UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
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
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
NOTE REGARDING FORWARD LOOKING STATEMENTS.........................................................................1
Item 1. Business.............................................................................................2
RISK FACTORS.....................................................................................................14
Item 2. Financial Information...............................................................................28
Item 3. Properties..........................................................................................33
Item 4. Security Ownership of Certain Beneficial Owners and Management......................................33
Item 5. Directors and Executive Officers....................................................................34
Item 6. Executive Compensation..............................................................................37
Item 7. Certain Relationships and Related Transactions......................................................39
Item 8. Legal Proceedings...................................................................................39
Item 9. Market Price of and Dividends on Registrant's Common Equity and
Related Shareholder Matters.........................................................................39
Item 10. Recent Sales of Unregistered Securities............................................................40
Item 11. Descriptions of Registrant's Securities to be Registered...........................................42
Item 12. Indemnification of Directors and Officers..........................................................42
Item 13. Financial Statements and Supplementary Data....................................................... 44
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure...............................................................................45
Item 15. Financial Statements and Exhibits..................................................................45
</TABLE>
i
<PAGE>
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; 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.
1
<PAGE>
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. RLN Realty Associates was an
inactive company until the decision was made to enter the e-commerce business.
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.
On March 1, 1999, we amended our Articles of Incorporation to change our name to
"Netmaximizer.com, Inc." to reflect our new e-commerce focus. 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. To
avoid confusion, unless otherwise indicated we have referred throughout this
Registration Statement to numbers of shares giving effect to the split, whether
or not the transaction occurred prior to the split. In other words, unless
otherwise indicated, the effect of the split is given retroactively.
Our common stock was first quoted on the National Association of Securities
Dealers' Over-The-Counter Bulletin Board (also known as the "OTC-BB") on June
19, 1998 and traded under the symbol "RLNR." Effective March 17, 1999, our stock
symbol was changed to "MAAX." 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 current
phase-in schedule for the new eligibility requirements provides that we must
meet the requirements on or before March 24, 2000, including clearing this
registration statement under the '34 Act with the SEC. Because we were unable to
meet the requirements in the prescribed time, NASD has appended an "E" to our
ticker symbol and our shares continue to be quoted under that symbol for only a
temporary period. Our shares will be delisted from the OTC-BB following the
period allowed by the exception, until such time as the eligibility requirement
is met. After this registration statement becomes effective, the "E" is deleted
from our symbol and we are again trading on the OTC-BB without exception, we
intend to submit an application to Nasdaq to have
2
<PAGE>
our common stock traded on the Nasdaq SmallCap Market. We cannot assure you,
however, that we will be successful in our application for membership.
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.
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.
3
<PAGE>
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.
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 company. When we launch our full-scale operation, we
will provide an e-commerce department store (the "Store") that will sell a wide
variety of consumer goods to members of affinity groups, paying a commission on
those sales to the 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.
Our initial, public operation began in September, 1999, when we started
soliciting and enrolling affinity groups. When we launch our full-scale
operations during late-April or early-May, we will establish a portal for each
affinity group to the Store through which the group's members
4
<PAGE>
may purchase merchandise in the Store. Affinity groups will not pay any fee to
us to establish their custom portal to the Store. Each affinity group will
receive a fifteen percent (15%) commission on every product which is purchased
by its members or by people referred to the Store by its members.
Our Store technically opened to public view beginning on November 4, 1999. We
had interim warehousing and fulfillment operations on line to accommodate casual
shoppers, although our plan was (and is) to initiate no marketing efforts to
encourage purchasing at our Store until we are fully prepared. During March,
2000, we have begun to stand up our own warehousing and fulfillment operations
and, as we consummate planned financing (if such financing is available on terms
acceptable to us), we will establish inventory stock levels and hire warehousing
and fulfillment personnel. Beginning in mid-April, 2000, we plan to distribute a
catalogue to affinity groups and commence active selling through the Store.
The Store is housed by Yahoo! Yahoo is a computer service that provides space
and an Internet provider address on its computer servers for the
Netmaximizer.com web site (the Store). A virtual "shopping cart" is included
with the service, which allows the company to conduct Internet commerce by
enabling site visitors to click on a product to purchase it from the Store,
adding it to the shopping cart (see the discussion following "A Transaction with
MAAX - What the member of the affinity group sees"). 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 (see "Processing a Financial Transaction"). In addition,
this service enables worldwide access to the web site. "Housed" is simply a term
for the collective services provided by Yahoo.
Currently, the Store has fifteen 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;
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.
As of November 4, 1999, when the Store nominally opened, we had enrolled 171,490
families who are members of fifteen affinity groups to be our potential
shoppers. As of April 1, 2000, we have enrolled 336 affinity groups. Those
affinity groups inform us that they have a total of 4,388,684 families who are
members. To accommodate that population in full scale operations will require
continued execution of our planned preparation.
5
<PAGE>
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 have enrolled and continue to 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 will be able to 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
will establish a unique portal for that group ("Portal", which is more
completely described at page 11, can be thought of as a custom doorway for the
members of that affinity group into the Store). Since the affinity group
receives a fifteen percent (15%) commission on every purchase its members make,
the leaders of that affinity group are incentivized to use the group's 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 to members of
that affinity group are completed, thereby substantially eliminating the up
front marketing and advertising costs typically found in the retail sales
industry.
We are also developing a four-color, sixteen-page catalogue that we will make
available to affinity groups for distribution to their members. We expect to
begin distributing the catalogue during late-April to early-May, 2000. With the
distribution of that catalogue, we will commence full scale operations.
Web Site Development
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.
Network is a corporation wholly-owned by Mr. Steven Howell, one of our
shareholders. 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 4, 1999, the web site was substantially complete and
the Store nominally available for shopping. As of November 27, 1999, those
shares have been issued and the cash has been paid.
Employees
On November 1, 1999, we had five full-time employees or consultants. As of April
1, 2000, we have thirteen full-time employees. We anticipate that number to
expand rapidly during the next month as we commence our warehouse and
fulfillment operations, expand our customer service
6
<PAGE>
operations and begin our aggressive marketing campaign. 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 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, 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;
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 direct marketing programs.
Some of our current and potential
7
<PAGE>
competitors, such as Amazon.com, eToys.com, Outpost.com, ValueAmerica.com and
Buy.com, 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 and 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.
Our current logo consists of a gorilla and a tag line including the words
"Netmaximizer.com", colored blue and red. Although we have a license to use it,
we were advised that the present design of our mark may not be sufficiently
unique to be protected as a trademark. We are currently having our logo and
other related scripts and images custom designed so that there will be no
conflict with existing caricatures and type styles. We intend to file to have
that intellectual property trademark protected. If we determine that our
business plan or any individual aspect of the way we are doing business is an
asset whose value can be protected as intellectual property, we will attempt to
protect that proprietary asset by applying for a patent, copyright or trademark.
We cannot assure you that our patents, once applied for, will be issued, that
our trademark registrations will be approved or that our patents or trademarks
will not be successfully challenged by others or invalidated. 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.
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
8
<PAGE>
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.
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.
9
<PAGE>
We believe the benefits of 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 David Saltrelli and Peter Schuster who both possess extensive
business, marketing, sales, and operations backgrounds and will manage
our day-to-day business activities.
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 Established a relationship with American Sales Industries, Inc.
- Initially as our interim product fulfillment provider, ASI was
paid $2,000 per month for fulfillment services plus a fee per
item for merchandise that we purchased through ASI (at ASI's
cost) equal to: $0.50 per item costing under $5.00, $0.75 per
item costing $5.00 to $9.99 and $1.00 per item costing $10.00 or
more.
- Starting February 1, 2000, we leased 9,000 square feet of
warehouse space from ASI at a monthly rental of $5,000 and
commenced the set up of our own fulfillment center, while ASI
continued to provide complete warehousing and fulfillment
services as before at the same fixed fee plus fee per item basis.
- Commencing in mid-April, 2000, we will begin maintaining our own
warehouse and fulfillment center in the leased space and stop
using ASI for that purpose.
- We have a written agreement with ASI under which they will
function as our purchasing agent on a non-exclusive basis, and
their compensation for those services will be the "fee-per-item
based on product cost" described above.
10
<PAGE>
o Executed a Merchant Bankcard Services and Security Agreement with
Charter Pacific Bank.
o Executed lease agreements for executive office space in Boca Raton,
Florida.
o On November 4, 1999, nominally opened the web site Store to fifteen
affinity groups which had a total of 171,490 families as members. As
of April 1, 2000, we have enrolled 336 affinity groups that tell us
they have 4,388,684 families that are members of those groups.
o On February 8, 2000, we obtained $1.3M+ in a financing transaction
with Monavia, Limited. Monavia received our non-negotiable, 9%
promissory note due February 7, 2003 plus a three-year warrant to
purchase 681,987 shares of our common stock at an exercise price of
$15.00 per share (the market price on the date of the warrant).
o Designed and ordered a four-color, sixteen page catalogue for delivery
during April, 2000.
We intend to take the following steps to continue to implement our business
plan:
o Obtain requisite financing and create an inventory of merchandise for
our Store;
o Establish and staff a complete warehousing and fulfillment operation;
o Distribute our catalogue and commence aggressive marketing on a
phase-in basis to our present pool of 336 affinity groups with
established (but yet-to-be-opened) custom portals;
o Increase our marketing activities to new affinity groups by
identifying and expanding the number of independent representatives;
o Open at least fifteen new affinity group portals into our Store during
each of the next twelve months of operation ("Portal", as it is used
in this registration statement, refers to the web page that has
hyperlinks to the Netmaximizer.com web site. Usually a portal web page
is customized with images and verbiage that relate to the individual
affinity group and acts as a doorway for the members of that affinity
group into the Netmaximizer.com store); and
o Hire necessary key consultants and personnel with Internet e-commerce
experience to further implement our business strategy.
11
<PAGE>
A Transaction with MAAX
What the member of the affinity group sees:
- -------------------------------------------
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, we found that this feature dramatically increases
customer awareness and satisfaction.
o Alternatively, the member may select from one or more of the fifteen
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.
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.
12
<PAGE>
o For every order placed, a member will also receive an incentive (a
variety of which are available, for example a two-piece ginsu knife
set).
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. Members can select from a variety of delivery
options, including overnight and various shipping options, as well as
gift-wrapping services. 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 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 (beginning after mid-April,
2000), our computer generates a purchase order which is delivered
electronically to our fulfillment and warehouse operation in Riviera
Beach, Florida.
13
<PAGE>
* 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. Our fulfillment employees "pick" the order
into the correct box, double check the contents to the order, fill the
box with packing materials, and place 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).
* Our computer also tracks usage data and inventory stock levels to
ensure maximum product availability while minimizing inventory
carrying cost. When our stock level indicates a product reorder point
has been reached, our computer automatically generates a bulk purchase
order. Depending upon the product being reordered and current market
conditions, either we order the bulk shipment ourselves, or we place
an order with American Sales Industries, Inc., which 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 our warehouse facility. Each of our suppliers will
ship to us FOB (our warehouse).
* When the products arrive at our warehouse, they are counted, scanned
into the computer, and electronically matched against the respective
bulk purchase order. Information is uploaded to our computers where
everything is cross-checked.
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.
14
<PAGE>
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. For us, these risks include:
o our significant dependence on selling products through the Internet,
which thus far has 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 our need to manage changing operations as the number of our products
and purchasers increase;
o our reliance upon strategic relationships, such as:
a. Yahoo Housing Agreement: If Yahoo were to discontinue providing
this service then we would have to change our Store front and
Department templates and relocate (house) the Store on another
Internet Service Provider.
b. American Sales Industry Lease and Purchasing Agreements: If
American Sales Industries were to discontinue providing
purchasing services we might not be able to buy our goods as
cheaply. If we were to lose our lease, then we would have to move
our warehousing and fulfillment functions to another location or
find a qualified provider of these services.
c. Affinity Groups' Participation: If the current Affinity Groups
were to stop promoting their members' purchasing through our
Store, then we would have to find replacement Affinity Groups to
maintain the same level of business.
o regulatory risks associated with our business, particularly with
regard to the possibility of our having to determine and collect state
taxes for sales conducted over the Internet; and
o our dependence upon and need to hire key personnel, for example a
Chief Operating Officer, a Director of Customer Service, a Director of
Purchasing, a Director of Shipping & Fulfillment and a Director of
Computer Operations.
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 continue to
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 retail
sales. Accordingly, our limited operating history does not provide investors
with a
15
<PAGE>
meaningful basis for evaluating our business, our prospects or an investment in
our common stock.
WE HAVE A HISTORY OF LOSSES AND THESE LOSSES MAY CONTINUE UNTIL
JULY 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 and inventory to
support the expansion of our business. We anticipate needing $1,500,000 to
sustain our operations for the next year, not including the lines of credit and
other capitalization which we intend to employ to fund our inventory. 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 intend to finance our expanded
inventory using lines of credit from financial institutions, secured by that
inventory, as well as through other capitalization. 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.
PERMANENT INJUNCTION AGAINST OUR PRESIDENT
In June 1993, following the filing of a complaint by the Federal Trade
Commission, 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,
allegations were made that (a) consumers acquired travel-related services and
products (both as incentives and as direct purchases) from telemarketing
entities either controlled by or affiliated with Mr.
16
<PAGE>
Saltrelli; (b) that the descriptions of and disclosures regarding these
travel-related products or services were inadequate; (c) that consumers were at
times required to pay undisclosed fees or increased costs with regard to the
travel-related products to services; and (d) that on occasion the travel-related
products or services were not available at the times or on the terms advertised.
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.
Netmaximizer.com, Inc. has beginning on November 4, 1999 and prior to March 1,
2000, provided travel-related premiums and incentives to affinity group members
to promote the sale of products, albeit never in a telemarketing context. As of
March 1, 2000, we eliminated all use of travel-related incentives, as we
determined that our affinity group members relate better to a more tangible,
name-product incentive. Nonetheless, if the FTC were to determine that Mr.
Saltrelli, as our President, or Netmaximizer.com itself had violated the terms
of the Injunction between November 4, 1999 and March 1, 2000, by engaging in
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.
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;
17
<PAGE>
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. A downturn in the general economy
or a shift in consumer buying patterns could harm our results of operations.
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 thirteen
employees on April 1, 2000. We are continuing to integrate these individuals
into our organization. We plan to expand our warehousing and fulfillment and our
customer service operations very rapidly. 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 April 1, 2000, we
had accepted a total of 336 applications. We have accepted them in increments
over time and intend to continue to do so. This growth may strain our 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,
18
<PAGE>
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 initially accepted applications for participation
by 15 affinity groups representing approximately 171,490 members and have
subsequently expanded our membership base to 336 affinity groups with 4,388,684
families that are 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, whether created in due course by regular market
activity or artificially by computer "hackers",
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.
19
<PAGE>
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.
WE ARE ASSUMING MERCHANDISING, INVENTORY MANAGEMENT AND
FULFILLMENT RESPONSIBILITIES
We recently started the phase-in to handling our own merchandising, inventory
management and order fulfillment. Our failure to perform these functions
efficiently and in a timely manner could result in the disruption of our
operations, including shipment delays. In addition, changing trends in consumer
tastes in the products we offer subject us to inventory risks. It is important
to our success that we accurately identify and predict these trends and do not
overstock unpopular products. The demand for specific products can change
between the time the products are ordered and the date of receipt. If products
do not achieve sufficient consumer acceptance, we may be required to take
inventory markdowns, which could reduce our sales and gross margins. We believe
that this risk will increase as we open new departments or enter new product
categories due to our lack of experience in purchasing products for these
categories. In addition, to the extent that demand for our products increases
over time, we may be forced to increase inventory levels.
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, will generate sufficient
satisfied members. To the extent that our products, prices and incentives
programs 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.
20
<PAGE>
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.
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. The attractiveness of our program to current and potential members and
affinity groups depends in part on the attractiveness of the incentives or
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 (for example,
Amazon.com; eToys.com; Outpost.com; ValueAmerica.com and Buy.com) 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.
21
<PAGE>
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
customers. 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 Store operates is housed at Yahoo!. We
maintain our own hardware for warehousing, purchasing and administrative
functions 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
22
<PAGE>
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 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.
Periodically, we may experience unscheduled system downtime that may result in
our web site being inaccessible to members, or we may experience slow response
times that 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.
23
<PAGE>
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.
SOME STATES MAY IMPOSE A NEW SALES TAX ON OUR BUSINESS
A 1992 Supreme Court decision confirmed that the commerce clause of the United
States Constitution prevents a state from requiring the collection of its sales
and use tax by a mail-order company unless such company has a physical presence
in the state. However there continues to be uncertainty due to inconsistent
application of the Supreme Court decision by state and federal courts. While
there is no case law on the issue, we believe that this analysis could also
apply to our online business.
We attempt to conduct our operations consistent with our interpretation of the
applicable legal standard, but there can be no assurance that such compliance
will not be challenged. In recent challenges, various states have sought to
require companies to begin collection of sale and use taxes and/or pay taxes
from previous sales. As of the date of this registration statement, we have not
received assessments from any state. We currently collect and forward sales tax
on all shipments to Florida.
The Supreme Court decision also established that Congress has the power to enact
legislation which would permit states to require collection of sales and use
taxes by mail-order companies. Congress has from time to time considered
proposals for such legislation. We anticipate that any legislative change, if
adopted, would be applied on a prospective basis.
Recently, several states and local jurisdictions have expressed an interest in
taxing e-commerce companies who do not have any contacts with their
jurisdictions other than selling products online to customers in such
jurisdictions. The Internet Tax Freedom Act imposed a moratorium on new taxes or
levies on e-commerce for a three-year period due to expire in October 2001.
However, there is a possibility that Congress may not renew this legislation.
Any such taxes could have an adverse effect on online commerce, including our
business.
24
<PAGE>
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 will 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 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 related to Year 2000 compliance have not been
material to our business, results of operations or financial condition. We have
experienced no Year 2000 problems. In the event that we do encounter such
problems (either within our own systems or with regard to a prolonged data
communication, telecommunications or electrical failure), we could be required
to expend additional resources or lose revenues.
SUBSTANTIAL CONTROL WILL REMAIN WITH OUR MANAGEMENT AND MAJOR
STOCKHOLDERS AND THIS COULD DELAY OR PREVENT A CHANGE OF CONTROL
As of April 1, 2000, our executive officers, directors and 5% stockholders
together beneficially owned approximately 50.86% 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
25
<PAGE>
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 April 1, 2000, we have 39,153,006 shares of common stock outstanding. Of
these shares, 19,884,000 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 April 1, 2000, 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 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 April 1, 2000, 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 current phase-in schedule for the new
eligibility requirements provides that we must meet the requirements on or
before March 24, 2000, including clearing this registration statement under the
'34 Act with the SEC. Because we were unable to meet the requirements in the
prescribed time, NASD has appended an "E" to our ticker symbol and our shares
continue to be quoted under that symbol for only a temporary period. Our shares
will be delisted from the OTC-BB following the period allowed by the exception,
until such time as the eligibility requirement is met.
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.
26
<PAGE>
After this registration statement becomes effective, the "E" is deleted from our
symbol and we are again trading on the OTC-BB without exception, we intend to
submit an application to Nasdaq to have our common stock traded on the Nasdaq
SmallCap Market. We cannot assure you, however, that we will be successful in
our application for membership.
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,
either because of our symbol's having been appended with an "E", we have been
delisted or once we become admitted to the SmallCap Market, if we do become
admitted for membership. The present market for the shares on the OTC-BB may not
be indicative of prices that will prevail in the SmallCap trading market.
OUR STOCK PRICE COULD BE VOLATILE
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 either as a result of our symbol's
having been appended with an "E", if we are delisted or in the event of our
admission to the SmallCap Market. In addition, our results of operations during
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.
27
<PAGE>
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>
Year Ended
December 31,
1999 1998 1997 1996 1995
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
Net Revenue 15,002 nil nil nil nil
General & Administrative Expenses 488,025 900 nil nil nil
Non-cash Compensation
Officer & Employee 150,000 nil nil nil nil
Stock Options 5,503,321 nil nil 5,000 nil
Net Income (Loss) (6,135,904) (900) nil (5,000) nil
Net Income (Loss) per Share (.16) nil nil nil nil
December 31,
1999 1998 1997 1996 1995
$ $ $ $ $
Total Assets 415,127 nil nil nil nil
Total Liabilities 301,610 900 nil nil nil
Shareholders' Equity (Deficiency) 113,517 (900) nil nil nil
Long-Term Obligations 150,000 nil nil nil nil
Cash Dividends nil nil nil nil nil
</TABLE>
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
28
<PAGE>
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 (post-split: 7,290,000 shares) of our common stock as part of a
12,000,000 share (post-split: 36,000,000 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. As of December 31, 1999, the Company was
primarily involved in organizational activities, developing a strategic plan and
raising capital. Full operations, as defined by our strategic plan, have not
commenced. 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.
Year Ended December 31, 1999 Compared to December 31, 1998
Our total assets were approximately $415,000 at December 31, 1999 (nil at
December 31, 1998). The increase was due primarily to our investment of
approximately $34,000 primarily in office equipment and computer servers, and
our $350,000 investment (paid $62,000 in cash remitted 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
29
<PAGE>
cash and short-term investments were approximately $39,000 at December
31, 1999 (nil at December 31, 1998). Our current liabilities were approximately
$152,000 at December 31, 1999 compared to approximately $900 at December 31,
1998. This increase was principally the result of fees for professional services
and other operating costs.
For the year ended December 31, 1999, we had revenue from operations of $15,002.
For the same period ended December 31, 1999, our general and administrative
expenses increased to approximately $6,141,346 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 4,073,304 shares of our common stock1,
which resulted in compensation of $5,503, 321 during the year ended December 31,
1999 and deferred compensation of an additional $964,972. 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 $30,920 to our President and $24,379 to our
Secretary during 1999. We intend to pay a monthly salary to our President of
$15,000 and to our Secretary of $12,000 going forward.
During the year ended December 31, 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 year ended December 31, 1999.
Liquidity and Capital Resources
Since we began implementing our current business plan in March 1999 through
December 31, 1999, we have raised an aggregate of $459,000 in cash through
private placements, $62,000 of which was remitted on the Company's behalf by
stockholders to the consultant for web site design. We received approximately
$15,000 in cash from our operations during this period. During this period, we
have used net cash of approximately $358,000, primarily for professional fees,
consulting fees, salaries, rent and expenses, and overhead.
As of December 31, 1999, we had $39,055 in cash. As of February 8, 2000, we
obtained $1.3M+ in a financing transaction with Monavia, Limited. Monavia
received our non-negotiable, 9% promissory note due February 7, 2003 plus a
three-year warrant to purchase 681,987 shares of our common stock at an exercise
price of $15.00 per share (the market price on the date of the warrant).
Although that cash will be sufficient to sustain our current operations for the
remainder of calendar year 2000, we will need to raise additional financing to
fund our inventory expansion. We intend to raise additional capital 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.
- --------
1 The methodology employed to calculate the expense associated with issuance of
these options is discussed below beginning at page F-13.
30
<PAGE>
During the year ended December 31, 1999, we committed approximately $34,000 for
office equipment and computer servers and had no material cash flows from
investing activities.
We anticipate that our cash requirements will increase to approximately $120,000
to $160,000 per month during calendar year 2000 as a result of salaries,
professional fees and related expenses associated with the anticipated expansion
of our operations. There can be no assurance that our actual expenditures for
such periods will not exceed our estimated operating budget. Actual expenditures
will depend upon a number of factors, some of which are beyond our control,
including, among other things, timing of SEC approval of this registration
statement, reliability of the assumptions of management in estimating cost and
timing, and the time expended by professionals and consultants and fee
associated therewith.
Recent Financing
Our business activities and operations have been partially funded to date
through issuance of shares of our common stock. The following transactions had
been completed as of December 31, 1999:
<TABLE>
<CAPTION>
Number of Total Price of
Summary of Transactions2 Issue Date Shares Shares($)
- ------------------------ ---------- ------ ---------
<S> <C> <C> <C>
Balance of Netmaximizer.com at December 31, 1998 3,000,000 $ 5,000
Issued to 10 investors for cash at $.001 per share March 8, 1999 36,000,000 12,000
Issued to 1 investor for cash at $1.04 per share March 23, 1999 48,000 50,000
Issued to 1 investor for cash at $4.84 per share August 27, 1999 3,510 17,000
Issued to 1 investor for cash at $5.08 per share August 30, 1999 39,345 200,000
Issued to 1 investor for cash at $5.46 per share October 1, 1999 5,496 30,000
Issued to 1 investor for services at $5.08 per share October 20, 1999 56,655 288,000
TOTAL 39,153,006
</TABLE>
On February 8, 2000, we obtained $1.3M+ in a financing transaction with Monavia,
Limited, a corporation organized and legally existing under the laws of the Isle
of Man. Monavia received our non-negotiable, 9% promissory note due February 7,
2003 plus a three-year warrant to purchase 681,987 shares of our common stock at
an exercise price of $15.00 per share (the market price on the date of the
warrant).
- ---------
2 The shares issued for cash at $.001 were all issued on March 8, 1999, when the
Company became active and before the stock began trading under the symbol
"MAAX." The remainder of the shares were acquired at the trading price as of the
date acquired. Both the number of shares and the acquisition price have been
adjusted to reflect the stock split retroactively. The variance in price, given
the development stage and lack of public activity of the Company, is attributed
to unknown market forces.
31
<PAGE>
Year 2000 Compliance
The Year 2000 issue arose 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 had to be updated
to ensure they recognized dates during and after the Year 2000.
We were exposed to a risk that certain aspects of our business would 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 stemmed from our reliance on certain hardware,
software and services to carry out the daily operation of our business. As of
April 1, 2000, we had experienced no adverse consequences as the result of the
Year 2000 issue.
We do not 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. We cannot assure you, however, that there will be no failure of our
material systems, our vendors' material systems or the Internet related to the
Year 2000 issue that will emerge in the months to come.
New Accounting Pronouncements
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. 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.
In March 1998, the Accounting Standards Executive Committee issued Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use." SOP 98-1 requires all costs related to the
development of internal used software other than those incurred during the
application development stage to be expensed as incurred. Costs incurred during
the application development stage are required to be capitalized and
32
<PAGE>
amortized over the estimated useful life of the software. SOP 98-1 was adopted
by the Company on January 1, 1999.
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 series of leases, each of which is
approximately one year in duration. The total monthly rent payments under the
leases are approximately $7,600, plus tax. We also pay for a pro rata share of
common area expenses such as insurance, cleaning services, and maintenance
related to the space we rent. Our pro rata share of the common area expenses is
currently approximately $4,350 per month.
As of February 1, 2000, we began leasing approximately 9,000 square feet of
warehouse space at 3560 Investment Lane, Suite 201, Riviera Beach, Florida,
pursuant to a lease that expires on January 31, 2001. The monthly rental
payments for the lease are $5,000. We have an option to renew that lease for an
additional one-year term at a monthly rental of $5,500. We pay all of our own
utilities, maintenance and cleaning for the warehouse space we lease, but pay no
share of expenses for any other or common areas.
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 March 22, 2000 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>
Title of Class Name and Address of Amount and Nature of
- -------------- Beneficial Owner Beneficial Ownership Percentage of Class (1)
---------------- -------------------- -------------------
<S> <C> <C> <C>
Common Stock David Saltrelli 9,105,648(2) 22.23%
4400 N. Federal Highway,
Suite 307
Boca Raton, FL 33431
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Common Stock Peter Schuster 9,105,648 (2) 22.23%
4400 N. Federal Highway,
Suite 307
Boca Raton, FL 33431
Common Stock Steven Howell 4,371,303 (3) 10.72%
437 West Bockman Way
Sparta, TN 38583
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 March 22, 2000.
(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.
As of April 1, 2000, 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
34
<PAGE>
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.
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.
35
<PAGE>
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.
Injunction
In June 1993, following the filing of a complaint by the Federal Trade
Commission, 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,
allegations were made that (a) consumers acquired travel-related services and
products (both as incentives and as direct purchases) from telemarketing
entities either controlled by or affiliated with Mr. Saltrelli; (b) that the
descriptions of and disclosures regarding these travel-related products or
services were inadequate; (c) that consumers were at times required to pay
undisclosed fees or increased costs with regard to the travel-related products
to services; and (d) that at times the travel-related products or services were
not available at the times or on the terms advertised. 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.
Netmaximizer.com, Inc. has beginning on November 4, 1999 and prior to March 1,
2000, provided travel-related premiums and incentives to affinity group members
to promote the sale of products, albeit never in a telemarketing context. As of
March 1, 2000, we eliminated the use of travel-related incentives, as we
determined that our affinity group members relate better to a more tangible,
name-product incentive. Nonetheless, if the FTC were to determine that Mr.
Saltrelli, as our President, or Netmaximizer.com itself had violated the terms
of the Injunction between November 4, 1999 and March 1, 2000, by engaging in
prohibited conduct, it may seek to enforce the Injunction directly against us.
36
<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.
IRS Tax Liens
The Internal Revenue Service has filed several federal tax liens against David
Saltrelli relating to unpaid federal income taxes. One lien covers the periods
beginning with the tax year ending 12/31/79 and continuing through the tax year
ending 12/31/82 in the aggregate amount of $902,889.20. The second covers tax
years 1993, 1994 and 1995 in the aggregate amount of $36,721.98. These tax liens
should have no effect on Netmaximizer.com, Inc.
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.
- -------------------------------
Our President received total cash compensation from us of $30,920 for 1999. Our
Secretary received total cash compensation from us of $24,379 for 1999. No cash
compensation was paid to either our President or Secretary prior to 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 $12,000.
The following table contains information concerning the grant of stock options
to our two executive officers, Peter Schuster and David Saltrelli, on April 5,
1999. No grants of stock options to executive officers and directors were made
prior to April 5, 1999.
Our directors do not receive any salary for their services as directors or as
members of committees of the Board of Directors. Directors may also serve our
company in other capacities as an officer, agent or otherwise, and may receive
compensation for their services in such other capacity.
Stock Options
We reserved 7,809,600 shares of common stock for issuance pursuant to the 1999
Employee Stock Option Plan. On April 5, 1999, we granted stock options for
7,809,600 shares of common stock to our officers, employees and consultants. No
grants of stock options were made prior to
37
<PAGE>
April 5, 1999 and no stock appreciation rights were granted to these
individuals. The grants to consultants were compensation for services rendered
in connection with the web site design, sales platform design, affinity group
program design, and other similar services.
We intend to register our plan under the Securities Act of 1933 after this
registration statement is declared effective.
Pursuant to the Plan, the following stock options were issued on April 5, 1999
to our executive officers. The table shows the hypothetical gains or "option
spreads" that would exist for the respective options. These gains are based on
assumed rates of annual compound stock price appreciation of five percent (5%)
and ten percent (10%) from the date the options were granted over the full term
of the options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS OPTIONS GRANTED EXERCISE PRICE APPRECIATION FOR
GRANTED T0 EMPLOYEES PRICE EXPIRATION OPTION TERM(4)
NAME (#)(1) (2) ($/SH)(3) DATE 5% 10%
---- ------ --- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
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.
38
<PAGE>
Item 7. Certain Relationships and Related Transactions.
- -------------------------------------------------------
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.
Network is a corporation wholly-owned by Mr. Steven Howell, one of our
shareholders who owns more than 5% of our outstanding shares of common stock. 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 4, 1999, the web site was substantially complete and the Store
nominally available for shopping. As of November 27, 1999, those shares have
been issued and the cash has been paid.
Except for the ownership of our securities and the development of our web site
that we have disclosed above, 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, 1997, 1998
and 1999 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.
39
<PAGE>
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
4th Quarter $19.00 $10.75
As of March 22, 2000, there were 20 holders of record of our common stock.
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 current phase-in schedule for the new
eligibility requirements provides that we must meet the requirements on or
before March 24, 2000, including clearing this registration statement under the
'34 Act with the SEC. Because we were unable to meet the requirements in the
prescribed time, NASD has appended an "E" to our ticker symbol and our shares
continue to be quoted under that symbol for only a temporary period. Our shares
will be delisted from the OTC-BB following the period allowed by the exception,
until such time as the eligibility requirement is met. The imposition of the
NASD eligibility requirements has resulted in a large number of companies quoted
on the OTC-BB filing registration statements under the '34 Act with the SEC, and
accordingly there may be significant delays in clearing a registration statement
with the SEC due to the volume of filings.
We intend to submit an application to Nasdaq to have our common stock traded on
The Nasdaq SmallCap Market. After this registration statement becomes effective,
the "E" is deleted from our symbol, we are again trading on the OTC-BB without
exception, and our application with The Nasdaq SmallCap Market is approved, we
anticipate that our common shares will be traded on The Nasdaq SmallCap Market.
We cannot, however, assure you that these events will occur.
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
40
<PAGE>
$.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.
On March 8, 1999, before our shares were being quoted on the OTCBB, we issued
12,000,000 (pre-split) 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 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 March 23, 1999, we issued 16,000 (pre-split) shares of our common stock for
$3.125 per share to raise $50,000 in cash. Our shares had begun to be quoted at
this point, but the price was very volatile, ranging between $1.06 and $12.00
during the month of March 1999 for no apparent reason. This offering was made to
one non-affiliated subscriber at the agreed "fair value" 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 (pre-split) shares of our common stock
for $14.531 per share to raise $17,000 in cash. On September 30, 1999, we issued
13,115 (pre-split) shares of our common stock for $15.250 per share to raise
$200,000 in cash. On October 20, 1999, we issued 1,832 (pre-split) 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.
The Company accounted for the sales of restricted stock issued in both March and
September of 1999 by recording common stock and additional paid in capital for
the total of the proceeds received.
On February 8, 2000, we issued a non-negotiable, 9% promissory note due February
7, 2003 plus a three-year warrant to purchase 681,987 shares of our common stock
at an exercise price of $15.00 per share (the market price on the date of the
warrant). This sale was made to Monavia. Ltd. This offering was not
underwritten. The sale was exempt from registration in reliance upon Section
4(2) of the Securities Act since it did not involve a public offering.
41
<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 March 20, 2000, there were 39,153,006 issued and
outstanding shares of our common stock. On March 22, 2000, there were 20 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,
42
<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.
43
<PAGE>
<TABLE>
<CAPTION>
Item 13. Financial Statements and Supplementary Data
NetMaximizer.com, INC.
(A Development Stage Enterprise)
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PAGE
----
<S> <C>
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-17
</TABLE>
44
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Netmaximizer.com, Inc.
Boca Raton, Florida
We have audited the accompanying balance sheets of Netmaximizer.com, Inc. (a
development stage enterprise) as of December 31, 1999 and 1998, and the related
statements of operations, stockholders' equity (deficiency) and cash flows for
each of the three years in the period ended December 31, 1999, and cumulative
from inception. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Netmaximizer.com, Inc. as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 and cumulative
from inception, 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. Management's plans with regard to these matters are also
described in Note 2 to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
RACHLIN COHEN & HOLTZ LLP
Fort Lauderdale, Florida
February 29, 2000 except for the last paragraph of Note 8, as to which the date
is March 14, 2000
See notes to financial statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS 1999 1998
------ ---- ----
<S> <C> <C>
Current Assets:
Cash, including restricted cash of $683 $ 39,055 $ --
Inventories 29,886 --
----------- -----------
Total current assets 68,941 --
Property and Equipment 28,843 --
Web Site Design, Net of Amortization of $50,000 300,000
Other Assets 17,343 --
----------- -----------
Total assets $ 415,127 $ --
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------------------
Current Liabilities:
Accounts payable $ 123,790 $ 900
Due to officer/stockholder 27,820 --
----------- -----------
Total current liabilities 151,610 900
----------- -----------
Long-Term Debt:
Note payable, stockholder 150,000 --
----------- -----------
Commitments, Contingencies and Subsequent Events -- --
Stockholders' Equity (Deficiency):
Common stock, $.001 par value; 50,000,000 shares authorized;
39,153,006 and 3,000,000 shares issued and outstanding,
respectively 39,153 3,000
Additional paid-in capital 7,181,140 2,000
Deficit accumulated during the development stage (6,141,804) (5,900)
Deferred compensation (964,972) --
----------- -----------
Total stockholders' equity (deficiency) 113,517 (900)
----------- -----------
Total liabilities and stockholders' equity (deficiency) $ 415,127 $ --
=========== ===========
</TABLE>
See notes to financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
Cumulative
from
Year Ended December 31, Inception
1999 1998 1997 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 15,002 $ -- $ -- $ 15,002
Direct Costs 9,560 -- -- 9,560
------------ ------------ ------------ ------------
Gross Margin 5,442 -- -- 5,442
------------ ------------ ------------ ------------
General and Administrative Expenses:
Stock options issued for services 5,503,321 -- -- 5,503,321
Officer compensation 205,299 -- -- 205,299
Other 432,726 900 -- 438,626
------------ ------------ ------------ ------------
5,991,346 900 -- 5,997,246
------------ ------------ ------------ ------------
Net Loss $ (6,135,904) $ (900) $ -- $ (6,141,804)
============ ============ ============ ============
Net Loss Per Share - Basic and Diluted $ (0.16) $ -- $ --
============ ============ ============
Weighted Average Shares Outstanding 39,066,446 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)
Deficit
Common Stock Accumulated
------------ Additional During the
Paid-In Development Deferred
Shares Amount Capital Stage Compensation Total
------ ------ ------- ----- ------------ -----
<S> <C> <C> <C> <C> <C>
Inception (June 29, 1995) to December 31, 1995 -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1995 -- -- -- -- -- --
Year Ended December 31, 1996:
Stock issued for services ($.0017 per share) 3,000,000 3,000 2,000 -- -- 5,000
Net loss -- -- -- (5,000) -- (5,000)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1996 3,000,000 3,000 2,000 (5,000) -- --
Year Ended December 31, 1997:
Net loss -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 3,000,000 3,000 2,000 (5,000) -- --
Year Ended December 31, 1998:
Net loss -- -- -- (900) -- (900)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 3,000,000 3,000 2,000 (5,900) -- (900)
Year Ended December 31, 1999:
Sale of common stock, proceeds of which were
remitted directly to web site developer:
Issuance of common stock ($.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
Sale of common stock for cash:
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 ($5.46 per share) 5,496 6 29,994 -- 30,000
Issuance of common stock for web site 56,655 57 287,943 -- -- 288,000
development services ($5.08 per share)
Options granted for services -- -- 6,468,293 -- (964,972) 5,503,321
Officer compensation forgone -- -- 150,000 -- -- 150,000
Net loss -- -- -- (6,135,904) -- (6,135,904)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 39,153,006 $ 39,153 $ 7,181,140 $(6,141,804) $ (964,972) $ 113,517
=========== =========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
Year Ended December 31, Cumulative
----------------------- from
1999 1998 1997 Inception
---- ---- ---- ---------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $(6,135,904) $ (900) $-- $(6,141,804)
Adjustments to reconcile net loss to net cash
used in operating activities:
Options granted for services 5,503,321 -- -- 5,503,321
Common stock issued for services -- -- -- 5,000
Officer compensation 150,000 -- -- 150,000
Depreciation and amortization 54,755 -- -- 54,755
Changes in operating assets and liabilities:
Inventories (29,886) -- -- (29,886)
Other assets (11,542) -- -- (11,542)
Accounts payable 122,890 900 -- 123,790
----------- ----------- --- -----------
Net cash used in operating activities (346,366) -- -- (346,366)
----------- ----------- --- -----------
Cash Flows from Investing Activities:
Expenditures for property and equipment (9,739) -- -- (9,739)
Other (1,840) -- -- (1,840)
----------- ----------- --- -----------
Net cash used in investing activities (11,579) -- -- (11,579)
----------- ----------- --- -----------
Cash Flows from Financing Activities:
Proceeds from long-term debt, related party 150,000 -- -- 150,000
Proceeds from sales of common stock 247,000 -- -- 247,000
----------- ----------- --- -----------
Net cash provided by financing activities 397,000 -- -- 397,000
----------- ----------- --- -----------
Net Increase in Cash 39,055 -- -- 39,055
Cash, Beginning -- -- -- --
----------- ----------- --- -----------
Cash, Ending $ 39,055 $ -- $-- $ 39,055
=========== =========== === ===========
Non-Cash Investing and Financing Transactions:
Officer compensation converted to contributed capital $ 150,000
===========
Common shares issued for web site development services $ 288,000
===========
Proceeds from sales of common stock remitted directly to
web site developer $ 62,000
===========
Equipment purchased from officer in exchange for debt $ 23,859
===========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
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 number of shares of common stock to
50,000,000 shares. 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 then
issued and outstanding shares to 39,153,006.
The effect of all these actions has been 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 stores primarily to
members of affinity groups such as churches, schools and unions.
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.
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>
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,
accounts payable, and long-term debt with a related party. The
carrying amounts of such financial instruments, as reflected in the
balance sheet, approximate their estimated fair value as of
December 31, 1999. 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.
Inventories
Inventories, comprised primarily of consumer products held for
sale, are stated at the lower of cost or market. Cost is determined
on the first in-first out basis.
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
Web site design includes 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 and is amortizing such costs over
the estimated life of the web site, fourteen months (see Note 9).
F-7
<PAGE>
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
Revenue Recognition
The Company recognizes revenue, including shipping and handling
fees, 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, and 1997 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.
F-8
<PAGE>
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Loss Per Common Share (Continued)
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.
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.
In March 1998, the Accounting Standards Executive Committee issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1
requires all costs related to the development of internal used
software other than those incurred during the application
development stage to be expensed as incurred. Costs incurred during
the application development stage are required to be capitalized
and amortized over the estimated useful life of the software. SOP
98-1 was adopted by the Company on January 1, 1999.
F-9
<PAGE>
NOTE 2. SUMMARY OF CERTAIN RISKS AND UNCERTAINTIES
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. Beginning
November 4, 1999 and continuing to March 1, 2000, the Company
offered 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. As of March 1, 2000,
the Company eliminated the use of travel-related incentives.
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 and has
incurred a substantial net loss in 1999, primarily as the result of
the issuance of certain stock options. 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>
NOTE 2. SUMMARY OF CERTAIN RISKS AND UNCERTAINTIES (Continued)
Going Concern Considerations (Continued)
Management's plans with regard to these matters include the
adoption of a business plan intended to address the Company's
strategy for growth and expansion of the affinity group membership
base, together with raising additional capital and/or debt
financing (see Note 5).
The eventual success of management's plans cannot be
ascertained with any degree of certainty.
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. WEB SITE DESIGN
These costs consist of fees for a total of $350,000 paid to a
consultant, which is owned or controlled by a major stockholder, as
follows: $62,000 in cash and 56,655 shares of Company common stock
valued at the market value of such stock on the date of issuance ($5.08
per share) or $288,000 (see Note 9). The web site was available for use
on November 4, 1999, and the Company commenced amortizing the cost over
the estimated useful life of fourteen months as of that date.
NOTE 4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Estimated
Useful Lives 1999
------------ ----
<S> <C> <C> <C>
Furniture and Equipment 5 - 7 years $33,598
Less accumulated depreciation 4,755
-------
$28,843
=======
</TABLE>
NOTE 5. RELATED PARTY TRANSACTIONS
Long-Term Debt, Related Party
The Company issued a promissory note in the amount of $1,363,975 on
February 8, 2000 to a stockholder in exchange for cash. This note
bears interest at 9%, payable quarterly, with principal due
February 7, 2003.
F-11
<PAGE>
NOTE 5. RELATED PARTY TRANSACTIONS (Continued)
Long-Term Debt, Related Party (Continued)
In connection with the promissory note, the Company issued warrants
to purchase 681,987 shares of common stock at $15.00 per share, the
market price of the Company's common stock on the date of issuance
of the warrant. These warrants can be exercised at any time before
February 7, 2003.
As of December 31, 1999, the Company had received an advance of
$150,000 against the total funds to be received in consideration
for the promissory note. The balance of $1,213,975 proceeds of the
note payable was received by February 8, 2000.
Officer/Employee Compensation
The officer/employees received no compensation for the period
March-August 1999 other than stock options issued (see Note 7).
Compensation expense was recorded in the amount of $150,000 for
this period with a corresponding increase in additional paid-in
capital. During the period September-December 1999, these
officer/employees received $55,229 of cash compensation.
NOTE 6. 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.
A reconciliation of income tax computed at the statutory federal rate
to income tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Tax provision at the statutory rate of 34% $( 2,035,000) $(300) $ --
State income taxes, net of federal income tax (180,000) -- --
Change in valuation allowance 19,105,000 300 --
Stock options not exercised (16,890,000) -- --
------------- ----- ----------
$ -- $ -- $ --
============= ===== ==========
</TABLE>
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>
December 31,
1999 1998
---- ----
<S> <C> <C>
Benefit of net operating loss carryforwards $ 181,000 $2,000
Stock options issued for services 18,924,000 --
Less valuation allowance (19,105,000) (2,000)
------------- ------
Net deferred tax asset $ -- $ --
============= ======
</TABLE>
F-12
<PAGE>
NOTE 6. INCOME TAXES (Continued)
At December 31, 1999, the Company had net operating loss carryforwards
for federal income tax purposes of approximately $488,000, which are
available to offset future federal taxable income, if any, through
2019.
As of December 31, 1999 and 1998, 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. However, based upon the amount of
the taxable loss incurred to March 19, 1999 (approximately $6,000), the
Company estimates that no annual limitation will apply to the net
operating loss carryforward existing as of that date.
NOTE 7. 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 stockholders 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.
F-13
<PAGE>
NOTE 7. STOCK OPTION PLAN (Continued)
The Company has issued options to purchase a total of 7,809,600 shares
of common stock (3,631,296 to employees and 4,178,304 to consultants)
out of the shares of common stock provided for in the Stock Option
Plan, at an exercise price of $2.00 per share, the price at which the
stock was trading as of the day of the grant of the options (giving
effect to the stock splits described in Note 1). These options are for
a term of five years and contain an anti-dilution provision. 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 prior to September 30,
1999 (see Note 5).
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.
The fair value of the options granted to consultants in 1999 has been
recorded as a charge to operations in the accompanying financial
statements over the period in which they vest. As of December 31, 1999,
$964,972 has been reflected as deferred compensation, representing the
unamortized portion of the options which vest in October 2000, and is
presented as a reduction of stockholders' equity.
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 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 adjusted in connection with options
issued to employees to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net loss:
As reported $ (6,135,904) $(900) $ --
Pro forma (11,607,000) $(900) --
Loss per share - basic and diluted:
As reported $(.16) $ -- $ --
Pro forma $(.30) $ -- $ --
</TABLE>
F-14
<PAGE>
NOTE 7. STOCK OPTION PLAN (Continued)
A summary of the status of options under this plan and additional
options, granted outside of the plan (if any), as of December 31, 1999
and changes during the year ended on that date are presented below:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Shares 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, December 31, 1999 7,809,600 $2.00
========= =====
Options granted during the period at exercise prices which equal
market price of stock at date of grant:
Weighted average exercise price 7,809,600 $2.00
Weighted average fair value 7,809,600 $2.00
========= =====
</TABLE>
Note: No options were granted prior to 1999.
The following table summarizes information about options under the plan
which are outstanding at December 31, 1999 after giving effect to the
November 1, 1999 stock split:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise December 31, Contractual Exercise December 31, Exercise
Prices 1999 Life Price 1999 Price
------ ---- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
$2.00 7,809,600 4.5 $2.00 7,061,592 $2.00
===== ========= === ===== ========= =====
</TABLE>
7,061,592 options vested on October 1, 1999; the remainder vest October
1, 2000.
NOTE 8. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases operating facilities under one year operating
leases expiring September 2000 through February 2001. Monthly rent
expense, including cost reimbursements, aggregates approximately
$12,000 per month.
F-15
<PAGE>
NOTE 8. COMMITMENTS AND CONTINGENCIES (Continued)
The Company leases equipment under an operating lease which expires
December 2000. Monthly payments are approximately $1,200.
Beginning February 2000, the Company leased warehouse space from
the entity which serves as the purchasing agent for the Company.
The lease expires January 31, 2001, but may be extended for an
additional twelve months. The monthly rent is $5,000.
The future minimum lease payments pursuant to these leases are as
follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C> <C>
2000 $186,000
2001 14,000
--------
$200,000
========
</TABLE>
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 maintains custody of the products purchased by the Company
and ships the products to the ultimate consumer once they are
ordered. No written contract exists between the Company and this
fulfillment provider for these services. The Company pays $2,000
per month plus a per product fee ranging from $.50 to $1.00 for
these services. Effective March, 2000, the Company ceased using
this provider and began doing fulfillment in-house.
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
agreed to pay $.30 per free product, as defined. Each agreement is
cancelable without notice by either party.
F-16
<PAGE>
NOTE 8. COMMITMENTS AND CONTINGENCIES (Continued)
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 that a merchant reserve account be
established to cover potential chargebacks or other loss resulting
from transactions deposited into the merchant account. As of
December 31, 1999, the Company had established a reserve account of
$683. The agreement may be terminated by either party with thirty
days notice.
Non-Exclusive Purchasing Agent Agreement
The Company has entered into an agreement, commencing March 14,
2000, with an unrelated party to act as the Company's purchasing
agent. The purchasing agent will receive a fee per unit purchased
ranging from $.50 to $1.00 determined by the cost of the units
purchased. The agreement may be canceled by either party.
NOTE 9. COMMON STOCK
During March 1999, the Company raised capital through two 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; and
48,000 shares were issued at $1.08 per share for proceeds of $50,000.
The combined proceeds of $62,000 were remitted directly to the
consultant for web site design by the investors.
On September 27, 1999, the Company issued 3,510 shares of common stock
for proceeds of $17,000.
On September 30, 1999, the Company issued 39,345 shares of common stock
for proceeds of $200,000.
On September 30, 1999, the Company issued 56,655 shares of common stock
pursuant to an agreement with the web site design consultant in payment
for web site development services of $288,000.
On October 20, 1999, the Company issued 5,496 shares of common stock
for proceeds of $30,000.
F-17
<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
Auditors' Report
Balance Sheets as of December 31, 1999 and 1998.
Statements of Operations for the years ended December 31, 1999, 1998
and 1997.
Statements of Stockholders' Equity for the years ended December 31,
1999, 1998 and 1997.
Statements of Cash Flows for the years ended December 31, 1999, 1998
and 1997.
Notes to Audited Financial Statements.
(b) Exhibits
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
* 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 27, 1999.
** 10.3A Lease Agreement by and between Netmaximizer.com, Inc. and Sanctuary of Boca, Inc.
dated January 3, 2000.
45
<PAGE>
** 10.3B Lease Agreement by and between Netmaximizer.com, Inc. and Sanctuary of Boca, Inc.
dated January 20, 2000.
** 10.3C Lease Agreement by and between Netmaximizer.com, Inc. and Sanctuary of Boca, Inc.
dated March 3, 2000.
* 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.
** 10.9 Warehouse Lease Agreement by and between Netmaximizer.com, Inc. and American Sales
Industries dated February 1, 2000.
** 10.10 Purchasing Agreement by and between Netmaximizer.com, Inc. and American Sales
Industries dated March 14, 2000.
** 10.11 Non-negotiable 9% Promissory Note from Netmaximizer.com, Inc. to Monavia, Limited,
dated as of February 8, 2000.
** 10.12 Monavia, Limited, Warrant to Purchase 681,987 Shares of Common Stock of
Netmaximizer.com, Inc. dated February 8, 2000.
** 10.13 Master Equipment Lease Agreement between Mitel Capital and Netmaximizer.com, Inc.,
Netmaximizer.com, Inc. dated October 8, 1999.
*** 11.1 Statement re: Computation of Net Income per Common Share
*** 27.1 Financial Data Schedules
*** 27.2 Financial Data Schedules
* Previously provided.
** Filed with this amendment.
*** Revised schedule filed with this amendment.
</TABLE>
46
<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: April 6, 2000
/s/ David Saltrelli
- -------------------
David Saltrelli, President
47
SANCTUARY OF BOCA, INC.
LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter referred to as "Lease") is made and
entered into this 3rd day of January, 2000 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 at 4400 North Federal Highway, Suite 307,
Boca Raton, Florida 33431.
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
407, the office building known as Sanctuary Tower & Shoppes ("Office Building"),
4400 North Federal Highway, Boca Raton, Florida, consisting of 1198 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 and fifteen (15)
days commencing on December 17, 1999 ("Commencement Date") and ending December
31, 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
2
<PAGE>
amounts so estimated in equal installments, in advance, on the first day of each
month during 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 $5921.92, 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.
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 eight
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
8
<PAGE>
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.
9
<PAGE>
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.
10
<PAGE>
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
11
<PAGE>
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
eight 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).
12
<PAGE>
(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
13
<PAGE>
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
14
<PAGE>
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
15
<PAGE>
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, inter alia, the
provisions of this Section 15.07.
16
<PAGE>
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 Prorated Rent: $1,277.75 (including FL State Sales Tax)
First Month's Carpet Payment: $209.56 (including Florida State Sales Tax)
15.23 Renewal Option. Provided that Tenant is in good standing and has
performed all of the terms and conditions under this Lease, the Tenant shall
have the option to extend the Lease Term for an additional twelve (12) months at
the same terms and conditions of this Lease by giving Landlord four (4) months
advance written notice prior to the Lease expiration. Said notice shall be
delivered by certified mail, return receipt requested. Lessee's failure to
timely deliver written notice shall be deemed a waiver and release of this
option to extend the Lease term. Time is of the essence. The base rent for the
renewal period will be:
January 1, 2001 through December 31, 2001 $1,782.03 plus FL Sales Tax
18
<PAGE>
EXECUTED as of the day and year first above written.
WITNESSES: LANDLORD:
SANCTUARY OF BOCA, INC.
/s/ Maria C. Mitchell By: /s/ Ms. Elaine Prince
- ----------------------------- ----------------------------------
Maria C. Mitchell Name and Title: Vice President
- ----------------------------- ------------------
Date: 01/09/00
----------------------------
TENANT:
NETMAXIMIZER.COM, INC.
/s/ Maria C. Mitchell By: /s/ Peter Schuster
- ----------------------------- ----------------------------------
Maria C. Mitchell Name and Title: Peter Schuster, VP
- ----------------------------- ------------------
Date: 01/09/00
----------------------------
19
<PAGE>
EXHIBIT "A"
FOURTH 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.
2.) Landlord will install building standard carpet at Tenant's cost, which will
be $209.56 per month for twelve months as described in Exhibit "D."
Carpet shall be Big Apple:
Tenant's first choice Color #681
Tenant's second choice Color #595
Tenant's third choice Color #675
<PAGE>
EXHIBIT "D"
RENT SCHEDULE
December 17, 1999 through December 31, 1999 $848.58 prorated rent
plus Florida Sales Tax
January 1, 2000 through December 31, 2000 $1,697.16 rent per month
plus Florida Sales Tax
Initial estimated operating expenses $ 713.80 expenses per month
plus Florida Sales Tax
Carpet Cost:
January 1, 2000 through December 31, 2000 $209.56 per month
including Florida Sales Tax
SANCTUARY OF BOCA, INC.
LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter referred to as "Lease") is made and
entered into this 20th day of January, 2000 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 4400 North Federal Highway, Suite 307, Boca
Raton, Florida. 33431.
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
301, the office building known as Sanctuary Tower & Shoppes ("Office Building"),
4400 North Federal Highway, Boca Raton, Florida, consisting of 1332 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
February 1, 2000 ("Commencement Date") and ending January 31, 2001 ("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 $5341.30, 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.
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, assessments, impositions
and outlays of every nature and kind relating to the Premises except as
expressly herein stated.
3
<PAGE>
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 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)
4
<PAGE>
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 six
people, at any time during the term of the lease.
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
5
<PAGE>
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 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.
6
<PAGE>
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 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
7
<PAGE>
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 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
8
<PAGE>
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.
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
9
<PAGE>
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.
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
10
<PAGE>
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 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
11
<PAGE>
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 six 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).
(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
12
<PAGE>
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 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
13
<PAGE>
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 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
14
<PAGE>
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 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
15
<PAGE>
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, inter alia, the
provisions of this Section 15.07.
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
16
<PAGE>
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.
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.
17
<PAGE>
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: $0
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 option to extend the Lease Term for an additional twelve (12) months at
the same terms and conditions of this Lease by giving Landlord four (4) months
advance written notice prior to the Lease expiration. Said notice shall be
delivered by certified mail, return receipt requested. Lessee's failure to
timely deliver written notice shall be deemed a waiver and release of this
option to extend the Lease term. Time is of the essence. The base rent for the
renewal period will be:
February 1, 20001 through January 31, 20002 $1981.95 per month plus FL
State Sales Tax.
18
<PAGE>
EXECUTED as of the day and year first above written.
WITNESSES: LANDLORD:
SANCTUARY OF BOCA, INC.
/s/ Maria C. Mitchell By: /s/ Ms. Elaine Prince
- ----------------------------- ------------------------------------
Maria C. Mitchell Name and Title: Vice President
- ----------------------------- --------------------
Date: 01/20/00
------------------------------
TENANT:
NETMAXIMIZER.COM, INC.
/s/ Maria C. Mitchell By: /s/ Peter Schuster
- ----------------------------- ------------------------------------
Maria C. Mitchell Name and Title: Peter Schuster, V.P.
- ----------------------------- --------------------
Date: 01/05/00
------------------------------
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
February 1, 2000 through January 31, 2001 $1831.50 rent per month
plus Florida Sales Tax
Initial estimated operating expenses $ 793.65 per month
plus Florida Sales Tax
SANCTUARY OF BOCA, INC.
LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter referred to as "Lease") is made and
entered into this 3rd day of March, 2000 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 4400 North Federal Highway, Suite 301,
307,407, Boca Raton, Florida 33431.
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
410, the office building known as Sanctuary Tower & Shoppes ("Office Building"),
4400 North Federal Highway, Boca Raton, Florida, consisting of 1585 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 March
1, 2000 ("Commencement Date") and ending February 28, 2001 ("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 $6247.52, 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.
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, assessments, impositions
and outlays of every nature and kind relating to the Premises except as
expressly herein stated.
3
<PAGE>
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 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)
4
<PAGE>
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.
5.02 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
5
<PAGE>
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 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.
6
<PAGE>
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 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
7
<PAGE>
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 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
8
<PAGE>
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.
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
9
<PAGE>
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.
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
10
<PAGE>
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 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
11
<PAGE>
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).
(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
12
<PAGE>
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 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
13
<PAGE>
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 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
14
<PAGE>
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 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
15
<PAGE>
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, inter alia, the
provisions of this Section 15.07.
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
16
<PAGE>
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.
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.
17
<PAGE>
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: $0
15.23 This Lease is subject to the existing Tenant, Premiere Sports
Connection, Inc., vacating the premises.
18
<PAGE>
EXECUTED as of the day and year first above written.
WITNESSES: LANDLORD:
SANCTUARY OF BOCA, INC.
/s/ Maria C. Mitchell By: /s/ Ms. Elaine Prince
- ----------------------------- ----------------------------------
Maria C. Mitchell Name and Title: Vice President
- ----------------------------- ------------------
Date: 03/02/00
----------------------------
TENANT:
NETMAXIMIZER.COM, INC.
/s/ Maria C. Mitchell By: /s/ Peter Schuster
- ----------------------------- ----------------------------------
Maria C. Mitchell Name and Title: Peter Schuster, VP
- ----------------------------- ------------------
Date: 02/24/00
----------------------------
19
<PAGE>
EXHIBIT "A"
FOURTH 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
March 1, 2000 through February 28, 2001 $2179.37 rent per month plus
Florida Sales Tax
Initial estimated operating expenses $ 944.39 expenses per month plus
Florida Sales Tax
WAREHOUSE LEASE AGREEMENT
-------------------------
THIS LEASE AGREEMENT is made and entered into as of this lst day of
February, 2000, by and between AMERICAN SALES INDUSTRIES, a Florida corporation,
whose address is 3560 Investment Lane, Riviera Beach, Florida 33404 ("Lessor");
and NETMAXIMIZER.COM, INC., a Florida corporation, whose address is 4400 North
Federal Highway, Suite 407, Boca Raton, Florida 33431 ("Lessee").
W I T N E S S E T H :
1. Leased Property. Lessor, for and in consideration of the rent herein
reserved to be paid by Lessee, and in consideration of the covenants and
provisions herein contained to be kept and performed by Lessee, does hereby
lease, let and demise unto Lessee approximately 9,000 square feet of floor space
located at 3560 Investment Lane, Suite 201, Riviera Beach, Florida 33404 (the
"Leased Premises"). Lessee hereby accepts possession of the Leased Premises in
their present AS IS CONDITION, and agrees Lessor has no duty to further alter or
change any portion of the Leased Premises except as may elsewhere in this Lease
be expressly set forth.
TO HAVE AND TO HOLD the Leased Premises, together with the rights and
appurtenances unto Lessee, subject to the following conditions and covenants.
2. Term. The term of this Lease shall commence on the lst day of February,
2000, and expire on the 3lst day of January, 2001 (the "Lease Term"), unless
this Lease is sooner terminated under the provisions of Paragraphs l5, l6 or l9
hereof.
3. Rent. The annual rent for the Leased Premises shall be $60,000.00,
representing a rental rate of $6.67 per square foot per year. Lessee agrees to
pay to Lessor at Lessor's office located at 3560 Investment Lane, Riviera Beach,
Florida 33404, on the first day of each month $5,000 per month plus sales tax in
advance, which rent shall be applicable for the period commencing the lst day of
February, 2000, and ending on the 3lst day of January, 2001. In the event the
term of this lease commences on any other day other than the first day of the
month, then the first partial month's rent shall be paid on the day this lease
commences and shall be prorated using the number of days remaining in the month
divided by the number of days in that month. Thereafter, rent shall be due and
payable on the first day of each month without demand or notice. If such rent is
not paid on or prior to the sixth (6th) day of each month, Lessee shall pay a
late charge equal to two percent (2%) of the monthly payment plus sales tax.
4. Renewal Option. Provided that Lessee is not in default under the terms
of this Lease, Lessee is given an option to extend the term of this Lease for
one additional one year term, which option Lessee must exercise at least sixty
days prior to the termination this Lease by providing written notice to Lessor
of Lessee's decision to exercise such option. The annual rent for such
<PAGE>
option exercised shall be $66,000, the other terms, covenants and conditions of
the renewal Lease, however, to be the same as those contained herein.
5. Assignment. Lessee shall not assign, transfer, mortgage, pledge or
hypothecate this Lease nor sublet, license, or permit the use or occupancy by
any third party of the Leased Premises or any part thereof without the prior
written consent of Lessor, and any attempt to do any of the foregoing without
Lessor's consent shall be void. Notwithstanding any such consent, Lessee shall
continue until the end of the term hereof to be obligated, jointly and severally
along with each approved assignee or sublessee (who shall automatically become
liable for all obligations of Lessee hereunder), to fulfill all of the terms,
covenants and conditions hereof, and Lessor shall be permitted to enforce the
provisions of this Lease directly against Lessee and/or any assignee or
sublessee without proceeding in any way against any other person. The consent by
Lessor to any assignment or sublease shall not constitute a waiver of the
necessity for such consent to any subsequent assignment or sublease.
6. Use of Leased Premises. The Leased Premises are being leased for
Lessee's use as a receiving, warehousing and shipping facility, and Lessee
agrees to restrict the use of the Leased Premises to such use, and not to use,
or permit the use of, the Leased Premises for any other purpose without first
obtaining the written consent of Lessor. Lessee agrees that no hazardous trade
or occupation shall be conducted or permitted on the Leased Premises and no act
or omission to act shall be permitted which will increase the risk or hazard of
fire or damage. Lessee further agrees not to conduct any business that is
contrary to or in violation of Federal, State or Local laws, regulations or
ordinances. Lessee shall not use the Leased Premises for the manufacture,
storage or disposal of "hazardous substances" or "hazardous wastes," as such
terms are defined in Section 403.703, Florida Statutes, nor for any use or
purpose in violation of the Comprehensive Environmental Response, Compensation,
and Liability Act of l980, 42 U.S.C. Section 960l et. seq., or any other
applicable Federal or State law, statute or regulation. Lessee must provide
Lessor, immediately upon Lessee's receipt thereof, copies of all correspondence
from Federal or State environmental regulatory agencies relating to Lessee's
occupancy or use of the Leased Premises. In using the Leased Premises, Lessee
shall, at its own expense, comply with all applicable laws, regulations and
ordinances affecting the Leased Premises.
7. Signs. Lessee shall be permitted to erect, subject to the prior written
approval of Lessor, such signs in or about the Leased Premises as Lessee may
deem necessary or desirable. Lessor agrees to execute promptly such consents or
applications for permission to erect such signs as may be required by any
governmental authorities. Upon termination of this Lease, or upon Lessee's
departure from the Leased Premises, Lessee shall at its sole cost, expense and
liability remove all signs that it erected or had erected, and restore the
Leased Premises to its previous condition.
8. Alterations. Lessee, at its own expense, shall have the right, subject
to the prior written approval of Lessor, to make reasonable alterations to the
interior of the Leased Premises. Such alterations shall be made in a good and
workmanlike manner and in compliance with all legal and insurance requirements,
and shall in no respect act to diminish the fair market value of
2
<PAGE>
the Leased Premises. Any and all permanent alterations or improvements shall be
and become part and parcel of the Leased Premises and ownership shall be in
Lessor.
9. Liens. Lessor shall not be liable for any labor or materials furnished
to Lessee upon credit, and no mechanic's or other liens for any such labor or
materials shall attach to or affect the reversion or other estate, or interest
of Lessor in and to the Leased Premises. Whenever any mechanic's liens shall
have been filed against the Leased Premises, based upon any act or interest of
Lessee or of anyone claiming through Lessee or if any security agreement shall
have been filed for or affecting any materials, machinery or fixtures used in
the construction, repair or operation thereof or annexed thereto by Lessee,
Lessee shall immediately and within ten (l0) days thereafter take such action by
bonding, deposit or payment as will remove the lien or security agreement. If
Lessee has not removed the lien after notice to Lessee, Lessor may pay the
amount of such mechanic's lien or security agreement or discharge by deposit,
and the amount so paid or deposited, with interest thereon, shall be deemed
additional rent reserved under this Lease and shall be payable forthwith with
interest payable at the highest lawful rate from the date of such advance, and
with the same remedies available to Lessor as in the case of default in the
payment of rent as herein provided.
10. Maintenance, Repair and Inspection.
----------------------------------
(a) Lessee agrees to conduct proper maintenance and make all necessary
repairs and replacements to the interior of the Leased Premises, including but
not limited to, any electrical and plumbing systems, fixtures, air conditioning
systems, and heating systems. Lessee agrees to keep the exterior of the Leased
Premises free from all merchandise, boxes, furniture, equipment and other items
at all times. Lessor shall have the right to enter the Leased Premises during
all reasonable hours to examine the Leased Premises to make such repairs,
additions, alterations or replacements as may be deemed necessary for the
safety, comfort, or preservation thereof, and to inspect the Leased Premises for
potential environmental violations or infractions.
(b) Lessor agrees to maintain and repair sidewalks, curbs, and parking
areas adjoining the Leased Premises. However, Lessee shall repair at its sole
cost and expense any damage or destruction to any of the foregoing caused
directly or indirectly by Lessee, and its guests, employees, agents or invitees.
(c) Lessor may, upon an event of default pursuant to subparagraph l7(g)
hereof, or at such other times as Lessor deems reasonably necessary, at Lessee's
sole cost and expense, commission an environmental assessment of the Leased
Premises to determine the nature and extent of damages, actual or potential,
incurred in connection with the actual or possible violation of any applicable
Federal or State environmental law, statute or regulation.
11. Taxes.
-----
(a) Lessor shall be liable for all ad valorem taxes on the real property
leased hereunder and all improvements thereon, except as expressly provided
otherwise in subparagraph (b) below.
3
<PAGE>
(b) Lessee shall be liable for any taxes levied or assessed upon its stock
in trade or fixtures, and shall be liable for any special assessments levied or
assessed upon the Leased Premises.
(1) Lessee agrees to pay its proportionate share of all increases
in ad valorem real property taxes and general and special assessments ("real
property taxes") resulting from increased rate and/or valuation, levied and
assessed against the buildings, other improvements, and land of which the Leased
Premises are a part, for the base year, which is 2000. Lessee's proportionate
share of real property tax increases shall be the ratio of the increase that the
total number of square feet in the buildings and other improvements located on
the real property assessed on the tax bill, and of which the Leased Premises is
a part.
(2) Upon any increase in real property taxes, Lessor shall notify
Lessee of Lessor's calculation of Lessee's proportionate share of the real
property taxes and together with such notice shall furnish Lessee with a copy of
the tax bill, including the tax bill for the base year. Lessee shall reimburse
Lessor for Lessee's proportionate share of the increase in real property taxes
not later than twenty (20) days before the Palm Beach County, Florida, taxing
authority's delinquency date or ten (l0) days after Lessee's receipt of the tax
bill, whichever event is later.
12. Utilities. Lessee shall be responsible for obtaining at its own
expense water and sewer service, telephone, electric service and garbage
collection for the Leased Premises.
13. Insurance.
---------
(a) Lessor shall, during the term of this Lease, maintain and pay for
hazard insurance on the Leased Premises, except as expressly provided otherwise
in subparagraph (b) below.
(b) Lessee shall indemnify, protect and save harmless Lessor from and
against any and all claims, suits, actions, damages, liability or causes of
action arising during the term of this Lease for any personal injury, loss of
life, or damage to property incurred by or as a result of any act of negligence
of Lessee, or any of its agents, servants or employees, in, on or about the
Leased Premises, and shall at all time, at Lessee's own expense, protect Lessor
with public liability insurance and property damage insurance in a responsible
insurance company or companies authorized to do business in this State in such
form as may be reasonably satisfactory to Lessor, in amounts not less than seven
hundred fifty thousand ($750,000) in case of death or injury to one person and
not less than one million five hundred thousand Dollars ($1,500,000) in case of
death or injury to more than one person, or any one occurrence or incident. The
property damage insurance coverage required hereunder shall not be less than
seventy-five thousand Dollars ($75,000) in case of damage to property arising
out of one occurrence or incident. Lessee will, upon Lessor's request, furnish
evidence that such insurance is in full force and effect. Each insurance policy
shall carry an endorsement requiring that, before changing or canceling any
policy, the insurance company issuing the same shall provide Lessor at least ten
(l0) days prior written notice of such change or cancellation. Lessee agrees
that if such insurance policies are not kept in force during the entire term of
this Lease and any extension thereof, Lessor may
4
<PAGE>
procure the necessary insurance and pay the premium therefor, and that such
premium shall be repaid to Lessor as an additional rent installment for the
month following the date on which such premiums are paid.
14. Damage to Leased Premises. Partial or total destruction of the Leased
Premises shall not render this Lease void or voidable, nor terminate it except
as herein provided.
(a) If the Leased Premises are partially destroyed during the term of this
Lease, Lessor shall endeavor to repair the Leased Premises in conformity with
governmental laws and regulations within sixty (60) days of the partial
destruction.
(b) In the event of total loss or damage to the Leased Premises, Lessor
shall have the option of either (i) relocating Lessee to comparable warehouse
space in another building, or (ii) restoring the Leased Premises to their former
condition, in either event, the terms and conditions of this Lease shall remain
in full force and effect. If Lessor elects to restore the Leased Premises,
Lessor shall within ten (l0) days after the casualty, provide Lessee with
written notice of such intention to restore, and shall restore the Leased
Premises to its former condition within a reasonable time after such notice to
Lessee. If Lessor does not restore the Leased Premises to its former condition
within a reasonable time after Lessor's notice to Lessee, then Lessee may
terminate this Lease, and possession shall be immediately restored to Lessor and
Lessee thereafter shall be released from any further obligation under this
Lease.
15. Condemnation. If the Leased Premises, or any part thereof, is taken or
condemned for a public or quasi-public use, this Lease shall, as to the part so
taken, terminate as of the date title shall vest in the condemnor and rent
reserved shall abate proportionately as to the part so taken or shall cease if
the entire premises be so taken. At Lessee's option, if a substantial portion of
the Leased Premises shall be taken, this Lease shall terminate.
16. Subordination and Estoppel. This Lease, and any and all rents,
options, liens and charges created hereby, are, and at all times shall be,
subject and subordinate to all present and future mortgages which may affect the
Leased Premises and to all recastings, renewals, modifications, consolidations,
replacements, and extensions of any such mortgage(s); provided, however, that so
long as Lessee faithfully discharges its obligations under the terms of this
Lease, its tenancy will not be disturbed.
(a) Lessee shall, upon demand, without cost to Lessor, execute any
statement or instrument necessary to effectuate such subordination. If Lessee ,
within fifteen (l5) days after submission of such instrument to Lessee for
execution, shall fail to execute the same, then Lessor is hereby authorized to
execute the same as attorney-in-fact for Lessee. The foregoing notwithstanding,
the subordination provided for herein shall be self-operative, and no further
instrument of subordination need be obtained to effect the same.
(b) If any mortgagee comes into possession or ownership of the Leased
Premises, whether by foreclosure or otherwise, Lessee shall attorn to such
mortgagee. Lessee shall not be
5
<PAGE>
entitled in any such case to a credit for any rent or other sums due hereunder
which has been paid for more than one month in advance.
(c) If any such mortgagee shall request reasonable modifications to this
Lease as a condition to disbursing any monies to be secured by such mortgagee's
mortgage, Lessee agrees that, within five (5) days after receipt by Lessee of
such request from such mortgagee, Lessee shall execute and deliver to such
mortgagee an agreement, in form and substance satisfactory to such mortgagee,
evidencing such modifications; provided that such modifications do not increase
Lessee's obligations under this Lease, or materially and adversely affect
either: (a) the leasehold interest created by this Lease, or (b) Lessee's use
and occupancy of the Leased Premises.
(d) Lessee also agrees to execute and return such instrument as Lessor or
any mortgagee of the Leases Premises may request, within seven (7) days after
receipt of such request, certifying whether the Lease is in full force and
effect, listing any modifications thereof, identifying the Leased Premises,
stating the term of the Lease together with any options, stating the current
annual fixed rent due under the Lease, and representing that Lessee has made no
assignment or sublease of the Lease. This statement, commonly known as an
estoppel certificate, is intended to be for the benefit of Lessor, any purchaser
from or mortgagee of Lessor, and any purchaser or assignee of Lessor's
mortgagee, and failure by Lessee to execute the same within the time period
provided herein shall constitute confirmation by Lessee that this Lease is in
full force and effect and unmodified, and that Lessee has no right to withhold
or deduct any rent thereunder.
17. Lessee's Default. Each of the following events shall constitute a
default hereunder by Lessee and a breach of this Lease.
(a) If Lessee shall fail to pay to Lessor any rent when due and payable
and shall not make such payment within fifteen (15) days thereafter.
(b) If Lessee or any successor or any assignee of Lessee while in
possession shall file a petition in bankruptcy, or if there commences under any
law relating to bankruptcy, insolvency, reorganization, or relief of debtors,
proceedings for the relief of Lessee or if Lessee shall be dissolved or shall
make an assignment for the benefit of creditors, and if any such petition or
proceedings hereinabove described is not dismissed or withdrawn within thirty
(30) days after the filing of the entry into the same.
(c) If involuntary proceedings under any law relating to bankruptcy,
insolvency, reorganization, or relief of debtors, for the relief of Lessee or
for the dissolution of Lessee shall be instituted against Lessee or any
successor or assignee, or if a receiver or trustee shall be appointed of all or
substantially all of the property of Lessee or any successor or assignee and if
such proceedings are not dismissed or withdrawn within thirty (30) days of the
filing of or entry into the same.
(d) If Lessee shall violate or fail to perform any of the conditions on
Lessee's part to be performed pursuant to this Lease and if such violation or
nonperformance shall continue for a period of ten (l0) days after written notice
thereof by Lessor or Lessee, or, if such performance
6
<PAGE>
cannot be fulfilled reasonably within such ten (l0) day period, Lessee shall not
in good faith have commenced such performance within such ten (l0) day period
and shall not diligently proceed therewith to completion.
(e) If Lessee shall vacate or abandon the Premises for a period of ten
(l0) days or more and if such vacation or abandonment continues for ten (l0)
additional days after written notice thereof by Lessor to Lessee.
(f) If this Lease or the interest of Lessee hereunder shall be transferred
or assigned in a manner other than herein permitted.
18. Lessor's Rights Upon Default. In the event of any default Lessor may
at its option:
(a) Terminate this Lease and re-enter upon the Leased Premises whereupon
the term hereby granted shall terminate, or, at Lessor's option, all right,
title and interest of Lessee in or under this Lease shall end and the Lessee
shall become a tenant at sufferance.
(b) Declare the entire rent for the remainder of the term following the
default due and payable forthwith and proceed to collect the same either by
distress or otherwise and thereupon said term shall terminate.
(c) Take possession of the Leased Premises and rent the same for the
account of Lessee.
(d) Lessor's exercise or failure to exercise of any of the collective
remedies stated herein shall not be deemed to constitute a waiver of Lessor's
rights with respect to any other collective remedies available to Lessor at law
or in equity. Lessor's waiver of breach of any one covenant or condition of this
Lease is not a waiver of breach of other covenants or conditions nor of a
subsequent breach of any condition waived. Lessor's acceptance of rent payments
after breach is not a waiver of the breach, except of breach of the covenant to
pay any rent when due, and Lessor's acceptance of rental payments past due shall
not be construed as a waiver or refusal to accept payments past due in the
future.
(e) In the event that legal action is necessary to enforce any of Lessor's
rights, Lessee hereby agrees to pay to Lessor reasonable attorney's fees
incurred by Lessor for services so rendered together with all costs, charges and
expenses of such legal action.
19. Additional Security. Lessee does hereby grant, assign, transfer and
set over unto Lessor all equipment, furniture, fixtures, goods, chattels, tools
and other property now owned or hereafter acquired by Lessee and placed in the
Leased Premises, as collateral security for the payment of the rent herein
reserved and for the performance of the covenants and conditions of this Lease
to be kept and performed by Lessee. Lessee does hereby covenant and agree that
said lien may be enforced by distress, foreclosure or other proceedings at the
option of Lessor. Lessee further covenants and agrees that should Lessor be
required to enforce this or any other provision of this Lease, Lessee will pay
all costs thereby incurred, including a reasonable attorney's fee.
7
<PAGE>
20. Termination. Upon the expiration or earlier termination of the term
hereof, or any extensions thereof, Lessee covenants to surrender and yield up
peacefully and quietly to Lessor, possession of the Leased Premises in as good
condition as they were at the time of delivery of possession as herein provided,
reasonable wear and tear and damages by fire or the elements excepted. Lessee
may remove its trade fixtures, equipment and other items of personal property
which it may have stored or installed in the Leased Premises, provided, however,
that fixtures or equipment connected directly to the plumbing or electrical
systems in the Leased Premises shall be property of Lessor and may not be
removed without Lessor's consent. Lessee shall repair any damage to the Leased
Premises which was caused by such removal, and restore to original condition.
21. Lessor's Covenants. Lessor covenants that at all times during which
Lessee is not in default under the terms of this Lease, Lessee's quiet and
peaceful enjoyment of the Leased Premises shall not be disturbed by anyone
claiming under or through Lessor.
22. Miscellaneous.
-------------
(a) Notice. All notices to the parties shall be sent by hand delivery or
United States mail, addressed to the parties at their addresses as listed on
page l hereof.
(b) Entire Agreement. It is agreed that this Lease contains the entire
agreement between the parties and no rights are to be conferred upon Lessor
until this Lease has been executed by Lessee.
(c) Captions. The captions contained herein are for convenience and
reference only and shall not necessarily be deemed as part of this Lease or
construed as in any manner limiting, amplifying, or altering the terms and
provisions of this Lease to which they relate.
(d) Successors and Assigns. This contract shall bind Lessor and its
assigns or successors, and the assigns, administrators, legal representatives,
executors or successors, as the case, may be of Lessee.
[The next page is the signature page.]
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease the day and year
first above written.
LESSEE:
NETMAXIMIZER.COM, INC.
/s/ David A. Saltrelli
------------------------------
By: David Saltrelli
Its President
LESSOR:
AMERICAN SALES INDUSTRIES
/s/ Pat Talerico
------------------------------
By: Pat Talerico
Its President
9
AMERICAN SALES INDUSTRIES
3560 Investment Lane
Riviera Beach, Florida 33404
March 14, 2000
NetMaximizer.com, Inc.
4400 North Federal Highway, Suite 407
Boca Raton, Florida 33431
Gentlemen:
You have advised us that you propose to assume for yourselves the
warehousing and fulfillment services that we have been performing with regard to
certain products (the "Products") that you have been selling through the
NetMaximizer.com, Inc. Internet store or otherwise to your customers (each a
"Customer"). Separately, you and we have agreed to a lease regarding a portion
of our warehouse space, located at 3560 Investment Lane, Suite 201, Riviera
Beach, Florida 33404 (the "Leased Premises"). You have asked that we act as your
non-exclusive purchasing agent to acquire and have the Products delivered to the
Leased Premises. This agreement ("Agreement") sets forth the terms and
conditions under which we will act as your non-exclusive purchasing agent.
23. We have relationships with various suppliers of the Products that enable us
to establish and maintain a price list (the "Price List") for the Products. Our
Price List will include all costs to be paid by you with regard to delivery of
the Product, but will not include our fee for acting as your purchasing agent,
as provided in paragraph 5, below. You may also have other purchasing agents for
some or all of the Products and you will have the ability to purchase the
Products yourselves. You will use our Price List and, based upon the cost per
item quoted on the Price List (as compared with the prices quoted by other
purchasing agents or available directly to you from a Product supplier), you
may, in your absolute discretion, place orders ("Purchase Orders") with us from
time-to-time which you will direct that we cause to be filled.
o We are responsible to ensure that any amendments to the Price List are
provided to you on a timely basis.
o In the event that the item cost has changed from that contained in the
Price List which you used to base your Purchase Order, we will have
two alternatives upon receipt of your Purchase Order: (a) we can
notify you within one (1) business day that we cannot provide the
Product at the quoted price and inform you of the current price,
holding that portion of your Purchase Order pending your decision
regarding purchase at the amended price (but fulfilling our
responsibilities to order the other
<PAGE>
Products, the price for which was correct on the Price List); or (b),
in the event that we either (i) fail to notify you or (ii) choose in
our discretion to do so, we will fill the Purchase Order at the price
indicated on the Price List.
24. We will direct (the "Supply Order") the Product suppliers to deliver the
Products to you at the Leased Premises according to the schedule that you have
requested in the Purchase Order (e.g., next day, two-day, ground). Until the
Products are delivered to the Leased Premises, all risk of loss or damage to the
Products will remain with the Product supplier or with us, but in no event will
you assume any of such risk.
25. Upon receipt of the Products, you will have the customary, commercially
reasonable time to accept or reject the goods; provided, however, that if you
pick and pack any Product item for shipment to your Customer, you will be deemed
to have accepted that Product item (but not all like Product items) at the time
of such packing. You will maintain records by Product Order number of all
Product items actually received, of the Product items accepted and of the
Product items rejected and returned to the Product supplier. This information
will be reported to us (the "Weekly Reconciliation Report") by Wednesday
(provided that Wednesday is a business day, but if it is not, by the next
business day thereafter) of the week following the Delivery Week (defined
below).
26. No Supply Order will permit the disclaimer of warranties of merchantability
or, as appropriate, fitness for a particular purpose by a Product supplier, nor
shall we otherwise permit any Product supplier to limit their Product
warranties. As your non-exclusive purchasing agent, however, we make no
warranties to you or to your Customers with regard to the Products.
o In the event that any Product is returned to you by your Customer, we
assume no responsibility to you with regard to such returned Product.
27. For acting as your non-exclusive purchasing agent in connection with the
purchase of Products, we shall be entitled to receive and you hereby agree to
pay to us upon consummation of each Supply Order, a fee (your "Purchasing Agent
Fee") determined as follows: for each item delivered and accepted the unit price
of which is less than $5.00, a per item fee of $0.50; for each item delivered
and accepted the unit price of which is equal to or greater than $5.00 but less
than $10.00, a per item fee of $0.75; and for each item delivered and accepted
the unit price of which is equal to or greater than $10.00, a per item fee of
$1.00. We shall be due no other fee or compensation in connection with acting as
your non-exclusive purchasing agent.
o In determining the "per item fee" for purposes of this paragraph, the
unit price as indicated on the Price List (or determined in accordance
with the Price List) for the quantity of units actually delivered
shall control. That is, if the Price List indicates that the per unit
price is $5.00 if the quantity ordered is ten or fewer, but the per
unit price is $4.75 if the quantity ordered is greater than ten, the
Purchasing Agent Fee
2
<PAGE>
shall be determined in accordance with the quantity actually delivered
pursuant to the Supply Order.
28. Payment and Reconciliation.
--------------------------
o At the time you deliver to us your Purchase Order, you agree to
deliver the total purchase price of the Products ordered
("Deposited Monies"), determined in accordance with the Price
List.
o We will identify any excess of Deposited Monies as follows: For
purposes of this paragraph, Products accepted during the period
beginning on Saturday and ending on the following Friday shall be
deemed to be purchased by you in that "Delivery Week," regardless
of the week during which the Purchase Order for such Product was
submitted to us or during which the Products were physically
delivered to the Leased Premises. By close of business on
Thursday of the week following the Delivery Week, we will use the
Weekly Reconciliation Report for that Delivery Week to determine
the excess, if any, of the Deposited Monies with regard to
Products accepted, relative to particular Purchase Orders to
which those Deposited Monies relate.
o We will credit the amount of such deviation, if any, against the
Purchasing Agent Fee due as the result of the activity of that
Delivery Week and invoice you for the balance of the Purchasing
Agent Fee due. In the event the result of that reconciliation is
less than $1,000 (whether that amount is due to us as additional
Purchasing Agent Fees or due to you as a refund of Deposited
Monies), we will carry that amount forward to the next week. In
any other event, the reconciliation amount shall be due to the
owed party on Friday of the week following the Delivery Week (but
if such Friday is not a business day, then on the next business
day).
29. We are an independent contractor. Except with regard to Supply Orders, our
personnel have no authority to make commitments, enter into contracts on behalf
of, bind or otherwise obligate NetMaximizer.com, Inc. in any manner whatsoever.
As a result of our acting as your non-exclusive purchasing agent, 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.
30. Indemnification.
---------------
o Except as limited in the next subparagraph, you agree to
indemnify and hold us harmless from any and all loss, liability,
cost, damages, and expenses (including reasonable attorneys'
fees) on account of any and all manner of claims, demands,
actions and proceedings that may be instituted against us by (a)
your Customers
3
<PAGE>
arising from or involving any Product or (b) any third party
arising from this Agreement. You shall have the sole right to
conduct the defense of any such claim or action and all
negotiations for its settlement or compromise; provided, however,
that we may, at our own expense, fully participate with your full
cooperation in such defense to protect our own interests, if we
determine that such participation is necessary. We agree to
cooperate with you, at your expense, and provide copies of any
documents or materials reasonably requested by you in support of
your defense of us hereunder, unless otherwise mutually agreed
upon in writing.
o Because we want to protect our relationships with our Product
suppliers, we agree to defend and/or handle at our own expense,
any claim or action against you by any Product supplier arising
from a Supply Order. You will give us prompt notice of any such
claim or action and copies of all papers served upon or received
by you relating to same. We further agree to indemnify and hold
you harmless from and against any and all liabilities, losses,
costs, damages and expenses (including reasonable attorneys'
fees) associated with any such claim or action, unless such claim
arose from your gross negligence. We shall have the sole right to
conduct the defense of any such claim or action and all
negotiations for its settlement or compromise; provided, however,
that you may, at your own expense, fully participate with our
full cooperation in such defense to protect your own interests,
if you determine that such participation is necessary. You agree
to cooperate with us, at our expense, and provide copies of any
documents or materials reasonably requested by us in support of
our defense of you hereunder, unless otherwise mutually agreed
upon in writing.
31. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand delivered, or
telexed or telegraphed and confirmed by letter, to the party to whom it is
addressed at the address set forth above. All notices hereunder shall be
effective upon receipt by the party to which it is addressed.
32. The benefits of this Agreement shall inure to our respective successors and
assigns and their successors and assigns and representatives, and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns; provided, that
the rights and obligations of either party under this Agreement may not be
assigned without the prior written consent of the other party hereto and any
other purported assignment shall be null and void.
33. This Agreement shall be governed by, and construed in accordance with the
laws of the State of Florida, without regard to choice-of-law principles, as if
made and to be performed solely in Florida.
A. The parties shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement by negotiation between an American
Sales Industries executive and a NetMaximizer.com, Inc. executive who has
authority to settle the controversy and who is at a
4
<PAGE>
higher level of management (if any) than the person with direct responsibility
for the administration of this Agreement. Either party may give the other party
written notice of any dispute not resolved in the normal course of business.
Within five (5) business days after delivery of the notice, the party receiving
the notice shall submit a written response to the other party. The notice and
the response shall include (i) a statement of each party's position and a
summary of arguments supporting that position and (ii) the name and title of the
executive who represents that party and of any other person who will accompany
the executive. Within five (5) business days after delivery of the response, the
executives of both parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary to attempt to resolve
the dispute. All reasonable requests for information made by one party to the
other will be honored. If the matter has not been resolved within thirty (30)
days of the disputing party's notice, or if the parties fail to meet within
fifteen (15) days of the delivery of the notice, either party may initiate
arbitration of the controversy or claim as provided hereinafter. All
negotiations pursuant to this clause are confidential and shall be treated as
compromise and settlement negotiations for purposes of the Florida and Federal
Rules of Evidence.
B. Except with regard to the confidentiality provisions of paragraph 7
and the indemnification provisions of paragraph 8, any disputes between us with
respect to the agreements contained in this Agreement are to be settled by
binding arbitration conducted pursuant to the commercial arbitration rules of
the American Arbitration Association in Palm Beach County, Florida. In any such
arbitration the scope and timing of any discovery shall be determined by the
arbitrators. Such arbitration is to be the sole remedy for the settlement of
such disputes.
C. With regard to confidentiality and indemnity disputes, each of us
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Florida and of the United States of
America, in each case located in the County of Palm Beach, for any action,
proceeding or investigation in any court or before any governmental authority
("Litigation") arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in this Agreement shall be effective service of process for any Litigation
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of Florida or the United States of America, in
each case located in the County of Palm Beach, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such Litigation brought in any such court has been brought in an
inconvenient forum.
5
<PAGE>
If the foregoing correctly sets forth our agreement, please sign two
copies of this letter in the space provided below and return one of the executed
copies to us.
Very truly yours,
AMERICAN SALES INDUSTRIES
/s/ Pat Talerico
-----------------------------
By: Pat Talerico
Its President
Confirmed and Agreed to
this __ day of March, 2000
NETMAXIMIZER.COM, INC.
/s/ David A. Saltrelli
- -----------------------------
By: David Saltrelli
Its President
6
EXHIBIT "A" to SUBSCRIPTION AGREEMENT
-------------------------------------
THIS NOTE IS NONNEGOTIABLE AND, AS SUCH, IS NON-TRANSFERABLE. IT HAS NOT BEEN
REGISTERED UNDER THE SECURITIES LAWS OF THE UNITED STATES OF AMERICA OR ANY
STATE THEREOF. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND,
EVEN IF SUBSEQUENTLY AMENDED TO BE NEGOTIABLE, NO INTEREST IN THIS NOTE MAY BE
OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF REGISTRATION AND QUALIFICATION OF THIS NOTE UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN OPINION OF COUNSEL OF THE
PAYEE REASONABLY SATISFACTORY TO THE PAYOR THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED.
NETMAXIMIZER.COM, INC.
NON-NEGOTIABLE 9% PROMISSORY NOTE
---------------------------------
$1,363,975.00 As of February 8, 2000
FOR VALUE RECEIVED, the undersigned, NETMAXIMIZER.COM, INC., a Florida
corporation (the "Payor"), having its executive office and principal place of
business at 4400 N. Federal Highway, Suite 307, Boca Raton, FL 33431, hereby
promises to pay to MONAVIA LIMITED, a corporation organized and legally existing
under the laws of the Isle of Man (the "Payee"), having an address at
International House, Castle Hill, Victoria Road, Douglas, British Isles 1M24RB,
on or before February 7, 2003 (the "Maturity Date"), at the Payee's address set
forth hereinabove or, at such other place as the Payee shall hereafter specify
in writing, the principal sum of One Million Three Hundred Sixty-three Thousand
Nine Hundred and Seventy-five and No/100 Dollars ($1,363,975) Dollars, in
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
1. Interest and Payment.
--------------------
1.1 The unpaid principal amount hereof shall bear interest
from the date hereof at the rate of nine percent (9%) per annum until the
Maturity Date (or until any such earlier date of payment if this Note is
prepaid).
1.2 Interest shall accrue and be payable on a quarterly basis
beginning June 30, 2000 and shall continue until the Maturity Date (or on any
such earlier date of payment if this Note is prepaid or converted into shares of
the Payee's common stock as hereinafter provided).
<PAGE>
2. Prepayment. At the option of the Payor, this Note may be prepaid in
whole or in part from time to time, without penalty or premium. Each partial
prepayment of this Note shall first be applied to interest accrued through the
date of prepayment and then to principal. Prior to any such prepayment, the
Payor will mail a notice of such prepayment to the Payee no less than 15 and no
more than 30 days prior to the date fixed for such prepayment.
3. Covenants of the Payor. The Payor covenants and agrees that, so long
as this Note remains outstanding and unpaid, in whole or in part, the Payor:
3.1 Shall not sell, transfer or in any other manner alienate
or dispose of a material part of its assets; provided, however, that the Payor
may effect such a transaction if the transaction is a bona-fide transaction in
which fair market value is received and no Event of Default or any condition or
event which, with notice or lapse of time or both, would become an Event of
Default has occurred or would occur after giving effect to such transaction;
3.2 Shall not make any loans to any person who is or becomes a
shareholder of the Payor, other than for reasonable advances for
expenses in the ordinary course of business;
3.3 Shall promptly pay and discharge all lawful taxes,
assessments and governmental charges or levies imposed upon the Payor
or upon its income and profits, or upon any of its property, before the
same shall become in default, as well as all lawful claims for labor,
materials and supplies which, if unpaid, might become a lien or charge
upon such properties or any part thereof; provided, however, that the
Payor shall not be required to pay and discharge any such tax,
assessment, charge, levy or claim so long as the validity thereof shall
be contested in good faith by appropriate proceedings and the Payor
shall set aside on its books adequate reserves with respect to any such
tax, assessment, charge, levy or claim so contested;
3.4 Shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence,
rights and franchises and comply with all laws applicable to the Payor
as interpreted by its counsel;
3.5 Shall keep adequately insured by financially sound
reputable insurers, all property of a character usually insured by
similar corporations and carry such other insurance as is usually
carried by similar corporations;
3.6 Shall promptly upon the occurrence of a condition or event
which is, to the best knowledge and belief of the Payor's President, an
Event of Default or of any condition or event which, with notice or
lapse of time or both, would constitute, to the best knowledge and
belief of the Payor's President, an Event of Default, furnish a
statement of the Payor and of the Payor's President to the Payee
setting forth the details of such Event of Default or condition or
event and the action which the Payor intends to take with respect
thereto; and
2
<PAGE>
3.7 Shall, at all times, keep its books, records and accounts
true and correct in all material ways.
4. Events of Default. If any of the following conditions, events or
acts shall occur:
4.1 The dissolution of the Payor or any successful vote in
favor thereof by the Board of Directors and shareholders of the Payor;
or
4.2 The Payor's insolvency, assignment for the benefit of
creditors, application for or appointment of a receiver, filing of a
voluntary petition under any provision of the Federal Bankruptcy Code
or amendments thereto or any other federal or state statute affording
relief to debtors; or there shall be commenced against the Payor any
such proceeding or filed against the Payor any such application or
petition which proceeding, application or petition is not dismissed or
withdrawn within thirty (30) days of commencement or filing as the case
may be; or
4.3 The failure by the Payor to make any payment of any amount
of principal on, or accrued interest under this Note, as and when the
same shall become due and payable and the continuance of such failure
for a period of thirty (30) days after written notice thereof is given
to Payor; or
4.4 The admission in writing of the Payor's inability to pay
its debts as they mature; or
4.5 The sale by the Payor of all or substantially all of its
assets; or the merger or consolidation by the Payor with or into
another corporation which results in any change in the ownership of the
shares of the resulting entity when compared to that of the Payor
immediately prior to such merger or consolidation; or
4.6 The commencement of a proceeding to foreclose the security
interest or lien in any property or assets to satisfy the security
interest or lien therein of any secured creditor of the Payor whose
debt is in excess of fifty thousand dollars ($50,000) provided that
such action is not dismissed within thirty (30) days after Payor
receives notice thereof; or
4.7 The entry of a final judgment for the payment of money in
excess of fifty thousand dollars ($50,000) by a court of competent
jurisdiction against the Payor, which judgment the Payor shall not
discharge (or provide for such discharge) in accordance with its terms
within thirty (30) days of the date of entry thereof, or procure a stay
of execution thereof within thirty (30) days from the date of entry
thereof and, within such thirty (30) day period, or such longer period
during which execution of such judgment shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such
appeal; or
3
<PAGE>
4.8 Any attachment or levy, or the issuance of any note of
eviction against the assets or properties of the Payor involving an
amount in excess of fifty thousand dollars ($50,000) which attachment,
levy or issuance is not dismissed, bonded, or otherwise terminated
within thirty (30) days of the effectiveness of such attachment, levy
or issuance; or
4.9 The default in the due observance or performance of any
covenant, condition or agreement on the part of the Payor to be
observed or performed pursuant to the terms hereof and such default
shall continue uncured for thirty (30) days after written notice
thereof, specifying such default, shall have been given to the Payor by
the holder of this Note, then, in any such event and at any time
thereafter while such Event of Default is continuing, the Payee shall
have the right to declare an event of default hereunder ("Event of
Default"), provided that, upon the occurrence of an event described in
Subsections 6.1 or 6.2, such event shall be deemed to be an Event of
Default hereunder whether or not the Payor makes such a declaration (an
"Automatic Default"), and the indebtedness evidenced by this Note shall
immediately upon such declaration or Automatic Default become due and
payable, both as to principal and interest, without presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived, notwithstanding anything contained herein to the
contrary.
5. Suits for Enforcement and Remedies. If any one or more defaults
shall occur and be continuing, the Payee may proceed to protect and enforce
Payee's rights either by suit in equity or by action at law, or both, whether
for the specific performance of any covenant, condition or agreement contained
in this Note or in any applicable agreement or document referred to herein or in
aid of the exercise of any power granted in this Note or in any agreement or
document referred to herein, or proceed to enforce the payment of this Note or
to enforce any other legal or equitable right of the holder of this Note. No
right or remedy herein or in any other agreement or instrument conferred upon
the holder of this Note is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
6. Unconditional Fees; Waivers; Other.
-----------------------------------
6.1 The obligations to make the payments provided for in this
Note are absolute and unconditional and not subject to any defense,
set-off, counterclaim, rescission, recoupment or adjustment whatsoever.
6.2 If the Payee shall institute any action to enforce the
collection of any amount of principal of and/or interest on this Note,
there shall be immediately due and payable from the Payor, in addition
to the then unpaid sum of this Note, all reasonable costs and expenses
incurred by the Payee in connection therewith, including, without
limitation, reasonable attorneys' fees and disbursements.
4
<PAGE>
6.3 No forbearance, indulgence, delay or failsafe to exercise
any right or remedy with respect to this Note shall operate as a
waiver, nor as an acquiescence in any default, nor shall any single or
partial exercise of any right or remedy preclude any other of further
exercise thereof or the exercise of any other right or remedy.
6.4 This Note may not be modified or discharged except by a
writing duly executed by the Payor and the Payee.
6.5 The Payor hereby expressly waives demand and presentment
for payment, notice of nonpayment, notice of dishonor, protest, notice
of protest, bringing of suit, and diligence in taking any action to
collect amounts called for hereunder, and shall be directly and
primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice (other than as expressly
provided for herein), diligence, act or omission with respect to the
collection of any amount called for hereunder or in connection with any
right, lien, interest or property at any and all times which the Payee
had or is existing as security for any amount called for hereunder.
6.6 The Payor shall bear all of its expenses, including,
without limitation, attorneys' fees incurred in connection with the
preparation of this Note.
7. RESTRICTION ON TRANSFER. THIS NOTE IS NONNEGOTIABLE AND, AS SUCH, IS
NON-TRANSFERABLE. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF
THE UNITED STATES OF AMERICA OR ANY STATE THEREOF. THIS NOTE HAS BEEN ACQUIRED
FOR INVESTMENT PURPOSES ONLY AND, EVEN IF SUBSEQUENTLY AMENDED TO BE NEGOTIABLE,
NO INTEREST IN THIS NOTE MAY BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION AND
QUALIFICATION OF SUCH SALE UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL OF THE PAYEE REASONABLY SATISFACTORY TO THE PAYOR THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
8. Investment Representations.
---------------------------
8.1 The Payee has been provided with access to all information
deemed to be relevant by the Payor in connection with this debt
financing and concerning the Payor and the proposed operations of the
Payor for the purpose of making an informed investment decision as to
the purchase of the Note subscribed for hereby.
8.2 The Payee is a corporation organized and legally existing
under the laws of the Isle of Man is an accredited investor as defined
in Rule 501(a) of Regulation D of the Securities Act of 1933 (the
"Act").
8.3 The Payee acknowledges that the offer and sale of the Note
is being made without the use of a Private Placement Memorandum. The
Payee understands and has
5
<PAGE>
evaluated the merits and risks of an investment in the Payor and the
purchase of the Note. The Payee acknowledges that (i) the purchase of
the Note is a speculative investment and involves a high degree of
risk; (ii) no Federal or State agency has made any finding or
determination as to the fairness of such investment or any
recommendation or endorsement of it; (iii) there is not and will not be
in the foreseeable future a market for the sale of the Note by the
Payee, and (iv) the operations of the Payor are dependent on the
Payor's ability to generate substantial income or to secure additional
financing, and there can be no assurance that such income will be
generated and there are no existing arrangements with respect to such
financing being available and no assurance that it will become
available.
8.4 The Payee is able to bear the economic risk of an
investment in the Payee and the purchase of the Note in that, among
other factors, such Payee can afford to hold Note for an indefinite
period and can afford a complete loss of the investment in the Payee.
8.5 The Payee is relying solely on the financial and tax
advice of his own advisor(s) with respect to an investment in the Payee
and the purchase of the Note.
8.6 The Payee is acquiring the Note for his own account as
principal and not with a view to resale or distribution.
8.7 All documents, records and books pertaining to the sale of
the Note or the existing or projected operations of the Payor have been
made available for inspection to the Payee, and the books and records
of the Payor will be available upon reasonable notice, for inspection
by Payee during reasonable business hours at its principal place of
business.
8.8 The Payee has not authorized any broker, dealer, agent or
finder to act on his behalf, nor has any knowledge of any broker,
dealer, agent or finder purporting to act on his behalf, with respect
to this transaction.
9. Miscellaneous.
--------------
9.1 The headings of the various paragraphs of this Note are
for convenience of reference only and shall in no way modify any of the
terms or provisions of this Note.
9.2 All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been duly given when
personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, to the address of the intended
recipient set forth in the preamble to this Note or at such other
address as the intended recipient shall have hereafter given to the
other party hereto pursuant to the provisions hereof.
6
<PAGE>
9.3 This Note and the obligations of the Payor and the rights
of the Payee shall be governed by and construed in accordance with the
laws of the State of Florida with respect to contracts made and to be
fully performed therein.
9.4 The Payor (a) agrees that any legal suit, action or
proceeding arising out of or relating to this Note will be instituted
exclusively in the courts of Broward County, Florida, or in the United
States District Court for the Southern District of Florida, each and
any of which shall apply Florida law, (b) waives any objection which
the Payor may have now or hereafter to the venue of any such suit,
action or proceeding, and (c) irrevocably consents to the jurisdiction
of the said Courts in any such suit, action or proceeding. The Payor
further agrees to accept and acknowledge service of any and an process
which may be served in any such suit, action or proceeding in the said
Courts and agrees that service of process upon the Payor mailed by
certified mail to the Payor's address will be deemed in every respect
effective service of process upon the Payor, in any such suit, action
or proceeding.
9.5 This Note shall bind the Payor and its successors and
assigns.
9.6 The Payee has the right to cancel and rescind this
transaction provided that written notice of such determination is
delivered to the Payor within three (3) days of the date the Note is
delivered to the Payee.
[Signature page follows.]
NETMAXIMIZER.COM, INC.
By: /s/ David A. Saltrelli
--------------------------
Authorized Signatory
Accepted and agreed to this 8th day of
February, 2000.
MONAVIA LIMITED
By: /s/ Nigel Forrister
-----------------------
Authorized Signatory
7
EXHIBIT "B" TO SUBSCRIPTION AGREEMENT
-------------------------------------
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT. NEITHER SUCH WARRANTS
NOR SUCH SHARES MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH SUCH ACT.
WARRANT TO PURCHASE
681,987 SHARES OF COMMON STOCK,
PAR VALUE $.00l PER SHARE,
OF
NETMAXIMIZER.COM, INC.
This Certifies that, for and in consideration of $15.00 per each share of
Common Stock, par value $.001 per share, initially purchasable pursuant to the
terms of this warrant and other good and valuable consideration, MONAVIA
LIMITED, a corporation organized and legally existing under the laws of the Isle
of Man or its assigns (collectively, the "Warrantholder"), is entitled to
purchase from NETMAXIMIZER.COM, INC., a corporation incorporated under the laws
of the State of Florida (the "Corporation"), subject to the terms and conditions
hereof, at any time at or after 9:00 A.M., Florida time, on February 8, 2000,
and before 5:00 P.M., Florida time on the Expiration Date (as defined herein),
the number of fully paid and nonassessable shares of Common Stock, par value
$.00l per share, of the Corporation stated above at the Exercise Price (as
defined herein).
ARTICLE I
Section 1.01: Definition of Terms. As used in this Warrant, the
following capitalized terms shall have the following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day on
which banks in the State of Florida are authorized by law to remain closed.
(b) Common Stock: Common Stock, $.001 par value per share, of the
Corporation.
(c) Common Stock Equivalents: Securities that are convertible into, or
exercisable or exchangeable for, shares of Common Stock.
(d) Exercise Price: $15.00 per Warrant Share as such price may be
adjusted from time to time pursuant to Article III hereof.
<PAGE>
(e) Expiration Date: 5:00 P.M., Florida time, on the third anniversary
of the Initial Investment Date.
(f) Initial Investment Date: February 8, 2000.
-----------------------
(g) Person: An individual, partnership, joint venture, corporation,
trust, unincorporated organization or government of any department or agency
thereof.
(h) Sale of the Corporation: A consolidation or merger of the
Corporation with or into any other corporation or corporations (other than a
consolidation or merger in which the Corporation is the continuing Corporation),
or a sale, conveyance or disposition of all or substantially all of the assets
of the Corporation or the effectuation by the Corporation of a transaction or
series of related transactions in which more than fifty (50%) percent of the
voting power of the Corporation is disposed of.
(i) Warrant Shares: Shares of Common Stock and/or securities purchased
or purchasable upon exercise of this Warrant.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
Section 2.01: Duration of Warrant. The Warrantholder may exercise this
Warrant at any time and from time to time after 9:00 A.M., Florida time, on
February 8, 2000, and before 5:00 P.M., Florida time, on the Expiration Date. If
this Warrant is not exercised on the Expiration Date, it shall become void, and
all rights hereunder shall thereupon cease.
Section 2.02: Exercise of Warrant.
------------ -------------------
(a) The Warrantholder may exercise this Warrant, in whole or in part,
by presentation and surrender of this Warrant to the Corporation at its
principal corporate office or at the office of its stock transfer agent, if any,
with the subscription form attached hereto as Exhibit A (the "Subscription
Form") duly executed and accompanied by payment of the full Exercise Price for
each Warrant Share to be purchased.
(b) Upon receipt of this Warrant with the Subscription Form fully
executed and accompanied by payment of the aggregate Exercise Price for the
Warrant Shares for which this Warrant is then being exercised, the Corporation
shall cause to be issued certificates for the total number of whole shares of
Common Stock for which this Warrant is being exercised in such denominations as
are requested for delivery to the Warrantholder registered in the name of the
Warrantholder or its nominee, and the Corporation shall thereupon deliver such
certificates to the Warrantholder. The Warrantholder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the
2
<PAGE>
Corporation shall then be closed or that certificates representing such shares
of Common Stock shall not then be actually delivered to the Warrantholder.
(c) In lieu of exercising the Warrant in the manner set forth in
sub-paragraph 2.02(a) and (b) above, and subject to the last sentence of this
sub-paragraph 2.02(c), this Warrant may be exercised without payment of any
other consideration, commission, or remuneration, by presentation and surrender
of the Warrant to the Corporation, together with a written notice of the
Warrantholder's intention to effect a cashless exercise ("Notice of Cashless
Exercise") and the Subscription Form, duly executed. In the event of a Cashless
Exercise, the number of shares to be issued in exchange for the Warrant will be
computed using the following formula:
X = Y (A-B)/A
where:
X = the number of shares of Common Stock to be issued to
the Warrantholder.
Y = the number of shares of Common Stock for which this
Warrant is being exercised.
A = the Closing Bid Price. The Closing Bid Price means
the closing bid price per share of the Common Stock on
the last business day prior to the date of receipt of
the Warrant, the Notice of Cashless Exercise, and the
Subscription Form, on the principal national securities
exchange in the United States on which the Common Stock
is listed or admitted to trading, or if the Common
Stock is not listed or admitted to trading on any such
national securities exchange, the average of the
highest reported bid and lowest reported asked price,
on such day, as furnished by the National Association
of Securities Dealers, Inc. ("Nasdaq") through its
automated quotation system or a similar organization if
Nasdaq is no longer reporting such information.
B = the Warrant Exercise Price
For purposes of Rule 144 and sub-section (d)(3)(iii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued. Notwithstanding anything to the
contrary contained herein, this Warrant may not be exercised in a cashless
exercise transaction if, on the Date of Exercise, the shares of Common Stock to
be issued upon exercise of this Warrant would upon such issuance be then
registered pursuant to an effective and current registration statement.
(c) In case the Warrantholder shall exercise this Warrant with respect
to less than all of the Warrant Shares that may be purchased under this Warrant,
the Corporation shall execute a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
3
<PAGE>
(d) The Corporation shall pay any and all stock transfer and similar
taxes which may be payable in respect of the issue of any Warrant Shares to the
Warrantholder.
Section 2.03: Reservation of Shares. The Corporation hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise of
this Warrant such number of shares of Common Stock from time to time issuable
upon exercise of this Warrant. All such shares shall be duly authorized, and
when issued upon such exercise, shall be validly issued, fully paid and
nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights.
Section 2.04: Fractional Shares. The Corporation shall not be required
to issue any fraction of a share of its capital stock in connection with the
exercise of this Warrant, and in any case where the Warrantholder would, except
for the provisions of this Section 2.04, be entitled under the terms of this
Warrant to receive a fraction of a share upon the exercise of this Warrant, the
Corporation shall, upon the exercise of this Warrant and receipt of the Exercise
Price, issue the largest number of whole shares purchasable upon exercise of
this Warrant. The Corporation shall, in lieu of issuing any fractional share pay
the Warrantholder a sum in cash equal to the fair market value of any such
fractional interest as determined in good faith by the Corporation.
Section 2.05: Listing. Prior to the issuance of any shares of Common
Stock upon exercise of this Warrant, the Corporation shall secure the listing of
such shares of Common Stock upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Corporation shall so list on each national
securities exchange or automated quotation system, and shall maintain such
listing of, any other shares of capital stock of the Corporation issuable upon
the exercise of this Warrant if and so long as any shares of the same class
shall be listed on such national securities exchange or automated quotation
system.
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article III.
Section 3.01: Mechanical Adjustments.
------------ ----------------------
(a) In case the Corporation shall at any time or from time to time
after the date hereof (i) pay any dividend, or make any distribution, on the
outstanding shares of Common Stock (or Common Stock Equivalents) in shares of
Common Stock, (ii) subdivide the outstanding shares of
4
<PAGE>
Common Stock, (iii) combine the outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of the shares of
Common Stock any shares of capital stock of the Corporation, then and in each
such case, the Exercise Price in effect immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the
Warrantholder shall be entitled to receive the number and type of shares of
Common Stock which such Warrantholder would have owned or have been entitled to
receive after the happening of any of the events described above, had such
Warrant been converted into Common Stock immediately prior to the happening of
such event or the record date therefor, whichever is earlier. An adjustment made
pursuant to this Section 3.01(a) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close of business on the
record date for the determination of holders of shares of Common Stock entitled
to receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification or combination, at the close of business on the
day upon which such corporate action becomes effective.
(b) Except with respect to Excluded Securities (as defined below), in
case the Corporation shall issue any shares of Common Stock (or Common Stock
Equivalents) after the date hereof at a consideration per share (or having a
conversion or exercise price per share) less than the Exercise Price, then in
each such case, the Exercise Price shall be adjusted by multiplying (i) the
Exercise Price in effect on the day immediately prior to the date of issuance of
such shares (or Common Stock Equivalents) by (ii) a fraction, the numerator of
which shall be the sum of (x) the number of shares of Common Stock outstanding
on such date prior to such issuance and (y) the number of shares of Common Stock
purchasable at the then Exercise Price with the aggregate consideration
receivable by the Corporation for the total number of shares of Common Stock so
issued (or issuable upon conversion, exchange or exercise of such Common Stock
Equivalents), and the denominator of which shall be the sum of (x) the number of
shares of Common Stock outstanding on such date prior to such issuance and (y)
the number of additional shares of Common Stock issued (or issuable upon
conversion, exchange or exercise of such Common Stock Equivalents.) An
adjustment made pursuant to this Section 3.01(b) shall be made on the next
Business Day following the date on which any such issuance is made and shall be
effective retroactively to the close of business on the date of such issuance.
For purposes of this Section 3.01(b), the aggregate consideration receivable by
the Corporation in connection with the issuance of shares of Common Stock or of
Common Stock Equivalents shall be deemed to be equal to the sum of the aggregate
offering price (e.g., the aggregate consideration received by the Corporation in
connection with the issuance of all such Common Stock and/or Common Stock
Equivalents before deduction of underwriting discounts or commissions and
expenses payable to third parties, if any) of all such Common Stock and/or
Common Stock Equivalents plus the minimum aggregate amount, if any, payable upon
conversion, exchange or exercise of any such Common Stock Equivalents. The
issuance or reissuance of any shares of Common Stock (whether treasury shares or
newly issued shares) pursuant to a dividend or distribution on, or subdivision,
combination or reclassification of, the outstanding shares of Common Stock
requiring an adjustment in the Exercise Price pursuant to Section 3.01(a) shall
not be deemed to constitute an issuance of Common Stock or Common Stock
Equivalents by the Corporation to which this Section 3.01(b) applies. Upon the
expiration of any unconverted, unexchanged or unexercised Common Stock
Equivalents for which an adjustment has been made pursuant to this
5
<PAGE>
Section 3.01(b), the adjustments shall forthwith be reversed to effect such
Exercise Price as would have been in effect if at the time of such Common Stock
Equivalents, to the extent outstanding immediately prior to such expiration or
termination, had never been issued. Excluded Securities shall mean all shares of
Common Stock or Common Stock Equivalents (i) issued and outstanding upon the
Initial Investment Date, or (ii) issued or issuable pursuant to the 1999
Employee Stock Option Plan, (iii) issued or issuable pursuant to the 1999
Non-Employee Director Stock Option Plan, and (iv) executive options issued to
James A Brown in connection with his employment.
(c) For purposes of Subsections (a) through (d) of this Section 3.01,
the number of shares of Common Stock at any time outstanding shall mean the
aggregate of all shares of Common Stock then outstanding (other than any shares
of Common Stock then owned or held by or for the account of the Corporation)
treating for purposes of this calculation all Common Stock Equivalents as having
been converted, exchanged or exercised.
(d) If the Corporation shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution and shall thereafter, and before such dividend or distribution is
paid or delivered to stockholders entitled thereto, legally abandon its plan to
pay or deliver such dividend or distribution, then no adjustment in the Exercise
Price then in effect shall be made by reason of the taking of such record, and
any such adjustment previously made as a result of the taking of such record
shall be reversed.
(e) As used in this Section 3.01 the term "Common Stock" shall mean and
include the Corporation's authorized Common Stock, par value $.001 per share, as
constituted on the date hereof, and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall neither be limited to
a fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends nor be entitled to a preference in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the Corporation.
(f) In the case of a Sale of the Corporation or a proposed
reorganization of the Corporation or a proposed reclassification of the capital
stock of the Corporation (except a transaction for which provision for
adjustment is otherwise made in this Section 3.01), the Warrant shall thereafter
be exercisable into the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon exercise of such Warrant would have been entitled
upon such Sale of the Corporation, reorganization or reclassification; and, in
any such case, appropriate adjustment (as determined by the Board of Directors)
shall be made in the application of the provisions herein set forth with respect
to the rights and interest thereafter of the holders of the Warrant, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the applicable conversion price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
the Warrant. The Corporation shall not effect any such Sale of the Corporation
unless prior to or simultaneously with the consummation thereof the successor
Corporation or
6
<PAGE>
purchaser, as the case may be, shall assume by written instrument the obligation
to deliver to the Warrantholder such shares of stock, securities or assets as,
in accordance with the foregoing provisions, each such holder is entitled to
receive.
(g) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to paragraph (a) or (b) of this Section 3.01, the Warrant
Shares shall simultaneously be adjusted by multiplying the number of Warrant
Shares initially issuable upon exercise of each Warrant (as set forth on the
front page of this Warrant) by $15.00 and dividing the product so obtained by
the Exercise Price, as adjusted.
(h) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one cent ($.01) in
such price; provided, however, that any adjustments which by reason of this
paragraph (h) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
3.01 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Notwithstanding anything in this Section 3.01 to the
contrary, the Exercise Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.
(i) In the event that at any time, as a result of any adjustment made
pursuant to Section 3.01(a), the Warrantholder thereafter shall become entitled
to receive any shares of capital stock of the Corporation other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 3.01(a).
Section 3.02: Notices of Adjustment. Whenever the number of Warrant
Shares or the Exercise Price is adjusted as herein provided, the Corporation
shall prepare and deliver forthwith to the Warrantholder a certificate signed by
its President or a Vice President, or by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary, setting forth the adjusted number of
shares purchasable upon the exercise of this Warrant and the Exercise Price of
such shares after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which adjustment
was made.
Section 3.03: Form of Warrant After Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Exercise Price or
the number or kind of the Warrant Shares, and Warrants theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant, as initially issued.
Section 3.04: Treatment of Warrantholder. Prior to due presentment for
registration of transfer of this Warrant, the Corporation may deem and treat the
Warrantholder as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for all purposes and shall not be
affected by any notice to the contrary.
7
<PAGE>
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
Section 4.01: No Rights as Shareholders; Notice to Warrantholders.
Nothing contained in this Warrant shall be construed as conferring upon the
Warrantholder the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of shareholders for
the election of directors of the Corporation or of any other matter, or any
rights whatsoever as shareholders of the Corporation. The Corporation shall give
notice to the Warrantholder by certified mail if at any time prior to the
expiration or exercise in full of the Warrants, any of the following events
shall occur:
(a) the Corporation shall declare any dividend or distribution with
respect to its capital stock;
(b) a dissolution, liquidation or winding up of the Corporation shall
be proposed; or
(c) a capital reorganization or reclassification of the capital stock
of the Corporation, any consolidation or merger of the Corporation with or into
another corporation, any transaction or series of transactions in which more
than fifty percent (50%) of the voting securities of the Corporation are
transferred to another person, or of any sale or conveyance to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety.
Such giving of notice shall be initiated at least ten Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Corporation's stock transfer books for the determination of the
shareholders entitled to such dividend or distribution, or for the determination
of the shareholders entitled to vote on such proposed merger, consolidation,
sale, conveyance, dissolution, liquidation or winding up. Such notice shall
specify such record date or the date of closing the stock transfer books, as the
case may be.
Section 4.02: Lost, Stolen, Mutilated or Destroyed Warrants. If this
Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on such
reasonable terms as to indemnity or otherwise as it may in its reasonable
discretion impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant.
8
<PAGE>
ARTICLE V
SPLIT-UP, COMBINATION,
EXCHANGE AND TRANSFER OF WARRANTS
Section 5.01: Split-Up, Combination, Exchange and Transfer of Warrants.
Subject to the provisions of Section 5.02 hereof, this warrant may be split up,
combined or exchanged for another Warrant or Warrants containing the same terms
to purchase a like aggregate number of Warrant Shares. If the Warrantholder
desires to split up, combine or exchange this Warrant, the Warrantholder shall
make such request in writing delivered to the Corporation and shall surrender to
the Corporation this Warrant and any other Warrants to be so split-up, combined
or exchanged. Upon any such surrender for a split-up, combination or exchange,
the Corporation shall execute and deliver to the person entitled thereto a
Warrant or Warrants, as the case may be, as so requested. The Corporation shall
not be required to effect any split-up, combination or exchange which will
result in the issuance of a Warrant entitling the Warrantholder to purchase upon
exercise a fraction of a share of Common Stock or a fractional Warrant. The
Corporation may require such Warrantholder to pay a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any split-up,
combination or exchange of Warrants.
Section 5.02: Transfer. This Warrant and all rights hereunder may be
sold, transferred or otherwise disposed of, in whole or in part, to any person
in accordance with and subject to the provisions of the Securities Act of 1933,
as amended (the "Securities Act"), and the rules and regulations promulgated
thereunder. Upon the delivery to the Corporation at its principal corporate
office of this Warrant along with a duly completed Assignment Form substantially
in the form of Exhibit B hereto, the Corporation shall execute and deliver a new
Warrant in the form of this Warrant, but registered in the name of the
transferee, to purchase the number of Warrant Shares assigned to the transferee.
In case the Warrantholder shall assign this Warrant with respect to less than
all of the Warrant Shares that may be purchased under this Warrant, the
Corporation shall execute a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
Section 5.03: Restrictive Legend. Each Warrant Share issued upon
exercise of this Warrant shall bear a legend containing the following words:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH SUCH ACT."
The requirement that the above legend be placed upon certificates evidencing any
such securities shall cease and terminate upon the earliest of the following
events: (i) when such shares are
9
<PAGE>
transferred in an underwritten public offering, (ii) when such shares are
transferred pursuant to Rule 144 under the Securities Act or (iii) when such
shares are transferred in any other transaction if the seller delivers to the
Corporation an opinion of its counsel, which counsel and opinion shall be
reasonably satisfactory to the Corporation, or a "no-action" letter from the
Staff of the Securities and Exchange Commission, in either case to the effect
that such legend is no longer necessary in order to protect the Corporation
against a violation by it of the Securities Act upon any sale or other
disposition of such shares without registration thereunder. Upon the occurrence
of such event, the Corporation, upon the surrender of certificates containing
such legend, shall, at its own expense, deliver to the holder of any such
securities as to which the requirement for such legend shall have terminated,
one or more new certificates evidencing such securities not bearing such legend.
ARTICLE VI
OTHER MATTERS
Section 6.01: Successors and Assigns. The terms and provisions of this
Warrant shall bind and inure to the benefit of the Warrantholder and its
successors and assigns.
Section 6.02: No Inconsistent Agreements. The Corporation will not on
or after the date of this Warrant enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Warrantholder or
otherwise conflicts with the provisions hereof. The rights granted to the
Warrantholder hereunder do not in any way conflict with and are not inconsistent
with the rights granted to holders of the Corporation's securities under any
other agreements.
Section 6.03: Entire Agreement. This Warrant and the Exhibits hereto
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.
Section 6.04: Amendments and Waivers. The terms and provisions of this
Warrant, including the provisions of this sentence, may be modified or amended,
or any of the provisions hereof waived, temporarily or permanently, pursuant to
the written consent of the Corporation and the Warrantholder.
Section 6.05: Counterparts. This Warrant may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section 6.06: Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Florida without giving
effect to the principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Florida and of the United States
10
<PAGE>
of America, in each case located in the County of Palm Beach, for any action,
proceeding or investigation in any court or before any governmental authority
("Litigation") arising out of or relating to this Warrant and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in this Warrant shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Warrant or the transactions contemplated hereby in the
courts of the State of Florida or the United States of America, in each case
located in the County of Palm Beach, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum.
Section 6.07: Notice. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(i) if to the Corporation. to:
NetMaximizer.com, Inc.
4400 North Federal Highway
Suite 307
Boca Raton, Florida 33431
Telecopy: (561) 447-9490
Attention: Mr. David Saltrelli
with a copy to:
Greenberg Traurig, P.A.
777 South Flagler Drive
Suite 300, East Tower
West Palm Beach, FL 33401
Telecopy: (561) 655-6222
Attention: Morris Brown, Esq.
11
<PAGE>
(ii) if to the Warrantholder, to:
Monavia Limited
International House
Castle Hill, Victoria Road
Douglas, British Isles 1M24RB
Telecopy: _______________
Attention: Nigel Forrester
All such notices, requests, consents and other communications shall be
deemed to have been given when received.
Section 6.08: Severability. Whenever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid, but if
any provision of this Warrant is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Warrant.
12
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly, executed by the
Corporation under its corporate seal as of the 8th day of February, 2000.
NETMAXIMIZER.COM, INC.
By: /s/ David A. Saltrelli
--------------------------
Name: DAVID SALTRELLI
Title: President
Attest: /s/ Peter Schuster
--------------------------
Name: Peter Schuster
Title: Secretary
13
<PAGE>
Exhibit A to Warrant
--------------------
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
NETMAXIMIZER.COM, INC.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, _____________(1) shares of
Common Stock covered by the within Warrant and requests that the certificates
for such shares be issued in the name of and delivered to, _______________ whose
address is ______________. The undersigned herewith makes payment in full
therefor of the Exercise Price therefor (or $____________ in the aggregate).
------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
- -----------------------
1 Insert here the number of shares called for on the face of this Warrant
(or, in the case of partial exercise, the portion thereof as to which
this Warrant is being exercised). In the case of partial exercise, a
new Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the Warrant, to the holder surrendering the
Warrant.
14
<PAGE>
Exhibit B to Warrant
--------------------
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ____________________ the right
represented by such Warrant to purchase ___________________(2) shares of Common
Stock of Netmaximizer.com, Inc. to which such Warrant relates and appoints
_________________ Attorney to make such transfer on the books of
Netmaximizer.com, Inc. maintained for such purpose, with full power of
substitution in the premises.
Dated:
------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
- -------------------------------
- -------------------------------
- -------------------
2 Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial assignment, the portion thereof as to
which this Warrant is being assigned). In the case of a partial
assignment, a new Warrant or Warrants will be issued and delivered,
representing the unassigned portion of the Warrant, to the holder
surrendering the Warrant.
15
MASTER EQUIPMENT LEASE AGREEMENT
Agreement No. 30-DE-0507
Date: October 8,1999
LESSOR: Mitel Capital; 75 Second avenue Suite 200, Needham Heights, MA 02494
LESSEE: Full Legal Name- Netmaximizer.com, Inc. [ ] corporation [ ] limited
partnership [ ] sole proprietorship
ADDRESS: 4400 N. Federal Hwy. Boca Raton, FL 33431
BILLING ADDRESS:
TELEPHONE NO:
TERMS AND CONDITIONS OF LEASE
1. LEASE. (a) Lessor hereby leases to Lessee and Lessee leases from Lessor the
personal property described on the Equipment Schedule, together with all
replacements, parts, cables, additions and accessories incorporated therein or
affixed thereto (collectively hereinafter called the "Equipment"). Such
replacements, parts, cables, repairs, additions and accessories shall (whether
or not purchased by Lessor) be considered part of the Equipment for all purposes
and, when installed in or attached to the Equipment (unless otherwise agreed),
be or become the property of the Lessor. Except as otherwise specifically
provided or the context so requires, the term "Equipment" includes Software
which is delivered on or with the Equipment or is included on the Equipment
Schedules.
(b) "Equipment Schedule" means the Equipment Schedule in the
form attached hereto as Exhibit A with all the blanks completed and including
the additional terms and provisions set forth therein, signed by Lessor and
Lessee and incorporating, by reference, the terms and provisions of this Master
Equipment Lease Agreement ("Master Lease"). Each Equipment Schedule shall
constitute a separate and independent lease (a "Lease"), the original of such
Lease shall consist of the manually-signed Equipment Schedule and a reprographic
copy of the Master Lease. Capitalized terms used herein shall mean and refer to
the corresponding items on the applicable Equipment Schedule.
2. TERM. The Lease shall commence with respect to Equipment upon the Rental
Start Date and shall continue for the Rental Term. The Rental Start Date shall
be the date, as determined by Lessor or its designees to be ready for use at
Lessee's location, and Lessee agrees to executor a Delivery and Acceptance
Certificate (in the form of Exhibit B hereto) and a Leasing Certificate (in the
form of Exhibit C hereto) as of such date. For the Rental Term, Lessee agrees to
pay Lessor aggregate rental s equal to the sum of the Rental Payments (including
Advance Rental Payments). (If Rental Payments are payable on a periodic basis
other than monthly, as specified under the Equipment Schedule, the references
herein to "month" shall mean such period.) The first Rental Payment (together
with Advance Rental Payments and
<PAGE>
payment for any partial month at the commencement of the Lease) is due on the
Rental Start Date, and remaining Rental Payments are due on the succeeding
Rental Payment Dates specified in the applicable Equipment Schedule. Each
Equipment Schedule shall be a net lease, and Lessee's obligation to pay all rent
and other sums thereunder shall be absolute and unconditional, and shall not be
subject to any abatement, reduction, set-off, defense, counterclaims,
interruption, determent or recoupment, for any reason whatsoever. A charge on
any rent payments or other sums due hereunder which are past due shall accrue at
the rate of 18% per annum, or if such rate exceeds the maximum rate allowed by
law, then at such maximum rate, and shall be payable on demand. The Lease may
only be terminated as expressly provided herein or in the applicable Equipment
Schedule. A handling and delivery charge to cover all Equipment transportation,
rigging, drayage, packing, installation and handling to and from Lessor's
facilities or vendor's paint shall be paid by Lessee. This Lease is
non-cancelable.
3. WARRANTIES. Lessee acknowledges that it has made the selection of each item
of Equipment based upon its judgment and expressly disclaims any reliance upon
statements made by Lessor. LESSOR MAKES NO EXPRESS OR IMPLIED WARRANTIES
INCLUDING THOS OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE WITH RESPECT
TO THE EQUIPMENT AND HEREBY DISCLAIMS THE SAME. Lessee shall have no liability
for any damages, whether direct, or indirect, general, special, incidental,
exemplary or consequential, incurred by Lessee as a result of any defect or
malfunction of the Equipment. Lessee shall look solely to the Equipment supplier
for any and all claims related to the Equipment. Lessee understands and agrees
that neither supplier nor any salesperson or other agent of supplier is an agent
of Lessor. No salesperson or agent of supplier is authorized to waive or alter
this Lease, and not representation by supplier shall in any way affect Lessee's
duty to pay the Rental Payments and perform its obligations under the Lease.
Lessor hereby assigns to Lessee, for and during the Rental Term, any warranty on
the Equipment provided by the supplier. Lessor and Lessee agree that all
limitations on remedies and liability contained in this Lease represent a
reasonable allocation of risks that is part of the fundamental bargain between
parties.
4. TITLE. Lessor and Lessee hereby confirm their intent that the Equipment shall
always remain and be deemed personal property even though it may become attached
or affixed to reality, and title hereto shall remain in Lessor (or its
successors and assigns) exclusively. If requested by Lessor, Lessee will affix
plates or markings on the Equipment indicating the interests of Lessor and its
assigns therein, and Lessee will not allow any other indication of ownership or
other interest in the Equipment to be placed thereon. Lessee shall not sell,
assign, grant a security interest in, sublet, pledge, hypothecate or otherwise
encumber or suffer a lien upon or against this Lease or the Equipment.
5. ASSIGNMENT. (a) LESSEE ACKNOWLEDGES THAT LESSOR MAY SELL ASSIGN, GRANT A
SECURITY INTEREST IN, OR OTHERWISE TRANSFER ALL OR ANY PART OF ITS RIGHTS, TITLE
AND INTEREST IN THIS LEASE AND THE EQUIPMENT WITHOUT NOTICE TO OR CONSENT OF
LESSEE. Upon Lessor's written
<PAGE>
notice to Lessee that this Lease, or the right to the Rental Payments hereunder,
have been assigned, Lessee shall, if requested, pay directly to Lessor's
assignee without abatement, deduction or set-off amounts which become due
hereunder. Lessee waives and agrees it will not assert against Lessor's assignee
any counterclaim or set-off in any action for rent under the Lease. Upon the
assignment of this Lease, Lessor's assignee shall have and be entitled to
exercise any and all rights and remedies (but none of the obligations) of Lessor
hereunder, and all references herein to Lessor shall include Lessor's assignee.
Lessee acknowledges that any assignment or transfer by Lessor does not
materially change Lessee's duties or obligations under this Lease nor materially
increase the burdens of risks imposed on Lessee.
(b) LESSEE MAY NOT ASSIGN THIS LEASE OR SUBLEASE THE EQUIPMENT OR ANY
PART THEREOF WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD OR DELAYED. In the event Lessee makes an assignment on
sublessee (in which Lessor has consented). Lessee shall not thereby be relieved
of its duties and obligations hereunder, for which it shall remain fully
responsible and liable (independent of its assignee).
6. TAXES AND REGULATIONS. Lessee shall comply with all applicable federal,
state, local, foreign and international laws, regulations and orders relating to
this Lease. Lessee hereby assumes liability for, and shall pay when due and on a
net after-tax basis shall indemnify and defend Lessor against, all federal,
state, local, foreign and international fees, taxes and governmental charges
(including, without limitation, interest and penalties) of any nature imposed
upon or in any way relating to Lessor, Lessee, any item of Equipment or this
Lease, except any taxes on or measured by Lessor's net income (other than any
such tax will not be in substitution for or relieves Lessee from the payment of
taxes it would otherwise be obligated to pay to or reimburse Lessor for as
herein provided). Unless otherwise requested by Lessor, Lessee shall at its
expense file when due with the appropriate authorities any and all tax and
similar returns and reports required to be filed with respect thereto.
7. INDEMNIFICATION. (a) Lessee hereby assumes liability for, and shall pay when
due, and shall indemnify and defend Lessor against, any and all liabilities,
losses, damages, claims and expenses (including reasonable attorney fees) in any
way relating to or arising out of this Master Lease, any Equipment Schedule or
any items of Equipment, including without limitation the manufacture, purchase,
ownership, shipment, transportation, delivery, installation, leasing,
possession, use, operation, storage and return of such Equipment. Lessee shall
give Lessor prompt notice of any occurrence, event or condition in connection
with which Lessor may be entitled to indemnification hereunder. The provisions
of this Section are in addition to, and not in limitation of, the provisions of
Section 6. The indemnities contained herein shall survive the expiration of the
Rental Term of the Lease.
(b) This Lease has been entered into on the assumption that Lessor
shall be entitled to all deductions, credits, and other tax benefits as are
provided in the Internal Revenue Code of 1986, including amendments as may occur
(the "Code"), to an owner of property including, without limitation,
depreciation deductions and interest deductions with respect to any debt
incurred to finance the purchase of the Equipment. If, as a result of any acts,
omissions or
<PAGE>
misrepresentations by Lessee or as a result of any changes in the Code
(including any changes in the marginal corporate income tax rate), the
regulations issued thereunder or the administrative or judicial interpretations,
Lessor's projected after tax economic return resulting from ownership and lease
of the Equipment hereunder is reduced, then Lessee's Rental Payments shall be
increased in an amount (Lessee or Lessor's reasonable calculations) sufficient
to provide the same net after-tax economic return as if such acts or omissions
or changes had not occurred. Appropriate increases shall also be made in the
applicable Stipulated Loss Values for this Lease. In the event the Equipment is
sold by Lessor to another party, the net after-tax economic returns considered
shall be those of such transferee.
8. USE; MAINTENANCE; EXTENSIONS. (a) Lessee, at its expense, shall make all
necessary site preparations and cause the Equipment to be operated in accordance
with any applicable manufacturer's manuals or instructions. Notwithstanding any
transfer or assignment by Lessor and provided Lessee is not in default
hereunder, Lessee shall have the right to quietly possess and use the Equipment
as provided herein without interference by Lessor, its assigns, or any other
third party claiming through or under Lessor.
(b) Lessee shall effect and bear the expense of all necessary repair,
maintenance, operation and replacements required to be made to maintain the
Equipment in good condition, reasonable wear and tear excepted, and to comply
with all domestic and international laws to which the use and operation of the
Equipment may be or become subject. Such obligations shall extend to repair or
replacement of any partial loss or damage to items or Equipment, regardless of
the cause of such loss or damage. Lessee shall obtain and keep in effect, at all
times during the Rental Term (and any renewal or extension thereof), maintenance
service contracts covering the Equipment with the Equipment supplier or with
suppliers of maintenance services approved by Lessor, such approval not to be
unreasonably withheld. All replacement Equipment and parts furnished in
connection with such maintenance or repair shall immediately become the property
of Lessor and part of the Equipment for all purposes hereof. All such
maintenance, repair and replacement services shall be immediately paid for and
discharged by Lessee with the result that no lien under any applicable laws will
attach to the Equipment as a result of the performance of such services or the
provision of any such material.
(c) At the expiration of the Rental Term, upon notice given by Lessee
at least ninety (90) days prior thereto, (i) the Lease shall be extended or
renewed under the terms and conditions set forth herein for a period and rental
amount to be agreed, or (ii) if no such agreement is reached or such notice
specifies return of the Equipment, then Lessee shall return the Equipment in the
manner and condition prescribed in Section 10. In the absence of any notice as
permitted by the preceding sentence, the Lease shall be automatically extended
on a month-to-month basis, until terminated (upon notice by either party given
at least ninety (90) days prior to the end of the month on which the termination
is to be effective) or until extended or renewed by the agreement of the
parties.
(d) Until either (i) the Equipment is returned in the manner and
condition prescribed in Section 10 and (if requested by Lessor) the
certification required under Section 10 as provided, or (ii) the purchase option
price is paid pursuant to the terms of the Equipment Schedule or (iii) a
mutually agreed renewal or extension of the Lease takes effect, Lessee agrees to
continue paying
<PAGE>
rent for the Equipment in the amount of the Rental Payment set forth in the
Equipment Schedule. Without limitation of the foregoing, such obligation to pay
rent shall continue for any period during which repairs are being performed (at
Lessee's expense) to place returned equipment in the condition required under
Section 10.
9. INSURANCE; LOSS. (a) Lessee shall obtain and maintain for the entire
Rental Term (and any renewal or extension thereof, at its own expense, property
damage and personal injury liability insurance and insurance against loss or
damage to the Equipment including, without limitation, loss by fire (including
so-called extended coverage), theft and such other risks or loss as are
customarily insured against on the types of Equipment leased hereunder and by
the types of business in which the Equipment will be used by Lessee, in such
amounts, in such form and with such insurers as shall be satisfactory to Lessor,
provided however, that the amount of insurance against loss or damage to the
Equipment shall not be less than the greater of the replacement value of the
Equipment, the original Equipment cost to Lessor, and the applicable Stipulated
Loss Value (if any) for this Lease. Each insurance policy will memo Lessee as an
in insured and Lessor as an additional insured or loss payee thereof, and shall
contain a clause requiring the insurer to give Lessor at least 30 days prior
written notice of any alterations in the terms of such policy or of the
cancellation thereof. Lessee shall furnish to Lessor a certificate of insurance
or other evidence satisfactory to Lessor that such insurance coverage is in
effect; provided, however, that Lessor shall be under no duty other to ascertain
the existence of or to examine such insurance policy or to advise Lessee in the
event such insurance coverage shall not comply with the requirements hereof.
Lessee further agrees to give Lessor prompt notice of any damage to, or loss of,
the Equipment, or any part thereof.
(b) If any terms of Equipment shall become lost, stolen, destroyed or
damaged beyond repair for any reason, or in the event of condemnation,
confiscation, seizure or requisition of title to or use of such items. Lessee
shall promptly pay to Lessor the applicable Stipulated Loss Value (if any) for
this Lease, and in the absence of such Stipulated Loss Value. Lessee shall pay
the aggregate unpaid Unit Rental Payments for the full, remaining Rental Term
for such items or Equipment plus the Equipment's fair market value at the
expiration of the Rental Term, as estimated by Lessor, less the net amount of
the recover, if any, received by Lessor from insurance or otherwise for such
loss or damage. Upon payment by Lessee as aforesaid, Lessor will transfer to
Lessee, without recourse or warranty, all of Lessor's right, title and interest,
if any, in such items of Equipment.
10. INSPECTION, LOCATION AND RETURN. Lessor shall have the right, at all times,
to inspect the Equipment during regular business hours, with reasonable notice,
and in compliance with Lessee's reasonable security procedures. Lessee may move
the Equipment from the installation address shown on the Equipment Schedule (or
any other location for which Lessee has compiled with this provision) only if
(i) the new location is within the continental United States, and (ii) Lessee
gives at least 30 days prior written notice of the relocation and provides UCC-1
financing statements or such other documentation as Lessor reasonably requests
to protect its interest in the Equipment. Upon expiration or cancellation of the
Rental Term or any extension or renewal thereof, Lessee at its own risk and
expense (i) will immediately return the
<PAGE>
Equipment to Lessor in the same condition as when delivered, ordinary wear and
tear excepted, at such location as Lessor shall designate; and (ii) will, on
request from Lessor, obtain from the Equipment supplier (or other maintenance
service supplier previously approved by Lessor) a certificate stating that the
Equipment qualifies for continued maintenance service at the standard rates and
terms than in effect.
11. EVENTS OF DEFAULT. An Event of Default shall occur under this Lease if
Lessee (i) fails to pay any Rental Payment or other payment required under this
when due and such failure continues for a period of ten (10) days after written
notice from Lessor; or (ii) fails to perform or observe any other convenant,
condition or agreement to be performed or observed by it under this Lease; or
(iii) without Lessor's consent attempts to assign this Lease or sell, transfer,
encumber, part with possession, or sublet any item of Equipment; or (iv) makes
any representation or warranty in this Lease or in any document furnished by
Lessee in connection herewith, which shall have been materially false or
inaccurate when made or at the time to which such representation or warranty
relates; or (v) shall commit an act of bankruptcy or become insolvent or
bankrupt or make an assignment for the benefit of creditors or consent to the
appointment of a Trustee or Receiver or either shall be appointed for Lessee or
for a substantial part of its property without its consent, or bankruptcy
reorganization, or insolvency proceedings shall be instituted by or against
Lessee, and if instituted against Lessee shall not be vacated or dismissed
within sixty (60) days. Any Event of Defaults shall be deemed material and a
substantial impairment of Lessor's interests for the purposes of this Lease, the
Uniform Commercial Code (as in effect in the State of Delaware during the term
of this Lease and referenced to hereunder as the "UCC"), and any other
applicable law.
12. REMEDIES. (a) Upon the occurrence of any Event of Default and at any time
thereafter, provided such Event of Default is then continuing, Lessor may, in
its discretion, do any one or more of the following: (i) cancel any or all
Leases which reference this Master Lease, upon notice to Lessee: (ii) recover
any accrued unpaid Rental Payments and other amounts which are due and owing
under the Leases so canceled on the Rental Payment Date immediately preceding
the date on which Lessor obtains possession of the Equipment (or such earlier
date as judgment is entered in favor of Lessor) (the "Determination Date"), plus
interest as specified herein for pas due amounts: (iii) if this Lease specifies
a Stipulated Loss Value for the Equipment, with or without canceling this Lease,
recover (A) such Stipulated Loss Value as of the Rental Payment Date immediately
preceding the Determination Date, and (B) the amount of any loss or reduction of
tax benefits which Lessor anticipated it would receive if the Lease continued
for its full Rental
<PAGE>
Term; (iv) if no Stipulated Loss Value is specified in this Lease, with or
without canceling this Lease, recover damages, not as a penalty, but herein
liquidated for all purposes in an amount equal to (A) the present value of all
future Rental Payments reserved in the Lease discounted to the Determination
Date at a rate equal to the then-current discount rate of the Federal Reserve
Bank of San Francisco plus on percent (1%), and (B) the present value of the
Equipment's fair market value at the expiration of the Rental Term as estimated
by Lessor discounted at the same rate as provided under Section(a)(iv)(A) above,
and (C) the amount of any loss or reduction of tax benefits which Lessor
anticipated it would receive if the Lease continued for its full Rental Term;
(v) recover any amounts due under any indemnity then discernable, plus interest
as specified herein for past due amounts; (vi) require that Lessor Provide the
return and certification of the Equipment to Lessor in accordance with Section
10 hereof; (vii) sell any or all of the Equipment at public or private sale,
with or without any duty to account to Lessee for such action or inaction or for
any proceeds with respect thereto; and (viii) exercise any other right or remedy
which may be available to it under the UCC or other applicable law including the
right to recover damages for the breach hereof.
(b) In addition, Lessee shall be liable for, and reimburse Lessor for,
all reasonable and necessary legal fees and all commercially reasonable costs
and expenses incurred by Lessor as a result of the foregoing defaults, or the
exercise of Lessor's remedies, including without limitation, recovering
possession of the Equipment, selling or leasing the Equipment (including
broker's and sales representative's fees and commissions), and placing any
Equipment in the condition and obtaining the certificate required by Section 10
hereof. No remedy referred to in this Section is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy referred to above
or otherwise to Lessor at law or in equity. No express or implied waiver by
Lessor of any default shall constitute a waiver of any other default by Lessee,
or a waiver of any of Lessor's rights.
13. FINANCE LEASE. The parties agree that each Lease is a finance lease as
defined by Article 2A of the UCC. Lessee acknowledges that (i) Lessee has
selected the supplier of the Equipment, and (ii) by this provision Lessor has
advised Lessee that (A) Lessee may have rights under the supply contract between
Lessor and the supplier and (B) Lessee may contact the supplier for a
description of any such rights Lessee may have under the supply contract. Lessee
hereby waives any duty and all rights and remedies granted Lessee by Sections
2A-508 through 2A-522 of the Uniform Commercial Code.
14. MISCELLANEOUS. This lease may not be amended except by a written agreement
signed by both Lessor and Lessee, and shall be binding upon and inure to the
benefit of the parties hereto, their permitted successors and assigns. Any
provision of the Lease which is unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; provided, however, that
to the extent that the provision of any such applicable law can be waived, they
are hereby waived by Lessee. Time is of the essence with to the Lease. Lessee
hereby expressly assumes liability for and agrees to indemnify and defend and
hold Lessor harmless from and against any breach by Lessee of any
representation, warranty or covenant made by Lessee in this Lease and in
connection therewith to pay and reimburse Lessor for the payment of any and all
expenses, including reasonable attorneys fees incurred by Lessor in connection
with or as the result of any such breach. The captions set forth herein are for
convenience only and shall not define or limit any of the terms hereof. This
Lease shall in all respects be governed by, and construed in accordance with the
laws of the State of Delaware, without reference to conflict of laws principles.
LESSOR AND LESSEE WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING
FROM THIS LEASE. This Lease shall become effective and binding on the parties,
their
<PAGE>
respective successors and permitted assigns, and shall be deemed executed and
performed in the State of Delaware, when the related Equipment Schedule is
accepted by Lessor. Lessee consents to the non-exclusive jurisdiction of the
state courts of Delaware for the resolution of any dispute hereunder.
Any notices or demands required or permitted hereunder shall be given
to the parties in writing and by personal delivery, regular or certified mail,
facsimile or telegram at the address herein set forth or to such other address
as the parties may hereafter substitute by written notice given in the manner
prescribed in this Section. Such notices or demands shall be deemed given upon
receipt in the case of personal delivery and upon mailing or transmission in the
case of mail, facsimile or telegram. Lessee will promptly execute and deliver to
Lessor such further reasonable documents (including, but not limited to,
financing statements) and take such further reasonable action (such as obtaining
Landlord or Mortgagee's Waiver and Consent), as Lessor may request in order to
more effectively carry out the intent and purpose of this Lease or an assignment
of Lessor's interest herein. Lessee authorizes Lessor to sign, on Lessee's
behalf and in Lessee's name, any financing statements (including without
limitation continuation statements) and to file the same in such state and
county offices as may be necessary, in Lessor's judgment, to protect the
interest of Lessor and/or its assignees in the Equipment and this Lease.
Lessee: Netmaximizer.com, Inc. Mitel Capital
By: By:
---------------------- ----------------------
Name: Name:
---------------------- ----------------------
Title: Title:
---------------------- ----------------------
<PAGE>
EXHIBIT A
Revised
EQUIPMENT SCHEDULE NO. A-1 TO MASTER EQUIPMENT LEASE AGREEMENT
NO. 30-DE-0507 DATED October 8, 1999 BETWEEN ATHE UNDERSIGNED PARTIES.
<TABLE>
<S> <C>
Lessor: Mitel Capital
Address: 75 Second Avenue, Suite 200, Needham Heights, MA 02494
Lessee: Netmaximizer.com, Inc.
Business Address: 4400 N. Federal Hwy, Boca Raton, FL 33431
Installation Address: 4400 N. Federal Hwy, Boca Raton, FL 33431
1. Rental Term: 15 Months
2. Rental Payments: 3 Payments of $1,712.80 Plus tax
12 Payments of $1,101.17 Plus tax
each, payable monthly (or such other period as is
otherwise specified herein).
3. Rental Payment Dates: First day of each month (or the first day of such
other period as is otherwise specified herein).
4. Advance Rental Payments: First and last Rental Payments shall be delivered
to Lessor on the date of execution of the
Equipment Schedule.
5. Equipment Description: See attached "DESCRIPTION OF EQUIPMENT AND
SOFTWARE".
6. Lessor's cost: Equipment: $17,128.00
Sales tax: $
Total: $17,128.00
</TABLE>
7. Purchase Option: At the expiration of the Rental Term, Lessee shall, upon
written notice given at least ninety (90) days prior thereto, have the option to
purchase all (but not less than all) of the Equipment having the same Rental
Term expiration date at the purchase option price indicated below, provided no
Event of Default, has occurred which is then continuing. If no purchase option
pricing is indicated on this Equipment Schedule for such Equipment, the purchase
price shall be its then fair market value. Fair market value, as applied to a
purchase option hereunder, shall be determined by Lessor based on the price a
willing buyer would pay and a willing seller would accept (neither buyer nor
seller being under compulsion to act) for the Equipment as installed and in use,
giving due consideration to its condition, utility, revenue producing
capability, and replacement cost. The purchase option price shall be paid not
later than the last day of the Rental Term.
8. Purchase Option Price: Fair Market Value at the end of lease term.
9. If the Rental Start Date (as evidenced by an executed Delivery and Acceptance
Certificate) does not occur prior to 1/7/2000, this Equipment Schedule, at
Lessor's option, may be declared null and void.
10. Terms and Conditions: Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed to them in the Master Equipment Lease
Agreement. The terms and conditions of the above-referenced Master Equipment
Lease Agreement are incorporated herein. In addition, the following attachments
apply to this Equipment Schedule only: None.
<PAGE>
LESSEE: Netmaximizer.com, Inc. Mitel Capital
By: /S/Peter Schuster as Sec/Treasurer By:
----------------------------------- --------------------------------
Name: Name:
--------------------------------- -------------------------------
Title: Title:
-------------------------------- -----------------------------
Lessee's Insurance Carrier: Valley Forge Insurance Co.
----------------------------------
Policy Number:
----------------------------------
Agent's Name: Ter Wallace
----------------------------------
Agent's Address: 21301 Powerline Rd #211 Boca Raton
----------------------------------
Agent's Phone:
----------------------------------
NETMAXIMIZER.COM, INC.
STATEMENT RE: COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
Year Ended
December 31,
------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Basic:
Net loss $ (6,135,904) $ (900) $ -
============ ============ ============
Total Weighted Average Number of Common Shares
Basic and Diluted 39,066,446 3,000,000 3,000,000
Net Loss Per Share:
Basic and Diluted $ (.16) $ (.00) $ -
============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1.000
<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
1,000
0
<COMMON> 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
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 39,055
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 29,886
<CURRENT-ASSETS> 68,941
<PP&E> 33,598
<DEPRECIATION> 4,755
<TOTAL-ASSETS> 415,127
<CURRENT-LIABILITIES> 151,610
<BONDS> 0
39,153
0
<COMMON> 0
<OTHER-SE> 74,364
<TOTAL-LIABILITY-AND-EQUITY> 415,127
<SALES> 15,002
<TOTAL-REVENUES> 15,002
<CGS> 9,560
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,141,346
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,135,904)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,135,904)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,135,904)
<EPS-BASIC> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
