UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The
Securities Exchange Act of 1934
Netmaximizer.com, Inc.
(Exact name of registrant as specified in its charter)
Florida 65-0907899
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4400 North Federal Highway, Suite 307
Boca Raton, Florida 33431
(Address of principal executive offices, including Zip Code)
Registrant's telephone number: (561) 447-9330
Securities to be registered under Section 12(b) of the Act: None
Title of each Class Name of each Exchange on which
to be so registered each class is to be registered
None None
Securities to be registered under Section 12(g)of the Act:
Common Stock, $.001 par value per share
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TABLE OF CONTENTS
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NOTE REGARDING FORWARD LOOKING STATEMENTS.........................................................................1
Item 1. Business............................................................................................2
RISK FACTORS.....................................................................................................13
Item 2. Financial Information..............................................................................25
Item 3. Properties.........................................................................................31
Item 4. Security Ownership of Certain Beneficial Owners and Management.....................................31
Item 5. Directors and Executive Officers...................................................................32
Item 6. Executive Compensation.............................................................................35
Item 7. Certain Relationships and Related Transactions.....................................................37
Item 8. Legal Proceedings..................................................................................37
Item 9. Market Price of and Dividends on Registrant's Common Equity and Related
Shareholder Matters................................................................................37
Item 10. Recent Sales of Unregistered Securities............................................................38
Item 11. Descriptions of Registrant's Securities to be Registered...........................................39
Item 12. Indemnification of Directors and Officers..........................................................39
Item 13. Financial Statements and Supplementary Data........................................................41
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.........................................................................................59
Item 15. Financial Statements and Exhibits..................................................................59
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NOTE REGARDING FORWARD LOOKING STATEMENTS
Except for statements of historical fact, certain information in this
registration statement constitutes "forward-looking statements," including
without limitation statements containing the words "believes," "anticipates,"
"intends," "expects," "projection", "estimated", "outlook", "are expected to"
and similar words, as well as all projections of future results. These
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause our actual results or achievements to be
materially different from any future results or achievements expressed or
implied by such forward-looking statements. Any forward-looking statement speaks
only as of the date on which such statement is made, and we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances which may occur after the date on which such statement is made or
to reflect the occurrence of unanticipated events. New factors emerge from time
to time and it is not possible for us to predict all of such factors, nor can we
assess the impact of each such factor on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statement.
Some important factors that could cause actual results or outcomes to
differ materially from those discussed in the forward-looking statements
include, but are not limited to the following: our limited operating history;
history of losses; competition; our ability to manage growth and integration;
risks of technological change; competition for customers; pricing and
transportation of products; our dependence on key personnel; marketing
relationships with third party suppliers; our ability to protect our
intellectual property rights; government regulation of Internet commerce;
economic and political factors; dependence on continued growth in use of the
Internet; risk of technological change; capacity and systems disruptions;
liability for Internet content; uncertainty regarding infringing intellectual
property rights of others; security risks; any unanticipated impact of the year
2000, including delays or changes in costs of year 2000 compliance, or the
failure of our major suppliers to resolve their own year 2000 issues on a timely
basis; and the other risks and uncertainties described under "Description of
Business - Risk Factors" in this registration statement. Certain of the forward
looking statements contained in this registration statement are identified with
cross-references to this section and/or to specific risks identified under
"Business - Risk Factors". All such factors are difficult to predict, contain
uncertainties which may materially affect actual results, and are beyond our
control.
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PART I
Item 1. Business.
- -----------------
Introduction
History of Our Company - Netmaximizer.com, Inc.
We were incorporated in the State of Florida on June 29, 1995 under the name
"RLN Realty Associates, Inc." with an authorized share capital of 7,500 shares
of common stock with a $1.00 par value per share. On June 9, 1998, we filed
Articles of Amendment to amend our Articles of Incorporation to increase our
authorized share capital to 50,000,000 shares of common stock with a $.001 par
value per share. In addition to increasing our authorized capital, we authorized
a split of our 5,000 outstanding shares of common stock on a 200-for-one basis
effective on June 9, 1998.
We were for the most part inactive through February 1999. On March 1, 1999, we
amended our Articles of Incorporation to change our name to "Netmaximizer.com,
Inc." On March 8, 1999, David Saltrelli and Peter Schuster each purchased
2,430,000 shares of our common stock as part of a 12,000,000 share offering (see
"Recent Sales of Unregistered Securities"), became our President and Secretary
(respectively) and began to implement our current business strategy.
On October 19, 1999, we authorized a split of our 13,049,170 then-outstanding
shares of common stock on a 3-for-1 basis effective as of November 1, 1999.
Our common stock was first quoted on the National Association of Securities
Dealers' Over-The-Counter Bulletin Board (also known as the "OTCBB") on June 19,
1998 and traded under the symbol "RLNR." Effective March 17, 1999, our stock
symbol was changed to "MAAX" and continues to be quoted under that symbol.
However, we will lose our eligibility for quotation on March 24, 2000 unless
this registration statement is declared effective prior to that date and we are
current in our reporting obligations under the Securities Exchange Act of 1934,
as amended.
We will be submitting an application to Nasdaq to have our common stock traded
on The Nasdaq SmallCap Market. If this registration statement becomes effective
and our application with the The Nasdaq SmallCap Market is approved prior to
March 24, 2000, we anticipate that our common shares will be traded on the The
Nasdaq SmallCap Market. We cannot, however, assure you that either of these
events will occur in the required timeframe.
We have not been subject to any bankruptcy, receivership or other similar
proceeding.
Investors should carefully review and consider the factors set forth under
"Business - Risk Factors" as well as other information contained in this
registration statement before investing in the shares of our stock.
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Domain Name
We have registered our domain name "Netmaximizer.com" with Network Solutions,
Inc. ("NSI"). NSI acts as a clearinghouse for web site domain names under
license from the United States government.
The Business of Netmaximizer.com
Overview
Industry Overview - The Internet
The Internet is an increasingly significant global interactive medium for
communications, content and commerce. Growth in Internet usage has been fueled
by a number of factors, including:
o the large and growing base of personal computers in the workplace and
home;
o advances in the performance of personal computers and modems;
o improvements in network systems and infrastructure;
o readily available and lower cost access to the Internet;
o increased awareness of the Internet among businesses and consumers;
o increased volume of information and services offered on the Web; and
o reduced security risks in conducting transactions online.
International Data Corporation estimates that the number of Internet users
worldwide exceeded 97 million in 1998 and will grow to approximately 320 million
by the end of 2002. International Data Corporation also estimates that worldwide
commerce over the Internet will reach approximately $426 billion by the end of
2002, up from approximately $32 billion in 1998.
The availability of a broad range of content and the acceptance of electronic
commerce has driven rapid Internet adoption by businesses and consumers alike,
which has in turn stimulated the proliferation of additional content and
electronic commerce.
We believe that the growing adoption of the Internet represents an enormous
opportunity for businesses to conduct commerce electronically without borders
over the Internet.
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E-commerce
The term "e-commerce" encompasses business to consumer transactions conducted
over the Internet and the World Wide Web. As interest in the Web exploded during
the mid-1990's and, as the number of consumers with access to the Internet at
work or at home grew, companies that originally had established Web sites for
marketing purposes (to promote their corporate or brand identity or to provide
information about their products) soon became interested in using those sites
for sales purposes. Businesses identified the Internet as a means to shorten the
sales cycle.
The information that is presented on a Web site is delivered in a focused manner
to targets who are intentionally looking for that specific information. The
Internet can reduce costs and level the playing field for small and large
businesses, allowing them to extend their reach globally. As well, the
availability of sophisticated Internet and Web technology, stronger security
mechanisms, and the increasing acceptance of the new communications medium are
fueling the use of e-commerce by businesses and consumers.
We believe that consumers' trust will increase with the number of successfully
completed transactions. Studies are demonstrating that the consumers' attitudes
are rapidly changing and that they are rapidly gaining confidence with
transacting business over the Internet.
We believe that the way in which products and services will be directly or
indirectly sold in the future will increasingly shift toward the Internet.
Leading businesses throughout the world are developing their Web strategies to
take advantage of this shift in the way consumers will receive product and
service related information, and purchase goods and services.
Netmaximizer.com Overview
We are a development-stage electronic-commerce company. Beginning on November 4,
1999 with the launch of our web site, we began providing an e-commerce
department store (the "Store") which is available to members of affinity groups.
An "affinity group" is a group of people who are members of an entity or
organization based upon a common interest or goal. Churches, schools,
fraternities, and unions are examples of affinity groups. When we accept an
affinity group for participation we will establish a portal for that affinity
group to the Store through which the group's members may purchase merchandise in
the Store. The Store is housed by Yahoo!
Affinity groups do not pay any fee to us to establish their custom portal to the
Store. Each affinity group receives a fifteen percent (15%) commission on every
product which is purchased by its members or by people referred to the Store by
its members and $.30 for every free product which is offered to and accepted by
its members or by people referred to the Store by its members.
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Initially, the Store has eighteen departments which mirror the departments found
in a traditional brick and mortar department store. Additional departments will
be added over time. The Store offers the following services and benefits to its
customers:
o free incentives with each purchase (a variety of which are available
including airchecks and hotel discount certificates);
o the ability to e-mail the BananaGram, which is a free, animated
e-card, to family and friends which invites them to visit the
department in the Store containing complimentary gifts;
o a reminder service which electronically reminds customers of important
dates; and
o a newsletter which updates members on new department grand openings,
new product lines, special promotions and discounts.
The Store opened on November 4, 1999 to the members of fifteen affinity groups.
Marketing Strategy
The lynchpin of our marketing strategy is to utilize and potentially enhance the
affinity groups' internal methods of communication to their members to grow our
market share. We enroll the affinity groups through the use of commission-only,
outside sales representatives. The representatives use our on-line description
of our Store and the affinity group program to demonstrate to affinity groups
how its members can use the Store, the accuracy of our transaction tracking
system and the potential profitability for the affinity group as its members
make the purchases from the Store that they would otherwise make elsewhere. The
affinity group completes an on-line application.
If the affinity group is accepted by us for membership, we establish a portal
for that group through which its members may enter our Store. Since the affinity
group receives a fifteen percent (15%) commission on every purchase its members
make, the affinity group is incentivized to use its internal communications
methods (such as the pulpit, a newsletter, a payroll insert, or a flier brought
home from school) to market our Store.
Both the sales representative that recruits an affinity group and the affinity
group itself are paid commissions only if and when product sales by members of
that affinity group are completed, thereby substantially eliminating the up
front marketing and advertising costs typically found in the retail sales
industry.
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Web Site Development Costs
Effective March 31, 1999, we entered into an agreement with Network 2001, Inc.
("Network") for the design and development of the first phase of the web site.
As payment for the services rendered to us, we agreed to pay to Network $62,000
in cash and to issue to Network eighteen thousand, eight hundred and eighty-five
(18,885) shares of our common stock. Following the stock split on November 1,
1999, the number of shares which they hold as a result of providing these
services is fifty-six thousand, six hundred and fifty-five (56,655). As of
November 27, 1999, those shares have been issued and the cash has been paid.
Employees
As of November 27, 1999, we had five full-time employees or consultants. From
time to time, we may also retain consultants and consulting firms to provide us
with special expertise in developing marketing, software and telecommunications
technologies.
Competition
The online commerce market, particularly over the Web, is new, rapidly evolving
and intensely competitive. Our current or potential competitors include:
o online vendors (whether or not incentive-based online vendors) of the
types of products we currently offer in the Store or intend to offer
in the future;
o a number of indirect competitors, including Web portals and Web search
engines such as Yahoo! and America OnLine, that are involved in online
commerce either directly or in collaboration with other retailers;
o traditional brick and mortar distributors and retail vendors of the
products we currently offer in the Store or intend to offer in the
future, many of which possess significant brand awareness, sales
volume and customer bases;
o catalogue vendors; and
o conventional retail outlets who currently sell, or who may sell,
products or services through the Internet.
We believe that the principal competitive factors in the online, affinity-group
centered, incentives-based retailing market are:
o breadth and depth of product selection and services;
o number of affinity group members and the quality and frequency of the
groups' contacts with their members;
o size of groups' membership base;
o accessibility to, and ease of use of, site;
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o quality of editorial and other site content;
o quality of search tools and transaction speed and security;
o quality of service and personalized service;
o technical expertise;
o convenience and price; and
o reliability and speed of fulfillment.
We expect competition to increase due to the lack of significant barriers to
entry for online business generally, and for online incentives-based direct
marketing programs. Some of our current and potential competitors have longer
operating histories, greater brand recognition, larger client and member bases
and significantly greater financial, technical and marketing resources than we
do.
These advantages may enable them to respond more quickly to new or emerging
technologies and changes in customer preferences. These advantages may also
allow them to engage in more extensive research and development, undertake
extensive far-reaching marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees, strategic
partners and advertisers. As a result, it is possible that our existing
competitors or new competitors may rapidly acquire significant market share.
Increased competition may result in price reductions, reduced gross margin and
loss of market share. We may not be able to compete successfully, and
competitive pressures may affect our business, results of operations and
financial condition.
Intellectual Property
We intend to rely on a combination of patent, copyright, trademark and trade
secret laws and restrictions on disclosure to protect our intellectual property
rights. As of the date of this registration statement, we do not own or
otherwise control any registered patents, copyrights or trademarks, nor have we
submitted any applications for trademark registration. We intend to apply for
trademark registration and protection for our logo and various phrases in the
United States. If we determine that we have created an asset whose value can be
protected, we will attempt to protect the proprietary asset by applying for
patents, copyrights or trademarks.
We cannot assure you that our patents or trademarks will not be successfully
challenged by others or invalidated, that our patents, once applied for, will be
issued or that our trademark registrations will be approved. If our trademark
registrations are not approved because third parties own these trademarks, our
use of these trademarks would be restricted unless we entered into arrangements
with the third-party owners, which might not be possible on reasonable terms.
Despite any efforts we may make in the future to protect our proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use our
technology or business model. Monitoring unauthorized use of our technology and
business model is difficult and we cannot be certain that the steps we will take
will prevent unauthorized use of our technology and business model.
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In addition, our business activities may infringe upon the proprietary rights of
others, and, from time to time, we may receive, claims of infringement against
us. Litigation may be necessary to enforce our intellectual property rights, to
protect our trade secrets or to determine the validity and scope of the
proprietary rights of others. Any litigation could subject us to significant
liability for damages and invalidation of our proprietary rights. These
lawsuits, regardless of their success, would likely be time consuming and
expensive to resolve and would divert management's time and attention away from
our business. Any potential intellectual property litigation could also force us
to do one or more of the following:
o make significant changes to the structure and operation of our
business;
o attempt to design around a third party's patent; or
o license alternative technology from another party.
Implementation of any of these alternatives could be costly and time consuming,
and may not be possible. Accordingly, an adverse determination in any litigation
that we are a party to would have a material adverse effect on our business,
results of operations and financial condition.
In addition, we will endeavor to rely on trade secret laws and non-disclosure
and confidentiality agreements with our employees and consultants who have
access to our proprietary technology. We strictly control access to and
distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies.
We cannot assure you that the steps we have taken will prevent misappropriation
of our solutions or technologies, particularly in foreign countries where laws
or law enforcement practices may not protect our proprietary rights as fully as
in the United States.
Governmental Regulation
We are subject to general business regulations and laws regarding taxation and
access to online commerce. In addition, the Internet is subject to government
obscenity and decency standards.
Like all companies, we are subject to consumer protection laws and we are
governed by the Federal Trade Commission.
In addition, in 1993, following the filing of a complaint by the FTC, a federal
district court entered a permanent injunction against David Saltrelli, our
President and director, enjoining him from engaging in certain business
practices. See "Risk Factors - Federal Trade Commission Permanent Injunction
Against President" and "Item 5. Directors and Executive Officers - Other
Information - FTC Injunction."
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Processing Financial Transactions
Yahoo! processes the financial transaction involved when a customer purchases a
product from the Store and then Yahoo! delivers the information relating to that
transaction to Charter Pacific Bank. We have entered into an agreement with
Charter to complete the processing of the financial transactions. Charter has
significant experience in processing credit card transactions and offers a
real-time payment processing system. Charter has been in the business of
processing and administering financial transactions for several years and we
believe Charter will offer the benefits of reliable, secure payment processing
functionality. We hope to benefit from Charter's low incidence of customer
charge-backs and credit card fraud. A further benefit to us is that we will not
have to bear the cost of developing and maintaining complex systems,
infrastructure, and overhead to process credit card transactions.
We believe the benefits of the Charter's service are:
o secure communication lines between us and Charter;
o the customer payment information is encrypted to prevent alteration or
tampering; and
o the messages are authenticated to verify the identity of the parties
sending and receiving the payment processing request.
Access to Charter's servers is secure, monitored and controlled 24 hours a day,
seven days a week.
Development of the Business
Since February 1999, we have taken the following steps to implement our business
plan:
o Retained experienced senior management and consultants;
o Retained Network 2001, Inc. to develop our web site;
o Completed the design and construction of our web site;
o Selected Yahoo! to house our web site;
o Retained American Sales Industries, Inc. as our full service product
fulfillment provider;
o Executed a Merchant Bankcard Services and Security Agreement with
Charter Pacific Bank;
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o Executed a lease agreement for executive office space in Boca Raton,
Florida;
o On November 4, 1999, opened the web site Store to fifteen affinity
groups.
We intend to take the following steps to continue to implement our business
plan:
o Open at least fifteen new Affinity Group portals into our Store during
each of the next twelve months of operation;
o Hire necessary key consultants and personnel with Internet e-commerce
experience to implement our business strategy; and
o Increase our marketing activities by identifying and expanding the
number of independent representatives.
A Transaction with MAAX
What the member of the affinity group sees:
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o An affinity group member visits the affinity group web site and clicks
through that portal to our Store.
o If a member is a first time visitor, the member may click on the
"First Time Visitor" button and receive a virtual guided tour through
the site, conducted by "MAAX," our 800-pound gorilla storekeeper.
During testing, this feature dramatically increases customer awareness
and satisfaction.
o Alternatively, the member may select from one or more of the eighteen
departments available (e.g., "The Fragrance Counter", "As Seen on TV",
"Jewelry", and "Gifts"). The design criteria for each department was
to keep it colorful, simple and easy to navigate with the fewest
number of mouse clicks needed to transport the viewer to the buying
decision.
o If they would prefer, the member may click on a "Search" button to
search the entire Store quickly and efficiently. Products are sorted
by recipient ("For Her," "For Him," "For Mom," etc.), by department
and by price. In addition, the viewer may simply type in their request
and ask MAAX to find it for them.
o A member arrives at the front page of a particular department where
the products are presented in a sorted fashion that allows the
customer to go directly to the product in which the customer is
interested, in the shortest amount of time.
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o When a member clicks on a product, the member then sees a uniform
template that enables him or her to view (a) the picture of a product,
(b)"MAAX Facts," which are summarized information regarding the
product, (c) product availability, (d) shipping time, (e) the cost of
shipping and handling, and (f) the price of the product.
o When the member elects to purchase a product, a mouse click will add
that product to the member's virtual "shopping cart," powered by
Yahoo. The shopping cart can process over 5,000 orders per hour. The
customer simply clicks on "Add to Cart" and the product is placed in
the respective shopping cart. The customer continues to shop (similar
to placing an item in a shopping cart at a brick and mortar store) by
adding more and more products to the shopping cart. The customer may
view the shopping cart at any time by simply clicking on "View Cart".
Additional items or item quantities may be added or deleted at any
time. The shopping cart totals everything so one simple mouse click
shows how much the order totals. When they are finished shopping, they
simply "Check Out" and the Yahoo shopping cart shows them how to
complete their purchase.
o For every order placed, a member will also receive an incentive (a
variety of which are available including airchecks and hotel discount
certificates).
o When the member has concluded shopping, the member enters menu-driven
personal data, including their name, address, the address to which to
ship the product(s) purchased, e-mail address (for confirmations) and
credit card number. Shipping and handling are added and sales tax is
computed (Florida residents only).
o Yahoo! processes the credit card immediately and generates the
approval or notifies the member of the need to present another credit
card to complete the transaction. Simultaneously, our software is
running additional algorithms to verify the propriety of the credit
card transaction. When the transaction is approved by the credit card
company, funds are reserved for application to the purchase, but the
card is not charged.
o A receipt is created for the transaction which may be printed and
which is stored at a locatable web site. An email confirmation of the
order summarizing the transaction is immediately sent to the member.
o Because they have seen the MAAX Facts, the member knows (a) whether
the item is in stock, (b) all relevant pricing and cost of shipping
data, (c) whether sales tax applies, and (d) approximate shipping
delays. Nonetheless, if a member has a question, the member may query
customer service and receive an autoresponder reply by e-mail to a
variety of commonly asked questions. Those electronic replies are also
monitored by Customer Care Representatives, who ensure the query is
properly and completely answered, e.g., by sending a personalized
e-mail response to the member. Finally, a member may use our toll free
number to discuss the question with a
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Customer Care Representative. Our goal and intent is to achieve
100% customer satisfaction.
o The products will be received by the member along with a
distinctively-colored form permitting the return of the product for
full credit. Unless a product has been personalized in some manner, we
offer a no question, money back guaranty. In this regard, we may
experience significant and unpredictable losses due to our return
policy. Because we will not offer items where customer satisfaction is
dependent upon color or size, we do not believe returns will be
excessive.
What the member does not see:
- -----------------------------
* As the order is confirmed to the member, our computer generates a
purchase order which is delivered electronically to our fulfillment
and warehousing provider, American Sales Industries, Inc., a full
service product fulfillment provider with more than 17,000 square feet
of licensed and bonded distribution facilities in Palm Beach County,
Florida.
* ASI, a company with 20-year's experience in warehousing and
fulfillment, aggregates products needed by Netmaximizer.com and
electronically issues the corresponding purchase orders directly to
the respective supplier.
* The suppliers receive the orders and then pick the products and ship
them directly to ASI's warehouse facility. Each of our suppliers will
ship daily to ASI.
* When the products arrive at ASI's warehouse, they are counted, scanned
into the computer, and electronically matched against the respective
purchase order. Information is uploaded to our computers where
everything is cross-checked.
* Each order is taken down one by one electronically, a packing invoice
is created, a shipping label, a pick slip, a return authorization,
gift card (if ordered) and a quality control sheet are all generated
automatically by computer. ASI "picks" the order into the correct box,
double checks the contents to the order, fills the box with packing
materials, and places the invoice, thank you letter, return
authorization, free gifts and a flier on specials into the box. They
seal the box, affix a tracking number provided by the United States
Post Office, and scan the tracking number into the computer. The
package is weighed, postage is affixed, all information is entered
into the computer, and the package is placed in the respective bin
(priority or express) awaiting pick up by the Postal Service.
* The information is transferred to our customer service computer. We
then send an email to each customer which informs them that their
purchase has been packaged (and provides the tracking number).
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The vast majority of the products that are offered in the Store are available
for shipment within four days. This allows us to use a just-in-time inventory
stocking process. Most products we sell can be obtained and delivered to our
fulfillment warehouse within two to three days. If a product takes longer than
three days to obtain, we will either purchase the needed inventory of that
product or discontinue offering the product. During our suppliers' winter
months, we allow additional shipping days for inclement weather. We seek to
provide rapid and reliable fulfillment of customer orders and intend to continue
to improve our speed of availability and fulfillment.
Members can select from a variety of delivery options, including overnight and
various shipping options, as well as gift-wrapping services
RISK FACTORS
We have included information in this registration statement that contains
"forward looking statements." Our actual results may materially differ from
those projected in the forward looking statements as a result of risks and
uncertainties. Although we believe that the assumptions made and expectations
reflected in the forward looking statements are reasonable, we cannot assure you
that the underlying assumptions will, in fact, prove to be correct or that
actual future results will not be different from the expectations expressed in
this report. An investment in our securities is speculative in nature and
involves a high degree of risk. You should read this registration statement
carefully and consider the following risk factors.
WE HAVE ONLY A LIMITED OPERATING HISTORY THAT INVESTORS MAY USE
TO ASSESS OUR FUTURE PROSPECTS
We have only a limited operating history. We have not and may never generate
sufficient revenues to achieve profitability. We have limited experience
addressing challenges frequently encountered by early-stage companies in the
electronic commerce and direct marketing industries. You should evaluate our
business in light of the risks and difficulties frequently encountered by early
stage companies engaged in Internet commerce. These risks include:
o our significant dependence on services with only limited market
acceptance;
o our ability to develop and upgrade our infrastructure, including
internal controls, transaction processing capacity, data storage and
retrieval systems and Web site;
o competition;
o our need to manage changing operations;
o our reliance upon the Internet for commerce;
o our reliance upon general economic conditions;
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o our reliance upon strategic relationships;
o regulatory risks associated with our business; and
o our dependence upon and need to hire key personnel.
We may not be successful in addressing these risks, and our business strategy
may not be successful. Our revenue and income potential is unproven and our
business model is still emerging. We cannot assure you that we will attract
affinity group participants or achieve significant revenues or operating margins
in future periods. In addition, we have never operated during a general economic
downturn in the United States, which typically adversely affects advertising and
marketing expenditures and retail sales. Accordingly, our limited operating
history does not provide investors with a meaningful basis for evaluating our
business, our prospects or an investment in our common stock.
WE HAVE A HISTORY OF LOSSES AND EXPECT LOSSES TO CONTINUE UNTIL AT
LEAST JANUARY 31, 2000
We have never operated profitably and, given our planned level of operating
expenses, we expect to continue to incur losses for the foreseeable future.
Although we project revenue growth to begin shortly, such growth may not be
achieved or if it is achieved, such growth may not be sustainable at a rate
sufficient to achieve and maintain profitability. We plan to increase our
operating expenses as we continue to build infrastructure to support the
expansion of our business. Our losses may increase in the future, and even if we
achieve our revenue targets, we may not be able to sustain or increase
profitability on a quarterly or annual basis. If our revenues grow more slowly
than we anticipate, or if our operating expenses exceed our expectations and
cannot be adjusted accordingly, our business, results of operations and
financial condition will be materially and adversely affected.
OUR PROSPECTS FOR OBTAINING ADDITIONAL FINANCING ARE UNCERTAIN
AND FAILURE TO OBTAIN NEEDED FINANCING COULD AFFECT OUR ABILITY TO
PURSUE FUTURE GROWTH
We will need to raise additional funds to develop or enhance our services, to
fund expansion, to respond to competitive pressures or to acquire complementary
products, businesses or technologies. We cannot assure you that additional
financing will be available on terms favorable to us, or at all. If additional
funds are raised through the issuance of equity or convertible debt securities,
the percentage ownership of our stockholders would be reduced and these
securities might have rights, preferences or privileges senior to those of our
current stockholders. If adequate funds are not available on acceptable terms,
our ability to fund our expansion, take advantage of unanticipated
opportunities, develop or enhance services or products, or otherwise respond to
competitive pressures would be significantly limited. Our business, results of
operations and financial condition could be materially adversely affected by
this limitation.
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FEDERAL TRADE COMMISSION PERMANENT INJUNCTION AGAINST PRESIDENT
In June 1993, following the filing of a complaint by the FTC, David Saltrelli,
our President and director, (and other individuals and entities not affiliated
with Netmaximizer.com, Inc.) entered into a Stipulated Permanent Injunction and
Final Judgment with the FTC. The Injunction was entered by the United States
District Court for the Middle District of Florida, Orlando Division. In the
proceedings leading up to the Injunction, Mr. Saltrelli denied all material
allegations contained in the FTC's complaint. He agreed to the injunction,
without trial or adjudication of any issue of law or fact, to resolve all
matters in dispute between him and the FTC. See "Item 5.
Directors and Executive Officers - Other Information - FTC Injunction."
The Injunction enjoins Mr. Saltrelli, as well those acting with him or
participating in his activities, from supplying travel-related services and
products for use in telemarketing and from assisting in the telemarketing of any
travel-related product or service. The Injunction also states that, in
connection with the advertising, promotion, marketing, distribution, offering
for sale or sale of travel-related products or services (including premiums and
incentives), Mr. Saltrelli and the related parties are permanently enjoined
from, among other things, failing to disclose or misrepresenting in any manner
any restriction, limitation or condition on any consumer's use of a
travel-related product or service, or failing to provide to each consumer who
obtains such travel-related product or service the exact trip, product or
service as was represented to the consumer. A copy of the Injunction is filed as
an exhibit to this registration statement, and this description of the
Injunction is qualified in its entirety by reference to the Injunction.
Because Netmaximizer.com, Inc. provides travel related premiums and incentives
to affinity group members to promote the sale of products, the Injunction
requires that the prohibited activities be scrupulously avoided. If the FTC were
to determine that Mr. Saltrelli, as our President, or Netmaximizer.com itself
had violated the terms of the Injunction by engaging in that prohibited conduct,
it may seek to enforce the Injunction directly against us. Should this or any
other regulatory action lead to civil or criminal charges against
Netmaximizer.com, Inc., we may be subject to negative publicity, the costs of
litigation, the diversion of management time and other negative effects, even if
we ultimately prevail. We expect that our business would suffer if we were not
to prevail in any action like this.
OUR QUARTERLY OPERATING RESULTS MAY BE SUBJECT TO FLUCTUATIONS,
WHICH COULD AFFECT OUR STOCK PRICE
We hope to grow rapidly and our revenue and operating results may vary
significantly from quarter to quarter due to a number of factors, some of which
are outside of our control. As a result, our operating results may be below the
expectations of public market analysts and investors. In this event, the price
of our common stock may fall.
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The factors most likely to produce varied results include:
o changes in marketing and advertising costs that we incur to attract
and retain affinity groups and their members;
o our rate of acquiring affinity groups and the level of activity of new
and existing members of groups;
o changes in the prices we pay for the goods we sell or the availability
of such goods in the quantity and variety we require to retain our
members;
o the introduction of new products and services by us or by our
competitors;
o changes in the costs of warehousing or delivering our goods;
o changes in our pricing policies, the pricing policies of our
competitors or the pricing policies for internet retail sales
generally;
o unexpected costs and delays relating to the expansion of our
operations; and
o the occurrence of technical difficulties or unscheduled system
downtime.
Due to these factors, revenues and operating results are difficult to forecast
and investors should not rely on period to period comparisons of results of
operations as an indication of our future performance. Any significant shortfall
in revenues in relation to our expenses would have a material adverse effect on
our business, results of operations and financial condition.
OUR OPERATING RESULTS MAY BE SUBJECT TO SEASONAL FLUCTUATIONS
THAT COULD IMPACT OUR GROWTH AND AFFECT OUR STOCK PRICE
We believe that our revenues will be subject to seasonal fluctuations as a
result of general patterns of retail buying, which are typically higher during
the fourth calendar quarter. In addition, expenditures by consumers tend to be
cyclical, reflecting general economic conditions, holidays, vacation periods and
the beginning and end of school. The extent of these seasonal fluctuations in
any period may be difficult to predict and, if the fluctuations are higher than
our expectations, they could have a material adverse effect on our business,
results of operations and financial condition. Our results of operations could
be harmed by a downturn in the general economy or a shift in consumer buying
patterns.
WE HOPE TO GROW RAPIDLY, AND THE FAILURE TO MANAGE OUR GROWTH
COULD ADVERSELY AFFECT OUR BUSINESS
As we continue to increase the scope of our operations, we may not have an
effective planning and management process in place to implement our business
plan successfully. We have grown from two employees in March of 1999 to five
employees on November 27, 1999. We are continuing to integrate these individuals
into our organization. We plan to continue the expansion of our sales, marketing
and administrative functions. We received our first application from an affinity
group in September 1999. As of September 30, 1999, we had received a total of 30
applications. We intend to accept them in increments over time. This growth may
strain our
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management systems and resources. We anticipate the need to continue to improve
our financial and managerial controls and our reporting systems. In addition, we
will need to expand, train and manage our growing work force. Our business,
results of operations and financial condition will be materially and adversely
affected if we are unable to manage our expanding operations effectively.
OUR SUCCESS DEPENDS ON OUR ABILITY TO MAINTAIN AND EXPAND AN
ACTIVE MEMBERSHIP BASE
Our success largely depends on our ability to maintain and expand an active
membership base. Although we currently have accepted applications for
participation by 15 affinity groups representing approximately 150,000 members,
this industry typically has generated the majority of its revenues from a small
percentage of its members, and we cannot assure you that the percentage of
active members will increase in our case. In addition, we cannot be certain that
our membership growth will continue at current rates or increase in the future.
OUR BUSINESS WILL SUFFER IF THE ACCEPTANCE OF ONLINE PURCHASING
DOES NOT CONTINUE
Our future success will depend substantially upon continued growth in the use of
the Internet and in the acceptance and volume of commerce transactions on the
Internet. Our potential customers will likely accept and adopt the Internet as a
medium to conduct business only if the Internet provides them with greater
efficiencies, lower prices and avoided costs, all in a secure environment.
However, the number of Internet users may not continue to grow, and commerce
over the Internet may not become more accepted or widespread.
As this is a new and rapidly evolving industry, the ultimate demand and market
acceptance for Internet-related services is subject to a high level of
uncertainty. The Internet may not prove to be a viable commercial marketplace
for a number of reasons, including:
o lack of acceptable security technologies,
o lack of access and ease of use,
o congestion of traffic,
o inconsistent quality of service,
o lack of availability of cost-effective, high-speed service,
o potentially inadequate development of the necessary infrastructure,
o excessive governmental regulation,
o uncertainty regarding intellectual property ownership or timely
development, and
o commercialization of performance improvements, including high speed
modems.
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A necessity of online commerce and communications is the secure transmission of
confidential information over public networks. Our security measures may not
prevent security breaches. Any failure to prevent security breaches could harm
our business. We rely on encryption and authentication technology licensed from
third parties to provide the security and authentication technology to effect
secure transmission of confidential information, including customer credit card
numbers. Advances in computer capabilities, new discoveries in the field of
cryptography, or other developments may result in a compromise or breach of the
technology used by us to protect customer transaction data. Any compromise of
our security could harm our reputation and, therefore, our business.
OUR BUSINESS WILL SUFFER IF AFFINITY GROUP MARKETING
DOES NOT SUCCEED
The success of our business model will depend on our ability to attract and
retain affinity groups and their members. We cannot assure you that our
marketing efforts and the quality of each member's experience, including the
number and availability of the products we provide and the perceived value of
the rewards we offer, will generate sufficient satisfied members. To the extent
that our products, prices and online rewards program do not achieve market
acceptance among groups and their members, our business would be materially and
adversely affected.
Any member of an affinity group who is dissatisfied with the quality of an
experience with our company for reasons within or outside of our control could
damage our reputation and/or cause the termination of participation by the
entire affinity group. Any damage to our reputation and/or termination of
participation by an entire affinity group could have a material adverse effect
on our business, results of operations and financial condition.
OUR BUSINESS WILL SUFFER IF OUR BANANAGRAM IS PERCEIVED TO BE SPAM
The market for email advertising in general is vulnerable to the negative public
perception associated with unsolicited email, known as "spam." We do not send
unsolicited email and we require that our affinity groups refrain from sending
it as well. However, public perception, press reports or governmental action
related to spam could reduce the overall demand for email advertising in general
and our "BananaGram service" in particular.
IF OUR AFFINITY GROUPS FAIL TO EFFECTIVELY PROMOTE THEIR SITES, OUR
REVENUES COULD SUFFER
Our business model is substantially dependent upon the promotional efforts of
our affinity groups. For example, if our groups do not prominently display the
availability of their sites to make sales or do not work with us to create
promotional offers that are attractive and understandable to the members of the
affinity groups, their promotions may not be successful, and as a result, we may
not be successful. We cannot assure present or potential investors that our
affinity groups will allocate sufficient technical resources and promotional
budgets and efforts to make regular sales through their sites and other
promotions successful. If our groups' sales programs are not successful, our
revenues could suffer.
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OUR BUSINESS WILL SUFFER IF ONLINE REWARDS PROGRAMS ARE NOT
WIDELY ACCEPTED BY INTERNET USERS
Our success depends in part on the continued growth and acceptance of online
rewards programs. If online rewards programs are not widely embraced by internet
users, our business will suffer. Although loyalty and rewards programs have been
used extensively in conventional marketing and sales channels, they have only
recently begun to be used online. We cannot assure you that online programs will
continue to be accepted and that we can continue to offer attractive promotions
and satisfied members.
CREDIT CARD FRAUD COULD CAUSE US LOSSES IN THE FUTURE
Under current credit card practices, a merchant is liable for fraudulent credit
card transactions when that merchant does not obtain a cardholder's signature,
as is the case with the transactions we process. We may not be able to
adequately control fraudulent credit card transactions.
WE FACE INTENSE COMPETITION, AND THE FAILURE TO COMPETE
EFFECTIVELY COULD ADVERSELY AFFECT OUR MARKET SHARE AND
RESULTS OF OPERATIONS
We face intense competition from both traditional and online retailing
businesses. We expect competition to increase due to the lack of significant
barriers to entry for online business generally. As we expand the scope of our
product and service offerings, we may compete with a greater number of companies
across a wide range of retailing services. Our ability to generate significant
revenue from sales will depend on our ability to differentiate ourselves through
the goods and prices we provide and the revenues we generate for affinity
groups. Rewards providers are also a critical element of our business. The
attractiveness of our program to current and potential members and affinity
groups depends in large part on the attractiveness of the rewards that we offer.
Currently, several companies offer competitive online products or services,
including MyPoints.com, CyberGold and Netcentives. We also expect to face
competition from established online portals and community web sites that engage
in direct marketing and loyalty point programs, as well as from traditional
advertising agencies and direct marketing companies that may seek to offer
online products or services.
Many of our current competitors and potential new competitors have longer
operating histories, greater name recognition, larger customer bases and
significantly greater financial, technical and marketing resources than we do.
These advantages may allow them to respond more quickly to new or emerging
technologies and changes in customer requirements. It may also allow them to
engage in more extensive research and development, undertake more far-reaching
marketing campaigns, adopt more aggressive pricing policies, and make more
attractive offers to potential employees, strategic partners and advertisers.
In addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their products or services to address the needs of our prospective
advertisers and advertising agency customers.
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As a result, it is possible that new competitors may emerge and rapidly acquire
significant market share. Increased competition may result in price reductions,
reduced gross margins and loss of our market share. We may not be able to
compete successfully, and competitive pressures may materially and adversely
affect our business, results of operations and financial condition. See
"Business -- Competition."
WE DEPEND ON THE SERVICES OF OUR EXECUTIVE OFFICERS TO MANAGE
OUR GROWTH, AND THERE IS NO ASSURANCE WE CAN RETAIN THEIR SERVICES
Our future success depends on the continued service of our key senior
management, David Saltrelli, our President and Chief Executive Officer, and
Peter Schuster, our Secretary and Treasurer. The loss of either of these persons
could have a material adverse effect on our business. We do not have either
employment contracts with or key-person insurance on any of our employees.
Our success depends on our ability to attract, retain and motivate highly
skilled employees. Competition for employees in our industry is intense. We may
be unable to retain our key employees or to attract, assimilate and retain other
highly qualified employees in the future. We anticipate difficulty from time to
time in attracting the personnel necessary to support the growth of our business
in the future.
WE DEPEND UPON THIRD PARTY SOFTWARE
We depend on third-party software to track performance and to invoice customers.
We expect to continue to depend on thirty-party software in the future. We will
be obligated to integrate any third-party technology we license in the future
into our technology and services. Although we believe that alternative sources
for comparable software are available, any failure to obtain and maintain the
rights to use such software would have a material adverse effective on our
operations.
We also are dependent upon third parties to provide maintenance to our Internet
site and to others to provide us with the necessary access to the Internet with
sufficient capacity and bandwidth so that our Store can properly function and
remain "online." Any restrictions or interruption in our connection to the
Internet may cause significant revenue loss.
WE ARE VULNERABLE TO SYSTEM FAILURES WHICH COULD CAUSE
INTERRUPTIONS OR DISRUPTIONS IN OUR SERVICE
Our success depends on the capacity, reliability and security of our networking
hardware, software and telecommunications infrastructure. The hardware
infrastructure on which the NetMaximizer system operates is housed at Yahoo!. In
addition, we maintain our own hardware and also rely on Network 2001, Inc. for
hardware support. Despite precautions taken by us and the host of our Web site,
our system is susceptible to natural and man-made disasters such as earthquakes,
fires, floods, power loss and vandalism. Telecommunications failures, computer
viruses, electronic break-ins or other similar disruptive problems could
adversely affect the operation of our systems. Any such technical failure or
security problems could harm our
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business, financial condition and results of operations. Our insurance policies
may not adequately compensate us for any losses that may occur due to any
damages or interruptions in our systems. We could be required to make capital
expenditures in the event of damage. We do not currently have fully redundant
systems.
Periodically, we may experience unscheduled system downtime which may result in
our web site being inaccessible to members, or we may experience slow response
times which may result in decreased traffic to our web site. If these problems
arise, it could materially and adversely affect our business, results of
operations and financial condition.
OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO KEEP PACE WITH RAPID
TECHNOLOGICAL CHANGES IN OUR INDUSTRY
Our market is characterized by rapidly changing technologies, frequent new
product and service introductions, short development cycles and evolving
industry standards. The recent growth of the internet and intense competition in
our industry exacerbate these market characteristics. The introduction of
products and services embodying new technologies, the emergence of new industry
standards and changing consumer needs and preferences could render our existing
services obsolete and unmarketable. Our future success will depend in part on
our ability to respond effectively to rapidly changing technologies, industry
standards and customer requirements by adapting and improving the performance
features and reliability of our services. We may experience technical
difficulties that could delay or prevent the successful development,
introduction or marketing of new products and services. In addition, any new
enhancements to our products and services must meet the requirements of our
current and prospective users. We may experience technical difficulties that
could delay or prevent the successful development, introduction or marketing of
new products and services. We could incur substantial costs to modify our
services or infrastructure to adapt to rapid technological change.
CONTINUED DEVELOPMENT AND USE OF THE INTERNET INFRASTRUCTURE IS CRITICAL TO
OUR ABILITY TO OFFER OUR SERVICES
Our affinity groups and their members depend on internet service providers for
access to our web site. Internet service providers and web sites have
experienced significant outages in the past, and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
If outages or delays occur frequently in the future, internet usage, as well as
electronic commerce and the usage of our products and services, could grow more
slowly or decline, and this could have an adverse effect on our business.
A number of factors may inhibit internet usage, including inadequate network
infrastructure, security concerns, inconsistent quality of service, and lack of
availability of cost-effective, high-speed service. If internet usage grows, the
internet infrastructure may not be able to support the demands placed on it by
this growth and its performance and reliability may decline.
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FUTURE REGULATION OF THE INTERNET COULD AFFECT OUR OPERATIONS
Laws and regulations that apply to the internet may become more prevalent in the
future. The laws governing the internet and email services remain largely
unsettled. There is no single governmental body overseeing our industry, and
many state laws that have been enacted in recent years have different and
sometimes inconsistent application to our business.
The governments of foreign countries may also attempt to regulate electronic
commerce. New laws could dampen the growth in use of the internet generally and
decrease the acceptance of the internet as a commercial medium. In addition,
existing laws such as those governing intellectual property and privacy may be
interpreted to apply to the internet. In the event that foreign governments, the
federal government, state governments or other governmental authorities adopt or
modify laws or regulations relating to the internet, our business, results of
operations and financial condition could be materially and adversely affected.
In 1998, the United States government enacted a three-year moratorium
prohibiting states and local governments from imposing new taxes on electronic
commerce transactions. Upon expiration of this moratorium, if it is not
extended, states or other governments might levy sales or use taxes on
electronic commerce transactions. An increase in the taxation of electronic
commerce transactions might also make the internet less attractive for consumers
and businesses.
WE FACE RISKS ASSOCIATED WITH THIRD PARTY CLAIMS AND PROTECTION OF
OUR INTELLECTUAL PROPERTY RIGHTS, AND ANY LITIGATION RELATING TO
INTELLECTUAL PROPERTY RIGHTS COULD HARM OUR BUSINESS
Our business activities may infringe upon the proprietary rights of others, and
other parties may assert infringement claims against us. An adverse
determination in any litigation of this type could require us to make
significant changes to the structure and operation of our affinity sales or
online rewards program, attempt to design around a third party's patent, or
license alternative technology from another party. Implementation of any of
these alternatives could be costly and time consuming, and might not be
possible. Accordingly, an adverse determination in any litigation that might
ensue between a third party and us could have a material adverse effect on our
business, results of operations and financial condition. In addition, any
intellectual property litigation, even if successfully defended, would result in
substantial costs and diversion of resources and management attention and could
therefore have a material adverse effect on our business, results of operations
and financial condition.
Our success and ability to compete depends on our internally developed
technologies and trademarks, which we seek to protect through a combination of
patent, copyright, trade secret and trademark laws. Despite actions we take to
protect our proprietary rights, it may be possible for third parties to copy or
otherwise obtain and use our proprietary information without authorization or to
develop similar technology independently. In addition, legal standards relating
to the validity, enforceability and scope of protection of proprietary rights in
internet-related businesses are uncertain and still evolving. We cannot give any
assurance regarding the future viability or value of any of our proprietary
rights. In addition, we cannot give any assurance that the steps taken by us
will prevent misappropriation or infringement of our
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proprietary information. Any infringement or misappropriation, should it occur,
could have a material adverse effect on our business, results of operations and
financial condition. See "Business -- Intellectual Property."
FAILURES RELATED TO YEAR 2000 WHICH COULD
ADVERSELY AFFECT OUR BUSINESS
The costs we have incurred and expect to incur related to Year 2000 compliance
have not been material to our business, results of operations or financial
condition. In the event that our assessment of our Year 2000 readiness is
inaccurate, we could be required to expend substantial resources to remedy any
unanticipated Year 2000 problems. Costs associated with unanticipated Year 2000
problems and difficulties in remedying these problems by year-end could have a
material adverse effect on our business, results of operations and financial
condition.
The most likely Year 2000 failure scenario attributable to a supplier or
customer is a systemic failure beyond our control or the supplier's or
customer's immediate control, such as a prolonged data communication,
telecommunications or electrical failure. A failure of this sort could prevent
members from accessing our web site and prevent us from operating our business.
The primary business risks in the event of a failure of this type would include
lost advertising revenues, increased operating expenses and loss of members. Any
of these occurrences could have a material adverse effect on our business,
results of operations and financial condition.
SUBSTANTIAL CONTROL WILL REMAIN WITH OUR MANAGEMENT AND MAJOR
STOCKHOLDERS AND THIS COULD DELAY OR PREVENT A CHANGE OF CONTROL
As of November 27, 1999, our executive officers, directors and 5% stockholders
together beneficially owned approximately 64.83% of our outstanding common
stock. These stockholders, if they vote together, will retain substantial
control over matters requiring approval by our stockholders, such as the
election of directors and approval of significant corporate transactions. This
concentration of ownership might also have the effect of delaying or preventing
a change in control. See "Security Ownership of Certain Beneficial Owners and
Management."
FUTURE SALES OF OUR COMMON STOCK COULD CAUSE THE PRICE OF
OUR SHARES TO DECLINE
As of November 27, 1999, we have 39,153,006 shares of common stock outstanding.
Of these shares, 21,181,000 are transferable without restriction or registration
under the Securities Act of 1933, or pursuant to the volume and other
limitations of Rule 144 promulgated under the Securities Act. An offering of a
substantial number of shares of our common stock into the public market could
cause its price to decline. This is particularly the case because a substantial
portion of our outstanding shares of common stock are held by persons who
purchased their shares at prices significantly below the current market price.
As of November 27, 1999, 105,006 shares of common stock are subject to lock-up
agreements between the holders of those shares and us. Under those agreements,
the holders have agreed not
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to offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of their common stock until a managing underwriter of a public offering
releases the holders from the lockup agreements. Following the release, those
shares subject to the lock-up agreements will become available for immediate
resale in the public market subject, in some instances, to the volume and other
limitations of Rule 144.
As of November 27, 1999, we had outstanding options to purchase an aggregate of
7,809,600 shares of common stock which were granted under our stock option plan.
Holders of such options, once those options are vested, are likely to exercise
them when, in all likelihood, we could obtain additional capital on terms more
favorable than those provided by the options. Further, while options are
outstanding, our ability to obtain additional financing on favorable terms may
be adversely affected.
WE MUST COMPLY WITH THE OTC BULLETIN BOARD ELIGIBILITY RULE
In January of 1999, the SEC granted approval to the NASD OTC Bulletin Board
eligibility Rule 6530 which requires a company listed on the OTC Bulletin Board
to be a reporting company and current in its reports filed with the SEC. As a
result of this rule change, we have filed this registration statement in order
to become a full reporting company. The SEC reporting requirements will add
additional expenses to our operations, including the expense of filing this
registration statement and preparing annual and quarterly reports. We will be
submitting an application to Nasdaq to have our common stock traded on The
Nasdaq SmallCap Market. If this registration statement becomes effective and our
application with the The Nasdaq SmallCap Market is approved prior to March 24,
2000, we anticipate that our common shares will be traded on the The Nasdaq
SmallCap Market. We cannot, however, assure you that either of these events will
occur in the required timeframe. If they do not happen, we may lose our listing
on the OTC Bulletin Board, which may have an adverse impact upon the market for
our common stock.
THERE IS NO ASSURANCE THAT A PUBLIC MARKET FOR OUR COMMON STOCK
WILL CONTINUE TO DEVELOP
There has only been a limited public market for our common stock. We cannot
predict the extent to which investor interest in our common stock will lead to
the development of a trading market or how liquid that market might become once
we become admitted to the SmallCap Market, if we do become admitted for
membership. The present market for the shares on the OTCBB may not be indicative
of prices that will prevail in the SmallCap trading market.
OUR STOCK PRICE COULD BE VOLATILE FOLLOWING ADMISSION
TO THE SMALLCAP MARKET AND SHAREHOLDERS MAY NOT BE ABLE TO
SELL THEIR SHARES AT A PROFIT
The stock market has experienced significant price and volume fluctuations, and
the market prices of technology companies, particularly internet-related
companies, have been highly volatile. Investors may not be able to resell their
shares at or above the current, OTCBB price in the event of our admission to the
SmallCap Market. In addition, our results of operations during
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future fiscal periods might fail to meet the expectations of stock market
analysts and investors. This failure could lead the market price of our common
stock to decline and cause us to become the subject of securities class action
lawsuits.
WE DO NOT INTEND TO PAY FUTURE CASH DIVIDENDS
We currently do not anticipate paying cash dividends on our common stock at any
time in the near future. Any decision to pay dividends will depend upon our
profitability at the time, cash available and other factors. We may never pay
cash dividends or distributions on our common stock.
Item 2. Financial Information.
- ------------------------------
Selected Financial Data
The following table sets forth selected financial data regarding our
consolidated operating results and financial position. The data has been derived
from our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States
("US GAAP"). See "Management's Discussion and Analysis of Financial Condition
and Results of Operation." The following selected financial data is qualified in
its entirety by, and should be read in conjunction with, the consolidated
financial statements and notes thereto included elsewhere in this Registration
Statement.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
(Unaudited)
1999 1998 1998 1997 1996 1995
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C>
Net Revenue 711 nil nil nil nil nil
General & Administrative Expenses 6,375,232 900 900 nil 5,000 nil
Net Loss 6,374,805) (900) (900) nil (5,000) nil
Net Loss per Share (.49) nil nil nil nil nil
September 30, December 31,
(Unaudited)
1999 1998 1998 1997 1996 1995
$ $ $ $ $ $
Total Assets 533,324 nil nil nil nil nil
Total Liabilities 36,283 900 900 nil nil nil
Shareholders' Deficiency 497,041 (900) (900) nil nil nil
Long-Term Obligations nil nil nil nil nil nil
Cash Dividends nil nil nil nil nil nil
</TABLE>
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Management's Discussion and Analysis of Financial Condition
and Results of Operation
The information contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operation contains "forward looking
statements." Actual results may materially differ from those projected in the
forward looking statements as a result of certain risks and uncertainties set
forth in this report. See Note Regarding Forward Looking Statements. Although
management believes that the assumptions made and expectations reflected in the
forward looking statements are reasonable, there is no assurance that the
underlying assumptions will, in fact, prove to be correct or that actual future
results will not be different from the expectations expressed in this
Registration Statement.
Overview
We were incorporated in the State of Florida on June 29, 1995 under the name
"RLN Realty Associates, Inc." with an authorized share capital of 7,500 shares
of common stock with a $1.00 par value per share. On June 9, 1998, we filed
Articles of Amendment to amend our Articles of Incorporation to increase our
authorized share capital to 50,000,000 shares of common stock with a $.001 par
value per share. In addition to increasing our authorized capital, we authorized
a split of our 5,000 outstanding shares of common stock on a 200-for-one basis
effective on June 9, 1998.
We were for the most part inactive through February 1999. On March 1, 1999, we
amended our Articles of Incorporation to change our name to "Netmaximizer.com,
Inc." On March 8, 1999, David Saltrelli and Peter Schuster each purchased
2,430,000 shares of our common stock as part of a 12,000,000 share offering (see
"Recent Sales of Unregistered Securities), became our President and Secretary
(respectively) and began to implement our current business strategy.
On October 19, 1999, we authorized a split of our 13,049,170 then-outstanding
shares of common stock on a 3-for-1 basis effective as of November 1, 1999.
Our primary objective will be to provide an internet e-commerce store available
to affinity groups which will provide products at reduced prices coupled with
incentives.
During the next twelve months, we intend to increase the number of affinity
groups which become members of our Store.
Results of Operations
We are a development stage company. Prior to March 1999, we had no active
business operations and therefore, no material or substantive transactions or
results of operations. As a result, no meaningful comparison can be made between
our present operations and our operations during the years ended December 31,
1994 to December 31, 1998.
26
<PAGE>
Nine Month Period Ended September 30, 1999 Compared to December 31, 1998
Our total assets were approximately $533,000 at September 30, 1999 (nil at
December 31, 1998). The increase was due to our investment of approximately
$2,000 primarily in office equipment and computer servers, and our $350,000
investment (paid $62,000 in cash on our behalf by certain subscribing
shareholders and the balance by our issuance of 18,885 shares of our common
stock) in the first phase of development of our web site with Network 2001. Our
cash and short-term investments were approximately $181,000 at September 30,
1999 (nil at December 31, 1998). Our current liabilities were approximately
$36,000 at September 30, 1999 compared to approximately $900 at December 31,
1998. This increase was a result of fees for professional services and other
operating costs.
For the nine months ended September 30, 1999, we had revenue from operations of
$711. For the nine months ended September 30, 1999, our general and
administrative expenses increased to approximately $6,375,000 from $900 at
December 31, 1998. This increase was primarily due to the expense recorded as a
result of our grant to non-employees of options to purchase 1,357,768 shares of
our common stock. These grants were compensation for consultant services
rendered in connection with the web site design, sales platform design, affinity
group program design, and other similar services. We paid cash salaries of
$10,000 to our President and Secretary on September 30, 1999. We intend to
continue to pay a monthly salary to our President of $10,000 and to our
Secretary of $8,000 going forward.
During the nine months ended September 30, 1998, we had no active business
operations. As a result, we had no material transactions or results of
operations that require a comparison to our operations during the quarter ended
September 30, 1999.
Liquidity and Capital Resources
Since we began implementing our current business plan in March 1999 through
September 30, 1999, we have raised an aggregate of $279,000 in cash through
private placements. During this period, we have used net cash of approximately
$35,000, primarily for professional fees and expenses, and overhead. Also during
this period, $62,000 of the aggregate proceeds were remitted on the Company's
behalf by the investors to the consultant for web site design. We received no
cash from our operations during this period.
As of September 30, 1999, we have approximately $181,000 in cash, which we
believe will be sufficient to satisfy our cash requirements through December 31,
1999. We will need to raise additional financing to fund our operations after
December 31, 1999. We intend to raise additional capital during the fourth
quarter 1999 to meet our anticipated cash needs for the year 2000. We plan to do
so through additional sales of unregistered shares of our common stock conducted
under exemptions provided by the Securities Act or by the rules of the SEC.
There can be no assurance that we will be able to raise additional capital as
needed and in the time required. If we are unable to meet our capital
requirements, our implementation plans could be severely and adversely impacted,
and it is questionable whether we could continue as a going concern.
27
<PAGE>
During the nine months ended September 30, 1999, we spent approximately $2,000
for office equipment and computer servers and had no cash flows from investing
activities.
We estimate that our cash requirements for the remainder of fourth quarter of
1999 will be approximately $60,000 per month, principally for professional
services and office expenses. We anticipate that our cash requirements will
increase to approximately $100,000 to $120,000 per month in the first quarter of
2000 as a result of salaries, professional fees and related expenses associated
with the anticipated expansion of the number of affinity group portals using our
Store. There can be no assurance that our actual expenditures for such periods
will not exceed our estimated operating budget. Actual expenditures will depend
upon a number of factors, some of which are beyond our control, including, among
other things, timing of SEC approval of this registration statement, reliability
of the assumptions of management in estimating cost and timing, and the time
expended by professionals and consultants and fee associated therewith.
We anticipate that our cash requirements will decrease as income is generated by
operations. However, there can be no assurance that we will generate sufficient
revenues from our operations to operate a commercially viable business or to
earn a profit.
Recent Financing
Our business activities and operations have been partially funded to date
through issuance of shares of our common stock. The following transactions had
been completed as of October 31, 1999:
<TABLE>
<CAPTION>
Number of Total Price of
Summary of Transactions Shares Shares($)
<S> <C> <C>
Balance of Netmaximizer.com at
December 31, 1998 1,000,000 5,000
Issued for cash at $.001 per share 12,000,000 12,000
Issued for cash at $ 3.125 per share 16,000 50,000
Issued for cash at $14.531 per share 1,170 17,000
Issued for cash at $15.250 per share 13,115 200,000
Issued for cash at $16.375 per share 1,832 30,000
Issued for services at $15.250 per share 18,885 288,000
TOTAL 13,051,002 $ 602,000
</TABLE>
Accordingly, following the stock split on November 1, 1999, we had a total of
39,153,006 shares of common stock outstanding.
28
<PAGE>
Year 2000 Compliance
The Year 2000 issue arises with the change in century and the potential
inability of information systems to correctly "rollover" dates to the new
century. To save on computer storage space, many systems were programmed with a
two-digit century (i.e. December 31, 1999 would appear as 12/31/99) assuming
that all years would be part of the 20th century. On January 1, 2000, systems
with this programming will default to 01/01/1900 instead of 01/01/2000, and
calculations using or reporting the date will not be correct and errors will
arise (the "Year 2000 Issue"). To prevent this from occurring, information
systems need to be updated to ensure they recognize dates during and after the
Year 2000.
We are exposed to a risk that certain aspects of our business will fail or be
impaired as a result of internally operated or externally contracted hardware or
software systems and services not being able to correctly "rollover" dates to
the new century. The risk stems from our reliance on certain hardware, software
and services to carry out the daily operation of our business. The exposure may
result from, amongst other things, the use of computers, general software and
servers for carrying out the daily operation of our business, as well as for
office purposes and data storage; connections to and use of the services of
Internet Service Providers and telephone companies for carrying out the daily
operation of our business, we well as for office purposes and customer and
investor relations; and the software underlying the operation of the web site.
We have only been operating and developing our business during the last six
months and the office hardware, administrative general software, custom
developed special purpose software, servers and services of Internet Service
Providers and telephone companies have been acquired during this period. As a
result, and in consultation with the suppliers of this hardware, software and
services, we believe the related systems that we intend, directly or indirectly,
to use in our business are Year 2000 compliant. Our due diligence also included
an evaluation of supplier provided technology and the implementation of new
policies to require our suppliers to confirm that they have disclosed and will
correct Year 2000 compliance issues. Although we are relying primarily on
systems developed with current technology and on systems designed to be Year
2000 compliant, we may have to replace, upgrade or reprogram certain systems to
ensure that all interfacing technology will be Year 2000 compliant when running
jointly.
In the event that we incur expenses associated with resolving Year 2000
compliance issues, we intend to expense the operating costs as they are incurred
and capitalize the capital costs as they are incurred. However, our purchases of
hardware and general and specific purpose software have been relatively recent,
and the more expensive of the hardware and general and specific software items
that we have purchased are covered under warranties that will extend over the
rollover period to January 1, 2000. As a result, we do not expect to incur any
major operating or capital expenditures that would have a material impact on our
financial condition or results of operations.
Although we believe that our hardware and general and specific purpose software
applications will be Year 2000 compliant, there can be no assurance until the
Year 2000 occurs that all systems will function adequately.
29
<PAGE>
We do not currently anticipate any disruption in our operations as the result of
the Year 2000 issue. We do not have any information concerning the Year 2000
compliance status of our suppliers and customers that would adversely affect our
operations. Any failure of our material systems, our vendors' material systems
or the Internet to be Year 2000 compliant may have a material adverse effect on
our business and results of operations.
New Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board or FASB issued Statement
of Financial Accounting Standards SFAS No. 128, "Earnings per Share." This
Statement establishes standards for computing and presenting earnings per share
("EPS") and applies to all entities with publicly-held common shares or
potential common shares. This Statement replaces the presentation of primary EPS
and fully-diluted EPS with a presentation of basic EPS and diluted EPS,
respectively. Basic EPS excludes dilution and is computed by dividing earnings
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Similar to fully diluted EPS, diluted EPS reflects
the potential dilution of securities that could share in the earnings. The
adoption of SFAS No. 130 did not have a material effect on our reported EPS
amounts.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
which is effective for fiscal years beginning after December 15, 1997. SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components in financial statements. The adoption of SFAS No. 130 did not
have a material effect on our financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which is effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 establishes standards for the
way a public business enterprise reports certain information about operating
segments, and discloses enterprise-wide information about its products and
services, activities in different geographic areas, and its reliance on major
customers. The adoption of this Statement did not have a material effect on our
financial statements.
Statement of Financial Standards No. 132, "Employees' Disclosures About Pension
and Other Post-retirement Benefits," standardizes the disclosure requirements
for pensions and other post-retirement benefits. This statement requires
additional information on changes in benefit obligations and fair values of plan
assets. It revises prior standards and is effective for years beginning after
December 15, 1997. Because the Company does not currently have any significant
employee benefit plans nor intends to initiate any in the near-term, there
should be no impact on its financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
requires companies to recognize all derivatives contracts as either assets or
liabilities in the balance sheet and to measure them at
30
<PAGE>
fair value. If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of the gain
or loss recognition on the hedging derivative with the recognition of (i) the
changes in the fair value of the hedged asset or liability that are attributable
to the hedged risk or (ii) the earnings effect of the hedged forecasted
transaction. For a derivative not designated as a hedging instrument, the gain
or loss is recognized in income in the period of change. On June 30, 1999 the
FASB issued SFAS No. l 137 "Accounting for Derivative Instruments and Hedging
Activities Deferred as of the Effective Date of FASB Statement No. 133." SFAS
No. 133, as amended by SFAS 137, is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. Historically, the Company has not entered
into derivatives contracts to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new standard on January
1, 2000 to affect its financial statements.
Quantitative and Qualitative Disclosures About Market Risks
None.
Item 3. Properties.
- -------------------
We currently lease our principal business office at 4400 North Federal Highway,
Boca Raton, Florida pursuant to a lease that expires on September 30, 2000. The
monthly rent payments under the lease are approximately $1,900. We also pay for
a pro rata share of common area expenses such as insurance, cleaning services,
maintenance related to the space we rent. Our pro rata share of the common area
expenses is currently approximately $900 per month.
Other than described above, we do not presently own or lease any other real
property.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- -----------------------------------------------------------------------
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of November 27, 1999 by: (i)
each person (including any group) known to us to own more than five percent (5%)
of any class of our voting securities, (ii) each of our directors and officers,
and (iii) officers and directors as a group. Unless otherwise indicated, the
shareholders listed possess sole voting and investment power with respect to the
shares shown.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percentage of Class (1)
-------------- ---------------- -------------------- -------------------
<S> <C> <C> <C>
Common Stock David Saltrelli 9,105,648(2) 22.23%
135 Yacht Club Way, #304
Hypoluxo, Fl 33462
31
<PAGE>
Common Stock Peter Schuster 9,105,648(2) 22.23%
7491 N. Federal Highway, #262
Boca Raton, FL 33487
Common Stock Steven Howell 4,371,303(3) 10.72%
437 West Bockman Way
Sparta, TN 38583
Common Stock Shadow Financial, Inc. 3,795,000 9.69%
18 Mopan Street
Belize City, Belize C.A.
Common Stock Paladin Investments, Inc. 2,406,000 6.15%
25 Regent Street
Belize City, Belize, C.A.
Common Stock Officers and Directors as a Group 18,211,296 42.57%
</TABLE>
(1) Based on an aggregate 39,153,006 shares outstanding as of November 27,
1999.
(2) Includes 1,815,648 shares of common stock for Mr. Saltrelli and 1,815,648
shares of common stock for Mr. Schuster that may be purchased pursuant to
the exercise of vested stock options.
(3) Includes 56,655 shares of common stock owned by Network 2001, Inc., a
corporation solely owned by Steven Howell. Also includes 1,614,648 shares
of common stock that may be purchased by Mr. Howell pursuant to the
exercise of vested stock options.
Changes in Control
We are not aware of any arrangement that might result in a change in control in
the future.
Item 5. Directors and Executive Officers.
- -----------------------------------------
Directors and Officers
Both of our directors are elected annually by the shareholders and hold office
until the next annual general meeting of shareholders or until their successors
are duly elected and qualified, unless they sooner resign or cease to be
directors in accordance with our Articles and Bylaws. Our executive officers are
appointed by and serve at the pleasure of our Board of Directors.
32
<PAGE>
As of November 27, 1999, the following persons were our directors and/or
executive officers:
Name and present office held Director and
Officer since
David Saltrelli, President, Director March 1999
Peter Schuster, Secretary, Treasurer, Director March 1999
The following is a brief biographical information on each of the officers and
directors of listed:
DAVID SALTRELLI. Age 51. David Saltrelli holds a Masters in Business
Administration (MBA) from the Simon School of Business at the University of
Rochester where he majored in Finance & Economics. After completing four years
in the United States Navy, David went on to become a leading stock and commodity
broker for the Investment Firms of Merrill Lynch and Prudential Bache where he
pioneered computerized commodity trading. He went into the Real Estate
Development business in 1981 when he became President of Pantra Investments and
quickly became one of the largest Developers of Vacation Timeshare Property in
the United States with sales totaling over $50,000,000. Realizing the need for
up to the minute marketing and sales techniques David went on to build a very
successful direct mail and premium incentive company that serviced many of the
Fortune 500 companies. David's companies employed over 200 full time employees
that concentrated in traffic building for over 1,000 companies nationwide. His
newest endeavors have been focused on delivering downloadable online premiums
and incentives that can be used to generate large amounts of traffic (hits) to
web sites on the Internet. He brings his over 30 years of direct marketing to
Netmaximizer.com, Inc. and he concentrates his efforts in building vast amounts
of online traffic for the company and linking webmasters as well.
PETER SCHUSTER. Age 53. Peter Schuster, subsequent to completing undergraduate
and graduate degrees in Rochester, New York, began a career in the
telecommunications industry during which he held numerous managerial positions
at the largest independent operating telco including Customer Service Manager,
Operations Manager, and finally Personnel Manager during which he was
responsible for all corporate employment, human resource planning, management
training, and organization development. As a business leader, Schuster served as
a director of the Monroe County Industrial Development Council where he was
responsible for the approval of all bank submitted proposals for commercial
development in Monroe County (Rochester, N.Y.) applying for tax exempt revenue
bonds. As an independent real estate developer, completing several commercial
and residential rehab projects, Schuster received the "Best Rehab Conversion"
award for historical preservation properties, and subsequently developed
numerous commercial properties within the Interval Ownership industry. He brings
years of corporate organizational and human resource skills along with
entrepreneurial development and marketing background to Netmaximizer.com, Inc.
and focuses principally on building and managing the human resource
infrastructure.
33
<PAGE>
Other Information
The Board of Directors is elected by our shareholders. Currently, both of our
Directors review significant developments affecting our company and act on
matters requiring Board approval. Although the Board of Directors may delegate
many matters to others, it reserves certain powers and functions to itself.
Neither of our directors or executive officers is a party to any arrangement or
understanding with any other person pursuant to which he was elected as a
director or officer.
Neither of our directors or executive officers has any family relationship with
the other officer or director.
A condition to our admission to trading on The Nasdaq SmallCap market is
changing our corporate governance to include two independent directors. We
presently have no agreements with anyone to serve as an independent director and
can offer no assurance that we will obtain the agreement of any individual to
serve as an independent director.
FTC Injunction
In June 1993, following the filing of a complaint by the FTC, David Saltrelli,
our President and director, (and other individuals and entities not affiliated
with Netmaximizer.com, Inc.) entered into a Stipulated Permanent Injunction and
Final Judgment with the FTC. The Injunction was entered by the United States
District Court for the Middle District of Florida, Orlando Division. In the
proceedings leading up to the Injunction, Mr. Saltrelli denied all material
allegations contained in the FTC's complaint. He agreed to the injunction,
without trial or adjudication of any issue of law or fact, to resolve all
matters in dispute between him and the FTC.
The Injunction enjoins Mr. Saltrelli, as well those acting with him or
participating in his activities, from supplying travel-related services and
products for use in telemarketing and from assisting in the telemarketing of any
travel-related product or service. The Injunction also states that, in
connection with the advertising, promotion, marketing, distribution, offering
for sale or sale of travel-related products or services (including premiums and
incentives), Mr. Saltrelli and the related parties are permanently enjoined
from, among other things, failing to disclose or misrepresenting in any manner
any restriction, limitation or condition on any consumer's use of a
travel-related product or service, or failing to provide to each consumer who
obtains such travel-related product or service the exact trip, product or
service as was represented to the consumer.
Because Netmaximizer.com, Inc. provides travel related premiums and incentives
to affinity group members to promote the sale of products, the Injunction
requires that the prohibited activities be scrupulously avoided. If the FTC were
to determine that Mr. Saltrelli, as our President, or Netmaximizer.com itself
had violated the terms of the Injunction by engaging in that prohibited conduct,
it may seek to enforce the Injunction directly against us.
34
<PAGE>
The Injunction gives the FTC the right to access during normal business hours
the premises of any businesses which Mr. Saltrelli is involved in, including the
offices of Netmaximizer.com, Inc. Until June of 2000, Mr. Saltrelli is required
to disclose the existence and contents of the Injunction to any of his
employees, agents, independent contractors, distributors or sales persons
engaged in the marketing, distribution or sale of any travel-related products or
services or premiums or incentives. A copy of the Injunction is filed as an
exhibit to this registration statement, and this description of the Injunction
is qualified in its entirety by reference to the Injunction.
IRS Tax Liens
The Internal Revenue Service has filed several federal tax liens against David
Saltrelli relating to unpaid federal income taxes in the aggregate amount of
approximately $950,000 plus penalties. Except for the foregoing, neither of our
officers or directors have been involved in the past five years in any of the
following: (1) bankruptcy proceedings; (2) subject to criminal proceedings or
convicted of a criminal act; (3) subject to any order, judgment or decree
entered by any court limiting in any way his or her involvement in any type of
business, securities or banking activities; or (4) subject to any order for
violation of federal or state securities laws or commodities laws.
Item 6. Executive Compensation.
- -------------------------------
Each of our President and Secretary received a cash salary payment of $10,000 on
September 30, 1999. Our intent going forward is to pay to our President a
monthly salary of $15,000 and to our Secretary a monthly salary of $12,000, as
was done at the end of October, 1999. The following table contains information
concerning the grant of stock options to our two executive officers, Peter
Schuster and David Saltrelli, on April 5, 1999. No grants of stock options to
executive officers and directors were made prior to April 5, 1999. Further,
because there were no records of incidental expenses that may have been incurred
by our executive officers, no reimbursement has been paid to either of them.
Accordingly, the sole compensation to our executive officers for salaries
foregone and unreimbursed (albeit unidentified and unspecified) expenses
incurred has been through the grant of options to purchase our common stock.
Our directors do not receive any salary for their services as directors or as
members of committees of the Board of Directors. Directors may also serve our
company in other capacities as an officer, agent or otherwise, and may receive
compensation for their services in such other capacity.
Stock Options
We reserved 2,603,200 shares of common stock for issuance pursuant to the 1999
Employee Stock Option Plan. On April 5, 1999, we granted stock options for
2,603,200 shares of common stock to our officers, employees and consultants. No
grants of stock options were made prior to April 5, 1999 and no stock
appreciation rights were granted to these individuals. The grants to consultants
were compensation for services rendered in connection with the web site design,
35
<PAGE>
sales platform design, affinity group program design, and other similar
services. Following the stock split on November 1, 1999, the number of shares
reserved and the number of options granted increased to 7,809,600.
We intend to register our plan under the Securities Act of 1933 after this
registration statement is declared effective.
Pursuant to the Plan, the following stock options were issued on April 5, 1999
to our executive officers. The table shows the hypothetical gains or "option
spreads" that would exist for the respective options. These gains are based on
assumed rates of annual compound stock price appreciation of five percent (5%)
and ten percent (10%) from the date the options were granted over the full term
of the options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS OPTIONS GRANTED EXERCISE PRICE APPRECIATION FOR
GRANTED T0 EMPLOYEES PRICE EXPIRATION OPTION TERM(4)
NAME (#)(1) (2) ($/SH)(3) DATE 5% 10%
---- ------ --- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
David A. Saltrelli.. 1,815,648 48.6% 2.00 04/05/04 $4,634,556 $ 7,310,298
Peter G. Schuster... 1,815,648 48.6% 2.00 04/05/04 $4,634,556 $ 7,310,298
--------- ----- ---------- -----------
TOTAL 3,631,296 97.2% $9,269,112 $14,620,596
========= ===== ========== ===========
</TABLE>
(1) Each of the options listed in the table is currently exercisable. The
initial grant was for options to purchase 605,216 shares. The number
indicated in the chart reflects the effect of our stock split. Each of the
options has a five-year term.
(2) Options were issued to purchase a total of 7,809,600 shares of our common
stock under our 1999 Employee Stock Option Plan. Of that, 4,073,304 were
issued to consultants.
(3) The exercise price is equal to the OTCBB closing price for shares of our
stock on April 4, 1999 ($6.00), adjusted for the stock split. The exercise
price may be paid in cash or by check or through a cashless exercise
procedure.
(4) The dollar amounts under these columns represent the potential tangible
value, before income taxes, of each option assuming that the market price of
the common stock appreciates in value from fair market value at the date of
grant to the end of the option term at five percent (5%) and ten percent
(10%) annual rates and therefore are not intended to forecast possible
future appreciation, if any, of the price of the common stock.
Employment and Consulting Agreements
We currently have no employment, consulting or other service contracts or
arrangements between us and our directors and/or executive officers.
36
<PAGE>
Item 7. Certain Relationships and Related Transactions.
- -------------------------------------------------------
Except for relationships and transactions that we have disclosed in other
sections of this registration statement, such as the ownership of our securities
and the development of our web site, none of our directors, executive officers,
holders of five percent (5%) of our outstanding shares of common stock, or any
associate or affiliate of such person, have, to our knowledge, had a material
interest, direct or indirect, during the three fiscal years ended December 31,
1996, 1997 and 1998 in any proposed transaction which may materially affect us.
Item 8. Legal Proceedings.
- --------------------------
Except for the Injunction and tax liens disclosed under Item 5 "Directors and
Executive Officers - Other Information" above, to the best of our knowledge,
Netmaximizer.com, Inc. is not subject to any active or pending legal proceedings
or claims against us or any of our properties. However, from time to time, we
may become subject to claims and litigation generally associated with any
business venture.
Item 9. Market Price of and Dividends on Registrant's Common Equity and Related
- -------------------------------------------------------------------------------
Shareholder Matters.
- --------------------
On June 18, 1998, our common stock was approved for trading on the OTCBB under
the symbol "RLNR" (reflecting our former name, RLN Realty Associates, Inc.). On
March 1, 1999, we changed our name to "Netmaximizer.com, Inc.", and our OTCBB
symbol was changed to "MAAX". The following table sets forth, for the periods
indicated, the range of the high and low bid quotations (as reported by NASD).
There were no trades of our securities on the OTCBB prior to the first quarter
1999.
The bid quotations set forth below, reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions:
OTCBB
1999 High Low
1st Quarter $12.00 $1.0625
2nd Quarter $13.50 $6.00
3rd Quarter $15.62 $7.00
As of November 27, 1999, there were 16 holders of record of our common stock.
We will lose our eligibility for quotation on March 24, 2000 unless this
registration statement is declared effective prior to that date and we are
current in our reporting obligations under the Securities Exchange Act of 1934,
as amended.
We intend to submit an application to Nasdaq to have our common stock traded on
The Nasdaq SmallCap Market. If this registration statement becomes effective and
our application with the
37
<PAGE>
The Nasdaq SmallCap Market is approved prior to March 24, 2000, we anticipate
that our common shares will be traded on The Nasdaq SmallCap Market. We cannot,
however, assure you that either of these events will occur in the required
timeframe.
We have not declared or paid any cash dividends on our common stock since our
inception, and our Board of Directors currently intends to retain all earnings
for use in the business for the foreseeable future. Any future payment of
dividends will depend upon our results of operations, financial condition, cash
requirements and other factors deemed relevant by our Board of Directors.
Item 10. Recent Sales of Unregistered Securities.
- -------------------------------------------------
In March of 1996, we initially issued 5,000 shares of common stock, $1.00 par
value per share out of an authorized share capital of 7,500 shares of common
stock. On June 9, 1998, we increased our authorized share capital from 7,500 to
50,000,000 shares of common stock with a $.001 par value per share. Pursuant to
the resolution authorizing the increase in authorized share capital, our board
of directors authorized a forward stock split that increased the number of
original shares on a 200-for-1 basis, resulting in 1,000,000 outstanding common
shares. The issuance of original shares was exempt from registration under the
provisions of Section 4(2) of the Securities Act of 1933, as amended. The
issuance of the original shares did not involve a public offering.
In March of 1999, we issued 12,000,000 shares of our common stock for $0.001 per
share to raise $12,000 in cash. This offering was made to ten subscribers and
was fully subscribed. The shares were issued to Paladin Investments, Shadow
Financial, Culrain Ltd, T. Howell, Denali Foundation, Specter Equity Ltd, Martin
Leigh, Exeter Management and Trading, Peter Schuster and David Saltrelli. The
offering was not underwritten. This sale was exempt from registration in
reliance upon Rule 504 under Regulation D promulgated under the Securities Act.
The aggregate offering price did not exceed $1,000,000, and the offering was
otherwise in compliance with Rules 501 and 502 promulgated under the Securities
Act.
In March of 1999, we issued 16,000 shares of our common stock for $3.125 per
share to raise $50,000 in cash. This offering was made to one subscriber, Ulrich
Grunenwald, and was fully subscribed. The offering was not underwritten. This
sale was exempt from registration in reliance upon Rule 504 under Regulation D
promulgated under the Securities Act. The aggregate offering price did not
exceed $1,000,000, and the offering was otherwise in compliance with Rules 501
and 502 promulgated under the Securities Act.
On September 27, 1999, we issued 1,170 shares of our common stock for $14.531
per share to raise $17,000 in cash. On September 30, 1999, we issued 13,115
shares of our common stock for $15.250 per share to raise $200,000 in cash. On
October 20, 1999, we issued 1,832 shares of our common stock for $16.375 per
share to raise $30,000 in cash. These offering were made to one subscriber,
Monavia, Ltd., and were fully subscribed. These offerings were not underwritten.
The sales were exempt from registration in reliance upon Section 4(2) of the
Securities Act since the offerings did not involve a public offering.
38
<PAGE>
Item 11. Descriptions of Registrant's Securities to be Registered.
- ------------------------------------------------------------------
Our authorized capital stock consists of 50,000,000 of common stock, par value
$.001 per share. As of November 27, 1999, there were 39,153,006 issued and
outstanding shares of our common stock. On November 27, 1999, there were 16
holders of record of common stock.
Each of our shareholders is entitled to one vote for each share of common stock.
All elections for directors are decided by plurality vote; all other questions
are decided by a majority vote except as may otherwise be provided by our
Articles of Incorporation or by the Florida General Corporation Law.
The holders of our common stock are not entitled to cumulative voting rights
with respect to the election of directors, and as a consequence, minority
shareholders will not be able to elect directors on the basis of their votes
alone. Our shareholders are entitled to receive ratably such dividends as may be
declared by our Board of Directors out of funds that are legally available to
pay such dividends.
In the event of a liquidation, dissolution or winding up of the company, our
shareholders are entitled to share ratably in all assets remaining after payment
of liabilities. Our shareholders have no preemptive rights and no right to
convert their common stock into any other securities. There are no redemption or
sinking fund provisions applicable to the common stock. All outstanding shares
of our common stock are fully paid and non-assessable
Item 12. Indemnification of Directors and Officers.
- ---------------------------------------------------
Our Bylaws require us to indemnify to the fullest extent permitted by law each
person that is empowered by law to indemnify. Our Articles of Incorporation
require us to indemnify to the fullest extent permitted by Florida law, each
person that we have the power to indemnify.
Florida law permits a corporation, under specified circumstances, to indemnify
its directors, officers, employees or agents against expenses (including
attorney's fees), judgments, fines and amounts paid in settlements actually and
reasonably incurred by them in connection with any action, suit, or proceeding
brought by third parties by reason of the fact that they were or are directors,
officers, employees or agents of the corporation, if such directors, officers,
employees or agents acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reason to believe their
conduct was unlawful. In a derivative action, i.e. one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers,
39
<PAGE>
employees or agents are fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Our Articles of Incorporation and Bylaws also contain provisions stating that no
director shall be liable to us or any of our shareholders for monetary damages
for breach of fiduciary duty as a director, except with respect to (1) a breach
of the director's duty of loyalty to the corporation or its shareholders, (2)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) liability under Florida law (for unlawful payment
of dividends, or unlawful stock purchases or redemptions) or (4) a transaction
from which the director derived an improper personal benefit. The intention of
the foregoing provisions is to eliminate the liability of our directors or our
shareholders to the fullest extent permitted Florida law.
40
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
Item 13. Financial Statements and Supplementary Data.
- ------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PAGE
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity (Deficiency) F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6-F-16
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Stockholders
Netmaximizer.com, Inc.
Fort Lauderdale, Florida
We have audited the accompanying balance sheets of Netmaximizer.com, Inc. (a
development stage enterprise) as of December 31, 1998 and 1997, and the related
statements of operations, stockholders' equity (deficiency), and cash flows for
each of the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Netmaximizer.com, Inc. as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2 to the
financial statements, the Company is subject to certain risks and uncertainties,
which conditions raise substantial doubt about the Company's ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
RACHLIN COHEN & HOLTZ LLP
Fort Lauderdale, Florida
October 29, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEETS
ASSETS
September 30, December 31,
1999 1998 1997
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Current Assets:
Cash $ 181,358 $ -- $ --
Property and Equipment 1,966 -- --
Website Design Costs 350,000 -- --
----------- ----------- -----------
Total assets $ 533,324 $ -- --
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable $ 36,283 $ 900 $ --
----------- ----------- -----------
Commitments, Contingencies and Subsequent Events -- -- --
Stockholders' Equity (Deficiency):
Common stock, $.001 par value; 50,000,000
shares authorized; 39,147,510 shares issued
and outstanding at September 30, 1999 and
3,000,000 shares at December 31, 1998 and 1997 39,147 3,000 3,000
Additional paid-in capital 6,838,599 2,000 2,000
Deficit accumulated during the development stage (6,380,705) (5,900) (5,000)
----------- ----------- -----------
Total stockholders' equity (deficiency) 497,041 (900) --
----------- ----------- -----------
Total liabilities and stockholders' equity (deficiency) $ 533,324 $ -- $ --
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
June 29, 1995
Nine Months Ended (Inception) to
September 30, Year Ended December 31, September 30,
1999 1998 1998 1997 1996 1999
---- ---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 711 $ -- $ -- $ -- $ -- $ 711
Direct Costs 284 -- -- -- -- 284
------------ ----------- ------------ ------------ ------------ ------------
Gross Margin 427 -- -- -- -- 427
------------ ----------- ------------ ------------ ------------ ------------
General and Administrative Expenses:
Stock options issued for services 6,305,746 -- -- -- -- 6,305,746
Other expenses 69,486 900 900 -- 5,000 75,386
------------ ----------- ------------ ------------ ------------ ------------
6,375,232 900 900 -- 5,000 6,381,132
------------ ----------- ------------ ------------ ------------ ------------
Net Loss $ (6,374,805) $ (900) $ (900) $ -- $ (5,000) $ (6,380,705)
============ =========== ============ ============ ============ ============
Net Loss Per Share - Basic and Diluted $ (.16) $ -- $ -- $ -- $ --
============ =========== ============ ============ ============
Weighted Average Shares Outstanding 39,037,678 3,000,000 3,000,000 3,000,000 3,000,000
============ =========== ============ ============ ============
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
Common Stock Additional During the
------------ Paid-In Development
Shares Amount Capital Stage Total
------ ------ ---------- ----- -----
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1996:
Stock issued for services ($.005 per share) 3,000,000 $ 3,000 $ 2,000 $ -- $ 5,000
Net loss
-- -- -- (5,000) (5,000)
----------- ------------ ------------ ------------ -----------
Balance, December 31, 1996
3,000,000 3,000 2,000 (5,000) --
Year Ended December 31, 1997:
Net loss -- -- -- -- --
----------- ------------ ------------ ------------ -----------
Balance, December 31, 1997
3,000,000 3,000 2,000 (5,000) --
Year Ended December 31, 1998:
Net loss
-- -- -- (900) (900)
----------- ------------ ------------ ------------ -----------
Balance, December 31, 1998
3,000,000 3,000 2,000 (5,900) (900)
Nine Months Ended September 30, 1999 (Unaudited):
Issuance of common stock ($.001 per share) 36,000,000
36,000 (24,000) -- 12,000
Issuance of common stock ($1.04 per share)
48,000 48 49,952 -- 50,000
Issuance of common stock ($4.84 per share)
3,510 3 16,997 -- 17,000
Issuance of common stock ($5.08 per share)
39,345 39 199,961 -- 200,000
Issuance of common stock for services ($5.08 per share)
56,655 57 287,943 -- 288,000
Options granted for services 6,305,746
-- -- -- (6,374,805) (6,374,805)
----------- ------------ ------------ ------------ -----------
Balance, September 30, 1999 (Unaudited) 39,147,510 $ 39,147 $ 6,838,599 $ (6,380,705) $ 497,041
=========== ============ ============ ============ ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
June 29, 1995
Nine Months Ended (Inception) to
September 30, Year Ended December 31, September 30,
1999 1998 1998 1997 1996 1999
---- ---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $(6,374,805) $ (900) $ (900) $ -- $ (5,000) $(6,380,705)
Adjustments to reconcile net loss to net cash
used in operating activities:
Common stock issued for services
-- -- -- 5,000 5,000
Options granted for services 6,305,746
-- -- -- -- 6,305,746
Depreciation
50 -- -- -- -- 50
Changes in operating assets and liabilities:
Accrued expenses
35,383 900 900 -- -- 36,283
----------- ----------- --------- --------- -------- -----------
Net cash used in operating activities (33,626) -- -- -- -- (33,626)
----------- ----------- --------- --------- -------- -----------
Cash Flows from Investing Activities:
Expenditures for property and equipment (2,016) -- -- -- -- (2,016)
----------- ----------- --------- --------- -------- -----------
Cash Flows from Financing Activities:
Proceeds from sale of common stock 217,000 -- -- -- -- 217,000
----------- ----------- --------- --------- -------- -----------
Net Increase in Cash 181,358 -- -- -- -- 181,358
Cash, Beginning -- -- -- -- -- --
----------- ----------- --------- --------- -------- -----------
Cash, Ending $ 181,358 $ -- $ -- $ -- $ -- $ 181,358
=========== =========== ========= ========= ======== ===========
Non-Cash Investing and Financing Transactions:
Common shares issued for web site development $ 288,000
===========
Web site development costs paid by
stockholders $ 62,000
===========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Capitalization
The Company was incorporated under the laws of the state of Florida
on June 29, 1995 under the name RLN Realty Associates, Inc.
Initially the Board authorized 7,500 shares of $1.00 par value
common stock of which 5,000 shares were issued in exchange for
services in 1996. On June 9, 1998, the Company filed amended
Articles of Incorporation to change the par value to $.001 and
increase the authorized shares to 50,000,000. On June 9, 1998, the
Board of Directors authorized a 200 for 1 stock split, which
increased the issued and outstanding shares to 1,000,000.
On March 1, 1999, the Articles of Incorporation were amended to
reflect the change in corporate name to "Netmaximizer.com, Inc."
On October 19, 1999, the Board of Directors authorized a 3 for 1
stock split, effective November 1, 1999, which increased the issued
and outstanding shares to 39,147,510. The effect of all these
actions are reflected retroactively in the accompanying financial
statements.
Business
The Company is an Internet marketing and merchandising company that
sells an array of products via an e-commerce site. The Company
provides access to an e-commerce department store solely to members
of affinity groups such as churches, schools and unions.
Unaudited Financial Information
The accompanying financial statements as of September 30, 1999 and
for the nine months ended September 30, 1999 and 1998 are
unaudited. However, in the opinion of management, such financial
statements contain all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of
financial position, results of operations and cash flows for such
periods. Results of interim periods are not necessarily indicative
of results to be expected for an entire year.
Use of Estimates
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles. In
preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amount of assets
and liabilities as of the date of the balance sheet and operations
for the period. Although these estimates are based on management's
knowledge of current events and actions it may undertake in the
future, they may ultimately differ from actual results.
F-6
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash. The
Company maintains its cash, which consists primarily of demand
deposits, with high quality financial institutions, which the
Company believes limits risk.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and
accounts payable. The carrying amounts of such financial
instruments, as reflected in the balance sheet, approximate their
estimated fair value as of September 30, 1999 and December 31, 1998
and 1997. The estimated fair value is not necessarily indicative of
the amounts the Company could realize in a current market exchange
or of future earnings or cash flows.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of
the assets. Gain or loss on disposition of assets is recognized
currently. Repairs and maintenance which do not extend the lives of
the respective assets are charged to expense as incurred. Major
replacements or betterments are capitalized and depreciated over
the remaining useful lives of the assets.
Web Site Design Costs
Web site development costs include costs incurred by the Company to
develop the Company's web site. Pursuant to Statement of Position
(SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," the Company has
capitalized the costs incurred to develop the web site. These costs
consist of fees paid to a consultant as follows: $62,000 in cash
and 56,655 (post 3 for 1 split) shares of Company common stock
valued at fair value on the date of issue ($5.08 per share) or
$288,000 for a total of $350,000. The web site is expected to be
available for use on or about November 4, 1999, and the Company
will commence amortizing the cost over the estimated useful life
beginning at that time.
Income Taxes
The Company accounts for its income taxes using Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes, which requires recognition of deferred tax
liabilities and assets for expected future tax consequences of
events that have been included in the financial statements or tax
returns. Under this method, deferred tax liabilities and assets are
determined based on the differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse.
F-7
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
The Company recognizes revenue when the merchandise is shipped to
customers. Allowances for estimated returns are provided when sales
are recorded.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs
incurred for 1999, 1998, 1997, and 1996 were not material.
Stock-Based Compensation
The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB
No. 25"), and related interpretations, in accounting for its
employee stock options rather than the alternative fair value
accounting allowed by SFAS No. 123, "Accounting for Stock-Based
Compensation." APB No. 25 provides that the compensation expense
relative to the Company's employee stock options is measured based
on the intrinsic value of the stock option. SFAS No. 123 requires
companies that continue to follow APB No. 25 to provide a pro-forma
disclosure of the impact of applying the fair value method of SFAS
No. 123.
The Company follows SFAS No. 123 in accounting for stock options
issued to non-employees.
Net Loss Per Common Share
The Company computes earnings (loss) per share in accordance with
SFAS No. 128, "Earnings Per Share", which was adopted in 1997. This
standard requires dual presentation of basic and diluted earnings
per share on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the
numerator and denominator of the diluted earnings per share
computation.
Net loss per common share (basic and diluted) is based on the net
loss divided by the weighted average number of common shares
outstanding during the year.
The Company's potentially issuable shares of common stock pursuant
to outstanding stock options are excluded from the Company's
diluted computation as their effect would be anti-dilutive.
F-8
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Reporting Comprehensive Income" and No. 131, "Disclosures
About Segments of an Enterprise and Related Information". SFAS No.
130 establishes standards for reporting and displaying
comprehensive income, its components and accumulated balances. SFAS
No. 131 establishes standards for the way that public companies
report information about operating segments in annual financial
statements and requires reporting of selected information about
operating segments in interim financial statements issued to the
public. Both SFAS No. 130 and SFAS No. 131 are effective for
periods beginning after December 15, 1997. The Company adopted
these new accounting standards in 1998, and their adoption had no
effect on the Company's financial statements and disclosures.
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities". SFAS No. 133 requires companies to recognize all
derivatives contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as
a hedge, the objective of which is to match the timing of the gain
or loss recognition on the hedging derivative with the recognition
of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) the
earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss
is recognized in income in the period of change. On June 30, 1999,
the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133." SFAS No. 133 as amended by SFAS No. 137
is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000.
Historically, the Company has not entered into derivatives
contracts to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new
standard on January 1, 2000 to affect its financial statements.
NOTE 2. SUMMARY OF CERTAIN RISKS AND UNCERTAINTIES
Development Stage Enterprise
As described above, the Company was incorporated on June 29, 1995,
and, since that time, has been primarily involved in organizational
activities, developing a strategic plan for the marketing of its
products, and raising capital. Planned operations, as described
above, have not commenced to any significant extent. Accordingly,
the Company is considered to be in the development stage, and the
accompanying financial statements represent those of a development
stage enterprise.
F-9
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 2. SUMMARY OF CERTAIN RISKS AND UNCERTAINTIES (Continued)
Governmental Regulation and Injunction
The activities of the Company are governed by the Federal Trade
Commission ("FTC"). In 1993, the FTC secured a permanent injunction
against the Company's president (who is also a director and major
stockholder), and other entities not related to the Company,
enjoining them, directly or indirectly, from supplying
travel-related services and products for use in telemarketing and
from assisting in the telemarketing of any travel-related product
or service.
The injunction also states that, in connection with the
advertising, promotion, marketing, distribution, offering for sale
or sale of travel-related products or services, all named parties
are permanently enjoined from participating in or assisting others
that participate in (a) misrepresenting in any manner, any
restriction, limitation or condition on any consumer's use of a
travel-related product or service; (b) failing to disclose in
writing any material fact regarding any such restriction; (c)
misrepresenting the total cost any consumer must pay to use such
travel-related product or service; and (d) misrepresenting the
consumer's right to any refund. The injunction also restricts
activities in connection with the use of travel-related products or
services, whether as a premium or incentive or otherwise. The
Company offers airchecks and hotel vouchers as a premium or
incentive to customers to promote the sale of products and,
therefore, certain aspects of the Company's business could fall
within the scope of the activities addressed in the injunction.
The injunction gives the FTC the right to access during normal
business hours the premises of any businesses which the Company's
president is involved in, including the business of the Company.
Until June 2000, the Company's president is required to disclose
the existence and contents of the injunction to any of his
employees, agents, independent contractors, distributors or sales
persons engaged in the marketing, distribution or sale of any
travel-related products or services or premiums or incentives.
As a result of the injunction, it may be possible for the FTC to
enforce the injunction against the Company if the FTC determined
that the Company had violated the terms of the injunction by
engaging in prohibited conduct.
Going Concern Considerations
The accompanying financial statements have been presented in
accordance with generally accepted accounting principles, which
assume the continuity of the Company as a going concern. However,
as discussed above, the Company is in the development stage and,
therefore has generated virtually no revenue to date. Additionally,
the Company is subject to the impacts, if any, of the injunction
put in place by the FTC against the Company's president, as
described above. These conditions raise substantial doubt as to the
ability of the Company to continue as a going concern.
F-10
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 2. SUMMARY OF CERTAIN RISKS AND UNCERTAINTIES (Continued)
Summary
The accompanying financial statements do not include any
adjustments that might result from the outcome of the risks and
uncertainties described above.
NOTE 3. INCOME TAXES
The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes. SFAS No. 109 is an asset and liability
approach for computing deferred income taxes.
The net tax effects of temporary differences between the carrying
amount of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes are reflected in
deferred income taxes. Significant components of the Company's
deferred tax assets are as follows:
<TABLE>
<CAPTION>
September 30, December 31
1999 1998 1997
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Benefit of net operating loss carryforwards $ 28,000 $2,000 $1,700
Less valuation allowance (28,000) (2,000) (1,700)
-------- ------ ------
Net deferred tax asset $ - $ - $ -
======== ====== ======
</TABLE>
At September 30, 1999 and December 31, 1998 and 1997, the Company had
net operating loss carryforwards for federal income tax purposes of
approximately $76,000, $6,000, and $5,000, respectively, which are
available to offset future federal taxable income, if any, through
2014.
As of September 30, 1999 and December 31, 1998 and 1997, sufficient
uncertainty exists regarding the realizability of these deferred tax
assets and, accordingly, a 100% valuation allowance has been
established.
In accordance with certain provisions of the Tax Reform Act of 1986, a
change in ownership of greater than 50% of a corporation within a three
year period will place an annual limitation on the corporation's
ability to utilize its existing tax benefit carryforwards. Such a
change in ownership occurred in 1999. As a result, based upon the
amount of the taxable loss incurred to December 31, 1999, the Company
estimates that an annual limitation will apply to the net operating
loss carryforward existing as of that date. The Company's utilization
of its tax benefit carryforwards may be further restricted in the event
of subsequent changes in the ownership of the Company.
F-11
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 4. STOCK OPTION PLAN
In April 1999, the Board of Directors of the Company (the "Board")
authorized the 1999 Employee Stock Option Plan (the "Stock Option
Plan") for those employees, consultants, and advisors (the
"Participants") of the Company who, in the judgment of the
Administrator (defined below) are or will become responsible for the
direction and financial success of the Company. The adoption of the
Stock Option Plan was ratified by the shareholders on September 30,
1999. The purpose of the Stock Option Plan is to provide the
Participants with an increased incentive to make significant
contributions to the long-term performance and growth of the Company.
Under the Stock Option Plan, the Participants may only receive awards
of non-qualified stock options. A maximum of 2,603,200 shares of common
stock are subject to the Stock Option Plan.
The Stock Option Plan may be administered by the Board, or in the
Board's sole discretion, by the Compensation Committee of the Board
(the "Committee," and with the Board, the "Administrator") or such
other committee as may be specified by the Board to perform the
functions and duties of the Committee under the Stock Option Plan.
The Participants in the Stock Option Plan may include officers and
directors who are also employees of the Company.
The exercise period for stock options and stock appreciation rights
will be determined by the Administrator, but no stock option or stock
appreciation right may be exercisable prior to the expiration of six
months from the date of grant or after 10 years from the date of grant,
subject to certain conditions and limitations.
The Stock Option Plan may be abandoned or terminated at any time by the
Board. Unless sooner terminated, the Stock Option Plan will terminate
on the date ten years after its adoption by the Board. The termination
of the Stock Option Plan will not affect the validity of any stock
option, stock appreciation right, or restricted stock outstanding on
the date of termination.
The Company has issued options to purchase a total of 2,603,200 shares
of Company common stock (1,245,432 to employees and 1,357,768 to
consultants) out of the shares of common stock provided for in the
Stock Option Plan, at a price of $6.00 per share, the price at which
the stock was trading as of the day of the grant of the options. These
options are for a term of five years. The options contain an
anti-dilution provision and, therefore, effective November 1, 1999, the
total number of common shares subject to issuance upon the exercise of
these stock options is 7,809,600 with an exercise price of $2.00. The
options issued to employees were, among other things, in lieu of
compensation for services provided during this organizational stage
when no salary was paid to officer employees until September 30, 1999.
Statement of Financial Accounting Standards No. 123 (SFAS 123),
"Accounting for Stock-Based Compensation", requires the Company to
provide pro forma information regarding net income and earnings per
share as if compensation cost for the Company's employee stock options
has been determined in accordance with the fair value based method
prescribed in SFAS 123.
F-12
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 4. STOCK OPTIONS PLAN (UNAUDITED) (Continued)
The Company estimates the fair value of each stock option at the grant
date by using the Black-Sholes option-pricing model with the following
weighted-average assumptions used for grants in 1999 (no options were
granted prior to 1999); no dividend yield; an expected life of five
years; 100% expected volatility, and 6.00% risk free interest rate. The
fair value of the options granted in 1999 to consultants has been
recorded as a charge to operations in these financial statements.
The option valuation model was developed for use in estimating the fair
value of traded options which have no vesting restrictions and are
fully transferable. In addition, valuation models require the input of
highly subjective assumptions including the expected price volatility.
Since the Company's stock options have characteristics significantly
different from those of traded options, and since variations in the
subjective input assumptions can materially affect the fair value
estimate, the actual results can vary significantly from estimated
results.
Under the accounting provisions of SFAS 123, the Company's net loss and
loss per share would have been reduced to the pro forma amounts
indicated below:
<TABLE>
<CAPTION>
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss: (Unaudited)
As reported $ (6,374,805) $(900) $ - $(5,000)
Pro forma $ (12,158,840) $(900) - $(5,000)
Loss per share - basic and diluted:
As reported $ (.16) $ - $ - $ -
Pro forma $ (.31) $ - $ - $ -
</TABLE>
A summary of the status of options under this plan and additional
options, granted outside of the plan, as of September 30, 1999 and
changes during the period ended on that date are presented below
(unaudited):
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
------ --------------
<S> <C> <C>
Balance, January 1, 1999 0 $0.00
Options granted 7,809,600 2.00
Options exercised 0 0.00
Options expired 0 0.00
--------- -----
Balance, September 30, 1999 7,809,600 $2.00
========= =====
Options granted during the period at exercise prices which equal
market price of stock at date of grant (unaudited):
Weighted average exercise price 7,809,600 $2.00
Weighted average fair value 7,809,600 $2.00
Note: No options were granted prior to 1999.
</TABLE>
F-13
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 4. STOCK OPTIONS PLAN (Continued)
The following table summarizes information about options under the plan
which are outstanding at September 30, 1999 after giving effect to the
November 1, 1999 stock split (unaudited):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise September 30, Contractual Exercise September 30, Exercise
Prices 1999 Life Price 1999 Price
------ ---- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
$2.00 7,809,600 4.5 $2.00 0 $2.00
===== ========= === ===== = =====
</TABLE>
7,061,592 options vest on October 1, 1999; the remainder vest
October 1, 2000.
NOTE 5. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases its facility under a one year operating lease
expiring in September 2000. Rent expense is approximately $1,900
per month.
Merchant Service Agreement
In connection with the hosting of its interactive on-line store,
the Company entered into a Yahoo! Store Merchant Service Agreement
("YSMA"). In exchange for a monthly fee, Yahoo! grants the Company
a non-exclusive license to use its Yahoo! store software which
enables the Company to process its on-line e-commerce transactions.
The YSMA, among other things, is for a term of ninety days,
automatically renews, and may be terminated by either party with
thirty days notice.
Fulfillment Provider
In the ordinary course of business, the Company has established an
arrangement with a fulfillment and warehouse provider. This
provider aggregates the products needed by the Company,
electronically issues corresponding purchase orders to vendors, and
then ships the products to the ultimate consumer once they are
received from the vendor. No written contract exists between the
Company and this fulfillment provider. Management believes that
should this relationship cease, another fulfillment provider could
be obtained.
F-14
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 5. COMMITMENTS AND CONTINGENCIES (Continued)
Affinity Group Agreements
The Company has entered into agreements with certain affinity
groups such as churches, schools and unions whereby the Company has
agreed to pay a commission to the group of 15% of the purchase
price of products purchased as defined. In addition, the Company
agrees to pay $.30 per FREE product, as defined. Each agreement is
cancelable without notice by either party.
Merchant Banking Agreement
In April, 1999, the Company entered into an agreement with a
banking institution for the processing and collection of credit
card transactions. The agreement defines, among other things,
various fees and chargebacks, which may be applicable to the
Company, and requires a merchant reserve account be established to
cover potential chargebacks or other loss resulting from
transactions deposited into the merchant account. The agreement may
be terminated by either party with thirty days notice.
NOTE 6. COMMON STOCK
In 1996, the Company issued 5,000 shares of common stock in exchange
for services with a value of $5,000. Subsequently, those 5,000 shares
became 3,000,000 shares as a result of a 200 for 1 split authorized by
the Board of Directors on June 9, 1999 and a 3 for 1 split authorized
by the Board of Directors on October 19, 1999.
During March 1999, the Company raised capital through the private
placements of equity securities. The private placements of equity
securities were exempt from registration in reliance on Rule 504 under
Regulation D promulgated under the Securities Act of 1933. The common
stock was offered by the Company without the services of a placement
agent.
These sales of common stock resulted in the following: 36,000,000
shares were issued at $.001 per share for proceeds of $12,000; 48,000
shares were issued at $1.08 per share for proceeds of $50,000. The
combined proceeds of $62,000 were remitted on the Company's behalf by
the investors to the consultant for web site design.
On September 27, 1999, the Company issued 3,510 (post 3 for 1 split)
shares of common stock for proceeds of $17,000.
On September 30, 1999, the Company issued 39,345 (post 3 for 1 split)
shares of common stock for proceeds of $200,000.
On September 30, 1999, the Company issued 56,655 (post 3 for 1 split)
shares of common stock pursuant to an agreement with the web site
design consultant in payment of $288,000 of fees.
F-15
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTE 6. COMMON STOCK (Continued)
On October 20, 1999, the Company issued 5,496 (post 3 for 1 split)
shares of common stock for proceeds of $30,000.
F-16
<PAGE>
Item 14. Changes in and Disagreements with Accountants on Accounting and
- ------------------------------------------------------------------------
Financial Disclosure.
- ---------------------
We retained Rachlin Cohen & Holtz as our independent accountants to audit our
financial statements effective as of October 7, 1999.
Item 15. Financial Statements and Exhibits.
- -------------------------------------------
The following financial statements and related schedules are included in this
Item:
(a) Financial Statements
Balance Sheets for the Fiscal Years Ended December 31, 1998 and 1997
Auditors' Report
Balance Sheets as at December 31, 1998 and 1997.
Statements of Operations for the years ended December 31, 1998, 1997
and 1996.
Statements of Stockholders' Equity for the years ended December 31,
1998, 1997 and 1996.
Statements of Cash Flows for the years ended December 31, 1998, 1997
and 1996.
Notes to Audited Consolidated Financial Statements.
Unaudited Financial Statements for the period ended September 30, 1999
Balance Sheet as at September 30, 1999.
Statements of Operations for the nine month period ended September 30,
1999.
Statement of Stockholders' Equity for the nine month period ended
September 30, 1999
Statements of Cash Flows for the nine month period ended September 30,
1999.
Notes to Unaudited Consolidated Financial Statements
41
<PAGE>
(b) Exhibits
Exhibit Number Description
3.1 Articles of Incorporation of RLN Realty Associates, Inc.
effective June 29, 1995.
3.2 Articles of Amendment to RLN Realty Associates, Inc. filed
on June 9, 1998.
3.3 Articles of Amendment to RLN Realty Associates, Inc. filed
on March 1, 1999.
3.4 Bylaws of Netmaximizer.com, Inc.
10.1 Form of Private Placement Subscription Agreement dated
March 1, 1999.
10.2 Form of Agreement with Affinity Group
10.3 Lease Agreement by and between Netmaximizer.com, Inc. and
Sanctuary of Boca, Inc. dated September 22, 1999.
10.4 Agreement between Kim International Manufacturing, Inc.
and Netmaximizer.com, Inc. dated September 10, 1999
10.5 Merchant Bankcard Service and Security Agreement by and
between Netmaximizer.com, Inc. and Charter Pacific Bank
dated April 22, 1999.
10.6 Netmaximizer.com, Inc. Employee Stock Option Plan 1999
10.7 Yahoo! Store Merchant Service Agreement
10.8 Stipulated Permanent Injunction and Final Judgment re:
Federal Trade Commission v. David Saltrelli, et al; Civil
No. 92-275-CIV-ORL-22
11.1 Statement re: Computation of Net Income per Common Share
27.1 Financial Data Schedule
27.2 Financial Data Schedule
42
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Netmaximizer.com, Inc.
Date: December 7, 1999
/s/ David Saltrelli
- -------------------
David Saltrelli, President
43
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Number Description
-------------- -----------
3.1 Articles of Incorporation of RLN Realty Associates, Inc.
effective June 29, 1995.
3.2 Articles of Amendment to RLN Realty Associates, Inc. filed
on June 9, 1998.
3.3 Articles of Amendment to RLN Realty Associates, Inc. filed
on March 1, 1999.
3.4 Bylaws of Netmaximizer.com, Inc.
10.1 Form of Private Placement Subscription Agreement dated
March 1, 1999.
10.2 Form of Agreement with Affinity Group
10.3 Lease Agreement by and between Netmaximizer.com, Inc. and
Sanctuary of Boca, Inc. dated September 22, 1999.
10.4 Agreement between Kim International Manufacturing, Inc.
and Netmaximizer.com, Inc. dated September 10, 1999
10.5 Merchant Bankcard Service and Security Agreement by and
between Netmaximizer.com, Inc. and Charter Pacific Bank
dated April 22, 1999.
10.6 Netmaximizer.com, Inc. Employee Stock Option Plan 1999
10.7 Yahoo! Store Merchant Service Agreement
10.8 Stipulated Permanent Injunction and Final Judgment re:
Federal Trade Commission v. David Saltrelli, et al; Civil
No. 92-275-CIV-ORL-22
11.1 Statement re: Computation of Net Income per Common Share
27.1 Financial Data Schedule
27.2 Financial Data Schedule
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
RLN REALTY ASSOCIATES, INC.
The undersigned subscriber to these Articles of Incorporation, a
natural person competent to contract, hereby forms a corporation under the laws
of the State of Florida.
ARTICLE I
NAME
The name of this corporation is RLN REALTY ASSOCIATES, INC.
ARTICLE II
NATURE OF THE BUSINESS
This corporation shall have the power to transact or engage in any
business permitted under the laws of the United States and of the State of
Florida.
ARTICLE III
CAPITAL STOCK
The capital stock of this corporation shall consist of 7,500 shares of
common stock having a par value of One ($1.00) Dollar per share. All of said
stock shall be issued only for cash or other property or for services at a just
valuation as shall be determined by the Board of Directors.
ARTICLE IV
INITIAL CAPITAL
The amount of capital with which this corporation shall commence
business shall be not less than One Hundred ($100.00) Dollars.
ARTICLE V
TERM OF EXISTENCE
This corporation shall have perpetual existence.
<PAGE>
ARTICLE VI
INITIAL ADDRESS
The initial address of the principal place of business of the
corporation in the State of Florida shall be 3689 NE 195 Terrace, Adventura,
Miami, FL. The Board of Directors may at any time and from time to time move the
principal office of this corporation to any location within or without the State
of Florida.
ARTICLE VII
DIRECTORS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws. The number of persons constituting the initial
Board of Directors shall be ONE (1).
ARTICLE VIII
INITIAL DIRECTORS
The names and addresses of the initial Board of Directors are as
follows:
RICHARD L. NEWBERG 3689 NE 195 Terrace
Adventura, Miami, FL
ARTICLE IX
SUBSCRIBER
The name and address of the person signing these Articles of
incorporation as subscriber is:
David R. Berley
Suite 200
848 Brickell Avenue
Miami, FL 33131
2
<PAGE>
ARTICLE X
VOTING FOR DIRECTORS
The Board of Directors shall be elected by the Stockholders of the
corporation at such time and in such manner as provided in the By-Laws.
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any
person, firm or corporation shall be affected by the fact that any officer or
director of this corporation is such other party or is. or at some time in the
future becomes, an officer, director or partner of such other contracting party,
or has now or hereafter a direct or indirect interest in such contract.
ARTICLE XII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
This corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, did in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
ARTICLE XIII
RESTRAINT ON ALIENATION
The stockholders of this corporation shall have the power to include in
the By-Laws, or adopt resolutions by a two-thirds (2/3) majority any regulatory
or restrictive provision regarding the proposed sale, transfer or other
disposition of the corporation's :'rock by its stockholders or in the event of
the death of any stockholder. Said restrictions shall be binding upon third
parties with actual knowledge thereof or if the same, or notice of the same,
shall be plainly written upon the certificate evidencing ownership of the stock.
3
<PAGE>
ARTICLE XIV
AMENDMENT
Except as may be provided in the By-Laws of this corporation to the
contrary, these Articles of Incorporation may be amended by the affirmative vote
of a majority of the Board of Directors and by the affirmative vote of the
holders of not less than two-thirds (2/3) of the then outstanding stock of the
corporation.
ARTICLE XV
RESIDENT AGENT
The name and address of the initial resident agent of this corporation
is:
BERLIT CORPORATE SERVICES, INC.
Suite 200
848 Brickell Avenue
Miami, FL 33131
ARTICLE XVI
EFFECTIVE DATE
The effective date of this corporation shall be the date upon which
these articles of incorporation were executed by the incorporator.
ARTICLE XVII
WAIVER OF FS. 607.0901 AND F.S. 607.0902
This corporation expressly waives the provisions of FS. 607.090i and
F.S. 607.C902 and elects not to be governed thereby.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed these
Articles of Incorporation on June 23, 1995.
/s/
----------------------------
David R. Berley, Subcriber
Subscribed and Sworn to on
June 23, 1995
Before me:
/s/ Aida Rosado
- ---------------------------------
Notary Public
My Commission Expires:
4
<PAGE>
EXHIBIT 3.1
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR
DOMICILE FOR SERVICE OF PROCESS WITHIN THIS STATE
NAMING THE AGENT UPON WHOM PROCESS MAY BE SERVED
In pursuance of Chapter 48.091 of the Florida Statutes, the following
is submitted:
RLN REALTY ASSOCIATES, INC. desiring to organize a corporation under
the laws of the State of Florida with its principal place of business as stated
in its Articles of Incorporation has named BERLIT CORPORATE SERVICES, INC.
located at Suite 200, 848 Brickell Avenue, Miami, FL 33131 as its agent upon
whom process may be served within this state.
Having been named to accept service of process for the above-stated
corporation, I hereby accept to act in this capacity and to comply with the
provisions of the Act relative to keeping open said office.
BERLIT CORPORATE SERVICES, INC.
By: /s/
---------------------------------
President
5
EXHIBIT 3.2
ARTICLES OF AMENDMENT TO
RLN REALTY ASSOCIATES, INC.
THE UNDERSIGNED, being the sole director and president of RLN Realty
Associates, Inc., does hereby amend its Articles of Incorporation as follows:
ARTICLE I
CORPORATE NAME
The name of the Corporation shall be RLN Realty Associates, Inc.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the State of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000
shares of common stock, $.00t par value.
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this corporation in
the State of Florida shall be 7695 S.W. 104th Street, Suite 210, Miami, FL
33156. The Board of Directors may at any time and from time to time move the
principal office of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other
securities of the Corporation except to the extent such right may be granted by
an amendment to these Articles of Incorporation or by a resolution of the board
of Directors.
<PAGE>
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repealed by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1. INSPECTION OF BOOKS. The board of directors shall make reasonable
rules to determine at what times and places and under what conditions the books
of the Corporation shall be open to inspection by shareholders or a duly
appointed representative of a shareholder.
9.2. CONTROL SHARE ACQUISITION. The provisions relating to any control
share acquisition as contained in Florida Statutes now, or hereinafter amended,
and any successor provision shall not apply to the Corporation.
9.3. QUORUM. The holders of shares entitled to one-third of the votes
at a meeting of shareholder's shall constitute a quorum.
9.4. REQUIRED VOTE. Acts of shareholders shall require the approval of
holders of 50.01% of the outstanding votes of shareholders.
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
ARTICLE XL
CONTRACTS
No contract or other transaction between this corporation and any
person, firm or corporation shall be affected by the fact that any officer or
director of this corporation is such other party or is, or at some time in the
future becomes, an officer, director or partner of such other contracting party,
or has now or hereafter a direct or indirect interest in such contract.
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on June 8, 1998 and that the
number of votes cast was sufficient for approval.
2
<PAGE>
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation this on June 8, 1998.
/s/
- ----------------------------------
Eric P. Littman, Sole Director
The foregoing instrument was acknowledged before me on June 8, 1998, by
Eric P. Littman, who is personally known to me.
My commission expires: /s/
---------------------------
Notary Public
3
ARTICLES OF AMENDMENT TO
RLN REALTY ASSOCIATES, INC.
THE UNDERSIGNED, being the sole director and president of RLN REALTY
ASSOCIATES, INC, does hereby amend its Articles of Incorporation effective
February 26, 1999, as follows:
ARTICLE I
CORPORATE NAME
The new name of the Corporation shall be Netmaximizer.com, Inc.
I hereby certify that the following was adopted by a majority vote of
the shareholders and directors of the corporation on February 26, 1999 and that
the number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation this on February 26, 1999.
/s/
- ------------------------------------------
Eric P. Littman, President and Sole Director
The foregoing instrument was acknowledged before me on February 26,
1999 by Eric P. Littman, who is personally known to me.
My commission expires: /s/ Isabel J. Cantera
---------------------------
Notary Public
BYLAWS
OF
NETMAXIMIZER.COM, INC.
---------------------------------
Incorporated under the laws of
the State of Florida
<PAGE>
<TABLE>
<CAPTION>
INDEX TO BYLAWS
OF
NETMAXIMIZER.COM, INC.
-----------------------------------
<S> <C>
ARTICLE I. MEETINGS OF STOCKHOLDERS..............................................................................1
Section 1.01 Annual Meeting.............................................................................1
Section 1.02 Special Meetings...........................................................................1
Section 1.03 Place......................................................................................1
Section 1.04 Notice of Meeting..........................................................................1
Section 1.05 Notice of Adjourned Meetings...............................................................1
Section 1.06 Record Date................................................................................2
Section 1.07 Voting List................................................................................2
Section 1.08 Stockholder Quorum and Voting..............................................................3
Section 1.09 Voting of Shares...........................................................................4
Section 1.10 Proxies....................................................................................5
Section 1.11 Voting Trusts..............................................................................6
Section 1.12 Stockholders' Agreements...................................................................6
Section 1.13 Action by Stockholders Without a Meeting...................................................6
ARTICLE II. DIRECTORS............................................................................................7
Section 2.01 Function...................................................................................7
Section 2.02 Qualification..............................................................................7
Section 2.03 Compensation...............................................................................8
Section 2.04 Duties of Directors........................................................................8
Section 2.05 Presumption of Assent......................................................................8
Section 2.06 Number.....................................................................................8
Section 2.07 Election and Term of Directors.............................................................9
Section 2.08 Vacancies on Board.........................................................................9
Section 2.09 Resignation of Directors...................................................................9
Section 2.10 Removal of Directors.......................................................................9
Section 2.11 Quorum and Voting..........................................................................9
Section 2.12 Director Conflicts of Interest.............................................................9
Section 2.13 Committees................................................................................10
Section 2.14 Place of Meetings.........................................................................11
Section 2.15 Meetings..................................................................................11
Section 2.16 Action Without a Meeting..................................................................12
ARTICLE III. OFFICERS...........................................................................................12
Section 3.01 Officers..................................................................................12
Section 3.02 Duties....................................................................................12
Section 3.03 Resignation and Removal of Officers.......................................................13
i
<PAGE>
Section 3.04 Compensation..............................................................................13
ARTICLE IV. STOCK CERTIFICATES..................................................................................13
Section 4.01 Issuance..................................................................................13
Section 4.02 Form......................................................................................13
Section 4.03 Transfer of Stock.........................................................................14
Section 4.04 Lost, Stolen, or Destroyed Certificates...................................................14
ARTICLE V. BOOKS AND RECORDS....................................................................................15
Section 5.01 Corporate Records.........................................................................15
Section 5.02 Inspection of Records by Stockholders.....................................................16
Section 5.03 Financial Information.....................................................................17
ARTICLE VI. DISTRIBUTIONS TO STOCKHOLDERS.......................................................................17
ARTICLE VII. CORPORATE SEAL.....................................................................................18
ARTICLE VIII. AMENDMENT.........................................................................................19
</TABLE>
ii
<PAGE>
BYLAWS
OF
NETMAXIMIZER.COM, INC.
-----------------------------------
ARTICLE I. MEETINGS OF STOCKHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the stockholders of
this corporation shall be held at the time and place designated by the Board of
Directors of the corporation. The annual meeting shall be held within four
months after the close of the corporation's fiscal year. The annual meeting of
stockholders for any year shall be held no later than thirteen months after the
last preceding annual meeting of stockholders. Business transacted at the annual
meeting shall include the election of Directors of the corporation.
Section 1.02 Special Meetings. Special meetings of the stockholders
shall be held when directed by the President or the Board of Directors, or when
requested in writing by the holders of not less than ten percent (10%) of all
the shares entitled to vote at the meeting. A meeting requested by stockholders
shall be called for a date not less than ten (10) nor more than sixty (60) days
after the request is made, unless the stockholders requesting the meeting
designate a later date. The call for the meeting shall be issued by the
Secretary, unless the President, Board of Directors, or stockholders requesting
the meeting shall designate another person to do so.
Section 1.03 Place. Meetings of stockholders may be held within or
without the State of Florida at a place stated in the notice of the meeting. If
no place of meeting is stated in the notice of meeting, the meeting shall be
held at the corporation's principal office.
Section 1.04 Notice of Meeting. Written notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the meeting, either personally or by
first class mail, by or at the direction of the President, the Secretary, or the
officer or persons calling the meeting to each stockholder of record entitled to
vote at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the stockholder at his
address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid.
Section 1.05 Notice of Adjourned Meetings. When a meeting is adjourned
to another time or place, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been transacted on the
original date of the meeting. If, however, after the adjournment the Board of
Directors fixes a new record date for the adjourned meeting, notice of the
adjourned meeting
1
<PAGE>
must be given as provided in Section 1.04 hereof to each stockholder of record
as of the new record date who are entitled to vote at such meeting.
Section 1.06 Record Date. For purposes of determining stockholders
entitled to notice of a stockholders' meeting, to demand a special meeting, to
vote, or to take any other action, the Board of Directors may fix in advance a
date as the record date for any such determination; provided, however, that in
no event shall a record date fixed by the Board of Directors be more than
seventy (70) days before a meeting or action requiring a determination of the
stockholders, or a date preceding the date upon which the resolution fixing the
record date is adopted.
If not otherwise fixed by resolution of the Board of Directors, the
record date for determining stockholders entitled to demand a special meeting is
the date the first stockholder delivers his or her demand to the corporation.
If not otherwise fixed by the Board of Directors, where no prior action
is required by the Board of Directors, the record date for determining
stockholders entitled to take action without a meeting is the date the first
signed written consent is delivered to the corporation pursuant to Section 1.13
hereof. If a record date has not been fixed by the Board of Directors, but prior
action is required by the Board of Directors, the record date for determining
stockholders entitled to take action without a meeting is at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action.
If not otherwise fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of and to vote at an annual or
special stockholders' meeting is the close of business on the day before the
first notice is delivered to stockholders.
A determination or a record date pursuant to this Section 1.06 shall be
effective for any adjournment of a meeting, unless the Board of Directors fixes
a new record date, which it must do if the meeting is adjourned to a date more
than one hundred twenty (120) days after the date fixed for the original
meeting. In the event that a court of competent jurisdiction orders a meeting
adjourned to a date more than one hundred twenty (120) days after the date fixed
for the original meeting, such court may provide that the original record date
continues in effect or it may fix a new record date.
Section 1.07 Voting List. After fixing a record date for a meeting,
this corporation shall prepare an alphabetical list of the names of all its
stockholders who are entitled to notice of a stockholders' meeting arranged by
voting group, with the address of, and the number and class and series, if any,
of shares held by each such stockholder.
The list of stockholders shall be available for inspection by any
stockholder for a period of ten (10) days prior to the meeting or such shorter
time as exists between the record date and the meeting and continuing through
the meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. A stockholder or his agent or
attorney shall be entitled
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on written demand to inspect the list, subject to the requirements of Section
5.02 hereof, during regular business hours and at such stockholder's expense,
during the period the stockholders list is available for inspection under these
Bylaws.
The corporation shall make the list of stockholders available at the
stockholders meeting, and any stockholder or his or her agent or attorney is
entitled to inspect the list at any time during the meeting or any adjournment
of such meeting.
The list of stockholders shall be prima facie evidence of the identity
of the stockholders entitled to examine the list of stockholders or to vote at a
meeting of stockholders.
In the event that there has been a failure to substantially comply with
the provisions of this Section 1.07, or if the corporation refuses to allow a
stockholder or his or her agent or attorney to inspect the list of stockholders
before or at the meeting, the meeting shall be adjourned until such requirements
are complied with on the demand of any stockholder in person or by proxy who
failed to get such access, or, if such meeting is not adjourned after such
demand and such requirements are not complied with, the circuit court of the
circuit where the corporation's principal office (or, if not in this state, its
registered office) is located, on application of the stockholder, may summarily
order the inspection or copying at the corporation's expense and may postpone
the meeting for which the list was prepared until the inspection or copying is
complete.
Notwithstanding anything contained in this Section 1.07 to the
contrary, refusal or failure to comply with the requirements of this section
shall not affect the validity of any action taken at such meeting.
Section 1.08 Stockholder Quorum and Voting. A majority of the issued
and outstanding shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of stockholders. When a specified item of
business is required to be voted on by a class or series of stock, a majority of
the shares of such class or series shall constitute a quorum for the transaction
of such item of business by that class or series.
An amendment to the Articles of Incorporation that adds, changes, or
deletes a greater or lesser quorum or voting requirement must meet the same
quorum requirements and be adopted by the same vote and voting groups required
to take action under the quorum and voting requirements then in effect or
proposed to be adopted, whichever is greater; provided, however, that in no
event shall a quorum consist of less than one-third (1/3) of the shares entitled
to vote.
If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders unless otherwise provided by law.
After a quorum has been established at a stockholders' meeting, the
subsequent withdrawal of stockholders so as to reduce the number of shares
entitled to vote at the meeting
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below the number required for a quorum, shall not affect the validity of any
action taken at the meeting or any adjournment thereof.
Section 1.09 Voting of Shares. Except as provided by law, each
outstanding share, regardless of class, shall entitle the owner thereof to one
vote on each matter submitted to a vote at a meeting of stockholders.
Shares of stock of the corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
this corporation owns, directly or indirectly, a majority of the shares entitled
to vote for directors of the second corporation.
The above paragraph does not limit the power of this corporation to
vote any shares, including its own shares, held by it in a fiduciary capacity.
Redeemable shares are not entitled to vote on any matter, and shall not
be deemed to be outstanding, after notice of redemption is mailed to the holders
thereof and a sum sufficient to redeem such shares has been deposited with a
bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy as the bylaws of the
corporate stockholder may prescribe; or, in the absence of any applicable
provision, by such person as the Board of Directors of the corporate stockholder
may designate. In the absence of any such designation, or in case of conflicting
designation by the corporate stockholder, the Chairman of the Board, the
President, any Vice President, the Secretary and the Treasurer of the corporate
stockholder shall be presumed to be fully authorized to vote such shares.
Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by such trustee, either in person or by proxy,
but no trustee shall be entitled to vote shares held by such trustee without a
transfer of such shares into his name or the name of his nominee.
Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares unless the secretary
of the corporation is given notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, then acts with respect to voting have the following effect:
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(a) If only one votes, in person or by proxy, his act binds all;
(b) If more than one vote, in person or by proxy, the act of the
majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote is
evenly split on any particular matter, each faction is
entitled to vote the share or shares in question
proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote
evenly split for purposes of this subsection shall be a
majority or a vote evenly split in interest;
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or
objections and for the purpose of ascertaining the presence of
a quorum.
Subject to Section 607.0723 of the Florida Statutes nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or other fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
Section 1.10 Proxies. A stockholder, other person entitled to vote on
behalf of a stockholder pursuant to Section 1.09 above, or a stockholder's
attorney-in-fact may vote the stockholder's shares in person or by proxy as
provided in this Section 1.10.
A stockholder may appoint a proxy to vote or otherwise act for him by
signing an appointment form, either personally or by his attorney-in-fact. No
proxy shall be valid after the expiration of eleven (11) months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
by the stockholder, except where the appointment form conspicuously states that
it is irrevocable and the appointment is coupled with an interest. An executed
telegram or cablegram appearing to have been transmitted by such person, or a
photographic, photostatic, or equivalent reproduction of an appointment form, is
a sufficient appointment form.
The authority of the holder of a proxy to act shall not be revoked by
the incapacity or death of the stockholder who executed the proxy unless, before
the authority is exercised, notice of such death or incapacity is received by
the Secretary of the corporation or other officer or agent authorized to
tabulate votes.
If a proxy for the same shares confers authority upon two or more
persons and does not otherwise provide, a majority of them present at the
meeting, or if only one is present, then that
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one, may exercise all the powers conferred by the proxy; but, if the proxy
holders present at the meeting are equally divided as to the right and matter of
voting in any particular case, the voting of such shares shall be prorated.
If the appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
Section 1.11 Voting Trusts. One or more stockholders may create a
voting trust for the purpose of conferring upon a trustee the right to vote or
otherwise act for them by signing an agreement setting forth the provisions of
the trust (which may include anything consistent with its purpose) and
transferring their shares to the trustee. When a voting trust agreement is
signed, the trustee shall prepare a list of the names and addresses of all
owners of beneficial interests in the trust, together with the number and class
of shares each stockholder transferred to the trust, and deliver copies of the
list and agreement to the corporation's principal office. After filing a copy of
the list and agreement in the corporation's principal office, such copy shall be
open to inspection by any stockholder of the corporation (subject to Section
5.02 hereof) or any beneficiary of the trust under the agreement during business
hours.
Section 1.12 Stockholders' Agreements. Agreements among the
stockholders of the corporation and between the corporation and its stockholders
may include the following as valid matters of contract; reasonable restrictions
upon the transferability or assignment of the shares of stock of the
corporation; obligations or first refusal rights to redeem or purchase shares of
stock of the corporation prior to a transfer or assignment of such shares and
the manner in which stockholders of the corporation will vote their shares of
stock in the corporation; provided, however, that such agreements shall be made
in accordance with the provisions of Sections 607.0627 and 607.0731 of the
Florida Statutes. Copies of any stockholders' agreements between the corporation
and its stockholders shall be maintained at the principal office of the
corporation and shall be open to inspection by any stockholder of the
corporation or any party to the agreement during normal business hours.
Section 1.13 Action by Stockholders Without a Meeting. Any action
required or permitted by law, these Bylaws, or the Articles of Incorporation of
this corporation to be taken at an annual or special meeting of stockholders may
be taken without a meeting, without prior notice, and without a vote if the
action is taken by the holders of outstanding stock of each voting group
entitled to vote thereon having not less than the minimum number of votes with
respect to each voting group that would be necessary to authorize or take such
action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted. In order to be effective the action must be
evidenced by one or more written consents describing the action taken, dated and
signed by approving stockholders having the requisite number of votes of each
voting group entitled to vote thereon, and delivered to the corporation by
delivery to its principal office in this state, its principal place of business,
the corporate secretary, or another officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. No written consent shall be effective to take the corporate action
referred to therein unless, within sixty (60) days of the date of the earliest
dated consent delivered
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in the manner required by this Section, written consents signed by the number of
holders required to take action is delivered to the corporation by delivery as
set forth in this Section.
Any written consent may be revoked prior to the date that the
corporation receives the required number of consents to authorize the proposed
action provided that such revocation is in writing and received by the
corporation as provided in this Section 1.13.
The corporation shall, within ten (10) days after obtaining such
authorization by written consent, send notice to those stockholders who have not
consented in writing or who are not entitled to vote on the action. The notice
shall fairly summarize the material features of the authorized action and, if
the action be such for which dissenters' rights are provided under law, the
notice shall contain a clear statement of the right of stockholders dissenting
therefrom to be paid the fair value of their shares upon compliance with further
provisions of the law regarding the rights of dissenting stockholders.
The written consent of the stockholders consenting to an action
pursuant to this Section 1.13, or the written reports of inspectors appointed to
tabulate such consents, shall be filed with the minutes of proceedings filed
with the corporation.
ARTICLE II. DIRECTORS
Section 2.01 Function. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors.
Section 2.02 Qualification. Directors must be natural persons who are
eighteen (18) years of age or older, but need not be residents of the state in
which the corporation is organized or stockholders or employees of the
corporation.
Section 2.03 Compensation. The Board of Directors shall have authority
to fix the compensation of directors.
Section 2.04 Duties of Directors. A director shall discharge his duties
as a director, including his duties as a member of any committee of the Board of
Directors on which he may serve, in good faith, in a manner he reasonably
believes to be in the best interests of the corporation, and with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances.
In performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by:
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(a) one or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in
the matters presented,
(b) legal counsel, public accountants or other persons as to
matters which the director reasonably believes to be within
the persons professional or expert competence, or
(c) A committee of the Board of Directors of which he is not a
member if the director reasonably believes the committee
merits confidence.
In discharging his duties, a director may consider such factors as the
director deems relevant, including the long-term prospects and interests of the
corporation and its stockholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
A director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that makes reliance otherwise
permitted by this Section unwarranted.
A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this Section.
Section 2.05 Presumption of Assent. A director of the corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless he objects at the beginning of the meeting (or promptly upon his arrival)
to the holding of such meeting or transacting specified business at such meeting
or such director votes against or abstains from the action taken.
Section 2.06 Number. This corporation shall have initially one (1)
director. Thereafter, the number constituting the entire Board of Directors
shall be at least one. Subject to the foregoing limitation and except for the
first Board of Directors, such number may be fixed from time to time by action
of the stockholders or of the directors, or, if the number is not fixed, the
number shall be one.
Section 2.07 Election and Term of Directors. Each person named in the
Articles of Incorporation as a member of the initial Board of Directors shall
hold office until the first annual meeting of the stockholders, and until his
successor shall have been elected and qualified or until the earlier of his
resignation, removal from office or death.
At the first annual meeting of the stockholders and each annual meeting
thereafter, the stockholders shall elect the directors to hold office until the
next succeeding annual meeting. Each director shall hold office for the term for
which such director is elected until his successor shall have been elected and
qualified or until such director's earlier resignation, removal from office or
death.
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Section 2.08 Vacancies on Board. Any vacancy occurring on the Board of
Directors, including a vacancy resulting from an increase in the number of
Directors, may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the Board of Directors, or by the
stockholders. A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
Section 2.09 Resignation of Directors. A director may resign at any
time by delivering written notice to the Board of Directors or its chairman or
to the corporation.
Section 2.10 Removal of Directors. At a meeting of stockholders called
expressly for the purpose of removing one or more directors, any director or the
entire Board of Directors may be removed, with or without cause, by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. If a director was elected by a voting group of stockholders, only the
stockholders of the voting group may participate in the vote to remove such
director.
Section 2.11 Quorum and Voting. A majority of the number of directors
shall constitute a quorum for the transaction of business. The act of a majority
of directors present at a meeting at which a quorum exists shall be the act of
the Board of Directors.
Section 2.12 Director Conflicts of Interest. No contract or other
transaction between this corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of its
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
director or directors are present at the meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract or
transaction or because his or their votes are counted for such purposes,
provided:
(a) the fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes,
approves or ratifies the contract or transaction by a vote or
consent sufficient for the purpose without counting the votes
or consents of such interested directors; or
(b) the fact of such relationship or interest is disclosed or
known to the stockholders entitled to vote and they authorize,
approve or ratify such contract or transaction by vote or
written consent; or
(c) the contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the Board, a
committee or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
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A conflict of interest transaction is authorized, approved, or ratified
if such conflict of interest transaction receives the vote of a majority of the
shares entitled to be counted under this Section. Shares owned by or voted under
the control of a director who has a relationship or interest in the transaction
may not be counted in a vote of stockholders to determine whether to authorize,
approve, or ratify a conflict of interest transaction. The vote of such shares,
however, shall be counted in determining whether the transaction is approved for
other purposes. A majority of the shares, whether or not present, that are
entitled to be counted in a vote on the transaction under this Section
constitutes a quorum for the purpose of taking action hereunder.
Section 2.13 Committees. The Board of Directors, by resolution adopted
by a majority of the full Board of Directors, may designate from among its
members an executive committee and one or more other committees each of which,
to the extent provided in such resolution shall have and may exercise all the
authority of the Board of Directors, except that no committee shall have the
authority to:
(a) approve or recommend to stockholders actions or proposals
required by law to be approved by stockholders;
(b) fill vacancies on the Board of Directors or any committee
thereof;
(c) adopt, amend, or repeal the Bylaws; or
(d) authorize or approve the issuance or sale or contract for the
sale of shares, or determine the designation and relative
rights, preferences, and limitations of a voting group except
that the Board of Directors may authorize a committee (or a
senior executive officer of the corporation) to do so within
limits specifically prescribed by the Board of Directors.
The provisions of these Bylaws governing meetings, notice and quorum
and voting requirements of the Board of Directors shall also apply to committees
and their members.
Each committee established pursuant to this Section 2.13 must have two
(2) or more members who serve at the pleasure of the Board of Directors. The
Board of Directors, by resolution adopted by a majority of the full Board of
Directors, may designate one (1) or more directors as alternate members of any
such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
Section 2.14 Place of Meetings. Regular and special meetings by the
Board of Directors may be held within or without the State of Florida.
Section 2.15 Meetings. Regular meetings of the Board of Directors may
be held without notice of the date, time, place, or purpose of the meeting.
Written notice of the date, time and
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place of a special meeting of the Board of Directors shall be given to each
director at least two (2) days before the meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, or promptly upon
arrival at the meeting, any objection to the transaction of business because the
meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any
regular special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting shall be given to the Directors who were
not present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors.
Meetings of the Board of Directors may be called by the Chairman of the
Board, by the President or by any two (2) directors.
The Board of Directors may permit any or all directors to participate
in a regular or special meeting by, or conduct the meeting through the use of,
conference telephone or any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.
Section 2.16 Action Without a Meeting. Action required or permitted to
be taken at a Board of Directors' meeting or committee meeting may be taken
without a meeting if the action is taken by all members of the Board of
Directors or of the committee. The action must be evidenced by one or more
written consents describing the action taken and signed by each director or
committee member.
Action taken under this Section is effective when the last director
signs the consent, unless the consent specifies a different effective date.
A consent signed under this Section has the effect of a meeting vote
and may be described as such in any document.
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ARTICLE III. OFFICERS
Section 3.01 Officers. The officers of the corporation shall consist of
a President and a Secretary, and may also consist of one or more Vice
Presidents, a Treasurer, one or more Assistant Secretaries or Assistant
Treasurers and such other officers as the Board of Directors may from time to
time consider necessary for the proper conduct of the business of the
corporation. The same person may simultaneously hold more than one office.
Each officer shall be elected by the Board of Directors. Each such
officer (whether elected at an annual meeting of the Board of Directors or to
fill a vacancy or otherwise) shall hold his office until the next annual meeting
of the Board of Directors and until his successor shall have been elected and
qualified, or until his death, resignation or removal.
Section 3.02 Duties. The officers of this corporation shall have the
following duties:
The President shall be the chief executive officer of the corporation,
shall have general and active management of the business and affairs of the
corporation subject to the direction of the Board of Directors, and shall
preside at all meetings of the stockholders and Board of Directors.
The Secretary shall have the custody of, and maintain, all of the
corporate records except the financial records, shall record the minutes of all
meetings of the stockholders and Board of Directors, send all notices of
meetings to the proper parties, and perform such other duties as may be
prescribed by the Board of Directors or the President.
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of the stockholders and whenever
else required by the Board of Directors or the President, and shall perform such
other duties as may be prescribed by the Board of Directors or the President.
Section 3.03 Resignation and Removal of Officers. An officer may resign
at any time by delivering notice to the corporation. A resignation is effective
when the notice is delivered unless the notice specifies a later effective date.
If a resignation is made effective at a later date and the corporation accepts
the future effective date, the Board of Directors may fill the pending vacancy
before the effective date if the Board of Directors provides that the successor
does not take office until the effective date.
The Board of Directors may remove any officer at any time with or
without cause.
The appointment of an officer does not itself create contract rights.
An officer's removal does not affect the officer's contract rights, if any, with
the corporation. An officer's resignation does not affect the corporation's
contract rights, if any, with the officer.
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Section 3.04 Compensation. The compensation of the President,
Secretary, Treasurer and such other officers elected or appointed by the Board
of Directors shall be fixed by the Board of Directors and may be changed from
time to time by a majority vote of the Board of Directors. The fact that an
officer is also a director shall not preclude such person from receiving
compensation as either a director or officer, nor shall it affect the validity
of any resolution by the Board of Directors fixing such compensation. The
President shall have authority to fix the salaries of all employees of the
corporation other than officers elected or appointed by the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
Section 4.01 Issuance. All shares of the corporation issued to
stockholders must be represented by certificates in the form prescribed in
Section 4.02 hereof.
Section 4.02 Form. Every certificate representing shares issued by the
corporation shall state the following:
(a) the name of the corporation and that it is organized under the
laws of the State of Florida;
(b) the name of the person to whom the stock certificate is
issued; and
(c) the number and class of shares and the designation of the
series, if any, the stock certificate represents.
If the corporation is authorized to issue different classes of shares
or different series within a class, the designation, relative rights,
preferences, and limitations applicable to each class and the variations and
rights, preferences and limitations determined for each series (and for
authority of the Board of Directors to determine variations for future series)
shall be summarized on the front or back of each certificate. Alternatively,
each certificate may state conspicuously on its front or back that the
corporation will furnish to the shareholder a full statement of this information
on request and without charge.
Every certificate representing shares issued by the corporation must be
signed by the President and the Secretary of the corporation and may bear the
corporate seal. In the event any officer who signed a certificate no longer
holds office when the certificate is issued, the certificate shall nevertheless
be valid.
Every certificate representing shares which are restricted as to their
sale, disposition or other transfers shall conspicuously state on the front or
back of the stock certificate that such shares are so restricted and shall set
forth or fairly summarize upon the certificate, or shall state that the
corporation will furnish to any shareholder upon request and without charge, a
full statement of such restrictions.
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Section 4.03 Transfer of Stock. The corporation shall register a stock
certificate presented to it for transfer if the certificate is properly endorsed
by the holder of record or by his or her duly authorized attorney, and the
signature of such person has been guaranteed by a commercial bank or trust
company or by a member of the New York or American Stock Exchange unless such
guaranteed signature requirement is waived by the Board of Directors.
Section 4.04 Lost, Stolen, or Destroyed Certificates. The corporation
shall issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate (a) makes proof in affidavit
form that such certificate has been lost, destroyed or wrongfully taken; (b)
requests the issuance of a new certificate before the corporation has notice
that the certificate has been acquired by a purchaser for value in good faith
and without notice of any adverse claim; and (c) satisfies any other reasonable
requirements imposed by the corporation; including bond in such form as the
corporation may direct, to indemnify the corporation, the transfer agent, and
registrar against any claim that may be made on account of the alleged loss,
destruction or theft of a certificate.
ARTICLE V. BOOKS AND RECORDS
Section 5.01 Corporate Records. This corporation shall keep as
permanent records minutes of all meetings of its stockholders and Board of
Directors, a record of all actions taken by the stockholders or Board of
Directors without a meeting, and a record of all actions taken by a committee of
the Board of Directors in place of the Board of Directors on behalf of the
corporation. Additionally, the corporation shall maintain accurate accounting
records.
The corporation or its agent shall maintain a record of its
stockholders in a form that permits preparation of a list of the names and
addresses of all stockholders in alphabetical order by class of shares showing
the number and series of shares held by each.
The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
The corporation shall keep a copy of the following records:
(a) its Articles or Restated Articles of Incorporation and all
amendments to the Articles or Restated Articles of
Incorporation currently in effect;
(b) its Bylaws or Restated Bylaws and all amendments to the Bylaws
or Restated Bylaws currently in effect;
(c) resolutions adopted by the Board of Directors creating one or
more classes or series of shares and fixing their relative
rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding;
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(d) the minutes of all stockholders' meetings and records of all
action taken by stockholders without a meeting for the past
three (3) years;
(e) written communications to all stockholders generally or all
stockholders of a class or series within the past three (3)
years, including the financial statements furnished for the
past three (3) years as required under Section 5.03 hereof;
(f) a list of the names and business street addresses of its
current directors and officers; and
(g) the most recent annual report delivered to the Department of
State or required under Section 607.1622 of the Florida
Statutes.
Section 5.02 Inspection of Records by Stockholders. Any stockholder of
the corporation is entitled to inspect and copy, during regular business hours
at the corporation's principal office, any of the records of the corporation set
forth in Section 5.01 above, if such stockholder gives the corporation written
notice of his demand at least five (5) business days before the date on which he
wishes to inspect and copy such records of the corporation.
Any stockholder of the corporation is entitled to inspect and copy,
during regular business hours at a reasonable location specified by the
corporation, the records of the corporation set forth in subsections (a) and (d)
below, if the stockholder's demand for inspection is made in good faith and for
a proper purpose, the shareholder describes with reasonable particularity his
purpose for the records he desires to inspect, the records are directly
connected with such purpose and such shareholder gives the corporation written
notice of his demand at least five (5) days before the date on which he wishes
to inspect and copy such corporate records:
(a) excerpts from minutes of any meeting of the Board of
Directors, records of any action of a committee of the Board
of Directors while acting in place of the Board of Directors
on behalf of the corporation, minutes of any meeting of the
stockholders, and records of action taken by the stockholders
or Board of Directors without a meeting, to the extent not
subject to inspection under this Section 5.02;
(b) accounting records of the corporation;
(c) the record of stockholders; and
(d) any other books and records of the corporation.
Any stockholder of this corporation shall be entitled to inspect and
copy, during regular business hours at a reasonable location in this state
specified by the corporation, a copy of the Bylaws or Restated Bylaws and all
amendments to the Bylaws or the Restated Bylaws of the
15
<PAGE>
corporation currently in effect and a list of the names and business street
addresses of the corporation's current directors and officers if such
shareholder gives the corporation written notice of his demand at least fifteen
(15) business days before the date on which he wishes to inspect and copy such
corporate records.
This section does not affect: the right of any stockholder to inspect
and copy records under Section 1.07 hereof; the right of a stockholder to
inspect and copy records to the same extent as any other litigant if the
stockholder is in litigation with the corporation, or the power of a court, to
compel the production of corporate records for examination.
The corporation shall have the right to deny any demand for inspection
requiring the stockholder to have a proper purpose to inspect and copy the
corporate records, if the stockholder's demand was made for an improper purpose,
or if the demanding stockholder has within two (2) years preceding his or her
demand sold or offered for sale any list of stockholders of the corporation or
any other corporation, has aided or abetted any person in procuring any list of
stockholders for any such purpose, or has improperly used any information
secured through any prior examination of the records of the corporation or any
other corporation.
For purposes of this section, the term "stockholder" includes a
beneficial owner whose shares are held in a voting trust or by a nominee on his
behalf.
For purposes of this section, a "proper purpose" means a purpose
reasonably related to such person's interest as a stockholder.
Section 5.03 Financial Information. The corporation shall furnish to
its stockholders annual financial statements which may be consolidated or
combined statements of the corporation and one or more of its subsidiaries, as
appropriate, that include a balance sheet as of the end of the fiscal year, an
income statement for that year, and a statement of cash flows for that year. If
financial statements are prepared for the corporation on the basis of generally
accepted accounting principles, the annual financial statements must also be
prepared on that basis.
If the annual financial statements of the corporation are reported upon
by a public accountant, the public accountant's report must accompany the annual
financial statements. If the annual financial statements are not reported upon
by a public accountant, the annual financial statements must be accompanied by a
statement of the President or the person responsible for the corporation's
accounting records:
(a) stating such person's reasonable belief whether such
statements were prepared on the basis of generally accepted
accounting principles and, if not, describing the basis of
preparation; and
16
<PAGE>
(b) describing in what respects the statements were not prepared
on a basis of accounting consistent with the statements
prepared for the immediately preceding year.
The corporation shall mail the annual financial statements to each
shareholder within one hundred twenty (120) days after the close of each fiscal
year or within such additional time thereafter as is reasonably necessary to
enable the corporation to prepare its financial statements if, for reasons
beyond the corporation's control, it is unable to prepare its financial
statements within the prescribed period. Thereafter, on written request from a
shareholder who was not mailed the annual financial statements, the corporation
shall mall such shareholder the latest annual financial statements.
ARTICLE VI. DISTRIBUTIONS TO STOCKHOLDERS
The Board of Directors may authorize the corporation to make
distributions to its stockholders, provided that following such distribution:
(a) the corporation will be able to pay its debts as they become
due in the usual course of business; or
(b) the corporation's total assets will be greater than the sum of
its total liabilities plus (unless the Articles of
Incorporation permit otherwise) the amount that will be
needed, if the corporation were to be dissolved at the time of
the distribution, to satisfy any preferential rights upon
dissolution of stockholders whose preferential rights are
superior to those receiving the distribution.
If the record date is not fixed by the Board of Directors for
determining stockholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), the
record date is the date the Board of Directors authorizes the distribution.
The Board of Directors may base a determination that a distribution may
be made as provided in this Article VI either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the stockholders concurrent with their receipt
of the distribution.
ARTICLE VII. CORPORATE SEAL
A corporate seal shall not be required to be attached to any instrument
executed by or on behalf of the corporation unless required by law, but if so
required shall be of such shape and
17
<PAGE>
have such words thereon as may be described by law or by the Board of Directors.
The seal may be used by impressing it or reproducing a facsimile thereof, or
otherwise.
ARTICLE VIII. AMENDMENT
This corporation's Board of Directors may amend or repeal the
corporation's Bylaws unless:
(a) the Articles of Incorporation or other provision of law
reserves the power to amend the Bylaws generally, or a
particular bylaw provision, exclusively to the stockholders;
or
(b) the stockholders, in amending or repealing the Bylaws
generally, or a particular bylaw provision, provide expressly
that the Board of Directors may not amend or repeal the Bylaws
or that bylaw provision.
Notwithstanding anything contained in these Bylaws to the contrary, the
corporation's stockholders may amend or repeal the corporation's Bylaws even
though the Bylaws may also be amended or repealed by its Board of Directors.
18
EXHIBIT 10.1
ACKNOWLEDGMENT AND RELEASE
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT ACCEPTED
ISSUER: CHERRY TREE CAPITAL CORP. (K.N.A. NETMAXIMIZER.COM, INC.)
PURCHASER:
LEGAL COUNSEL: VENTURE LAW CORPORATION
I, the subscriber, release the Issuer, and its Legal Counsel from any
claims that I have or may have arising from the above Subscription Agreement,
legally terminated as of the signing of this mutual release, and acknowledge the
return of my subscription funds in full and consent to the cancellation of all
shares issued in connection with this matter.
DATED at ____________________ , this ____ day of ____________, 1999.
Witness:
------------------------------- --------------------------------------
Signed by:
-----------------------------
Print Name
Address:
-------------------------------
------------------------------- Address:
I, the Issuer, release the Subscriber, and my Legal Counsel from any
claims that I have or may have arising out of the above Subscription Agreement,
legally terminated as of the signing of this mutual release, and agree to return
the subscription funds in the amount of US $_______ to the Subscriber in full.
I, the Issuer, acknowledge and agree all shares issued in connection with the
Subscription Agreement will be cancelled.
DATED at ________________, ______________ this ______ day of
____________, ______.
NETMAXIMIZER.COM, INC.
Witness:
------------------------------------------
Authorized Signatory
Address:
Address:
<PAGE>
RNL REALTY ASSOCIATES, INC.
7695 SW 104th Street, Suite 210
Miami, FL 33156
INVESTOR QUESTIONNAIRE
----------------------
THE FOLLOWING INVESTOR QUESTIONNAIRE IS ESSENTIAL TO INSURE THAT THIS PRIVATE
OFFERING IS CONDUCTED IN FULL COMPLIANCE WITH RULE 504 OF REGULATION D
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE QUESTIONNAIRE WILL
REMAIN ON FILE IN ABSOLUTE CONFIDENCE IN THE OFFICE OF THE COMPANY. YOUR
COOPERATION IN THE FULL COMPLETION OF THE INVESTOR QUESTIONNAIRE IS GREATLY
APPRECIATED.
Please answer each question fully and attach additional information, if
necessary. If the answer to any question is "None" or "Not Applicable," please
state so. Please sign and date the Questionnaire on the final page.
Gentlemen,
I understand that each "Share" being subscribed for consists of one share in the
common stock of RNL REALTY ASSOCIATES, INC. (the "Company") with a part value of
$0.001 per share (the "Shares") for $0.001 per Share.
I further understand that the Shares herein offered to me will not be registered
under the SECURITIES ACT OF 1933, as amended and applicable state securities law
(the "State Act"). I also understand that in order to insure that the offer and
sale of the Shares (the "Offering") are exempt from registration under the
SECURITIES ACT OF 1933 and the State Acts, the Company is required to have
reasonable grounds to believe, and must actually believe, after making
reasonable inquiries and prior to making any sale, that all purchasers are able
to evaluate the merits and risks of an vestment in the Shares.
In order to induce you to permit the undersigned to purchase the Shares, I
hereby warrant and represent to you as follows:
1. Subscriber's Name:
Home Address:
Home Phone:
Social Security No., or
Employers Identification No:
Date of Birth:
2. Occupation/Business
Present Employer
Business Address:
Business Phone:
<PAGE>
3. ACCREDITED INVESTOR STATUS:
Check one of the following representations (a) through (d), if applicable. If
not applicable, proceed to question 4.
___ (a) My individual net worth, or joint net worth with my spouse,
exceeds $1,000,000.
___ (b) My individual income was in excess of $200,000 in each of the
two most recent years, or my joint income with my spouse was
excess of $300,000 in each of the two most recent years, and I
reasonably expect to reach the same income level in the
current year.
___ (c) I am a director or executive officer of the Company.
___ (d) My net worth or joint net worth is at least: (Check one):
IF AN INDIVIDUAL
with my spouse is at least:
___ $500,000 to $1 million
___ $1 million to $5 million
___ over $5 million
IF A CORPORATION
___ over $5 million
___ all equity owners are accredited investors under statement
3(d) above
IF A TRUST
___ trust assets over $5 million
___ trustee is (i) a bank, or savings and loan association or
other institution, as defined in Sections 3(a)(2) or
3(a)(5)(A) of the SECURITIES ACT OF 1933, (ii) acting in its
fiduciary capacity as trustee, and (iii) subscribing on behalf
of a trust for the purchase of the Units
___ all grantors are accredited investors under statement 3(d)
above.
4. NON-ACCREDITED INVESTOR STATUS:
My net worth, excluding home, furnishings, automobiles, and other assets which
are not readably marketable is in excess of: (Check one)
___ $65,000
___ $100,000
___ $200,000
___ $300,000
___ over $300,000
The current market value of my liquid assets is $
-------------------------------
5. Have you previously participated in other private placements?
Yes No
2
<PAGE>
6. State the types of investments in which you have previously participated:
Types of Investments: Amount of Investment:
--------------------------- ---------------------------------
--------------------------- ---------------------------------
--------------------------- ---------------------------------
--------------------------- ---------------------------------
7. State your investment objectives by checking the following where applicable
____ Income
_X__ Appreciation
____ Other:___________________________
8. GENERAL WARRANTIES:
(a) SEC Rule 504 of Regulation D requires that each purchaser who
is not an Accredited Investor have sufficient knowledge and
experience in financial and business matters to be capable of
evaluating the merits and risks of an investment in the
Company.
I represent and warrant that I have such knowledge and experience in
financial and business matters, and that I am capable of evaluating the
merits and risks of an investment decision.
(b) I agree and warrant I am familiar with the business and
financial condition, properties, operations and prospects of
the Company. I have obtained copies of all information I deem
necessary or appropriate to evaluate the merits and risks of
an investment in the Units and underlying Shares. I further
acknowledge that I have had the opportunity to ask questions
of, and to receive answers from representatives of the Company
concerning the terms and conditions of the offering.
(c) I represent and warrant to the Company that information
contained in this Investor Questionnaire is true, complete and
correct.
Date:
---------------------------
Per: Authorized Signatory
3
<PAGE>
GENERAL SUBSCRIPTION AGREEMENT AND QUESTIONNAIRE
------------------------------------------------
RNL REALTY ASSOCIATES, INC.
GENERAL SUBSCRIPTION AGREEMENT
RNL Realty Associates, Inc.
(the "Company")
7695 SW 104th Street, Suite 210
Miami, FL 33156
Gentlemen:
The undersigned hereby tenders this Subscription Agreement to you and
applies for the purchase of _______ shares of the Company for $0.001 each for an
aggregate purchase price of $______. The securities being offered are shares in
the common stock of the Company with a par value of $0.001 per share (the
"Shares"). All sums are in U.S. currency.
The undersigned hereby acknowledges:
(a) the undersigned is familiar with the business and financial
condition, properties, operations and prospects of the Company
and the undersigned has obtained copies of all information the
undersigned deems necessary or appropriate to evaluate the
merits and risks of an investment in the Shares. The
undersigned further acknowledges that the undersigned has had
the opportunity to ask questions of, and to receive answers
from representatives of the Company concerning the terms and
conditions of the offering;
(b) that upon the execution hereof by the undersigned, payment by
the undersigned of the full price of the Shares subscribed for
hereby shall be due and payable and shall accompany the return
of this Subscription Agreement by the undersigned and shall be
payable in U.S. funds;
(c) that in the event this Subscription Agreement is rejected by
the Company, the initial payment by the undersigned shall be
returned to the undersigned with the notice of such rejection;
(d) that any cash payment for the Shares (in a form payable to the
Company) will be deposited directly into the Company's bank
account and will be immediately available for use by the
Company. In the event that this subscription has not been
accepted by the earliest of (1) the date the Company may, in
its sole discretion, determine; (2) the date on which all the
Shares are sold; or (3) March 5, 1999 (the "Closing Date"),
the payment made by the undersigned and documents provided
will be promptly returned by the Company to the undersigned
without further obligation;
(e) the undersigned understands and acknowledges that an
investment in the Company is not liquid, not easily
transferable or disposed of, and that he has no need for
liquidity of this investment. The Shares issued under Rule 504
to Ontario residents will bear a restrictive legend; and
(f) that each subscriber is personally liable for the total amount
of the subscription price.
<PAGE>
In consideration of the sale of the Shares and intending to be legally bound,
the undersigned hereby represents and warrants as follows:
1. The undersigned has substantial knowledge, skill and experience in
business, financial and investment matters and is capable of evaluating
the merits and risks of an investment in the Shares. To the extent that
the undersigned has deemed it appropriate to do so, the undersigned has
retained, at his or her own expense, and relied on, appropriate
professional advice regarding the investment, tax and legal merits and
consequences of purchasing the Shares.
2. The principal residence of each of the undersigned, if an individual,
is in the State, Province or Country shown in this Subscription
Agreement; if the undersigned is a corporation, trust or other entity
(except a partnership), it was incorporated or organized and is
existing under the laws of the State, Province or Country shown in this
Subscription Agreement; if the undersigned is a partnership, the
principle residence of all of its general partners are in the States
shown in this Subscription Agreement; and if the undersigned is a
corporation, trust, partnership or other entity; it was not organized
for the specific purpose of acquiring the Shares.
3. The Shares for which the undersigned hereby subscribes will be acquired
solely for the account of the undersigned (or if the undersigned is a
trust, solely for the beneficiaries thereof), for investment and is not
being purchased for subdivision or fractionalization thereof; and the
undersigned has no contract, undertaking, agreement or arrangement with
any person to sell, transfer or pledge to such person, or to anyone
else, the Shares which the undersigned hereby subscribes to purchase or
any part thereof, and the undersigned has no present plans to enter
into any such contract, undertaking, agreement or arrangement.
4. The Company has made all documents pertaining to this investment
available to the undersigned.
5. The undersigned is investing in his own name or in the capacity
indicated herein; and was not solicited by any form of general
solicitation or general advertising.
6. The undersigned, if an individual, is at least 21 years of age and a
bona fide resident of the State, Province or Country indicated herein
and has no present intention of becoming a resident of any other state
or jurisdiction.
The undersigned is one of the following: (Please check one)
FOR INDIVIDUAL INVESTORS ONLY
-----------------------------
_____ (a) a natural person who has an individual net worth, or
joint forth with that person's spouse of more than
$1,000,000; or
_____ (b) a natural person who had an individual income in
excess of $200,000 (a joint income in excess of
$300,000 with his spouse) in each of the two most
recent years and who reasonably expects to reach the
same income level in the current year; or
_____ (c) a director or executive officer of the Company;
_____ (d) a person with an annual income of at least $65,000
per year with sufficient knowledge and experience in
financial and business matters to valuate the risks
of the investment.
(e) none of the above.
2
<PAGE>
FOR CORPORATE INVESTORS ONLY
_____ (f) the undersigned hereby certifies that it is an
accredited investor because it has total assets in
excess of $5,000,000 and was not formed for the
specific purpose of investing in the Company;
_____ (g) the undersigned hereby certifies that it is a
accredited investor because all of its equity owners
are accredited investor under statement 6(a), (b),
(c), or (d) above.
_____ (h) none of the above.
FOR TRUSTS
----------
_____ (i) the undersigned hereby certifies that it is an
accredited investor because it is a trust which has
total assets in excess of $5,000,000 and was not
formed for the specific purpose of investing in the
Company and that the purchase is directed by a person
with such knowledge and experience in financial and
business matters that he is capable of evaluating the
risks and merits of an investment in the Company;
_____ (j) the undersigned hereby certifies that it is an
accredited investor because it is (i) a bank, or
savings and loan association or other institution, as
defined in Sections 3(a)(2) or 3(a)(5)(A) of the
SECURITIES ACT OF 1935, (ii) acting in its fiduciary
capacity as trustee, and (iii) subscribing on behalf
of a trust of the purchase of the Shares.
_____ (k) the undersigned hereby certifies that it is an
accredited investor because it is a revocable trust
which may be amended or revoked at any time by the
grantors thereof and all of the grantors are
accredited investors under either statement 6(a),
(b), (c), or (d) above.
_____ (l) none of the above.
7. If the undersigned warrants eligibility for participation in accordance
with Paragraph 6(d) above, undersigned hereby represents and warrants
that he has an individual net worth (or joint net worth with his
spouse) at the time of Subscription of at least $65,000 (exclusive of
home, home furnishings and personal automobiles) for the Shares
subscribed for.
8. The undersigned acknowledges an understanding of the restrictions on
transferability of the Shares purchased herein.
The undersigned acknowledges and is aware of the following:
9. This subscription may be accepted or rejected, in whole or in part by
the Company in its sole and absolute discretion.
10. The Shares are a speculative investment which involves a high degree of
risk of loss by the undersigned of the entire investment of the
undersigned and there is no assurance of any income from such
investment.
11. No federal or state agency has made any finding or determination as the
fairness of the offering, or any recommendation or endorsement of the
Shares.
3
<PAGE>
12. There are substantial restrictions on the transferability of the
Shares. There will be no public market for the Shares, and accordingly,
the undersigned will need to bear the economic risk of his investment
for an indefinite period of time and will not be readily able to
liquidate this investment in case of any emergency. Further, the Shares
issued under Rule 504 of Regulation D of the SECURITIES ACT OF 1933
issued to Ontario residents will also bear a restrictive legend
concerning resale restrictions imposed by the Ontario securities
legislation.
13. The undersigned agrees not to transfer or assign this subscription or
any interest therein and agrees that if this subscription is accepted
by the Company, the assignment and transferability of the Shares
purchased by the undersigned will be governed by all applicable state,
provincial and federal laws.
14. In connection with this subscription, the undersigned is relying on the
following representations and warranties of the Company:
(a) the Company has been duly incorporated and organized, is
validly subsisting under the laws of its jurisdiction of
incorporation, is current and up to date with all material
filings required to be made under the laws of that
jurisdiction and has all requisite corporate power and
authority to own its property and assets and to carry on its
business as now conducted or proposed to be conducted;
(b) the authorized capital of the Issuer consists of 50,000,000
shares of common stock with a par value of $0.001 per share,
of which 1,000,000 shares have been validly issued and are
outstanding as of the date hereof;
(c) no person has any agreement or option, or any right or
privilege (whether pre-emptive or contractual) capable of
becoming an agreement (including convertible securities or
warrants), to acquire any unissued shares or other securities
of the Company;
(d) the Company has not entered into any contracts, commitments or
engagements or incurred any liabilities that could be regarded
as presently material to a proposed investor in this offer of
shares other than contracts, commitments or engagements
entered into or liabilities incurred in the ordinary course of
business of the Company and except in connection with the
offering of the subject shares;
(e) to the knowledge of the Company, there are no actions, suits,
proceedings or inquiries pending or threatened against or
affecting the Company, at law or in equity, before or by any
federal, state, provincial, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which may in any way
materially and adversely affect the Company taken as a whole
or which may question the validity of the issue and sale of
the shares;
(f) neither the acceptance or execution of this subscription
agreement nor the consummation of the transactions provided
for or contemplated herein results ore will result in the
breach of nor conflict with any of the terms, conditions or
provisions of, or will constitute a default under, the
articles, by-laws or resolutions of the Company or any
indenture, agreement or instrument to which the Company is a
party or is bound;
(g) the balance sheet of the Company as at June 10, 1995 and the
statements of income, retained earnings and changes in cash
for the years then ended, together with the report of the
auditors of the Company thereon, have been prepared in
accordance with the accounting practices described in the
notes thereto, on a basis consistent with previous years and
present fairly the assets, liabilities and the financial
condition of the Company as at such dates and the sales,
income and results of operations of the Company during the
periods covered thereby;
4
<PAGE>
(h) the unaudited financial statements of the Company as at
December 31, 1997 have been prepared in accordance with the
same accounting practices described in section (k) above
applied on a basis consistent with previous years and present
fairly the sales, income and results of operations of the
Company during the periods covered thereby;
(i) the proceeds to the Company from the sale of the shares will
be used as general working capital;
(j) as far as the current Board of Directors are aware there has
been no material change (actual, anticipated, contemplated or
threatened, financial or otherwise) except as publicly
disclosed prior to February 28, 1999, in the business,
affairs, operations, capital, assets or liabilities
(contingent or otherwise) of the Company since June 10, 1998;
and
(k) the shares of the common stock of the Company are quoted on
the Over the Counter Bulletin Board operated by the National
Association of Securities Dealers in the United States.
The undersigned recognizes that the offer and sale of the Shares to the
undersigned is based on the representations and warranties of the undersigned
contained in Paragraphs 1 through 8 above and hereby agrees to indemnify the
Company and the officers and directors of the Company, and to hold each of such
entities and persons harmless against all liabilities, costs or expenses
(including reasonable attorney's fees) arising by reason of or in connection
with any misrepresentations or any breach of such warranties by the undersigned,
or arising as a result of the sale or distribution of the Shares by the
undersigned in violation of the SECURITIES EXCHANGE ACT OF 1934, as amended, the
SECURITIES ACT OF 1933, as amended, or any other applicable federal or state
statute.
Upon acceptance by the Company of the subscription agreement by the undersigned,
the undersigned agrees to become an investor in the Company. The undersigned
acknowledges and agrees that the undersigned is not entitled to cancel,
terminate or revoke this subscription agreement or any agreements of the
undersigned herein, and that such subscription or agreements shall survive (a)
changes in transactions, documents, and instruments described in any materials
provided by the Company which the aggregate are not material, and (b) the death
or disability of the undersigned; provided, however, that if the Company shall
not have accepted this subscription by the Closing Date, either by personally
delivering to the undersigned an executed copy hereof reflecting such acceptance
or by depositing in the United States Mail, postage prepaid, a written notice of
acceptance addressed to the undersigned hereunder, and the power of attorney
granted hereby shall be automatically canceled, terminated and revoked.
The undersigned acknowledges that he/she is a person who has knowledge and
experience in financial and business matters such that the undersigned is
capable of evaluating the merits and risk of an investment in the Company and
making an informed decision.
RNL REALTY ASSOCIATES, INC. Date: 3/1/99
--------------------------
- ---------------------------------------------------------
Per: Authorized Signatory
5
<PAGE>
RNL REALTY ASSOCIATES, INC.
REGISTRATION INSTRUCTIONS
Please register the Shares acquired by the undersigned as follows:
---------------------------------------------------------
Printed Name
---------------------------------------------------------
Address
-----------------------------------------------------------
City State/Province Zip Code/Postal Code
N/A
---------------------------------------------------------
Social Security Number/Employer Identification Number
Number of Shares:
-------------------------
Date Acquired: 3-1-99
-------------------------
3/1/99
- -------------------------------- -----------------------------------
Signature Date
- --------------------------------
Printed Name
Date:
Netmaximizer.com, Inc.
7491 N. Federal Highway
Suite 262
Boca Raton, FL 33487
Ladies and Gentlemen:
We maintain a site on the World Wide Web. The universal resource
locator ("URL") of our site is indicated on the attached membership application.
We ask that you evaluate our site and review the information which is contained
on the attached application to determine if (in your sole discretion) we may
participate in the Netmaximizer.com Associates Program (the "Program"). The
attached application also indicates the name of the salesperson or broker, if
any, who has convinced us to send this letter to you and may be entitled to a
commission or other compensation from you. This letter is our agreement
regarding our participation in the Program and supercedes all prior or
contemporaneous agreements and understandings, written or oral, with respect to
our participation in the Program. By signing and returning a copy of this letter
to us, you indicate your acceptance of us as a participant in the Program.
If we are accepted into the Program, you will give us a URL and
password that will enable us to set up links between your site and ours and to
monitor activity on those links. The URL will also us access to your graphics
library so that we may establish connectivity between our site and yours using
your logos, buttons and banners. Those logos, buttons and banners (together with
your name, trademarks and service marks, your "Marks") remain your property, and
we may not modify them or use them in any way other than to establish the links.
It is solely our responsibility to establish and maintain the links. We
will not assert any claim against you if the links do not function as they
should at any time for any reason. We will notify you promptly of any
malfunctions. You may use a graphic of ours on your site for co-branding
purposes or as a return link to our site; but you agree that such graphic or
banner remains our property and to remove that graphic or banner if we ask you
to do so.
The links between your site and ours, once properly formatted, will
give access to some or all of the products and services offered on your site
(your "Products"). If a person visits our site (a "Customer"), follows one of
those links to your site and places an order to purchase a Product, the Customer
will be deemed to be your customer, subject to your rules, policies, and prices.
Because your rules, policies and prices are subject to change at any time and
without notice to us, we will not advertise your rules, policies, and prices,
either on our site or elsewhere. You will process Product orders, payments and
cancellations, and handle customer service. We will make no claim against you
and you will not be responsible to us for delays, nondeliveries or misdeliveries
of Products.
Because the Customer followed the link from our site to yours to make
the purchase (but only if the Customer followed that link), you are able to
track that activity and will pay to us a fee of fifteen per cent (15%) of the
purchase price paid (not including taxes, shipping or handling), provided you
fill the order and the customer does not subsequently cancel it or return the
Product. You will pay the fee to us at the end of the second full calendar week
following the week during which our Customer purchased the Product, if our
Customers have generated sales which entitle us to fees of more than $25.00 for
that week; otherwise, you will
<PAGE>
carry the fee forward until we are entitled to fees of at least $25.00. We will
be able to obtain reports from you regarding the purchasing activity of our
Customers through your site.
Each of us is an independent party and our participation in the Program
does not change that in any way. Neither of us will be liable to the other for
indirect, special or consequential damages arising in connection with this
agreement or the Program. We cannot make or accept any representations,
warranties or offers on your behalf. As a result of participating in the
Program, we may learn confidential information about you (for example,
information not generally known to the public regarding your business methods,
technical operations and trade secrets). We agree to keep that information
secret, unless we are required by a court or other authority to disclose it, in
which case we will so notify you.
Either of us can terminate our participation in the Program by
providing five days' notice to the other by electronic message. If you accept
our application now, and later determine that our site is no longer suitable for
participation in the Program (in your sole discretion), you may terminate our
participation in the Program immediately, without regard to the five-day period.
You may also terminate our participation in the Program immediately if you
determine that we have been "spamming" from our site; that is, sending an
unsolicited advertisement to an electronic mail address of an individual with
whom we lack a business or personal relationship without consent or invitation.
If our participation in the Program is terminated for any reason, we will
eliminate the links to your site and stop using any of your Marks.
The agreement contained in this letter will be interpreted in
accordance with the laws of the State of Florida and any action arising from it
must be brought in the federal or state courts located in Palm Beach County,
Florida.
We understand that you may at any time, directly or indirectly, permit
Program participation by others on terms different from those contained in this
letter. You may modify the Program rules that relate to us at any time and in
your sole discretion. If any such modification is unacceptable to us, our only
recourse is to terminate our participation in the Program. You may also operate
web sites that are similar to or compete with our web site. We have evaluated
the desirability of participating in the Program, have relied on no
representation or guaranty other than as set forth above, and request that you
approve us as a participant in the Program.
Very truly yours,
____________________________
Accepted:
NETMAXIMIZER.COM, INC.
By: ____________________________
Date:
<PAGE>
APPLICATION
-----------
NETMAXIMIZER.COM ASSOCIATES PROGRAM
This Application should be completed and submitted along with the letter setting
forth your agreement to the terms of the program. You will hear from us within
two business days of our receipt of this Application and the letter.
1. Site Information
----------------
Please tell us the name of your site and your URL. If you don't know your URL,
please copy it from the location field at the top of your browser.
Site Name:
----------------------------------------
Site URL:
----------------------------------------
o Your site must be live.
2. Contact Information
-------------------
Primary Contact:
Please tell us who should receive all correspondence about your participation in
our program.
Federal Tax ID or Social Security Number (non-U.S.: type
"international*)
<TABLE>
<CAPTION>
<S> <C> <C>
--------------------------
Name: (First/Last)
-------------------------- --------------------------
Phone: (###) ###-####
--------------------------
Fax: (###) ###-####
--------------------------
Email Address:
--------------------------
Mailing Address:
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
City/State/Zip ----------------------------------------------------------
Country:
--------------------------
o Your email must be correct for us to send you required notices and
other correspondence.
o Please provide only one email address.
<PAGE>
Billing Contact:
Please tell us who should receive all monthly statements and payments
|_| Check box if same as the Primary Contact.
--------------------------
Name: (First/Last)
-------------------------- -------------------------
Phone: (###) ###-####
--------------------------
Fax: (###) ###-####
--------------------------
Email Address:
--------------------------
Mailing Address:
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
City/State/Zip ----------------------------------------------------------
Country:
--------------------------
Make check payable to:
----------------------------------------------------------
</TABLE>
Technical Contact:
Please tell us who to contact regarding technical issues and updates.
|_| Check box if same as the Primary Contact.
<TABLE>
<CAPTION>
<S> <C> <C>
Name: (First/Last) /
-------------------------- -------------------------
Title:
--------------------------
Phone: (###) ###-####
--------------------------
Fax: (###) ###-####
--------------------------
Email Address:
--------------------------
--------------------------
Pager:
--------------------------
3. Salesperson/Broker
Please tell us who, if anyone, introduced you to the Program (please enter only
one name or write the words "No One")
Salesperson/Broker:
----------------------------------------------------------
</TABLE>
<PAGE>
4. Tell us a little more about your website
This information will be used to speed up the approval process. Please check all
the boxes below that apply to your website. Please choose carefully, as we will
use this information to target relevant promotions to your site. This
information will remain confidential and will only be used for this purpose.
<TABLE>
<CAPTION>
<S> <C> <C>
|_| Arts |_| Business |_| Mature/Adult
|_| Education |_| Entertainment |_| Family
|_| Health |_| Home & Living |_| News
|_| Regional |_| Science |_| Shopping
|_| Sports |_| Society & Culture |_| Travel
|_| Technology |_| Women |_| *Personal Home Page
</TABLE>
Please provide us with a brief description of your website (optional):
<TABLE>
<CAPTION>
<S> <C>
Description (limit to 25 words):
------------------------------------------------
------------------------------------------------
Monthly Unique Users (numbers only, e.g. 10000000)
------------------------------------------------
Average # of page views/month:
------------------------------------------------
Do you have a third-party auditor? If so, who:
------------------------------------------------
Please give us the URL of your websites' logo:
(This logo may be used for co-branding purposes)
------------------------------------------------
Please tell us when your website was established: (mm/dd/yyyy)
------------------------------------------------
What is your business tax classification:
------------------------------------------------
</TABLE>
Step 5: Help us spread the word
Do you know anyone else who may be interested in joining our program?
<TABLE>
<CAPTION>
First Name Last Name Email Address
<S> <C> <C> <C>
----------------------- ----------------------- ----------------------
----------------------- ----------------------- ----------------------
----------------------- ----------------------- ----------------------
If you have any questions, please contact "MAAX" at [email protected].
</TABLE>
SANCTUARY OF BOCA, INC.
LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter referred to as "Lease") is made and
entered into this 22 day of September, 1999 by and between SANCTUARY OF BOCA,
INC., a Florida Corporation (hereinafter referred to as "Landlord"), with its
principal place of business at 4400 North Federal Highway, Suite 210, Boca
Raton, Florida. 33431, and NETMAXIMIZER.COM, INC. (hereinafter referred to as
"Tenant") whose mailing address is 7491 North Federal Highway, #262, Boca Raton
FL 33487.
ARTICLE I
PREMISES
1.01 Premises. Landlord does lease unto Tenant, and Tenant does hereby
hire and take as Tenant under Landlord the office premises described as Suite
307, the office building known as Sanctuary Tower & Shoppes ("Office Building"),
4400 North Federal Highway, Boca Raton, Florida, consisting of 1509 gross square
feet, (hereinafter known as the "Premises"), upon the terms and conditions set
forth herein.
1.02 LOCATION OF OFFICE PREMISES: The approximate location of the
premises are depicted in Exhibit "A" attached hereto. For purposes of
calculating net square footage, the premises shall be measured to the interior
face of all exterior glass, and the midpoint of all interior walls separating
the premises from other office space or common area, except in the case of an
end office, measurements shall include the full width of end walls. Landlord may
increase, reduce or change the number, dimensions or locations of the walks,
buildings and parking as Landlord shall deem proper, and reserves the right to
make alterations or additions to, and to build additional suites on, the
building in which the Demised Premises are contained and to add buildings same
or elsewhere in the Office Building.
The use and occupation by Tenant of the Demised Premises shall include
the right to the non-exclusive use, in common with others, of all such
automobile parking areas, driveways, truck and service courts, walks and other
facilities designated for common use, as have been installed by Landlord, and of
such other and further facilities as may be provided or designated from time to
time by Landlord for common use, subject, however, to the terms and conditions
of this Lease and to reasonable rules and regulations for the use thereof, as
prescribed from time to time by Landlord.
1.03 CALCULATION OF GROSS SQUARE FOOTAGE. The parties agree that the
square footage determined in Section 1.02 is the "net square footage" of the
leased premises. Such net square footage shall be increased in accordance with
the following formula: Net square footage multiplied by 1.16 equals gross square
footage.
1.04 ACCEPTANCE OF PREMISES. The Premises are hereby leased to Tenant
subject to: (i) any and all laws, as applicable, now in force hereafter enacted;
and (ii) any title matters of record or otherwise disclosed to Tenant. If
construction of the Premises is completed as of the date this Lease is signed by
the parties, Tenant certifies that it has inspected the Premises and, in
reliance on such inspection, acknowledges and accepts the Premises and the
Office Building, all of which Tenant confirms as being satisfactory. Tenant
further acknowledges that the Premises, including all fixtures, equipment and
furnishings
<PAGE>
contained therein, are in satisfactory or excellent condition and accepts the
Premises in its "AS IS" condition, without requiring Landlord to make any
repairs or replacements thereof. Tenant hereby waives any objection to and
releases Landlord from any liability arising from the condition of the Premises
from and after the date of Lease execution.
1.05 CONSTRUCTION OF PREMISES. Landlord will, at its sole expense,
perform all work specified to be performed by Landlord more specifically set
forth in Exhibit "B" attached hereto and entitled "Landlord's Improvements".
Tenant will at its sole expense perform all other work necessary to complete the
premises for its business purposes including, without limitation, the work
specified to be performed by Tenant more particularly described in Exhibit "C"
attached hereto as "Tenant's Improvements"; provided however, all of Tenant's
work shall be performed by licensed contractors acceptable to Landlord, in
accordance with its final plans, specifications and drawings furnished to
Landlord, which shall be in compliance with all laws, including applicable
building and zoning codes.
ARTICLE II
TERM
The term of this Lease shall be twelve (12) months commencing on
October 1, 1999 ("Commencement Date") and ending September 30, 2000 ("Expiration
Date"). At the expiration of the term of the Lease, Tenant will vacate and
surrender the Premises to Landlord in accordance with the terms hereof and said
Premises shall be in broomclean condition.
ARTICLE III
RENT
3.01 COVENANT TO PAY. Tenant shall pay Rent to Landlord from the
Commencement Date without prior demand, together with all applicable Florida
sales tax thereon as provided by law from time to time; for any Lease Year
greater or less than twelve (12) months shall be prorated on the per diem basis,
based upon the number of days elapsed over 365 - day year. Tenant agrees that
its covenant to pay Rent to Landlord is an independent covenant and that all
such amounts are payable without counterclaim set-off, deductions, abate or
reduction whatsoever, except as expressly provided for in this Lease. If Tenant
has given as payment of rent during the term of this lease, checks which are
returned to Landlord marked insufficient funds or no good for any reason, then
Landlord at Landlord's sole discretion may demand payment from Tenant by bank
check or money order.
3.02 MINIMUM RENT. Subject to any escalations which may be provided for
in this Lease, Tenant shall pay Minimum Rent for the Term in the initial amount
specified in Exhibit "D" attached hereto, which shall be payable throughout the
Term in monthly installments in advance of the first day of each calendar month
of each year of the Term.
3.03 PAYMENT OF OPERATING COSTS. In addition to payments of Rent,
Tenant shall pay to Landlord Tenant's Proportionate Share of "Operating Costs"
(defined in Section 4.03 hereof). Tenant's Proportionate Share of the Operating
Costs shall be 8.42%. The amount of the Operating Costs payable to Landlord may
be estimated by Landlord for such period as Landlord determines from time to
time, and Tenant agrees to pay Landlord the amounts so estimated in equal
installments, in advance, on the first day of each month during
2
<PAGE>
such period. Notwithstanding the foregoing when bills for all or any portion of
Operating Costs so estimated are actually received by Landlord, Landlord may
bill Tenant for Tenant's Proportionate Share thereof, less any amount previously
paid by Tenant to Landlord on account of such item(s) by way of estimated
Operating Costs payments. Within a reasonable period of time after the end of
the period for which estimated payments have been made, Landlord shall submit to
Tenant a statement setting forth the actual amounts payable by Tenant based on
actual costs. If the amount Tenant has paid based on estimates is less than the
amount due based on actual costs, Tenant shall pay Landlord such deficiency
within (5) days after submission of such statement to Tenant. If the amount paid
by Tenant is greater than the amount actually due, the excess may be retained by
Landlord to be credited and applied by Landlord to the next due installment(s)
of Tenant's Proportionate Share of Operating Costs, or as to the final lease
year, provided Tenant is not in default, Landlord will refund such excess to
Tenant or credit such amount to Tenant's next rent payment coming due at
Landlord's option. Tenant's Proportionate Share of actual Operating Costs for
the final estimate period of the Term of this Lease shall be due and payable
even though it may not be finally calculated until after the expiration of the
Term. Accordingly, Landlord shall have the right to continue to hold Tenant's
Security Deposit following expiration of the Term until Tenant's share of actual
Operating Costs has been paid, unless an alternative security (letter of credit
or otherwise) is furnished to the satisfaction of the Landlord.
3.04 RENT PAST DUE. In the event any installment of Rent is not
received within five (5) days after the due date, a late charge of ten percent
(10%) of the delinquent sum may be charged by Landlord. If any installment of
Rent shall remain overdue for more than fifteen (15) days, an additional late
charge in an amount equal to one and one-half percent (1.5%) per month (18% per
annum) of the delinquent amount may be charged by Landlord, such charge to be
computed for the entire period for which the amount is overdue and which shall
be in addition to and not in lieu of the ten percent (10%) late charge or any
other remedy available to Landlord.
3.05 SECURITY DEPOSIT. Landlord acknowledges receipt of a Security
Deposit in the amount of $5720.12, to be held by Landlord, without any liability
for interest thereon, as security for the performance by Tenant of all its
obligations under this Lease. In the event of default by Tenant of any of its
obligations under this Lease, Landlord may at its option, but without prejudice
to any other rights which Landlord may have, apply all or part of the Security
Deposit to compensate Landlord for any loss, damage or expense sustained by
Landlord as a result of such default. If all or any part of the Security Deposit
is so applied, Tenant shall restore the Security Deposit to its original amount
on demand of Landlord. Within thirty (30) days following termination of this
Lease, if Tenant is not then in default, the Security Deposit will be returned
by Landlord to Tenant. If Landlord sells its interest in the Premises, it may
deliver the Security Deposit to the Purchaser and Landlord will thereupon be
released from any further liability with respect to the Security Deposit or its
return to Tenant and the purchaser shall become directly responsible to Tenant.
The Security Deposit is in the amount of $5,470.12 plus the garage door opener
deposit for five (5) garage door openers at $50.00 each, for a total of $250.00
equals the total Security Deposit of $5,720.12.
3.06 NET LEASE. This Lease is a completely net lease to Landlord,
except as otherwise expressly herein stated. Landlord is not responsible for any
expenses or outlays of any nature arising from or relating to the Premises, the
use or occupancy thereof, the contents thereof or the business carried on
therein. Tenant shall pay all costs, expenses, charges,
3
<PAGE>
assessments, impositions and outlays of every nature and kind relating to the
Premises except as expressly herein stated.
3.07 NO ABATEMENT OF RENT. Except as specifically provided to the
contrary in this Lease, there shall be no abatement from or reduction of the
Rent due, nor shall Tenant be entitled to damages, losses, costs or
disbursements from Landlord during the Term caused by or on account of the fire,
water or sprinkler systems or the partial or temporary failure or stoppage of
any heating, cooling, lighting, plumbing or other services in or to the Premises
or the Office Building, whether due to Force Majeure or the making of
alterations, repairs, renewals, improvements or structural changes to the
Premises, the Office Building, the equipment or systems supplying the services,
or from any cause whatsoever, provided that the said failure or stoppage is
remedied within a reasonable time.
ARTICLE IV
COMMON AREAS AND OPERATING COSTS
4.01 DESIGNATION. Landlord grants to Tenant and Tenant's Agents, a
non-exclusive license to use the Common Areas in common with others during the
Term, subject to the exclusive control and management thereof at all times by
Landlord, and subject further to the rights of Landlord set forth below.
4.02 RULES AND REGULATIONS. Landlord shall operate and maintain any
areas designated by Landlord as Common Areas in a manner deemed by Landlord to
be reasonable and appropriate and in the best interests of the Office Building.
Landlord shall have the right, from time to time, to: (i) establish, modify and
enforce reasonable rules and regulations with respect to the Common Areas, and
to impose parking charges therefore; (ii) enter into, modify and terminate
easements, licenses and other agreements pertaining to the use and maintenance
of the Common Areas, and any portions thereof and any additions thereto or
exclusions therefrom; (iii) close any or all portions of the Common Areas to
such extend as may, in the opinion of Landlord, be necessary to prevent a
dedication thereof or to the accrual of any rights by any person or by the
public therein; (iv) temporarily close any portions of the Common Areas; and (v)
do and perform such other acts which relate to, concern or arise out of the
Common Areas and improvements thereon as Landlord shall reasonably determine to
be advisable or necessary. Tenant shall comply with all rules and regulations,
and amendments thereto, adopted by Landlord from time to time, provided such
rules and regulations are not inconsistent with and do not contradict this
Lease. The rules and regulations may differentiate between different types of
businesses in the Office Building; Landlord shall not be responsible to any
Tenant for any non-observance of such rules or regulations by any other Tenant
of the Office Building.
Moving Hours: The Tenant shall not move freight, furniture or bulky matter of
any description into or out of the building between the hours of 9:00 a.m. and
5:00 p.m., Monday through Friday.
4.03 OPERATING COSTS DEFINED. Operating Costs shall mean any amounts
paid or payable, whether by Landlord or by others on behalf of Landlord, arising
out of Landlord's ownership, maintenance, operation, repair, replacement and
administration of the Office Building, including, without limitation: (a) the
cost of taxes including all costs associated with the
4
<PAGE>
appeal of any assessment on taxes; (b) the cost of insurance which Landlord is
obligated or permitted to obtain under this Lease, including, but not limited
to, rent interruption insurance, and any deductible amount applicable to any
claim made by Landlord under such insurance; (c) the cost of security,
janitorial, landscaping, window Cleaning, garbage removal and trash removal
services; (d) the cost of heating, ventilating and air conditioning to the
extent incurred with respect to Common Areas or with respect to any shared
systems; (e) the cost of all gas, water, sewer, electricity, telephone and any
other utilities used in the maintenance, operation or administration of the
Office Building; (f) salaries, wages and other amounts paid or payable for all
personnel involved in the repair, maintenance, operation, leasing, security,
supervision or cleaning of the Office Building, including fringe benefits,
unemployment and workmen's compensation insurance premiums, pension plan
contributions and other employment costs, as well as the cost of engaging
independent contractors to perform any of the foregoing services; (g) auditing,
accounting and legal fees and costs; (h) the cost of repairing, replacing,
operating and maintaining the Office Building, and the equipment serving the
Office Building; (i) the cost of the rental of any equipment and signs (not
including Tenant's signage); (j) amortization of the costs referred to in
subsection (h) immediately above to the extent not charged fully in the year in
which they are incurred, all as determined by Landlord in accordance with sound
accounting principles, together with interest on any unamortized balance of such
costs calculated at three percent (3%) per annum above the "Prime Rate" during
the period of calculation, as stated in the Wall Street Journal, or similar
publication in the event the Wall Street Journal ceases publication; (k) all
management fees; (I) administration costs and fees; (m) capital expenditures
which are required by law and/or which result in a substantial labor or cost
saving device or operation, in which case the capital expenditures shall be
amortized over (10) years and included by Landlord to conduct any environmental
tests required by State or Federal Law, including administrative agencies, or by
Landlord.
4.04 ELECTRICITY. The parties acknowledge that the Premises are
separately metered for electricity and the Tenant shall directly pay Florida
Power and Light for said service.
ARTICLE V
USE OF PREMISES
5.01 USE. Tenant shall use the Premises exclusively as a general
office, and for no other use or purpose whatsoever. Tenant shall comply with all
laws, ordinances, rules and regulations of applicable governmental authorities
respecting the use, operation and activities of the Premises (including
sidewalks, streets, approaches, drives, entrances and Common Areas which serve
the Premises), and Tenant shall not make, suffer or permit any unlawful,
improper or offensive use of the Premises or such other areas, or any part
thereof, or permit any nuisance thereon. Tenant shall not make any use of the
Premises which would make void or voidable any policy of fire or extended
coverage insurance covering the Premises. Tenant shall use the Premises only for
the purposes stated in this Lease and shall not leave said Premises vacant or
suffer or permit any waste or mistreatment thereof. The Tenant is restricted
from using the demised premises for the purposes of telemarketing. The total
number of occupants in the demised premises is not to exceed more than ten
people, at any time during the term of the lease.
5
<PAGE>
5.02 TENANT'S COVENANTS AS TO USE AND OCCUPANCY.
(A) Tenant shall carry on its business on the Premises in a
reputable manner and shall not cause, permit or suffer to be done or exist upon
the Premises anything which shall result in a danger, hazard or bring about a
breach of any provision of this Lease or any applicable law.
(B) Tenant shall be prohibited from conducting any use, or
making any modification, which would in any manner (i) violate any certificate
of occupancy, or similar governmental approval, (ii) cause structural injury to
all or any part of the Premises or to any improvements constructed thereon, or
(iii) constitute a public or private nuisance.
(C) Tenant shall not use the Premises, any traveling or
flashing lights or signs or any loud speakers, television, phonographs, radio or
other audio-visual or mechanical devices in a manner so that they can be heard
or seen outside the Premises without obtaining in each case prior written
consent of Landlord. If Tenant uses any such equipment without receiving the
prior written consent of Landlord, Landlord shall be entitled to remove such
equipment without notice at any time and at the cost of Tenant payable as
Additional Rent forthwith on demand.
(D) Tenant shall not burn any trash or garbage in or about the
Premises or anywhere else in the Office Building, nor cause, permit or suffer
upon the Premises or anywhere else in the Office Building any unusual or
objectionable noises or odors or anything which may disturb the enjoyment of the
Office Building and all the Common Areas and facilities thereof by other
tenants, customers and invitees of the Office Building, or any adjacent property
owners.
(E) Tenant shall not keep or display any merchandise which in
any manner shall obstruct the Common Areas, and shall not sell, advertise,
conduct or solicit business within the Office Building other than in the
Premises. Tenant shall not cause, permit or suffer any machine selling
merchandise, services or entertainment, including vending machines or other
machines operated by coins to be present on the Premises without prior written
consent of Landlord.
(F) Tenant shall not overload any floor in the Premises, or
any utility or service or commit any act of waste or damage any part of the
Premises.
(G) Tenant shall (i) ship and receive supplies, fixtures,
equipment, furnishing, wares and merchandise only through the appropriate
service and delivery facilities provided by Landlord, (ii) not park its trucks
or other delivery vehicles or allow suppliers or others making deliveries to or
receiving shipments from the Premises to park in the parking areas, except in
those parts thereof as may from time to time be allocated by Landlord for such
purpose.
(H) Tenant shall not store or bring on the Premises any
articles of any combustible, toxic or dangerous nature and shall at all times
keep the Premises in such condition as to comply with all laws. Tenant shall
keep and maintain on the Premises all safety apparatus or appliances required by
law. Tenant shall not cause, permit or suffer any act, occurrence, or series of
acts or occurrences upon the Premises which shall cause the rate of
6
<PAGE>
insurance on the Premises and/or Office Building, or any part thereof, to be
cancelled, result in an increase in the Premises for coverages of same or
preclude the obtaining of such insurance.
ARTICLE VI
ACCESS AND ENTRY
6.01 Right of Access. Landlord reserves the right to enter the Premises
at all reasonable times (and in emergencies at all times) in order to: (i) make
such repairs, alterations or improvements to the Office Building as Landlord
considers necessary or desirable; (ii) have access to underfloor facilities and
access panels to mechanical shafts; (ii) check, calibrate, adjust and balance
controls and other parts of the heating, air conditioning, ventilating and
climate control systems; and (iv) install, maintain, repair or replace pipes,
ducts, conduits, vents and wires leading in, through, over or under the
Premises. Tenant shall not unduly obstruct any pipes, conduits or mechanical or
other electrical equipment so as to prevent reasonable access thereto. Landlord
further reserves unto itself the right to use all exterior walls and roof area.
Landlord shall exercise its rights under this Section 6.01, to the extent
possible in each circumstance, in a manner which minimizes interference with
Tenant's use and enjoyment of the Premises, including Tenant's decorations or
operations within the Premises. Rent will not abate or be reduced while the
maintenance, repairs, alterations, installations, replacements or improvements
are being made.
6.02 Right to Show Premises. Landlord and Landlord's Agents have the
right to enter the Premises at all reasonable times to show them to prospective
purchasers or mortgagees and, during the last six {6) months of the Term (or the
last six (6) months of any renewal term if this Lease is renewed), to show the
Premises then to prospective tenants.
6.03 Entry not Forfeiture. No entry into the Premises by Landlord
pursuant to a right granted by this Lease shall constitute a breach of any
covenant for quiet enjoyment, or (except where expressed by Landlord in writing)
shall constitute a retaking of possession by Landlord or forfeiture of Tenant's
rights hereunder.
ARTICLE VII
MAINTENANCE, REPAIRS AND ALTERATIONS
7.01 Maintenance and Repairs by Landlord. Landlord covenants to keep
the following in good order, repair and condition: (i) the structure of the
Office Building, including all of the exterior walls, structural columns, beams,
joists, footings and stem walls and roofs; (ii) the mechanical, electrical, and
other bases building systems (except such as may be installed by or be the
property of Tenant), and (iii) the entrances, sidewalks, corridors, parking
areas and other facilities from time to time comprising the Common Areas. The
cost of such maintenance and repairs shall be included in Operating Costs. So
long as Landlord is acting in good faith, Landlord shall not be responsible for
any damages caused to Tenant by reason of failure or equipment or facilities
serving the Office Building or delays in the performance of any work for which
Landlord is responsible pursuant to this Lease.
7.02 Maintenance and Repairs by Tenant. Tenant shall, at its sole cost,
maintain the Premises, in good order, condition and repair, exclusive of base
building mechanical, plumbing and electrical systems, all to a standard
consistent with a first class Office Building, with the
7
<PAGE>
exception only as those which are the obligation of Landlord set forth in
Section 7.01 above. All repairs and maintenance performed by Tenant in the
Premises shall be performed by contractors or workmen designated or approved by
Landlord. At the expiration or earlier termination of the Term, Tenant shall
surrender the Premises to Landlord in as good condition and repair as Tenant is
required to maintain the Premises throughout the Term.
7.03 Approval of Tenant's Alterations. Tenant shall have the right to
make non-structural interior alterations to the Premises which are not visible
from outside the Premises (excluding electrical, mechanical and HVAC
alterations). Tenant shall submit to Landlord details of the proposed work
including drawings and specifications prepared by qualified architects or
engineers conforming to good engineering practice. All such alterations shall be
performed: (i) at the sole cost of Tenant; (ii) by contractors and workmen
approved in writing by Landlord; (iii) in a good and workmanlike manner; (iv) in
accordance with drawings and specifications approved in writing by Landlord; (v)
in accordance with all applicable laws; (vi) subject to the reasonable
regulations, supervision, control and inspection of Landlord; and (vii) subject
to such indemnification against liens and expenses as Landlord reasonably
requires. If any alterations would affect the structure of the Office Building
or any of the electrical, plumbing, mechanical, heating, ventilating or air
conditioning systems or other base building systems, Landlord shall, at the
option of Landlord, but not the obligation of Landlord, perform such work at
Tenant's cost. In such cases, Tenant shall be required to pay Landlord upon
demand, as Additional Rent, an amount equal to the costs of Landlord making such
repairs, together with an administrative fee equal to fifteen percent (15%) of
such costs.
7.04 Repair Where Tenant at Fault. Notwithstanding any other provisions
of this lease, if any part of the Office Building is damaged or destroyed or
requires repair, replacement or alteration as a result of the act or omission of
Tenant or Tenant's Agent, Landlord shall have the right to perform same and the
cost of such repairs, replacement or alterations, plus an administration fee
equal to fifteen percent (15%) of such costs, shall be paid by Tenant upon
demand by Landlord, as Additional Rent.
7.05 Removal of Improvements and Fixtures. All Leasehold Improvements,
other than trade fixtures, shall immediately upon their placement in the
Premises become Landlord's property without compensation to Tenant. Except as
otherwise agreed by Landlord in writing, no Leasehold Improvements shall be
removed from the Premises by Tenant either during or at the expiration or sooner
termination of the Term except that: (a) Tenant may, during the Term, in the
usual course of its business, remove its trade fixtures, provided that Tenant is
not in default under this Lease; and (b) Tenant shall, at the expiration or
earlier termination of the Term, at its sole cost, remove such of the Leasehold
Improvements and trade fixtures in the Premises as Landlord shall require be
removed and restore the Premises to Landlord's then current Office Building
standard to the extent required by Landlord. Tenant shall at its own expense
repair any damage caused to the Office Building by such removal. If Tenant does
not remove its trade fixtures at the expiration or earlier termination of the
Term, the trade fixtures shall, at the option of Landlord, become the property
of Landlord and may be removed from the premises and sold or disposed of by
landlord in such manner as it deems advisable without any accounting to Tenant.
7.06 Liens. Tenant shall promptly pay for all materials supplied and
work done in respect of the Premises so as to ensure that no lien is recorded
against any portion of the real property upon which the Office Building is
erected or against Landlord's or Tenant's interest
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therein. If a lien is so recorded, Tenant shall discharge it promptly by payment
or bonding. If any such lien against the Office Building or Landlord's interest
therein is recorded and not discharged to Tenant as above required within
fifteen (15) days following recording, Landlord shall have the right to remove
such lien by bonding or payment and the cost thereof shall be paid immediately
from Tenant to Landlord. Tenant has no right or authority to create any
mechanics' or materialmen's lien on the Office Building or Landlord's interest
therein and Tenant in compliance with Section 713.10, Florida Statutes, shall
provide written notice (and provide written acknowledgment thereof to Landlord)
to all suppliers of labor or materials, as well as all contractors and
subcontractors, as applicable, prior to ordering such labor or materials or
executing any agreement for construction of Leasehold Improvements.
ARTICLE VIII
OFFICE BUILDING HOURS
Except for New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas the Common Areas of the Office Building shall be
open for business from 8:00 a.m. to 6:00 p.m., Monday through Friday. Tenant's
access shall be accommodated by the Office Building security system at all other
times.
ARTICLE IX
INDEMNITY; INSURANCE
9.01 INDEMNIFICATION. Each party agrees to indemnify and hold the other
harmless from and against any and all loss, damage, claim, demand, liability or
expense by reason of any damage or injury to persons (including loss of life) or
property which may arise or become claimed to have arisen as a result of or in
connection with the indemnifying party's (i) improvement, occupancy or use of
the Premises or Office Building or its site, or (ii) failure to conscientiously
and promptly perform any of its obligations under this Lease.
9.02 Insurance. Tenant shall, at its sole expense, provide and maintain
in force during the entire term of this Lease, and any extension or renewal
hereof, public liability insurance with limits of coverage not less than One
Million Dollars ($1,000,000.00) (for death or bodily injury for any one
occurrence) and One Million Dollars ($1,000,000.00) for any property damage or
loss from any one accident. Each such policy of insurance shall name as the
insured thereunder both the Landlord and Tenant. Each such liability insurance
policy shall be of the type commonly known as Owner's, Landlord's and Tenant's
insurance and shall be obtained from a company reasonably satisfactory to both
parties.
9.03 Builder's Risk Insurance. At the times during which construction
is being performed within or upon the Premises by Tenant, whether during initial
construction or thereafter at any time, Tenant shall provide builder's risk
insurance with such reasonable limits as Landlord shall from time to time
require, and any such policy or insurance shall have as named insured thereunder
both Landlord and Tenant. Further, Tenant shall maintain at all times during the
term of the Lease, Workmen's Compensation and Employer's Liability insurance at
legally required levels for the benefit of all employees entering upon the site
as a result of or in connection with their employment by Tenant or Tenant's
general contractor.
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The original of each policy of insurance required of Tenant from time
to time by this Lease, or a certificate or certified duplicate thereof, issued
by the insurer or insuring organization, shall be delivered by Tenant to
Landlord (i) on or before thirty (30) days prior to occupancy of the Premises by
Tenant during the original and any renewed or extended term hereof, and (ii)
again at ten (10) days prior to the lapse or expiration or termination of any
prior policy which would otherwise occur during such term, renewal or extension.
ARTICLE X
CASUALTY
In the event any improvements on the Office Building site are rendered
untenantable by fire or other casualty, Landlord shall have the option of
terminating this Lease or rebuilding, and in such event written notice of the
election by Landlord shall be given to Tenant within thirty (30) days after the
occurrence of such casualty. In the event Landlord elects to rebuild, (1)
Landlord shall not be obligated to rebuild the Tenant's or any other Tenant
Improvements; and (2) the affected portions of the Office Building shall be
restored, as nearly as practicable in Landlord's reasonable judgment, to their
former condition, exclusive of Tenant Improvements, within a reasonable time,
during which time no payment of rent or other sum due hereunder from Tenant to
Landlord shall abate unless and until Tenant's space shall have continued
untenantable for at least thirty (30) days after (and as a result of) such
casualty. In the event (i) Landlord fails to give timely notice of its election
to rebuild, or (ii) Landlord fails to rebuild so that Tenant's Improvements can
be replaced within six (6) months of such casualty, the term of this Lease shall
then expire and this Lease and all options and rights under-it shall be of no
further force or effect and Landlord shall be entitled to sole possession of the
Premises, and Landlord shall not be obligated to reimburse the Tenant for the
value or cost of its improvements, or for any expense or damage incident to such
casualty or such election.
ARTICLE XI
ASSIGNMENT; SUBLETTING AND TRANSFERS
11.01 Assignments, Subleases end Transfers. Tenant shall not enter
into, consent to or permit any transfer of this Lease without the prior written
consent of Landlord in each instance, which consent shall not be unreasonably
withheld, but shall be subject to Landlord's rights under the following Sections
11.02 and 11.03.
11.02 Landlord's Right to Consent. If Tenant intends to effect a
transfer, tenant shall give prior notice to Landlord of such intent specifying
the identity of the Transferee and providing such financial, business or other
information relating to the transfer, the proposed Transferee and its principals
as Landlord or any mortgagee requires, together with copies of sufficient
documents to evidence the particulars of the proposed transfer, including the
total consideration to be paid by the Transferee. Landlord shall, within thirty
(30) days after having received such notice and all requested information,
notify Tenant either that it consents or does not consent to the transfer in
accordance with the provisions and qualifications of this Article XI. If
Landlord fails to timely give any notice, Landlord shall be deemed to have
refused consent to the transfer.
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11.03 Conditions of Transfer.
(A) If there is a permitted transfer, Landlord may collect
Rent from the Transferee and apply the net amount collected to the Rent required
to be paid pursuant to this Lease, but no acceptance by Landlord of any payments
by a Transferee shall be deemed a waiver of any provisions hereof regarding
Tenant. Any consent by Landlord shall be subject to Tenant and Transferee
executing an agreement with Landlord agreeing: (i) that the Transferee will be
bound by all of the terms of this Lease as if such Transferee had originally
executed this Lease as tenant, and (ii) to amend this Lease to incorporate such
terms, covenants, and conditions as are necessary so that this Lease will be in
accordance with Landlord's standard form of Lease in use for the Office Building
at the time of the transfer, and so as to incorporate therein any conditions
imposed by Landlord in its consent to such transfer and such further conditions
as may be required by the provisions of this Section 11.03.
(B) Notwithstanding any transfer permitted or consented to by
Landlord, or acceptance of Rent from the Transferee, Tenant (and Guarantor if
applicable) shall be jointly and severally liable with the Transferee under this
Lease and shall not be released from performing any of the terms of this Lease.
(C) Notwithstanding the effective date of any permitted
transfer as between Tenant and the Transferee, all Minimum Rent for the month in
which such effective date occurs shall be paid by Tenant so that Landlord will
not be required to accept partial payments of Minimum rent for such month from
either Tenant or Transferee.
11.04 Change of Control. Tenant shall make available to Landlord or its
representatives all of its corporate, partnership, trust or other similar
records, as the case may be, for inspection at all reasonable times, in order to
ascertain whether there has been any change of control of Tenant.
11.05 Assignment by Landlord. Landlord shall have the unrestricted
right to sell, lease, convey, encumber or otherwise dispose of the Office
Building or any part thereof and this Lease or any interest of the Landlord in
this Lease. To the extent that the purchaser, assignee or secured party from
Landlord assumes the obligations of Landlord under this Lease, Landlord shall
thereupon and without further agreement be released of all liability under this
Lease.
ARTICLE XII
DEFAULT
12.01 Defaults. A default by Tenant shall be deemed to have occurred
hereunder, if and whenever: (a) any Minimum Rent is in arrears by the fifth of
the month, whether or not any notice or demand for payment has been made by
Landlord; (b) any Additional Rent is in arrears and is not paid within five (5)
days after written demand by Landlord; (c) Tenant has breached any of its
obligations in this Lease (other than the payment of Rent) and Tenant fails to
remedy such breach within fifteen (15) days (or such shorter period as may
provided in this Lease), or if such breach cannot reasonably be remedied within
fifteen (15) days (or such shorter period), if Tenant fails to immediately
commence to remedy and thereafter proceed diligently to remedy such breach, in
each case after notice in writing from Landlord; then Tenant will be in default
of this Lease; (d) Tenant or any Guarantor becomes bankrupt or insolvent or
makes any proposal, assignment or arrangement with its creditors, or any steps
are taken or proceedings
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commenced by any person for the dissolution, winding-up or other termination of
Tenant's existence or the liquidation of its assets; (e) a trustee, receiver, or
like person is appointed with respect to the business or assets of Tenant or any
Guarantor; (f) Tenant makes a sale in bulk of all or a substantial portion of
its assets other than in conjunction with a transfer approved by Landlord; (g)
this Lease or any of Tenant's assets are taken under a writ of execution; (h)
Tenant proposes to make a transfer other than in compliance with the provisions
of this Lease; (i) Tenant abandons or attempts to abandon the Premises or the
Premises become vacant, unoccupied or not open for business during the required
hours pursuant to Article VIII hereof, for a period of five (5) consecutive days
or more without the consent of Landlord; (j) any of Landlord's policies of
insurance with respect to the Office Building are actually or threatened to be
cancelled or adversely changed as a result of any use or occupancy of the
Premises; or (k) any obligations of Tenant or any Guarantor owing to Landlord,
whether or not related to this Lease and however arising (whether by operation
of law, contract, acquired or otherwise) shall be in default. (I) The Tenant is
restricted from using the demised premises for the purposes of telemarketing.
The total number of occupants in the demised premises is not to exceed more than
ten people, at any time during the term of the lease.
12.02 Remedies. In the event of any default hereunder by Tenant, then
without prejudice to any other rights which it has pursuant to this Lease or at
law or in equity, Landlord shall have the following rights and remedies, some or
all of which may be exercised by Landlord:
(A) Landlord may terminate this Lease by notice to Tenant and
retake possession of the Premises for Landlord's account.
(B) Landlord may enter the Premises as agent of Tenant to take
possession of any property of Tenant on the Premises, to store such property at
the expense and risk of Tenant or sell or otherwise dispose of such property in
Such manner as Landlord may see fit without notice to Tenant, which shall be
credited towards any Rent owed Landlord pursuant hereunder.
(C) Landlord may re-take possession of the Premises for the
account of Tenant and recover from Tenant all of Landlord's damages incurred by,
due to, or arising out of Tenant's default and Landlord's retaking of
possession. If this remedy is elected by Landlord, Landlord's damages shall be
the value of the Premises for the remaining Term of this Lease after Tenant's
default. For the purposes of computing the "value" of the unexpired Lease Term,
each Lease Year of the unexpired Term shall be deemed to increase five percent
(5%) per year. The amount so calculated shall be added to it all sums owing to
Landlord which have accrued prior to Tenant's default, plus all of Landlord's
costs, direct and consequential, of re-taking possession, preparing the Premises
for re-rental, and re-renting the Premises. If the Premises are not re-rented at
the time Landlord brings its action for damages under this provision, or if the
term of the re-rental is for a period less than the remaining Term of this Lease
and therefore additional re-rentals may be required to fill the remaining Term,
then in either case Landlord shall make a reasonable estimate of such costs and
such estimate shall be binding on the parties. The costs referred to above shall
include, but not be limited to, legal fees, cleaning, painting, re-fixturing,
partitioning, repairs, advertising, lease commissions and an administrative fee
to Landlord equal to fifteen percent (15%) of all the costs referred to in this
Subsection 12.02(C).
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(D) Landlord may remedy or attempt to remedy any default of
Tenant under this Lease for the account of Tenant and to enter upon the Premises
for such purposes. Landlord shall not be liable to Tenant for any loss or damage
caused by acts of Landlord in remedying or attempting to remedy such default and
Tenant shall pay to Landlord all expenses incurred by Landlord in connection
with remedying or attempting to remedy such default.
(E) Landlord may recover from Tenant all damages and expenses
incurred by Landlord as a result of any breach by Tenant.
(F) Landlord may accelerate all Rent for the entire Term.
(G) At the conclusion of the tenancy described herein for any
reason whatsoever, tenant shall cause its telephone lines to be removed from the
landlord's switchboard and trunk system. In the event tenant fails to arrange
for removal of said telephone lines, it hereby appoints landlord as its agent
and authorized representative for the purpose of coordinating with Bell South
and any other carrier for the removal of said lines and directs the carrier to
accept the authorization set forth herein.
12.03 Costs/Attorney's Fees. In any dispute or litigation between the
parties hereto, the prevailing party shall be entitled to recover all costs
incurred in such action, including attorney's fees at all levels, from the
non-prevailing party.
12.04 Allocation of Payments. Landlord may at its option apply any sums
received from Tenant against any amounts due and payable by Tenant under this
Lease in such manner as Landlord sees fit and regardless of the express purpose
for which the tender was made and notwithstanding any endorsement placed on the
check by which payment is made.
ARTICLE XIII
ATTORNMENT AND SUBORDINATION
13.01 Estoppel Certificate. At any time and from time to time, upon not
less than ten (10) days prior notice by Landlord, the "Superior Lessor," or the
"Superior Mortgagee" (as both are herein after defined) to Tenant, Tenant shall
comply with, execute, acknowledge and deliver in writing addressed to such party
as designated by Landlord or the Superior Lessor or the Superior Mortgagee, as
the case may be (hereinafter collectively called the "Requesting Party"),
certifying to the following: (i) that this Lease is unmodified and in full force
and effect, or if there have been modifications, that the Lease is in full force
and effect, as modified, and stating the modifications; (ii) whether the Term
has commenced and Minimum Rent, and Additional Rent have become payable
hereunder and, if so, the dates to which they have been paid; (iii) whether or
not Landlord is in default in performance of any of the terms of this Lease, and
if so, specifying each such default of which the signor may have knowledge; (iv)
whether Tenant has accepted possession of the Premises; (v) whether Tenant has
made any claim against Landlord under this Lease and, if so, the nature thereof
and the dollar amount, if any, of such claim; (vi) whether there are any offsets
or defenses existing against enforcement of any of the terms of this Lease upon
the part of Tenant to be performed, and, if so, specifying same; (vii) either
that Tenant does not know of any default in the performance of any provisions of
this Lease or specifying any default of which Tenant may have knowledge and
stating what action is taken or proposes to take with respect thereto; (viii)
that, to the best knowledge of Tenant, there are no
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proceedings pending or threatened against Tenant before or by a court or
administrative agency which, if adversely decided, would materially and
adversely effect the financial condition or operations of Tenant, or, if any
such proceedings are pending or threatened to the best knowledge of Tenant,
specifying and describing same; and (ix) such further information with respect
to the Lease or the Premises as the Requesting Party may reasonably request or
require, it being intended that any such statement delivered pursuant to this
Section 13.01 may be relied upon by any prospective purchaser of the Office
Building or any part thereof or the interest of Landlord in any part thereof, by
any prospective Superior Mortgagee or any prospective Superior Lessor, or by any
prospective assignees of such parties. The failure of Tenant to provide a
complete statement in accordance with the provisions of this Section 13.01
within the required ten (10) day period shall constitute a default hereunder.
13.02 Subordination. This Lease and all rights of Tenant hereunder are
and shall be subject and subordinate in all respects to (i) all present and
future ground leases, operating leases, superior leases, overriding leases and
underlying leases and grants of term of the land and buildings constructed
thereon, including the Office Building or any portion thereof (hereinafter
collectively referred to as a "Superior Lease,") and (ii) all mortgages, deeds
of trust, deeds to secure debt and building loan agreements, including leasehold
mortgages and consolidation agreement, which may now or hereafter effect the
Office Building, or any portion thereof, including all future advances made
thereunder (hereinafter collectively referred to as the "Superior Mortgage")
whether or not the Superior Mortgage covers any other lands or buildings. All
references hereunder to Superior Leases shall refer to the lessor at the time of
execution of a Superior Lease, while each reference to Superior Mortgagee shall
mean the holder at any time of a Superior Mortgage, as well as each of their
respective successors and assigns. The provisions of this Section 13.02 shall be
self-operative and no further instrument of subordination shall be required. If
any Requesting Party shall seek confirmation of such subordination, Tenant shall
promptly execute and deliver, at its own cost and expense, an instrument, in
recordable form, to evidence such subordination; if Tenant fails to execute,
acknowledge or deliver any such instrument within ten (10) days after request
therefor, Tenant hereby irrevocable constitutes and appoints Landlord as
Tenant's attorney-in-fact, coupled with an interest, to execute, acknowledge and
deliver any such instruments for and on behalf of Tenant. Tenant shall not
cause, permit or suffer anything to be done which would constitute a default
under any Superior Mortgage or Superior Lease or cause the Superior Lease to be
terminated or forfeited by virtue of any rights of termination or forfeiture
reserved or vested in the Superior Lease.
13.03 Attornment. If, at any time prior to the termination of this
Lease, the Superior Lessor or Superior Mortgagee, or their successors or assigns
acquire the interest of Landlord under this Lease through foreclosure action or
a deed-in-lieu thereof, whereby the Superior Lessor or Superior Mortgagee
succeeds to the rights of Landlord under this Lease through possession or
foreclosure or delivery of a new lease or deed or otherwise, Tenant agrees, at
the election and upon request of any such party (hereinafter called the
"Successor Landlord"), to attorn fully and completely from time to time, and to
recognize any such Successor Landlord as Tenant's landlord under this Lease upon
the executory terms of this Lease; provided, however, such Successor Landlord
shall agree in writing to accept Tenant's attornment. The foregoing provisions
of this Section 13.03 shall inure to the benefit of any such Successor Landlord,
shall apply notwithstanding that, as a matter law, this Lease may terminate upon
the termination of a Superior Lease, shall be self-operative upon any such
demand, and no further instrument shall be required to give effect to said
provisions. Tenant, however, upon demand of
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any such Successor Landlord, agrees to execute any instruments to evidence and
confirm the foregoing provisions of this Section 13.03, satisfactory to any such
Successor Landlord, acknowledging such attornment and setting forth the terms
and conditions of its tenancy and Tenant hereby constitutes and appoints
Landlord attorney-in-fact for Tenant to execute any such instrument for and on
behalf of Tenant, such appointment being coupled with an interest.
ARTICLE XIV
CONDEMNATION
In the event the title to all or part of the Office building shall be
condemned or taken, and if in the opinion of Landlord, (i) the property should
be restored or used in such a way as to alter the use of the Premises
materially, or (ii) it is economically unfeasible to restore all or part of the
Office Building after such taking, Landlord may terminate this Lease and the
term and estate hereby granted shall expire on the date specified in the notice
of termination (but not less than sixty (60) days after the giving of such
notice) as fully and completely as if such date were the date hereinabove set
forth for the expiration of the Term of this Lease, and the Rent hereunder shall
be apportioned as of said date.
Landlord reserved unto itself, and Tenant assigns to Landlord, all
right to damages accruing on account of any taking or condemnation of any part
of the office building or any improvements on it, or by reason of any act of any
public or quasi-public authority for which damages are payable under their
applicable law. Landlord does not reserve to itself, and Tenant does not assign
to Landlord, any damages payable to the taking of personal property installed on
the Premises by Tenant at its cost and expense which is not to pass to Landlord
at the end of this Lease, for relocation of Tenant's business, or for its lost
profits. Tenant agrees to execute such instrument or assignments as may be
desired or required by Landlord to exercise its rights hereunder; if reasonably
requested by Landlord, to join with Landlord in any petition for the recovery of
damages; and to forthwith turn over to Landlord any such damages to which
Landlord is entitled but which may be received by Tenant.
ARTICLE XV
GENERAL PROVISIONS
15.01 Quiet Enjoyment. Tenant, upon paying the Rent, charges and other
sums reserved hereunder, and performing and observing all of the other terms,
covenants and conditions of this Lease set forth herein, shall peaceably and
quietly have, hold and enjoy the Premises during the Term without hindrance by
Landlord or any other person lawfully claiming through or under Landlord,
subject, however, to the terms of this Lease, and of any Superior Lease or
Superior Mortgage, if applicable, and such other agreements and encumbrances to
which this Lease may be subordinate. This covenant shall be construed as a
covenant running with the land and shall not be construed as a personal covenant
or obligation of the landlord.
15.02 Holding Over. If Tenant remains in possession of the Premises
after the end of the Term hereof, there shall be no tacit renewal of this Lease,
and Tenant shall be deemed to be a tenant at sufferance. In such event, Tenant
shall pay to Landlord, for each day Tenant remains in possession of the Premises
without the written consent of Landlord, an amount equal to the Rent for the
last twelve (12) months of the Term, divided by 365-days, and then
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multiplied by two. Such amount shall accrue and be due and payable on a daily
basis commencing on the first day following the end of the Term and terminating
on the day that either (i) possession of the Premises is restored to Landlord,
or (ii) a new lease is entered into between Landlord and Tenant. All other
obligations of Tenant under this Lease, other than the payment of Rent (which is
payable in accordance with the foregoing calculation) shall be applicable to
Tenant during the period the Tenant is a Tenant at sufferance.
15.03 Waiver. If either Landlord or Tenant excuses or condones any
default by the other of any obligation under this Lease, this shall not be a
waiver of such obligation in respect to any continuing or subsequent default and
no such waiver shall be implied.
15.04 Recording. Neither Tenant nor anyone claiming under Tenant shall
record this Lease or any memorandum hereof in any public records without the
prior written consent of Landlord.
15.05 Notices. Any notice, consent or other instrument required or
permitted to be given under this Lease shall be in writing and shall be
delivered in person, or sent by certified mail, return receipt requested,
postage prepaid, or by Federal Express or similar overnight courier service,
addressed (a) if to Landlord, at the address set forth in the introductory
paragraph of this Lease; and (b) if to Tenant, at the Premises. Any such notice
or other instruments shall be deemed to have been given and received on the day
upon which personal delivery is made or, if mailed, then forty-eight (48) hours
following the date of mailing. Either party may give notice to the other of any
change of address and after the giving of such notice, the address therein
specified is deemed to be the address of such party for the giving of notices.
If postal service is interrupted or substantially delayed, all notices or other
instruments shall be delivered in person, or by Federal Express, or similar
overnight courier service.
15.06 Liability of Landlord. Tenant shall look solely to Landlord's
estate and interest in the Office Building and the rentals therefrom for the
satisfaction of any right of Tenant for the collection of a judgement or other
judicial process or arbitration award requiring the payment of money by
Landlord, subject, however, to any prior rights of any Mortgagee, and no other
property or assets of Landlord, Landlord's Agents, including all of Landlord's
general partners, incorporators, shareholders, officers, directors, or other
principals, disclosed or otherwise, or affiliates, shall be subject to levy,
lien, execution, attachment or other enforcement procedure for the satisfaction
of Tenant's rights and remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder, or under Law, including Tenant's
use and occupancy of the Premises, or any liability of Landlord to Tenant. The
limitation of Landlord's liability under this Section 15.06 shall be absolute
and without exception, and shall survive the expiration or earlier termination
of this Lease.
15.07 Waiver of Jury Trial. Tenant hereby knowingly, voluntarily and
intentionally waives any right it might have to a trial by jury in respect of
any litigation, including, without limitation, any claims, cross-claims, or
third party claims, arising out of, under, or in connection with this lease, or
the transaction contemplated herein. Tenant hereby certifies that no
representative or agent of landlord or its counsel has represented, expressly or
otherwise, that landlord would not, in the event of such litigation, seek to
enforce this waiver of right to jury trial provision. Tenant acknowledges that
landlord has been induced to enter into this lease by, ~, the provisions of this
Section 15.07.
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15.08 Radon Gas. In compliance with Section 404.056, Florida Statutes,
Tenant is hereby made aware of the following: Radon gas 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.
15.09 Successors. The rights and liabilities created by this Lease
extend to and bind the successors and assigns of Landlord and the heirs,
executors, administrators and permitted successors and assigns of Tenant. No
rights, however shall inure to the benefit of any Transferee unless the
provisions of Article XI are complied with.
15.10 Joint and Several Liability. If there is at any time more than
one Tenant or more than one person constituting Tenant, their covenants shall be
considered to be joint and several and shall apply to each and every one of
them.
15.11 Captions and Section Numbers. The captions, section numbers,
article numbers and table of contents appearing in this Lease are inserted only
as a matter of convenience and in no way affect the substance of this Lease.
15.12 Extended Meanings. The words "hereof," "hereto," and "hereunder"
and similar expressions used in this Lease relate to the whole of this Lease and
not only to the provisions in which such expressions appear. This Lease shall be
read with all changes in number and gender as may be appropriate or required by
the context. Any reference to Tenant includes, where the context allows, the
employees, agents, invitees and licensees of Tenant and all others whom Tenant
might reasonably be expected to exercise control. This Lease has been fully
reviewed and negotiated by each party and their counsel and shall not be more
strictly construed against either party.
15.13 Partial Invalidity. All of the provisions of this Lease are to be
construed as covenants even though not expressed as such. If any such provision
is held or rendered illegal or unenforceable it shall be considered separate and
severable from this Lease and the remaining provisions of this Lease shall
remain in force and bind the parties as though the illegal or unenforceable
provision had never been included in this Lease.
15.14 Entire Agreement. This Lease and the Exhibits, if any, attached
hereto are incorporated herein and set forth the entire agreement between
Landlord and Tenant concerning the Premises and there are no other agreements or
understandings between them. This Lease and its Exhibits may not be modified
except by agreement in writing executed by Landlord and Tenant.
15.15 Governing Law. This Lease shall be construed in accordance with
and governed by the laws of the State of Florida, without giving effect to
principals of conflict of laws, except where specifically preempted by Federal
Law.
15.16 Time. Time is the essence of this Lease. Any time period herein
specified of five (5) days or less shall mean business days; any period in
excess of five (5) days shall mean calendar days.
17
<PAGE>
15.17 No Partnership. Nothing in this Lease creates any relationship
between the parties other than that of lessor and lessee and nothing in this
Lease constitutes Landlord a partner of Tenant or a joint venturer or member of
a common enterprise with Tenant.
15.18 Accord and Satisfaction. No endorsement or statement on a check
or letter accompanying any check or payment by Tenant to Landlord shall be
deemed an accord and satisfaction or a release of liability, and Landlord may
accept such check or payment without prejudice to Landlord's rights to recover
the balance of all sums due to Landlord hereunder, or to pursue any other remedy
set forth in this Lease of granted by law or in equity.
15.19 Counterparts. This Lease may be executed in several counterparts,
each of which shall be deemed an original, and all such counterparts shall
together constitute one and the same instrument.
15.20 Parking. Sanctuary Tower & Shoppes provides an abundance of
parking in the front, rear and both the north and south sides of the property.
The Monday-Friday parking spaces in the front of the property have been reserved
for the exclusive use of the retail tenant's customers. All Office Tower,
Executive Suites, Sanctuary Suites and Retail Tenants and affiliates are
required to park in the other surrounding parking spaces located in the rear,
north and south sides of the property. Covered garage parking is available at a
charge of $20.00 per month. The parking use is monitored by management and a
charge of $25.00 per car per incident will be assessed as additional rent for
violating the parking requirements.
15.21 Broker. Tenant acknowledges that it has not been shown any space
at Sanctuary Tower & Shoppes, 4400 N. Federal Highway, Boca Raton, FL 33431 by
any Real Estate Broker.
15.22 In addition to the security deposit referred to in paragraph 3.05
of the Lease Agreement, Landlord acknowledges receipt from tenant of the
following sums:
First Month's Rent: $2,899.16 (including FL Sales Tax)
15.23 Right To Renew. Provided that Tenant is in good standing and has
performed all of the terms and conditions under this Lease, the Tenant shall
have the right to renew their Tenancy in the demised premises for a new term.
The Landlord's terms and conditions of the renewal lease must be accepted by the
Tenant before the lease expiration of the existing lease. The Tenant must notify
Landlord three (3) months in advance of the Lease expiration by giving written
notice of its intent to exercise this right to renew. Said notice shall be
delivered by certified mail, return receipt requested. Tenant's failure to
timely deliver written notice shall be deemed a waiver and release of this right
to renew for another Lease term. Time is of the essence.
18
<PAGE>
EXECUTED as of the day and year first above written.
WITNESSES: LANDLORD:
SANCTUARY OF BOCA, INC.
/s/ Elaine C. Cohen By: /s/ Ms. Elaine Prince
- ------------------- ------------------------------
Elaine C. Cohen Name and Title: Vice President
- ------------------- ------------------------------
Date: 09/22/99
------------------------------
TENANT:
NETMAXIMIZER.COM, INC.
/s/ Elaine C. Cohen By: /s/ Peter Schuster
- ------------------- ------------------------------
Elaine C. Cohen Name and Title: Peter Schuster
- ------------------- ------------------------------
Date: 09/10/99
------------------------------
19
<PAGE>
EXHIBIT "A"
THIRD FLOOR
-----------
<PAGE>
EXHIBIT "B"
LANDLORD IMPROVEMENTS
---------------------
None.
<PAGE>
EXHIBIT "C"
TENANT IMPROVEMENTS
-------------------
1.) All phone and computer hook up, wiring and equipment. The Landlord will
not be responsible for the performance or workability of the Tenant's
phone, fax or computer equipment.
<PAGE>
EXHIBIT "D"
RENT SCHEDULE
-------------
<TABLE>
<CAPTION>
<S> <C>
October 1, 1999 through September 30, 2000 $1886.25 rent per month plus Florida Sales
Tax
Initial estimated operating expenses $ 848.81 expenses per month plus Florida
Sales Tax
</TABLE>
AGREEMENT
This Agreement is between KIM INTERNATIONAL MANUFACTURING, INC. ("KIM")
and NETMAXIMIZER.COM ("Retailer").
KIM is a manufacturer and wholesale distributor of jewelry items (the
"Products"). KIM employs various means of marketing and distributing the
products, including, without limitation, compiling and producing a catalog which
is updated from time-to-time. The catalogs and all supplements thereto are
copyrighted materials and have been and will continue to be developed and
updated at great expense to KIM (collectively, the "Catalog").
Retailer has purchased and will continue to purchase Products from
time-to-time from KIM. Retailer has also requested that KlM make the Catalog
available to Retailer for display solely on Retailer's internet website to
promote the sale of the Products by Retailer.
KlM is willing to grant Retailer a non-exclusive limited right to
display the Catalog on Retailer's internet website subject to the terms and
conditions of this Agreement.
Based upon the foregoing recitals, the mutual covenants and
undertakings set forth below and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Grant. KIM hereby grants Retailer a limited, non-exclusive license
(the "License") solely for the purpose of displaying the Catalog on Retailer's
internet website and provided Retailer is not in default under this Agreement or
any other agreement, written or oral, with KlM. As a condition precedent to this
Agreement, Retailer agrees to prominently and conspicuously mark and identify
ail displays or depictions of the Catalog as being copyrighted materials owned
solely by, KIM in such form and content as may be approved by KIM. Retailer
expressly acknowledges that KIM is the sole owner of the Catalog and all related
rights thereto and KIM may grant similar rights to display or otherwise use the
Catalog or any portion thereof to other persons or entities at such times and
upon such terms as KIM may decide in its sole and absolute discretion. KIM's
right to grant such rights to third parties is in addition to KIM's unlimited
rights to use the Catalog for its own purposes in any manner whatsoever.
2. Efforts. As a material inducement to KIM to enter into this
Agreement, Retailer agrees to use its best efforts to actively market and
promote sales of the Products in a manner consistent with the first-class image
of KIM and the Products.
3. Limited Rights. Except as expressly provided herein, Retailer shall
have no right whatsoever to use the Catalog or any portion thereof in any other
manner, including, without limitation, copying, making extracts, permitting
others to download or otherwise duplicate all or arty portion of the Catalog.
Retailer acknowledges that KlM has invested years of effort and substantial sums
of money to produce, develop and continually refine all aspects of the Catalog
and the Catalog is critical to KIM's ability to sell Products and in maintaining
the first class image of KlM and the Products.
4. No Royalties. Retailer shall not be obligated to pay KlM any
royalties for displaying the Catalog on Retailer's internet website during the
term of this Agreement.
<PAGE>
5. No Ownership or Other Rights. Retailer hereby acknowledges the
proprietary nature of the Catalog and its contents and that Retailer has no
right, title or interest to the Catalog and all use of the Catalog shall inure
to the benefit of KlM. Retailer shall have no right whatsoever to change, alter
or modify any part of the Catalog whether on Retailer's internet website or
otherwise.
6. Term. This Agreement may be terminated by either party upon five
days' prior notice. Notwithstanding the preceding sentence, this Agreement and
ail of Retailer's rights hereunder shall immediately and automatically terminate
upon Retailer's breach of any term or provision of this Agreement or any other
agreement with KlM, including, without limitation, any failure to timely pay any
monies now or hereafter due KlM. Upon termination o this Agreement, with or
without cause, Retailer shall immediately return to KlM all copies of the
Catalog or any portions thereof regardless of the form (e.g. electronic, tape,
paper or otherwise) and destroy or delete any back-up or other copies of the
Catalog.
7. Waiver. The failure of a party to enforce any provision of this
Agreement shall not constitute a waiver of such party's right to thereafter
enforce such provision or to enforce arty other provision at any time.
8. Modification. The terms of this Agreement cannot be modified except
by a written instrument signed by the parties.
9. Entire Agreement. All prior negotiations and understandings of the
parties relating to the subject matter hereof are merged herein. This instrument
contains the entire agreement between the parties relating to such subject
matter and supersedes all agreements, written and oral, if any, relating
thereto.
10. Attorneys' Fees. The prevailing party in any suit brought to
enforce or interpret this Agreement shall be entitled to recover reasonable
attorneys' fees in addition to any other relief awarded.
11. Notice. Any notice required or permitted to be sent hereunder shall
be effective when actually delivered or when mailed by certified mail, return
receipt requested to the party entitled to receive such notice at the address
set forth on the signatory page hereof. Each party may change its address for
notice by notice to the other party.
12. Governing Law, Jurisdiction and Venue. This Agreement and the
fights and obligations of the parties hereunder shall be governed by and
construed and enforced in accordance with the laws of the State of Texas. In any
dispute or proceeding to enforce or interpret this Agreement, the parties
expressly consent to the exclusive jurisdiction of the state and federal courts
of Dallas County, Texas and venue shall be proper in Dallas County.
2
<PAGE>
Effective the 10th day of September, 1999.
KIM INTERNATIONAL MANUFACTURING, INC.
Address:
14840 Landmark Boulevard By: ______________________________
Suite 310 C. Mike Kim, General Manager
Dallas, Texas 75240-7033
RETAILER
Address: NETMAXIMIZER.COM, INC.
7491 N. Federal Highway By: /s/ David A. Saltrelli
- ----------------------- -------------------------------
Suite 262 Title: President
- ----------------------- -------------------------------
Boca Raton, FL 33487 Printed Name: David A. Saltrelli
- ----------------------- -------------------------------
3
CHARTER PACIFIC BANK
Member FDIC
MERCHANT BANKCARD SERVICE AND SECURITY AGREEMENT
NETMAXIMIZER.COM, INC.
This Merchant BankCard Service and Security Agreement ("Agreement") is made
between Charter Pacific Bank, a California Banking Corporation (referred to as
"Bank") and the merchant identified below (referred to as "Merchant") for the
processing and collection of Visa and/or MasterCard Credit Card transactions
(referred to as "Bank Card Transactions").
This Agreement shall be effective upon execution by Bank and notification to
Merchant of final approval. All references herein to this "Agreement" shall
collectively include all current Schedules, Amendments, Change Notices,
Addendums and Attachments, as well as the associated reference materials, all of
which are incorporated herein by reference and made part of this Agreement as if
fully set forth.
ARTICLE I -- DEFINITIONS
1.1 DEFINITIONS. The Bank and Merchant hereby agree that the
following terms used in this Agreement shall have the
following meanings:
1.2 APPLICATION. The Merchant BankCard Service Application or
other Application form, and any associated documents, to be
completed and submitted by Merchant to Bank. Final approval by
Bank must be completed prior to the establishing of the
Merchant BankCard Service.
1.3 AUTHORIZATION. The verification of a Bank Card Transaction by
the card-issuing bank or approved independent service provider
for each transaction limit.
1.4 AUTHORIZATION CENTER. The card-issuing bank or approved
independent service provider that verifies Bank Card
Transactions.
1.5 BANK CARDS. Designated Visa and MasterCard credit cards issued
by banks to individual cardholders.
1.6 MERCHANT BANKCARD SERVICES. Service provided by Bank to
Merchant for processing all Bank Card Transactions and related
fees, charges and costs.
1.7 BANK CARD TRANSACTIONS. A transaction for a sale, rental or
service, or any credit therein, by and between Merchant and a
bona fide cardholder, evidenced by a sales slip or a credit
slip, which is presented to Bank by Merchant for processing
through the Bank's Interchange System, and may include
transactions where the cardholder's signature is not obtained
or where the slip does not contain a physical card imprint so
long as the transaction has been authorized by the cardholder.
1.8 CHARGEBACKS. Bank Card Transaction returned for debiting to
the Merchant's Bank Account by Bank because of nonconformity
with Federal, State, Local or Interchange System laws, rules
and regulations, because of cardholder dispute or for
violation of any term or condition of this Agreement.
1.9 CREDIT SLIP. Records of returns or credit transactions between
Merchant and individual cardholders that shall be delivered to
the Bank or presented electronically by Merchant to Bank for
processing through the Interchange System for crediting to the
cardholder's account and debiting to the Merchant Bank
Account.
<PAGE>
1.10 ELECTRONIC TICKET CAPTURE ("ETC"). The Interchange System by
which the Merchant authorizes and captures each Bank Card
Transaction.
1.11 FACTORING. Presentation by Merchant to Bank of any Bank Card
Transaction that originated from a source other than Merchant.
1.12 FINAL APPROVAL. Notification by Bank that Merchant has
completed to Bank's satisfaction all those steps necessary to
verify that Merchant is financially responsible and that
Merchant conducts, or intends to conduct, a bona fide
operation.
1.13 FLOOR LIMIT. All transactions are subject to a zero dollar
($0.00) floor limit, unless otherwise stated.
1.14 INTERCHANGE SYSTEM. MasterCard and Visa processing systems, of
which Bank is a Member, which facilitates the interchange and
payment of Bank Card Transactions by and between individual
cardholder and merchants who accept MasterCard and Visa Bank
Cards, including the Merchants herein.
1.15 INTERCHANGE SYSTEM/MEMBERS. Financial institutions licensed by
Visa and MasterCard as Members of the Interchange System and
participants in Visa and MasterCard credit card programs,
including Bank herein.
1.16 MERCHANT. The term "Merchant" as used in this Agreement refers
to any person, firm, partnership, organization or corporation
falling within the meanings assigned to the term "Merchant" by
MasterCard and Visa. The term "Merchant" shall refer to the
undersigned Merchant.
1.17 MERCHANT BANK ACCOUNT. A business checking account established
by Merchant at Bank through which Merchant authorizes Bank to
settle all Bank Card Transactions, electronically via the
Automated Clearing House ("ACH"), or for the Merchant to
receive immediate settlement upon direct presentation to Bank
if Merchant maintains a business checking account in good
standing with the Bank.
1.18 MERCHANT IDENTIFICATION PLATE. Metal plate issued to Merchant
by Bank which contains current information for identifying the
Merchant and Merchant's location and which contains a unique
Merchant BankCard Service number (when applicable).
1.19 REFERENCE MATERIALS. All reference materials, including, but
not limited to, respectively the Interchange System rules and
procedures and the Bank rules and procedures provided to
Merchant by Bank which describe in detail, policy and
transactional requirements to be followed by Merchant for the
possessing, collection and settlement of all Bank Card
Transactions, as those rules and procedures may be amended
from time to time in whole or in part.
1.20 RETRIEVAL REQUEST. Request for the original, copy or
electronic rendering of any sales draft, sales slip or credit
slip.
1.21 RETURN AND CORRECTION ("R&C"). Any transaction, whether by
sale or credit, that cannot be processed due to incorrect or
incomplete information or data.
1.22 SALES SLIP. Record of payment of a sale, rental or service
transaction between Merchant and individual cardholders
presented by Merchant to Bank for processing through the
Interchange System for debiting to the cardholder's account
and crediting to the Merchant Bank Account.
2
<PAGE>
1.23 SPLIT SALE. Preparation of two (2) or more Sales Slips or
processing of two (2) or more electronic sales for a single
transaction on one (1) account.
1.24 SUPPLEMENTAL SERVICES. Additional BankCard Service and
processing enhancements that may be selected by Merchant.
1.25 TRAVEL RELATED SERVICES. MasterCard/Visa Interchange Services
available to a merchant regarding airline, hotel, motel, or
inn; travel related services or a reservation service; engages
in sale of traveler's checks; or engages in the sale of
foreign currency. The initial Travel Related Services in which
Merchant currently participates are set forth below Merchant's
signature herein.
1.26 WARNING BULLETIN. Communication issued periodically by the
Interchange System or participants in the Interchange System
to advise Merchant(s) of Bank Card account numbers which are
not to be accepted by Merchant for various reasons.
ARTICLE II -- APPLICATION AND APPROVAL
2.1 By completion of the Application and the execution of this
Agreement, Merchant applies for establishment of the Merchant
BankCard Service through which all of Merchant's Bank Card
Transactions will be processed. The Merchant BankCard
Transactions will be processed. The Merchant BankCard Service
may be used by Merchant for only those transactions directly
related to the bona fide business activity(ies) indicated on
the Application. Any change in said activity(ies) must be
approved in writing by Bank.
2.2 The Bank may approve or reject Merchant's Application in
Bank's sole discretion. Upon Final Approval, notice shall be
provided to Merchant by Bank by the delivery of the Merchant
Identification Plate or in writing, if not applicable.
Terminal Installation and/or training will be provided by Bank
or its designated agent. Thereafter, this Agreement shall
continue until it is terminated as provided below.
2.3 At any time during the term of this Agreement, Bank may
reinvestigate any prior or current information provided by
Merchant or contained in Merchant's Application, and in so
doing, Bank may require additional information to be provided
by Merchant to Bank. Bank may also request or obtain, without
additional notice to Merchant, credit bureau reports and/or
otherwise verify Merchant's current financial standing and
funding adequacy.
2.4 If Merchant's Application receives Final Approval, Merchant
shall be entitled to all of the benefits of the Merchant
BankCard Service and related Merchant support services.
2.5 If approved, account must begin activity within 30 days after
notification of approval. This allows for an acceptable length
of lead time for advertising to be put in place.
ARTICLE III -- CARD TRANSACTIONS
3.1 HONORING CARDS.
(a) Merchant shall honor without discrimination all valid
cards of the type(s) checked below ("Cards") when
properly presented as payment by customer in
connection with bona fide, legitimate business
transactions. If Merchant does not deal with the
public at large (such as in the case of a private
club), Merchant shall be deemed to have complied with
this non-discrimination rule if it honors all valid
Cards of cardholders who have purchasing privileges
or memberships with Merchant.
3
<PAGE>
(b) Merchant shall not require, through an increase in
price or otherwise, any cardholder to pay any
surcharge at the time of sale or to pay any part of
any charge imposed on Merchant by Bank (discounts for
payment in cash, however, are permitted).
(c) Merchant shall not establish minimum or maximum
transaction amounts.
3.2 ADVERTISING.
(a) Merchant shall display adequately any advertising or
promotional materials provided or required by Bank to
inform the pubic that Cards will be honored at
Merchant's place of business. Such displays, however,
are not required of private clubs and other Merchants
that do not deal with the general public, vehicle
leasing companies at airport locations,
transportation companies subject to government
regulation, or other Merchants expressly exempted
from this requirement by MasterCard International
Inc. ("MasterCard") and/or Visa U.S.A. Inc. ("Visa"),
as applicable.
(b) Merchant shall not display or use advertising or
promotional materials containing Bank's name or
symbol which might cause a customer to assume that
Merchant honors only Cards issued by Bank.
(c) Merchant shall not refer to MasterCard or Visa in
stating eligibility for its products, services, or
memberships.
(d) Merchant shall have the right to use or display the
proprietary names and symbols associated with Cards
only while this Agreement is in effect, or until
Merchant is notified by Bank or any appropriate
BankCard organization to cease such usage.
(e) Merchant shall comply with all applicable MasterCard
and Visa rules and regulations concerning the use of
service marks and copyrights owned by MasterCard or
Visa.
(f) Merchant shall use the proprietary names and symbols
associated with Cards only to indicate that Cards are
accepted for payment and shall not indicate, directly
or indirectly, that Bank, MasterCard, Visa, or any
BankCard organization endorses Merchant's products or
memberships.
3.3 CARD EXAMINATION.
(a) Merchant shall not engage in a transaction (other
than mail order, telephone order, or pre-authorized
transaction) with a cardholder that fails to present
the Card that is intended to be used to complete the
transaction.
(b) Before honoring any Card, Merchant shall:
(i) check the effective date (if any) and the
expiration date on the Card;
(ii) examine any card security features (such as
holograms) included on the Card; and
(iii) Merchant shall not honor any Card that is
not yet effective or that has expired.
4
<PAGE>
3.4 AUTHORIZATION.
(a) Before honoring any Card, Merchant shall request
authorization from Bank's designated authorization
center if:
(i) the total amount of the transaction
(including any applicable taxes) exceeds the
floor limit then applicable to the
transaction (for hotel, motel and vehicle
leasing transactions Merchant must estimate
the amount of the transaction based upon the
customer's intended length of stay or rental
and request authorization if the estimated
transaction amount exceeds the applicable
floor limit; upon check-out or return of the
rental vehicle, additional authorization
must be obtained and recorded for charges
actually incurred in excess of the estimated
amount authorized; when multiple airline
tickets are purchased at the same time using
the same account number, Merchant may obtain
authorization for each ticket individually;
when a transaction is completed in partial
payments of a purchase, authorization is
required for the portion of the purchase
effected with the Card, regardless of the
applicable floor limit);
(ii) Merchant desires to make a delayed
presentment of the transaction record;
(iii) the sales slip (as defined in Section 4.1,
below) is not signed or is not Imprinted
with the Card or with the Merchant plate; in
a transaction other than a mail or telephone
order;
(iv) the signature panel on the Card does not
contain the customer's signature, the
customer's signature on the sales slip is
questionable, the Merchant believes the Card
may be counterfeit or stolen, or there are
other unusual or suspicious circumstances.
(b) Except when authorization is required only because
the amount of the transaction exceeds the applicable
floor limit, Merchant must contact Bank's designated
authorization center by telephone and advise the
authorization center of the specific reason for the
authorization request and wait instructions.
(c) If authorization is granted, Merchant shall print the
authorization number legibly in the designated area
on the sales slip.
(d) If authorization is denied, Merchant shall not
complete the transaction and shall follow any
instructions from the authorization center.
(e) Merchant shall be liable to Bank, regardless of any
authorization, if:
(i) Merchant completes a transaction when the
Cardholder is present but does not have his
Card;
(ii) the Cardholder does not sign the sales slip;
or
(iii) the signature on the sale slip does not
match the signature appearing on the Card.
5
<PAGE>
3.5 RETENTION AND RETRIEVAL OF CARDS.
Merchant shall use its best efforts, by reasonable and
peaceful means, to retain or recover a Card:
(a) while making an authorization request;
(b) if Merchant is advised to retain the Card in response
to an authorization request; or
(c) if Merchant has reasonable grounds to believe that
the Card is counterfeit, fraudulent, or stolen.
The obligation of Merchant to retain or recover a Card imposed
by this section does not authorize a breach of the peace or
any injury to persons or property, and Merchant will hold Bank
harmless form any claim arising from any injury to person or
property or other breach of the peace.
3.6 COMPLETING THE TRANSACTION RECORD.
Except as otherwise provided below, Merchant agrees to do all
of the following when honoring a Card:
(a) include on any conventional sales slip the
transaction date, description of the goods or
services sold, and the price thereof (including any
applicable taxes) in detail sufficient to identify
the transaction;
(b) to imprint legibly on the sales slip the embossed
legends from the Card and from the Merchant imprinter
plate;
(c) to obtain the signature of the customer on the sales
slip, but only after the total transaction amount is
included on the slip;
(d) to compare the signatures on the sales slip and the
signature panel of the Card, and if the Card has a
photograph of the cardholder, to ascertain that the
customer resembles the person depicted in the
photograph, and if either identification is uncertain
or Merchant otherwise questions the validity of the
Card, to contact Bank's authorization center for
instructions;
(e) if Merchant is using a magnetic stripe reading
terminal in connection with a transaction and that
terminal is unable to read the Card's magnetic
stripe, complete and obtain the cardholder's
signature on a conventional sales slip for the
transaction, and obtain an imprint on that slip as
required under Section 3.6(b) above (as an
alternative to completing a conventional sales slip
for a transaction such as this, Merchant may include
an imprint of the Card directly on a blank portion of
the printer slip produced by the electronic
terminal); and
(f) to deliver a true and complete copy of the sales slip
to the customer at the time of delivery of the goods
or performance of the services;
(g) if the transaction is initiated at a
point-of-transaction terminal, include on the printer
receipt:
(i) The cardholder's account number;
6
<PAGE>
(ii) Merchant's name;
(iii) Merchant's location;
(iv) the amount of the transaction;
(v) the date of the transaction; and
(h) if the transaction occurs at a gasoline station or at
a retail establishment that sells gasoline as a
secondary service, to enter on the sales slip the
number and state (or other jurisdiction) of the motor
vehicle license plate or, if no motor vehicle is
present, the words "No Car" (the license number and
state or the words "No Car" are not required if the
transaction is at an unattended gasoline station
where the pump is activated by a magnetic stripe, or
if the transaction is for goods or automotive
products).
3.7 MULTIPLE TRANSACTION RECORDS; PARTIAL CONSIDERATION.
(a) Merchant must include on one transaction record the
entire amount due for the transaction, except in the
following instances:
(i) the transaction involves purchases made in
separate departments of a multi-department
store;
(ii) the transaction involves delayed or amended
charges for a lodging or vehicle rental
transaction in which:
(A) the cardholder consented to be
liable for such charges;
(B) such charges consist of ancillary or
corrected charges such as room
charges, taxes, or full fees, and
not charges for loss, theft, damage,
or traffic violations; and
(C) Merchant sends the cardholder a copy
of the amended or add-on sales
draft;
(iii) the customer pays a portion of the
transaction amount in cash or by check at
the time of the transaction;
(iv) all or a portion of the goods or services
are to be delivered or performed at a later
date, and the customer signs two separate
sales slips, one of which represents a
deposit and the second of which represents
payment of the balance, and the "balance"
sales slip is completed only upon delivery
of the goods or performance of the services;
in which case Merchant agrees:
(A) to note on the sales slips the word
"deposit" or "balance," as
appropriate;
(B) if the total amount of the two slips
exceeds the applicable floor limit,
to obtain prior authorization and
note the authorization number(s) on
the sales slips; and
(C) not to present the "balance" sales
slip until all the goods are
delivered or all the services are
performed;
7
<PAGE>
(v) the cardholder is participating in an
advance resort deposit transaction; or
(vi) the cardholder is using the installment
payment option offered in accordance with
Section 3.8.
(b) Merchant agrees not to divide a single transaction
between two or more transaction records to avoid
obtaining an authorization.
3.8 TELEPHONE ORDERS, MAIL ORDERS, PREAUTHORIZED ORDERS, AND
INSTALLMENT ORDERS.
(a) If a Card transaction is made by telephone order
(TO), mail order (MO), or pre-authorized order (PO),
the sale slip may be completed without a customer's
signature or a Card imprint, but Merchant agrees:
(i) to imprint legibly on the sales slip
sufficient information to identify Merchant
and the cardholder, including: Merchant's
name and address, the Card issuer's
Interbank number and bank initials (if any),
the account number, the expiration date and
any effective date on the Card, the
cardholder's name, and any company name; and
(ii) to print legibly on the signature line of
the sales slip the letters "TO," "MO," or
"PO" ("Recurring Transaction" for Visa
transaction), as appropriate.
(iii) for telephone and mail order transactions,
include the expiration date as part of any
authorization inquiry; and
(iv) be liable for the amount of any sales slip
generated in a telephone, mail, or
pre-authorized order transaction that proves
to be uncollectible for any reason
whatsoever.
(b) In any non-imprint transaction, Merchant shall be
deemed to warrant the customer's true identity as an
authorized user of the Card, whether or not
authorization is obtained, unless Merchant obtains
and notes legibly on the sales slip independent
evidence of the customer's true identity.
(c) In connection with a recurring transaction (or
pre-authorized order) pursuant to which goods or
services are delivered to or performed for a
cardholder periodically, Merchant agrees to the
following conditions:
(i) Merchant must obtain a written request from
the cardholder that the recurring
transaction be charged to the cardholder's
account;
(ii) The written request must specify the amount
of the recurring transaction, the frequency
of the recurring charges, and the length of
time for which the pre-authorized order is
to remain in effect;
(iii) Before renewing a pre-authorized order,
Merchant must obtain a subsequent written
request from the cardholder containing the
information listed above;
(iv) Merchant must retain the cardholder's
written authorization for as long as the
pre-authorized order is in effect and must
provide a copy to Bank upon request; and
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(v) Merchant must not deliver goods or perform
services covered by a pre-authorization
order after being advised that the
pre-authorization has been canceled or that
the Card is not to be honored.
(d) Merchant may offer cardholders an installment payment
option for its mail/telephone order merchandise
subject to the following conditions:
(i) Merchant's promotional material must clearly
disclose the installment terms, including
but not limited to:
(A) whether the plan is available only
for selected items or for the total
amount of any order, and
(B) how shipping and handling charges
and applicable taxes will be billed.
The material also must advise
cardholders who are not billed in
the transaction currency of the
Merchant, that the installment
illing amounts may vary due to
fluctuations in the conversion
rates.
(ii) No finance charges may be added by the
Merchant. The sum of the installment
transaction may not exceed the total sales
price of the merchandise on a single
transaction basis.
(iii) Authorization is required for each
installment transaction; Merchant's floor
limit is zero.
(iv) Merchant may not deposit the first
installment transaction with Bank until the
merchandise is shipped. Subsequent
installment transactions must be deposited
at intervals of 30 days or more, or on the
anniversary date of the transaction (i.e.,
the same date each month).
3.9 LODGING AND VEHICLE RENTAL TRANSACTIONS. Regardless of the
terms and conditions of any written pre-authorization form,
the sales slip amount for any lodging or vehicle rental
transaction shall include only that portion of the
transaction, including any applicable taxes, evidencing a bona
fide renting of real or personal property by Merchant to a
customer and shall not include any consequential charges.
Nothing herein is intended to restrict Merchant from enforcing
the terms and conditions of its pre-authorization form through
means other than a Card transaction.
3.10 RETURNS AND ADJUSTMENTS; CREDIT SLIPS.
(a) If Merchant maintains a policy of permitting refunds,
exchanges, returns, or adjustments for cash
customers, Merchant shall maintain the same policy
for persons making purchases through use of a Card.
Merchant may restrict its refund or return policy as
to any Card transaction however, if Merchant
discloses its policy at the time of the transaction
by printing an appropriate notice (such as "No
Refunds or Exchange") on all copies of the sales slip
prior to obtaining the customer's signature. The
language regarding Merchant's refund or return policy
must be printed near the space for the cardholder's
signature in letters that are approximately1/4inch in
height.
(b) Except as provided above, if Merchant accepts any
goods for return, permits the termination or
cancellation of any services, or allows any price
adjustment (other than involuntary refunds required
by applicable airline or other tariffs or otherwise
by law), then Merchant shall not make any cash
refund, but shall complete and
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<PAGE>
deliver promptly to Bank a credit slip evidencing the
refund or adjustment, and deliver to the cardholder a
true and complete copy of the credit slip at the time
the refund or adjustment is made. Merchant shall
include on the credit slip a brief description of the
goods returned, services terminated or canceled, or
refund or adjustment made, together with the date and
amount of the credit, in sufficient detail to
identify the transaction. Merchant shall imprint or
legibly reproduce on each credit slip the embossed
legends from the Card and from Merchant's imprinter
plate. The amount of the credit slip cannot exceed
the amount of the original transaction as reflected
on the sales slip.
(c) Within ten (10) days of the date of This Agreement,
Merchant shall provide Bank with a written
description of Merchant's refund or return policy.
3.11 CASH PAYMENTS. Merchant shall not receive any payments from a
customer for charges included on any transaction record
resulting from the use of any Card, nor receive any payments
from a cardholder to prepare and present a credit slip for the
purpose of effecting a deposit to the cardholder's account.
3.12 CASH ADVANCES. Unless expressly authorized in writing by Bank,
Merchant agrees not to make any cash advance to a cardholder,
either directly or by deposit to the cardholder's account.
Money orders sent by wire, contributions to charitable and
political organizations, tax payments, insurance premium
payments, alimony and child support payments, and court costs
and fines shall not be considered cash advances or
withdrawals.
3.13 RELEASE OF CARDHOLDER ACCOUNT INFORMATION. Merchant shall not,
without the cardholder's prior written consent, sell,
purchase, provide, or otherwise disclose the cardholder's
account information or other cardholder personal information
to any third party other than Bank, Merchant's agents, and
processing organizations for the purpose of assisting Merchant
in its business, or as required by law.
3.14 COMPLIANCE WITH CARD ASSOCIATION RULES. Merchant shall comply
with and conduct its credit card activities in accordance with
all applicable (i.e., current and future) MasterCard and Visa
rules and regulations. Merchant shall pay, or reimburse Bank
for its payment of any fines or assessments imposed by
MasterCard or Visa that relate to the credit card activities
of Merchant without limiting the generality of the foregoing,
the Merchant specifically agrees to comply and adhere to the
following rules mandated by Visa:
(a) The Merchant may not imply that Visa endorses any of
its goods or services;
(b) The Merchant may not refer to Visa in stating
eligibility to participate in any program or purchase
of any products or services;
(c) The Merchant must include all items, goods, or
services purchased in a single transaction in the
total amount of a single draft;
(d) The Merchant must provide the cardholder with a copy
of the sales draft or transaction record; and
(e) The Merchant may not submit any draft that did not
result from a transaction between the cardholder and
that Merchant.
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ARTICLE IV -- PRESENTMENT, PAYMENT, AND CHARGEBACK
4.1 TRANSMISSION OF DATA. In lieu of depositing paper sales slips
and credit slips with Bank, Merchant may transmit to Bank, in
the form of magnetic tape or electronic data, as specified by
and acceptable to Bank, all data required by this Agreement to
appear on the sales slip or credit slip. The term "sales data"
as used in this Agreement shall mean the data transmitted by
Merchant that is contained in sales slip or the electronic or
magnetic tape record that is the equivalent of such a sales
slip. The term "credit data" as used in this Agreement shall
mean the data transmitted by Merchant that is contained in a
credit slip or the electronic or magnetic tape record that is
the equivalent of such a credit slip. All data transmitted
shall be in a medium, for, and format approved in advance by
Bank and shall be presorted and organized according to Bank's
instructions: All references to "sales slips" and "credit
slips" in this Agreement, unless stated otherwise, shall be
deemed to include, in addition to conventional sales slips and
credit slips, the printed receipts produced in connection with
transactions initiated at magnetic stripe reading terminals
and other point-of-transaction terminals. The term
"transaction record," as used in the Agreement, shall be
deemed to refer to sales slips and credit slips, as
applicable, and the data transmitted pursuant to those slips.
4.2 PRESENTMENT OF TRANSACTION RECORDS TO BANK.
(a) Merchant may designate a third party (that does not
have a direct agreement with Bank) as its agent for
the purpose of delivering transaction data-captured
at the point of sale by such agent.
(b) If Merchant elects to use such a third party as its
agent for the direct delivery of data-captured
transactions, Merchant agrees to the following
conditions (for the purpose of this Section 4.2,
"Merchant" includes any agent designated by Merchant
as permitted under this Section):
(i) Merchant must provide satisfactory notice to
Bank that Merchant chooses to exercise the
option specified above;
(ii) The obligation of Bank to reimburse Merchant
for transactions is limited to the amount
(less the appropriate discount fee)
delivered by Merchant's designated agent;
and
(iii) Merchant is responsible for any failure by
its agent to comply with all applicable
rules and regulations of MasterCard and
Visa.
(c) Merchant shall present all sales data relevant to a
transaction to Bank within the lesser of three (3)
bank business days or five (5) calendar days after
the date of the transaction, except that:
(i) Merchant shall present no sales data until
the goods have been shipped or the services
have been performed and Merchant has
otherwise performed all of its principal
obligations to the customer in connection
with the transaction;
(ii) when Merchant requests and receives
authorization for delayed presentment and
legibly prints on the sales slip the
authorization number and the words "Delayed
Presentment," Merchant may present the sales
data within the period permitted for delayed
presentment (not to exceed thirty (30)
calendar days);
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<PAGE>
(iii) if Merchant is obligated by law to retain a
sales slip or return it to a buyer upon
timely cancellation, Merchant may present
the sales data within ten (10) bank business
days after the date of the transaction; and
(iv) when Merchant has multiple locations or
offices and accumulates transaction records
at a central facility, Merchant may present
the transaction records to Bank within seven
(7) bank business days after the date of the
transaction.
(d) Merchant shall deliver all credit data to Bank within
three (3) bank business days after the credit
transaction data, except that if Merchant has
multiple locations as described in subsection (b)(iv)
above, Merchant may deliver the credit data to Bank
within seven (7) bank business days after the
transaction date.
4.3 PROHIBITION AGAINST FACTORING AND OTHER PRACTICES. Merchant
shall not present to Bank, directly or indirectly, any
transaction record that does not result from a transaction
between the cardholder and Merchant, that Merchant knows or
should have known to be fraudulent or not authorized by the
cardholder, that results from a transaction outside Merchant's
normal course of business, or that contains the account number
of a Card account issued to Merchant.
4.4 ACCEPTANCE AND DISCOUNT. Subject to the provisions of any
warranty of Merchant hereunder and of any chargeback rights,
Bank agrees to accept valid transaction records from Merchant
during the term of this Agreement and to pay Merchant the
total amount represented by the transaction records less any
percentage discount agreed to by the parties. Any payment made
by Bank to Merchant in connection with a transaction shall not
become final until the expiration of the period during which
the transaction could be charged back under the
MasterCard/Visa rules.
4.5 RESERVE TO COVER CHARGEBACKS. At the sole option of Bank, Bank
may withhold payment to Merchant of amounts otherwise payable
under Section 4.4 that are reasonably determined by Bank to be
necessary to cover future chargebacks, credits, and other
charges that may result from Merchant's credit card
activities. If Bank determines that the proceeds of Merchant's
future credit card sales are unlikely to cover anticipated
chargebacks and credits (whether because this Agreement has
been terminated or for any other reason), Bank may also
prohibit the withdrawal by Merchant of some or all of
Merchant's funds then held on deposit with Bank.
4.6 ENDORSEMENT. Merchant agrees that Merchant shall be deemed to
have endorsed in Bank's favor any transaction records Merchant
presents to Bank, and Merchant hereby authorizes Bank to
supply such endorsement on Merchant's behalf.
4.7 PROHIBITED PAYMENTS. Merchant agrees that Bank has the sole
right to receive payments on any accepted transaction record
as long as:
(a) Bank has paid Merchant the amount represented by the
transaction record less the discount thereof; and
(b) Bank has not charged such transaction record back to
Merchant. Unless specifically authorized in writing
by Bank, Merchant agrees not to make or attempt to
make any collections or any transaction record.
Merchant agrees to hold in trust for Bank any payment
Merchant receives of all or part of the amount of any
accepted transaction record, and promptly to deliver
the same kind to Bank as soon as received, together
with the cardholder's name and account number and any
correspondence accompanying the payment.
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<PAGE>
4.8 CHARGEBACK.
(a) Under any one or more of the following circumstances,
Bank may charge back to Merchant any transaction
record that Bank has accepted, and Merchant shall
repay Bank the amount represented by the transaction
record:
(i) The transaction record or any material
information on a sales slip (such as the
account number, expiration date of the Card,
Merchant description, transaction amount, or
date) is illegible, incomplete, or otherwise
indiscernible, is not endorsed, or is not
delivered to Bank within the required time
limits;
(ii) The sales slip does not contain the imprint
of a Card that was valid, effective, and
unexpired on the transaction record;
(iii) The transaction was one for which prior
credit authorization was required and prior
credit authorization was not obtained, or a
valid authorization number is not correctly
and legibly included on the transaction
record;
(iv) The transaction record is a duplicate of an
item previously paid, or is one of two or
more transaction records generated in a
single transaction in violation of this
Agreement;
(v) The cardholder disputes the execution of the
transaction record, the sale, delivery,
quality, or performance of the goods or
services purchased, or alleges that a credit
adjustment was requested and refused or that
a credit adjustment was issued by Merchant
but not posted to the cardholder's account;
(vi) The price of the goods or services shown on
the transaction record differs from the
amount shown on the copy of the sales slip
or the receipt delivered to the customer at
the time of the transaction.
(vii) Bank reasonably determines that Merchant has
violated any term, condition, covenant,
warranty, or other provision of this
Agreement in connection with the transaction
record or the transaction to which it
relates;
(viii) Bank reasonably determines that the
+transaction record is fraudulent or that
the related transaction is not a bona fide
transaction in Merchant's ordinary course of
business, or is subject to any claim of
illegality, cancellation, rescission,
avoidance, or offset for any reason
whatsoever, including without limitation
negligence, fraud, or dishonesty on the part
of Merchant or Merchant's agents or
employees;
(ix) The transaction record arises from a mail or
telephone order transaction which the
cardholder disputes entering into or
authorizing, or which involves an account
number that never existed or that has
expired and has not been renewed; or
(x) In any other situation in which a
transaction has been charged back to Bank in
accordance with the chargeback rules
established by MasterCard and Visa.
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<PAGE>
(b) Bank may charge back a transaction in accordance with
Section 4.8(a) above even if an authorization was
obtained in connection with the transaction (this
subsection does not apply in the case of chargebacks
that are based solely on the Merchant's failure to
obtain an authorization).
(c) Each Merchant will be responsible for the
verification of each chargeback item charged to the
account. The Merchant must protest any chargeback
item within 35 days of the date of the original
chargeback (the date of the "ACH" entry). In the
event the chargeback item is not protested within the
35 day time frame, the Merchant agrees to accept the
item regardless of its accuracy or authenticity. The
Merchant agrees to hold Bank harmless from any claim
it may have as a result of the item(s) being returned
if it is not protested within the 35 day time frame.
(d) Bank shall charge a per item handling fee for each
chargeback processed in an amount set forth on a
schedule of charges. Bank may from time to time, in
its sole discretion and without notice, change the
chargeback handling fee. As in the case of certain
electronic transactions, Visa and MasterCard rules
may not allow the reversal of a chargeback and
Merchant agrees to accept all chargebacks issued
pursuant to Visa and MasterCard regulations.
4.9 VOLUME CONSTRAINTS. Bank, in its sole discretion, may
implement and enforce volume constraints on Merchant accounts.
4.10 PROFILING PARAMETERS FOR AUDIOTEXT MERCHANTS.
(a) Each service bureau and Merchant must agree to obtain
all authorizations through the authorization system
the Bank may require.
(b) Each service bureau and Merchant must also agree to
and comply with the parameters and controls Bank has
developed. Should any service bureau or Merchant
intentionally circumvent these rules, or
inadvertently fail to consistently follow these
rules, they will be subject to immediate cancellation
of all processing or Merchant privileges.
(c) Each service bureau and Merchant must comply with the
Profiling Parameters and Authorization Requirements
that presently exist and/or that may be amended from
time to time at the sole discretion of the Bank.
4.11 CUSTOMER SERVICE. Merchant agrees to establish an 800
telephone customer service line for the purposes of complying
with Section 4.9 and Section 4.10 of this Agreement. Merchant
further agrees to provide Bank with a complete list of all 800
telephone numbers which will generate the sales slips that are
transmitted to Bank for settlement. This list of 800 telephone
numbers becomes a part of this Agreement.
ARTICLE V - FEES AND CHARGES - CALCULATION AND COLLECTION
5.1 Merchant shall pay to Bank all applicable fees and charges in
accordance with the current Schedule of Fees described in
Schedule A hereto, in effect at the time the same are
incurred, including but not limited to the following:
(a) A per-item fee, assessed if applicable, and payable
by Merchant to Bank for processing Credit Slips.
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<PAGE>
(b) Credit Transaction Fee. Discount Fee. A fee charged
and payable by Merchant to Bank for processing
Merchant's Bank Card Transactions. The Discount Fee
is calculated on the Merchant's dollar volume of
business either for the day or for the months as set
forth by Bank, in Schedule A hereto. A minimum
monthly Discount Fee may be charged irrespective of
business volume.
(c) Imprinter Fee. An annual or monthly fee, which may be
prorated, payable to Bank for Merchant's use of an
imprinter provided by Bank.
(d) Set-Up Fee. A one-time administrative fee charged to
Merchant by Bank (upon Final Approval of the
Application) and upon initiation of any Merchant
BankCard Service, Supplemental Services or
enhancements selected by Merchant.
(e) Chargeback Fee. A per-item fee assessed to Merchant
by Bank.
(f) Excessive Chargebacks. If Merchant's Chargeback
activities become excessive, Merchant shall pay an
additional per-item charge set by Bank for any costs
of processing such excessive chargebacks.
(g) Terminal Rental. A monthly terminal rental fee will
be assessed by Bank, if applicable.
(h) Post Termination Charges. Merchant shall continue to
be liable to Bank for all processing costs and
charges incurred by Bank after termination of this
Agreement, until no further activity originating form
Merchant takes places.
(i) Retrieval Fee. A per-item fee charged to Merchant for
retrieval by Bank of a copy of any Credit Slip, Sales
Slip, draft, or other item requested by Merchant.
5.2 In addition to the Fees and Charges described above and in
Schedule A, Bank may assess, and Merchant shall pay upon
demand, charges for any of the following:
(a) Interchange System Fines and Penalties. It is
understood that the Interchange System may impose
various fines or penalties upon Bank for Bank's
violation of the Interchange System By-Laws or Rules.
To the extent that Merchant is responsible for the
violation,
(b) Merchant shall indemnify and hold Bank harmless for
the fine or penalty, whether the violation occurs or
fines or penalties are imposed during the term of
this Agreement or after its termination, including,
but not limited to any damages, fines, levies,
assessments, costs, fees, interest or other sum.
(c) Legal Fees and Costs. Bank shall pass through to
Merchant and Merchant agrees to pay all of Bank's
legal fees and costs incurred in seeking legal advice
in matters not in the ordinary course of the
Merchant/Bank relationship described in this
Agreement, including but not limited to, contract
disputes, legal procedures, bankruptcy, or other
similar events. Merchant shall reimburse Bank for all
such fees and costs, whether incurred during the term
of this Agreement or after its termination.
5.3 FINES. It is understood that Visa and MasterCard may charge
Merchants a chargeback handling fee or fine when a Merchant
exceeds certain thresholds set by Visa and MasterCard or
violates other rules or regulations that exist or that may be
implemented from time to time. Each Merchant agrees to pay for
and reimburse Bank for any charge or fine within 30 days from
the receipt of any fine or charge levied by Visa or MasterCard
15
<PAGE>
on behalf of that Merchant. Merchant's payment and
reimbursement requirement herein provided for is absolute and
unconditional and exists independent from any right of protest
Merchant may have against Visa or MasterCard regarding any
such fines.
5.4 COLLECTION OF FEES AND CHARGES. Bank may collect any and all
of the various Charges and Fees described in paragraphs 5.1,
5.2, and 5.3 above by:
(a) making a withdrawal without further notice or demand
of any kind from the Merchant's Bank Account
identified below; or
(b) invoicing the amount of the Fee or Charges from time
to time; or
(c) taking any lawful collection measures, in court or
otherwise to collect such sums.
ARTICLE VI -- TERMINATION
6.1 TERMINATION BY BANK. The Bank may terminate this Agreement for
any reason, including, but not limited to inactivity of the
Merchant BankCard Service. Termination shall be effective
thirty (30) days after written notice is mailed or dispatched
for delivery to the Merchant at the Merchant's address as
listed below or as Merchant may have notified the Bank in
writing and is listed in the Bank's records. Notice of
termination shall be effective whether or not actually
received by the Merchant.
6.2 In addition to Paragraph 6.1 above, if Merchant breaches any
term or fails to perform any of its obligations under the
Agreement, including, without limitation, the payment when due
of any fees, charges, deposit or taxes, or chooses not to
accept any change to the terms and conditions of this
Agreement made pursuant to Section 7.13, Bank, may, at it sole
option, promptly terminate this Agreement without prior
notice, such termination to be effective immediately. Any
failure by Merchant to comply with the Interchange System
rules and regulations or federal, state or local law
applicable to any aspect of any Bank Card Transaction shall be
an immediate breach of this Agreement and such breach shall
authorize Bank to immediately terminate this Agreement without
prior notice.
6.3 In addition to Paragraph 6.1 and 6.2 above, Bank may terminate
this Agreement effective immediately without prior notice from
Bank if:
(a) Merchant materially misrepresents any data or
information required by Bank in connection with
Merchant's Application or at any other time;
(b) Merchant discontinues the operation or materially
changes the type of business engaged represented by
Merchant to Bank in this Agreement.
(c) all or substantially all of the assets of Merchant's
business are sold, hypothecated, transferred or
pledged;
(d) Merchant becomes insolvent;
(e) there is a substantial or material change in the
form, management, operations or ownership of
Merchant's business;
(f) there is a substantial change in Merchant's current
credit standing; or
(g) for any other reason based on Bank's policy or
business decision. Merchant hereby agrees to notify
Bank immediately upon the occurrence of any of the
events or conditions covered by this Section.
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<PAGE>
6.4 TERMINATION BY MERCHANT. Merchant may terminate this Agreement
in its sole discretion for any reason upon thirty (30) days'
written notice to the Bank.
6.5 DUTIES UPON TERMINATION. Upon termination by either Bank or
Merchant for any reason, the right of Merchant to participate
in Bank Card Transactions under this Agreement shall also
terminate. Merchant shall return to Bank all advertising or
promotional brochures, all unused slips and forms, all
Merchant Identification Plate(s), all Terminals and imprinters
which were supplied by Bank and any other items associated
with the BankCard Services. Merchant agrees to provide Bank
copies or originals of any of its records, including any
required Sales Slips after termination of this Agreement and
said obligation shall survive the termination of this
Agreement, regardless of time.
6.6 Termination by Bank shall not affect Ban's rights under this
Agreement as to Sales Slips presented by Merchant prior to
termination. If Bank exercises its right to terminate this
Agreement, it shall have no duty to pay any Sales Slip from
the time termination is effective. Bank shall also have the
right to return, unpaid, any and all Sales Slips previously
presented by Merchant but not yet irrevocably entered into the
Bank's processing system or the interchange Systems.
6.7 Merchant shall pay to Bank any and all charges, costs, and
fees outstanding at termination, any and all Post-Termination
charges, and any other charges, costs, and fees incurred after
termination.
6.8 Bank may retain any records, including unpaid Sales Slips, for
purposes of investigation and prosecution if the Bank has a
reasonable belief that such unpaid Sales Slips (or other
records) have been prepared or presented in violation of any
law, regulation, or rules, or the terms of this Agreement.
6.9 All funds, deposits, securities and pledges held by or
assigned to Bank shall remain held by Bank so long as any
transactions are subject to Chargeback or for a period of time
Bank deems necessary to prevent loss to Bank by Chargebacks or
otherwise.
6.10 Each Merchant must maintain a chargeback ratio which does not
exceed 1%. Merchant acknowledges the importance of operating
within the allowable chargeback ratio. Chargeback ratios shall
be calculated by dividing the number of chargebacks received
in any month by the number of sales during that month. In the
event a Merchant excess the chargeback percentage, whether the
period of excess is one month or a longer period, Bank
reserves the absolute right to cease processing the account at
any time and without notice.
ARTICLE VII - MISCELLANEOUS
7.1 RESERVE ACCOUNT. To cover potential chargebacks, credit slips,
uncollected discounts and fees the Merchant and Bank agree as
follows:
(a) From each deposit transaction, Bank shall withhold a
percentage as reserves, for a certain number of days
that may be changed from time to time by the Bank at
its sole and absolute discretion according to
Schedule A attached hereto. This amount shall be
deposited into a Reserve Account which shall earn
interest at 0% per annum until such account reaches
$10,000. Thereafter, the account will earn interest
based upon current market value. If the account
closes before interest is credited you will not
receive the accrued interest. Merchant further agrees
to an initial deposit as outlined in Schedule A into
a separate blocked account, known as a Merchant
Reserve Account, prior to the implementation of the
Merchant services account. All Merchant Reserve
Accounts shall be maintained to cover
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<PAGE>
any chargebacks or other loss resulting from
transactions deposited into the Merchant Account(s).
The Merchant Reserve Account shall be maintained at
all times at or greater than the sum required and
shall be immediately replenished when and if
depleted. They may be increased at any time for
proven cause or excessive chargebacks.
(b) Any chargebacks or fees referred to above shall first
be charged to Merchant's general operating account.
If there are not sufficient funds in the operating
account to cover these items within 24 hours after
they are received, Bank shall have the right to
withdraw enough funds from the Reserve Account to
cover any of the chargebacks or fees. However, it is
agreed that Bank shall not be required to withdraw
any funds from the Reserve Account for this purpose
and doing so, shall be in its sole discretion.
(c) Nothing stated here shall limit the general rights
and provisions in this Agreement.
(d) Bank shall have the right to increase the Reserve
Percentage and the amount of funds required to be in
the Reserve Account (as specified in Section 7.1A
above), and/or the number of days that the funds hall
be held in the Reserve Account at any time without
prior notice to the Merchant.
(e) Upon termination of this Agreement, the Merchant
Reserve Account shall be retained for a period not
less than seven (7) months following cessation of
Merchant Services for the Merchant or the conclusion
of the chargeback period, whichever period is
greater, to cover any chargebacks, credit slips,
uncollected discounts and fees that may result after
the date of termination.
7.2 MONTHLY TRANSACTION VOLUME LIMITATION. Customer shall NOT
process more than the monthly sales volume limit as specified
in Schedule A in aggregate approved Merchant drafts during any
calendar month without formal written application and approval
of a higher transaction level by Bank. Drafts in excess of the
sum set forth above may be rejected or held in the Reserve
Account as additional reserves until the chargeback period
related to those sums fully expires, at Bank's option. If the
application is accepted for a higher transaction volume, prior
to any final approval, Customer will be required to increase
the Reserve Account set forth in 7.1 (a) and (e), above, to an
amount the Bank may, in its sole discretion, require.
7.3 IMPRINTERS AND TERMINALS. Merchant shall keep any imprinter(s)
and terminals used to process card transactions in good
working order and shall notify Bank prior to any change of the
imprinted or programmed information.
7.4 FORMS. Merchant shall use only such forms or modes of
transmission for sales data and credit data as are provided or
approved in advance by Bank, and Merchant shall not use forms
or equipment provided by Bank other than in connection with
Card transactions hereunder.
7.5 RECORDS. Merchant shall retain either the original or a
legible microfilm copy of both sides of all sales slips for at
least three (3) years after the date Merchant presents the
transaction data to Bank.
7.6 REQUESTS FOR COPIES. Within five (5) days of receipt of any
request by Bank, Merchant shall provide to Bank either the
actual paper transaction record, if requested by Bank, or a
legible microfilm thereof (in size comparable to the actual
paper transaction records), and any other documentary evidence
available to Merchant and reasonably requested by Bank to meet
its obligations under law (including its obligations under the
18
<PAGE>
Fair Credit Billing Act) or otherwise to respond to questions
concerning cardholder accounts.
7.7 COMPLIANCE WITH LAW. Merchant shall comply with all laws
applicable to Merchant, Merchant's business, and any Card
transaction, including without limitation all state and
federal consumer credit and consumer protection statutes and
regulations.
7.8 INDEMNIFICATION. Merchant agrees to hold Bank harmless from,
and indemnify Bank against all claims, losses, damages, and
liabilities, including attorney's fees and other costs of
defense that relate to or result from any alleged violation by
Merchant of any applicable law or regulation or any action of
Merchant in connection with a Card transaction subject to this
Agreement.
7.9 MODIFICATION. This Agreement is subject to such modifications,
changes, and additions as may be required, or deemed by Bank,
in its sole discretion, to be required, by reason of any state
or federal statute, judicial decision, MasterCard or Visa rule
or regulation, actual or potential prejudice to Bank's
relationship with Visa or MasterCard, or the regulation or
ruling of any federal agency having jurisdiction over Bank or
Merchant.
7.10 AMENDMENT. Bank may amend this Agreement at any time by
mailing written notice to Merchant of any amendment at least
ten (10) days prior to the effective date of the amendment,
and the amendment shall become effective on the date specified
unless Bank receives Merchant's notice of termination of this
Agreement before such effective date. Nothing herein shall
prohibit Bank from taking any immediate or other action,
without notice, otherwise provided for in this Agreement.
7.11 LIABILITY. Bank's liability to Merchant with respect to any
Card transaction shall not exceed the amount represented by
the transaction record in connection with that transaction
less any applicable discount, and Bank shall in no event be
liable for any incidental or consequential damages whatsoever.
7.12 RIGHT TO MAKE CHANGES. Because Interchange Systems' rules,
federal, state and local law and the Bank Card market change
frequently and rapidly, it is agreed and understood that the
relationship between Bank and Merchant may change in the
future. Bank, in its sole discretion, may change its policy,
procedures or forms, or any term or condition of this
Agreement or may terminate any service or discontinue its
services entirely upon reasonable notice to Merchant as set
forth in Article 6. Merchant agrees to comply with any such
changes which shall be deemed effective as of that date
indicated on any Change Notice. Should Merchant choose not to
accept a Change prior to its effective date, Merchant shall
give immediate written notice of that fact to Bank at the
address designated herein and Bank may terminate the
Agreement, effective immediately, a set forth in Article 6.
7.13 RIGHT OF SETOFF. Bank has the right of setoff against any
deposit account Merchant maintains with Bank to satisfy any
obligations of Merchant to Bank.
7.14 SECURITY INTEREST IN MERCHANT BANK ACCOUNT, DEPOSIT ACCOUNTS,
AND DEPOSIT ACCOUNT PROCEEDS. To secure Merchant's liability
for potential Chargebacks and any other charges or liability
of Merchant to Bank, Merchant hereby grants to Bank a security
interest in all deposits, regardless of source, made to any
merchant Bank Account and any personal and business deposit
accounts in the name of Merchant or Merchant's principals at
any depository institution, and in the proceeds of any of said
deposits. Bank may enforce its security interest without
notice or demand of any kind, by:
19
<PAGE>
(a) making an immediate withdrawal from or freezing any
or all of said deposit accounts; and/or
(b) taking possession of any deposits made to said
accounts, upon Bank's reasonable determination that
any term or condition of this Agreement has been
breached; and/or
(c) taking any other lawful action, by legal action or
otherwise. Bank may also require any other security
or pledge which Bank deems necessary to prevent loss
to Bank. Bank's security interest shall remain after
the termination of this Agreement so long as any Bank
Card Transaction processed by Merchant remains
subject to Chargebacks, and so long as any fee,
charge, or cost mentioned in Article 5 of this
Agreement remains unpaid by Merchant or could be
incurred by Bank. Merchant agrees to execute any and
all documents Bank may reasonably believe necessary
to create, perfect, or preserve the Bank security
interests granted pursuant to this Paragraph.
7.15 FINALITY OF SETTLEMENT. Merchant agrees that payment of Bank
Card Sales Slips by Bank shall not be final, so long as the
Transaction is subject to chargeback or return. Merchant
agrees that Bank may revoke any prior provisional settlement
of a Sales Slip by making an immediate withdrawal without
notice or demand of any kind from the Bank. Merchant waives
all notice of default or nonpayment and consents to all
extensions or compromises given by Bank or the Interchange
System to any cardholders.
7.16 CREDIT AND FINANCIAL INFORMATION. Merchant authorizes Bank to
obtain, from time to time, credit, financial, and other
information regarding Merchant from other persons or entities,
such as credit reporting agencies. Merchant also authorizes
Bank to respond to requests form others for information
regarding Merchant.
7.17 CHANGE IN TRANSMISSION METHOD. The means of transmission
indicated below shall be exclusive means utilized by Merchant
for the transmission of sales data or credit data to Bank.
Merchant shall give Bank at least thirty (30) days' prior
written notice of Merchant's desire to deliver and deposit
actual sales slips and credit slips or otherwise to alter in
any material respect Merchant's medium of transmission of
sales data and credit data to Bank. Following termination,
Merchant shall upon request provide Bank with all original and
microfilm copies required to be retained as of the date of
termination.
7.18 NOTICES. All notices, demands, and other communications
required or permitted hereunder shall be made in writing and
shall be deemed to have been duly given if delivered by hand
or mailed, postage prepaid, certified, registered, or
first-class mail, and addressed to:
Bank: Charter Pacific Bank
30141 Agoura Road, Suite 205
Agoura Hills, CA 91301
Attention: Lisa M. Ott
Merchant: Netmaximizer.com, Inc.
7491 N. Federal Highway, Suite 262
Boca Raton, FL 33487
Attention: Peter Schuster
Notice of change of address shall be effective only when given
in accordance with this Section. All notices complying with
this Section shall be deemed to have been received on the date
of delivery or on the third (3rd) business day after mailing.
20
<PAGE>
7.19 SUPPLEMENTARY DOCUMENTS. Reference to "this Agreement"
includes any valid schedules, appendices, and amendments
hereto.
7.20 ENTIRE AGREEMENT. The parties intend that the terms of this
Agreement, including any attached schedules and addenda, shall
be the final expression of their agreement with respect to the
subject matter hereof and may not be contradicted by evidence
of any prior or contemporaneous agreement. The parties further
intend that this Agreement shall constitute the complete and
exclusive statement of its terms and that no extrinsic
evidence whatsoever may be introduced in any judicial,
administrative or other legal proceedings involving this
Agreement.
7.21 WAIVER. No failure to exercise and no delay in exercising any
right, remedy, or power under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of
any right, remedy, or power hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity. The
waiver by any party of the time for performance of any act or
condition hereunder does not constitute a waiver of the act or
condition itself.
7.22 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their
respective successors and assigns. Notwithstanding the
foregoing, Merchant shall not assign, sell, transfer,
delegate, or otherwise dispose of, whether voluntarily or
involuntarily, or by operation of law, any right or obligation
under this Agreement without the written consent of Bank. Any
purported assignment, transfer, or delegation in violation of
this Section shall be null and void.
7.23 CHOICE OF LAW. The validity, interpretation, enforceability
and performance of this Agreement shall be governed by and
construed in accordance with the laws of the State of
California.
IN WITNESS WHEREOF, Bank and Merchant have caused their duly authorized
representatives to execute this Agreement as of the date set forth below the
signature of each.
Cards subject to this Agreement ("Cards"):
X MasterCard Cards (including any other MasterCard
International, Inc. cards)
X Visa Cards (including any other Visa U.S.A. Inc. & Visa
International Services cards)
X Discover
X American Express
X JCB
X Diners
Mode of Transmission:
______ Tap Trans
______ Electronic Terminal Transmission
21
<PAGE>
______ CPU-CPU
______ ETC Plus
X Software: PTC
<TABLE>
<CAPTION>
<S> <C>
Bank: Merchant:
CHARTER PACIFIC BANK Netmaximizer.com, Inc.
30141 Agoura Road, Suite #205 7491 N. Federal Highway, Suite 262
Agoura Hills, CA 91301 Boca Raton, FL 33487
By: /s/ Signer: /s/ Peter Schuster
------------------------------ -----------------------------------
Title: Merchant Services Manager Printed Name
------------------------------
Date: 04/22/99 Signature: Peter Schuster
------------------------------ -----------------------------------
Title: Secretary/Treasurer
-----------------------------------
Date: 04/20/99
-----------------------------------
Merchant Account #(Visa) ------------------
Merchant Account #(MC) ------------------
Merchant DDA # ------------------
Merchant Reserve # ------------------
22
</TABLE>
NETMAXIMIZER.COM, INC.
1999 EMPLOYEE STOCK OPTION PLAN
1. DEFINITIONS: As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board of Directors or the
Committee if the Board of Directors, in its sole discretion, designates the
Committee to administer the Plan.
(b) "Board of Directors" shall mean the Board of Directors of
the Corporation.
(c) "Committee" shall mean the Compensation Committee
designated by the Board of Directors of the Corporation, or such other committee
as shall be specified by the Board of Directors to perform the functions and
duties of the Committee under the Plan; provided, however, that the Committee
shall comply with the requirements of (i) Rule 16b-3 of the Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and (ii) Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations thereunder.
(d) "Corporation" shall mean NETMAXIMIZER.COM, Inc., a Florida
corporation, or any successor thereof.
(e) "Discretion" shall mean in the sole discretion of the
Administrator, with no requirement whatsoever that the Administrator follow past
practices, act in a manner consistent with past practices, or treat a key
employee, consultant or advisor in a manner consistent with the treatment
afforded other key employees, consultants or advisors with respect to the Plan.
(f) "Nonqualified Option" shall mean an option to purchase
Common Stock of the Corporation which meets the requirements set forth in the
Plan but does not meet the definition of an incentive stock option within the
meaning of Section 422 of the Code. The stock option agreement for a
Nonqualified Option shall state that the option is intended to be a Nonqualified
Option.
(g) "Participant" shall mean any individual designated by the
Administrator under Paragraph 6 for participation in the Plan.
(h) "Plan" shall mean this Netmaximizer.com, Inc., 1999
Employee Stock Option Plan.
(i) "Subsidiary" shall mean any corporation or similar entity
in which the Corporation owns, directly or indirectly, stock or other equity
interest ("Stock") possessing more than 25% of the combined voting power of all
classes of Stock.
2. PURPOSE OF PLAN: The purpose of the Plan is to reward employees
(including officers and directors), consultants and advisors of the Corporation
and its Subsidiaries for their significant and extraordinary contributions to
the long-term performance and growth of the Corporation and its Subsidiaries.
<PAGE>
3. ADMINISTRATION: The Plan shall be administered by the Administrator.
Subject to the provisions of the Plan, the Administrator shall determine, from
those eligible to be Participants under the Plan, the persons to be granted
stock options, the amount of stock to be optioned or granted to each such
person, and the terms and conditions of any stock options. Subject to the
provisions of the Plan, the Administrator is authorized to interpret the Plan,
to make, amend and rescind rules and regulations relating to the Plan and to
make all other determinations necessary or advisable for the Plan's
administration. Interpretation and construction of any provision of the Plan by
the Administrator shall, unless otherwise determined by the Board of Directors
in cases where the Committee is the Administrator, be final and conclusive. A
majority of the Administrator shall constitute a quorum, and the acts approved
by a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Administrator, shall
be the acts of the Administrator.
4. INDEMNIFICATION OF THE BOARD OF DIRECTORS AND COMMITTEE MEMBERS: In
addition to such other rights of indemnification as they may have, the members
of the Board of Directors and the Committee shall be indemnified by the
Corporation in connection with any claim, action, suit or proceeding relating to
any action taken or failure to act under or in connection with the Plan or any
option granted hereunder to the full extent provided for under the Corporation's
Bylaws with respect to indemnification of directors of the Corporation.
5. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN: The maximum number of
shares with respect to which stock options may be granted shall be 2,603,200
shares of Common Stock of the Corporation. If a stock option expires or
terminates for any reason (other than termination as a result of the exercise of
a related right) without having been fully exercised, the number of shares with
respect to which the stock option was not exercised at the time of its
expiration or termination shall again become available for the grant of stock
options under the Plan, unless the Plan shall have been terminated.
The number of shares subject to each outstanding stock option, the
option price with respect to outstanding stock options, and the aggregate number
of shares remaining available under the Plan shall be subject to such adjustment
as the Administrator, in its Discretion, deems appropriate to reflect such
events as stock dividends, stock splits, recapitalizations, mergers,
consolidations or reorganizations of or by the Corporation; provided, however,
that no fractional shares shall be issued pursuant to the Plan, no rights may be
granted under the Plan with respect to fractional shares, and any fractional
shares resulting from such adjustments shall be eliminated from any outstanding
stock option.
6. PARTICIPANTS: The Administrator shall determine and designate from
time to time, in its Discretion, those employees, consultants or advisors of the
Corporation or any Subsidiary to receive stock options who, in the judgment of
the Administrator, have been or are responsible for the direction and financial
success of the Corporation or any Subsidiary.
2
<PAGE>
7. WRITTEN AGREEMENT: Each stock option shall be evidenced by a written
agreement (each a "Corporation-Participant Agreement") containing such
provisions as may be approved by the Administrator. Each such
Corporation-Participant Agreement shall constitute a binding contract between
the Corporation and the Participant and every Participant, upon acceptance of
such Agreement, shall be bound by the terms and restrictions of the Plan and of
such Agreement. The terms of each such Corporation-Participant Agreement shall
be in accordance with the Plan, but each Agreement may include such additional
provisions and restrictions determined by the Administrator, in its Discretion,
provided that such additional provisions and restrictions are not inconsistent
with the terms of the Plan.
8. ALLOTMENT OF SHARES: Subject to the terms of the Plan, the
Administrator shall determine and fix, in its Discretion, the number of shares
of Common Stock with respect to which a Participant may be granted stock
options.
9. STOCK OPTIONS: Subject to the terms of the Plan, the Administrator,
in its Discretion, may grant to Participants Nonqualified Options only. Each
option granted under the Plan shall designate the number of shares covered
thereby.
10. STOCK OPTION PRICE: Subject to the rules set forth in this
Paragraph 10, at the time any stock option is granted, the Administrator, in its
Discretion, shall establish the price per share for which the shares covered by
the option may be purchased. Such option price shall not be less than 100% of
the fair market value of the stock on the date on which such option is granted.
Fair market value of a share shall be determined by the Administrator and may be
determined by taking the mean between the highest and lowest quoted selling
prices of the Corporation's Common Stock on any exchange or other market on
which the shares of Common Stock of the Corporation shall be traded on such
date, or if there are no sales on such date, on the next following day on which
there are sales. The option price shall be subject to adjustment in accordance
with the provisions of paragraph 5 of the Plan.
11. PAYMENT OF STOCK OPTION PRICE: To exercise in whole or in part any
stock option granted hereunder, payment of the option price in full in cash or,
with the consent of the Administrator, in Common Stock of the Corporation or by
a promissory note payable to the order of the Corporation in a form acceptable
to the Administrator, shall be made by the Participant for all shares so
purchased. Such payment may, with the consent of the Administrator, also consist
of a cash down payment and delivery of such promissory note in the amount of the
unpaid exercise price. In the Discretion of and subject to such conditions as
may be established by the Administrator, payment of the option price may also be
made by the Corporation retaining from the shares to be delivered upon exercise
of the stock option that number of shares having a fair market value on the date
of exercise equal to the option price of the number of shares with respect to
which the Participant exercises the stock option. Such payment may also be made
in such other manner as the Administrator determines is appropriate, in its
Discretion. No Participant shall have any of the rights of a shareholder of the
Corporation under any stock option until the actual issuance of shares to said
Participant, and prior to such issuance no adjustment shall be made for
dividends, distributions or other rights in respect of such shares, except as
provided in Paragraph 5.
3
<PAGE>
12. GRANTING AND EXERCISING OF STOCK OPTIONS: Subject to the provisions
of this Paragraph 12, each stock option granted hereunder shall be exercisable
at any such time or times or in any such installments as may be determined by
the Administrator at the time of the grants; provided, however, no stock option
may be exercisable prior to the expiration of six months from the date of grant
unless the Participant dies or becomes disabled prior thereto.
A Participant may exercise a stock option, if then exercisable, in
whole or in part by delivery to the Corporation of written notice of the
exercise, in such form as the Administrator may prescribe, accompanied by (i)
payment for the shares with respect to which the stock option is exercised in
accordance with Paragraph 11, or (ii) in the Discretion of the Administrator,
irrevocable instructions to a stock broker to promptly deliver to the
Corporation full payment for the shares with respect to which the stock option
is exercised from the proceeds of the stock broker's sale of or loan against the
shares.
Successive stock options may be granted to the same Participant,
whether or not the stock option(s) previously granted to such Participant remain
unexercised. A Participant may exercise a stock option, if then exercisable,
notwithstanding that stock options previously granted to such Participant remain
unexercised.
13. TERM OF STOCK OPTIONS: If not sooner terminated, each stock option
granted hereunder shall expire not more than 5 years from the date of the
granting thereof.
14. INVESTMENT PURPOSE: If the Administrator in its Discretion
determines that as a matter of law such procedure is or may be desirable, it may
require a Participant, upon any acquisition of Common Stock hereunder and as a
condition to the Corporation's obligation to issue or deliver certificates
representing such shares, to execute and deliver to the Corporation a written
statement, in form satisfactory to the Administrator, representing and
warranting that the Participant's acquisition of shares of stock shall be for
such person's own account, for investment and not with a view to the resale or
distribution thereof and that any subsequent offer for sale or sale of any such
shares shall be made either pursuant to (a) a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), which registration statement has become effective and is current with
respect to the shares being offered and sold, or (b) a specific exemption from
the registration requirements of the Securities Act, but in claiming such
exemption the Participant shall, prior to any offer for sale or sale of such
shares, obtain a favorable written opinion from counsel for or approved by the
Corporation as to the availability of such exemption. The Corporation may
endorse an appropriate legend referring to the foregoing restriction upon the
certificate or certificates representing any shares issued or transferred to a
Participant under the Plan.
15. WITHHOLDING PAYMENTS: If upon the exercise of a Nonqualified
Option, there shall be payable by the Corporation or a Subsidiary any amount for
income tax withholding, in the Administrator's Discretion, either the
4
<PAGE>
Corporation shall appropriately reduce the amount of Common Stock or cash to be
delivered or paid to the Participant or the Participant shall pay such amount to
the Corporation or Subsidiary to reimburse it for such income tax withholding.
The Administrator may, in its Discretion, permit Participants to satisfy such
withholding obligations, in whole or in part, by electing to have the amount of
Common Stock delivered or deliverable by the Corporation upon exercise of a
stock option appropriately reduced, or by electing to tender Common Stock back
to the Corporation subsequent to exercise of a stock option, to reimburse the
Corporation or a Subsidiary for such income tax withholding (any such election
being irrevocable), subject to such rules and regulations as the Administrator
may adopt, including such rules as it determines appropriate with respect to
Participants subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to effect such
tax withholding in compliance with the Rules established by the Securities and
Exchange Commission (the "Commission") under Section 16 to the Exchange Act and
the positions of the staff of the Commission thereunder expressed in no-action
letters exempting such tax withholding from liability under Section 16(b) of the
Exchange Act. The Administrator may make such other arrangements with respect to
income tax withholding as it shall determine.
16. EFFECTIVENESS OF PLAN: The Plan shall be effective as of April 5,
1999, the date the Board of Directors of the Corporation adopted the Plan,
provided that the shareholders of the Corporation approve the Plan within 12
months of its adoption by the Board of Directors. Stock options may be granted
or awarded prior to shareholder approval of the Plan, but each such stock option
shall be subject to shareholder approval of the Plan. No stock option may be
exercised prior to shareholder approval.
17. TERMINATION, DURATION AND AMENDMENTS OF PLAN: The Plan may be
abandoned or terminated at any time by the Board of Directors of the
Corporation. Unless sooner terminated, the Plan shall terminate on the date ten
years after its adoption by the Board of Directors, and no stock options may be
granted or awarded thereafter. The termination of the Plan shall not affect the
validity of any stock option outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law or
governmental regulations, or for any other lawful purpose, the Board of
Directors shall have the right, with or without approval of the shareholders of
the Corporation, to amend or revise the terms of the Plan at any time, however,
no such amendment or revision will, without the consent of the holder thereof,
change the stock option price (other than anti-dilution adjustment) or alter or
impair any stock option which has been previously granted or awarded under the
Plan.
As adopted by the Board of Directors on April 5, 1999.
5
YAHOO! STORE MERCHANT SERVICE AGREEMENT
1. AGREEMENT.
The Yahoo! Store service ("Yahoo! Store" or the "Service"),
owned and operated by Yahoo! Inc. ("Yahoo!") is provided to you ("you" or
"Merchant") under the terms and conditions of this Yahoo! Store Merchant Service
Agreement and any amendments thereto and any operating rules or policies
(collectively, the "YMSA" or "Agreement"). Yahoo! reserves the right, in its
sole discretion, to change, modify, or remove all or part of the YMSA at any
time. Merchant will receive notice of such changes and/or modifications pursuant
to Section 14 regarding notices.
1.1 By accepting the terms and conditions of the YMSA,
Merchant (a) represents and warrants that he or she is 18 years old or older;
(b) agrees to provide true, accurate, current and complete information about
Merchant as prompted by the Account Registration Form; and (c) agrees to
maintain and update this information to keep it true, accurate, current and
complete. If any information provided by Merchant is untrue, inaccurate, not
current or incomplete, Yahoo! has the right to terminate Merchant's account and
refuse any and all current or future use of the Service,
1.2 BY COMPLETING THE ACCOUNT REGISTRATION PROCESS AND
CLICKING THE "I ACCEPT" BUTTON, YOU AGREE TO BE BOUND BY THE YMSA. Nothing in
this agreement obligates Yahoo! or the Service to list, link to, accept or
otherwise host any online store anywhere on the Yahoo! site. If these terms and
conditions or any future changes are unacceptable to you, you may cancel your
account pursuant to Section 7.1 regarding termination of service.
2. DESCRIPTION OF YAHOO! STORE SERVICE
Yahoo! hosts interactive online stores ("Store") on the World
Wide Web and provides merchants with access to its Yahoo! Store Software
("Software") to facilitate the creation and maintenance of Stores for the sale
of goods and services and the listing of such Stores in the Yahoo! Store
Listings located at store.yahoo.com ("Online Store Services").
3. MERCHANT'S OBLIGATIONS
3.1 Merchant acknowledges and agrees that it shall be
responsible for all goods and services offered at Merchant's Store, all
materials used or displayed at the Store, and all acts or omissions that occur
at the Store or in connection with Merchant's account or password. Certain
Stores may be subject to additional requirements.
3.1.1 Merchant agrees to display in the Store
Merchant's contact information, including but not limited to Merchant's company
name, address, telephone number, fax number and e-mail address, Merchant also
agrees to update such information to keep it true, accurate, current and
complete.
3.1.2 Merchant agrees that any and all press releases
and other public announcements related to this Agreement arid subsequent
transactions between Yahoo! and Merchant, including the method and timing of
<PAGE>
such announcements, must be approved in advance by Yahoo! in writing. Yahoo
reserves the right to withhold approval of any public announcement in its sole
discretion. Without limitation, any breach of Merchant's obligation regarding
public announcements shall be a material breach of the YMSA.
3.1.3 Merchant represents and warrants that it has
full power and authority under all relevant laws and regulations:
o to offer and sell the goods and services offered
at the Store, including but not limited to
holding all necessary licenses from all
necessary' jurisdictions to engage in the
advertising and sale of the goods or services
offered at the Store;
o to copy and display the materials used or
displayed at the Store; and
o to provide for credit card payment and delivery
of goods or services as specified at the Store.
3.1.4 Merchant represents and warrants that it
will not engage in any activities;
o that constitute or encourage a violation of any
applicable law or regulation, including but not
limited to the sale of illegal goods or the
violation of export control or obscenity laws;
o that defame, impersonate or invade the privacy
of any third party or entity;
o that infringe the rights of any third party,
including but not limited to the intellectual
property, business, contractual, or fiduciary
rights of others; and,
o that are in any way connected with the
transmission of "junk mail," "spam" or the
unsolicited mass distribution of e-mail, or with
any unethical marketing practices.
3.2 Yahoo! reserves the right to refuse to host or continue to
host any Store which it believes in its sole discretion: (1) offers for sale
goods or services, or uses or displays materials, that are illegal, obscene,
vulgar, offensive, dangerous, or are otherwise inappropriate; (2) has
substantially changed its Store from the time it was accepted; (3) received a
significant number of complaints for failing to be reasonably accessible to
customers or timely fulfill customer orders; (4) has become the subject of a
government complaint or investigation; or (5) has violated or threatens to
violate the letter or spirit of the YMSA.
4. PROPRIETARY RIGHTS
4.1 Software License. Yahoo! hereby grants Merchant a
non-exclusive, non-transferable license to use the Software in object code form
only on a server controlled by Yahoo! for the sole purpose of creating and
maintaining Stores on such server. Merchant is not being granted any right to
copy the Software or to use it on computers other than a server controlled by
2
<PAGE>
Yahoo!. Merchant may not use Web pages or parts of Web pages generated by means
of the Software, other than content that originates from and is proprietary to
Merchant, on any server other than the servers controlled by Yahoo! without
Yahoo!'s express written agreement, Merchant also acknowledges and agrees that
the Software is intended access and use by means of web browsing software, and
that Yahoo! does not commit to support any particular browsing platform.
Yahoo! reserves the right at any time to revise and modify the
Software, release subsequent versions thereof and to alter features,
specification, capabilities, functions, and other characteristics of the
Software, without notice to Merchant. If any revision or modification to the
Software materially changes Merchant's ability to conduct business, Merchant's
sole remedy is to terminate the YMSA pursuant to Section 7.1 regarding
termination of service.
4.2 Yahoo! Intellectual Property. Merchant acknowledges and
agrees that content available from Yahoo! or the Service, including but not
limited to text, software, music, sound, logos, trademarks, service marks,
photographs, graphics, or video, is protected by copyright, trademark, patent,
or other proprietary rights and laws, and may not be used in any manner other
than as specified in Section 4.1 above.
4.3 Merchant's Property. Merchant agrees that by using the
Service, Merchant grants Yahoo!, and its successors and assigns, a
non-exclusive, worldwide, royalty-free, perpetual, non-revocable license under
Merchants copyrights and other intellectual property rights, if any, in all
material and content displayed in Merchant's Store to use, distribute, display,
reproduce, and create derivative works from such material in any and all media
and display in any manner and on any Yahoo! Property the results of search
queries and comparisons conducted on Yahoo!, including, without limitation,
searches conducted on Yahoo! Shopping and the Service. Merchant also grants
Yahoo! the right to maintain such content on Yahoo!'s servers during the term of
the YMSA and to authorize the downloading and printing of such material, or any
portion thereof, by endusers for their personal use.
4.4 Unauthorized Access. Merchant shall not attempt to gain
unauthorized access to any servers controlled by Yahoo!.
5. FEES
5.1 Merchant shall pay Yahoo! a monthly fee as set forth in
the Yahoo! Store fee schedule available at http://store.yahoo.com/pric.html and
made a part hereof. All such fees are payable in U.S. dollars to Yahoo! and
shall be charged on the first day of each month to the credit card number given
to Yahoo! at the time of registration or to such other credit card number which
Merchant shall so designate. Yahoo! may also, upon 30 days prior notice to
Merchant, alter its fee schedules and terms of the YMSA.
6. TERMS
6.1 Term. The term of the YMSA shall be 90 days commencing on
the date that Merchant opens an account for Merchant's Store. The term shall
automatically renew for successive monthly periods at renewal rates applicable
at the time, unless notice of non-renewal is provided in accordance with Section
6.2, below; provided, however, that to qualify for each renewal Merchant must at
the time of renewal be in substantial compliance with the material terms and
conditions of the YMSA. Yahoo! shall have the right, but not the obligation, to
review any Store for compliance with the YMSA as part of the renewal process, or
at any time.
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6.2 Non-Renewal. Either party, in its sole and absolute
discretion, may give notice of non-renewal with or without cause and without
stating any reason therefor. Any notice of non-renewal must be given at least
thirty (30) days prior to the end of the term then in effect and in the manner
described in Section 14 regarding notice.
7. TERMINATION
7.1 Termination. Either party may terminate the YMSA on thirty
(30) days notice if the other party has materially breached or is otherwise not
in compliance with any provision of the YMSA, and such breach or noncompliance
is not cured within such thirty (30) day period. Yahoo! reserves the right to
immediately suspend any customer access to the Store until such breach or
non-compliance is cured.
7.2 Termination for Illegal or Other Activity. Notwithstanding
the foregoing, Yahoo! may, but has no duty to, immediately terminate Merchant
and remove it from Yahoo! Servers if Yahoo!, in its sole discretion, concludes
that Merchant is engaged in illegal activities or the sale of illegal or harmful
goods or services, or is engaged in activities or sales that may damage the
fights of Yahoo! or others. Any termination under this Section 7.2 shall take
effect immediately and Merchant expressly agrees that it shall not have any
opportunity to cure.
7.3 Waiver. Merchant expressly waives any statutory or other
legal protection in conflict with the provisions of this Section 7.
7.4 Deletion of Information. Upon termination, Yahoo! reserves
the right to delete from its server any and all information contained in
Merchant's account, including but not limited to, order processing information,
mailing lists, and any Web pages generated by the Software.
7.5 The provisions of Section 4 (Proprietary Rights), Section
10 (Indemnity), and Section 11 (Disclaimer of Warranties and Liabilities) of
this Agreement shall survive any termination of the Agreement.
8. MERCHANT PRIVACY
8.1 Merchant Information. Yahoo! maintains information about
Merchant and the Store on Yahoo! servers, including but not limited to Merchants
account registration information, Merchant's customer order information, sales
information, and clickstream data ("Merchant Information"). Merchant agrees that
Yahoo! may use Merchant Information in aggregate form for marketing or ether
promotional purposes.
8.1.1 Merchant agrees that Yahoo! may disclose
Merchant information in the good faith belief that such action is reasonably
necessary. (a) to comply with the law; (b) to comply with legal process; (c) to
enforce the YMSA; (d) to respond to claims that the Merchant or Store is engaged
in activities that violate the rights of third parties; or (e) to protect the
rights or interests of Yahoo!, Yahoo! Store or others; provided, however, that
nothing in this section shall impose a duty on Yahoo! to make any such
disclosures.
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<PAGE>
8.1.2 Merchant agrees that Yahoo! may delete customer
credit card information from Yahoo! servers 14 days after Merchant retrieves
such information, and may delete all other Merchant Information from Yahoo!
servers at the end of each calendar year.
8.2 Password. Merchant shall receive a password from Yahoo! to
provide access to and use of the Software and Online Store Services. Merchant is
entirely responsible for any and all activities which occur under Merchants
account and password. Merchant agrees to keep its password confidential, to
allow no other person or company to use its account, and to notify Yahoo!
promptly if Merchant has any reason to believe that the security of its account
has been compromised.
8.3 Technical Access. Merchant acknowledges and agrees that
technical processing of Merchant information is and may be required: (a) for the
Service to function; (b) to conform to the technical requirements of connecting
networks; (c) to conform to the technical requirement of the Service; or (d) to
conform to other, similar technical requirements. Merchant also acknowledges and
agrees that Yahoo! may access Merchant's account and its contents as necessary
to identify or resolve technical problems or respond to complaints about the
Service.
9. MAINTENANCE AND SUPPORT
9.1 Merchant can obtain assistance with any technical
difficulty that may arise in connection with Merchant's utilization of the
Software or Online Store Services by requesting assistance by e-mail to
[email protected]. Yahoo! reserves the right to establish limitations
on the extent of such support, and the hours at which it is available.
9.2 Merchant is responsible for obtaining and maintaining all
telephone, computer hardware and other equipment needed for its access to and
use of the Software and Online Store Services and Merchant shall be responsible
for all charges related thereto.
10. INDEMNITY
Merchant agrees to indemnify and hold harmless Yahoo!, and its
parents, subsidiaries, affiliates, officers, directors, shareholders, employees
and agents, from any claim or demand, including reasonable attorney's fees, made
by any third party due to or arising out of Merchant's conduct, Merchant's use
of the Service, the goods or services offered at Merchant's Store, any alleged
violation of the YMSA, or any alleged violation of any rights of another,
including but not limited to Merchant's use of any content, trademarks, service
marks, trade names, copyrighted or patented material, or other intellectual
property used in connection with Merchant's Store. Yahoo! reserves the right, at
its own expense, to assume the exclusive defense and control of any matter
otherwise subject to indemnification by Merchant, but doing so shall not excuse
Merchant's indemnity obligations.
11. DISCLAIMER OF WARRANTIES AND LIABILITIES
THE SERVICE AND SOFTWARE ARE PROVIDED ON AN "AS IS" AND "AS AVAILABLE" BASIS
WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT. NEITHER THIS AGREEMENT OR ANY DOCUMENTATION FURNISHED UNDER IT
IS INTENDED TO EXPRESS OR IMPLY ANY WARRANTY THAT THE ONLINE STORE SERVICES WILL
BE UNINTERRUPTED, TIMELY OR ERROR-FREE OR THAT THE SOFTWARE WILL PROVIDE
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<PAGE>
UNINTERRUPTED, TIMELY OR ERROR FREE-SERVICE. THE SECURITY MECHANISM INCORPORATED
IN THE SOFTWARE HAS INHERENT LIMITATIONS AND MERCHANT MUST DETERMINE THAT THE
SOFTWARE ADEQUATELY MEETS ITS REQUIREMENTS. MERCHANT ACKNOWLEDGES AND AGREES
THAT ANY MATERIAL AND/OR DATA DOWNLOADED OR OTHERWISE OBTAINED THROUGH THE USE
OF THE SERVICE IS DONE AT ITS OWN DISCRETION AND RISK AND THAT MERCHANT WILL BE
SOLEY RESPONSIBLE FOR ANY DAMAGES TO ITS COMPUTER SYSTEM OR LOSS OF DATA THAT
RESULTS FROM THE DOWNLOAD OF SUCH MATERIAL AND/OR DATA. YAHOO! AND ITS PARENTS,
SUBSIDIARIES, AFFILIATES, OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND
AGENTS, SHALL NOT BE LIABLE, UNDER ANY CIRCUMSTANCES OR LEGAL THEORIES
WHATSOEVER, FOR ANY LOSS OF BUSINESS, PROFITS OR GOODWILL, LOSS OF USE OR DATA,
INTERRUPTION OF BUSINESS, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY CHARACTER, EVEN IF YAHOO! IS AWARE OF THE RISK OF
SUCH DAMAGES, THAT RESULT IN ANY WAY FROM MERCHANT'S USE OR INABILITY TO USE THE
ONLINE STORE SERVICES OR THE SOFTWARE, OR THAT RESULT FROM ERRORS, DEFECTS,
OMISSIONS, DELAYS IN OPERATION OR TRANSMISSION, OR ANY OTHER FAILURE OF
PERFORMANCE OF THE ONLINE STORE SERVICES OR THE SOFTWARE. YAHOO!'S LIABILITY TO
MERCHANT SHALL NOT, FOR ANY REASON, EXCEED THE AGGREGATE PAYMENTS ACTUALLY MADE
BY MERCHANT TO YAHOO! OVER THE COURSE OF THE EXISTING TERM. SOME JURISDICTIONS
DO NOT ALLOW THE EXCLUSION OF CERTAIN WARRANTIES OR LIABILITIES, SO SOME OF THE
ABOVE EXCLUSIONS MAY NOT APPLY TO YOU.
12. NO RESALE OR ASSIGNMENT OF SERVICE
Merchant agrees not to resell or assign or otherwise transfer
its rights or obligations under the YMSA without the express written
authorization of Yahoo!.
13. FORCE MAJEURE
Neither party shall be liable to the other for any delay or
failure in performance under the YMSA resulting directly or indirectly from acts
of nature or causes beyond its reasonable control.
14. NOTICES
Any notices or communications under the YMSA shall be by
electronic mail or in writing and shall be deemed delivered upon receipt to the
party to whom such communication is directed, at the addresses specified below.
If to Yahoo!, such notices shall be addressed to [email protected] or
3400 Central Expressway, Suite 201, Santa Clara, California 95051, USA. If to
Merchant, such notices shall be addressed to the electronic or mailing address
specified when Merchant opens an account with Yahoo! Store, or such other
address as either party may give the other by notice as provided above.
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15. ENTIRE AGREEMENT
The YMSA constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all previous proposals,
both oral and written, negotiations, representations, writings and all other
communications between the parties.
16. GENERAL
The YMSA and the relationship between Merchant and Yahoo! shall be governed by
the laws of the state of California without regard to its conflict of law
provisions. Merchant and Yahoo! agree to submit to the personal and exclusive
jurisdiction of the Superior Court of the State of California for the County of
Santa Clara or the United States District Court for the Northern District of
California. Yahoo!'s failure to exercise or enforce any right or provision of
the YMSA shall not constitute a waiver of such right or provision, if any
provision of the YMSA is found by a court of competent jurisdiction to be
invalid, the parties nevertheless agree that the court Should endeavor to give
effect to the parties intentions as reflected in tile provision, and agree that
the other provisions of the YMSA remain in full force and effect. Merchant
agrees that regardless of any statute or law to the contrary, any claim or cause
of action arising out of or related to use of the Service or the YMSA must be
filed within one (1) year after such claim or cause of action arose, or be
forever barred. The section titles in the YMSA are for convenience only and have
no legal or contractual effect.
7
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
FEDERAL TRADE COMMISSION,
6th and Pennsylvania Avenue N.W.
Washington, DC 20580
Plaintiff,
v.
<TABLE>
<CAPTION>
<S> <C> <C>
PASSPORT INTERNATIONAL(E}, INC.,
a Florida corporation, d/b/a PASSPORT Civil No.
INTERNATIONAL EXPRESS, INC., 92-275-CIV-ORL-22
PASSPORT PREMIUM PLUS, INC.,
PASSPORT EXPRESS, PASSPORT
TRAVEL CLUB, PASSPORT SAVINGS STIPULATED PERMANENT INJUNCTION AND
EXPRESS, PASSPORT TRAVEL FINAL JUDGMENT
PROMOTIONS, GEMINI INTERNATIONAL(E);
</TABLE>
INCENTIVE INTERNATIONALE TRAVEL, INC.,
a Florida Corporation,
d/b/a INCENTIVE INTERNATIONALE TRADE,
INCENTIVE INTERNATIONALE/DME INC.;
DIRECT MAIL EXPRESS, INC.,
a Florida corporation; U.S.
TRADE DISTRIBUTORS, INC.,
a Florida corporation, d/b/a U.S. TRADE;
DAVID SALTRELLI, individually and as an officer
and director of one or more of the above
corporations;
MICHAEL PANAGGIO, individually and as an
officer and director of one or more of the
above corporations
Defendants.
- ------------------------------------------------/
<PAGE>
Plaintiff, the Federal Trade Commission ("FTC" or "Commission"
commenced this action by filing its Complaint for a permanent injunction and
other equitable relief, pursuant to Section 13(b) of the Federal Trade
Commission Act ("FTC Act"), 15 U.S.C. Section 53(b), against the above-named
defendants, alleging violations of Section 5 of the FTC Act, 15 U.S.C. 5 45. The
defendants filed their answer denying all material allegations of the Complaint.
Plaintiff and defendants, by and through counsel, have agreed to the entry of
this Order by this Court, without trial or adjudication of any issue of law or
fact herein, in order to resolve all matters that are in dispute between them in
this action.
The Court being fully advised in the premises and acting upon the joint
request of the parties to enter this Order, HEREBY ORDERS, ADJUDGES AND DECREES
as follows:
FINDINGS
--------
1. This Court has jurisdiction over the s-abject matter and
all the parties to this action under 28 U.S.C. 55 1331, !337(a), 1345 and 15
U.S.C. 5 53(b). Venue is proper in this Court under 28 U.S.C. Section 1391
(b)-(c) and 15 U.S.C. Section 53(b).
2. The Complaint states a claim upon which relief may be
granted against the defendants under Sections 5 and 13 (b) of the FTC Act, 15
U.S.C. 5~ 45 and 53(b).
3. Entry of this Order is in the public interest.
4. The defendants waive all rights to seek judicial review or
otherwise challenge or contest the validity of this Order.
DEFINITIONS
-----------
For the purposes of this Order, the following definitions shall apply:
1. "Assisting" as used in Paragraphs I(B) and II of this Order
means providing any service to a third party, including but not limited to the
following:
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<PAGE>
a. providing or arranging for the provision of mailing or
telephone lists;
b. providing or arranging for the provision of mailing
services, including designing, printing or mailing, or
causing to be designed, printed or mailed, solicitation
postcards or letters;
c. providing, causing to be provided or arranging for the
provision of advertising services in any medium, including
advertisement design, advice on the efficacy of
advertisements and placement of advertisements for
publication, broadcast or dissemination in any manner;
d. preparing or causing to be prepared, and/or providing or
reviewing telephone sales scripts;
e. providing or arranging for the provision of mailing or
shipping of any travel-related product or service;
f. establishing or helping to establish means of obtaining
payment from consumers, including but not limited to
locating credit card merchant account holders to process
consumer credit card charges, processing consumer credit
card charges through defendants' own credit card merchant
accounts, establishing or helping to establish pay-per-call
telephone lines, or arranging or helping to arrange for the
transfer of funds from consumers' checking accounts, such
as payment by automatic checking account debiting or sight
drafts;
g. receiving or processing travel-related products or
services returned or refused by consumers; or
h. providing or arranging for the provision of consulting
services, including but not limited to marketing or
customer service advice or support.
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<PAGE>
2. "Consumer" means an actual or prospective purchaser or a
recipient of products or services for personal, family or household use.
3. "Travel-related product or service" means any product or
service that purports to provide transportation, accommodations or amenities
usable during vacation travel. This definition specifically includes, but is not
limited to: travel planning services; actual travel; transportation or
accommodation tickets, bookings or reservations; certificates, vouchers, coupons
or reservation forms that purport to be redeemable for transportation or
accommodation tickets or reservations, for full or partial payment toward
transportation or accommodations, for a portion of the cost of airlines tickets
or car rental, or for transportation, tours, gambling funds, sports or other
activities, meals, drinks or entrance to special events. This definition does
not include the sale to consumers of vehicles, luggage or similar products.
4. "Person" includes any natural person, proprietorship,
partnership, company, firm, corporation, and any other form of legal entity.
5. "Telemarketing" means the advertising, promotion,
distribution, offering for sale or sale of any product or service to consumers
by means of live or recorded telephone sales presentations, either exclusively
or in conjunction with the use of the mails or commercial parcel delivery
service. The definition applies whether the telephone contact is initiated by or
on behalf of the seller or the consumer. The definition includes, but is not
limited to, the use of "900 number" or pay-per-call telephone numbers or lines.
6. "Premium" or "incentive" means travel-related products or
services that are provided to consumers at no charge, by persons such as
merchants, in order to encourage consumers' participation in an activity not
necessarily otherwise related to travel such as viewing a real estate or time
share offering, or to encourage consumers to purchase an item not otherwise
necessarily related to travel such as a piece of furniture.
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<PAGE>
7. "Distributor" means a person who purchases travel-related
products or services for use as premiums or incentives.
ORDER
I.
IT IS THEREFORE ORDERED that the defendants, and each of them, and
their successors and assigns, officers, agents, servants and employees, and all
other persons or entities in active concert or participation with them who
receive actual notice of this Order by personal service or otherwise, whether
acting directly or through any corporation, subsidiary, division, or other
device, be and hereby are permanently restrained and enjoined from:
A. Supplying any travel-related product or service to any person
for use in telemarketing; or
B. Assisting in the telemarketing of any travel-related product
or service by any person who is not subject to the direct
supervision and control of the defendant as an employee or
similar contractual agent and who does not conduct such
telemarketing in the defendant's name.
II.
IT IS FURTHER ORDERED that, in connection with the advertising,
promotion, marketing, distribution, offering for sale or sale of any
travel-related product or service, the defendants, and each of them, and their
successors and assigns, officers, agents, servants and employees, and all other
persons or entities in active concert or participation with them who receive
actual notice of this Order by personal service or otherwise, whether acting
directly or through any corporation, subsidiary, division or other device, be
and hereby are permanently restrained and enjoined from participating in or
assisting other persons that participate in any of the acts or practices
described below:
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<PAGE>
A. Misrepresenting in any manner, directly or by implication, any
restriction, limitation or condition on any consumer's use of
such travel-related product or service;
B. Failing to disclose to any consumer, in writing, before the
consumer pays or becomes obligated to pay any money to any
defendant or any agent of any defendant, any material fact
regarding any restriction, limitation or condition on the use
by any consumer of such travel-related product or service;
C. Misrepresenting in any manner, directly or by implication, the
total cost any consumer must pay to use such travel-related
product or service;
D. Failing to disclose to any consumer, orally or in writing, at
the initial contact between the defendant and the consumer,
and, in any event, in writing, before the consumer pays or
becomes obligated to pay any money to any defendant or any
agent of any defendant, the total cost to any consumer to use
such travel-related product or service, including the amount
of any required deposit;
E. Misrepresenting in any manner, directly or by implication, any
right to a refund, including the right to the return of any
deposit represented as being refundable, or the procedure a
consumer must follow to obtain a refund;
F. Failing to disclose fully to any consumer, in writing, before
the consumer pays or becomes obligated to pay any money to any
defendant or any agent of any defendant, that, as set forth in
Paragraph IV of this Order, the consumer has a right to a
refund; such disclosure shall include the procedure a consumer
must follow to obtain a refund, and all terms, restrictions
and conditions affecting a consumer's ability to obtain a
refund; or
G. Misrepresenting in any manner, directly or by implication,
that fees or costs have been imposed by third parties and will
be paid by the defendants to those third parties on behalf of
any consumer.
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<PAGE>
III.
IT IS FURTHER ORDERED that the defendants, and each of them, and their
successors and assigns, officers, agents, servants and employees, and all other
persons or entities in active concert or participation with them who receive
actual notice of this Order, by personal service or otherwise, whether acting
directly or through any corporation, subsidiary, division or other device, in
connection with the advertising, promotion, marketing, distribution, offering
for sale or sale of travel-related products or services to any person for use as
a premium or incentive, be and hereby are permanently restrained and enjoined
from:
A. Failing to provide to the distributor of the premium or
incentive, in writing, before any premium or incentive is
given to any consumer, complete disclosure of the following:
1. any material fact regarding any restriction,
limitation or condition on any consumer's use of such
premium or incentive;
2. the total cost to any consumer to use such premium or
incentive; and
3. the fact that consumers have a right to a refund of
the money they pay to use such premium or incentive,
as provided in Paragraph IV of this Order and, if
such is the case, under any applicable state or local
law; such disclosure shall include the procedure a
consumer must follow to obtain a refund, and any
terms, restrictions and conditions affecting a
consumer's ability to obtain a refund;
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<PAGE>
B. Failing to have in effect, before any premium or incentive
provided by any defendants given by the distributor or any
consumer, a contract between the defendant and the distributor
that:
1. prohibits the distributor from representing to any
consumer that the incentive or premium entitles the
consumer to free travel or free travel-related
products or services unless, in fact, there is no
cost to the consumer associated with the use of the
premium or incentive;
2. requires the distributor to disclose, clearly and
conspicuously, at the time the distributor first
offers the premium or incentive to the consumer, if
such is the case, that costs and restrictions apply
to any consumer's use of the premium or incentive;
3. requires the distributor to disclose to each
consumer, clearly and conspicuously, in writing, at
the time the premium or incentive is distributed to
such consumer, the material information enumerated in
Paragraph III (A) above;
4. prohibits distributor from misrepresenting to
consumers any term, restriction, !imitation, right or
cost to consumers to use the premium, or incentive;
5. requires the defendant to terminate the contract and
make every reasonable effort to retrieve the
undistributed premiums and incentives if the
defendant knows or should know that the distributor
has misrepresented or failed to disclose to consumers
any of the information required by this Paragraph;
and
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<PAGE>
6. prohibits the distributor from selling or
telemarketing any of defendants' travel-related
products or services, or from transferring such
products or services directly or through any
intermediary to any telemarketer.
IV.
IT IS FURTHER ORDERED that the defendants, and each of them, and their
successors and assigns, officers, agents, servants and employees, and all other
persons or entities in active concert or participation with them who receive
actual notice of this Order, by personal service or otherwise, whether acting
directly or through any corporation, subsidiary, division or other device, in
connection with the advertising, promotion, marketing, distribution, offering
for sale or sale of travel-related products or services to any consumer, or to
any person for use as a premium or incentive, be and hereby are permanently
restrained and enjoined from:
A. Failing to provide a full refund of all money paid by a
consumer to purchase defendants travel-related products or
services if the consumer requests such a refund within ten
(10) business days of paying any money to any defendant or to
any agent of any defendant; provided, however, that such a
right of refund may be conditioned upon the return by the
consumer of the product or service information to a clearly
designated person or location; and provided further, that no
right to a refund established by this Paragraph shall apply to
any defendant's sale of air line tickets regulated by the
Airline Reporting Corporation;
B. Failing to provide to each consumer who obtains any of
defendants' travel-related products or services, whether as a
premium or incentive, or through a purchase from defendants,
the exact trip, product or service as it was represented to
the consumer; provided, however, that if the defendants are
unable to provide the travel-related product or service on the
dates requested by the consumer, the defendants must notify
the consumer as soon as the information is available, but in
no event later than 45 days after the consumer's request is
received by the defendants;
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<PAGE>
C. Failing to refund all money paid by the consumer for any
travel or travel-related product or service within ten (10)
days after mailing to the consumer a notice of the defendants'
inability to fulfill the consumer's request as required by
Paragraph IV(B) above; provided, however, that the defendants
may offer to any consumer the opportunity to extend for a
reasonable period of time, at no additional cost or penalty to
the consumer, valid period for use of his travel-related
product or service as an alternative to a refund; provided
further, that the defendants do not coerce, pressure or
require the consumer to extend rather than receive a refund;
or
D. Failing promptly to refund to each consumer all money held as
a refundable deposit according to the terms and schedules
disclosed to consumers pursuant to Paragraphs II(D) and (F),
but in no case later than fourteen (14) days from the end date
of the consumer's travel.
Nothing in this Paragraph shall be construed to prohibit the defendants from
offering alternative, additional or upgraded accommodations or amenities, at
extra cost, to consumers who have complied with properly disclosed conditions or
restrictions placed by defendants on the use of their travel-related products or
services, provided the defendants to not coerce, pressure or require consumers
to purchase alternative or upgraded accommodations or amenities as a condition
of travel or other use of defendants, travel-related products or services.
Alternative, additional or upgraded accommodations or amenities so offered are
travel-related products or services as defined herein and may be offered to
consumers only pursuant to the terms and provisions of this Order requiring full
disclosure of the total cost, and any restriction, limitation or condition of
use.
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<PAGE>
V.
IT IS FURTHER ORDERED that the defendants, and each of them, and their
successors and assigns, officers, agents, servants and employees, in connection
with the advertising, promotion, marketing, distribution, offering for sale or
sale of any travel-related products or services to any consumer, or to any
person for use as a premium or incentive, be and hereby are permanently
restrained and enjoined from failing to ensure that they are at all times
financially able to reimburse any consumer under the terms of this Order:
A. By maintaining at all times a separate, specially designated,
bank account, in a federally insured financial institution,
the balance of which at any given date is equal to or greater
than the total amount that would be required to provide a
refund to each and every consumer, as required under the terms
of Paragraphs IV(A), (C) and (D) of this Order and the
defendants' stated refund policy; or
B. By obtaining a bond, issued by a company that holds a Federal
Certificate of Authority as Acceptable Surety on Federal Bond
and Reinsuring and is authorized to do business in the state
where the defendant principally is doing business, in an
amount equal to or greater than the total dollar amount of
unfulfilled obligations to consumers incurred by any defendant
in connection with the marketing, distribution, offering for
sale or sale of any travel-related product or service or
premium or incentive, such bond to provide surety against
financial loss to consumers resulting from whole or partial
failure of performance due primarily to misrepresentation or
other violation of this Order, insolvency, or any other cause
attributable in significant par to such defendant or its
successors or assigns, as determined by an arbitration panel,
court or master of competent jurisdiction; proof that such
bond has been obtained shall be filed with counsel for the
FTC, and the availability of such bond to secure any
defendant's performance shall be disclosed, clearly and
conspicuously, in writing, to each consumer who pays money to
such defendant.
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<PAGE>
VI.
IT IS FURTHER ORDERED that the individual defendants, David Saltrelli
and Michael Panaggio, each shall pay consumer redress in the amount of
Twenty-five Thousand Dollars ($25,000.00) to the Commission in the following
manner:
A. By certified check made payable to the Federal Trade
Commission, each shall pay a minimum of One Thousand Dollars
[$1,000.00) monthly, on the first of each month, beginning in
the month following the entry of this Order by the Court:. The
checks shall be sent to counsel for the Commission, Division
of Marketing Practices, 6th and Pennsylvania Avenue, N.W.,
Washington, DC 20580;
B. In the event of any default in the above payment schedule,
which default continues for ten (10) .days beyond the due date
of payment, the entire unpaid amount, together with interest,
as computed pursuant to 28 U.S.C. Section 1961, from the date
of default to the date of payment, shall immediately become
due and payable;
C. In order to secure the payment of each individual defendant's
indebtedness to the Commission, within seven (7);. days of the
entry of this Order by the Court, David Saltrelli and Michael
Panaggio each shall cause to be transferred to the Commission
a security interest in the property described in Appendix A.
In addition, within seven (7) days of the entry of this Order,
David Saltrelli and Michael Panaggio each shall furnish to
counsel for the Commission an executed statement sufficient to
perfect the filing and recording of a security interest in the
property described in Appendix A under the appropriate state
laws:
12
<PAGE>
D. If the FTC determines, in its sole discretion, that the use of
these funds for redress to consumers who purchased defendants,
travel-related products or services is wholly or partially
impracticable, any funds not so used shall be paid either to
the bankruptcy court where the corporate defendants are in
bankruptcy proceedings, to be added to the Consumer Redress
Fund established under Paragraph IX; or if such use is not
possible or feasible, such funds shall be paid to the United
States Treasury. Defendants shall be notified as to how the
funds are disbursed, but shall have no right to contest the
manner of distribution chosen by the Commission.
VII.
IT IS FURTHER ORDERED that no later than three (3) business days after
the date of entry of this Order, the defendants shall submit to the Commission
truthful sworn statements; in the form shown on Appendices B and C attached to
this Order, that shall reaffirm and attest to the truthfulness, accuracy and
completeness of the documents and sworn testimony (together designated
"Financial Statements") submitted to the Commission by the defendants as
follows: FTC Financial Statement of Corporate Defendant submitted in May 1992
for each corporate defendant; corporate federal income tax returns for the years
1988 through 1991 for each corporate defendant; the initial bankruptcy filing
and the monthly financial reports of the debtor in bankruptcy for corporate
defendants Incentive International Travel, Inc., U.S. Trade Distributors, Inc.
and Direct Mail Express, Inc.; and the sworn testimony and financial documents
produced for examination taken at a deposition of defendants David Saltrelli and
Michael Panaggio on February 2-4, 1993. The Commission's agreement to this
Stipulated Permanent Injunction and Final Judgment is expressly premised upon
the truthful, accurate and complete portrayal of the defendants' financial
condition as represented in the Financial Statements referenced above, which
contain material information upon which the Commission relied in negotiating and
agreeing to the amount and/or the terms of the redress payment stated in
Paragraph VI and Paragraphs VIII and IX of this Order. If, upon motion by the
Commission, this Court finds that the defendants failed to file the sworn
statement required by this Paragraph, or that the defendants' Financial
Statements failed to disclose any material asset, or materially misrepresented
the value of any asset, or made any other material misrepresentation or
omission, the Order herein shall be reopened for the purpose of modifying the
amount and/or the terms of the redress payment; provided, however, that in all
other respects this Order shall remain in full force and effect unless otherwise
ordered by the Court; and provided further, that proceedings instituted under
this Paragraph are in addition to and not in lieu of any other civil or criminal
remedies as .may be provided by law, including any other proceedings the
Commission may initiate to enforce this Stipulated Permanent Injunction and
Final Judgment.
13
<PAGE>
VIII.
IT IS FURTHER ORDERED that the defendants' signatures on this
Stipulated Permanent Injunction and Final Judgment on behalf of themselves and
the corporate defendants constitute an acknowledgment of indebtedness by the
defendant corporations to the Federal Trade Commission for consumer redress in
the amount of Five Hundred Thousand Dollars ($500,000.00), the amount filed with
the bankruptcy court by the Commission in its proof of claim form, which shall
be treated as an allowed total general pre-petition unsecured claim. (This
Paragraph and Paragraph IX of this Order settle only the Commission's claim
against the defendant corporations; nothing in the Paragraphs shall be construed
to settle any claims of individual consumers.) If, upon motion by the
Commission, this Court finds that plans complying with Paragraph IX of this
Order were not confirmed within 180 days of the date of entry of this 0rder, or
if, at any time thereafter, the defendant corporations do not fully perform
under such plans, the Order herein shall be reopened for the purpose of
modifying or voiding the provisions contained in Paragraph IX which allow the
corporate defendants to satisfy their debt to the Commission by paying a lesser
amount of redress; provided, however, that in all other respects this Order
shall remain in full force and effect unless otherwise ordered by the Court; and
provided further, that proceedings instituted under this Paragraph are in
addition to and not in lieu of any other cavil or criminal remedies as may be
provided by law, including any other proceedings the Commission may initiate to
enforce this Stipulated Permanent Injunction and Final Judgment. The parties
acknowledge that the entire amount claimed by the Commission in this Paragraph
is owed for consumer redress and no portion of the Commission's claim is a
penalty.
IX.
IT IS FURTHER ORDERED that, in exclusive satisfaction of the
Commission's claim for Five Hundred Thousand Dollars ($500,000.00) stated above,
the defendants shall take all reasonable steps to gain bankruptcy court
approval, within 180 days of the date of entry of this Order, of plans of
reorganization in the bankruptcy cases presently pending under Chapter 11 of the
Bankruptcy Code, 11 U.S.C. Section 1101 et seq., in the United States Bankruptcy
Court, Middle District of Florida, Jacksonville Division, In re: Incentive
Internationale Travel, Inc., Case No. 92-4208 3P-1; In re: U.S. Trade
Distributors, Inc., Case No. 92-4207 3P-1; and In re: Direct Mail Express, Inc.,
Case No. 92-4206 3P-1, which plans shall provide for the following:
A. The establishment of an interest bearing checking account in a
federally insured financial institution (the Consumer Redress
Fund") which shall be used solely to provide cash
distributions to the allowed total general pre-petition
unsecured claims which shall consist of the following
categories of consumers from whom the Commission has received
written complaints: 1) consumers who purchased from any source
any of defendants' travel-related products or services that
were sold by the defendants from 1987 to the date of their
bankruptcy petitions and who did not receive the trip to which
they were entitled; 2) consumers who received any of
defendants' travel-related products or services as premiums or
incentives, who paid money to any defendant from 1987 to the
date of their bankruptcy petitions to use such products or
services, but did not receive the trip to which they were
entitled; 3) consumers who at any time from 1987 to the date
of defendants' bankruptcy petitions were required to pay
additional money to any defendant for upgraded accommodations
as a condition of receiving the trip to which they were
entitled; 4) consumers who were entitled to a
14
<PAGE>
five-day/four-night (5/4) trip but were required to accept a
shorter, four-day/three-night (4/3) trip at any time from 1987
to the date of defendants' bankruptcy petitions as a condition
of taking a trip; 5) consumers who paid a deposit to
defendants at any time from 1987 to the date of their
bankruptcy petitions that was represented as a refundable
deposit but who did not receive a refund; 6) consumers who, at
any time from 1937 to the date of defendants' bankruptcy
petitions, paid defendants or their sales agents for
additional travel-related products or services, such as
additional accommodations or airlines tickets, but did not
receive the purchased products or services or were required to
pay more than once for the same products or services; or 7)
consumers who, although their travel request was submitted to
defendants in time, could not obtain an acceptable travel date
from the defendants and were required, at any time from 1987
to the date of defendants' bankruptcy petitions, to pay
defendants to extend the valid period of the travel-related
product or service as a condition of travel; provided,
however, that consumers who received full reimbursement
through the seller, their credit card company or bank, or the
defendants shall not be eligible for redress provided by this
Paragraph;
B. The deposit into the Consumer Redress Fund by the defendant
corporations and/or any affiliate or successor companies
during the two full calendar years after confirmation of the
above-noted plans of reorganization, of periodic payments, at
least monthly, equaling I% of the previous month's gross
revenues from sales (excluding revenues received for postage
disbursements) for the combined companies; provided, however,
1. that annually, within 2 months of filing income tax
forms for each contributing company, copies of which
shall be provided to the Commission, adjustments in
the balance of the account, either up or down, may be
made to correct any over- or under-payment for the
year; and
2. if, at the end of the two full calendar years after
confirmation of the above-noted plans for
reorganization, the total amount of money in the
Consumer Redress Fund is less than One Hundred
Thousand Dollars ($100,000.00), the defendant
corporations and any affiliated or successor
companies shall make deposits within the following
three months sufficient to raise the total to One
Hundred Thousand Dollars ($100,000.00);
C. Giving all consumers who submitted proof of claim forms in any
of the above-mentioned bankruptcy cases, timely written
notice, in a form approved by counsel for the Commission, of
their option of satisfying their claims by being included in
the list for pro-rata distribution of the Consumer .Redress
Fund;
D. Maintaining a list of consumers which the Commission has
determined are members of the categories of consumers
described in Part A above; prior to the date on which the
defendants make their final payment into the Consumer Redress
15
<PAGE>
Fund, the Commission shall provide to the defendants a final
corrected list of all consumers who the Commission has
determined shall be entitled to share in the pro-rata
distribution of the Consumer Redress Fund;
E. Within thirty days of the date the final payment to the
Consumer Redress Fund is made, the pro-rata distribution of
all assets of the Consumer Redress Fund, solely through cash
distributions, to all consumers who the Commission has
determined are entitled to share in the distribution, and to
all consumers who elected to satisfy their claims against the
corporate defendants pursuant to Part C of this Paragraph by
participating in the distribution of the Consumer Redress
Fund;
F. Redepositing into the Consumer Redress Fund all checks that
are returned to the Fund uncashed, and distributing all
redeposited funds as practicable;
G. Within sixty days of the final distribution of the assets of
the Consumer Redress Fund, providing a report to the
Commission detailing: I) the name and address of each consumer
receiving assets from the Consumer Redress Fund; 2) the amount
of refund received by each consumer; 3) the name and address
of each consumer whose Consumer Redress Fund distribution was
returned to the defendants for any reason; and 4) the amount
of the distribution returned to the defendants for any such
consumer;
H. Closing the Consumer Redress Fund account six (6) months after
mailing the final distribution checks;
I. Delivering a certified check, made payable to the Federal
Trade Commission, to the counsel for the Commission, Division
of Marketing Practices, 6th and Pennsylvania Avenue, N.W.,
Washington, D.C. 20580, within 30 days of closing the Consumer
16
<PAGE>
Redress Fund account, in an amount equal to the sum of the
following: 1) any assets of the Consumer Redress Fund which
remain in the bank account following the pro-rata
distribution; 2) any funds which were paid to consumers out of
the Consumer Redress Fund and returned for any reason,
including, but not limited to, incorrect address or previous
refund, which funds were not redistributed; and 3) the total
of all checks which were outstanding and uncashed at the time
the account was closed pursuant to Part H; and
J. During the period when the bank account is open, the monthly
submission of bank statements and financial reports to the
Commission at the address above, detailing the status of the
Consumer Redress Fund.
X.
IT IS FURTHER ORDERED that for seven (7) years after the date of the
entry of this Order, the individual defendants, David Saltrelli and Michael
Panaggio, shall inform the Federal Trade Commission, 6th Street and Pennsylvania
Avenue N.W., Washington, DC 20580, in writing, in advance or within two weeks
thereafter, of any change in their permanent address, occupation, place of
business or place of employment, or of the identity of any corporation of which
either defendant or any insider of any corporate defendant is or is to become an
officer or director, or in which either defendant or any insider of any
corporate defendant is or is to become a holder of 25% or more of the stock. The
term "insider" shall be defined by II U.S.C. Section I01(30).
XI.
IT IS FURTHER ORDERED that the individual defendants, David Saltrelli
and Michael Panaggio, shall notify the Commission at the address above, in
writing, at least 30 days prior to any proposed change in any corporate
defendant, including, but not limited to, dissolution, assignment, sale
resulting in the emergence of a successor or affiliate corporation, the creation
or dissolution of subsidiaries, or any other change in any of the corporations
17
<PAGE>
that may affect compliance obligations arising out-of this Order. The
requirements of this Paragraph shall remain in effect for seven (7) years from
the date of the entry of this Order. The term "affiliate" shall be defined by 11
U.S.C. Section 101(2).
XII.
IT IS FURTHER ORDERED that:
A. Each defendant shall submit to the Commission copies of all
federal tax returns (including, but not limited to, income
tax, gift, estate, partnership or Subchapter S corporate tax
returns) that the defendant files with the United States
Internal Revenue Service for the years 1992 through 1999,
inclusive. These submissions shall be made within 30 days of
the filing of the returns.
B. For seven (7) years after the date of entry of this Order, the
individual defendants David Saltrelli and Michael Panaggio
shall provide sworn answers to such written questions
regarding their finances, assets, and liabilities, and the
sources of such assets and liabilities, as the staff of the
Commission may pose.
XIII.
IT IS FURTHER ORDERED that for seven (7) years after the date of entry
of this Stipulated Permanent Injunction and Final Judgment, the defendants, or,
in the case of the corporate defendants, their successors or assigns if any,
shall:
A. Provide a copy of this Order to each of defendants' employees,
agents, representatives, independent contractors, distributors
or sales persons engaged in the marketing, distribution,
offering for sale of any travel-related products or services
or premiums or incentives, or engaged in the telemarketing of
any travel-related goods or services; and
18
<PAGE>
B. Obtain from each such employee, agent, representative,.
independent contractor, distributor or sales person a signed
statement acknowledging receipt of a copy of the Order and,
upon request, make such receipts available to representatives
of the Federal Trade Commission during normal business hours
for inspection and copying. This Paragraph does not require
defendants to provide a copy of this Order to airlines from
which defendants purchase air travel or consumers provided
that the defendants are bonded through the Airline Reporting
Corporation; to hotels or cruise lines with which defendants
book space for travelers, provided the hotels or cruise lines
are not affiliated with the defendants through common
ownership, management or operation, or affiliated in marketing
or selling travel-related products or services.
Notwithstanding the exemption above, the Commission shall have
the right to distribute copies of this Order to any entity
which, in its sole judgment, should be on notice of the terms
of this Order.
XIV.
IT IS FURTHER ORDERED that the defendants, and each of them, and their
successors and assigns, officers, agents, servants and employees, and all other
persons or entities in active concert or participation with them who receive
actual notice of this Order, by personal service or otherwise, whether acting
directly or through any corporation, subsidiary, division, or other device, be
and hereby are permanently restrained and enjoined from misrepresenting, either
orally or in writing, either directly or by implication, that any government
agency, including, but not limited to, the Federal Trade Commission, has
reviewed, endorsed, approved, certified or made any positive statement about the
practices or operations of any defendant.
19
<PAGE>
XV.
IT IS FURTHER ORDERED that for purposes of determining or securing
compliance with this Order, subject to every legally recognized privilege,
defendants or their successors or assigns, in connection with any business
organization owned or controlled by, or subject to the control of any or all of
them, and engaged in marketing, distributing, offering for sale or the sale of
travel-related products or services, or premiums or incentives, shall, upon
written notice to any corporate or individual defendant, who may have counsel
present, permit representatives of the Federal Trade Commission access during
normal business hours to the business premises of the corporate or individual
defendant, to inspect and copy all documents in the possession or under the
control of the corporate or individual defendant relating to any matters covered
by this Stipulated Permanent Injunction and Final Judgment. The defendants shall
create and maintain records sufficient to document their compliance with the
terms of this Order. Records to document compliance with Paragraph V of the
Order must include, inter alia, all records showing the amount of any refunds or
return of refundable deposits paid from the special account, or any other of any
defendant's accounts or bond instruments, to consumers, and the names, addresses
and telephone numbers of all consumers who have received refunds or deposit
returns from defendants, or who have requested refunds or deposit returns and
have not received them, along with the reason for the refusal by the defendants
to make the refunds.
XVI.
IT IS FURTHER ORDERED that jurisdiction is retained by this Court for
the purpose of enabling the parties to apply at any time for further orders and
directions as may be necessary or appropriate for the interpretation or
modification of this Stipulated Permanent Injunction and Final Judgment, for the
enforcement of compliance thereof, or for the punishment of violations thereof.
SO ORDERED this _______ day of _________________, 1993.
----------------------------------
United States District Court Judge
20
<PAGE>
The parties agree to the terms and conditions set forth above and
hereby consent to entry of this Stipulated Permanent Injunction and Final
Judgment at the Court's convenience and without further notice to the parties.
This agreement may be executed in counterparts.
Defendants
/s/ Michael J. Panaggio
- --------------------------------------------------
Michael J. Panaggio
Individually and on behalf of the corporate defendants, Direct Mail
Express, Inc., U.S. Trade Distributors, Inc., Incentive Internationale
Travel, Inc., and Passport Internationale, Inc.
- --------------------------------------------------
David Saltrelli
Individually and on behalf of the corporate defendants, Passport
Internationale, Inc. and Incentive Internationale Travel, Inc.
/s/ Sheldon S. Lustigman
- --------------------------------------------------
Sheldon S. Lustigman
Attorney for the individual and corporate defendants
Federal Trade Commission
- ------------------------
By: James M. Spears
General Counsel
- --------------------------------------------------
Eileen Harrington
Associate Director
Division of Marketing Practices
- --------------------------------------------------
Patricia S. Howard
- --------------------------------------------------
Richard Quaresima
Attorneys for the Plaintiff
Federal Trade Commission
6th and Pennsylvania Avenue, N.W.
Washington, DC 20580
(202)326-3143
21
<PAGE>
Appendix A
The secured property as referred to in Paragraph VI(C) of the attached
Stipulated Permanent Injunction and Final Judgment is described as follows: all
real property and the improvements and fixtures thereon, located at 2441
Bellevue Avenue, Daytona Beach, Florida 32114.
22
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
FEDERAL TRADE COMMISSION, Civil No.
92-275-CIV-ORL-22
Plaintiff,
v.
PASSPORT INTERNATIONAL(E}, INC., et al.,
Defendants.
- --------------------------------------------------/
Declaration Of Michael J. Panaggio
----------------------------------
I, Michael J. Panaggio, hereby state that the financial information
contained in the following, together designated "Financial Statements," was
true, accurate and complete at the time it was submitted, to the best of my
Knowledge: financial statements for Passport international, Inc., U.S. Trade
Distributors, Inc., Incentive Internationale Travel, Inc., Direct Mail Express,
Inc., and for me individually, provided to the Federal Trade Commission in May
1992; all personal and corporate' income tax returns for the above corporations
for 1988-1991; the initial bankruptcy filing and August, September, October,
November and December 1992, and January and February 1993, monthly financial
reports of the debtor in bankruptcy for Incentive Internationale Travel, Inc.,
U.S. Trade Distributors, Inc., and Direct Mail Express, Inc.; and the sworn
testimony and financial documents produced for examination taken at my
deposition of February 2-3, 1993.
I declare under penalty of perjury that the foregoing is true and
correct.
June 4, 1993 /s/ Michael J. Panaggio
- ------------------------------------------------ -----------------------
Date Signed
APPENDIX B
23
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
FEDERAL TRADE COMMISSION, Civil No.
92-275-CIV-ORL-22
Plaintiff,
v.
PASSPORT INTERNATIONAL(E}, INC., et al.,
Defendants.
- --------------------------------------------------/
Declaration of David Saltrelli
------------------------------
I, David Saltrelli, hereby state that the financial information contained in the
following, together designated "Financial Statements," was true, accurate and
complete at the time it was submitted, to the best of my knowledge: financial
statements for Passport International, Inc., U.S. Trade Distributors, Inc.,
Incentive Internationale Travel, Inc., and for me individually, provided to the
Federal Trade Commission in May 1992; all personal and corporate income tax
returns for the above corporations for 1988-1991; and the sworn testimony and
financial documents produced for examination taken at my deposition of February
4, 1993.
I declare under penalty of perjury that the foregoing is true and correct.
June 9, 1993 /s/ David A. Saltrelli
- -------------------------------------------------- ----------------------
Date Signed
APPENIDIX C
24
<TABLE>
<CAPTION>
STATEMENT RE: COMPUTATION OF NET INCOME PER COMMON SHARE
September 30, Year Ended
1999 December 31,
(Unaudited) 1998 1997
----------- ---- ----
<S> <C> <C> <C>
Basic:
Net loss $(6,374,805) $ (900) $ -
Total Weighted Average Number of
Common Shares
Basic 39,037,678 3,000,000 3,000,000
Net Loss Per Share:
Basic $ (.16) $ (.00) $ -
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 900
<BONDS> 0
<COMMON> 1,000
0
0
<OTHER-SE> (1,900)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (900)
<INCOME-TAX> 0
<INCOME-CONTINUING> (900)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (900)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 181,358
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 181,358
<PP&E> 1,966
<DEPRECIATION> 0
<TOTAL-ASSETS> 533,324
<CURRENT-LIABILITIES> 36,283
<BONDS> 0
39,147
0
<COMMON> 0
<OTHER-SE> 457,894
<TOTAL-LIABILITY-AND-EQUITY> 533,324
<SALES> 711
<TOTAL-REVENUES> 711
<CGS> 284
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,375,232
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,374,805)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,374,805)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,374,805)
<EPS-BASIC> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
