exhibit "B". Employee's breach of the
Confidentiality Agreement shall constitute a material breach of this Agreement.
(b) The Employee acknowledges the Company will suffer irreparable harm
if the provisions of the Confidentiality Agreement and that the Company's
remedies at law for damages will be inadequate if the Employee fails to comply
with any of the provisions of the Confidentiality Agreement. Accordingly, the
Employee agrees that the Company shall be entitled to any appropriate legal,
equitable or other remedy, including preliminary and permanent injunctive
relief, in the event the Employee fails to comply with the Confidentiality
Agreement.
11. Amendments. This Agreement constitutes the entire agreement of the
parties and may be modified, amended or waived
-5-
<PAGE> 6
only by written instruments executed by the parties.
12. No Conflict. The Employee represents and warrants to AIC and the
Company that he is not bound by any agreement or subject to any restriction
which would interfere with or prevent his entering into or carrying out this
Agreement.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns, except that the Employee shall not assign any of
his rights or delegate any of his duties under this Agreement without the prior
express written consent in each instance of AIC and the Company.
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida.
15. Arbitration. Except as specifically provided for in this Section
16, all controversies, claims and disputes arising out of or relating to the
Employee's rendering of services to AIC or the Company of this Agreement
(including all federal and state statutory claims) shall be subject to final and
binding arbitration before a single arbitrator in Florida in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The costs
of such arbitration, including the arbitrator's fees, shall be allocated in the
manner determined by the arbitrator. Each party shall bear its own expenses,
including attorneys' fees and expert witness fees. The arbitration proceeding
shall be deemed to be an arbitration proceeding specifically enforceable under
the Federal Arbitration Act and any other applicable law. The award of the
arbitrator may be enforced in any court having competent jurisdiction. AIC, the
Company and the Employee shall have no obligation to arbitrate disputes arising
under Section 10 hereof, and may enforce any of their rights and remedies with
respect thereto in any court of competent jurisdiction.
16. Severability. If any part or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be effected thereby and shall be valid and enforced to the fullest extent
permitted by law.
17. No other Agreements. This Agreement shall supersede any and all
prior agreements between the parties hereto, and this Employment Agreement shall
be the only agreement between the
-6-
<PAGE> 7
parties with respect thereto.
18. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee, to him at: If to the Company, to it at:
Calle 114A No. 19-10 3333 S. Congress Ave., Suite 404
Bogota, Colombia Delray Beach FL 33445
19. Rights and Waivers. All rights and remedies of the parties hereto
are separate and cumulative, and no one of them, whether exercised or not, shall
be deemed to be to the exclusion of any other rights or remedies or shall be
deemed to limit or prejudice any other legal or equitable rights or remedies
that either of the parties hereto may or remedies under this Agreement unless
such waiver is in writing and signed by such party. No delay or omission on the
part of either party in exercising any right or remedy shall operate as a waiver
of such right or remedy or any other rights or remedies. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the date from above written.
GLOBAL DATA TEL, INC.
a Nevada Corporation
By: _________________________
Its:_________________________
EMPLOYEE:
_____________________________
-7-
<PAGE> 1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of June 1, 1999 among GLOBAL DATA TEL,
INC., a Nevada corporation (the "Company"), and Carlos Mejia, an individual (the
"Employee").
WITNESSETH
WHEREAS, the Company desires, effective as of the date hereof, to
employ the Employee as The President of the eHOLA.com and On Line Latin America,
S.A. subsidiaries subject to the terms and conditions set forth here; and
WHEREAS, the Employee desires to accept such employment subject to such
terms and conditions.
NOW, THEREFORE, in consideration of the mutual provisions herein
contained, the Employee and the Company agree as follows:
AGREEMENT
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Agreement" "hereof" and "hereunder" and words of similar import refer
to this Employment Agreement, as it may be from time to time amended.
"Base Salary" has the meaning given such term in Section 5(a).
"Board" means the Board of Directors of the Company.
"Shares" means shares of the Common Stock of Company, par value .001
per share.
"Disability" shall mean a physical or mental incapacity of the Employee
which has prevented him from effectively performing his duties for ninety (90)
days, whether or not consecutive, out of any twelve (12) consecutive months.
"Expiration Date" has the meaning given such term in Section 3(a).
"Options" shall mean nonqualified stock options to purchase Shares
issued by the Company.
2. Employment. The Company hereby employs the Employee as
<PAGE> 2
President, or such other key office as the Board may elect, and the Employee
accepts such employment, upon the terms and subject to the conditions
hereinafter set forth.
3. Term.
(a) The Employee's employment pursuant to this Agreement ("Employment")
shall commence as of June 1, 1999 and shall continue through May 31, 2002 (such
date, or any later date through which this Agreement has been renewed, the
"Expiration Date"), subject to termination under Section 8 or Section 9.
(b) This Agreement and the Employee's employment shall automatically be
renewed for a two (2) year period upon the Expiration Date (and upon each
anniversary of the Expiration Date), unless at least 30 days prior to the
Expiration Date (or prior to such anniversary) (i) the Employee has notified the
Company in writing that the Employee elects not to renew this Agreement, or (ii)
the Company has notified the Employee in writing that it elects not to renew
this Agreement.
4. Capacity and Services.
(a) The Employee shall assume such responsibilities, perform such
duties and have such authority as befits his positions or may from time to time
be assigned or delegated by the Board. In performing his duties, the Employee
shall fully and faithfully perform services and discharge his duties for the
Company consistent with the position of President and Chief Executive Officer,
or such other similar office as the Board may designate.
(b) As an employee of the Company, substantially all of the Employee's
efforts and responsibilities shall relate to the operation of the business of
the Company. The Employee shall report to and work closely with such persons as
the Board may designate from time to time.
(c) During the Employee's employment hereunder, the Employee shall
serve, and the Employee agrees to serve, as a member of the Board.
(d) The Employee shall devote a substantial part of his business time
and energies to his duties hereunder and shall use his best efforts, skills and
abilities to promote the interests of the Company. The Employee shall not engage
in any business
-2-
<PAGE> 3
activities that are directly or indirectly competitive with any business
conducted by the Company or any of its affiliates. Without in any way limiting
the foregoing, the Employee shall not, without the prior written consent in each
instance of the Company, directly or indirectly perform services of a business,
professional or commercial nature for any person or entity, for compensation or
deferred compensation, which will in any way interfere with the Employee's
obligations under this Agreement.
5. Base Salary, Bonuses and Benefits. The Company shall pay and the
Employee shall accept for the services to be rendered hereunder compensation
consisting solely of the following:
(a) During the period of his employment, the Employee shall receive an
annual base salary (the "Base Salary") of $ 65,000.00.
(b) During the period of his employment, the Employee shall be entitled
to participate in the Company's group health insurance coverage and such other
fringe benefits as the Company generally provides from time to time to employees
with positions and responsibilities similar to those of the Employee such as the
Chief Operating Officer and the Chief Financial Officer. The Company reserves
the right to modify such group health insurance coverage or benefits for such
employees generally.
(c) Employee may receive bonuses as approved by the Board in the
Board's discretion.
(d) The Company shall purchase for the Employee a term life insurance
policy with a death benefit not less than $50,000, the beneficiaries of which
will be designated by the Employee.
(e) The Company will provide Employee with long-term disability
insurance in the event he cannot perform his job for any reason.
6. Options.
(a) In addition to any other options granted under any Stock Option
Plan which may adopted by the Company, on the date hereof the Company is issuing
to the Employee Options for the purchase of 25,000 shares of the Company's
common stock with an exercise price $ 7.12 per share, as provided in the Option
Agreement attached hereto as Exhibit A. Such Options shall vest
-3-
<PAGE> 4
immediately.
7. Certain Expenses Incident to Employment. The Company agrees to
reimburse the Employee:
(i) in accordance with its normal policy and practices, for all other
authorized, approved and reasonable travel or other expenses or
disbursements incurred or made by him in connection with the
performance of the Employee's duties under this Agreement;
(ii) up to $ 750.00, net of Federal income taxes, per month for
documented costs incurred by the Employee in acquiring and maintaining
one automobile, including the purchase of automobile insurance;
(iii) for the cost of one cellular telephone and related costs related
to performing his duties hereunder.
8. Death or Disability. Notwithstanding anything else in this
Agreement, the Employee's employment shall terminate upon the Employee's death.
The Company may elect to terminate the Employee's employment upon the Employee's
disability. In the event that the Employee's employment terminates by reason of
death or disability, the Company shall not have any further obligations or
responsibilities hereunder whatsoever except (i) with respect to Base Salary,
Bonuses and other benefits earned or accrued through the date of termination,
(ii) in the event of a termination by reason of disability, the Employee will be
entitled to receive his Base Salary for three months after his Employment is
terminated or until such time as the insurance provided for in Paragraph 5(d)
begins to pay such benefits.
9. Termination.
(a) The Company may terminate this Agreement and the Employee's
employment by giving ten (10) days written notice thereof to the Employee in the
event that the Board determines that the Employee has (i) materially breached
this Agreement, (ii) repeatedly refused to perform required and reasonable
services after written notice thereof, (iii) engaged in willful misconduct or
committed gross negligence in connection with his employment or the affairs of
the Company, (iv) violated in a material manner any fiduciary duty to the
Company, or (v) committed theft, fraud, embezzlement or dishonesty.
-4-
<PAGE> 5
(b) Either the Company or the Employee may, with or without cause or
reason therefor, terminate this Agreement at any time and for any reason upon
thirty (30) days advance written notice to the other party.
(c) If the Company terminates this Agreement under Section 9(a), the
Company shall not have any further obligations or responsibilities hereunder
except with respect to Base Salary, Bonuses and other benefits earned or accrued
through the date of termination.
(d) If the Company terminates this Agreement under Section 9(b), the
Company shall be obligated to pay the Employee all Base Salary, Bonuses and
other benefits earned or accrued through the date of termination, and a lump sum
equivalent to one-half of Employee's Base Salary.
(e) If the Employee terminates this Agreement for any reason, the
Company shall not have any further obligations or responsibilities hereunder
except with respect to (i) Base Salary, Bonuses and other benefits earned or
accrued through the date of termination and (ii) the Options described in
Section 6.
10. Confidentiality, Non-Solicitation and Non-Competition.
(a) Employee acknowledges that as further inducement to the Company to
enter into this Agreement, Employee has executed a Confidentiality,
Non-Solicitation and Non-Competition Agreement (the "Confidentiality
Agreement"), attached hereto as Exhibit "B". Employee's breach of the
Confidentiality Agreement shall constitute a material breach of this Agreement.
(b) The Employee acknowledges the Company will suffer irreparable harm
if the provisions of the Confidentiality Agreement and that the Company's
remedies at law for damages will be inadequate if the Employee fails to comply
with any of the provisions of the Confidentiality Agreement. Accordingly, the
Employee agrees that the Company shall be entitled to any appropriate legal,
equitable or other remedy, including preliminary and permanent injunctive
relief, in the event the Employee fails to comply with the Confidentiality
Agreement.
11. Amendments. This Agreement constitutes the entire agreement of the
parties and may be modified, amended or waived
-5-
<PAGE> 6
only by written instruments executed by the parties.
12. No Conflict. The Employee represents and warrants to AIC and the
Company that he is not bound by any agreement or subject to any restriction
which would interfere with or prevent his entering into or carrying out this
Agreement.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns, except that the Employee shall not assign any of
his rights or delegate any of his duties under this Agreement without the prior
express written consent in each instance of AIC and the Company.
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida.
15. Arbitration. Except as specifically provided for in this Section
16, all controversies, claims and disputes arising out of or relating to the
Employee's rendering of services to AIC or the Company of this Agreement
(including all federal and state statutory claims) shall be subject to final and
binding arbitration before a single arbitrator in Florida in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The costs
of such arbitration, including the arbitrator's fees, shall be allocated in the
manner determined by the arbitrator. Each party shall bear its own expenses,
including attorneys' fees and expert witness fees. The arbitration proceeding
shall be deemed to be an arbitration proceeding specifically enforceable under
the Federal Arbitration Act and any other applicable law. The award of the
arbitrator may be enforced in any court having competent jurisdiction. AIC, the
Company and the Employee shall have no obligation to arbitrate disputes arising
under Section 10 hereof, and may enforce any of their rights and remedies with
respect thereto in any court of competent jurisdiction.
16. Severability. If any part or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of this Agreement shall
not be effected thereby and shall be valid and enforced to the fullest extent
permitted by law.
17. No other Agreements. This Agreement shall supersede any and all
prior agreements between the parties hereto, and this Employment Agreement shall
be the only agreement between the
-6-
<PAGE> 7
parties with respect thereto.
18. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee, to him at: If to the Company, to it at:
Calle 114A No. 19-10 3333 S. Congress Ave., Suite 404
Bogota,Colombia Delray Beach FL 33445
19. Rights and Waivers. All rights and remedies of the parties hereto
are separate and cumulative, and no one of them, whether exercised or not, shall
be deemed to be to the exclusion of any other rights or remedies or shall be
deemed to limit or prejudice any other legal or equitable rights or remedies
that either of the parties hereto may or remedies under this Agreement unless
such waiver is in writing and signed by such party. No delay or omission on the
part of either party in exercising any right or remedy shall operate as a waiver
of such right or remedy or any other rights or remedies. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the date from above written.
GLOBAL DATA TEL, INC.
a Nevada Corporation
By: _________________________
Its:_________________________
EMPLOYEE:
_____________________________
-7-
<PAGE> 1
GLOBAL DATATEL, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
Basic earnings:
Net loss $ (2,655,752) $ (3,696,457)
------------ ------------
Shares:
Weighted common shares outstanding 22,352,926 6,836,755
------------ ------------
Net loss per share $ (.12) $ (.54)
============ ============
Diluted earnings:
Net loss $ (2,655,752) $(3,696,457)
------------ ------------
Shares:
Weighted common shares outstanding 22,352,926 6,836,755
Employee stock options -- --
Other stock options -- --
Convertible note -- --
------------ ------------
Total weighted shares outstanding 22,352,926 6,836,755
------------ ------------
Diluted net loss per common share $ (.12) $ (.54)
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME FILED AS PART OF THE REPORT
ON FORM 10 FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT ON FORM 10.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 173,579
<SECURITIES> 0
<RECEIVABLES> 3,394,702
<ALLOWANCES> 363,718
<INVENTORY> 948,724
<CURRENT-ASSETS> 4,757,588
<PP&E> 884,953
<DEPRECIATION> 384,272
<TOTAL-ASSETS> 8,598,224
<CURRENT-LIABILITIES> 6,717,601
<BONDS> 72,921
0
0
<COMMON> 23,280
<OTHER-SE> 1,784,422
<TOTAL-LIABILITY-AND-EQUITY> 8,598,244
<SALES> 13,836,785
<TOTAL-REVENUES> 13,836,785
<CGS> 8,411,701
<TOTAL-COSTS> 7,201,680
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 686,044
<INCOME-PRETAX> (2,462,600)
<INCOME-TAX> 193,152
<INCOME-CONTINUING> (2,655,752)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,655,752)
<EPS-BASIC> (.12)
<EPS-DILUTED> (.12)
</TABLE>
<PAGE> 1
ALFAGUARANATIONAL POLICE
DEPARTMENT OF ADMINISTRATION AND FINANCE
CONTRACTS OFFICE
Santafe de Bogota, D.C., [stamp:] DEC. 18, 1998
No. [stamp:] 3220 /DIRAF OFCON
MESSRS.
MANTENIMIENTO ELECTRONICO DE SISTEMAS "M.E.S. LTDA."
ATT'N: RAFAEL ENRIQUE ROMERO SANCHEZ
CALLE 39 B NO. 18 A - 11
TELEPHONE: 2881077
SANTAFE DE BOGOTA
SUBJECT: Correspondence
I hereby inform you that your offer of November 6, 1998 was selected for
contracting in the amount of $344,000,000.00, for preventive / corrective
maintenance of the IBM RISC/6000 hardware and its peripherals at the national
level.
In light of the foregoing, you are requested to come to the Contracts Office
located at Transversal 45 No. 40 - 11 CAN 2nd Floor in order to perform the
pertinent procedures.
Sincerely,
/s/ Alfonso Leon Arellano Rivas
Brigadier General ALFONSO LEON ARELLANO RIVAS
Director of Administration and Finance
<PAGE> 2
NATIONAL POLICE
DEPARTMENT OF ADMINISTRATION AND FINANCE
CONTRACTS OFFICE
Santafe de Bogota, D.C., [stamp:] JULY 16, 1993
No. [stamp:] 1766 /OFCON - DIRAF
MESSRS.
MANTENIMIENTO ELECTRONICO DE SISTEMAS LIMITADA
ATT'N: ANTONIO SERRATO SUAREZ
LEGAL REPRESENTATIVE
CALLE 39 B NO. 18 A - 11 TELEPHONE: 2881077
SANTAFE DE BOGOTA
SUBJECT: Correspondence
I hereby inform you that your offer of June 12, 1998 was selected for
contracting the structured cabling maintenance service (logical network) of
several units, in the amount of $364,983,450.00.
In light of the foregoing, you are requested to come to the Contracts Office
located at Transversal 45 No. 40 - 11 CAN 2nd Floor in order to perform the
pertinent procedures.
Sincerely,
/s/ Alfonso Leon Arellano Rivas
Brigadier General ALFONSO LEON ARELLANO RIVAS
Director of Administration and Finance
<PAGE> 3
NATIONAL POLICE
DEPARTMENT OF ADMINISTRATION AND FINANCE
Santafe de Bogota, D.C., [stamp:] NOVEMBER 20, 1997 [hw:] A
No. [stamp:] 3473 / DIRAF - OFCON
MESSRS.
MANTENIMIENTO ELECTRONICO DE SISTEMAS LTDA.
ATT'N: MR. GERARDO MURCIA GOMEZ
LEGAL REPRESENTATIVE
Calle 39 B No. 18 A - 11
Telephone: 2881077
Santafe de Bogota
I hereby notify you that your price quote dated 110697 was selected for
contracting the maintenance of the National Police's Department of
Administration and Finance's Muzu Complex's Logical Network, in the amount of
$119,999,812.64.
In light of the foregoing, you are requested to come to the Contracts Office
located at Transversal 45 No. 40 - 11 CAN second floor in order to perform the
pertinent procedures.
Sincerely,
/s/ Alfonso Leon Arellano Rivas
Brigadier General ALFONSO LEON ARELLANO RIVAS
Director of Administration and Finance
<PAGE> 1
Carrera 19 39-36 Tels: 6115163 6167016 6182284 Fax: 6117299
Santafe de Bogota Colombia
Calle 4 11 1-10 Ed. Torre Mercurio / 5th Floor Tels.: (91) 560 45 02 - 660 45 63
Telefax: 860 78 47 Cali, Colombia
Calle 16 H 41 210 Ed. La Compania Tel. (24) 312 47 82 - 268 99 60
Telefax: 312 47 82 Medellin, Colombia
[logo:] Global DataTel [logo:] IBM
de Colombia S.A. Business Partners
PURCHASE ORDER FOR IBM MACHINES AND PROGRAMS
Messrs. IBM Customer Number
CACHARRERIA LA 14 S.A.
Santiago de Cali Page 1
<TABLE>
<CAPTION>
Type Model Device Description Quantity Unit Price Total Maintenance Warranty
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IBM POS 4694 Controller Server 16
IBM 4694 POS Terminals 505
LA 2470 ISA (Wireless LAN) Cards 505
Symbol Access Point Controller 36
IBM Ethernet HUB 8
Balanza PSC 384 Scanner 40
Duet Scann PSC Reader 60
7870 Scanner Cables 163
7890 Scanner Cables 247
IBM 4690 Supermarket Applic. V2
OS/4690 Operating System
TCP/IP, TOF
SUBTOTAL BEFORE V.A.T. 2,131,217
GLOBAL CORPORATE DISCOUNT 200,000
TOTAL BEFORE V.A.T. 1,931,217
Plus Current V.A.T.
</TABLE>
The aforementioned prices are stated in US$ and will be invoiced in $Col.
according to the Representative Market Rate (TRM) in effect on the business day
prior to the invoicing date, published by the Superintendent of Banks.
<PAGE> 2
Carrera 19 39-36 Tels: 6115163 6167016 6182284 Fax: 6117299
Santafe de Bogota Colombia
Calle 4 11 1-10 Ed. Torre Mercurio / 5th Floor Tels.: (91) 560 45 02 - 660 45 63
Telefax: 860 78 47 Cali, Colombia
Calle 16 H 41 210 Ed. La Compania Tel. (24) 312 47 82 - 268 99 60
Telefax: 312 47 82 Medellin, Colombia
[logo:] Global DataTel
de Colombia S.A.
PURCHASE ORDER FOR IBM MACHINES AND PROGRAMS
Messrs.
CACHARRERIA LA 14 S.A. Contract No.
Santiago de Cali Page 2
By signing this order, The Customer states that he/she has received and read the
document "IBM Customer Contract Version 2 dated March 1993, Edition 2 of
December 1995, and expressly accepts the conditions applicable to it contained
in such document and appendices thereto, which Global DataTel de Colombia S.A.
will apply to The Customer as it might assign the conditions of such document
based on which Global DataTel de Colombia S.A. acquires goods and services from
IBM Colombia S.A.
The payment for the goods covered by this contract shall be against delivery,
which shall be invoiced by using the TRM (Market Representative Rate) on the
business day prior to the invoicing date. When payment is made by The Customer,
Global DataTel de Colombia S.A. will settle the invoice with the TRM on the day
prior to the payment date; the difference between the original invoice will be
returned or reinvoiced to The Customer depending on in whose favor such
difference results. A delay in payment shall cause arrears interest, which
together with the TRM shall not exceed the maximum rate authorized by law.
The Customer Global DataTel de Colombia S.A.
[s. illegible]
- --------------- ---------------
Authorized Signature Authorized Signature
RODRIGO DE LOS RIOS CARLOS MEJIA GIRALDO
- ------------------- --------------------
Name Name
- --------------- ---------------
Date Date
<PAGE> 3
[logo:] L A 14
CALI
Mr. Rafael Santacruz
IBM de Colombia
Re.: POS - IBM Project
After yesterday's meeting, I would like to clarify for you some aspects of La
14's own procedures for them to be reviewed and programmed in the POS according
to this document.
- - PRICE CHANGES
1. To apply price changes in the POS, they must be administered from the
STORE 2000 application.
2. When a price change is authorized by the office, the section supervisor
marks the product.
3. Once the product is in the aisles, the System supervisor authorized to
perform the APPLY PRICES TO THE POS process [sic]. This option is
executed from one of the STORE2000 options.
4. Prices are only applied automatically for batch update processes for
the POS parameters. These processes are generally executed by Systems
personnel during non-business hours.
- - VARIABLE BAR CODES
1. The variable code prefix 29 is used to identify weighable products,
with the variation of creating an additional alias code in the STORE
identified with EAN, even with the variation. In this case there is no
risk of duplication with other codes because the codification assigned
is respected.
2. The reading of variable codes 26 should be reviewed.
3. The weighables parameter for bar codes should be identified with the
prefixes of the EAN codes sent.
4. EAN codes will be sent with a length of 13 characters.
5. To send parameters for articles:
CONVENTION DESCRIPTION
0 Non-weighable code
Cacharreria La 14 S.A. Super Centro "Calima"
Nit. 860.300.346-1 Carrera 1 Calle 70
Air PO Box 31817 PBX 6651817 - Fax: 6651819
<PAGE> 4
[logo:] L A 14
CALI
1 Weighable Code
2 Measurables
From the current applications it is only possible to identify type 1 products,
weighables for Fruver. Bar codes should be identified with the prefix sent in
the EAN.
For measurable products this parameter should be updated in the IBM POS for it
to be able to operate normally because the current articles maintenance system
does not include this attribute. This is not the definitive solution because
every time a new product is coded a manual process must be performed at the
Point of Sale.
This parameterization should be sent from the Central Purchasing System,
therefore, I will send you a document later with the definitive solution.
- - INTERFACE FILES
By today, Tuesday, in the afternoon we will review the files sent by to verify
the treasury, sales and inventories update.
Sincerely,
/s/ Martha Cecilia Marin C.
Martha Cecilia Marin C.
Cacharreria La 14 S.A. Super Centro "Calima"
Nit. 860.300.346-1 Carrera 1 Calle 70
Air PO Box 31817 PBX 6651817 - Fax: 6651819
<PAGE> 5
Cali, June 30, 1999
MS. MARTHA CECILIA MARIN
Director Systems Department LA 14 S.A.
Ref.: POS - IBM Project
Dear Madam:
We have performed a careful review of the matters cited in your correspondence
of last June 22, based on which we have also programmed some important changes,
with the following results:
IMPROVEMENTS TO THE BATCH INTERFACE PROGRAMS FOR NEW ITEMS FROM STORE 2000
Control over Brands or Codes that condition the sale of articles:
BY UNITS. The Sales price received from STORE 2000 is equivalent to the
record of the Sales Unit. Use of the QUANTITY or "X" Key.
BY WEIGHT. Sales by grams based on a Sales Price by KILO. Use of the
WEIGHT Key.
BY LENGTH. Sales by centimeters based on a Sales Price by METER. Use of
the QUANTITY or "X" Key.
WITH DISCOUNT. This new item can be available from:
A new items file Type = 3
A discount by Line / Department management session.
NOTE: In both cases the Effectiveness / Periodicity of the Discount can
be handled.
PRICE CHANGES
Control to handle Price Change of New Items Batches for files transmitted from
STORE 2000.
Each Batch transmitted to the POS 4694-244 servers received via TCP/IP
(ftp) from Store 2000, will be applied automatically. A LOG will be
kept of the files received and applied, together with the corresponding
Control Figures report.
Options menus have been implemented for batch modification processes
during NON-business hours. These will be handled by making use of the
Secondary Application options, known as "Administrative Processes."
<PAGE> 6
VARIABLE FORMAT BAR CODES
In the Warehouse Options chapter we have included the Bar Code format
definitions for variable prefix '29' with the following structure:
<TABLE>
<CAPTION>
<S> <C> <C>
Length = 13
Family = EAN
Format = 29 ||||| WWWWWc
Key = 29 |||||
</TABLE>
NOTE: It is important to know the new structure of the prefix '26' to
include it in the same set of options.
SALES INTERFACE FILES FOR ACCOUNTING AND TAX REPORTS
I would appreciate receiving for the tests you deem necessary, the
Store 2000 interface files, ACCORDING TO the list given below:
<TABLE>
<CAPTION>
INTERFACE FILE DESCRIPTION NO. RECORDS SIZE
<S> <C> <C> <C> <C>
1 cintdss.dcl PLU Sales, Cashier, Term Trans 27,609 2,401,983
2 cintart.dcl PLU Sales, Dept., Time 27,609 1,987,848
3 cintcns.dc Sales Concessions 567 48,762
4 cintfnr.dcl Total Summary Cashier Sales, Term 32 12,000
5 cinmhor.dcl Sales by Hour 24 1,416
6 cintesp.dcl Sales Hour Dept. 2,400 151,200
7 cinmmpa.dcl Total Sales Method of Payment 13 702
8 cintmpa.dcl Method of Payment, Terminal, Cashier 122 7,930
9 cintcms.dcl Day's Transactions 3,384 368,856
10 cintfis.dcl Total Sales Terminal Dept. 454 46,308
11 cinmdpt.dcl Disc. Sales, Credits, Returns, Dept. 30 4620
12 cintdpt.dcl Sales Dept. Terminal Cashier 575 42,550
13 cintfma.dcl Sales Term. Method/Pay Zeta's 117 7,488
14 cintchq.dcl Method of Payment Terminal 345 45,540
15 cinmfmr.dcl Summary Total Sales Store 1 358
16 cinthor.dcl Sales Hour, Term. Trans., Cashier 249 18,426
TOTALS 63,531 5,145,987
</TABLE>
NOTE: SIZE OF THE TRANSACTIONS LOG JUNE 12/99 1,328,535 BYTES
RATIO: TRANSACTIONS LOG / S200 INTERFACES = 1 : 3.9
To support the information contained in the preceding files, I am attaching the
following summary, which was affected, in our judgment, by the problems that
occurred on June 12 itself, related to Radio Frequency and Terminal blocks.
We have reviewed the "X" and "Z" reports obtained from each of the terminals
that were active, and managed to establish the following differences.
We must recover the inventories corresponding to missing items regarding Sales
records from the printed records on the Audit Reports. Also
<PAGE> 7
we believe that the GREATER SALES VALUES included in the "Z" Reports taken by
the Supervisors are the most reliable ones: (1) The figures issued from the
NON-VOLATILE part of the Terminal (Terminal Storage Retention Hard Totals Area);
(2) are supported by counts made directly at the point of sale with the shift
Supervisor and the Cashier who performed the delivery.
<TABLE>
<CAPTION>
ZETA # INITIAL FINAL # TERM. # CASHIER # DATE # TIME # SALES SALES/
DIFFERENCE # TOTAL Z SERVER
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1 59 33 741 6121999 201014 817,036 817,036 0
1 1 0 25 7673 6121999 202951 2,925,302 2,925,302 0
1 1 145 31 5934 6121999 203138 1,235,297 1,235,297 0
1 1 159 32 7662 6121999 203710 1,939,259 1,939,259 0
1 1 27 23 4928 6121999 204005 632,707 632,707 0
1 1 181 24 6132 6121999 204110 2,258,817 2,258,817 0
1 1 36 17 3341 6121999 204648 867,692 867,692 0
1 1 167 21 5841 6121999 205016 1,566,590 1,566,590 0
2 13 85 29 5532 6121999 205050 843,213 843,213 0
1 1 196 1 7676 6121999 205445 5741,455 5,741,455 0
1 1 76 27 7664 6121999 205433 1,074,452 1,051,451 23,001
1 1 56 4 5798 6121999 210206 1,960,082 1,960,082 0
1 1 12 29 5798 6121999 152811 213,360 213,360 0
1 1 112 9 7677 6121999 170551 4,251,654 4,251,654 0
1 1 36 7 7677 6121999 210559 911,836 911,836 0
1 1 165 34 7670 6121999 210625 2,335,456 2,335,456 0
1 1 15 8 2244 6121999 211241 761,070 761,070 0
1 1 143 19 5154 6121999 212012 3,832,546 3,832,546 0
1 1 127 6 5432 6121999 212030 3,893,739 3,893,739 0
1 1 199 22 5926 6121999 212059 1,698,622 1,698,622 0
1 1 71 3 7909 6121999 210714 1,964,703 1,964,703 0
1 1 14 2 7909 6121999 212138 213,230 213,230 0
1 1 188 15 5946 6121999 212746 5,183,101 5,183,101 0
1 1 112 5 5918 6121999 213835 4,383,536 4,383,536 0
1 1 1 10 5918 6121999 214349 1,140 1,140 0
1 1 14 30 5917 6121999 155549 49,395 49,395 0
2 113 153 9 5917 6121999 214441 1,811,631 1,811,631 0
1 1 230 11 7672 6121999 215055 5,141,591 5,135,541 6,050
1 1 126 12 7904 6121999 215513 3,302,064 3,291,944 10,120
1 1 122 14 3190 6121999 215859 4,010,705 4,010,705 0
1 1 137 16 7912 6121999 220154 4,179,660 4,166,660 13,000
2 93 132 18 6781 6121999 221440 1,451,633 1,451,633 0
1 1 92 18 6781 6121999 181702 2,892,997 2,892,997 0
74,415,571 74,363,400 52,171
</TABLE>
<PAGE> 8
I would appreciate your valuable comments on this correspondence and on the
result of the interfaces.
I remain,
Sincerely yours
/s/ J. Rafael Santacruz M.
J. RAFAEL SANTACRUZ M.
POS - IBM Project Support
<PAGE> 9
SistemasPOS_Avsexta_5
From: Martha Cecilia Marin
Sent on: Wednesday, June 23, 1999 11:25 AM
To: Hector R. Cardona; Ibeth Viviana Vargas; Janeth Pantoja Q.; Julio
Cesar Vasquez; Manuel F. Velasquez; Martha Ines Salazar; Myriam
Monroy; Nelly Fandino; Nelly Mancera; SistemasPOS_Acopi_51;
SistemasPOS_Alfaguara_25; SistemasPOS_Arroyo_50;
SistemasPOS_Avsexta_5; SistemasPOS_Calima_8; SistemasPOS_Centro4;
SistemasPOS_Cosmo_6; SistemasPOS_Limonar11;
SistemasPOS_Sameco_20; SistemasPOS_Pereira_23;
SistemasPOS_Sameco_20; Abel M. Cardona; Carlos H. Cardona
cc: Adriana Maria Cardona; Hector Fabio Marin; Nancy Nieto
Subject: EXPANSION OF THE NUMBER OF LINES
Priority: High
In order to have better control over the programming of the Millionaire
Festival, it was necessary to create additional lines to register the articles
that do not have discounts in the EXCEPTION LINE.
For purchase orders that stores have already entered , there will be
inconsistencies when trying to receive products that previously belonged to one
line code and are now in another.
For the reports that are requested at the Sales points, keep in mind that you
should request them and generate them for the two lines.
MARTHA CECILIA MARIN
INFORMATION SYSTEMS
Page 1
<PAGE> 10
[logo:] L A 14
CALI
Cali, June 29, 1999
Dr. Clara Ines Jaramillo
IBM Account Executive
Re: IBM POS ALFAGUARA PROJECT
Today the people in charge of performing the civil works to relocate the
communications equipment request authorization from La 14 to use the current
cabling and in some manner to cut the cable and to place a cable extension to
connect your equipment.
Before giving authorization or not in this regard it is clear that IBM should be
the one to perform and verify this procedure directly. Likewise, I would like to
verify with you whether this is the change that you want because I received the
information from the La 14 Systems Operator.
The only consideration on the part of La 14 is that the length of the current
cabling remain the same and you can perform any relocation of the communications
equipment where you deem necessary.
Keeping in mind that this job requires the cabling that we are currently using
to operate the Point of Sale; the works should be done after the close of the
Point of Sale.
Awaiting your response:
/s/Martha Cecilia Marin C.
Martha Cecilia Marin C.
Systems Department
Cacharreria La 14 S.A. Super Centro "Calima"
Nit. 860.300.346-1 Carrera 1 Calle 70
Air PO Box 31817 PBX 6651817 - Fax: 6651819
<PAGE> 11
[logo:] IBM IBM de Colombia S.A. [hw:] F. Giraldo
- --------------------------------------------------------------------------------
CSC - 0457
Santiago de Cali, June 29, 1999
Ms. MARTHA CECILIA MARIN C.
Systems Department
Cacharreria La 14 S.A.
Santiago de Cali
Reference: IBM POS ALFAGUARA Project
In response to your kind correspondence, we would like to inform you that the
company TELECENTRO LTDA., represented by Mr. MARCO A. QUINTERO, who performed
the structured and regulated cabling work in the ALFAGUARA Store, is the person
selected by our Business Partner GLOBAL DATATEL DE COLOMBIA S.A. to perform the
Access Point relocation work, in response to the recommendation of Mr. Warren
Miller - Senior Manager Technical Support of SYMBOL TECHNOLOGIES, suppliers of
the radio frequency system.
The work to be performed does not affect any aspect of the current installation
of cabling in the store. The symmetry achieved with the change of location of
the Access Points will provide future benefits to the Store, such as the
relocation and installation of new IBM POS machines.
We have made due note to perform such work after the close of the Point of Sale.
Sincerely,
/s/ Clara Isabel Jaramillo
Clara Isabel Jaramillo
Account Executive
- --------------------------------------------------------------------------------
<PAGE> 12
[logo:] IBM IBM de Colombia S.A.
- --------------------------------------------------------------------------------
Santiago de Cali, June 30, 1999
Mr. JORGE CARDONA
General Manager
Cacharreria La 14
Cali
As agreed in our last meeting, I would like to confirm to you that the company
Global Datatel de Colombia currently acts as a Business Partner (Authorized
Value-Added Reseller) of IBM de Colombia S.A., for IBM RISC/6000, POS, AS/400,
IMB SP, IBM Networking products and IBM structured cabling Hardware and Software
products.
Global Datatel de Colombia has IBM's support to perform its sales and service
business, including:
- Distribution Assistance
- Technical and Sales Education
- Promotion and Advertising Material
- Access to IBM Information Systems.
If the customer orders IBM products and services using "IBM Authorized
Resellers" as is the case of Global Datatel de Colombia, IBM provides the
technical warranties pursuant to the products' specifications.
Cordially,
/s/ Cesar Hurtado Villegas
CESAR HURTADO VILLEGAS
Manager South Western Region
- --------------------------------------------------------------------------------
Calle 4 North No. 1N-10 2nd Floor. Cali. Telephones (92) 660 4539 - 660 4541.
Air PO Box 1893. Fax (92) 660 4552
<PAGE> 1
<TABLE>
<S> <C> <C>
Branch of Microsoft Colombia Inc. Switchboard: 317 3838
NIT: 800.198.591-3 Microsoft Response Line: 524 0404
Carrera 7 No. 71 - 21 Tower B 7th Floor Fax: 317-3494
Santafe de Bogota, D.C. - Colombia
[logo:] Microsoft (R)
COLOMBIA
</TABLE>
Santafe de Bogota, June 3, 1999
Dr. Carlos Mejia
General Manager
Global DataTel de Colombia S.A.
Bogota
Dear Dr. Mejia:
Recently several companies merged into the company Global DataTel de Colombia
S.A. One of those companies was DLR & CIA., which was registered in Microsoft's
Solution Provider program. We are currently transferring that classification
with all its benefits to the new organization Global DataTel de Colombia S.A.
This Solution Provider program guarantees that you may count on adequate
knowledge of Microsoft products, assuring that customers will make appropriate
use of our platform, so that they become real solutions for the organizations
that acquire them. In order to reach this position, two engineers have had to
pass a minimum certification process until they achieved the title of Microsoft
Certified Professional.
Additionally, Microsoft Colombia considers Global DataTel to be one of our
strategic partners. In this way you enjoy additional benefits that tighten the
relationship with Microsoft, such as an Account Management Office and support
with Marketing and Business work from this firm.
At the most basic level Global DataTel is an authorized distributor of Microsoft
products and at the same time an authorized provider of Microsoft services.
Sincerely,
/s/ Luis Felipe Martinez B. [stamp:] Microsoft
- -----------------------------------
LUIS FELIPE MARTINEZ B. COLOMBIA
MANAGER STRATEGIC PARTNERS
Microsoft Colombia
<PAGE> 1
[logo:] LOTUS (R) DEVELOPMENT CORPORATION COLOMBIA S.A.
Santafe de Bogota, July 8, 1999
TO WHOM IT MAY CONCERN
The purpose of this letter is to certify that the company GLOBAL DATATEL is part
of our Business Partner Program with the classification of Qualified.
We would be pleased to answer any other question you might have.
Cordially,
/s/ Jaime Alberto Ospina C.
- -----------------------------------------
Jaime Alberto Ospina C.
Channel Sales & Operations Manager
Colombia - Ecuador
CALLE 98 NO. 22-64, SUITE 801
EDIFICIO CALLE 100 - SANTAFE DE BOGOTA D.C.
TEL.: (571) 6360909, FAX: (571) 2565427
EMAIL: [email protected]
<PAGE> 1
[logo:] hp HEWLETT Support Business Administration
PACKARD
LATIN AMERICA REGION
"CREDIT EXPRESS"
Hewlett-Packard's Services and Support Organization has implemented the CPO
Warranty Reimbursement Program in order to facilitate the repair process for its
products. Our principal objective is to improve this important process, so that
changes are always beneficial to our representatives.
The purpose of the modifications that are being implemented in this process is
to improve credits for claims and their delivery time.
Previously, a detailed check was first made of all claims received by month and
then the corresponding amount was credited. Due to an increase in the volume of
reimbursements, due to the successful growth we have experienced, we have found
it necessary to create a more efficient manner in order for our Authorized
Service Centers to continue the smooth handling of the CPO Warrantied Product
Repair Program. For this reason we have created "CREDIT EXPRESS"....
CREDIT EXPRESS is the new solution for continuing to advance and grow
efficiently. The new process consists of crediting you for the total amount of
all claims received monthly before being processed. Then, the claims will be
processed in detail, and all the ones that are incomplete due to a lack of
information will be rejected. Then the amount of all the labor charges for
rejections will be invoiced. The CAS's will be receiving their credit notes
monthly for the full amount and they will then receive the rejected claims with
the invoicing.
To introduce this new procedure we will be crediting all Authorized Service
Centers claims through the month of January 1997. Starting on February 1, 1997,
only those CAS's that have a percentage of 30% or fewer rejections may use
CREDIT EXPRESS. Thereafter the amount will be reduced to 20% for the month of
May 1997 and to 10% for the month of July 1997. We will be recognizing all those
who are at this level and those who show an increase in the quality of their
claims.
Take this opportunity to improve your rejection level and to participate in
CREDIT EXPRESS. This new program has been created for the benefit of our CAS's.
Don't waste this opportunity and become part of this important process.
Attached you have all the credit notes from all the claims that we have received
through today. Later you will be receiving the reconciliations from June through
September 1996, with the related rejections and invoices.
For any question related to the new CREDIT EXPRESS program, please contact me at
(305) 267-4643.
Thank you very much,
Isabel Alvarez
Services and Support Organization
<PAGE> 2
[logo:] hp HEWLETT Support Business Administration
PACKARD
LATIN AMERICA REGION
The new CREDIT EXPRESS process has been created for smooth crediting under the
CPO Warranty Reimbursement Program. Below you are being sent a list of the
claims that we have received. All claims will be processed in detail and those
which are classified as rejections will be separated. These (rejections) will be
totaled and then invoiced to your account.
MICROMES LTDA.
<TABLE>
<CAPTION>
CLAIM DATE CREDIT NUMBER AMOUNT
---------- ------------- ------
<S> <C> <C> <C>
August 1996 18CL-70896-700 $1310.00
December 1996 18CL-71296-700 $4478.25
</TABLE>
REJECTION PERCENTAGE
--------------------
N/A %
The Claim Date is the period in which the repairs made by the CAS were performed
and NOT when they are sent; that is, if a repair is made on January 19, 1996 and
the CAS sends the documentation in the month of March, the pertinent claim date
will be January 1996.
The main purpose of the new CREDIT EXPRESS process is to retain greater
satisfaction among our Authorized Service Centers (CAS's) and their end users.
The rejection percentage determines the participation of CAS's in this new
procedure. That is why it is important to take this time to improve your
rejection level. The rejection percentage that you have been supplied consists
of an average of all claims processed between September 1994 and May 1996.
However, starting in January 1997, the rejection percentage will be calculated
monthly, which will allow us to keep better control and evaluation of the
rejection levels obtained.
Attached you are being sent all the claims cited. Please contact me at (305)
267-4643 in case of any question.
Thank you very much,
Isabel Alvarez
Services and Support Organization
<PAGE> 1
[logo:] Q Compaq Computer de Colombia S.A.
Cra. 7 No. 71-21 12th Floor Tower B
Bogota, Colombia
NIT 800.053.316-1
http://www.compaq.com.co CERTIFICATION
TO WHOM IT MAY CONCERN
COMPAQ COMPUTER DE COLOMBIA S.A., in its capacity as a Subsidiary of COMPAQ
LATIN AMERICA CORPORATION, certifies that GLOBAL DATATEL LTDA. is an Authorized
Reseller of COMPAQ products in Colombia and that additionally it has the support
and backing of the COMPAQ RESELLERS CLUB, which entity is in charge of
supporting its partners by training them, reporting to them and giving them
support for all Presales, Sales and Post-Sales activities. Its Code is 10732.
In virtue of the foregoing, GLOBAL DATATEL LTDA. is able to provide COMPAQ
products, as well as the warranty, support, maintenance and supply of spare
parts, through the Authorized Service Providers, having for this purpose the
backing and support of COMPAQ COMPUTER DE COLOMBIA S.A.
Issued in Santafe de Bogota, D.C., on the eighth (8th) day of the month of July
of nineteen hundred ninety-nine (1999), and is valid for one (1) year from that
date.
/s/ Sandra Gomez
- ------------------------------
SANDRA GOMEZ
Commercial Manager
[logo:]
COMPAQ
