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As filed with the Securities and Exchange Commission on November 23, 1999
Registration No. 333-_____
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
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MIRACOM CORPORATION
(Exact Name of Small Business Issuer Specified in Its Charter)
NEVADA 88-0344869
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
121 EAST FIRST STREET
SANFORD, FLORIDA 32771
(407) 302-1314
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Principal Executive Offices)
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Securities to be Registered Pursuant to Section 12(b) of the Act:
NONE
Securities to be Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
===============================================================================
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TABLE OF CONTENTS
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Page
PART I
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Item 1. Description of Business 1
Item 2. Management's Discussion and Analysis 16
Item 3. Description of Property 19
Item 4. Security Ownership of Certain Beneficial Owners and Management 20
Item 5. Directors and Executive Officers 21
Item 6. Executive Compensation 23
Item 7. Certain Relationships and Related Transactions 26
Item 8. Description of Securities 27
PART II
Item 1. Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters 31
Item 2. Legal Proceedings 31
Item 3. Changes in and Disagreements with Accountants 31
Item 4. Recent Sales of Unregistered Securities 32
Item 5. Indemnification Of Directors And Officers 33
PART F/S
Item 1. Financial Statements F-1
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
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WITH THE EXCEPTION OF HISTORICAL FACTS STATED HEREIN, THE FOLLOWING DISCUSSION
MAY CONTAIN FORWARD-LOOKING STATEMENTS REGARDING EVENTS AND FINANCIAL TRENDS
WHICH MAY AFFECT THE COMPANY'S FUTURE OPERATING RESULTS AND FINANCIAL POSITION.
SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE
COMPANY'S ACTUAL RESULTS AND FINANCIAL POSITION TO DIFFER MATERIALLY INCLUDE,
IN ADDITION TO OTHER FACTORS IDENTIFIED IN THIS REGISTRATION STATEMENT, THE
COMPANY'S OPERATING LOSSES, ITS NEED FOR ADDITIONAL CAPITAL, ITS ABILITY TO
DEVELOP ITS PRODUCTS AND DEPENDENCE ON KEY PERSONNEL, ALL OF WHICH ARE SET
FORTH IN MORE DETAIL IN THE SECTIONS ENTITLED "FACTORS WHICH MAY AFFECT FUTURE
RESULTS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS." THE INFORMATION CONTAINED
IN THIS DOCUMENT IS ACCURATE ONLY AS OF THE DATE OF THIS DOCUMENT. IN THIS
DOCUMENT, REFERRALS TO "MIRACOM," "WE," "OUR," AND "US" REFER TO MIRACOM
CORPORATION.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Miracom Corporation ("Miracom") was incorporated in Nevada on
September 13, 1995, under the name I.E.L.S., Inc., which company had no
material operations and whose common stock was traded on the OTC Electronic
Bulletin Board. In September 1998, I.E.L.S. completed an exchange agreement
with Direct Touch Research, Inc. ("DTR"), a closely held Florida corporation
that also had no material operations. Pursuant to the exchange agreement, all
outstanding shares of DTR common stock were exchanged for 5,542,000 shares of
I.E.L.S. common stock. As a result, DTR became a wholly owned subsidiary of
I.E.L.S. and I.E.L.S. changed its name to Miracom Corporation. DTR was
subsequently dissolved as a corporation in August 1999.
In September 1998, Miracom acquired all of the assets, liabilities and
business of United Equity Partners, Inc., a Florida corporation ("UEP"). In
that transaction, Miracom issued a total of 150,000 shares of common stock to
UEP. UEP subsequently distributed those shares to its shareholders and UEP was
dissolved in August 1999.
Also in September 1998, Miracom acquired all of the assets,
liabilities and business of MTV/Pinnacle Advertising Group, Inc., a Florida
corporation ("Pinnacle"). In that transaction, Miracom issued a total of
582,000 shares of common stock to Pinnacle. Pinnacle subsequently distributed
those shares to its shareholders and Pinnacle was dissolved in August 1999.
In May 1999, Miracom acquired all of the outstanding common stock of
LiveCode, Inc. ("LiveCode") a Florida corporation in exchange for 600,000 shares
of the Company's common stock and a six-month non-interest bearing $20,000
promissory note in favor of the LiveCode stockholders. Effective September 30,
1999, the note was repaid by the issuance of 40,000 shares of Miracom Common
Stock.
The principal offices of Miracom are located at 121 East First Street,
Sanford, Florida 32771 and its telephone number is (407) 302-1314. Our web
sites are located at www.parts.com, www.parts.net, www.theparts.com,
www.theparts.net, www.miracomcorp.com, www.miracomcorp.net, www.miratouch.com.
Information contained on our web sites is not part of this registration
statement.
Miracom is a provider of turnkey electronic commerce services designed
to provide Internet-based business and on-line buying solutions. The Company
has two principal divisions - "Parts.com" and "ReallyKnow.com."
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MARKET AND INDUSTRY OVERVIEW
The Internet is an increasingly significant global medium for
communications, content and online commerce. The World Trade Organization
estimates the number of Internet users will grow from 30 million in 1999 to 300
million in 2001. Internet traffic is estimated to be doubling every 100 days,
according to the U.S. Department of Commerce, equating to an annual growth rate
exceeding 700%. E-commerce applications are increasing exponentially; market
research firm Forester Research projects the total value of goods and services
purchased over the Internet will exceed $3.2 trillion by 2003. Reflecting their
increasing functionality, accessibility and overall usage, the Internet and
online services are evolving into an attractive commercial medium and a unique
sales and marketing channel that can successfully compete with retail stores,
mail-order catalogs and television home shopping networks. Online retailers can
interact directly with customers and update their featured selections, shopping
interfaces, product pricing and visual presentations on a continuous basis.
Miracom expects its Parts.com division to emerge as one of the first and the
dominant marketer of auto parts on the Internet.
Auto Parts Industry. The worldwide auto parts industry is large,
growing and relatively fragmented. Business Week magazine estimates that the
value of global auto parts market at nearly $600 billion. As reported by
Automotive News, in 1998 there were six automotive parts suppliers worldwide
with sales in excess of $10 billion each. We intend to make Parts.com the
business-to-business e-commerce parts exchange that exploits and eliminates the
inefficiencies that exist and maximize the efficiencies through the use of
web-enabled technology.
Data Gathering and Market Research Industry. The need for quantifiable
information and computer equipment and data in the automotive industry is
growing rapidly. Automotive News reported that the market for these products
amounted to $900 million in 1998 representing a 14% growth over $790 million in
1997. Further, according to Automotive News, the overall market for
"information and data" as they relate to the automotive industry is projected
to be $1 billion by the end of 1999. For many years, dealers have relied on
information from Arbitron radio surveys, Nielsen Diaries or a particular
broadcast "representative" that somehow instinctively knew each particular
automobile dealer's market. With no empirical evidence to support information
provided, most dealers rely on these representatives to inform them of their
market. Most dealers think they know what works and completely avoid certain
mediums because they had a previous bad experience. We intend to make
ReallyKnow.com one of the leading real time electronic data gathering
businesses.
MIRACOM'S STRATEGY
Parts.com. We commenced development of Parts.com in March 1998 to capitalize on
the unrealized opportunities in business-to-business e-commerce bringing new
value to suppliers, buyers and
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distributors. We intend to use Parts.com's proprietary technology and
revolutionary logistics model to bring strong brand recognition, customer
loyalty and supplier relationships in the online auto parts industry. We
believe our e-commerce business-to-business model will be superior to that of
the capital and real estate-intensive, traditional original equipment
manufacturer component business.
The first area of operations for Parts.com is the automotive component
arena with our e-commerce web site located at www.Parts.com. We believe the
automotive industry is particularly well-suited for on-line services for
several reasons including: a large and growing market, unlimited shelf space,
significant cost advantages, superior product for sale on the Internet,
excellent demographics, selectivity, availability, capability, community and
quality. Parts.com offers the following competitive advantages: comprehensive
selection, compelling content, increase margins for suppliers, expand customer
base for distributors and increase productivity and cost savings for buyers.
ReallyKnow.com. We formed ReallyKnow.com in 1999 for the purpose of
revolutionizing the market research industry through our patent-pending
technologies by offering real-time data gathering capability. We commenced
development of the Miratouch product in 1998 initially as on-site kiosks and
most recently as PC-based software. Both versions feature a touch-screen
on-site survey used in conjunction with value added read/write business cards
of accurate, unbiased, concrete facts for use by a myriad of businesses. While
the concept of on-site surveys is not new, the touch screen on-site survey is
in its infancy. Department/specialty stores, grocery/supermarkets, hotels,
restaurants/food service, retail, sporting events, theatres and many more
industries all benefit from real-time data gathering. We believe that the
Miratouch product can save both time and money over the conventional
face-to-face interviewing, mail surveys or costly one time customized research.
All software application changes (Questions and Answers, Reports) are handled
entirely through on-line technology. This reduces time-consuming and costly
travel expenses and allows Miratouch clients to change the questions to address
different needs. ReallyKnow.com's latest addition, FlexRadio, Inc.
("FlexRadio") offers a radio frequency detection device that is designed to
provide real time data, superior research, technical proficiency and market
analysis. See "Recent Business Development."
THE MIRACOM SOLUTION
With our Parts.com division, businesses and customers can currently
enter the Parts.com domain through our beta stage Internet site. To purchase
auto parts, buyers simply click on a buy button and follow prompts that guide
them in supplying shipping and payment information. In addition to ordering
parts, buyers can post request for proposals/request for quotes, conduct
targeted searches for hard to find auto parts, browse through highlighted
selections of the web site, shop for accessories, read and post reviews on
automobiles and automobile parts, register for personalized services,
participate in promotions and check their order status. Suppliers can post
overstocked or obsolete parts, post catalogs and display their company news
instantly.
Our ReallyKnow.com's Miratouch division provides a real-time
electronic data gathering system that permits real time data gathering and
market analysis of consumer information. The Miratouch kiosk is an automated
computer-assisted marketing research product that is conducted on-site at a
merchant's location and online through use of the Internet. With the Miratouch
solution, the merchant can receive collected marketing research results
on-demand. We believe that we have perfected the front-end design, developed
the applications, customized the hardware and created reporting via the
Internet. A patent application is pending for the Miratouch system and its
related intellectual property. Miracom has also filed and is awaiting
registration for Miratouch trademarks and copyrights.
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Our ReallyKnow.com's FlexRadio division will rely upon a technology for which
we have a pending patent, namely the installing of data transmission units in
automobiles to monitor radio-listening habits on a real time basis. See "Recent
Business Development."
SALES AND MARKETING
Through our Parts.com division, our goal is to be the worldwide source
for automotive parts. Our marketing strategy is designed to strengthen the
Parts.com brand name, increase customer traffic to the Parts.com store, build
strong customer loyalty, maximize repeat purchases and develop incremental
revenue opportunities. Parts.com will provide increasingly targeted and
customized services by using the extensive customer preference and behavioral
data obtained through its online sales. As a marketing channel, the Internet
has proven to be unique in facilitating rapid and effective experimentation
analysis, instant user feedback and efficient "redecorating of the store" for
each customer. We intend to employ a variety of media, program and product
development and value added promotional activities to achieve our marketing
goals for Parts.com. We intend to place advertisements on various high profile
and high-traffic conduit Internet sites. We also plan to extend Parts.com's
market presence through an Affiliates Program, that we hope will grow to
include thousands of enrolled members. The program will enable Affiliate web
sites in each product category to offer parts to their customer base for
fulfillment by Parts.com.
ReallyKnow.com's marketing strategy incorporates plans to sell its
products through several channels including conventions, advertising agencies,
direct mail, print, outbound telemarketing and referrals. ReallyKnow.com's
advertising and promotion plan is to position itself as one of the leaders in
real time electronic data gathering. ReallyKnow.com will use media strategies
that include: developing a program to advertise its message, image and products
in trade magazines; developing a video/direct-mail campaign targeted at
specific audiences that benefit from utilizing ReallyKnow.com's research
products and services; developing relationships with advertising agencies with
respect to their hardware and software and enhancing these agencies'
performance which will enable them to maintain long-term relationships with
their clients.
CUSTOMERS
For our Parts.com division, we anticipate that most of our initial
customer base will be Original Equipment Manufacturer ("OEM") dealerships
locating parts for their business trading partners, as well as their
at-location customers. Shortly thereafter, we expect to see our OEM dealerships
begin to source after-market parts direct from manufacturers utilizing the
Parts.com business model. Finally, by allowing buyers to list "want ads" for
hard-to-find items and suppliers to post over-stocked or obsolete products,
Parts.com should be positioned to realize a significant source of revenue
through its trade-out/auction service as well.
We believe our ReallyKnow.com's initial market segment will be the retail
automotive industry where Automotive News estimates that there are more than
23,000 new car dealers, 70,000 used car dealers, 130,000 automobile repair and
service shops and 22,000 rental car locations in the U.S. The expansion markets
for the ReallyKnow.com market research include:
- - supermarkets;
- - hotels/motels;
- - restaurants and food service companies;
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- - retailers
- - sporting event/attraction companies;
- - theatres and others.
We expect the typical customer of ReallyKnow.com's real-time electronic
data gathering technology business products to be people who control the
expenditure of advertising and marketing dollars for their companies and people
who currently use advertisements to generate sales leads.
COMPETITION
We expect competition for our Parts.com web site from a variety of other
online companies. These competitors could include:
- - various online parts sellers and vendors of other component based
products;
- - indirect competitors specializing in online commerce or deriving a
substantial portion of their revenues from electronic commerce who may
offer component parts as an extension to their existing product lines;
- - manufacturers and retail vendors of parts and accessories, including
large specialty parts sellers that have significant brand awareness,
sales volume and customer bases.
Toyota and Republic Industries have recently announced their intention to
devote resources to online commerce in the near future. HyundaiUSA.com has
already launched an Internet web site to sell auto parts online. PartsVoice has
begun locating a number of auto parts through an online web site for dealers.
Additionally, traditional "brick-and-mortar" companies like CSK Auto and Haun
Automotive have already built e-commerce sites and will be competitors.
Competition for ReallyKnow.com exists from some companies in a broad
sense related to the data research gathering industry. Companies such as
Nielsen Media Research, The Arbitron Company, JD Power and Associates all
produce research largely through telemarketing. These companies however, do not
produce statistical data in a real-time format. In a stricter sense of the
ReallyKnow.com business model, we believe only one company - The Dohring
Company - has a similar product that offers an on-line feature to data
collection.
RELATIONSHIPS WITH SUPPLIERS
We do not rely on any single vendor or group to fulfill our auto parts
orders for Parts.com. We do rely on two main suppliers to manufacture and
produce Miratouch's proprietary products--Factura and MicroTouch, Inc. We have
no minimum purchase commitment requirements or minimum inventory level
requirements with these vendors and there exist alternative sources from which
we may contract for the manufacture of the Miratouch kiosk and related
components.
INTELLECTUAL PROPERTY
In February, 1999, we purchased for cash and stock the exclusive
rights, title and interest in and to the Internet Domain Names (a.k.a. "Unified
Resource Locator" or "URL") and any trademarks or service marks in connection
with "www.Parts.com" and "www.Parts.net." We also own the URL's for many
web-hosting sites on behalf of our customers. Our primary URL's that are the
property of
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Miracom include the following: www.theparts.com, www.theparts.net,
www.miratouch.com, www.reallyknow.com, www.reallyknow.net, www.flexradio.com
and www.flexradio.net. In October 1998 we received transfer of the pending
patent rights related to the "miratouch solution." The Miratouch solution is an
automated computer-assisted marketing research product that is conducted
on-site at a merchant's location and online through use of the Internet. With
the Miratouch solution, the merchant can receive collected marketing research
results on-demand. In October 1999, we acquired the pending patent rights of
FlexRadio (See "Recent Business Development").
EMPLOYEES
As of the date of this registration statement, Miracom had a total
staff of 22 employees, comprised of 10 technical professionals, 6 sales and
marketing personnel and 6 administrative personnel. No employees are
represented by a labor union or subject to a collective bargaining agreement.
Management believes that employee relations are good.
Miracom's success will depend in large part upon the ability to
attract, retain and motivate highly skilled employees. Qualified technical
professionals are in great demand and are likely to remain a scarce resource
for the foreseeable future. Although Miracom expects to continue to attract
sufficient numbers of highly skilled employees and to retain senior personnel
for the foreseeable future, there can be no assurance that Miracom will be able
to continue to do so.
RECENT BUSINESS DEVELOPMENT
On October 21, 1999, Miracom acquired all of the outstanding common stock of
FlexRadio, Inc., ("FlexRadio") for 6,200,000 shares of Miracom common stock, a
transaction valued at $6,417,000. The 6,200,000 shares of stock were issued to
FlexRadio's stockholders according to their respective ownership
percentages-Flex Technologies, Inc. (a Florida corporation owned by Walter
Anderson, father of Miracom Co-CEO and Chief Technology Officer Scott
Anderson-2,294,000 shares), Shawn Lucas (our co-CEO and President-1,922,000
shares), Official Sports Management, Inc. (a Florida corporation owned by Ross
Reback-496,000 shares) and Select Media, Inc. (a Florida corporation owned by
George DeMakos-1,488,000 shares). Under the terms of the acquisition, Miracom
obtained the rights to FlexRadio's provisional patent application for a radio
frequency detection and reporting device. FlexRadio technology will enable
radio stations to track program and advertising effectiveness in a real time
format. Miracom will combine FlexRadio's technology with its ReallyKnow.com's
Miratouch division's web-enabled real time market research business, thus
expanding the reach of real time data gathering for businesses.
FACTORS THAT MAY AFFECT FUTURE RESULTS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE MAKING AN INVESTMENT
DECISION. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES
FACING US. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT
WE CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS. IF ANY OF
THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OR OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED.
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RISKS RELATED TO MIRACOM GENERALLY
OUR AUDITORS HAVE QUALIFIED THEIR REPORT ON OUR FINANCIAL STATEMENTS WITH
RESPECT TO OUR ABILITY TO CONTINUE AS A GOING CONCERN
As noted in Miracom's Report of Independent Certified Public
Accountants, Miracom has experienced significant operating losses and an
accumulated deficit which raise substantial doubt about Miracom's ability to
continue as a going concern. Miracom incurred net losses of $3,128,888 and
$1,865,808 for the nine months ended September 30, 1999 (unaudited) and the
Period from Inception January 27, 1998 through December 31, 1998, respectively.
At September 30, 1999, Miracom had an accumulated deficit of $4,994,696
(unaudited). Miracom is continuing its efforts to increase its sales volume and
attain a profitable level of operations. However, there is no assurance that
Miracom's efforts will be successful. There are many events and factors in
connection with the development, manufacture and sale of Miracom's products over
which Miracom has little or no control, including without limitation, marketing
difficulties, lack of market acceptance of our products, superior competitive
products based on future technological innovation and continued growth of
e-commerce businesses. There can be no assurance that future operations will be
profitable or will satisfy future cash flow requirements. The report of Moore
Stephens Lovelace, P.A., our independent auditors, with respect to our financial
statements and the related notes thereto, indicate that, at the date of the
report, we incurred net losses and had negative cash flow from operations. Moore
Stephens Lovelace, P.A. qualified their report to indicate that these matters
raise substantial doubt, at such date, about our ability to continue as a going
concern. Our financial statements do not include any adjustments that might
result from this uncertainty. See "Management's Discussion and Analysis" and our
financial statements and the related notes.
WE NEED ADDITIONAL CAPITAL.
Miracom must raise additional capital in the near term to continue its
business plan. We are working with financial sources to raise additional
capital but there are no guarantees that we will be able to raise sufficient
capital on a timely basis and on reasonable terms. In light of Miracom's
limited resources and the competitive environment in which we operate, any
inability to obtain additional financing may cause Miracom to discontinue
operations. Additional financing could involve dilution to the interests of
Miracom's then-existing stockholders.
WE HAVE A LIMITED OPERATING HISTORY AND MAY EXPERIENCE RISKS ENCOUNTERED BY
EARLY-STAGE COMPANIES.
We have a very limited operating history for you to use in evaluating our
business. Our business and prospects must be considered in light of the risks,
expenses and difficulties that companies encounter in the early stages of
development, particularly companies in new and rapidly evolving markets like
the Internet and e-commerce. These risks include our ability to:
- manage our growth effectively;
- anticipate and adapt to the rapid changes that characterize our market;
- increase levels of traffic to our Web site;
- continue to develop and upgrade our technology and customer service;
- expand our supplier network;
- respond to competitive developments in our market;
- expand our sales and marketing efforts; and
- continue to identify, attract, retain and motivate qualified personnel.
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THE REVENUE AND PROFIT POTENTIAL OF OUR BUSINESS MODEL IS UNPROVEN.
Our business model is to generate revenues from the following sources:
- an e-commerce for businesses and consumers to search for and purchase
automotive parts and accessories; and
- real-time marketing research for the automotive industry, initially,
using information derived from our real-time, interactive Miratouch
product.
Our business model is new and our ability to generate revenue or profits
is unproven. We have initially focused on the automotive industry and our
success is dependent on our ability to attract customers to, and expand our
suppliers for our Parts.com web site, and our ability to attract customers for
our marketing research programs launched through Miratouch. There is no
assurance that we will be successful in doing so.
OUR FINANCIAL RESULTS MAY FLUCTUATE AND MAY BE DIFFICULT TO FORECAST.
Our quarterly revenues, expenses and operating results will be
unpredictable. We expect that our operating results will fluctuate in the
future due to a number of factors, some of which are beyond our control. These
factors include:
- our ability to attract businesses and customers to our Web site;
- our ability to attract and retain suppliers with large parts
inventories;
- our ability to control our gross margins;
- our ability to timely process orders and maintain customer
satisfaction;
- the availability and pricing of parts from suppliers;
- product obsolescence and price erosion
- consumer confidence in encrypted transactions in the Internet
environment;
- our ability to obtain cost effective advertising on other entities'
Web sites;
- the effectiveness of off-line advertising in generating additional
traffic to our Web site;
- the amount and timing of costs relating to expansion of our
operations;
- technical difficulties consumers and businesses might encounter in
using our Web site;
- suppliers' delays in shipments to customers/businesses as a result of
computer systems failures, strikes or other problems with our
suppliers' delivery service;
- delays in processing orders as a result of computer systems failures,
Internet brown-outs or problems with our credit card processing
providers; and
- general economic conditions and economic conditions specific to the
Internet and e-commerce.
WE MAY NOT BE SUCCESSFUL IN DEVELOPING BRAND AWARENESS AND THE FAILURE TO DO SO
COULD SIGNIFICANTLY HARM OUR BUSINESS AND FINANCIAL CONDITION.
We believe that the importance of brand recognition will increase as
more companies engage in commerce over the Internet. Development and awareness
of the parts.com and Miratouch brands will depend largely on our marketing
efforts. If suppliers do not perceive us as an effective marketing and sales
channel for their parts, or if businesses and consumers do not perceive us as
offering an efficient and desirable way to purchase parts, we will be
unsuccessful in promoting and maintaining our parts.com brand. Similarly,
potential customers for our Miratouch product must perceive a need for real
time
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market research. In order to attract and retain businesses and customers and
promote our brands, we must increase our marketing and advertising budgets
significantly. If we are unable to successfully promote our brands or achieve a
leading position in e-commerce, our business could be significantly harmed.
IF WE FAIL TO MAINTAIN SATISFACTORY RELATIONSHIPS WITH OUR SUPPLIERS, OUR
BUSINESS WOULD BE MATERIALLY HARMED.
We will be highly dependent upon our suppliers to provide inventory
for sale through our parts.com site. The availability of merchandise can be
unpredictable. We will rely on a network of suppliers for all automotive parts.
We do not have long-term supply contracts with any of our suppliers. We cannot
be certain that our current suppliers will continue to provide for sale at our
site. We must also attract additional suppliers. We cannot be certain that we
will be able to establish new supplier relationships that ensure merchandise
will be available through our Web site.
Our suppliers will process and ship merchandise directly to other
businesses and customers. We have limited control over their shipping
procedures, and shipments by these suppliers could be delayed by factors that
are beyond our control. Most parts we sell carry a warranty supplied either by
the manufacturer or the supplier. In addition, although we are not obligated to
accept parts returns, we could be compelled to accept returns from businesses
and customers without receiving reimbursements from the suppliers or
manufacturers if their warranties are not honored. Our business will be
significantly harmed if we are unable to develop and maintain satisfactory
relationships with suppliers on acceptable commercial terms, if we are unable
to access sufficient parts inventories, if the quality of service provided by
these suppliers falls below a satisfactory standard or if our level of returns
exceeds our expectations.
WE FACE INTENSE COMPETITION IN THE E-COMMERCE MARKET, AND WE CANNOT ASSURE YOU
THAT WE WILL BE ABLE TO COMPETE SUCCESSFULLY.
The e-commerce market is new, rapidly evolving and intensely
competitive, and we expect competition to intensify in the future. Barriers to
entry are minimal, and competitors may develop and offer similar services in
the future. Our business could be severely harmed if we are not able to compete
successfully against current or future competitors. Although we believe that
there may be opportunities for several providers of products and services
similar to ours, a single provider may dominate the market. We believe there is
no current dominant e-commerce provider in our markets. We expect that
additional companies will offer competing e-commerce solutions in the future.
In addition, our customers and suppliers may become competitors in the
future. Increased competition is likely to result in loss of market share which
could harm our business. Our parts suppliers are major parts distributors who
have significantly more resources than we do. We anticipate that some of our
business customers will be large distributors and auto parts stores who also
have significantly more resources than we do.
Virtually all of our potential competitors have longer operating
histories, larger customer bases and greater brand recognition in the markets
in which we compete and significantly greater financial, marketing, technical
and other resources. Our competitors may be able to devote significantly
greater resources to marketing and promotional campaigns.
Some of our competitors may establish cooperative relationships among
themselves or directly with suppliers to obtain exclusive or semi-exclusive
sources of parts. In addition, we anticipate that there
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will be consolidation in our industry. Accordingly, it is possible that new
competitors or alliances among competitors and suppliers may emerge and rapidly
acquire market share. In addition, manufacturers may elect to sell their parts
directly. Increased competition is likely to reduce our operating margins,
cause us to lose market share or diminish our brand. If any of these things
occur, our business would be significantly harmed.
OUR GROWTH AND FUTURE SUCCESS DEPEND ON OUR ABILITY TO GENERATE TRAFFIC TO OUR
WEB SITE.
Our ability to sell parts through our Internet site depends
substantially on our ability to attract user traffic to our Web site. We
anticipate spending significant amounts of money for on-line advertising to
attract and retain users to our Web site. In addition, we intend to pursue an
off-line advertising campaign through traditional media forms such as print,
radio and television. If we are unable to generate traffic to our Web site cost
effectively, or if our efforts to promote our services and products using both
on-line and off-line media are not successful, our growth and business
prospects will be substantially limited.
IF WE FAIL TO IMPROVE OUR FINANCIAL AND MANAGERIAL CONTROLS AND REPORTING
SYSTEMS AND PROCEDURES, AND IF WE DO NOT EFFECTIVELY EXPLAIN, TRAIN AND MANAGE
OUR WORKFORCE, OUR BUSINESS WILL SUFFER DRAMATICALLY AND WE MAY NOT BE ABLE TO
IMPLEMENT OUR BUSINESS PLAN.
Successful implementation of our business plan requires an effective
planning and management process. Our business will suffer dramatically if we do
not effectively manage our growth. We expect that we will need to continue to
improve our financial and managerial controls and reporting systems and
procedures, and we will need to expand, train and manage our workforce. We plan
to continue to add to our sales and marketing, customer support and technical
personnel. Rapid growth may place a significant strain on our management
systems and resources. Our future performance may also depend on the effective
integration of acquired businesses. This integration, even if successful, may
take a significant period of time and expense, and may place a significant
strain on our resources.
WE WILL RELY ON THIRD PARTIES TO MAINTAIN OUR CRITICAL SYSTEMS AND, IF THESE
THIRD PARTIES FAIL TO ADEQUATELY PERFORM THEIR SERVICES, WE COULD EXPERIENCE
DISRUPTIONS IN OUR OPERATIONS.
We will rely on a number of third parties for Internet and
telecommunications access, delivery services and credit card processing. We
will have limited control over these third parties and no long-term
relationships with any of them. From time to time, we expect to experience
temporary interruptions in our Web site connection and telecommunications
access. Slow Internet transmissions or prolonged interruptions in our Web site
connection or telecommunications access would materially harm our business.
We will rely on our suppliers to timely ship parts our customers order
from them. Should they be unable to deliver parts for a sustained time period
as a result of a strike or other reason, our business would be harmed. In
addition, delays in shipment could result due to computer systems failures or
other problems related to our third-party service providers.
OUR BUSINESS MAY SUFFER FROM CAPACITY CONSTRAINTS OR SYSTEM INTERRUPTIONS.
A key element of our strategy is to generate a high volume of traffic
to our Web site. Our revenues will depend substantially on the number of
businesses and customers who use our Web site to purchase parts. Accordingly,
the satisfactory performance, reliability and availability of our Web site,
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<PAGE> 13
transaction-processing systems, network infrastructure and delivery and
shipping systems are critical to our operating results, as well as to our
reputation and ability to attract and retain customers and maintain adequate
customer service levels.
We may periodically experience systems interruptions, including
Internet disruptions. Any systems interruptions, including Internet disruptions
that make our Web site inaccessible or reduce our order fulfillment performance
would reduce the volume of parts we are able to sell, which could harm our
business. An increase in the volume of traffic to our Web site could adversely
affect the capacity of the software or hardware deployed by us, which could
lead to slower response time or even system failures. We will be required to
continually enhance and expand our transaction-processing systems, network
infrastructure, and other technologies to accommodate a substantial increase in
the volume of traffic on our Web site. We cannot assure you that we will be
successful in these efforts or that we will be able to accurately project the
rate or timing of increases, if any, in the use of our Web site or timely
expand and upgrade our systems and infrastructure to accommodate these
increases. We cannot assure you that our network or our suppliers' networks
will be able to timely achieve or maintain a sufficiently high capacity of data
transmission, especially if our Web site traffic increases. If we fail to
achieve or maintain our capabilities for high capacity data transmission,
consumer demand for our services could decline.
WE MAY NOT BE ABLE TO SUSTAIN OR GROW OUR BUSINESS UNLESS WE KEEP UP WITH RAPID
TECHNOLOGICAL CHANGES.
The Internet and electronic commerce industries are characterized by:
- rapidly changing technology;
- changes in consumer demands;
- frequent introductions of new services or products that embody new
technologies; and
- evolving industry standards and practices that could render our Web
site and proprietary technology obsolete.
Our future performance will depend, in part, on our ability to license or
acquire leading technologies, enhance our existing services and respond to
technological advances and emerging industry standards and practices on a
timely and cost-effective basis. Developing Web site and other proprietary
technology involves significant technical and business risks. We also cannot
assure you that we will be able to successfully use new technologies or adapt
our Web site and proprietary technology to emerging industry standards. We may
not be able to remain competitive or sustain growth if we do not adapt to
changing market conditions or customer requirements.
IF WE ENCOUNTER SYSTEM FAILURE, SERVICE TO OUR CUSTOMERS COULD BE DELAYED OR
INTERRUPTED. SERVICE DELAYS OR INTERRUPTIONS COULD SEVERELY HARM OUR BUSINESS
AND RESULT IN A LOSS OF CUSTOMERS.
Our ability to successfully maintain an e-commerce Web site and
provide acceptable levels of customer service largely depends on the efficient
and uninterrupted operation of our computer and communications hardware and
network systems. Any interruptions could severely harm our business and result
in a loss of customers. Our computer and communications systems are located in
Sanford, Florida. Although we will periodically back up our databases to tapes
and store the backup tapes offsite, we will not maintain a redundant site. Our
systems and operations are vulnerable to damage or interruption from human
error, sabotage, fire, flood, earthquake, power loss, telecommunications
failure and similar events. Although we will take certain steps to prevent a
system failure, we cannot assure you that our measures will be successful and
that we will not experience system failures in the future. Moreover, we may
experience delays and interruptions in our telephone and Internet access which
will prevent customers
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<PAGE> 14
from accessing our Web site. The occurrence of any system failure or similar
event could harm our business dramatically. In addition, we may move to third
party hosting of our servers. We cannot assure you that this transition, if
undertaken, would be effected without interruptions. Further, any such
third-party host could be subject to the same risks of system failure as our
current site.
OUR BUSINESS MAY BE ADVERSELY AFFECTED IF WE LOSE KEY PERSONNEL.
Our future performance depends substantially on the continued service
of our senior management and other key personnel. In particular, our success
depends upon the continued efforts of our management personnel, including Shawn
D. Lucas, our President, Scott A. Anderson, our Chief Technology Officer and
David Lampert, our Senior Vice President of Software Development. We have
long-term employment agreements with our present key personnel, but have no key
person life insurance.
OUR BUSINESS WILL SUFFER IF WE DO NOT ATTRACT AND RETAIN ADDITIONAL HIGHLY
SKILLED PERSONNEL.
We believe that our future success will depend upon our ability to
hire, train and retain other highly skilled personnel. Competition for quality
personnel is intense. We cannot be sure that we will be successful in hiring,
assimilating or retaining the necessary personnel, and our failure to do so
could adversely affect our business and financial condition.
IF WE DO NOT ADEQUATELY ADDRESS "YEAR 2000" ISSUES, WE MAY INCUR SIGNIFICANT
COSTS AND OUR BUSINESS COULD SUFFER.
Failure of our internal computer systems or third-party equipment or
software, or systems maintained by our suppliers, to operate properly with
regard to the Year 2000 and thereafter could require us to incur significant
unanticipated expenses to remedy any problems and could cause system
interruptions and loss of data. Any of these events could harm our reputation
and adversely affect our business. (See "Year 2000 Readiness Disclosure
Statements" in the "MANAGEMENT'S DISCUSSION AND ANALYSIS" section of this
registration statement.)
WE MAY NOT BE ABLE TO SUCCESSFULLY PROTECT OUR PROPRIETARY RIGHTS.
Our ability to compete effectively will depend on our ability to
maintain the proprietary nature of our services and technologies, including our
proprietary software. Although we have two patent applications pending, we hold
no patents and rely on a combination of trade secrets and copyright laws,
non-disclosure, and other contractual agreements to protect our rights in our
technological know-how and proprietary services. We depend upon confidentiality
agreements with our officers, directors, employees and consultants to maintain
the proprietary nature of our technology. These measures may not afford us
sufficient or complete protection, and others may independently develop
know-how and services similar to ours, otherwise avoid our confidentiality
agreements, or produce patents or copyrights that would materially adversely
affect our business, prospects, financial condition and results of operations.
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<PAGE> 15
RISKS RELATED TO THE INTERNET AND E-COMMERCE INDUSTRIES
OUR SUCCESS DEPENDS ON THE INTERNET'S ABILITY TO ACCOMMODATE GROWTH IN
E-COMMERCE.
The use of the Internet for retrieving, sharing and transferring
information among businesses, buyers, suppliers and partners has only recently
begun to develop. If the Internet were not able to accommodate growth in
e-commerce, our business would suffer. The recent growth in the use of the
Internet has caused frequent periods of performance degradation. Our ability to
sustain and improve our services is limited, in part, by the speed and
reliability of the networks operated by third parties. Consequently, the
emergence and growth of the market for our services is dependent on
improvements being made to the Internet infrastructure to alleviate overloading
and congestion.
A LACK OF DEVELOPMENT OF THE E-COMMERCE MARKET WOULD NEGATIVELY AFFECT US.
If the e-commerce market does not grow or grows more slowly than expected,
our business will suffer. The possible slow adoption of the Internet as a means
of commerce by businesses may harm our prospects. A number of factors could
prevent the acceptance and growth of e-commerce, including the following:
- e-commerce is at an early stage and buyers may be unwilling to shift
their traditional purchasing to online purchasing;
- businesses may not be able to implement e-commerce applications on
these networks;
- increased government regulation or taxation may adversely affect the
viability of e-commerce;
- insufficient availability of telecommunication services or changes in
telecommunication services may result in slower response times; and
- adverse publicity and consumer concern about the reliability, cost,
ease of access, quality of services, capacity, performance and
security of e-commerce transactions could discourage its acceptance
and growth.
Even if the Internet is widely adopted as a means of commerce, the
adoption of our network for procurement, particularly by companies that have
relied on traditional means of procurement, will require broad acceptance of
the new approach. In addition, companies that have already invested substantial
resources in traditional methods of procurement, or in-house e-commerce
solutions, may be reluctant to adopt our e-commerce solution.
SECURITY RISKS OF ELECTRONIC COMMERCE MAY DETER USE OF OUR PRODUCTS AND
SERVICES.
A fundamental requirement to conduct business-to-business e-commerce
is the secure transmission of information over public networks. If members are
not confident in the security of e-commerce, they may not effect transactions
on our e-commerce Web site which would severely harm our business. We cannot be
certain that advances in computer capabilities, new discoveries in the field of
cryptography, or other developments will not result in the compromise or breach
of the algorithms we use to protect content and transactions on our e-commerce
Web site or proprietary information in our databases. Anyone who is able to
circumvent our security measures could misappropriate proprietary, confidential
member information, place false orders or cause interruptions in our
operations. We may be required to incur significant costs to protect against
security breaches or to alleviate problems caused by breaches. Further, a
well-publicized compromise of security could deter people from using the
Internet to conduct transactions that involve transmitting confidential
information. Our failure to prevent security breaches, or well-publicized
security breaches affecting the Internet in general could adversely affect our
business.
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<PAGE> 16
INCREASING GOVERNMENTAL REGULATION OF THE INTERNET COULD ADVERSELY AFFECT OUR
BUSINESS.
We are currently not regulated by any government agency, other than
regulations applicable to businesses generally, laws applicable to auction
companies and auctioneers, and laws or regulations directly applicable to
Internet commerce. However, due to the increasing popularity and use of the
Internet, it is possible that a number of laws and regulations may be adopted
with respect to the Internet, covering issues such as user privacy, pricing,
sales tax, and characteristics and quality of products and services.
Furthermore, the growth and development of Internet commerce may prompt calls
for more stringent consumer protection laws that may impose additional burdens
on companies conducting business over the Internet. New laws or regulations may
decrease the growth of the Internet, which, in turn, could decrease the demand
for our Internet auctions and increase our cost of doing business. The
applicability to the Internet of existing laws in various jurisdictions
governing issues such as property ownership, auction regulation, sales tax,
libel and personal privacy is uncertain and may take years to resolve.
The tax treatment of the Internet and electronic commerce is currently
unsettled. A number of proposals have been made at the federal, state and local
level and by some foreign governments that could impose taxes on the sale of
goods and services and other Internet activities. In October 1998, the Internet
Tax Freedom Act was signed into law, placing a three-year moratorium on new
state and local taxes on Internet commerce. However, it is possible that future
laws imposing taxes or other regulations on commerce over the Internet could
substantially impair the growth of electronic commerce and as a result have a
negative effect on our business.
In addition, because our service is available over the Internet in
multiple states and because we sell merchandise to numerous consumers resident
in multiple states, we could be required to qualify to do business as a foreign
corporation in each state in which our services are available. We are qualified
to do business in only two states, and our failure to qualify as a foreign
corporation in a jurisdiction where we are required to do so could subject us
to taxes and penalties for the failure to qualify. Any new legislation or
regulation, or the application of laws or regulations from jurisdictions whose
laws do not currently apply to our business, could have a material adverse
effect on our business.
FAILURE TO MAINTAIN ACCURATE DATABASES COULD SERIOUSLY HARM OUR BUSINESS AND
REPUTATION.
We must update and maintain extensive databases of the parts and
e-commerce transactions for our customers. Our computer systems and databases
must allow for expansion as our business grows without losing performance.
Database capacity constraints may result in data maintenance and accuracy
problems which could cause a disruption in our service and our ability to
provide accurate information to our customers. These problems may result in a
loss of customers, which could severely harm our business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following selected financial data should be read in conjunction
with the more detailed financial statements, related notes and other financial
information included herein.
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<TABLE>
<CAPTION>
Statement of Operations Data:
- ----------------------------- Nine Months From Inception
Ended September 30, January 27, 1998
1999 To December 31, 1998
---------------- --------------------
<S> <C> <C>
Revenues $ 1,153,414 $ 377,599
Cost of Sales $ 876,552 $ 302,109
Operating and other Expenses $ 3,405,750 $ 1,941,298
------------- -------------
Net Loss $ (3,128,888) $ (1,865,808)
<CAPTION>
Balance Sheet Data:
- ------------------ Sept. 30, 1999 December 31, 1998
------------------------- -----------------
<S> <C> <C>
Current Assets $ 211,151 $ 274,525
Total Assets $ 2,395,735 $ 1,257,126
Current Liabilities $ 1,126,049 $ 760,273
Total Liabilities $ 1,508,865 $ 805,563
Working Capital (Deficit) $ (914,898) $ (485,748)
Stockholders' Equity $ 886,870 $ 451,563
</TABLE>
RESULTS OF OPERATIONS
Nine months ended September 30, 1999 compared to the period from Inception,
January 27, 1998 to December 31, 1998
For the nine months ended September 30, 1999, Miracom's revenue
increased $775,815 or 205% compared to the period from Inception (January 27,
1998) to December 31, 1998 due to sales from its UEP/MTV Pinnacle acquisition
reflective of nine months, whereas in the prior period, this division produced
sales for only three months (from the date of acquisition, September 30, 1998
through December 31, 1998.)
Operating and other Expenses increased $1,464,452 or 75% from the
prior period arising primarily from the increased level of operations,
amortization of goodwill associated with the Miracom's acquisitions and the
asset impairment charge of $1,221,800 related to the Livecode, Inc.
acquisition.
Liquidity and Capital Resources
The increase in Miracom's assets from $1.3 million at December 31,
1998 to $2.4 million at September 30, 1999 is due to a combination of factors
that include: capital expenditures incurred for the purchase of Miracom's
building/headquarters and the related improvements; deferred costs associated
with the acquisition of the building and the acquisition of Livecode, Inc.
The increase in Miracom's liabilities to $1,508,865 at September 30,
1999 compared to $805,563 at December 31, 1998 is primarily attributable to
borrowings under mortgages payable related to the Miracom's office building and
the increase in accounts payable and accrued expenses due to the Company's
increased operations.
The increase in stockholders' equity from $451,563 at December 31,
1998 to $886,870 at September 30, 1999 is due to the acquisition of Livecode,
Inc. and various financing activities throughout the period.
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During the nine months ended September 30, 1999, Miracom's operations
used approximately $1.1 million of cash. In order to fund its operating losses,
Miracom sold shares of its common stock through a Rule 504 offering and
subsequent private placements raising approximately $1.2 million. Additionally,
Miracom executed a $50,000 promissory note with a private party in September
1999.
The ability of Miracom to satisfy its obligations depends in part on
its ability to reach a profitable level of operations and secure both short and
long-term financing for the development and expansion of its two main business
divisions, Parts.com and ReallyKnow.com. Miracom is currently in negotiations
with financial institutions and other private lenders to provide additional
funding through a combination of debt and equity financing to fund its business
plan. Without short or long-term financing, Miracom will attempt to sell
additional shares of common stock to meet its current and future capital needs.
There can be no assurance, however, that Miracom will be successful in
obtaining any such additional financing.
Year 2000 Readiness Disclosure Statements
Many currently installed computer systems and software products are
unable to distinguish between 20th century dates and 21st century dates. As a
result, many companies' software and computer systems may need to be upgraded
or replaced to comply with these "Year 2000" requirements. Our business is
dependent on the operation of numerous systems that could potentially be
impacted by Year 2000 related problems. Those systems include, among others:
- hardware and software systems used by us to process transactions
and deliver other services to our customers;
- including our proprietary software systems, as well as hardware
and software supplied by third parties;
- communications networks, such as the Internet and private
intranets, on which we depend to permit electronic commerce
transactions by our customers;
- the internal systems of our customers and suppliers;
- the hardware and software systems used internally by us in the
management of our business; and
- non-information technology systems and services used by us in
our business, such as telephone systems and building systems.
We have internally reviewed the proprietary software systems we use to
process transactions and deliver other services to our customers. Although we
believe that our internally developed applications and systems are designed to
be Year 2000 compliant, we utilize third-party equipment and software that may
not be Year 2000 compliant. Failure of third-party or currently owned equipment
or software to operate properly with regard to the Year 2000 could require us
to incur unanticipated expenses to remedy any problems, which could have a
material adverse effect on our business, prospects, financial condition, and
results of operations. To date, we have incurred $15,000 in connection with our
Year 2000 compliance activities. We believe that additional expenditures to
upgrade our internal systems and
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applications and replace non-compliant systems will not exceed $10,000 and will
not be material to our business, prospects, financial condition, and results of
operations. We have utilized, and intend to continue to utilize, general
working capital in order to fund these activities. We have not had to defer any
information technology projects as a result of these activities.
Furthermore, the success of our efforts may depend on the success of
our customers in dealing with their Year 2000 issues. Many of these
organizations are not Year 2000 compliant, and the impact of widespread
customer failure on our systems is difficult to determine. Customer
difficulties due to Year 2000 issues could interfere with electronic commerce
transactions or information, which might expose us to significant potential
liability. If customer failures result in the failure of our systems, our
business, prospects, financial condition, and results of operations would be
materially adversely affected. Furthermore, the purchasing patterns of these
customers or potential customers may be affected by Year 2000 issues as
companies expend significant resources to become Year 2000 compliant. The costs
of becoming Year 2000 compliant for current or potential customers may result
in reduced funds being available to purchase and implement our applications and
services.
We have implemented a Year 2000 program to assess and monitor Year
2000 issues with all of our significant customers, suppliers, and other third
parties. We have appointed a single individual to head our Year 2000 program.
The following significant parties, which provide us with essential or critical
systems, have certified through Year 2000 compliance testing or vendor
certification that such systems are Year 2000 compliant: Teligent, Inc., Sprint
Corp. and BellSouth Corp.
We have conducted a formal assessment of our Year 2000 exposure in
order to determine what steps beyond those identified by our internal review
may be advisable. We developed a contingency plan for handling Year 2000
problems that are not detected and corrected prior to their occurrence and
completed this plan in December 1998. Our most likely worst case Year 2000
scenario is unknown at this time. Our failure to address any unforeseen Year
2000 issue could materially adversely affect our business, prospects, financial
condition, and results of operations.
ITEM 3. DESCRIPTION OF PROPERTY
We own the office building that is Miracom's headquarters at 121 East
First Street, Sanford, Florida 32771, which is approximately twenty miles
northeast of Orlando. The building has approximately 8,000 square feet of space
and is in historic downtown Sanford. We also own a 5,000 square foot parking
lot located one block from our office. The lot is subject to a 9% first
mortgage in favor of American Note Investments, Inc. The loan balance of
$20,000 is due in monthly principal and interest payments of $260 through
January 2004. The office building and the lot are subject to a first mortgage
and second mortgage and loan agreements in favor of Eugene W. Gramzow, Trustee
for the Eugene W. Gramzow Revocable Trust. The promissory notes secured by the
mortgage are for $380,000. Interest is calculated at 15% per annum and is
payable at $4,750 per month, with the principal balance and any accrued but
unpaid interest due and payable in full on May 31, 2016. The President of the
Company has executed a conditional personal guaranty in connection with these
mortgage notes.
The office building and the lot are also subject to a third mortgage
in favor of StoneStreet Investments, Inc., a Florida corporation owned by five
officers and/or directors of the Company, some of whom are principal
shareholders of Miracom. The promissory note secured by the mortgage is in the
amount of $182,000. Interest is calculated at 9-1/2% per annum. Principal and
interest are amortized over 15 years, payable at $1,441 per month for the
initial five months; thereafter, the monthly payment increases to $1,900 for
the remainder of the term. The balance of any outstanding principal and accrued
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but unpaid interest is due and payable in full on July 31, 2002. Currently,
payments under the third mortgage are being deferred indefinitely.
At September 30, 1999, the carrying value of land, building and
improvements has been reduced by $74,000, which amount represents the excess of
the purchase price of the property over its appraisal value at the date of
purchase.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information regarding the beneficial
ownership of Miracom's common stock as of September 30, 1999, by the following
individuals or groups:
- Each person or entity who is known by Miracom to own
beneficially more than 5% of Miracom's outstanding stock;
- Each of the executive officers named in the summary compensation
table;
- Each director of Miracom; and
- All directors and executive officers as a group.
Unless otherwise indicated, the address of each of the individuals
listed in the table is c/o Miracom, 121 East First Street, Sanford, Florida
32771. Except as otherwise indicated, and subject to community property laws
where applicable, the persons named in the table have sole voting and
investment power with respect to all shares of common stock held by them.
Percentage ownership in the following table is based on 14,178,744
shares of common stock outstanding as of September 30, 1999. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of common stock subject to options, warrants or
other conversion rights that are presently exercisable or exercisable within 60
days of September 30, 1999 are deemed to be outstanding and beneficially owned
by the person holding the options, warrants or conversion rights for the
purpose of computing the percentage of ownership of that person, but are not
treated as outstanding for the purpose of computing the percentage of any other
person.
<TABLE>
<CAPTION>
NUMBER OF SHARES SHARES BENEFICIALLY OWNED AS A
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENTAGE OF CLASS OUTSTANDING
<S> <C> <C>
Shawn D. Lucas (1) 1,864,001 13%
Scott A. Anderson (1) 724,763 5%
Jeffrey M. Odato (1) 329,732 2%
Michael R. Fouts (1) 1,555,760 11%
David M. Lampert (2) 320,000 2%
David McComas (1) 1,872,836 13%
Ian J. Hart 10,000 *
SML, Limited 1,182,500 8%
</TABLE>
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<TABLE>
<S> <C> <C>
All directors and executive officers 6,667,092 47%
as a group (7 persons)
</TABLE>
- --------------------
* Less than one percent
(1) Includes 36,667 shares of common stock issuable upon exercise of stock
options.
(2) Shares are held in a family trust for which Mr. Lampert and his wife are
co-trustees.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers, and their ages as of September
30, 1999, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Shawn D. Lucas 31 Chairman, Co-Chief Executive Officer and President
Scott A. Anderson 31 Co-CEO, Chief Technology Officer, Director
Jeffrey M. Odato 43 National Sales Manager, Director
Michael R. Fouts 42 Director of Business Affairs, Director
David McComas 30 Strategic Business Development, Director
David Lampert 32 Senior Vice President of Software Development, Director
Ian Hart 35 Chief Financial Officer
</TABLE>
BACKGROUND INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Shawn D. Lucas has served as the Chairman, Co-Chief Executive Officer
of Miracom since September 1998. He co-founded the original entity, Direct
Touch Research, in January 1998 and has also been Miracom's President since
June 1999. Prior to co-founding Miracom, Mr. Lucas was the Vice President of
Media for MTV/Pinnacle Advertising, Sanford, Florida from January 1997 to
September 1998. From 1994 to 1996, he was Vice President and Principal of
DeFalco West Advertising, Inc., Los Angeles, California. From 1991 to 1994, Mr.
Lucas worked for DeFalco Advertising, Inc. of Heathrow, Florida. Prior to that
time, Mr. Lucas spent a considerable amount of time in the automotive industry
working for John Lucas Chevrolet in Oregon.
Scott A. Anderson has served as Co-Chief Executive Officer and Chief
Technology Officer of Miracom since September 1998. He co-founded the original
entity, Direct Touch Research, in January 1998. In July 1996, Mr. Anderson
joined UEP of Sanford, Florida, an Internet technology and workflow solution
company as a general partner. He served as its President from September 1997
through September 1998. From 1995 to January 1997 he was MIS director for
DeFalco Advertising, Inc.
Jeffrey M. Odato has been a director of Miracom and the National Sales
Manager Sales since September 1998. Prior to joining Miracom, he was the
President of MTV Pinnacle Advertising Group from January 1997 to September
1998. He served as the President of DeFalco Advertising from October 1993 to
January 1997.
Michael R. Fouts has been a director of Miracom since September
1998 and has served as our Director of Business Affairs since September 1998.
Mr. Fouts was the Chief Executive Officer of MTV Pinnacle Advertising Group
from January 1997 to September 1998. Prior to that time, he was Chief
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Operating Officer of a DeFalco Advertising, Inc. from February 1992 through
December 1996.
David McComas has been a director of Miracom since September 1998 and
serves as our executive in charge of Strategic Business Development. From
September 1998 through May 1999 he served as the President of Miracom. From
1993 to 1998, he was Senior Vice President, Sales and Marketing for
Sub-Solutions, Inc. of Clearwater, Florida.
David M. Lampert has been a director of Miracom and the Senior Vice
President of Software Development since April 1999. From October 1998 to April
1999, Mr. Lampert served as President of Livecode, Inc., Altamonte Springs,
Florida, an internet and workflow solutions company. Prior to that, he was
employed as a Senior Programmer/Analyst for Computer Sciences Corporation
Financial Services Group, Winter Park, Florida, from October 1996 to October
1998. From 1985 to 1996, Mr. Lampert was Director of Development and Webmaster
for Techware Corporation, Altamonte Springs, Florida. Mr. Lampert is the
brother of Daniel Lampert, an employee of Miracom.
Ian Hart joined Miracom in October 1999 as our Chief Financial
Officer. From October 1998 to September 1999, he served as Chief Financial
Officer of Sims Communications, Inc., Irvine, California. Prior to that, he was
Chief Financial Officer for Data Systems West, Los Angeles, California, from
April 1998 through October 1998. From December 1996 to April 1998, he was Chief
Financial Officer for D2 Electrical Contracting, Inc, Corona, California. From
October 1994 to November 1997, Mr. Hart worked as a financial consultant with
Merrill Lynch, Pasadena, California. From 1992 to October 1995, he was Vice
President of Secondary Marketing for Fallbrook Mortgage Corporation of Woodland
Hills, California. From 1986 to 1992, he worked as a CPA in public practice
with a local accounting firm and Ernst & Whinney, Century City, California.
All of the Company's officers and directors devote substantially all of their
time to the Company's business.
BOARD OF DIRECTORS AND COMMITTEES
Our bylaws provide that our board of directors may select the number
of directors that comprise the board. Directors are elected at the annual
meeting and serve for a one-year term until their successors are elected and
qualified. The board of directors currently consists of six members and we
anticipate expanding the size of the board of directors to include independent
directors.
Miracom has no compensation committee. The board of directors
currently makes all compensation decisions. Miracom anticipates forming and
implementing a compensation committee and an audit committee during 2000.
DIRECTOR COMPENSATION FOR ATTENDANCE AT MEETINGS
During 1998 and 1999, Miracom paid its employee-directors $7,500 for
their service as directors, but ceased paying those fees as of April, 1999.
Miracom has no plan of reinstating director fees in the future. Although
Miracom has not effected a compensation program for non-employee directors,
Miracom intends to have its non-employee directors participate in its stock
option plan. All directors will be reimbursed for their expenses in attending
board and committee meetings.
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ITEM 6. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth compensation information for the fiscal
year ended December 31, 1998 paid by Miracom for services by our co-Chief
Executive Officers ("Named Executive Officers"). No executive officer had a
salary for that fiscal year that exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
EXECUTIVE FISCAL
YEARS SALARY (1)
<S> <C> <C>
Shawn D. Lucas 1998 $33,394
Scott A. Anderson 1998 $31,950
</TABLE>
(1) Reflects compensation for the fourth quarter ended December 31, 1998.
There were no other forms of compensation provided (i.e. bonus, or
long-term compensation Awards)
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS
We entered into employment agreements (as amended) with the following
executives:
<TABLE>
<CAPTION>
Officer Term Salary Position
- ------- ---- ------ --------
<S> <C> <C> <C>
Shawn D. Lucas Oct. 1998-Oct. 2001 $72,000 Co-CEO, President
Scott A. Anderson Oct. 1998-Oct. 2001 $72,000 Co-CEO, Chief Technology Officer
Jeffrey M. Odato Oct. 1998-Oct. 2001 $72,000 National Sales Manager
Michael R. Fouts Oct. 1998-Oct. 2001 $72,000 Director of Business Affairs
David McComas Oct. 1998-Oct. 2001 $72,000 Strategic Business Development
David Lampert Apr. 1999-Apr. 2002 $72,000 Senior Vice President of Software
Development
</TABLE>
All provisions contained in the employment agreements for the
above-named executives are identical. Under each agreement, the executive is
entitled to participate in all employee benefit programs available to Company
employees generally, including participation in health care and disability
plans, stock option plans and any retirement plan. The original term of the
agreements is three years; however, on each anniversary of the commencement
date, the term is automatically extended for an additional year. The agreements
provide for discretionary performance bonuses as determined by the board of
directors.
The Company may terminate the executives' employment for cause or
without cause at any time, subject to the approval of a majority of the board
of directors. If the Company terminates the executive without cause he is paid
for his then existing annual base salary for a period of three years, payable
weekly or in accordance with our payroll practices at the time. An additional
six months of insurance coverage is provided for them under the Company's
medical and disability plans. Upon termination of
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employment without cause, the executives will be released from the
non-competition provisions of their employment agreements, but the
non-disclosure and provisions relating to proprietary information will remain
in effect.
The executives may terminate their employment at any time upon 90
days' written notice to the Company, except in the event of a change of
control, when 10 days' notice is required. The agreements contain
nonsolicitation and noncompetition provisions that are intended to survive the
termination of employment for a period of two years.
In addition, in April 1999, the Company entered into an employment
agreement (as amended) with Daniel Lampert. He serves as our Director of
Operations and receives an annual salary of $72,000. The agreement expires in
April, 2002; however, on each anniversary date, the term automatically extends
for an additional year. The Company may terminate Mr. Lampert's employment for
cause or without cause at any time, subject to the approval of a majority of
the board of directors. If the Company terminates Mr. Lampert without cause, he
is to be paid for his then existing annual base salary for a period of three
years, payable in accordance with our standard payroll practices. An additional
six months of insurance coverage is also to be provided for him under the
Company's medical and disability plans. Upon termination of employment without
cause, Mr. Lampert will be released from the non-competition provisions of
their employment agreements, but the non-disclosure and provisions relating to
proprietary information will remain in effect. Mr. Lampert may terminate his
employment at any time upon 90 days' written notice to the Company, except in
the event of a change of control, when 10 days' notice is required. The
agreements contain nonsolicitation and noncompetition provisions that are
intended to survive the termination of employment for a period of two years.
Also, in August 1999, the Company entered into an employment agreement
with Ian Hart. He serves as the Chief Financial Officer and receives an annual
salary of $100,000. The agreement expires on December 31, 2000, subject to
renewal for successive one year terms, and unless otherwise terminated under
the agreement. Under his agreement, Mr. Hart received stock options pursuant to
our 1998 Stock Option Plan to purchase an aggregate of 120,000 shares of common
stock at an exercise price of $1.75 per share. These stock options vest over 18
months. Mr. Hart was also granted 10,000 shares of restricted common stock to
be forfeited should he voluntarily terminate his employment prior to April 4,
2000 or should we discharge him for cause prior to April 4, 2000. If the
Company terminates Mr. Hart's employment without cause, he will continue to be
paid his base salary and be provided health insurance benefits (and life
insurance benefits, if any) for the greater of the remaining term of the
agreement or eight months. Mr. Hart may terminate the agreement upon 90 days'
prior notice to us. The agreement contains nonsolicitation and noncompetition
provisions that survive termination of his employment for two years.
STOCK OPTION PLAN
Miracom's stock option plan currently authorizes the award of
1,650,000 shares of common stock in the form of stock options. As of October 1,
1999, stock options to purchase 670,000 shares of common stock were outstanding
under the plan. Accordingly, 980,000 shares of common stock are available for
future awards under the plan. The plan is designed as a means to retain and
motivate qualified and competent persons who provide services to Miracom and
its subsidiaries, if any.
All employees of Miracom are eligible to be granted awards under the
plan, as are directors, consultants and independent contractors of Miracom or
its subsidiaries. Awards under the plan are made by the board of directors, or
if instituted by the board of directors, by the compensation committee, in its
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<PAGE> 25
sole discretion, from among those eligible. In granting options, the
compensation committee (when created) will considers current levels of
compensation, the need to provide incentives to particular employees, past
performance, comparison to employees at comparable companies and Miracom's
overall performance.
The plan is currently administered by the board of directors. The
board makes all decisions or determinations by either a majority vote of its
members at a meeting or by the unanimous written approval of its members. The
board may adopt, alter or repeal any administrative rules, guidelines and
practices for carrying out the purposes of the plan. The board has the right to
determine, among other things, the persons to whom awards are granted, the
terms and conditions of any awards granted, the number of shares of common
stock covered by the awards, the exercise price of options and the term
thereof.
If there is a change in the common stock due to a stock dividend or
recapitalization, the plan provides for appropriate adjustment in the number of
shares available for grant under the plan and the number of shares and the
exercise price per share under any option then outstanding under the plan, so
that the same percentage of Miracom's issued and outstanding shares shall
remain subject to being optioned under the plan or subject to purchase at the
same aggregate exercise price under any such outstanding option, as applicable.
Unless otherwise provided in any option, the committee may change the option
price and/or number of shares under any outstanding option when, in its
discretion, such adjustment becomes appropriate so as to preserve but not
increase benefits under the plan. The aggregate number of shares subject to
options granted to any one optionee under the Plan may not exceed 660,000,
subject to adjustment as described above. However, no incentive stock options
(as defined in Section 422 of the Internal Revenue Code) may be granted to a
person who is not also an employee of Miracom.
The plan provides for the granting of both incentive stock options and
nonqualified stock options. Options may generally be granted under the plan on
such terms and at such prices as determined by the committee, except that the
per share exercise price of any incentive stock options cannot be less than the
fair market value of a share of the common stock on the date of grant. Each
option is exercisable after the period or periods specified in the option
agreement, but no option may become exercisable after the expiration of ten
years from the date of grant. The committee may accelerate the exercisabilty or
vesting of any option or shares previously acquired by the exercise of any
options, and, in the event of a change in control, unless otherwise provided in
the option, each outstanding option will become immediately fully exercisable.
Incentive stock options granted to an individual who owns (or is deemed to own)
at least 10% of the total combined voting power of all classes of stock of
Miracom or any of its subsidiaries must have an exercise price of at least 110%
of the fair market value of the Common stock subject to such option on the date
of grant and a term of no more than five years. Incentive stock options granted
under the plan are not transferable other than by will or by the laws of
descent and distribution. Nonqualified stock options are also not transferable
unless the prior written consent of the committee is obtained and such transfer
does not violate Rule 16b-3 under the Securities Exchange Act of 1934.
The committee may permit the option price to be paid by cash,
certified or official bank check, personal check if accepted by the committee,
money order, shares of common stock that have been held for at least 6 months
(or such other shares as Miracom determines will not cause Miracom to recognize
for financial accounting purposes, a charge for compensation expense),
withholding of shares of common stock, any cashless exercise procedure approved
by the committee, other consideration deemed appropriate by the committee, or a
combination of the above. The plan also authorizes Miracom to make or guarantee
loans to optionees to enable them to exercise their options. Such loans must
(i) provide for recourse to the optionee, (ii) bear interest at the prime rate
of Miracom's principal lender, (iii) be secured
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<PAGE> 26
by the shares of Common Stock purchased, and (iv) contain such other terms as
the committee in its sole discretion shall reasonably require. The committee
has the authority to amend or terminate the plan or any options, provided that
no such action may substantially impair the rights or benefits of the holder of
any outstanding option without the consent of such holder, and provided further
that certain amendments to the plan are subject to shareholder approval.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1998, I.E.L.S., Inc., a Nevada corporation with no
material operations, completed an exchange agreement with Direct Touch
Research, Inc. a Florida corporation with no material operations, pursuant to
which all shares of DTR common stock were exchanged for 5,542,000 shares of
I.E.L.S. common stock. Three of the original shareholders and promoters of
I.E.L.S. agreed to have 1,610,000 shares of their stock redeemed by I.E.L.S.
for an aggregate consideration of $1,610.00. At the time of the completion of
the share exchange, the prior shareholders and promoters of DTR held 5,542,000
shares and the I.E.L.S. shareholders held 4,200,000 shares (prior to redemption
and cancellation of the 1,610,000 referenced above). As a result, DTR became a
wholly owned subsidiary of I.E.L.S. and I.E.L.S. changed its name to Miracom
Corporation. A total of 987,000 additional shares were issued to the following
persons for assisting with the share exchange: Consolidated Capital Group, Inc.
(300,000 shares); Roger Tichenon (300,000 shares); Pow Wow, Inc. (300,000
shares) and Douglas Hackett (87,000 shares). Miracom subsequently dissolved DTR
in August 1999.
In September 1998, Miracom acquired all of the business, assets and
liabilities of United Equity Partners, Inc., a Florida corporation, for 150,000
shares of Miracom common stock. UEP, a company owned by Scott A. Anderson and
Michael R. Fouts, provided website design and maintenance services for
businesses. The assets acquired consisted primarily of computer equipment,
accounts receivable and maintenance contracts. Miracom also assumed trade
payables of approximately $90,000. UEP was subsequently dissolved in August
1999.
In September 1998, Miracom acquired all of the business, assets and
liabilities of MTV/Pinnacle Advertising Group, Inc., a Florida corporation
("Pinnacle"), for 582,000 shares of Miracom common stock. Pinnacle, a company
owned by Jeffrey M. Odato and Michael R. Fouts, provided advertising services
primarily to automobile dealerships. The assets acquired consisted primarily of
accounts, receivables, computer and office equipment. Miracom also assumed
trade payables of approximately $469,000.
In May 1999, Miracom acquired all of the outstanding common stock of
LiveCode, Inc. ("LiveCode") a Florida corporation in exchange for 600,000 shares
of the Company's common stock and a six-month non-interest bearing $20,000
promissory note in favor of the stockholders of LiveCode. The Company, whose
President was David Lampert, provides software solutions and other
computer-related services to various industries. Effective September 30, 1999,
the $20,000 note was repaid by the issuance of 40,000 shares of Miracom common
stock.
In May 1999, Miracom purchased the office building that is its
headquarters and a future parking facility for $562,000. The sellers of the
property were Karl and Helen Stairs and StoneStreet Investments, Inc., a
Florida corporation ("StoneStreet"), owned by Messrs. Lucas, Fouts, Odato,
Anderson and McComas, each of whom is a director and shareholder of Miracom.
The purchase was financed with secured loans totaling $380,000 from an
unrelated party, Eugene E. Gramzow, Trustee for the Eugene W. Gramzow Revocable
Trust (the "Gramzow Loan") and an unsecured loan in the amount of
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<PAGE> 27
$182,000 in favor of StoneStreet Investments, Inc. The remaining loan proceeds
were used to complete approximately $130,000 worth of improvements to the
property and the building. The Gramzow Loan is secured by the following: (i) a
first mortgage against the Miracom's headquarters and second mortgage against
the parking lot; (ii) a conditional personal guaranty by Shawn D. Lucas; and
(ii) a pledge of a total of 100,000 shares of Miracom common stock by Scott A.
Anderson, Michael R. Fouts, Jeffrey M. Odato and David McComas (each of whom
pledged 25,000 shares). The loan from StoneStreet is secured by a second
mortgage on Miracom's headquarters and a third mortgage on the parking lot. For
a description of the terms of the loans, see Item 3 "Description of Property."
In February 1999, the board of directors granted a 10-year
non-qualified stock option under Miracom's stock option plan, to each of Shawn
D. Lucas, David McComas, Scott A. Anderson, Jeffrey M. Odato and Michael R.
Fouts. Each option is exercisable for 110,000 shares at an exercise price of
$3.00 per share commencing October 1, 1999 as to one-third, October 1, 2000 as
to one-third, and October 1, 2001 for the balance of one-third. The options are
subject to termination under certain circumstances and the exercise dates are
subject to acceleration upon a change of control (as defined in Miracom's stock
option plan).
Effective September 30, 1999, Miracom repaid $85,546 worth of debt to
its principal shareholders, directors and/or officers with the issuance of
171,091 shares of common stock. Messrs. Anderson, McComas, Odato and Fouts
received 55,763; 2,836; 17,065 and 95,427 shares respectively.
On October 21, 1999, Miracom acquired all of the outstanding common
stock of FlexRadio, Inc., ("FlexRadio") for 6,200,000 shares of Miracom common
stock, a transaction valued at $6,417,000. The 6,200,000 shares of stock were
issued to FlexRadio's owners - Flex Technologies, Inc., Shawn Lucas, Official
Sports Management, Inc. and Select Media, Inc.
ITEM 8. DESCRIPTION OF SECURITIES
GENERAL
The following description of our capital stock is only a summary and
is qualified in its entirety by reference to the actual terms of the capital
stock contained in our amended and restated articles of incorporation and
amended and restated bylaws.
Miracom's authorized capital stock consists of 50,000,000 shares of
common stock, par value $.001 per share, 14,178,744 shares of which are issued
and outstanding at September 30, 1999. The outstanding shares of Common Stock
are fully paid and non-assessable. Miracom is further authorized to issue up to
10,000,000 shares of "blank check preferred stock," par value $.001 per share,
none of which are issued and outstanding as of the date hereof.
COMMON STOCK
The holders of common stock are entitled to one vote per share for the
election of directors and
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with respect to all other matters submitted to a vote of stockholders. Shares
of common stock do not have cumulative voting rights, which means that the
holders of more than 50% of such shares voting for the election of directors
can elect 100% of the directors if they choose to do so and, in such event, the
holders of the remaining shares so voting will not be able to elect any
directors. Current holders of Miracom's common stock will have majority voting
control. As a result, such persons will be in the position to effectively
control the affairs of Miracom.
Upon any liquidation, dissolution or winding-up of Miracom, the assets
of Miracom, after the payment of company debts and liabilities and any
liquidation preferences of, and unpaid dividends on, any class of preferred
stock which may then be outstanding, if at all, will be distributed pro-rata to
the holders of the common stock. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock.
Holders of Miracom's common stock are entitled to receive such
dividends as the board of directors may from time to time declare to be paid in
accordance with Nevada law and if Miracom has sufficient surplus or net
earnings. Miracom has never paid cash dividends. Miracom seeks growth and
expansion of its business through the reinvestment of profits, if any, and does
not anticipate that it will pay dividends in the foreseeable future.
Miracom may issue additional shares of its common stock in the future
for such valid corporate purposes, as management may determine, in its sole
discretion, which could then cause dilution to Miracom's then common
stockholders.
PREFERRED STOCK
Our board of directors, without further action by the stockholders, is
authorized to issue an aggregate of 10,000,000 shares of preferred stock. No
shares of preferred stock are outstanding. The board of directors may, without
stockholder approval, issue preferred stock with dividend rates, redemption
prices, preferences on liquidation or dissolution, conversion rights, voting
rights and any other preferences, which rights and preferences could adversely
affect the voting power of the holders of common stock. Issuance of preferred
stock, while providing desirable flexibility in connection with possible
acquisitions or other corporate purposes, could have the effect of making it
more difficult for a third party to acquire, or could discourage or delay a
third party from acquiring, a majority of our outstanding stock.
REGISTRATION RIGHTS
Holders of 1,410,000 shares of common stock have piggyback
registration rights entitling them to include those shares in a registration
statement filed by Miracom for an offering of its shares. Miracom is obligated
to pay the costs of such registration, but the holders of the common stock that
is registered are responsible for the payment of their own selling commissions,
broker fees and fees of their own legal counsel. Those registration rights
expire in 2002.
The holders of stock options for 550,000 shares of Miracom's common
stock have piggyback registration rights entitling them to include shares
underlying their options in a registration statement filed by Miracom for an
offering of its shares. Miracom is obligated to pay the costs of such
registration, but the holders of the common stock that is registered are
responsible for the payment of their own selling commissions, broker fees and
fees of their own legal counsel. Those registration rights expire in 2009.
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Registration of shares of common stock pursuant to the exercise of
demand, piggyback registration rights under the Securities Act would result in
such shares becoming freely tradable without restriction under the Securities
Act immediately upon the effectiveness of such registration.
CERTAIN PROVISIONS OF NEVADA LAW AND OUR CORPORATE GOVERNANCE DOCUMENTS
Certain provisions of Nevada law and Miracom's Amended and Restated
Articles of Incorporation ("Articles of Incorporation") and Miracom's Amended
and Restated Bylaws ("Bylaws"), may deter or frustrate a takeover attempt of
Miracom that a stockholder might consider in its best interest.
CERTAIN BUSINESS COMBINATIONS. Once Miracom becomes subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended,
Miracom will be subject to the "affiliated transactions" provisions of the
Nevada Revised Statutes. These provisions require, subject to certain
exceptions, that certain business combinations and corporate transactions with
beneficial owners of more than 10 percent of a corporation's voting stock, or
any entity or individual controlled by such owner (an "interested stockholder")
be approved (i) by a majority of the board of directors or (ii) by the holders
of a majority of the voting shares other than those beneficially owned by an
"interested stockholder." These provisions to not apply to any combination of a
resident domestic corporation whose current articles of incorporation expressly
state that the corporation is not to be governed by these provisions. Our
Articles of Incorporation currently do not contain such an exclusionary
provision.
ACQUISITION OF A CONTROLLING INTEREST. Under Nevada law, voting rights
must be conferred on "control shares" acquired in specified control share
acquisitions, generally only to the extent conferred by resolution approval by
the stockholders, excluding the shares acquired in a control share acquisition.
Shares are acquired in a control share acquisition when a person acquires a
"controlling interest" in a corporation. A "controlling interest" is defined as
the ownership of shares that, except for the application of the statute, would
have voting power that, when added to all other shares that the acquirer owns
or has the power to vote, would give the acquirer (directly, indirectly, alone,
or in association with others) voting power in excess of certain statutory
parameters. Nevada's "control shares" statute apply to a Nevada corporation
having 200 or more stockholders (at least 100 of whom are stockholders of
record and residents of Nevada) and which does business in Nevada directly or
through an affiliated corporation. If a corporation's articles of incorporation
or bylaws provide that the "control shares" statutes do not apply, then those
provisions are not applicable. Our Articles of Incorporation and Bylaws,
however, currently do not contain such an exclusionary provision. Florida has
enacted a "control share acquisition" statute substantially similar to Nevada's
and to which Miracom may be subject if it meets certain parameters under
Florida law (i.e., has over 100 stockholders; its principal place of business,
its principal office, or substantial assets are located within Florida; and
either (i) more than 10 percent of its stockholders reside in Florida; (ii)
more than 10 percent of its shares are owned by residents of Florida; or (iii)
1,000 stockholders are resident in Florida.
SPECIAL MEETINGS OF STOCKHOLDERS. Miracom's Bylaws provide that any
special meeting of stockholders may be called only by the Chairman of the
Board, the President or upon the affirmative note of at least a majority of the
members of the Board of Directors, or upon the written demand of the holders of
not less than 25% of the votes entitled to be cast at a special meeting.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Miracom's Bylaws provide that stockholders seeking to bring
business before an annual meeting of stockholders, or to nominate candidates
for election as directors at an annual or special meeting of
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stockholders, must provide timely notice thereof in writing. To be timely with
respect to an annual meeting, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of Miracom not less than
90 days nor more than 120 days prior to the first anniversary of the date of
Miracom's notice of annual meeting for the pervious year's annual meeting.
However, if no annual meeting was held in the previous year or the date of the
annual meeting has been changed to be more than 30 calendar days earlier than
the date contemplated by the previous year's notice of annual meeting, such
notice by the stockholder must be delivered or received not later than the
close of business on the fifth day following the date on which notice of the
date of the annual meeting is given to stockholders or made public, whichever
first occurs. To be timely with respect to a special meeting, a stockholder's
notice must be delivered to or mailed and received at the principal office of
Miracom not later than the close of business on the fifth day following the
date on which notice of a special meeting is given to stockholders or the
public, whichever occurs first. Miracom's Bylaws also specify certain
requirements for a stockholder's notice to be in proper written form. These
provisions may preclude stockholders from bringing matters before the
stockholders at an annual or special meeting or from making nominations for
directors at an annual or special meeting.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK. Under the Articles
of Incorporation, Miracom is authorized to issue additional common stock and up
to 10,000,000 shares of preferred stock in one or more series, having terms
fixed by the board of directors without stockholder approval, including voting,
dividend or liquidation rights that could be greater than or senior to the
rights of holders of common stock. The existence of authorized but unissued and
unreserved shares of common stock and preferred stock may enable the board of
directors to issue shares to persons friendly to current management which would
render more difficult or discourage an attempt to obtain control of Miracom by
means of a proxy contest, tender offer, merger or otherwise, and thereby
protect the continuity of Miracom's management. Issuance of shares of common
stock or preferred stock could also be used as an anti-takeover device.
These provisions of our Articles of Incorporation and Bylaws are
intended to: enhance the likelihood of continuity and stability in the
composition of the board of directors and in the policies formulated by the
board of directors; reduce the vulnerability of Miracom to an unsolicited
acquisition proposal; discourage certain types of transactions that may involve
an actual or threatened change of control of Miracom; and discourage certain
tactics that may be used in proxy fights.
These provisions, however, could have the effect of discouraging
others from making tender offers for our shares and, as a consequence, they
also may inhibit fluctuations in the market price of our shares that could
result from actual or rumored takeover attempts. These provisions also may have
the effect of preventing changes in our management.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the common stock is Alpha Tech
Stock Transfer of Salt Lake City, Utah.
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The shares of common stock of Miracom are traded on the
Over-The-Counter Electronic Bulletin Board under the symbol "MIRM." The
following table sets forth for the periods indicated the high and low bid
prices of our common stock, as reported in published financial sources. The
quotations reflect prices between dealers in securities, without retail
mark-up, markdown or commission, and may not represent actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
Fiscal Year Ended:
-----------------
<S> <C> <C>
December 31, 1999
Fourth Quarter (1) $ 3.25 $ 1.06
Third Quarter-- 2.31 1.12
Second Quarter-- 3.63 1.28
First Quarter-- 6.44 2.25
Fiscal Year Ended:
-----------------
December 31, 1998
Fourth Quarter (2) 9.00 2.25
</TABLE>
- --------------------
(1) Through November 19, 1999
(2) Period includes trading from November 2, 1998 through December 31, 1998
On November 19, 1999, the most recent practicable date prior to the
printing of this registration statement, the closing bid price per share of our
common stock was $2.75.
As of September 30, 1999 there were approximately 600 record holders
of Miracom common stock; however, there were approximately 2,400 beneficial
owners.
Miracom has never paid a dividend on its common stock, and does not
intend to pay dividends on its common stock in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings, as such, and the
Company has no knowledge of any actions, suits, orders, investigations or
claims pending or threatened against or affecting the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There exists no disagreement between the Company and its accountants
on any matter of accounting principles or practice or financial statement
disclosure.
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ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In September 1998, Miracom issued a total of 5,542,000 shares of
common stock to shareholders and promoters of Direct Touch Research, Inc.
("DTR") pursuant to a share exchange agreement under which Miracom received all
of the issued and outstanding shares of DTR. Miracom also issued a total of
987,000 shares of common stock to outside parties in connection with the
facilitation of the share exchange between Miracom and DTR. The transaction was
exempt from registration pursuant to Section 4(2) of the Securities Act of
1933, as amended (the "Securities Act of 1933").
In September 1998, Miracom issued 150,000 shares of common stock to
United Equity Partners, Inc., a Florida corporation ("UEP") in exchange for all
of the assets, liabilities and business of UEP. The transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.
In September 1998, Miracom issued 582,000 shares of common stock to
MTV Pinnacle Advertising, Inc., a Florida corporation ("Pinnacle") in exchange
for all of the assets, liabilities and business of Pinnacle. The transaction
was exempt from registration pursuant to Section 4(2) of the Securities Act of
1933.
From November 1998 through September, 1999, Miracom sold an aggregate
of 1,418,653 shares of common stock for gross proceeds of $999,774 to 38
accredited investors and 9 non-accredited investors in an offering exempt from
registration pursuant to Rule 504 promulgated under the Securities Act of 1933.
The offers and sales were made by the officers and directors of Miracom without
compensation for same.
From April 1999 through September 1999, Miracom sold an aggregate of
1,320,000 shares of unregistered common stock for gross proceeds of $660,000 to
7 accredited investors and 0 non-accredited investors in an offering pursuant
to Rule 506 promulgated under the Securities Act of 1933. The offers and sales
were made by the officers and directors of Miracom without compensation for
same.
In February 1999, Miracom issued 10,000 shares of common stock to
Condor Logistics, Inc. for software design and consulting services. The
transaction was exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.
In February 1999, Miracom issued 100,000 shares of common stock to
Rubik Moradian for software design and consulting services. The transaction was
exempt from registration pursuant to Section 4(2) of the Securities Act of
1933.
In April 1999, Miracom issued 10,000 shares of common stock to James
A. Sims, Jr. and Jeffrey W. Sims in exchange for the domain Internet domain
names of "parts.com" and "parts.net." The transaction was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.
In May 1999, Miracom issued 600,000 shares of common stock to acquire
all of the outstanding common stock of LiveCode, Inc. ("LiveCode") a Florida
corporation. The transaction was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.
In May 1999, Miracom issued as an origination fee in connection with a
$350,000 loan made to Miracom: (i) a stock option for 20,000 shares of common
stock to Eugene W. Gramzow, Trustee for the Eugene W. Gramzow Revocable Trust,
(ii) a stock option for 10,000 shares to Michael Gramzow, (iii) a
32
<PAGE> 33
stock option for 10,000 shares to Robert Gramzow, and (iv) a stock option for
10,000 shares to Matthew Gramzow. Each option was exercisable for a total
purchase price of $10.00. In May 1999 all Holders exercised their options for
$10.00 and were each issued 10,000 shares resulting in a total issuance of
50,000 shares. The issuance of the options and the common stock issued upon
exercise of the options were transactions exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.
In May 1999, Miracom issued as a broker fee in connection with the
above-referenced $350,000 loan: (i) 28,000 shares of common stock to Advanced
Investment Corp., an Oregon corporation and mortgage broker (ii) 12,000 shares
of common stock to Patrick Seber, and (iii) 20,000 shares of Common Stock to
John P. Lucas, Brother of our president and Co-CEO. The issuance of the shares
was a transaction exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.
In 1998 and 1999 Miracom issued 465,000 shares of Common
stock exchanged for various consulting services and payment of other
liabilities.
In September 1999, Miracom issued 40,000 shares of common stock to
David Lampert and Daniel Lampert in connection with the acquisition of
Livecode.
In September 1999, Miracom issued 171,091 shares of common stock to
repay $85,546 worth of debt to its principal shareholders, directors and/or
officers. Messrs. Anderson, McComas, Odato and Fouts received 55,763; 2,836;
17,065 and 95,427 shares respectively as a result of the transaction.
On October 21, 1999, Miracom acquired all of the outstanding common
stock of FlexRadio, Inc., ("FlexRadio") for 6,200,000 shares of Miracom common
stock, a transaction valued at $6,417,000. The 6,200,000 shares of stock were
issued to FlexRadio's owners-Flex Technologies, Inc., Shawn Lucas, Official
Sports Management, Inc. and Select Media, Inc.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
ARTICLES OF INCORPORATION AND BYLAWS. Our Articles of Incorporation
and Bylaws provide that directors, officers and certain other persons may be
indemnified to the fullest extent authorized by Nevada law. We believe that
these provisions will assist us in attracting or retaining qualified
individuals to serve as directors or officers.
NEVADA LAW. Subsection 1 of Section 78.7502 of the NRS empowers a
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the corporation. We
can indemnify against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation.
Subsection 2 of Section 78.7502 of the NRS empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
he acted in any of the capacities set forth above, against expenses, including
amounts paid in settlement and attorneys' fees, actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in accordance with the standard set forth above. No
indemnification may be made in respect of any claim as to which such person
shall have been adjudged by a court to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which such action or suit was brought or other court of
competent jurisdiction determines that such person is fairly and reasonably
entitled to indemnity for such expenses.
33
<PAGE> 34
Subsection 3 of Section 78.7502 of the NRS further provides that, to
the extent a director or officer of a corporation has been successful on the
merits or otherwise in the defense of any action, suit or proceeding, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in his defense.
Indemnification provided for under Nevada law shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled
and that the scope of indemnification shall continue as to directors, officers,
employees or agents who have ceased to hold such positions. Finally, Nevada law
empowers the corporation to purchase and maintain insurance or make other
financial arrangements on behalf of a director, officer, employee or agent of
the corporation against any liability asserted against him or incurred by him
in any such capacity whether or not the corporation would have the authority to
indemnify him against such liabilities and expenses.
INDEMNIFICATION AGREEMENTS
As permitted under Nevada law, Miracom has entered into
indemnification agreements with its directors and its executive officers. The
indemnitee under the agreement is entitled to indemnification against all
expenses actually and reasonably incurred by him or on his behalf in connection
with serving as a witness in any proceeding (as defined in the agreements) by
virtue of his status with Miracom. The agreements also provide a procedural
mechanism under which the indemnitee can claim and obtain indemnification,
including a procedure for the board of directors or independent counsel to
determine entitlement to indemnification under specific situations. In the
event the indemnitee does not receive the indemnification to which he would
otherwise be entitled under the terms of the agreement, the indemnitee is
entitled to seek a judicial determination. In the event an indemnitee seeks a
judicial adjudication to enforce his rights under, or to recover damages for
breach of, the agreement, he is entitled to recover from Miracom his reasonable
legal fees and other expenses in connection with the legal proceeding, subject
to proration in the event the amount of the award is less than the amount of
indemnification sought.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Miracom pursuant to the foregoing provisions, or otherwise, in the opinion
of the SEC, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
34
<PAGE> 35
PART F/S
ITEM 1. FINANCIAL STATEMENTS
The financial statements filed as part of this registration statement
appear beginning at page F-1 of this registration statement as follows:
<TABLE>
<CAPTION>
Page
----
<S> <C>
MIRACOM CORPORATION AND SUBSIDIARIES F-1
Report of Independent Certified Public Accountants F-2
Consolidated Balance Sheets as of September 30, 1999 F3-F4
(Unaudited) and December 31, 1998
Consolidated Statements of Operations for the Nine Months Ended F5
September 30, 1999 (Unaudited) and for the Period From
Inception January 27, 1998 through December 31,1998
Consolidated Statements of Stockholders' Equity for the Nine Months F6
Ended September 30, 1999 (Unaudited) and for the Period From
Inception January 27, 1998 through December 31, 1998
Consolidated Statements of Cash Flows for the Nine Months Ended F7-F9
September 30, 1999 (Unaudited) and for the Period From
Inception January 27, 1998 through December 31, 1998
Notes to Consolidated Financial Statements F10-F27
MTV PINNACLE ADVERTISING GROUP, INC. AND UNITED EQUITY PARTNERS, INC. F28
Report of Independent Certified Public Accountants F29
Combined Balance Sheets as of September 30, 1998 and December 31, 1997 F30-F31
Combined Statements of Operations and Accumulated Deficit for the F32
Nine Months Ended September 30, 1998 and the Year Ended
December 31, 1997
Combined Statements of Cash Flows for the Nine Months Ended F33-F34
September 30, 1998 and the Year Ended December 31, 1997
Notes to Combined Financial Statements F35-F41
</TABLE>
35
<PAGE> 36
MIRACOM CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants F-2
Consolidated Balance Sheets as of
September 30, 1999 (Unaudited) and
December 31, 1998 F-3-4
Consolidated Statements of Operations
For the Nine Months Ended September
30, 1999 (Unaudited) and For the
Period From Inception January 27,
1998, through December 31, 1998 F-5
Consolidated Statements of
Stockholders' Equity For the Nine
Months Ended September 30, 1999
(Unaudited) and For the Period From
Inception January 27, 1998, Through
December 31, 1998 F-6
Consolidated Statements of Cash Flows
For the Nine Months Ended September
30, 1999 (Unaudited) and For the
Period From Inception January 27,
1998, Through December 31, 1998 F-7-9
Notes to Consolidated Financial
Statements F-10-27
</TABLE>
F-1
<PAGE> 37
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Miracom Corporation and Subsidiaries
Sanford, Florida
We have audited the accompanying consolidated balance sheet of Miracom
Corporation and Subsidiaries as of December 31, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the period January 27, 1998 (date of inception) through December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Miracom Corporation
and Subsidiaries as of December 31, 1998, and the results of their operations
and their cash flows for the period January 27, 1998 (date of inception)
through December 31, 1998 in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to
the financial statements, during the period ended December 31, 1998, the
Company has incurred a net loss of approximately $1,866,000 and had negative
cash flows from operations of approximately $238,000. In addition, the Company
had a deficiency in net working capital of approximately $486,000 as of December
31, 1998 and a substantial portion of its assets are intangible; the ultimate
realization of which is uncertain. These matters raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 1. The consolidated
financial statement do not include any adjustments that might result from the
outcome of these uncertainties.
Certified Public Accountants
Orlando, Florida
November 10, 1999
F-2
<PAGE> 38
MIRACOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 21,919 $ 65,509
Accounts receivable trade 110,414 48,787
Inventory 78,216 --
Deferred costs and other current
assets 602 160,229
---------- ----------
Total Current Assets 211,151 274,525
---------- ----------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation of
$105,662 and $85,000, respectively 742,655 209,758
DEFERRED LOAN COSTS, net of
accumulated amortization of
$6,336 and $-0-, respectively 252,164 --
OTHER ASSETS, net of
accumulated amortization of
$124,451 and $-0-, respectively 260,983 2,414
EXCESS OF COST OVER FAIR VALUE
OF NET ASSETS ACQUIRED,
net of accumulated
amortization of $182,196
and $40,549, respectively 928,782 770,429
---------- ----------
Total Assets $2,395,735 $1,257,126
========== ==========
</TABLE>
See Accompanying Notes
F-3
<PAGE> 39
MIRACOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 713,120 $ 310,184
Other current liabilities 158,068 206,255
Bank and other note payable 11,820 27,000
Convertible promissory note 50,000 --
Current portion of mortgages payable 182,000 --
Current portion of capitalized leases 11,041 19,334
Deferred revenue -- 197,500
----------- -----------
Total Current Liabilities 1,126,049 760,273
LONG TERM PORTION OF BANK NOTE AND
MORTGAGES PAYABLE 380,000 10,788
LONG TERM PORTION OF CAPITALIZED LEASES 2,816 10,252
OTHER LIABILITIES -- 24,250
----------- -----------
Total Liabilities 1,508,865 805,563
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $.001 par value,
50,000,000 shares authorized,
14,178,744 and 11,187,500 shares
issued and outstanding, respectively 14,179 11,188
Additional paid-in capital 5,867,387 2,323,183
Stock subscription receivable -- (17,000)
Accumulated deficit (4,994,696) (1,865,808)
----------- -----------
Total Stockholders' Equity 886,870 451,563
----------- -----------
Total Liabilities and
Stockholders' Equity $ 2,395,735 $ 1,257,126
=========== ===========
</TABLE>
See Accompanying Notes
F-4
<PAGE> 40
MIRACOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period From
Inception
Nine January 27,1998,
Months Ended Through
September 30, December 31,
1999 1998
------------- ----------------
(Unaudited)
<S> <C> <C>
NET SALES $ 1,153,414 $ 377,599
COST OF SALES 876,552 302,109
------------ ------------
GROSS PROFIT 276,862 75,490
------------ ------------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,640,632 354,867
AMORTIZATION 272,434 40,549
DEPRECIATION 44,667 14,279
STOCK BASED COMPENSATION 107,585 1,524,150
INTEREST 44,632 7,453
ASSET IMPAIRMENT CHARGES 1,295,800 --
------------ ------------
TOTAL EXPENSES 3,405,750 1,941,298
------------ ------------
NET LOSS $ (3,128,888) $ (1,865,808)
============ ============
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ (.25) $ (.20)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 12,640,338 9,517,856
============ ============
</TABLE>
See Accompanying Notes
F-5
<PAGE> 41
MIRACOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION JANUARY 27, 1998 THROUGH DECEMBER 31, 1998,
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional Stock
-------------------------- Paid In Subscription Accumulated
Shares Amount Capital Receivable Deficit Total
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Initial capitalization,
January 27, 1998 675,000 $ 6,750 $ -- $ -- $ -- $ 6,750
I.E.L.S Transaction:
Acquisition of existing common
shares, net of acquisition costs
of $7,429 4,200,000 4,200 (11,629) -- -- (7,429)
Cancellation of restricted shares (1,610,000) (1,610) 1,610 -- -- --
Issuance of common stock to DTR
stockholders 5,542,000 5,542 (5,542) -- -- --
Issuance of common stock
associated with recapitalization
costs 987,000 987 443,163 -- -- 444,150
Receipt of DTR common stock (675,000) (6,750) -- -- -- (6,750)
----------- ----------- ----------- ----------- ----------- -----------
Balances after recapitalization 9,119,000 9,119 427,602 -- -- 436,721
Issuance of common stock to
acquire MTV and UEP 732,000 732 328,668 -- -- 329,400
Issuance of common stock, for cash
in private placements, net of
$-0- of offering costs 896,500 897 447,353 -- -- 448,250
Issuance of common stock
in payment of expenses and
satisfaction of liabilities 440,000 440 1,119,560 -- -- 1,120,000
Stock subscription receivable -- -- -- (17,000) -- (17,000)
Net loss for the period -- -- -- -- (1,865,808) (1,865,808)
----------- ----------- ----------- ----------- ----------- -----------
Balances,
December 31, 1998 11,187,500 11,188 2,323,183 (17,000) (1,865,808) 451,563
Issuance of common stock, for
cash in private placements,
net of $50,000 of common stock
for offering costs, (Unaudited) 1,845,153 1,845 1,159,679 -- -- 1,161,524
Issuance of common stock to acquire
LiveCode, Inc., (Unaudited) 600,000 600 1,501,200 -- -- 1,501,800
Issuance of Common Stock
for accounts payable, conversion
of notes payable and services,
(Unaudited) 546,091 546 883,325 -- -- 883,871
Stock subscription receivable,
(Unaudited) -- -- -- 17,000 -- 17,000
Net loss for the period, (Unaudited) -- -- -- -- (3,128,888) (3,128,888)
----------- ----------- ----------- ----------- ----------- -----------
Balances,
September 30, 1999, (Unaudited) 14,178,744 $ 14,179 $ 5,867,387 $ -- $(4,994,696) $ 886,870
=========== =========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes
F-6
<PAGE> 42
MIRACOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period From
Inception
Nine January 27,1998,
Months Ended Through
September 30, December 31,
1999 1998
------------- ----------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(3,128,888) $(1,865,808)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 272,434 40,549
Depreciation 44,667 14,279
Stock based compensation 107,585 1,524,150
Asset impairment charges 1,295,800 --
Changes in operating assets and
liabilities, net of acquisitions:
Receivables (61,627) 35,973
Inventory (78,216) --
Other current assets 159,627 (32,147)
Deferred revenue (197,500) 88,000
Accounts payable and
accrued expenses 415,733 (45,577)
Other liabilities 24,562 2,367
----------- -----------
Net cash used in
operating activities (1,145,823) (238,214)
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments for property and
equipment (469,564) (93,758)
Payments for other assets (20,780) --
Acquisition costs paid, net
of cash acquired -- (3,511)
----------- -----------
Net cash used in
investing activities (490,344) (97,269)
----------- -----------
</TABLE>
See Accompanying Notes
F- 7
<PAGE> 43
MIRACOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
Period From
Inception
Nine January 27,1998,
Months Ended Through
September 30, December 31,
1999 1998
------------- ----------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from convertible
promissory note 50,000 --
Borrowing under mortgages
payable 380,000 --
Repayments of other liabilities (24,250) (7,000)
Repayments of bank note payable (25,968) (11,712)
Repayments of capitalized leases (15,729) (4,117)
Proceeds from issuance of
common stock 1,228,524 423,821
----------- -----------
Net cash provided by
financing activities 1,592,577 400,992
----------- -----------
INCREASE (DECREASE) IN CASH (43,590) 65,509
CASH, AT BEGINNING OF PERIOD 65,509 --
----------- -----------
CASH, AT END OF PERIOD $ 21,919 $ 65,509
=========== ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 32,534 $ 4,287
=========== ===========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON
CASH INVESTING & FINANCING
ACTIVITIES:
Nine Months Ended September 30, 1999, (Unaudited):
Issuance of 600,000 shares of Common Stock in connection with the
acquisition of LiveCode, Inc., valued at $1,501,800.
Issuance of promissory note in the original principal amount of $20,000 in
connection with the acquisition of LiveCode, Inc.
Issuance of 40,000 shares of Common Stock, valued at $.50 per share, in
satisfaction of the $20,000 promissory note issued in connection with
the acquisition of LiveCode, Inc.
Issuance of 171,091 shares of Common Stock in satisfaction of $85,546 of
amounts due to officers and directors.
See Accompanying Notes
F-8
<PAGE> 44
MIRACOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
SUPPLEMENTAL SCHEDULE OF NON
CASH INVESTING & FINANCING
ACTIVITIES, CONTINUED:
Nine Months Ended September 30, 1999, (Unaudited), Continued:
Issuance of 335,000 shares of Common Stock in payment of consulting fees,
deferred loan costs and deferred consulting fees, in the aggregate
amount of $778,325.
Period from Inception January 27, 1998, Through December 31, 1998:
Issuance of 732,000 shares of Common Stock valued at $329,400 in connection
with the acquisition of MTV Pinnacle Advertising, Group, Inc. and United
Equity Partners, Inc.
Issuance of 40,000 shares of Common Stock in repayment of $40,000 of loans
from an officer and stockholder.
Issuance of 400,000 shares of Common Stock valued at $1,080,000 in payment
of consulting fees.
Issuance of 987,000 shares of Common Stock valued at $444,150 in payment of
acquisition costs in connection with the reverse acquisition.
See Accompanying Notes
F-9
<PAGE> 45
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, (UNAUDITED) AND DECEMBER 31, 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION - Miracom Corporation ("the Company") was
incorporated in Nevada on September 13, 1995, under the name I.E.L.S.,
Inc., which had no material operations and whose common stock was
traded on the OTC, Bulletin Board. The Company is a provider of
Internet-based business and online buying solutions.
Effective September 8, 1998, the Company acquired 100% of the
outstanding common stock of Direct Touch Research, Inc. ("DTR") a
closely held corporation that had no material operations, in exchange
for 5,542,000 shares of the Company's Common Stock. As a result of
this transaction DTR stockholders became owners of approximately 61%
of the Company's then outstanding Common Stock and assumed 100%
control of the Company's Board of Directors. Accordingly, the
acquisition has been treated for financial reporting purposes as a
reverse acquisition. In connection with the reverse acquisition, the
Company issued 987,000 shares of Common Stock in payment of
acquisition costs. The shares were valued at $.45 per share, which
represents a 10% discount from market on the date of the reverse
acquisition. Market price for the Company's Common Stock was
determined based upon private sales to unrelated parties, since no
active trading market existed at that time. In connection with the DTR
transaction, stockholders of I.E.L.S., Inc. agreed to return 1,610,000
restricted shares of Common Stock for cancellation.
Effective September 30, 1998, the Company acquired all of the
assets and business operations and assumed all of the outstanding
liabilities of MTV Pinnacle Advertising Group, Inc. ("MTV") and United
Equity Partners, Inc. ("UEP") in exchange for the issuance of an
aggregate of 732,000 shares of the Company's Common Stock. MTV was
engaged in the business of providing full service advertising to
commercial customers and UEP was engaged in the business of providing
Internet hardware and software solutions. The purchase price was
allocated to the assets acquired based upon their estimated fair
values at the date of acquisition. The excess of the purchase price
over the fair value of the net assets acquired was approximately
$811,000 and is being amortized on a straight line basis over 5 years,
beginning October 1, 1998. The purchase price of $329,400 was
determined by valuing the 732,000 shares of the Company's Common Stock
at $.45 per share, which represents a 10% discount from market on the
date of the acquisition. Market price for the Company's Common Stock
was determined based upon private sales to unrelated parties, since no
active trading market existed at that time.
On May 28, 1999, the Company acquired 100% of the outstanding
common stock of LiveCode, Inc. ("LiveCode") a closely held corporation
in exchange for 600,000 shares of the Company's Common Stock and a
promissory note in the original principal amount of $20,000. LiveCode
was engaged in the business of software development and from its
inception through May 28, 1999, its major source of operating revenues
was from services performed for UEP. The purchase price of $1,521,800
was determined by valuing the 600,000 shares of the Company's Common
Stock at $2.503 per share, which represents
F-10
<PAGE> 46
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999, (UNAUDITED) AND DECEMBER 31, 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
a 10% discount from market, based upon the average of the high and low
trading prices on the OTC Bulletin Board on May 28, 1999, plus the
promissory note of $20,000. The purchase price was allocated to the
assets acquired based upon their estimated fair values at the date of
acquisition. The excess of the purchase price over the fair value of
the net assets acquired was approximately $1,521,800. LiveCode's
primary asset was the value associated with its 25% ownership interest
in a specialized software program that was developed for an unrelated
third party. The Company determined that the estimated fair value of
the assets acquired was $300,000, and accordingly, the accompanying
consolidated financial statements include an Asset Impairment Charge
of $1,221,800 for the nine months ended September 30, 1999.
The remaining excess of cost over net assets acquired of
$300,000 is being amortized on a straight line basis over 5 years
beginning June 1, 1999. Effective September 30, 1999, the promissory
note was repaid by issuance of 40,000 shares of the Company's Common
Stock.
The above acquisitions were accounted for by the purchase method
of accounting for business combinations. Accordingly, the accompanying
consolidated statements of operations do not include any revenues,
costs or expenses related to these acquisitions prior to their
respective closing dates.
Following are the Company's unaudited pro forma results for the
nine months ended September 30, 1999 and the period from inception,
January 27, 1998, through December 31, 1998, assuming the business
combinations occurred on January 27, 1998 or the date of formation of
the acquired company if later than January 27, 1998:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net Sales $ 1,153,414 $ 1,763,859
Net Loss (3,084,686) (2,200,601)
Basic and dilutive net loss
per common share (.24) (.21)
Weighted average common
shares 12,963,438 10,364,128
</TABLE>
These unaudited pro-forma results have been prepared for
comparative purposes only and do not purport to be indicative of the
results of operations which would have actually resulted had the
business combinations been in effect on January 27, 1998, or of future
results of operations.
F-11
<PAGE> 47
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
PRINCIPLES OF CONSOLIDATION - The accompanying consolidated
financial statements at December 31, 1998, include the accounts of the
Company and its wholly-owned subsidiaries, MTV and UEP. Subsequent to
December 31, 1998, MTV and UEP were merged into the Company. The
accompanying consolidated financial statements at September 30, 1999,
include the accounts of the Company and its wholly-owned subsidiary
LiveCode. All significant intercompany transactions and balances have
been eliminated for all periods presented.
CONTINUED OPERATIONS - The accompanying consolidated financial
statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities
in the normal course of business. As shown in the accompanying
financial statements during the nine months ended September 30, 1999
and the period from inception through December 31, 1998, the Company
incurred losses of $3,128,888 and $1,865,808, respectively and had a
deficiency in working capital of $914,898 and $485,748 at September
30, 1999 and December 31, 1998, respectively. These factors among
others may indicate the Company will be unable to continue as a going
concern for a reasonable period of time. The accompanying consolidated
financial statements do not include any adjustments relating to the
outcome of this uncertainty.
LIQUIDITY AND PLAN OF OPERATIONS - As of September 30, 1999
(Unaudited), and December 31, 1998, the Company had cash of $21,919
and $65,509 and a deficiency in working capital of $914,898 and
$485,748 respectively.
The Company's continuation as a going concern is dependant upon
its ability to generate sufficient cash flow to meet its obligations
on a timely basis. The Company's primary source of liquidity has been
through the private placement of equity and debt securities and from
the cash generated by its operating divisions. The Company is
presently exploring possibilities with respect to significant
expansion of its existing customer base in all operating divisions in
order to eventually achieve profitable operations. However, there can
be no assurance that the Company will be successful in achieving
profitable operations or acquiring additional capital or that such
capital, if available, will be on terms and conditions favorable to
the Company. Based upon its current business plan, the Company
believes it will generate sufficient cash flow through operations and
external sources of capital to continue to meet its obligations in a
timely manner.
UNAUDITED DATA - The accompanying consolidated financial
statements and all data included in the notes to consolidated
financial statements as of September 30, 1999, and for the nine months
then ended are unaudited. In the opinion of management, the financial
statements reflect all adjustments ( which include only normal
recurring adjustments ) necessary to state fairly the financial
position and results of operations as of September 30, 1999, and for
the nine months then ended.
F-12
<PAGE> 48
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported period.
Actual results could differ from these estimates.
REVENUE AND EXPENSE RECOGNITION - Revenues are recognized when
the service has been performed and related costs and expenses are
recognized when incurred. Amounts received on contracts in progress in
excess of the revenue earned, based upon the percent of completion
method, are recorded as deferred revenue and the related costs and
expenses incurred are recorded as deferred costs.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Cash, accounts receivable,
accounts payable, accrued expenses and other current liabilities are
reflected in the consolidated financial statements at fair value
because of the short-term maturity of these instruments. The fair
value of capitalized lease obligations approximate their fair value.
Fair value for these instruments is calculated using discounted cash
flows.
CONCENTRATIONS OF CREDIT RISK - Financial instruments which
potentially subject the Company to concentrations of credit risk
consist principally of accounts receivable. Concentrations of credit
risk with respect to trade receivables, in the opinion of management,
are limited due to the lack of concentration of large balances due
from any individual customer.
INVENTORY - Inventory is valued at the lower of cost or market.
Cost is determined by either the first-in, first-out or average cost
methods. Inventory consists of finished goods available for sale.
PROPERTY AND EQUIPMENT - Property and equipment is stated at
cost. Depreciation is provided on the straight-line method at rates
based on the estimated useful lives of individual assets or classes of
assets. Improvements to leased properties or fixtures are amortized
over their estimated useful lives or lease period, whichever is
shorter.
Leased property meeting certain criteria is capitalized and the
present value of the related lease payment is recorded as a liability.
Amortization of capitalized leased assets is computed on the
straight-line method over the estimated useful lives of assets
acquired.
Expenditures for repairs and maintenance are expensed as
incurred. Expenditures which materially increase values, or extend
useful lives are capitalized.
DEFERRED LOAN COSTS - Deferred loan costs in connection with the
acquisition of the mortgage financing to purchase the Company's office
building are being amortized on a straight line basis over the
seventeen year term of the loan, commencing in May 1999.
F-13
<PAGE> 49
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
OTHER ASSETS - Deferred consulting fees included in other assets
are being amortized over the two year term of the related consulting
agreement, commencing on January 1, 1999.
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 requires recognition
of deferred tax liabilities and assets for the 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 upon the difference 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. The Company has incurred losses since its
inception. Due to the uncertainty of the realization of the tax loss
carryforward, the Company has established a 100% valuation allowance
against the carryforward benefit.
NET LOSS PER SHARE OF COMMON STOCK - The basic and diluted net
loss per common share in the accompanying consolidated statements of
operations are based upon the net loss divided by the weighted average
number of shares outstanding during the periods presented. Diluted net
loss per common share is the same as basic net loss per common share
since the inclusion of all potentially dilutive common shares that
would be issuable upon the exercise of outstanding stock options and
the convertible promissory note would be anti-dilutive.
STOCK OPTION PLAN - The Company accounts for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25 "Accounting for Stock issued to
Employees." Compensation cost for stock options, if any, is measured
as the excess of the quoted market price of the Company's stock at the
date of grant over the amount the employee must pay to acquire the
stock. Restricted stock is recorded as compensation cost over the
requisite vesting periods based upon the market value on the date of
grant.
SFAS No. 123, "Accounting for Stock-Based Compensation,"
established accounting and disclosure requirements using a fair-value
based method of accounting for stock-based employee compensation
plans. The Company has elected to remain on its current method of
accounting as described above, and has adopted the disclosure
requirements of SFAS No. 123.
YEAR 2000 ISSUES (UNAUDITED) - The "Year 2000" issue effects the
Company's installed computer systems, network elements, software
applications and other business systems that have time sensitive
programs that may not properly reflect or recognize the Year 2000.
Because many computers and computer applications define dates by the
last two digits of the year "00" may not be properly identified as
Year 2000. This error could result in miscalculations or system
failures. The Year 2000 issue does not materially effect the Company's
computer systems, software or other business systems. The Company has
conducted a review to identify areas that could be affected and has
developed an implementation plan to ensure compliance. The Company
believes that with the
F-14
<PAGE> 50
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
YEAR 2000 ISSUES (UNAUDITED), CONTINUED:
modifications made to its existing software the issue will not pose
significant operational concerns nor have a material impact on
financial position or results of operations. The cost of modifications
was not material and has been expensed as incurred. However, failures
of computer systems maintained by third parties could have a material
impact on the Company's ability to conduct business. The Company has
requested that its major independent suppliers and support providers
confirm that they will be Year 2000 compliant.
2. DEFERRED COSTS AND OTHER CURRENT ASSETS:
A summary of deferred costs and other current assets at
September 30, 1999 and December 31, 1998 are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ -----------
(Unaudited)
<S> <C> <C>
Deferred costs $ - $ 150,000
Deposits and receivables from
officers and employees 602 10,229
----------- -----------
$ 602 $ 160,229
=========== ===========
</TABLE>
Deferred costs consist of amounts paid in excess of costs
recognized in connection with a contract accounted for using the
percent of completion method of accounting.
3. PROPERTY AND EQUIPMENT:
A summary of property and equipment at September 30, 1999 and
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ -----------
(Unaudited)
<S> <C> <C>
Land, building and improvements $ 599,659 $ --
Furniture and fixtures 21,021 7,440
Assets acquired under capitalized
leases 60,483 60,483
Computers and related equipment 167,154 145,373
Leasehold improvements -- 81,462
--------- ---------
848,317 294,758
Less: accumulated depreciation and
amortization (105,662) (85,000)
--------- ---------
$ 742,655 $ 209,758
========= =========
</TABLE>
F-15
<PAGE> 51
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
3. PROPERTY AND EQUIPMENT, CONTINUED:
<TABLE>
<S> <C> <C>
Depreciation and amortization
expense $ 44,667 $ 14,279
=========== ===========
Depreciation and amortization
of assets acquired under
capitalized leases $ 9,072 $ 3,024
=========== ===========
</TABLE>
Assets acquired under capitalized leases consist primarily of
computers and related equipment.
The carrying value of land, building and improvements at
September 30, 1999, has been reduced by $74,000, which amount
represents the excess of the purchase price of the property over its
appraised value at the date of purchase. The amount has been included
in asset impairment charges. The property was purchased from
Stonestreet Investments, Inc., which is owned by five officers of the
Company who are also major stockholders of the Company.
4. OTHER ASSETS:
Other assets at September 30, 1999 and December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
Deferred consulting fees $ 331,870 $ --
Internet domain 47,870 --
Deposits 5,694 2,414
--------- ---------
385,434 2,414
Less: accumulated amortization (124,451) --
--------- ---------
$ 260,983 $ 2,414
========= =========
Amortization expense $ 124,451 $ --
========= =========
</TABLE>
5. NOTES AND MORTGAGES PAYABLE:
BANK NOTE PAYABLE - The Bank note payable, in the original
principal amount of $45,500, bears interest at 2% over the lenders
prime rate and is payable in monthly principal installments of $1,900
from July 1, 1998 through June 1, 2000. Interest is also payable
monthly. The outstanding principal balance of the note on September
30, 1999 and December 31, 1998, was $11,820 and $33,588 respectively.
F-16
<PAGE> 52
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
CONVERTIBLE PROMISSORY NOTE - The Convertible Promissory Note
("the Note") in the original principal amount of $50,000 bears
interest at 9% per annum and is due and payable in a single balloon
payment of principal and interest on September 24, 2000. The note,
including accrued interest may be prepaid in full prior to maturity,
without penalty. The holder also has the option, with the Company's
consent, to increase the note by $50,000 under the same terms and
conditions. In November 1999, the holder increased the note by $50,000
(See Note 12). The note is collateralized by the Company's real
property located in Sanford, Florida, and is subordinate to $562,000
of existing indebtedness applicable to such property.
Provided the note has not been prepaid prior to maturity, the
holder may convert the principal balance of the note plus any accrued
interest, before or at the scheduled maturity date of the note into
shares of the Company's Common Stock at a conversion price of $.50 per
share.
MORTGAGES PAYABLE - The Company's real property is subject to
the following mortgages at September 30, 1999:
<TABLE>
<S> <C>
First mortgage note, with interest at 15% per annum, interest
payable monthly in the amount of $4,375, principal and
unpaid interest payable on May 31, 2016 $ 350,000
Second mortgage note, with interest at 15% per annum, interest
payable monthly in the amount of $375, principal and unpaid
interest payable on May 31, 2016 30,000
Third mortgage note, with interest at 9.5% per annum, payable in
monthly payments of interest only from May 6, 1999 through
January 31, 2000, in the amount of $1,441; monthly payments
of principal and interest from February 1, 2000 through June
30, 2002, in the amount of $1,900; principal balance plus
accrued interest due and payable on July 31, 2002
182,000
------------
Total $ 562,000
============
</TABLE>
F-17
<PAGE> 53
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
MORTGAGES PAYABLE, CONTINUED:
The first and second mortgages are also collateralized by a
pledge of 100,000 shares of the Company's Common Stock owned by four
officers of the Company, and by the conditional guarantee of the
President of the Company.
The third mortgage note is payable to Stonestreet Investments,
Inc., which is owned by five officers of the Company, who are also
major stockholders of the Company. Pursuant to an agreement between
the Company, the five officers and Stonestreet Investments, Inc., all
required payments under the mortgage are being deferred indefinitely.
As of September 30, 1999, the $182,000 principal balance of the
third mortgage has been classified as a current liability in the
accompanying consolidated balance sheet.
As of September 30, 1999, the net book value of the real
property collateralizing the above mortgages was $597,588.
OTHER NOTES PAYABLE - In September 1998, The Company assumed a
note from a related party in the original principal amount of $15,000.
The note provided for interest at the rate of 9.5% per annum and was
payable in three monthly installments of principal and interest. The
loan was paid in full in January 1999.
DEBT MATURITIES - Debt maturities of the bank note payable,
convertible promissory note and mortgages payable subsequent to
September 30, 1999, are as follows:
<TABLE>
<CAPTION>
Twelve Months Ending
September 30, unaudited
-------------------- ------------
<S> <C>
2000 $ 243,820
Thereafter 380,000
------------
Total $ 623,820
============
</TABLE>
F-18
<PAGE> 54
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
DEBT MATURITIES, CONTINUED:
Maturities of the bank note payable and other note payable
subsequent to December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
1999 $ 27,000
2000 10,788
Thereafter --
-----------
Total $ 37,788
===========
</TABLE>
6. CAPITALIZED LEASES:
Future minimum lease payments subsequent to September 30, 1999
and December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Twelve Month Period From
---------------------------------------
September 30, December 31,
Period 1999 1998
---------- ------------ ------------
(Unaudited)
<S> <C> <C>
1999 $ - $ 20,705
2000 15,273 12,218
2001 3,166 3,242
2002 - 413
2003 - -
----------- -----------
Total minimum lease payments 18,439 36,578
Less amount representing
interest at 9.9% to 25.5% 4,582 6,992
----------- -----------
Present value of minimum
lease payments 13,857 29,586
Less current portion 11,041 19,334
----------- -----------
Long term portion $ 2,816 $ 10,252
=========== ===========
</TABLE>
F-19
<PAGE> 55
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
7. INCOME TAXES:
The difference between the Company's effective income tax rate
and the federal statutory rate at September 30, 1999, and December 31,
1998, is reconciled below:
<TABLE>
<CAPTION>
1999 1998
----------- ------
(Unaudited)
<S> <C> <C>
Federal (benefit) expected (34)% (34)%
State taxes (2) (2)
Increase in valuation allowance 36 36
---- ----
0.0 % 0.0 %
==== ===
</TABLE>
Significant components of the Company's deferred tax assets and
liabilities at September 30, 1999, and December 31, 1998, are
approximately as follows:
<TABLE>
<CAPTION>
1999 1998
----------- ---------
(Unaudited)
<S> <C> <C>
Deferred Tax Assets
Net operating losses $ 609,000 $ 657,000
Other -- --
--------- ---------
Gross deferred tax asset 609,000 657,000
Less valuation allowance (609,000) (657,000)
--------- ---------
Deferred tax asset $ -- $ --
========= =========
</TABLE>
There were no deferred tax liabilities as of September 30, 1999,
and December 31, 1998.
As of September 30, 1999, and December 31, 1998, the Company had
estimated net operating loss carryforwards of approximately $3,516,000
and $1,825,000, available to offset future taxable income. The net
operating loss carryforwards expire through the year 2019. Under U.S.
federal tax law, certain changes in ownership of a company may cause a
limitation on future utilization of these loss carryforwards.
8. STOCKHOLDERS' EQUITY:
On March 13, 1998, The Company's Board of Directors authorized a
70 for 1 split of its Common Stock effective for holders of record on
such date. All shares and per share amounts in the accompanying
consolidated financial statements have been restated to give effect to
the stock split.
F-20
<PAGE> 56
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
8. STOCKHOLDERS' EQUITY, CONTINUED:
The Company has adopted the disclosure-only provisions of SFAS
No. 123. Accordingly, no compensation cost has been recognized for the
issuance of stock options to employees. For the nine month period
ended September 30, 1999, employees of the Company were issued options
to purchase a total of 670,000 shares of the Company's Common Stock,
at exercise prices ranging from $1.75 to $3.00 per share expiring from
August 2000 to February 2009.
Had compensation cost for the Company's issuance of common stock
options during the nine months ended September 30, 1999 been
determined based upon the fair value at the date of grant consistent
with the provisions of SFAS No 123, the Company's net loss and net
loss per common share would have been increased to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
Unaudited
--------------
<S> <C>
Net loss as reported $(3,128,888)
Proforma net loss $(4,969,082)
Net loss per share as reported $ (.25)
Proforma net loss per share $ (.39)
</TABLE>
The Company utilizes the Black-Scholes option pricing model to
calculate the fair value of each individual issuance of options with
the following assumptions used for grants during the nine months ended
September 30, 1999; dividends yield of 0%; expected average annual
volatility of 133.86%; average annual risk free interest rate of 6%;
and expected terms averaging three years.
The Company's stock option plan provides for the granting of
either incentive stock options or non qualified stock options to key
employees and non-employee members of the Company's Board of Directors
for up to a maximum of 1,650,000 shares of common stock. Options
outstanding at September 30, 1999, consist of 550,000 non qualified
options and 120,000 incentive options. The options granted under the
plan are to purchase common stock at not less than fair market value
at the date of grant. Employee options are generally exercisable one
year from date of grant in cumulative annual installments of 33% and
no options are exercisable after ten years from date of grant.
There were no stock options outstanding prior to February 12,
1999.
F-21
<PAGE> 57
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
8. STOCKHOLDERS' EQUITY, CONTINUED:
The following summarizes stock option activity for the nine
months ended September 30, 1999:
<TABLE>
<CAPTION>
Exercise
Amount Price Range
-------- -----------
<S> <C> <C>
Outstanding as of December 31, 1998 - - -
Granted 670,000 $1.75-$3.00
Exercised - - -
Forfeited - - -
--------
Outstanding as of September 30, 1999 670,000 $1.75-$3.00
========
Number of shares exercisable as of
September 30, 1999 36,667 $3.00
========
Weighted average fair value of options
granted $ 2.78
========
</TABLE>
The exercise price of options granted approximate their fair
market value on the date of grant.
During the period ended December 31, 1998, the Company issued
896,500 shares of Common Stock, in private placements at a per share
value of $.50, and received cash proceeds of $448,250. During the nine
months ended September 30, 1999, the Company issued 1,845,153 shares
of Common Stock, in private placements at per share prices ranging
from $.50 to $1.50, and received cash proceeds of $1,211,524.
During the periods ended September 30, 1999, and December 31,
1998, the Company issued 546,091 and 440,000 shares of Common Stock in
payment of accounts payable, conversion of notes payable and services.
Shares issued to liquidate recorded liabilities were valued based upon
the amount of the recorded liability satisfied and all other shares
were valued at a 10% discount to market for shares issued for services
rendered or goods received and were recorded as an asset or charged to
expense based upon the nature of the transaction.
At September 30, 1999, the Company had reserved the following
shares of Common Stock for issuance:
<TABLE>
<S> <C>
Stock option plan 980,000
Options exercisable at $1.75
to $3.00 per share 670,000
Convertible promissory note,
convertible at $.50 per share 100,000
---------
Total 1,750,000
=========
</TABLE>
F-22
<PAGE> 58
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
9. RELATED PARTY TRANSACTIONS:
At December 31, 1998, deferred costs and other current assets
include $8,998 due from officers and other current liabilities include
$79,600 due to officers. Effective September 30, 1999, the Company
liquidated the $85,546 outstanding balance due to officers by issuance
of $171,091 shares of Common Stock.
10. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
A summary of selling, general and administrative expenses for
the nine months ended September 30, 1999, and for the period ended
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Nine Months Ended Period Ended
September 30, December 31,
1999 1998
----------------- -----------
(Unaudited)
<S> <C> <C>
Salaries and related taxes $ 640,542 $ 177,640
Advertising 33,590 1,800
Rent and lease 60,080 15,807
Stockholder relations 124,079 375
Telephone 71,476 13,808
Travel and entertainment 94,423 50,684
Office expense and supplies 61,154 6,849
Dues and subscriptions 29,945 9,013
Professional fees 294,173 34,059
Insurance 35,620 2,092
Other 195,550 42,740
---------- ----------
Total $1,640,632 $ 354,867
========== ==========
</TABLE>
11. COMMITMENTS AND CONTINGENCIES:
The lease agreement, including amendments thereto, for office
facilities expired on June 30, 1999. The Company continued to occupy
the space on a month to month basis from July 1, 1999 through mid
August 1999. Total rental expense was $37,684 and $11,878 for the nine
months ended September 30, 1999 and the period ended December 31,
1998, respectively.
F-23
<PAGE> 59
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
11. COMMITMENTS AND CONTINGENCIES, CONTINUED:
The Company has entered into three year employment agreements
with its six most senior executive officers. The agreements provide
for annual salaries of $72,000, as amended. Under each employment
agreement, the executive is entitled to participate in all employment
benefit programs available to Company employees generally, including
participation in health care and disability plans, stock option plans
and any retirement plan. The term of the agreements is for three
years, however, on each anniversary of the commencement date, the term
is automatically extended for an additional year. The agreements
provide for discretionary performance bonuses as determined by the
Board of Directors. The Company may terminate the executives'
employment for cause or without cause at any time, subject to the
approval of a majority of the Board of Directors. If the Company
terminates the executives without cause they are paid for their then
existing annual salary for a period of three years, payable weekly or
in accordance with payroll practices at the time. An additional six
months of insurance coverage is provided for them under the Company's
medical and disability plans. Upon termination of employment without
cause, the executives will be released from the noncompetition
provisions of their employment agreements, but the nondisclosure and
provisions relating to propriety information will remain in effect.
The executives may terminate their employment at any time upon 90 days
written notice to the Company, except in the event of a change of
control, when 10 days notice is required. The agreements contain
nonsolicitation and noncompetition provisions that are intended to
survive the termination of employment for a period of two years.
In April 1999, the Company entered into an employment agreement
with a key employee who is to receive an annual salary of $72,000, as
amended. This agreement expires in April 2002, however, on each
anniversary date, the term automatically extends for an additional
year. The Company may terminate this employee's employment, for cause
or without cause, at any time, subject to the approval of a majority
of the Board of Directors. If the Company terminates the employee
without cause, he is to be paid for his then existing annual salary
for a period of three years, payable weekly or in accordance with
payroll practices at the time. An additional six months of insurance
coverage is provided to him under the Company's medical and disability
plans. Upon termination of employment without cause, this employee
will be released from the noncompetition provisions of his employment
agreement, but the non disclosure and provisions relating to
proprietary information will remain in effect. This agreement may be
terminated at any time upon 90 days written notice to the Company,
except in the event of a change of control, when 10 days notice is
required. The agreement contains nonsolicitation and noncompetition
provisions that are intended to survive the termination of employment
for a period of two years.
F-24
<PAGE> 60
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
11. COMMITMENTS AND CONTINGENCIES, CONTINUED:
In August 1999, the Company entered into an employment agreement
with an officer whom is to receive an annual salary of $100,000. The
agreement with the officer expires on December 31, 2000 and is subject
to renewal for successive one year terms, unless otherwise terminated.
Under this agreement the officer was granted stock options pursuant to
the Company's Stock Option Plan to purchase an aggregate of 120,000
shares of common stock at an exercise price of $1.75 per share. The
stock options vest over 18 months. The officer was also granted 10,000
shares of restricted common stock which would be forfeited should the
officer voluntarily terminate employment prior to April 4, 2000 or the
Company discharge the officer for cause prior to April 4, 2000. If the
Company terminates the officers' employment without cause, he will
continued to be paid his base salary and be provided health insurance
benefits, life insurance benefits, if any, for the greater of the
remaining term of the agreement or eight months. The officer may
terminate the agreement upon 90 days written notice to the Company,
except in the event of a change of control, when 10 days notice is
required. The agreement contains nonsolicitation and noncompetition
provisions that are intended to survive the termination of employment
for a period of two years.
12. SUBSEQUENT EVENTS:
Subsequent to September 30, 1999, the Company executed $100,000
worth of Convertible Promissory Notes ("Notes") in favor of two
individuals. Interest on the Notes is payable at 10% per annum on a
quarterly basis. The Notes are due in October and November 2000 and
are collateralized by restricted shares of the Company's Common Stock,
held in escrow for the duration that the Notes are outstanding. The
Notes are also convertible into shares of the Company's Common Stock
at a rate of $.50 per share.
In November 1999, the Company consented to increase one of their
Convertible Promissory Notes (See Note 5) and the holder increased the
note by an additional $50,000 under the same terms and conditions.
On October 21, 1999, the Company acquired all of the outstanding
Common Stock of FlexRadio, Inc. ("Flex") for 6,200,000 shares of the
Company's Common Stock. The majority stockholders of Flex are also
stockholders, directors and officers of the Company. Under the terms
of the purchase, the Company obtained the rights to Flex's provisional
patent application (its sole asset) for a radio frequency detection
and reporting service for providing real time research. From its
inception through October 21, 1999, Flex had no significant
operations. A key advantage is that Flex will be able to improve
current methods of monitoring consumers radio listening habits which
to this date, utilizes paper, telephone and limited electronic surveys
to quantify and tabulate data for the advertising industry. Moreover,
Flex intends to provide improved customer service by assisting clients
in making the best advertising/media decisions which best fit their
needs.
F-25
<PAGE> 61
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
12. SUBSEQUENT EVENTS, CONTINUED:
The following unaudited condensed pro-forma balance sheet
reflects the above described transactions as if they were consummated
as of September 30, 1999:
<TABLE>
<CAPTION>
September 30, 1999
---------------------------------------------------------------
As Pro-Forma Pro
Reported Adjustments Forma
------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS:
Current assets $ 211,151 $ 150,000(1) $ 361,151
Property and equipment, net 742,655 - 742,655
Deferred charges and other
assets, net 513,147 - 513,147
Goodwill, net 928,782 - 928,782
Patent - 6,417,000(2) 6,417,000
------------ ------------ ------------
Total Assets $ 2,395,735 $ 6,567,000 $ 8,962,735
============ ============ ============
LIABILITIES:
Current liabilities $ 1,126,049 $ 150,000(1) $ 1,276,049
Long-term debt and
capitalized leases 382,816 - 382,816
------------ ------------ ------------
Total liabilities 1,508,865 150,000 1,658,865
------------ ------------ ------------
STOCKHOLDERS' EQUITY:
Common stock 14,179 6,200(2) 20,379
Additional paid in capital 5,867,387 6,410,800(2) 12,278,187
Accumulated deficit (4,994,696) - (4,994,696)
------------ ------------ ------------
Total Stockholders' Equity 886,870 6,417,000 7,303,870
------------ ------------ ------------
Total Liabilities and
Stockholders Equity $ 2,395,735 $ 6,567,000 $ 8,962,735
============ ============ ============
</TABLE>
F-26
<PAGE> 62
MIRACOM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1999 (UNAUDITED) AND DECEMBER 31, 1998
12. SUBSEQUENT EVENTS, CONTINUED:
(1) Issuance of $150,000 of Convertible Promissory Notes for Cash.
(2) Issuance of 6,200,000 shares of Common Stock, valued at $6,417,000, in
exchange for 100% of the Common Stock of Flex. The purchase price of Flex
was based upon an independent valuation of the estimated fair value of Flex
as of the date of acquisition, after giving effect to the 10% discount to
market relating to the 6,200,000 shares of Common Stock issued in the
acquisition. The 6,200,000 shares were valued at $1.035 per share, which
represents a 10% discount from market based upon the average of the high
and low trading prices, on October 21, 1999, as reported on the OTC
Electronic Bulletin Board. The total purchase price of $6,417,000 was
allocated to Flex's provisional patent application, which represented
Flex's sole asset at the date of acquisition.
On November 12, 1999, the Company amended its articles of
incorporation to grant the Board of Directors of the Company the power to
issue up to 10,000,000 shares of Preferred Stock, par value $.001 per
share, and to determine the price , rights, preferences, privileges, and
restrictions, including voting rights of these shares without further vote
or action by the stockholders.
In October 1999, the Company issued approximately 550,000 shares of
its Common Stock to officers, directors and employees of the Company.
F-27
<PAGE> 63
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC
INDEX TO COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants F-29
Combined Balance Sheets as of
September 30, 1998 and December 31,
1997 F-30-31
Combined Statements of Operations and
Accumulated Deficit for the Nine
Months Ended September 30, 1998 and
the Year Ended December 31, 1997 F-32
Combined Statements of Cash Flows for
the Nine Months Ended September 30,
1998 and the Year Ended December 31,
1997 F-33-34
Notes to Combined Financial
Statements F-35-41
</TABLE>
F-28
<PAGE> 64
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Miracom Corporation and Subsidiaries
Sanford, Florida
We have audited the accompanying combined balance sheets of MTV Pinnacle
Advertising Group, Inc. and United Equity Partners, Inc. (the Company) as of
September 30, 1998 and December 31, 1997, and the related combined statements
of operations and accumulated deficit, and cash flows for the nine months ended
September 30, 1998 and the year ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of MTV
Pinnacle Advertising Group, Inc. and United Equity Partners, Inc. as of
September 30, 1998 and December 31, 1997, and the combined results of their
operations and their cash flows for the nine months ended September 30, 1998
and the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
The accompanying combined financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, effective at the close of business on September 30, 1998,
Miracom Corporation acquired all of the assets and business operations and
assumed all of the liabilities of MTV Pinnacle Advertising Group, Inc. and
United Equity Partners, Inc. Subsequent to the acquisition, MTV Pinnacle
Advertising Group, Inc. and United Equity Partners, Inc. were dissolved.
Certified Public Accountants
Orlando, Florida
November 10, 1999
F-29
<PAGE> 65
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC
COMBINED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,511 $ 8,349
Accounts receivable trade 84,760 149,873
Deferred costs and other current assets 128,082 4,168
-------- --------
Total Current Assets 216,353 162,390
-------- --------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation of
$70,722 and $38,994, respectively 138,257 126,643
DEPOSITS 2,414 2,414
-------- --------
Total Assets $357,024 $291,447
======== ========
</TABLE>
See Accompanying Notes
F-30
<PAGE> 66
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC
COMBINED BALANCE SHEETS, CONTINUED
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 354,551 $ 169,358
Other current liabilities 114,944 61,699
Bank note payable 22,800 11,400
Current portion of capitalized leases 19,592 13,814
Other notes payable -- 6,100
Due to affiliate 15,000 --
Deferred revenue 109,500 --
Officers' loans 138,644 133,906
--------- ---------
Total Current Liabilities 775,031 396,277
--------- ---------
LONG TERM PORTION OF BANK NOTE PAYABLE 17,000 34,100
LONG TERM PORTION OF CAPITALIZED
LEASES 14,111 17,111
OTHER LIABILITIES 31,250 54,750
--------- ---------
Total Liabilities 837,392 502,238
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY:
Common Stock:
MTV Pinnacle Advertising Group, Inc.,
$.01 par value, 500,000 shares
authorized; 90,000 issued and
outstanding, respectively 900 900
United Equity Partners, Inc.,
$.01 par value, 400,000
shares authorized; 150,000 issued
and outstanding, respectively 1,500 1,500
Accumulated deficit (482,768) (213,191)
--------- ---------
Total Stockholders' Deficiency (480,368) (210,791)
--------- ---------
Total Liabilities and
Stockholders' Deficiency $ 357,024 $ 291,447
========= =========
</TABLE>
See Accompanying Notes
F-31
<PAGE> 67
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC.
COMBINED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Nine
Months Ended Year Ended
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
NET SALES $ 1,386,260 $ 1,125,842
COST OF SALES 614,123 416,642
----------- -----------
GROSS PROFIT 772,137 709,200
----------- -----------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 991,456 779,565
DEPRECIATION AND AMORTIZATION 31,728 28,263
INTEREST 18,530 12,581
LITIGATION SETTLEMENT -- 100,000
----------- -----------
TOTAL EXPENSES 1,041,714 920,409
----------- -----------
NET LOSS FOR THE PERIOD (269,577) (211,209)
ACCUMULATED DEFICIT,
at beginning of period (213,191) (1,982)
----------- -----------
ACCUMULATED DEFICIT,
at end of period $ (482,768) $ (213,191)
=========== ===========
</TABLE>
See Accompanying Notes
F-32
<PAGE> 68
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine
Months Ended Year Ended
September 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(269,577) $(211,209)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Amortization and depreciation 31,728 28,263
Litigation settlement -- 100,000
Changes in operating assets and liabilities:
Receivables 65,113 (137,778)
Other current assets (123,914) 832
Deferred income 109,500 --
Accounts payable and
accrued expenses 185,193 162,928
Other liabilities 53,245 31,699
--------- ---------
Net cash provided by (used in)
operating activities 51,288 (25,265)
--------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payments for property and
equipment (32,425) (64,684)
Payments for other assets -- (2,414)
--------- ---------
Net cash used in
investing activities (32,425) (67,098)
--------- ---------
</TABLE>
See Accompanying Notes
F-33
<PAGE> 69
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC
COMBINED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
Nine
Months Ended Year Ended
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Advances from (to) Affiliate, net 15,000 --
Borrowings under bank note
payable -- 45,500
Borrowings under other notes
payable -- 11,500
Borrowings from stockholders' 4,738 64,465
Repayments of bank note payable (5,700) --
Repayments of other notes payable (6,100) (5,400)
Payment of litigation obligations (23,500) (15,250)
Repayments of capitalized leases (8,139) (5,587)
Issuance of common stock -- 900
-------- --------
Net cash used in (provided by)
financing activities (23,701) 96,128
-------- --------
(DECREASE) INCREASE IN CASH (4,838) 3,765
CASH AT BEGINNING OF PERIOD 8,349 4,584
-------- --------
CASH AT END OF PERIOD $ 3,511 $ 8,349
======== ========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 14,060 $ 8,464
======== ========
SUPPLEMENTAL SCHEDULE OF NON
CASH INVESTING & FINANCING
ACTIVITIES:
Property and equipment acquired
under capitalized leases $ 10,917 $ 36,512
======== ========
</TABLE>
See Accompanying Notes
F-34
<PAGE> 70
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
1. ORGANIZATION:
MTV Pinnacle Advertising Group, Inc. ("MTV") began operations in
1997, and is engaged in the business of providing full service
advertising to commercial customers. United Equity Partners, Inc.
("UEP") began operations in 1996, and is engaged in the business of
providing Internet hardware and software solutions. Effective at the
close of business on September 30, 1998, Miracom Corporation
("Miracom") acquired all of the assets and business operations and
assumed all of the outstanding liabilities of MTV and UEP in exchange
for 732,000 shares of Miracom common stock. Subsequent to the
acquisition the operations of MTV and UEP were merged into Miracom.
In August 1999, both MTV and UEP were dissolved.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION - The accompanying combined financial
statements include the accounts of MTV and UEP, ("the Company") and do
not include any adjustments for its merger with Miracom. All
significant intercompany transactions and balances have been
eliminated in combination.
GOING CONCERN MATTERS - The accompanying financial statements
have been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business. As shown in the accompanying financial statements
during the nine months ended September 30, 1998 and the year ended
December 31, 1997, the Company incurred losses of $269,577 and
$211,209, respectively and had a deficiency in working capital of
$558,678 at September 30, 1998. These factors among others may
indicate the Company will be unable to continue as a going concern for
a reasonable period of time. The financial statements do not include
any adjustments relating to the outcome of this uncertainty.
LIQUIDITY AND PLAN OF OPERATIONS - As of September 30, 1998, the
Companies had cash of $3,511 and a deficiency in working capital of
$558,678.
Effective at the close of business on September 30, 1998,
Miracom Corporation ("Miracom") acquired all of the outstanding common
stock and assumed all of the outstanding liabilities of MTV and UEP.
Subsequent to the acquisition the operations of MTV and UEP were
merged into Miracom as operating divisions.
F-35
<PAGE> 71
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997, CONTINUED
LIQUIDITY AND PLAN OF OPERATIONS, Continued
The ability of the Company to meet future obligations in relation to
the orderly payment of the outstanding liabilities and recurring
operating expenses is dependent upon their ability to expand their
existing customer base to generate sufficient revenues and achieve
profitable operations and to obtain the necessary funding from Miracom
until profitable operations are achieved. Since the acquisition,
Miracom has provided the required funding to enable the Company to
operate in an orderly manner, but there is no assurance that Miracom
will be able to obtain the necessary funding for its other operations
and continue to provide funding to its MTV and UEP divisions.
Miracom's primary source of liquidity has been through the private
placement of equity and debt securities and from the cash generated
from its operating divisions.
PREPARATION OF FINANCIAL STATEMENTS - The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these
estimates.
REVENUES, COSTS AND EXPENSES - Revenues are recognized when the
service has been performed and related costs and expenses are
recognized when incurred. Amounts received on contracts in progress in
excess of the revenue earned, based upon the percent of completion
method, are recorded as deferred revenue and the related costs and
expenses incurred are recorded as deferred costs.
FAIR VALUE OF FINANCIAL INSTRUMENTS - Cash, accounts receivable,
accounts payable, accrued expenses and other current liabilities are
reflected in the combined financial statements at fair value because
of the short-term maturity of these instruments. The book value of
capitalized lease obligations and officers' loans closely approximate
their fair value. Fair value for these instruments is calculated using
discounted cash flows.
CONCENTRATIONS OF CREDIT RISK - Financial instruments which
potentially subject the Company to concentrations of credit risk
consist principally of accounts receivable. Concentrations of credit
risk with respect to trade receivables, in the opinion of management,
are limited due to the lack of concentration of large balances due
from any individual customer.
PROPERTY AND EQUIPMENT - Owned property and equipment is valued
at cost. Depreciation is provided on the straight-line method at rates
based on the estimated useful lives of individual assets or classes of
assets. Improvements to leased properties or fixtures are amortized
over their estimated useful lives or lease period, whichever is
shorter.
F-36
<PAGE> 72
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997, CONTINUED
PROPERTY AND EQUIPMENT, Continued
Leased property meeting certain criteria is capitalized and the
present value of the related lease payments are recorded as a
liability. Amortization of capitalized leased assets is computed on
the straight-line method over the estimated useful lives of assets
acquired.
Normal repairs and maintenance are expensed as incurred.
Expenditures which materially increase values, or extend useful lives
are capitalized. Replacements are capitalized and the property and
equipment accounts are relieved of the items being replaced. The
related costs and accumulated depreciation of disposed assets are
eliminated and any gain or loss on disposition is included in income.
INCOME TAXES - Prior to their acquisition by Miracom both MTV
and UEP had elected to be treated as Subchapter S Corporations, U.S.
Small Business Corporations, pursuant to the provisions of the
Internal Revenue Code. Accordingly, the Companies were not liable for
corporate income taxes, since their net income or loss for each
calendar year was passed directly through to their stockholders' and
reported on their individual income tax returns. Subsequent to
September 30, 1998, both MTV and UEP filed final corporate income tax
returns. Their operations for all periods subsequent to September 30,
1998, will be included in the consolidated income tax return of
Miracom.
The Company has incurred losses since its inception. The
potential benefit from the net operating losses that would have been
available to the Company if it had been taxed as a C corporation,
would be fully allowed for due to the uncertainty of realization.
Accordingly, the accompanying financial statements do not include a
pro-forma presentation for the effects on the Company as if it were
taxed as a C corporation since inception.
YEAR 2000 ISSUES, (UNAUDITED) - Because many computerized
systems use only two digits to record the year in date fields (for
example, the year 1998 is recorded as "98"), such systems may not be
able to process dates accurately in the year 2000 and after.
The Company's management has made efforts to determine the
possible effects of Year 2000 issues on its operations and is
implementing remedial actions. Management will also attempt to
determine if its significant customers, vendors and other third
parties upon which it relies have addressed or will be able to address
any affected systems on a timely basis. Management does not expect the
potential disruption from Year 2000 issues to have a material effect
on the Company's business operations, but the outcome remains
uncertain. The accompanying financial statements do not contain
provisions or adjustments related to the ultimate outcome of this
uncertainty.
F-37
<PAGE> 73
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997, CONTINUED
3. DEFERRED COSTS AND OTHER CURRENT ASSETS:
A summary of deferred costs and other current assets at
September 30, 1998 and December 31, 1997 is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Deferred Costs $ 125,000 $ -
Other receivables 3,082 4,168
----------- -----------
$ 128,082 $ 4,168
=========== ===========
</TABLE>
Deferred costs consist of amounts paid in excess of costs
recognized in connection with a contract accounted for using the
percent of completion method of accounting.
4. PROPERTY AND EQUIPMENT:
A summary of property and equipment at September 30, 1998 and
December 31, 1997 is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Furniture and fixtures $ 5,671 $ 4,987
Assets acquired under capitalized
leases 60,483 57,763
Computers and other operating equipment 129,291 96,853
Leasehold improvements 13,534 6,034
----------- -----------
208,979 165,637
Less: accumulated depreciation and
amortization (70,722) (38,994)
----------- -----------
$ 138,257 $ 126,643
=========== ===========
Depreciation and amortization
of assets acquired under
capitalized leases $ 11,553 $ 8,865
=========== ===========
</TABLE>
Assets acquired under capitalized leases consist primarily of
computers and related equipment.
F-38
<PAGE> 74
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997, CONTINUED
5. BANK NOTE PAYABLE:
The Bank note payable, in the original principal amount of
$45,500, bears interest at 2% over the lenders prime rate and is
payable in monthly principal installments of $1,900 from July 1, 1998
through June 1, 2000. Interest is also payable monthly. The
outstanding principal balance of the note on September 30, 1998 and
December 31, 1997, was $39,800 and $45,500 respectively. Scheduled
principal payments subsequent to September 30, 1998 are as follows:
<TABLE>
<CAPTION>
Twelve Months Ending
September 30,
--------------------
<S> <C>
1999 $ 22,800
2000 17,000
-----------
Total $ 39,800
===========
</TABLE>
6. CAPITALIZED LEASES:
Future minimum lease payments subsequent to September 30, 1998 are as
follows:
<TABLE>
<CAPTION>
Twelve Month
Period Ending
September 30,
--------------
<S> <C>
1999 $ 20,700
2000 15,880
2001 5,067
2002 413
-----------
Total minimum lease payments 42,060
Less amount representing
interest at 9.9% to 25.5% 8,357
-----------
Present value of minimum
lease payments 33,703
Less current portion 19,592
-----------
Long term portion $ 14,111
===========
</TABLE>
F-39
<PAGE> 75
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997, CONTINUED
7. RELATED PARTY TRANSACTIONS:
At September 30, 1998, and December 31, 1997, the Company was
indebted to certain officers in the aggregate amounts of $138,644 and
$133,906. The loans bear interest at 9.5% per annum and are due on
demand.
At September 30, 1998, the Company is indebted to an affiliate
in the amount of $15,000, representing a non interest bearing advance
from an affiliate.
During the period ended September 30, 1998, MTV borrowed an
aggregate of $15,000, from the father of one of its officers and major
stockholders. The note provided for interest at the rate of 9.5% per
annum and was payable in three monthly installments of principal and
interest. The loan was paid in full in January 1999.
At September 30, 1998, the Company accounts payable includes
$50,000 due to LiveCode, Inc., a company that was acquired by Miracom
in May 1999.
8. GENERAL AND ADMINISTRATIVE EXPENSES:
A summary of general and administration expenses for the nine
months ended September 30, 1998 and the year ended December 31, 1997,
is as follows:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1998 1997
----------------- -----------
<S> <C> <C>
Salaries and related taxes $ 658,855 $ 415,380
Rent 57,659 39,685
Telephone 58,050 45,120
Travel and entertainment 23,822 42,258
Office expense and supplies 24,355 46,529
Professional fees 31,908 125,541
Insurance 32,896 11,813
Other 103,911 53,239
----------- -----------
Total $ 991,456 $ 779,565
=========== ===========
</TABLE>
F-40
<PAGE> 76
MTV PINNACLE ADVERTISING GROUP, INC.
AND UNITED EQUITY PARTNERS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997, CONTINUED
9. LITIGATION SETTLEMENT:
On June 25, 1997, MTV entered into a settlement agreement
relating to certain outstanding litigation, whereby the parties to the
litigation agreed to dismiss , with prejudice, all outstanding
lawsuits which were filed against them in exchange for $100,000 to be
paid in equal monthly installments of $2,500.
The accompanying combined financial statements for the year
ended December 31, 1997 include a charge of $100,000 to reflect the
cost of the settlement.
At September 30, 1998 and December 31, 1997, the balances due
under the settlement agreement are included in the accompanying
combined balance sheets as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- -----------
<S> <C> <C>
Other current liabilities $ 30,000 $ 30,000
Other liabilities 31,250 54,750
----------- -----------
$ 61,250 $ 84,750
=========== ===========
</TABLE>
10. COMMITMENTS AND CONTINGENCIES:
The lease agreement, including amendments thereto, for office
facilities expired on June 30, 1999. The Companies continued to occupy
the space on a month to month basis from July 1, 1999 through mid
August 1999. Required rental payments for the period from September
30, 1998 until the date the companies vacated the premises were
approximately $50,000. Total rental expense was $31,677 and $33,011
for the nine months ended September 30, 1998 and the year ended
December 31, 1997, respectively.
F-41
<PAGE> 77
PART III
ITEM 1. INDEX TO EXHIBITS
The exhibits filed as part of this registration statement are listed
below and are attached to this registration statement as indicated.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
<S> <C>
2.1 Amended and Restated Articles of Incorporation
2.2 Amended and Restated Bylaws
3.1 Stock Option Plan
3.2 Form of Stock Option Agreement for Messrs. Lucas, Anderson,
Odato, Fouts and McComas
3.3 Form of Registration Rights Agreement between Registrant and
certain shareholders of Registrant
6.1 Employment Agreement for Shawn D. Lucas and amendment
6.2 Employment Agreement for Scott A. Anderson and amendment
6.3 Employment Agreement for David Lampert and amendment
6.4 Employment Agreement for Ian Hart
6.5 Employment Agreement for Jeffrey Odato and amendment
6.6 Employment Agreement for Michael Fouts and amendment
6.7 Employment Agreement for David McComas and amendment
6.8 Form of Indemnification Agreement for Officers and Directors
6.9.1 Contract for Sale and Purchase between Registrant and
Karl O. Stairs and Helen L. Stairs
6.9.2 Contract for Sale and Purchase between Registrant and Stone
Street Investments, Inc.
6.10.1 Loan Agreement between Registrant and Eugene W. Gramzow, Trustee
6.10.2 Mortgage in favor of Eugene W. Gramzow, Trustee
6.10.3 Mortgage Note in favor of Eugene W. Gramzow, Trustee
6.11.1 Mortgage in favor of Stone Street Investments, Inc.
6.11.2 Mortgage Note in favor of Stone Street Investments, Inc.
6.12.1 Mortgage in favor of Eugene W. Gramzow, Trustee
6.12.2 Mortgage Note in favor of Eugene W. Gramzow, Trustee
6.13 Acquisition Agreement between Registrant and Direct Touch
Research, Inc.
6.14.1 Acquisition Agreement between Registrant and United Equity
Partners, Inc. ("UEP")
6.14.2 Amendment to Acquisition Agreement between Registrant and UEP
6.14.3 Amended and Restated Assumption Agreement between Registrant and UEP
6.15.1 Acquisition Agreement between Registrant and MTV/Pinnacle Advertising Group,Inc.
6.15.2 Amendment to Acquisition Agreement between Registrant and Pinnacle
6.15.3 Amended and Restated Assumption Agreement between Registrant and Pinnacle
6.16 Acquisition Agreement between Registrant and LiveCode, Inc
</TABLE>
<PAGE> 78
<TABLE>
<S> <C>
6.17 Agreement and Plan of Merger between Registrant, FlexRadio, Inc., Flex Acquisition, Inc. and the
shareholders of FlexRadio, Inc.
10 Consent of Moore Stephens Lovelace, P.A. Certified Public Accountants
27 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 79
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Sanford, State of Florida, on the 19th day of November, 1999.
MIRACOM CORPORATION
By: /s/ Shawn D. Lucas
--------------------------------------------
Shawn D. Lucas
President and Co-CEO
By: /s/Ian J. Hart
--------------------------------------------
Ian J. Hart, Chief Financial Officer
<PAGE> 80
ITEM 1. INDEX TO EXHIBITS
The exhibits filed as part of this registration statement are listed
below and are attached to this registration statement as indicated.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
2.1 Amended and Restated Articles of Incorporation
2.2 Amended and Restated Bylaws
3.1 Stock Option Plan
3.2 Form of Stock Option Agreement for Messrs. Lucas, Anderson,
Odato, Fouts and McComas
3.3 Form of Registration Rights Agreement between Registrant and
certain shareholders of Registrant
6.1 Employment Agreement for Shawn D. Lucas and amendment
6.2 Employment Agreement for Scott A. Anderson and amendment
6.3 Employment Agreement for David Lampert and amendment
6.4 Employment Agreement for Ian Hart
6.5 Employment Agreement for Jeffrey Odato and amendment
6.6 Employment Agreement for Michael Fouts and amendment
6.7 Employment Agreement for David McComas and amendment
6.8 Form of Indemnification Agreement for Officers and Directors
6.9.1 Contract for Sale and Purchase between Registrant and Karl O.
Stairs and Helen L. Stairs
6.9.2 Contract for Sale and Purchase between Registrant and Stone
Street Investments, Inc.
6.10.1 Loan Agreement between Registrant and Eugene W. Gramzow, Trustee
6.10.2 Mortgage in favor of Eugene W. Gramzow, Trustee
6.10.3 Mortgage Note in favor of Eugene W. Gramzow, Trustee
6.11.1 Mortgage in favor of Stone Street Investments, Inc.
6.11.2 Mortgage Note in favor of Stone Street Investments, Inc.
6.12.1 Mortgage in favor of Eugene W. Gramzow, Trustee
6.12.2 Mortgage Note in favor of Eugene W. Gramzow, Trustee
6.13 Acquisition Agreement between Registrant and Direct Touch
Research, Inc.
6.14.1 Acquisition Agreement between Registrant and Unity Equity
Partners, Inc. ("UEP")
6.14.2 Amendment to Acquisition Agreement between Registrant and UEP
6.14.3 Amended and Restated Assumption Agreement between Registrant and
UEP
6.15.1 Acquisition Agreement between Registrant and MTV/Pinnacle
Advertising Group, Inc.
6.15.2 Amendment to Acquisition Agreement between Registrant and
Pinnacle
6.15.3 Amended and Restated Assumption Agreement between Registrant and
Pinnacle
6.16 Acquisition Agreement between Registrant and LiveCode, Inc.
6.17 Agreement and Plan of Merger between Registrant, FlexRadio, Inc.,
Flex Acquisition, Inc. and the shareholders of FlexRadio, Inc.
10 Consent of Moore Stephens Lovelace, P.A. Certified Public
Accountants
27.1 Financial Data Schedule
27.2 Financial Data Schedule
<PAGE> 1
EXHIBIT 2.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
MIRACOM CORPORATION
The undersigned, Miracom Corporation, a Nevada corporation (the
"Corporation"), for the purpose of amending and restating the Articles of
Incorporation of the Corporation, in accordance with the provisions of Nevada
Revised Statutes, Title 17, Chapter 78, as from time to time amended (the
"Nevada General Corporation Law"), does hereby make and execute these Amended
and Restated Articles of Incorporation and does hereby certify that:
1. The name of the Corporation is Miracom Corporation. Its original
Articles of Incorporation were filed with the Secretary of State of Nevada on
September 13, 1995 under the name I.E.L.S., Inc. and an amendment thereto was
filed on September 29, 1998 changing the name of the Corporation to "Miracom
Corporation."
2. Upon a proposal recommended and submitted to the majority
stockholders of the Corporation by the Corporation's directors pursuant to
Section 78.315 of the Nevada General Corporation Law, resolutions setting forth
the within Amended and Restated Articles of Incorporation of this Corporation
were duly adopted by majority vote of the stockholders of the Corporation by
written consent, in accordance with Section 78.320 of the Nevada General
Corporation Law.
3. The Amended and Restated Articles of Incorporation of the
Corporation submitted and recommended by the Corporation's directors and
approved by the majority stockholders of the Corporation read as follows:
ARTICLE 1. NAME
The name of this corporation is Miracom Corporation.
ARTICLE 2. REGISTERED OFFICE
The address of the registered office of the Corporation in Nevada is
3675 Pecos McLeod, Suite 1400, Las Vegas, Nevada 89109, and the name of its
registered agent at such address is Incorp Services, Inc.
<PAGE> 2
ARTICLE 3. PURPOSE
The purpose for which this Corporation is organized in the transaction
of any and all lawful activities for which a corporation may be organized under
the laws of the State of Nevada, as the same may be amended from time to time.
ARTICLE 4. DURATION
This Corporation is to have perpetual existence.
ARTICLE 5. AUTHORIZED SHARES
The aggregate number of shares which this Corporation shall have
authority to issue is 60,000,000 shares of capital stock consisting of
50,000,000 common shares with a par value of $0.001 per share, which shall be
known as "Common Stock," and 10,000,000 preferred shares with a par value of
$0.001 per share, which shall be known as "Preferred Stock." The capital stock,
after the amount of the subscription price or par value has been paid in, shall
not be subject to assessment to pay the debts of the Corporation.
A. Common Stock. The holders of the Common Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of earnings or
surplus legally available therefor, dividends payable either in cash, in
property, or in shares of the capital stock of the corporation. Each holder of
record of the Common Stock shall have one vote for each share of Common Stock
standing in such holder's name on the books of the corporation and entitled to
vote. The Common Stock shall have no special powers, preferences, or rights, or
qualifications, limitations, or restrictions thereof.
B. Preferred Stock. Authority is hereby vested in the Board of
Directors of the Corporation to provide from time to time for the issuance of
Preferred Stock in one or more classes or series and in connection therewith to
fix by resolution providing for the issue of such classes or series, the number
of shares to be included and describing the voting rights, if any, designations,
powers, preferences, and relative participating, optional or other special
rights and the qualifications, limitations, and restrictions of such classes or
series, including, without limitation, rights of redemption or conversion into
Common Stock, to the fullest extent now or hereafter permitted by the Nevada
General Corporation Law.
Shares of any class or series of Preferred Stock that shall be issued
and thereafter acquired by the Corporation through purchase, redemption (whether
through the operation of a sinking fund or otherwise), conversion, exchange, or
otherwise, shall, upon appropriate filing and recording to the extent required
by law, have the status of authorized and unissued shares of Preferred Stock and
may be reissued as part of such class or series or as part of any other class or
series of Preferred Stock. Unless otherwise provided in the resolution or
resolutions of the Board of Directors providing for the issuance thereof, the
number of authorized shares of stock of any class or series of Preferred Stock
may be increased or decreased (but not below the number of shares thereof then
outstanding) by resolution or resolutions of the Board of Directors and
2
<PAGE> 3
appropriate filing and recording to the extent required by law. In case the
number of shares of any such class or series of Preferred Stock shall be
decreased, the shares representing such decrease shall, unless otherwise
provided in the resolution or resolutions of the Board of Directors providing
for the issuance thereof, resume the status of authorized but unissued shares of
Preferred Stock, undesignated as to class or series.
ARTICLE 6. BYLAWS
The Board of Directors is expressly authorized to adopt, amend or
repeal the Bylaws of the Corporation subject to the power of the stockholders to
adopt, amend, or repeal such Bylaws.
ARTICLE 7. INDEMNIFICATION
A. To the fullest extent permitted by the laws of the State of Nevada,
as the same exist or may hereinafter be amended, no director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director or officer
involving any act or omission of any such director or officer; provided,
however, that nothing contained herein shall eliminate or limit the liability of
a director or officer of the Corporation to the extent provided by applicable
laws (i) for acts or omissions which involve intentional misconduct, fraud or
knowing violation of law or (ii) for authorizing the payment of dividends in
violation of Section 78.300 of the Nevada General Corporation Law. The
limitation of liability provided herein shall continue after a director or
officer has ceased to occupy such position as to acts or omissions occurring
during such director's or officer's term or terms of office. No repeal,
amendment or modification of this Article 7, whether direct or indirect, shall
eliminate or reduce its effect with respect to any act or omission of a director
or officer of the Corporation occurring prior to such repeal, amendment or
modification.
B. Except as may otherwise be specifically provided in these Articles
of Incorporation, no provision of these Articles of Incorporation is intended by
the Corporation to be construed as limiting, prohibiting, denying or abrogating
any of the general or specific powers or rights conferred under the Nevada
General Corporation Law upon the Corporation, upon its stockholders, bondholders
and security holders, and upon its directors, officers and other corporate
personnel, including, in particular, the power of the Corporation to furnish
indemnification to directors and officers in the capacities defined and
prescribed by the Nevada General Corporation Law and the defined and prescribed
rights of said persons to indemnification as the same are conferred under the
Nevada General Corporation Law. The Corporation shall, to the fullest extent
permitted by the laws of the State of Nevada, including, but not limited to
Section 78.751 and Section 78.7502 of the Nevada General Corporation Law, as the
same may be amended and supplemented, indemnify, defend and hold harmless any
and all directors and officers of the Corporation and may, in the discretion of
the board of directors, indemnify any and all other persons whom it shall have
power to indemnify under said Sections or otherwise under Nevada law, from and
against any and all of the expenses, claims, damages or liabilities or other
matters referred to or covered by said Sections. The indemnification
3
<PAGE> 4
provisions contained in the Nevada General Corporation Law shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, resolution of stockholders or disinterested directors, or
otherwise, and shall continue as to a person who has ceased to be a director,
officer, employee or agent, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall inure to the
benefit of the heirs, executors and administrators of such person.
ARTICLE 8. AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Article of Incorporation, in the manner now or
hereafter prescribed by statute or by these Article of Incorporation, and all
rights conferred upon stockholders herein are granted subject to this
reservation; provided, however, that notwithstanding anything to the contrary in
these Articles of Incorporation to the contrary, the affirmative vote of
sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of stock of
this Corporation entitled to vote shall be required to amend, alter, change or
repeal, or adopt any provision inconsistent with Article 9.
IN WITNESS WHEREOF, this Amended and Restated Articles of Incorporation
is hereby executed on behalf of the corporation by the undersigned officers,
this 12th day of November, 1999.
MIRACOM CORPORATION
By: /s/ Shawn D. Lucas
-----------------------------------
Shawn D. Lucas, President
ATTEST:
By: /s/ Scott A. Anderson
---------------------------------
Scott A. Anderson, Secretary
4
<PAGE> 1
EXHIBIT 2.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
MIRACOM CORPORATION
The undersigned, Miracom Corporation, a Nevada corporation (the
"Corporation"), for the purpose of amending and restating the Articles of
Incorporation of the Corporation, in accordance with the provisions of Nevada
Revised Statutes, Title 17, Chapter 78, as from time to time amended (the
"Nevada General Corporation Law"), does hereby make and execute these Amended
and Restated Articles of Incorporation and does hereby certify that:
1. The name of the Corporation is Miracom Corporation. Its original
Articles of Incorporation were filed with the Secretary of State of Nevada on
September 13, 1995 under the name I.E.L.S., Inc. and an amendment thereto was
filed on September 29, 1998 changing the name of the Corporation to "Miracom
Corporation."
2. Upon a proposal recommended and submitted to the majority
stockholders of the Corporation by the Corporation's directors pursuant to
Section 78.315 of the Nevada General Corporation Law, resolutions setting forth
the within Amended and Restated Articles of Incorporation of this Corporation
were duly adopted by majority vote of the stockholders of the Corporation by
written consent, in accordance with Section 78.320 of the Nevada General
Corporation Law.
3. The Amended and Restated Articles of Incorporation of the
Corporation submitted and recommended by the Corporation's directors and
approved by the majority stockholders of the Corporation read as follows:
ARTICLE 1. NAME
The name of this corporation is Miracom Corporation.
ARTICLE 2. REGISTERED OFFICE
The address of the registered office of the Corporation in Nevada is
3675 Pecos McLeod, Suite 1400, Las Vegas, Nevada 89109, and the name of its
registered agent at such address is Incorp Services, Inc.
<PAGE> 2
ARTICLE 3. PURPOSE
The purpose for which this Corporation is organized in the transaction
of any and all lawful activities for which a corporation may be organized under
the laws of the State of Nevada, as the same may be amended from time to time.
ARTICLE 4. DURATION
This Corporation is to have perpetual existence.
ARTICLE 5. AUTHORIZED SHARES
The aggregate number of shares which this Corporation shall have
authority to issue is 60,000,000 shares of capital stock consisting of
50,000,000 common shares with a par value of $0.001 per share, which shall be
known as "Common Stock," and 10,000,000 preferred shares with a par value of
$0.001 per share, which shall be known as "Preferred Stock." The capital stock,
after the amount of the subscription price or par value has been paid in, shall
not be subject to assessment to pay the debts of the Corporation.
A. Common Stock. The holders of the Common Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of earnings or
surplus legally available therefor, dividends payable either in cash, in
property, or in shares of the capital stock of the corporation. Each holder of
record of the Common Stock shall have one vote for each share of Common Stock
standing in such holder's name on the books of the corporation and entitled to
vote. The Common Stock shall have no special powers, preferences, or rights, or
qualifications, limitations, or restrictions thereof.
B. Preferred Stock. Authority is hereby vested in the Board of
Directors of the Corporation to provide from time to time for the issuance of
Preferred Stock in one or more classes or series and in connection therewith to
fix by resolution providing for the issue of such classes or series, the number
of shares to be included and describing the voting rights, if any, designations,
powers, preferences, and relative participating, optional or other special
rights and the qualifications, limitations, and restrictions of such classes or
series, including, without limitation, rights of redemption or conversion into
Common Stock, to the fullest extent now or hereafter permitted by the Nevada
General Corporation Law.
Shares of any class or series of Preferred Stock that shall be issued
and thereafter acquired by the Corporation through purchase, redemption (whether
through the operation of a sinking fund or otherwise), conversion, exchange, or
otherwise, shall, upon appropriate filing and recording to the extent required
by law, have the status of authorized and unissued shares of Preferred Stock and
may be reissued as part of such class or series or as part of any other class or
series of Preferred Stock. Unless otherwise provided in the resolution or
resolutions of the Board of Directors providing for the issuance thereof, the
number of authorized shares of stock of any class or series of Preferred Stock
may be increased or decreased (but not below the number of shares thereof then
outstanding) by resolution or resolutions of the Board of Directors and
2
<PAGE> 3
appropriate filing and recording to the extent required by law. In case the
number of shares of any such class or series of Preferred Stock shall be
decreased, the shares representing such decrease shall, unless otherwise
provided in the resolution or resolutions of the Board of Directors providing
for the issuance thereof, resume the status of authorized but unissued shares of
Preferred Stock, undesignated as to class or series.
ARTICLE 6. BYLAWS
The Board of Directors is expressly authorized to adopt, amend or
repeal the Bylaws of the Corporation subject to the power of the stockholders to
adopt, amend, or repeal such Bylaws.
ARTICLE 7. INDEMNIFICATION
A. To the fullest extent permitted by the laws of the State of Nevada,
as the same exist or may hereinafter be amended, no director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director or officer
involving any act or omission of any such director or officer; provided,
however, that nothing contained herein shall eliminate or limit the liability of
a director or officer of the Corporation to the extent provided by applicable
laws (i) for acts or omissions which involve intentional misconduct, fraud or
knowing violation of law or (ii) for authorizing the payment of dividends in
violation of Section 78.300 of the Nevada General Corporation Law. The
limitation of liability provided herein shall continue after a director or
officer has ceased to occupy such position as to acts or omissions occurring
during such director's or officer's term or terms of office. No repeal,
amendment or modification of this Article 7, whether direct or indirect, shall
eliminate or reduce its effect with respect to any act or omission of a director
or officer of the Corporation occurring prior to such repeal, amendment or
modification.
B. Except as may otherwise be specifically provided in these Articles
of Incorporation, no provision of these Articles of Incorporation is intended by
the Corporation to be construed as limiting, prohibiting, denying or abrogating
any of the general or specific powers or rights conferred under the Nevada
General Corporation Law upon the Corporation, upon its stockholders, bondholders
and security holders, and upon its directors, officers and other corporate
personnel, including, in particular, the power of the Corporation to furnish
indemnification to directors and officers in the capacities defined and
prescribed by the Nevada General Corporation Law and the defined and prescribed
rights of said persons to indemnification as the same are conferred under the
Nevada General Corporation Law. The Corporation shall, to the fullest extent
permitted by the laws of the State of Nevada, including, but not limited to
Section 78.751 and Section 78.7502 of the Nevada General Corporation Law, as the
same may be amended and supplemented, indemnify, defend and hold harmless any
and all directors and officers of the Corporation and may, in the discretion of
the board of directors, indemnify any and all other persons whom it shall have
power to indemnify under said Sections or otherwise under Nevada law, from and
against any and all of the expenses, claims, damages or liabilities or other
matters referred to or covered by said Sections. The indemnification
3
<PAGE> 4
provisions contained in the Nevada General Corporation Law shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, resolution of stockholders or disinterested directors, or
otherwise, and shall continue as to a person who has ceased to be a director,
officer, employee or agent, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall inure to the
benefit of the heirs, executors and administrators of such person.
ARTICLE 8. AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Article of Incorporation, in the manner now or
hereafter prescribed by statute or by these Article of Incorporation, and all
rights conferred upon stockholders herein are granted subject to this
reservation; provided, however, that notwithstanding anything to the contrary in
these Articles of Incorporation to the contrary, the affirmative vote of
sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of stock of
this Corporation entitled to vote shall be required to amend, alter, change or
repeal, or adopt any provision inconsistent with Article 9.
IN WITNESS WHEREOF, this Amended and Restated Articles of Incorporation
is hereby executed on behalf of the corporation by the undersigned officers,
this 12th day of November, 1999.
MIRACOM CORPORATION
By: /s/ Shawn D. Lucas
-----------------------------------
Shawn D. Lucas, President
ATTEST:
By: /s/ Scott A. Anderson
---------------------------------
Scott A. Anderson, Secretary
4
<PAGE> 5
EXHIBIT 2.2
AMENDED AND RESTATED BYLAWS
OF
MIRACOM CORPORATION
(A NEVADA CORPORATION)
<PAGE> 6
MIRACOM CORPORATION
BYLAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
ARTICLE ONE - OFFICES........................................................................4
Section 1. Registered Office.........................................................4
Section 2. Other Offices.............................................................4
ARTICLE TWO - MEETINGS OF SHAREHOLDERS.......................................................4
Section 1. Place.....................................................................4
Section 2. Time of Annual Meeting....................................................4
Section 3. Call of Special Meetings..................................................4
Section 4. Conduct of Meetings.......................................................4
Section 5. Notice and Waiver of Notice...............................................5
Section 6. Business of Special Meeting...............................................5
Section 7. Quorum....................................................................5
Section 8. Voting Per Share..........................................................6
Section 9. Voting of Shares..........................................................6
Section 10. Proxies..................................................................6
Section 11. Shareholder List.........................................................7
Section 12. Action Without Meeting...................................................7
Section 13. Fixing Record Date.......................................................7
Section 14. Inspectors and Judges....................................................8
Section 15. Voting for Directors.....................................................8
ARTICLE THREE - DIRECTORS...................................................................10
Section 1. Number, Election and Term................................................11
Section 2. Vacancies................................................................11
Section 3. Powers...................................................................11
Section 4. Place of Meetings........................................................11
Section 5. Annual Meeting...........................................................11
Section 6. Regular Meetings.........................................................11
Section 7. Special Meetings and Notice..............................................11
Section 8. Quorum; Required Vote; Presumption of Assent.............................12
Section 9. Action Without Meeting...................................................12
Section 10. Conference Telephone or Similar Communications Equipment Meetings.......12
Section 11. Committees..............................................................12
Section 12. Compensation of Directors...............................................13
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
ARTICLE FOUR - OFFICERS.....................................................................13
Section 1. Positions................................................................13
Section 2. Election of Specified Officers by Board..................................13
Section 3. Election or Appointment of Other Officers................................13
Section 4. Salaries.................................................................13
Section 5. Term; Resignation........................................................13
Section 6. Chairman of the Board....................................................14
Section 7. President................................................................14
Section 8. Vice Presidents..........................................................15
Section 9. Secretary................................................................15
Section 10. Treasurer...............................................................15
Section 11. Chief Financial Officer.................................................15
Section 12. Other Officers, Employees and Agents....................................15
ARTICLE FIVE - CERTIFICATES FOR SHARES......................................................16
Section 1. Issue of Certificates....................................................16
Section 2. Legends for Preferences and Restrictions on Transfer.....................16
Section 3. Facsimile Signatures.....................................................16
Section 4. Lost Certificates........................................................16
Section 5. Transfer of Shares.......................................................17
Section 6. Registered Shareholders..................................................17
ARTICLE SIX - GENERAL PROVISIONS............................................................17
Section 1. Dividends................................................................17
Section 2. Reserves.................................................................17
Section 3. Checks...................................................................17
Section 4. Fiscal Year..............................................................17
Section 5. Seal.....................................................................17
Section 6. Fiscal Year..............................................................18
Section 7. Seal.....................................................................18
Section 8. Gender...................................................................18
ARTICLE SEVEN - AMENDMENTS OF BYLAWS........................................................18
CERTIFICATION...............................................................................18
</TABLE>
- 3 -
<PAGE> 8
MIRACOM CORPORATION
BYLAWS
ARTICLE ONE
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of MIRACOM
CORPORATION, a Nevada corporation (the "CORPORATION"), shall be located in the
City of Las Vegas, State of Nevada, unless otherwise designated by the Board of
Directors.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places, either within or without the State of Nevada, as the Board of
Directors of the Corporation (the "BOARD OF DIRECTORS") may determine from time
to time or as the business of the Corporation may require.
ARTICLE TWO
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE. All annual meetings of Stockholders shall be held at
such place, within or without the State of Nevada, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof. Special meetings of Stockholders may be held
at such place, within or without the State of Nevada, and at such time as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
SECTION 2. TIME OF ANNUAL MEETING. Annual meetings of Stockholders
shall be held on such date and at such time fixed, from time to time, by the
Board of Directors, provided that there shall be an annual meeting held every
year at which the Stockholders shall elect a Board of Directors and transact
such other business as may properly be brought before the meeting.
SECTION 3. CALL OF SPECIAL MEETINGS. Special meetings of the
Stockholders shall be held if called by a majority of the Board of Directors,
Chairman of the Board, the President, or if the holders of not less than
twenty-five percent (25%) of all the votes entitled to be cast on any issue
proposed to be considered at the proposed special meeting sign, date, and
deliver to the Secretary one or more written demands for the meeting describing
the purpose or purposes for which it is to be held.
SECTION 4. CONDUCT OF MEETINGS. The Chairman of the Board (or in his or
her absence, the President or such other designee of the Chairman of the Board)
shall preside at the annual and special meetings of Stockholders and shall be
given full discretion in establishing the rules and procedures to be followed
in conducting the meetings, except as otherwise provided by law or in these
Bylaws.
- 4 -
<PAGE> 9
SECTION 5. NOTICE AND WAIVER OF NOTICE. Except as otherwise provided by
law, written or printed notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than
sixty (60) days before the day of the meeting, either personally or by
first-class mail, by or at the direction of the President, the Secretary, or
the officer or person calling the meeting, to each Stockholder of record
entitled to vote at such meeting. If the notice is mailed at least thirty (30)
days before the date of the meeting, it may be done by a class of United States
mail other than first-class. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the Stockholder
at his, her or its address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid. If a meeting is adjourned to another
time and/or place, and if an announcement of the adjourned time and/or place is
made at the meeting, it shall not be necessary to give notice of the adjourned
meeting unless the Board of Directors, after adjournment, fixes a new record
date for the adjourned meeting. Whenever any notice is required to be given to
any Stockholder, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether signed before, during or after the time of the
meeting stated therein, and delivered to the Corporation for inclusion in the
minutes or filing with the corporate records, shall be equivalent to the giving
of such notice. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Stockholders need be specified in any
written waiver of notice. Attendance of a person at a meeting shall constitute
a waiver of (a) lack of or defective notice of such meeting, unless the person
objects at the beginning to the holding of the meeting or the transacting of
any business at the meeting, or (b) lack of defective notice of a particular
matter at a meeting that is not within the purpose or purposes described in the
meeting notice, unless the person objects to considering such matter when it is
presented.
SECTION 6. BUSINESS OF SPECIAL MEETING. Business transacted at any
special meeting shall be confined to the purposes stated in the notice thereof.
SECTION 7. QUORUM. Shares entitled to vote as a separate voting group
may take action on a matter at a meeting only if a quorum of these shares
exists with respect to that matter. Except as otherwise provided in the
Articles of Incorporation or by law, a majority of the shares entitled to vote
on the matter by each voting group, represented in person or by proxy, shall
constitute a quorum at any meeting of Stockholders, but in no event shall a
quorum consist of less than one-third (1/3) of the shares of each voting group
entitled to vote. If less than a majority of outstanding shares entitled to
vote are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. After a quorum
has been established at any Stockholders' meeting, the subsequent withdrawal of
Stockholders, so as to reduce the number of shares entitled to vote at the
meeting below the number required for a quorum, shall not affect the validity
of any action taken at the meeting or any adjournment thereof. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
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SECTION 8. VOTING PER SHARE. Except as otherwise provided in the
Articles of Incorporation or by law, each Stockholder is entitled to one (1)
vote for each outstanding share held by him, her or it on each matter voted at
a Stockholders' meeting.
SECTION 9. VOTING OF SHARES. A Stockholder may vote at any meeting of
Stockholders of the Corporation, either in person or by proxy. Shares standing
in the name of another corporation, domestic or foreign, may be voted by the
officer, agent or proxy designated by the bylaws of such corporate Stockholder
or, in the absence of any applicable bylaw, by such person or persons as the
board of directors of the corporate Stockholder may designate. In the absence
of any such designation, or, in case of conflicting designation by the
corporate Stockholder, the chairman of the board, the president, any vice
president, the secretary and the treasurer of the corporate Stockholder, in
that order, shall be presumed to be fully authorized to vote such shares.
Shares held by an administrator, executor, guardian, personal representative,
or conservator may be voted by him, her or it, either in person or by proxy,
without a transfer of such shares into his, her or its name. Shares standing in
the name of a trustee may be voted by him, her or it, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him, her or it
without a transfer of such shares into his, her or its name or the name of his,
her or its nominee. Shares held by or under the control of a receiver, a
trustee in bankruptcy proceedings, or an assignee for the benefit of creditors
may be voted by such person without the transfer thereof into his, her or its
name. If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or otherwise, or if two or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
Corporation is given notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein it is
so provided, then acts with respect to voting shall have the following effect:
(a) if only one votes, in person or by proxy, his, her or its act binds all;
(b) if more than one vote, in person or by proxy, the act of the majority so
voting binds all; (c) if more than one vote, in person or by proxy, but the
vote is evenly split on any particular matter, each faction is entitled to vote
the share or shares in question proportionally; or (d) if the instrument or
order so filed shows that any such tenancy is held in unequal interest, a
majority or a vote evenly split for purposes hereof shall be a majority or a
vote evenly split in interest. The principles of this paragraph shall apply,
insofar as possible, to execution of proxies, waivers, consents, or objections
and for the purpose of ascertaining the presence of a quorum.
SECTION 10. PROXIES. Any Stockholder of the Corporation, other person
entitled to vote on behalf of a Stockholder pursuant to law, or
attorney-in-fact for such persons may vote the Stockholder's shares in person
or by proxy. Any Stockholder of the Corporation may appoint a proxy to vote or
otherwise act for him, her or it by signing an appointment form, either
personally or by his, her or its attorney-in-fact. An executed telegram or
cablegram appearing to have been transmitted by such person, or a photographic,
photostatic, or equivalent reproduction of an appointment form, shall be deemed
a sufficient appointment form. An appointment of a proxy is effective when
received by the Secretary of the Corporation or such other officer or agent who
is authorized to tabulate votes, and shall be valid for up to 11 months, unless
a longer
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period is expressly provided in the appointment form. The death or incapacity
of the Stockholder appointing a proxy does not affect the right of the
Corporation to accept the proxy's authority unless notice of the death or
incapacity is received by the secretary or other officer or agent authorized to
tabulate votes before the proxy exercises his, her or its authority under the
appointment. An appointment of a proxy is revocable by the Stockholder unless
the appointment is coupled with an interest.
SECTION 11. STOCKHOLDER LIST. After fixing a record date for a meeting
of Stockholders, the Corporation shall prepare an alphabetical list of the
names of all its Stockholders who are entitled to notice of the meeting,
arranged by voting group with the address of, and the number and class and
series, if any, of shares held by each. The Stockholders' list must be
available for inspection by any Stockholder for a period of ten (10) days prior
to the meeting or such shorter time as exists between the record date and the
meeting and continuing through the meeting at the Corporation's principal
office, at a place identified in the meeting notice in the city where the
meeting will be held, or at the office of the Corporation's transfer agent or
registrar. Any Stockholder of the Corporation or his, her or its agent or
attorney is entitled on written demand to inspect the Stockholders' list
(subject to the requirements of law), during regular business hours and at his,
her or its expense, during the period it is available for inspection. The
Corporation shall make the Stockholders' list available at the meeting of
Stockholders, and any Stockholder or his, her or its agent or attorney is
entitled to inspect the list at any time during the meeting or any adjournment.
SECTION 12. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting
without notice and without a vote, if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the number of votes that would have been necessary to authorize such
action at a meeting at which all shares entitled to vote were present and
voted. Such written consent shall not be valid unless it is (a) signed by the
stockholder, (b) dated, as to the date of such stockholder's signature, and (c)
delivered to the Corporation personally or by certified or registered mail,
return receipt requested, to the Corporation's principal place of business,
principal office in the State of Nevada or officer or agent who has custody of
the book in which the minutes of meetings of stockholders are recorded, within
sixty (60) days after the earliest date that a stockholder signed the written
consent. Prompt notice of the taking of any such action shall be given to any
such stockholder entitled to vote who has not so consented in writing.
SECTION 13. FIXING RECORD DATE. For the purpose of determining
Stockholders entitled to notice of or to vote at any meeting of Stockholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of Stockholders for any other proper purposes,
the Board of Directors may fix in advance a date as the record date for any
such determination of Stockholders, such date in any case to be not more than
sixty (60) days, and, in case of a meeting of Stockholders, not less than ten
(10) days, prior to the date on which the particular action requiring such
determination of Stockholders is to be taken. If the Board of Directors has not
fixed a record date for determining the stockholders entitled to notice of and
to vote at a meeting of stockholders, the record date shall be at close of
business on the
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day next preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. If the Board of Directors has not fixed a record date for determining the
stockholders entitled to express consent to corporate action in writing without
a meeting, when no prior action by the Board of Directors is necessary, the
record date shall be the day on which the first written consent is expressed by
any stockholder. If the Board of Directors has not fixed a record date for
determining stockholders for any other purpose, the record date shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting. When a determination of
Stockholders entitled to vote at any meeting of Stockholders has been made as
provided in this Section 13, such determination shall apply to any adjournment
thereof, except where the Board of Directors fixes a new record date for the
adjourned meeting or as required by law.
SECTION 14. INSPECTORS AND JUDGES. The Board of Directors in advance of
any meeting may, but need not, appoint one or more inspectors of election or
judges of the vote, as the case may be, to act at the meeting or any
adjournment(s) thereof. If any inspector or inspectors, or judge or judges, are
not appointed, the person presiding at the meeting may, but need not, appoint
one or more inspectors or judges. In case any person who may be appointed as an
inspector or judge fails to appear or act, the vacancy may be filled by the
Board of Directors in advance of the meeting, or at the meeting by the person
presiding thereat. The inspectors or judges, if any, shall determine the number
of shares of stock outstanding and the voting power of each, the shares of
stock represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots and consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate votes, ballots and consents, determine the result, and
do such acts as are proper to conduct the election or vote with fairness to all
Stockholders. On request of the person presiding at the meeting, the inspector
or inspectors or judge or judges, if any, shall make a report in writing of any
challenge, question or matter determined by him, her or them, and execute a
certificate of any fact found by him, her or them.
SECTION 15. VOTING FOR DIRECTORS. Unless otherwise provided in the
Articles of Incorporation, directors shall be elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present.
SECTION 16. STOCKHOLDER NOMINATIONS OF DIRECTOR CANDIDATES. Only
persons who are nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation. Nominations of persons
for election to the Board at an annual or special meeting of Stockholders may
be made by or at the direction of the Board by any nominating committee or
person appointed by the Board or by any Stockholder of the Corporation entitled
to vote for the election of directors at such meeting who complies with the
procedures set forth in this Section 16; provided, however, that nominations of
persons for election to the Board at a special meeting may be made only if the
election of directors is one of
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the purposes described in the special meeting notice required by Section 78.370
of the Nevada Revised Statutes. Nominations of persons for election at a
special meeting, other than nominations made by or at the direction of the
Board, shall be made pursuant to notice in writing delivered to or mailed and
received at the principal executive offices of the Corporation not later than
the close of business on the fifth (5th) day following the date on which notice
of such meeting is given to Stockholders or made public, whichever first
occurs. Nominations of persons for election at an annual meeting, other than
nominations made by or at the direction of the Board, shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely, a
Stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than ninety (90) days
nor more than one hundred twenty (120) days prior to the first anniversary of
the date of the Corporation's notice of annual meeting provided with respect to
the previous year's annual meeting; provided, however, that if no annual
meeting was held in the previous year or the date of the annual meeting has
been changed to be more than thirty (30) calendar days earlier than the date
contemplated by the previous year's notice of annual meeting, such notice by
the Stockholder to be timely must be so delivered or received not later than
the close of business on the fifth (5th) day following the date on which notice
of the date of the annual meeting is given to Stockholders or made public,
whichever first occurs. Such Stockholder's notice to the Secretary shall set
forth the following information: (a) as to each person whom the Stockholder
proposes to nominate for election or re-election as a director at the annual
meeting, (i) the name, age, business address and residence address of the
proposed nominee, (ii) the principal occupation or employment of the proposed
nominee, (iii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the proposed nominee, and (iv) any
other information relating to the proposed nominee that is required to be
disclosed in solicitations for proxies for election of directors pursuant to
Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to
the Stockholder giving the notice of nominees for election at the annual
meeting, (i) the name and record address of the Stockholder, and (ii) the class
and number of shares of capital stock of the Corporation which are beneficially
owned by the Stockholder. The Corporation may require any proposed nominee for
election at an annual or special meeting of Stockholders to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director of the Corporation.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth herein. The
Chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that a nomination was not made in accordance with the requirements
of this Section 16, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Nothing in the foregoing provision shall obligate the Corporation or
the Board of Directors to include in any proxy statement or other stockholder
communication distributed on behalf of the Corporation or the Board of
Directors information with respect to any nominee for directors submitted by a
stockholder.
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SECTION 17. ADVANCE NOTICE OF STOCKHOLDER-PROPOSED BUSINESS FOR ANNUAL
MEETING. At an annual meeting of the Stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board, (b) otherwise properly brought before the meeting
by or at the direction of the Board, or (c) otherwise properly brought before
the meeting by a Stockholder. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a Stockholder,
the Stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a Stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation, not less than ninety (90) days nor more than one hundred twenty
(120) days prior to the first anniversary of the date of the Corporation's
notice of annual meeting provided with respect to the previous year's annual
meeting; provided, however, that if no annual meeting was held in the previous
year or the date of the annual meeting has been changed to be more than thirty
(30) calendar days earlier than the date contemplated by the previous year's
notice of annual meeting, such notice by the Stockholder to be timely must be
so delivered or received not later than the close of business on the fifth
(5th) day following the date on which notice of the date of the annual meeting
is given to Stockholders or made public, whichever first occurs. Such
Stockholder's notice to the Secretary shall set forth as to each matter the
Stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and record
address of the Stockholder proposing such business, (iii) the class and number
of shares of capital stock of the Corporation which are beneficially owned by
the Stockholder, and (iv) any material interest of the Stockholder in such
business. The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the requirements of this Section 17, and
if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Nothing in the foregoing provision shall obligate the Corporation or
the Board of Directors to include in any proxy statement or other stockholder
communication distributed on behalf of the Corporation or the Board of
Directors information with respect to any nominee for directors submitted by a
stockholder.
ARTICLE THREE
DIRECTORS
SECTION 1. NUMBER, ELECTION AND TERM. Subject to the requirements of
the applicable provisions of the Nevada Revised Statutes or the Corporation's
Articles of Incorporation, the number of directors of the Corporation shall be
fixed from time to time by resolution of the Board of Directors; provided,
however, no director's term shall be shortened by reason of a resolution
reducing the number of directors. The directors shall be elected at the annual
meeting of the Stockholders, except as provided in Section 2 of this Article
Three, and
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each director elected shall hold office for the term for which he or she is
elected and until his or her successor is elected and qualified or until his or
her earlier resignation, removal from office or death. Directors must be
natural persons who are 18 years of age or older but need not be residents of
the State of Nevada, Stockholders of the Corporation or citizens of the United
States.
SECTION 2. VACANCIES. A director may resign at any time by giving
written notice to the Corporation, the Board of Directors or the Chairman of
the Board. Such resignation shall take effect when the notice is delivered
unless the notice specifies a later effective date, in which event the Board of
Directors may fill the pending vacancy before the effective date if they
provide that the successor does not take office until the effective date. Any
vacancies in the Board of Directors for any reason and any newly created
directorships resulting from any increase in the number of directors, may be
filled by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall hold
office until the next election and until their successors shall be elected and
qualified or until their respective earlier resignation, removal or death. No
decrease in the number of directors shall shorten the term on any incumbent
director.
SECTION 3. POWERS. Except as provided in the Articles of Incorporation
and by law, all corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be managed under the
direction of, its Board of Directors.
SECTION 4. PLACE OF MEETINGS. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Nevada.
SECTION 5. ANNUAL MEETING. The first meeting of each newly elected
Board of Directors shall be held, without call or notice, immediately following
each annual meeting of Stockholders.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors
may also be held without notice at such time and at such place as shall from
time to time be determined by the Board of Directors.
SECTION 7. SPECIAL MEETINGS AND NOTICE. Special meetings of the Board
of Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
Written notice of special meetings of the Board of Directors shall be given to
each director at least forty-eight (48) hours before the meeting. Except as
required by statute, neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting. Notices to directors shall
be in writing and delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by mail shall be
deemed to be given at the time when the same shall be received. Notice to
directors may also be given by telegram, teletype or other form of electronic
communication. Notice of a meeting of the Board of Directors need not be given
to any director who signs a written waiver of notice before, during or after
the meeting. Attendance of a director at a
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meeting shall constitute a waiver of notice of such meeting and a waiver of any
and all objections to the place of the meeting, the time of the meeting and the
manner in which it has been called or convened, except when a director states,
at the beginning of the meeting or promptly upon arrival at the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
SECTION 8. QUORUM; REQUIRED VOTE; PRESUMPTION OF ASSENT. A majority of
the number of directors fixed by, or in the manner provided in, these Bylaws
shall constitute a quorum for the transaction of business; provided, however,
that whenever, for any reason, a vacancy occurs in the Board of Directors, a
quorum shall consist of a majority of the remaining directors until the vacancy
has been filled. The act of a majority of the directors present at a meeting at
which a quorum is present when the vote is taken shall be the act of the Board
of Directors. A director of the Corporation who is present at a meeting of the
Board of Directors or a committee of the Board of Directors when corporate
action is taken shall be presumed to have assented to the action taken, unless
he or she objects at the beginning of the meeting, or promptly upon his or her
arrival, to holding the meeting or transacting specific business at the
meeting, or he or she votes against or abstains from the action taken.
SECTION 9. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if a consent in writing, setting forth the action
taken, is signed by all of the members of the Board of Directors or the
committee, as the case may be, and such consent shall have the same force and
effect as a unanimous vote at a meeting. Action taken under this section is
effective when the last director signs the consent, unless the consent
specifies a different effective date. A consent signed under this Section 9
shall have the effect of a meeting vote and may be described as such in any
document.
SECTION 10. CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT
MEETINGS. Members of the Board of Directors may participate in a meeting of the
Board by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation in such a meeting shall constitute presence in
person at the meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground the meeting is not lawfully called or convened.
SECTION 11. COMMITTEES. The Board of Directors, by resolution adopted
by a majority of the full Board of Directors, may designate from among its
members an executive committee and one or more other committees, each of which,
to the extent provided in such resolution, shall have and may exercise all of
the authority of the Board of Directors in the business and affairs of the
Corporation except where the action of the full Board of Directors is required
by statute. Each committee must have two or more members who serve at the
pleasure of the Board of Directors. The Board of Directors, by resolution
adopted in accordance with this Article Three, may designate one or more
directors as alternate members of any committee, who may act in the place and
stead of any absent member or members at any meeting of such committee.
Vacancies
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in the membership of a committee shall be filled by the Board of Directors at a
regular or special meeting of the Board of Directors. The executive committee
shall keep regular minutes of its proceedings and report the same to the Board
of Directors when required. The designation of any such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed upon it, him or
her by law. The provisions of Sections 4 through 10 of this Article 3 shall
also apply to committee meetings.
SECTION 12. COMPENSATION OF DIRECTORS. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
ARTICLE FOUR
OFFICERS
SECTION 1. POSITIONS. The officers of the Corporation shall consist of
a Chairman of the Board, a President, a Secretary and a Treasurer, and, if
elected by the Board of Directors by resolution, a Chairman of the Board and/or
one or more Vice Presidents and an Assistant Secretary. Any two or more offices
may be held by the same person.
SECTION 2. ELECTION OF SPECIFIED OFFICERS BY BOARD. The Board of
Directors at its first meeting after each annual meeting of Stockholders shall
elect a President, a Secretary, a Treasurer and may elect one or more Vice
Presidents and an Assistant Secretary.
SECTION 3. ELECTION OR APPOINTMENT OF OTHER OFFICERS. Such other
officers and assistant officers and agents as may be deemed necessary may be
elected or appointed by the Board of Directors, or, unless otherwise specified
herein, appointed by the President of the Corporation. The Board of Directors
shall be advised of appointments by the President at or before the next
scheduled Board of Directors meeting.
SECTION 4. SALARIES. The salaries of all officers of the Corporation to
be elected by the Board of Directors pursuant to Article Four, Section 2 hereof
shall be fixed from time to time by the Board of Directors or pursuant to its
discretion. The salaries of all other elected or appointed officers of the
Corporation shall be fixed from time to time by the President of the
Corporation or pursuant to his or her direction.
SECTION 5. TERM; RESIGNATION. The officers of the Corporation shall
hold office until their successors are chosen and qualified. Any officer or
agent elected or appointed by the Board of Directors or the President of the
Corporation may be removed, with or without cause, by the Board of Directors.
Any officers or agents appointed by the President of the Corporation pursuant
to Section 3 of this Article Four may also be removed from such officer
positions by the
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President, with or without cause. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise shall be filled by the
Board of Directors, or, in the case of an officer appointed by the President of
the Corporation, by the President or the Board of Directors. Any officer of the
Corporation may resign from his or her respective office or position by
delivering notice to the Corporation. Such resignation is effective when
delivered unless the notice specifies a later effective date. If a resignation
is made effective at a later date and the Corporation accepts the future
effective date, the Board of Directors may fill the pending vacancy before the
effective date if the Board provides that the successor does not take office
until the effective date.
SECTION 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
the chief executive officer of the Corporation and shall have, subject to the
control of the Board of Directors, general and active supervision and direction
over the business and affairs of the Corporation and over its several officers.
The Chairman of the Board shall: (a) preside at all meetings of the
stockholders and at all meetings of the Board of Directors; (b) make a report
of the state of the business of the Corporation at each annual meeting of the
stockholders; (c) see that all orders and resolutions of the Board of Directors
are carried into effect; (d) sign, with the Secretary or an Assistant
Secretary, certificates for stock of the Corporation; (e) have the right to
sign, execute and deliver in the name of the Corporation all deeds, mortgages,
bonds, contracts or other instruments authorized by the Board of Directors,
except in cases where the signing, execution or delivery thereof is expressly
delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation or where any of them are required by law otherwise to
be signed, executed or delivered; and (f) have the right to cause the corporate
seal, if any, to be affixed to any instrument which requires it. In general,
the Chairman of the Board shall perform all duties incident to the office of
the Chairman of the Board and such other duties as from time to time may be
assigned to him or her by the Board of Directors.
SECTION 7. PRESIDENT.. The President shall have, subject to the control
of the Board of Directors and the Chairman of the Board, general and active
supervision and direction over the business and affairs of the Corporation and
over its several officers. At the request of the Chairman of the Board, or in
case of his or her absence or inability to act, the President shall perform the
duties of the Chairman of the Board and, when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Chairman of the
Board. He may sign, with the Secretary or an Assistant Secretary, certificates
for stock of the Corporation. He may sign, execute and deliver in the name of
the Corporation all deeds, mortgages, bonds, contracts or other instruments
authorized by the Board of Directors, except in cases where the signing,
execution or delivery thereof is expressly delegated by the Board of Directors
or by these Bylaws to some other officer or agent of the Corporation or where
any of them are required by law otherwise to be signed, executed or delivered,
and he may cause the corporate seal, if any, to be affixed to any instrument
which requires it. In general, the President shall perform all duties incident
to the office of the President and such other duties as from time to time may
be assigned to him or her by the Board of Directors or the Chairman of the
Board.
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<PAGE> 19
SECTION 8. VICE PRESIDENTS. The Vice President and any additional Vice
Presidents shall have such powers and perform such duties as the Chairman of
the Board, the President or the Board of Directors may from time to time
prescribe and shall perform such other duties as may be prescribed by these
Bylaws. At the request of the President, or in case of his or her absence or
inability to act, the Vice President shall perform the duties of the President
and, when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President.
SECTION 9. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the Stockholders and record all the
proceedings of the meetings of the Stockholders and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He or she shall give, or cause to be given,
notice of all meetings of the Stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the
Board of Directors or President, under whose supervision he or she shall be. He
or she shall keep in safe custody the seal of the Corporation and, when
authorized by the Board of Directors, affix the same to any instrument
requiring it.
SECTION 10. TREASURER. The Treasurer shall have the custody of
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He or she shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors at
its regular meetings or when the Board of Directors so requires an account of
all his or her transactions as treasurer and of the financial condition of the
Corporation unless otherwise specified by the Board of Directors, the Treasurer
shall be the Corporation's Chief Financial Officer.
SECTION 11. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
prepare the financial plans for the Corporation and shall monitor the financial
performance of the Corporation and its subsidiaries, as well as performing such
other duties as may be prescribed by the Board of Directors, the Chairman of
the Board or the President.
SECTION 12. OTHER OFFICERS, EMPLOYEES AND AGENTS. Each and every other
officer, employee and agent of the Corporation shall possess, and may exercise,
such power and authority, and shall perform such duties, as may from time to
time be assigned to him, her or it by the Board of Directors, the officer so
appointing him, her or it and such officer or officers who may from time to
time be designated by the Board of Directors to exercise such supervisory
authority.
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<PAGE> 20
ARTICLE FIVE
CERTIFICATES FOR SHARES
SECTION 1. ISSUE OF CERTIFICATES. The Corporation shall deliver
certificates representing all shares to which Stockholders are entitled; and
such certificates shall be signed by the Chairman of the Board, President or a
Vice President, and by the Secretary or an Assistant Secretary of the
Corporation, and may be sealed with the seal of the Corporation or a facsimile
thereof.
SECTION 2. LEGENDS FOR PREFERENCES AND RESTRICTIONS ON TRANSFER. The
designations, relative rights, preferences and limitations applicable to each
class of shares and the variations in rights, preferences and limitations
determined for each series within a class (and the authority of the Board of
Directors to determine variations for future series) shall be summarized on the
front or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the Corporation will furnish the
Stockholder a full statement of this information on request and without charge.
Every certificate representing shares that are restricted as to the sale,
disposition, or transfer of such shares shall also indicate that such shares
are restricted as to transfer and there shall be set forth or fairly summarized
upon the certificate, or the certificate shall indicate that the Corporation
will furnish to any Stockholder upon request and without charge, a full
statement of such restrictions. If the Corporation issues any shares that are
not registered under the Securities Act of 1933, as amended, and registered or
qualified under the applicable state securities laws, the transfer of any such
shares shall be restricted substantially in accordance with the following
legend:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AT HOLDER'S
EXPENSE, AN OPINION (SATISFACTORY TO THE CORPORATION) OF COUNSEL
(SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT REQUIRED."
SECTION 3. FACSIMILE SIGNATURES. The signatures of the Chairman of the
Board, the President or a Vice President and the Secretary or Assistant
Secretary upon a certificate may be facsimiles, if the certificate is manually
signed by a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. In case any officer who
has signed or whose facsimile signature has been placed upon such certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he or she were such
officer at the date of the issuance.
SECTION 4. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate
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<PAGE> 21
or certificates, or his, her or its legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost or destroyed.
SECTION 5. TRANSFER OF SHARES. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 6. REGISTERED STOCKHOLDERS. The Corporation shall be entitled
to recognize the exclusive rights of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of the State
of Nevada.
ARTICLE SIX
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. From time to time, the Board of Directors may
declare and the Corporation may pay dividends on its outstanding shares in
cash, property or its own shares pursuant to law and subject to the provisions
of the Articles of Incorporation.
SECTION 2. RESERVES. The Board of Directors may create by resolution a
reserve or reserves out of earned surplus for any proper purpose or purposes,
and may abolish any such reserve in the same manner.
SECTION 3. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may designate from time to time.
SECTION 4. EXECUTION OF CONTRACTS. Except as otherwise required by law
or by these Bylaws, any contract or other instrument may be executed and
delivered in the name of the Corporation and on its behalf by the Chairman of
the Board, the President, or any Vice President. In addition, the Board of
Directors may authorize any other officer of officers or agent or agents to
execute and deliver any contract or other instrument in the name of the
Corporation and on its behalf, and such authority may be general or confined to
specific instances as the Board of Directors may by resolution determine.
SECTION 5. ATTESTATIONS. Any Vice President, the Secretary, or any
Assistant Secretary may attest the execution of any instrument or document by
the Chairman of the Board,
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<PAGE> 22
the President, or any other duly authorized officer or agent of the Corporation
and may affix the corporate seal, if any, in witness thereof, but neither such
attestation nor the affixing of a corporate seal shall be requisite to the
validity of any such document or instrument.
SECTION 6. FISCAL YEAR. The fiscal year of the Corporation shall end on
December 31st of each year, unless otherwise fixed by resolution of the Board
of Directors.
SECTION 7. SEAL. The corporate seal shall have inscribed thereon the
name and state of incorporation of the Corporation. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
SECTION 8. GENDER. All pronouns used in these Bylaws in any gender
shall extend to and shall include all other genders as the context may require.
ARTICLE SEVEN
AMENDMENTS OF BYLAWS
Unless otherwise provided by law, these Bylaws may be altered, amended
or repealed or new Bylaws may be adopted by action of the Board of Directors.
CERTIFICATION
I HEREBY CERTIFY that the foregoing Amended and Restated Bylaws of
MIRACOM CORPORATION are the Bylaws duly adopted by the Board of Directors of
the Corporation by unanimous written action dated November 8, 1999.
/s/ SCOTT A. ANDERSON
----------------------------
SCOTT A. ANDERSON, Secretary
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<PAGE> 1
Exhibit 3.1
---------------------------------------
MIRACOM CORPORATION
1999 STOCK OPTION PLAN
---------------------------------------
1. Purpose. The purpose of this Plan is to advance the interests of
Miracom Corporation, a Nevada corporation (the "Company"), and its Subsidiaries
by providing an additional incentive to attract and retain qualified and
competent persons who provide services to the Company and its Subsidiaries, and
upon whose efforts and judgment the success of the Company and its Subsidiaries
is largely dependent, through the encouragement of stock ownership in the
Company by such persons.
2. Definitions. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the committee appointed by the
Board pursuant to Section 13(a) hereof.
(c) "Common Stock" shall mean the Company's Common Stock, par
value $[ ] per share.
(d) "Director" shall mean a member of the Board.
(e) "Fair Market Value" of a Share on any date of reference
shall mean the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding such date, unless the Committee or the Board
in its sole discretion shall determine otherwise in a fair and uniform manner.
For the purpose of determining Fair Market Value, the "Closing Price" of the
Common Stock on any business day shall be (i) if the Common Stock is listed or
admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of Common Stock on such exchange
or reporting system, as reported in any newspaper of general circulation, (ii)
if the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the last
reported sale price of Common Stock on such system or, if sales prices are not
reported, the mean between the closing high bid and low asked quotations for
such day of Common Stock on such system, as reported in any newspaper of general
circulation or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
<PAGE> 2
through the OTC Electronic Bulletin Board or the National Quotation Bureau,
Incorporated (whichever is applicable) if at least two securities dealers have
inserted both bid and asked quotations for Common Stock on at least five of the
ten preceding days. If neither (i), (ii), or (iii) above is applicable, then
Fair Market Value shall be determined in good faith by the Committee or the
Board in a fair and uniform manner.
(f) "Incentive Stock Option" shall mean an incentive stock
option as defined in Section 422 of the Internal Revenue Code.
(g) "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
(h) "Non-Qualified Stock Option" shall mean an Option which is
not an Incentive Stock Option.
(i) "Officer" shall mean the Company's Chairman of the Board,
President, Chief Executive Officer, principal financial officer, principal
accounting officer, any vice-president of the Company in charge of a principal
business unit, division or function (such as sales, administration or finance),
any other officer who performs a policy-making function, or any other person who
performs similar policy-making functions for the Company. Officers of
Subsidiaries shall be deemed Officers of the Company if they perform such
policy-making functions for the Company. As used in this paragraph, the phrase
"policy-making function" does not include policy-making functions that are not
significant. If pursuant to Item 401(b) of Regulation S-K (17 C.F.R. ss.
229.401(b)) the Company identifies a person as an "executive officer," the
person so identified shall be deemed an "Officer" even though such person may
not otherwise be an "Officer" pursuant to the foregoing provisions of this
paragraph.
(j) "Option" (when capitalized) shall mean any option granted
under this Plan.
(k) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(l) "Outside Director" shall mean a member of the Board who
qualifies as an "outside director" under Section 162(m) of the Internal Revenue
Code and the regulations thereunder and as a "Non-Employee Director" under Rule
16b-3 promulgated under the Securities Exchange Act.
(m) "Plan" shall mean this 1999 Stock Option Plan for the
Company.
(n) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(o) "Share" shall mean a share of Common Stock.
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<PAGE> 3
(p) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. Shares Available for Option Grants. The Committee or the Board may
grant to Optionees from time to time Options to purchase an aggregate of up to
One Million Six Hundred Fifty Thousand (1,650,000) Shares from the Company's
authorized and unissued Shares. If any Option granted under the Plan shall
terminate, expire, or be cancelled or surrendered as to any Shares, new Options
may thereafter be granted covering such Shares.
4. Incentive and Non-Qualified Options.
(a) An Option granted hereunder shall be either an Incentive
Stock Option or a Non-Qualified Stock Option as determined by the Committee or
the Board at the time of grant of such Option and shall clearly state whether it
is an Incentive Stock Option or a Non-Qualified Stock Option. All Incentive
Stock Options shall be granted within 10 years from the effective date of this
Plan. Incentive Stock Options may not be granted to any person who is not an
employee of the Company or any Subsidiary.
(b) Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Section
422(b) of the Internal Revenue Code are exercisable for the first time by any
individual during any calendar year (under all plans of the Company and its
parent and subsidiary corporations as defined in Section 424 of the Internal
Revenue Code), exceeds $100,000.
5. Conditions for Grant of Options.
(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee or the
Board, provided such terms are not inconsistent with this Plan or any applicable
law. Optionees shall be (i) those persons selected by the Committee or the Board
from the class of all regular employees of, or persons who provide consulting or
other services as independent contractors to, the Company or its Subsidiaries,
including Directors and Officers who are regular employees, and (ii) Directors
who are not employees of the Company or of any Subsidiaries. Any person who
files with the Committee or the Board, in a form satisfactory to the Committee
or the Board, a written waiver of eligibility to receive any Option under this
Plan shall not be eligible to receive any Option under this Plan for the
duration of such waiver.
(b) In granting Options, the Committee or the Board shall take
into consideration the contribution the person has made to the success of the
Company or its
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<PAGE> 4
Subsidiaries and such other factors as the Committee or the Board shall
determine. The Committee or the Board shall also have the authority to consult
with and receive recommendations from officers and other personnel of the
Company and its Subsidiaries with regard to these matters. The Committee or the
Board may from time to time in granting Options under the Plan prescribe such
other terms and conditions concerning such Options as it deems appropriate,
including, without limitation, (i) prescribing the date or dates on which the
Option becomes exercisable, (ii) providing that the Option rights accrue or
become exercisable in installments over a period of years, or upon the
attainment of stated goals or both, or (iii) relating an Option to the continued
employment of the Optionee for a specified period of time, provided that such
terms and conditions are not more favorable to an Optionee than those expressly
permitted herein.
(c) The Options granted to employees under this Plan shall be
in addition to regular salaries, pension, life insurance or other benefits
related to their employment with the Company or its Subsidiaries. Neither the
Plan nor any Option granted under the Plan shall confer upon any person any
right to employment or continuance of employment by the Company or its
Subsidiaries.
(d) Notwithstanding any other provision of this Plan, an
Incentive Stock Option shall not be granted to any person owning directly or
indirectly (through attribution under Section 424(d) of the Internal Revenue
Code) at the date of grant, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company (or of its parent or
subsidiary corporation (as defined in Section 424 of the Internal Revenue Code)
at the date of grant) unless the option price of such Option is at least 110% of
the Fair Market Value of the Shares subject to such Option on the date the
Option is granted, and such Option by its terms is not exercisable after the
expiration of five years from the date such Option is granted.
(e) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, the aggregate number of Options
granted to any one Optionee may not exceed 660,000, subject to adjustment as
provided in Section 10 hereof.
6. Option Price. The option price per Share of any Option shall be any
price determined by the Committee or the Board but shall not be less than the
par value per Share; provided, however, that in no event shall the option price
per Share of any Incentive Stock Option be less than the Fair Market Value of
the Shares underlying such Option on the date such Option is granted.
7. Exercise of Options. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee or the Board in its sole discretion have
been made for the Optionee's payment to the Company of the amount that is
necessary for the Company or Subsidiary employing the Optionee to withhold in
accordance with applicable Federal or state tax withholding requirements. The
consideration to be paid for
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<PAGE> 5
the Shares to be issued upon exercise of an Option as well as the method of
payment of the exercise price and of any withholding and employment taxes
applicable thereto, shall be determined by the Committee or the Board and may in
the discretion of the Committee or the Board consist of: (1) cash, (2) certified
or official bank check, (3) money order, (4) Shares that have been held by the
Optionee for at least six (6) months (or such other Shares as the Company
determines will not cause the Company to recognize for financial accounting
purposes a charge for compensation expense), (5) the withholding of Shares
issuable upon exercise of the Option, (6) pursuant to a "cashless exercise"
procedure, by delivery of a properly executed exercise notice together with such
other documentation, and subject to such guidelines, as the Board or the
Committee shall require to effect an exercise of the Option and delivery to the
Company by a licensed broker acceptable to the Company of proceeds from the sale
of Shares or a margin loan sufficient to pay the exercise price and any
applicable income or employment taxes, or (7) in such other consideration as the
Committee or the Board deems appropriate, or by a combination of the above. In
the case of an Incentive Stock Option, the permissible methods of payment shall
be specified at the time the Option is granted. The Committee or the Board in
its sole discretion may accept a personal check in full or partial payment of
any Shares. If the exercise price is paid in whole or in part with Shares, or
through the withholding of Shares issuable upon exercise of the Option, the
value of the Shares surrendered or withheld shall be their Fair Market Value on
the date the Option is exercised. The Company in its sole discretion may, on an
individual basis or pursuant to a general program established in connection with
this Plan, lend money to an Optionee, guarantee a loan to an Optionee, or
otherwise assist an Optionee to obtain the cash necessary to exercise all or a
portion of an Option granted hereunder or to pay any tax liability of the
Optionee attributable to such exercise. If the exercise price is paid in whole
or part with Optionee's promissory note, such note shall (i) provide for full
recourse to the maker, (ii) be collateralized by the pledge of the Shares that
the Optionee purchases upon exercise of such Option, (iii) bear interest at the
prime rate of the Company's principal lender, and (iv) contain such other terms
as the Committee or the Board in its sole discretion shall reasonably require.
No Optionee shall be deemed to be a holder of any Shares subject to an Option
unless and until a stock certificate or certificates for such Shares are issued
to such person(s) under the terms of this Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 10 hereof.
8. Exercisability of Options. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee or the
Board shall provide in such Option, except as otherwise provided in this Section
8.
(a) The expiration date of an Option shall be determined by
the Committee or the Board at the time of grant, but in no event shall an Option
be exercisable after the expiration of 10 years from the date on which the
Option is granted.
(b) Unless otherwise provided in any Option agreement, each
outstanding Option shall become immediately fully exercisable in the event of a
"Change in Control" or in the event that the Committee or the Board exercises
its discretion to provide a cancellation notice
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<PAGE> 6
with respect to the Option pursuant to Section 9(b) hereof. For this purpose,
the term "Change in Control" shall mean:
(i) approval by the shareholders of the Company of a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, consolidation or other
transaction, or a liquidation or dissolution of the Company or the sale of all
or substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(ii) any "person" (as such term is used in Sections
13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage (excluding for this purpose, any acquisitions
by (X) the Company or its subsidiaries, (Y) any person, entity or "group" that
as of the date of this Plan owns beneficial ownership, as defined in Rule 13d-3
of the Act, or (Z) any employee benefit plan of the Company or its subsidiaries;
(iii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or
(iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board (including
for this purpose any new director whose election or nomination for election by
the Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
(c) The Committee or the Board may in its sole discretion,
accelerate the date on which any Option may be exercised and may accelerate the
vesting of any Option or portion thereof.
9. Termination of Option Period. (a) Unless otherwise provided in any
Option agreement, the unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
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<PAGE> 7
(i) three months after the date on which the
Optionee's employment is terminated other than by reason of (A) Cause (defined
below), (B) a mental or physical disability (within the meaning of Internal
Revenue Code Section 22(e)) of the Optionee as determined by a medical doctor
satisfactory to the Committee, or (C) death of the Optionee;
(ii) immediately upon the termination of the
Optionee's employment for Cause (which, solely for purposes of this Plan, shall
mean the termination of Optionee's employment by reason of Optionee's willful
misconduct or gross negligence; provided, however, this definition of "Cause"
shall be superseded by the definition of "Cause" as contained in any employment
agreement between Optionee and the Company;
(iii) twelve months after the date on which the
Optionee's employment is terminated by reason of a mental or physical disability
(within the meaning of Internal Revenue Code Section 22(e)) as determined by a
medical doctor satisfactory to the Committee or the Board;
(iv) (A) twelve months after the date of termination
of the Optionee's employment by reason of death of the Optionee, or, if later,
(B) three months after the date on which the Optionee shall die if such death
shall occur during the one year period specified in Subsection 9(a)(iii) hereof.
All references herein to the termination of the Optionee's employment shall, in
the case of a Optionee who is not an employee of the Company or a Subsidiary,
refer to the termination of the Optionee's service with the Company.
(b) To the extent not previously exercised, (i) each Option
shall terminate immediately in the event of (1) the liquidation or dissolution
of the Company, or (2) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor corporation,
assumes the Option or substitutes an equivalent option or right pursuant to
Section 10(c) hereof, and (ii) the Committee or the Board in its sole discretion
may by written notice ("cancellation notice") cancel, effective upon the
consummation of any corporate transaction described in Subsection 8(b)(i) hereof
in which the Company does survive, any Option that remains unexercised on such
date. The Committee or the Board shall give written notice of any proposed
transaction referred to in this Section 9(b) a reasonable period of time prior
to the closing date for such transaction (which notice may be given either
before or after approval of such transaction), in order that Optionees may have
a reasonable period of time prior to the closing date of such transaction within
which to exercise any Options that then are exercisable (including any Options
that may become exercisable upon the closing date of such transaction). An
Optionee may condition his exercise of any Option upon the consummation of a
transaction referred to in this Section 9(b).
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<PAGE> 8
10. Adjustment of Shares.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan, or available for
grant to any person under the Plan, so that the same percentage of the Company's
issued and outstanding Shares shall continue to be subject to being so optioned;
and
(ii) the Board or the Committee may, in its
discretion, make any adjustments it deems appropriate in the number of Shares
and the exercise price per Share thereof then subject to any outstanding Option,
so that the same percentage of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price.
(b) Unless otherwise provided in any Option, the Committee or
the Board may change the terms of Options outstanding under this Plan, with
respect to the option price or the number of Shares subject to the Options, or
both, when, in the Committee's or Board's sole discretion, such adjustments
become appropriate so as to preserve but not increase benefits under the Plan.
(c) In the event of a proposed sale of all or substantially
all of the Company's assets or any reorganization, merger, consolidation or
other form of corporate transaction in which the Company does not survive, where
the securities of the successor corporation, or its parent company, are issued
to the Company's shareholders, then the successor corporation or a parent of the
successor corporation may, with the consent of the Committee or the Board,
assume each outstanding Option or substitute an equivalent option or right. If
the successor corporation, or its parent, does not cause such an assumption or
substitution to occur, or the Committee or the Board does not consent to such an
assumption or substitution, then each Option shall terminate pursuant to Section
9(b) hereof upon the consummation of sale, merger, consolidation or other
corporate transaction.
(d) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with a direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made to, the number of or exercise price
for Shares then subject to outstanding Options granted under the Plan.
(e) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any
-8-
<PAGE> 9
merger or consolidation of the Company; (iii) any issue by the Company of debt
securities, or preferred or preference stock that would rank above the Shares
subject to outstanding Options; (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the assets
or business of the Company; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise.
11. Transferability of Options and Shares.
(a) No Incentive Stock Option, and unless the prior written
consent of the Committee or the Board is obtained (which consent may be withheld
for any reason) and the transaction does not violate the requirements of Rule
16b-3 promulgated under the Securities Exchange Act no Non-Qualified Stock
Option, shall be subject to alienation, assignment, pledge, charge or other
transfer other than by the Optionee by will or the laws of descent and
distribution, and any attempt to make any such prohibited transfer shall be
void. Each Option shall be exercisable during the Optionee's lifetime only by
the Optionee, or in the case of a Non-Qualified Stock Option that has been
assigned or transferred with the prior written consent of the Committee or the
Board, only by the permitted assignee.
(b) No Shares acquired by an Officer or Director pursuant to
the exercise of an Option may be sold, assigned, pledged or otherwise
transferred prior to the expiration of the six-month period following the date
on which the Option was granted, unless the transaction does not violate the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act.
12. Issuance of Shares.
(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and State laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon
exercise of any Option, the Committee or the Board may require such agreements
or undertakings as the Committee or the Board may deem necessary or advisable to
facilitate compliance with any applicable law or regulation including, but not
limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends endorsed upon the certificate(s) for such Shares that
are, in the opinion of the Committee
-9-
<PAGE> 10
or the Board, necessary or appropriate to facilitate compliance with the
provisions of any securities laws deemed by the Committee or the Board to be
applicable to the issuance and transfer of such Shares.
13. Administration of the Plan.
(a) The Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee") which shall be composed of
two or more Directors all of whom shall be Outside Directors. The membership of
the Committee shall be constituted so as to comply at all times with the
applicable requirements of Rule 16b-3 promulgated under the Securities Exchange
Act and Section 162(m) of the Internal Revenue Code. The Committee shall serve
at the pleasure of the Board and shall have the powers designated herein and
such other powers as the Board may from time to time confer upon it.
(b) The Board may grant Options pursuant to this Plan to
Directors who are not employees of the Company or any Subsidiary and/or other
persons to whom Options may be granted under Section 5(a) hereof.
(c) The Committee or the Board, from time to time, may adopt
rules and regulations for carrying out the purposes of the Plan. The
determinations by the Committee or the Board, and the interpretation and
construction of any provision of the Plan or any Option by the Committee or the
Board, shall be final and conclusive.
(d) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
14. Withholding or Deduction for Taxes. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to any
Optionee or beneficiary, any law or regulation of any governmental authority
having jurisdiction in the premises shall require the Company to withhold, or to
make any deduction for, any taxes or take any other action in connection with
the issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
15. Interpretation.
(a) As it is the intent of the Company that the Plan comply in
all respects with Rule 16b-3 promulgated under the Securities Exchange Act
("Rule 16b-3"), any ambiguities or inconsistencies in construction of the Plan
shall be interpreted to give effect to such intention, and if any provision of
the Plan is found not to be in compliance with Rule 16b-3, such provision shall
be deemed null and void to the extent required to permit the Plan to comply with
Rule 16b-3. The Committee or the Board may from time to time adopt rules and
regulations under, and amend, the Plan in furtherance of the intent of the
foregoing.
-10-
<PAGE> 11
(b) The Plan and any Option agreements entered into pursuant
to the Plan shall be administered and interpreted so that all Incentive Stock
Options granted under the Plan will qualify as Incentive Stock Options under
section 422 of the Internal Revenue Code. If any provision of the Plan or any
such Option agreement should be held invalid for the granting of Incentive Stock
Options or illegal for any reason, such determination shall not affect the
remaining provisions hereof, but instead the Plan and the Option agreement shall
be construed and enforced as if such provision had never been included in the
Plan or the Option agreement.
(c) This Plan shall be governed by the laws of the State of
Florida.
(d) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(e) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
16. Amendment and Discontinuation of the Plan. The Committee or the
Board may from time to time amend, suspend or terminate the Plan or any Option;
provided, however, that, any amendment to the Plan shall be subject to the
approval of the Company's shareholders if such shareholder approval is required
by any federal or state law or regulation (including, without limitation, Rule
16b-3 or to comply with Section 162(m) of the Internal Revenue Code) or the
rules of any Stock exchange or automated quotation system on which the Common
Stock may then be listed or granted. Except to the extent provided in Sections 9
and 10 hereof, no amendment, suspension or termination of the Plan or any Option
issued hereunder shall substantially impair the rights or benefits of any
Optionee pursuant to any Option previously granted without the consent of the
Optionee.
17. Effective Date and Termination Date. The effective date of the Plan
is February 12, 1999, and the Plan shall terminate at 12:00 a.m. on February 12,
2009.
-11-
<PAGE> 1
EXHIBIT 3.2
MIRACOM CORPORATION
STOCK OPTION AGREEMENT
FOR
SHAWN D. LUCAS
AGREEMENT
1. Grant of Option. Miracom Corporation (the "Company") hereby grants,
as of February 12, 1999, to Shawn D. Lucas (the "Optionee") an option (the
"Option") to purchase up to 110,000 shares of the Company's Common Stock, $.001
par value per share (the "Shares"), at an exercise price per share equal to
$3.00. The Option shall be subject to the terms and conditions set forth herein.
The Option was issued pursuant to the Company's 1999 Stock Option Plan (the
"Plan"), which is incorporated herein for all purposes. The Option is a
nonqualified stock option, and not an Incentive Stock Option. The Optionee
hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all
of the terms and conditions hereof and thereof and all applicable laws and
regulations.
2. Definitions. Unless otherwise provided herein, terms used herein
that are defined in the Plan and not defined herein shall have the meanings
attributed thereto in the Plan.
3. Exercise Schedule. Except as otherwise provided in Sections 6 or 9
of this Agreement, or in the Plan, the Option is exercisable in installments as
provided below, which shall be cumulative. To the extent that the Option has
become exercisable with respect to a percentage of Shares as provided below, the
Option may thereafter be exercised by the Optionee, in whole or in part, at any
time or from time to time prior to the expiration of the Option as provided
herein. The following table indicates each date (the "Vesting Date") upon which
the Optionee shall be entitled to exercise the Option with respect to the
percentage of Shares granted as indicated beside the date, provided that the
Optionee has been continuously employed by the Company or a Subsidiary through
and on the applicable Vesting Date:
<TABLE>
<CAPTION>
Percentage or Number of Shares Vesting Date
------------------------------ ------------
<S> <C>
36,667 shares October 1, 1999
36,667 shares October 1, 2000
36,666 shares October 1, 2001
</TABLE>
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date. Upon an Optionee's
termination of employment with the Company and its Subsidiaries, any unvested
portion of the Option shall terminate and be null and void.
4. Method of Exercise. The vested portion of this Option shall be
exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice
<PAGE> 2
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised, and such other representations
and agreements as to the holder's investment intent with respect to such Shares
as may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be accompanied by payment of the exercise price. This Option shall be deemed to
be exercised after both (a) receipt by the Company of such written notice
accompanied by the exercise price and (b) arrangements that are satisfactory to
the Committee in its sole discretion have been made for Optionee's payment to
the Company of the amount that is necessary to be withheld in accordance with
applicable Federal or state withholding requirements. No Shares will be issued
pursuant to the Option unless and until such issuance and such exercise shall
comply with all relevant provisions of applicable law, including the
requirements of any stock exchange upon which the Shares then may be traded.
5. Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee: (a)
cash; (b) check; or (c) with Shares that have been held by the Optionee for at
least 6 months (or such other Shares as the Company determines will not cause
the Company to recognize for financial accounting purposes a charge for
compensation expense), or (d) such other consideration or in such other manner
as may be determined by the Board or the Committee in its absolute discretion.
6. Termination of Option.
(a) Any unexercised portion of the Option shall automatically
and without notice terminate and become null and void immediately upon the
termination of the Optionee's employment with the Company and its Subsidiaries
for Cause (as "Cause" is defined in Optionee's employment agreement with the
Company).
(b) If Optionee's employment with the Company and its
Subsidiaries is terminated by the Company without Cause, the Option shall become
exercisable in full upon such termination and Optionee shall have the right to
retain the Option.
(c) If Optionee's employment with the Company and its
Subsidiaries is terminated by the Company due to Optionee's Disability (as
defined in Optionee's employment agreement with the Company), Optionee shall
have the right to retain the portion of the Option that is exercisable on the
date of termination of employment.
(d) If Optionee's employment with the Company and its
Subsidiaries is terminated due to Optionee's death, any unexercised portion of
the Option shall automatically and without notice terminate and become null and
void twelve months after Optionee's date of death.
(e) If Optionee's voluntarily terminates his employment with
the Company and its Subsidiaries (except in connection with a Change of
Control), any unexercised portion of the Option shall automatically and without
notice terminate and become null and void immediately upon such termination of
employment.
2
<PAGE> 3
(f) If Optionee voluntarily terminates his employment with the
Company and its subsidiaries upon a Change of Control, Optionee shall have the
right to retain the portion of the Option that is exercisable on the date of
termination of employment. If Optionee terminates his employment with the
Company and its subsidiaries more than six (6) months after the occurrence of a
Change of Control, Section 6(e) shall apply to the Option instead of this
Section 6(f).
(g) Notwithstanding the foregoing, this Option shall
automatically and without notice terminate and become null and void on the tenth
anniversary of the date as of which the Option is granted.
(h) To the extent not previously exercised, (i) the Option
shall terminate immediately in the event of (1) the liquidation or dissolution
of the Company, or (2) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor corporation,
assumes the Option or substitutes an equivalent option or right pursuant to
Section 10(c) of the Plan, and (ii) the Committee or the Board in its sole
discretion may by written notice ("cancellation notice") cancel, effective upon
the consummation of any corporate transaction described in Subsection 8(b)(i) of
the Plan in which the Company does survive, the Option (or portion thereof) that
remains unexercised on such date. The Committee or the Board shall give written
notice of any proposed transaction referred to in this Section 6(h) a reasonable
period of time prior to the closing date for such transaction (which notice may
be given either before or after approval of such transaction), in order that
Optionee may have a reasonable period of time prior to the closing date of such
transaction within which to exercise the Option if and to the extent that it
then is exercisable (including any portion of the Option that may become
exercisable upon the closing date of such transaction). The Optionee may
condition his exercise of the Option upon the consummation of a transaction
referred to in this Section 6(h).
7. Transferability. The Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and distribution,
and during the lifetime of the Optionee the Option shall be exercisable only by
the Optionee, or the Optionee's guardian or legal representative. In addition,
the Option shall not be assigned, negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise), and the Option shall not be subject
to execution, attachment or similar process. Upon any attempt to transfer,
assign, negotiate, pledge or hypothecate the Option, or in the event of any levy
upon the Option by reason of any execution, attachment or similar process
contrary to the provisions hereof, the Option shall immediately become null and
void.
8. No Rights of Stockholders. Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.
9. Acceleration of Exercisability of Option. This Option shall become
immediately fully exercisable in the event of a "Change in Control", as defined
in Section 8(b) of the Plan, that
3
<PAGE> 4
occurs while the Optionee is employed by the Company or any of its subsidiaries,
or in the event that the Committee or the Board exercises its discretion to
provide a cancellation notice with respect to the Option pursuant to Section 6
hereof.
10. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.
11. Registration Rights. The Optionee shall be entitled to certain
piggy-back and demand registration rights as follows:
(a) Piggy-Back Registration. Whenever the Company proposes to
file with the Securities and Exchange Commission (the "Commission"), a
registration statement under the Securities Act for the registration of its
securities (other than a registration statement (x) relating solely to employee
benefit plans or (y) on any registration form including, without limitation,
Form S-4, which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Option Shares), it shall, at
least sixty (60) days prior to such filing, give notice of such proposed filing
to the Optionee at the address set forth herein and shall offer to include in
such registration statement the Option Shares which are then subject to
exercisable Options on the proposed date of filing of such registration
statement. Upon receipt by the Company, not less than thirty (30) days prior to
the proposed filing date, of a request for inclusion of any such shares, the
Company shall include such shares in such registration statement on the terms
and conditions set forth herein, subject to any underwriter's cutback or
lock-up. If the underwriter of the Company's proposed offering with respect to
which the Optionee has made a request pursuant to this Section 14(a) advises the
Company, in the underwriter's reasonable judgment, that such inclusion is likely
to adversely affect the market for the securities being registered for sale by
the Company, the Company may refuse to include any of the Optionee's Shares in
the registration statement filed with respect to such offering.
If, at any time after giving such written notice of the Company's
intention to register any of the Option Shares and prior to the effective date
of the registration statement filed in connection with such registration, the
Company shall determine for any reason not to file the registration statement
wherein the Option Shares would be registered or to delay the registration, at
its sole election, the Company may give written notice of such determination to
the Optionee and thereupon shall be relieved of its obligation to register any
Option Shares issued or issuable in connection with such registration; and in
the case of a determination to delay a registration, the Company shall thereupon
be permitted to delay registering any Option Shares for the same period as the
delay in respect of securities being registered for the Corporation's own
account or the account of others. The Company may, in its sole discretion and
without the consent of the Optionee, withdraw such registration statement and
abandon the proposed offering in which the Optionee had requested to
participate.
The Company shall not be required to include any of the Option Shares
in the registration statement relating to an underwritten offering of the
Company's securities unless the Optionee accepts the terms of the underwriting
as agreed upon between the Company and the underwriters
4
<PAGE> 5
selected by it and the Optionee agrees to execute and/or deliver such documents
in connection with such registration as the Company or the managing underwriter
may reasonably request.
(b) Demand Registration. If Optionee's employment is
terminated without Cause (as defined in the employment agreement) or if a Change
of Control occurs, Optionee shall have the right to require the Company or its
successor to register for resale the Option Shares, provided that the Company is
able to utilize a Form S-8 or Form S-3 for such registration. Notwithstanding
the foregoing, should the Company be contemplating a public offering of its
securities at such time, and should piggy-back registration rights not be
available to Optionee under Section 14(a) above, the Company's registration
obligations under this Section 14(b) may be postponed, at the Company's sole
discretion, until the completion of the Company's public offering. Further, the
Company's obligation to register the Option Shares pursuant to this Section
14(b) shall in all cases be subject to an extension or delay by the Company for
one period of up to ninety (90) days if, upon advice of counsel such delay is
advisable and in the best interests of the Company because of the existence of
non-public material information, or to allow the Company to complete any pending
audit of its financial statements.
(c) Withdrawal. The Optionee shall be permitted to withdraw
all or any part of the Option Shares at any time prior to the effective date of
such registration.
(d) Expiration of Registration Rights. The obligations of the
Company to register the Option Shares under this Section 14 shall terminate five
(5) years after the date of this Agreement, unless such obligations terminate
earlier in accordance with the terms of this Agreement.
(e) Cooperation with Company. The Optionee will cooperate with
the Company in all respects in connection with this Section 14, including,
without limitation, timely supplying all information reasonably requested by the
Company and executing and returning all documents reasonably requested in
connection with the registration and sale of the Option Shares.
(f) Expenses. The Company will pay all Registration Expenses
(as defined below) in connection with each registration of the Option Shares
pursuant to the provisions of this Agreement. All Selling Expenses (as defined
below) in connection with each such registration statement shall be borne by the
participating sellers in proportion to the number of shares sold by each, or by
such participating sellers other than the Company (except to the extent the
Company shall be a seller) as they may agree.
12. Law Governing. This Agreement shall be governed in accordance with
and governed by the internal laws of the State of Florida.
13. Interpretation/Provisions of Plan Control. This Agreement is
subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Committee or
the Board as may be in effect from time to time. If and to the extent that this
Agreement conflicts or is inconsistent with the terms, conditions and provisions
of the Plan,
5
<PAGE> 6
the Plan shall control, and this Agreement shall be deemed to be modified
accordingly. The Optionee accepts the Option subject to all the terms and
provisions of the Plan and this Agreement. The undersigned Optionee hereby
accepts as binding, conclusive and final all decisions or interpretations of the
Committee or the Board upon any questions arising under the Plan and this
Agreement.
14. Notices. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Company's Secretary at 1180 Spring Centre
South Blvd., Suite 310, Altamonte Springs, Florida 32714, or if the Company
should move its principal office, to such principal office, and, in the case of
the Optionee, to the Optionee's last permanent address as shown on the Company's
records, subject to the right of either party to designate some other address at
any time hereafter in a notice satisfying the requirements of this Section.
15. Tax Consequences. Set forth below is a brief summary as of the date
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of Option. There may be a regular federal income
tax liability upon the exercise of the Option. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the fair market value of the Shares on the date of
exercise over the Exercise Price. If Optionee is an employee, the Company will
be required to withhold from Optionee's compensation or collect from Optionee
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.
(b) Disposition of Shares. If Shares are held for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the 12th day of February, 1999.
COMPANY:
MIRACOM CORPORATION
By:
David McComas, President
6
<PAGE> 7
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option, and fully
understands all provisions of the Option.
Dated: OPTIONEE:
By:
Shawn D. Lucas
7
<PAGE> 1
Exhibit 3.3
FORM OF
REGISTRATION RIGHTS AGREEMENT
The parties to this Registration Rights Agreement (the
"Agreement") are MIRACOM CORPORATION, a Nevada corporation (the "Company"), and
the Holder (the "Holder") named on and executing the signature page below.
The Holder is purchasing from the Company ________ shares of
the common stock (the "Common Stock") of the Company. The Company desires to
grant to the Holder the registration rights set forth below with respect to the
shares of Common Stock.
Therefore, the parties hereby agree as follows:
1. DEFINITIONS. As used herein, the following terms
shall have the following meanings:
(a) "Securities Act" means the Securities Act of
1933, as amended.
(b) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(c) "Register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and the declaration or ordering
of effectiveness of such registration statement.
(d) "Registrable Securities" means that number of
shares of Common Stock purchased by the Holder and any additional shares of
Common Stock that may be issued by the Company as a dividend or other
distribution in respect of those shares.
(e) "SEC" means the Securities and Exchange
Commission.
2. PIGGY-BACK REGISTRATION.
(a) If at any time prior to May 1, 2002, the Company proposes
to register any of its Common Stock under the Securities Act for sale to the
public, whether for its own account or for the account of other security holders
or both (except in connection with registration statements on Forms S-4, Form
S-8 or another form not available for registering the Registrable Securities for
sale to the public), then the Company shall at such time give prompt written
notice to the Holder of its intention to effect such registration setting forth
a description of intended method of distribution and indicating Holder's right
under such proposed registration, and upon the request of the Holder delivered
to the Company within twenty (20) days after giving such notice (which request
shall specify the Registrable Securities intended to be disposed of by the
Holder), the Company shall include such Registrable Securities held by the
Holder and requested to be included in such registration, subject to any
<PAGE> 2
underwriter's cutback or lock-up of the Registrable Securities as mutually
agreed between Holder, the Company and the underwriter, if the registration
statement relates to an underwritten public offering by the Company. The
Company's obligation to give such notice and to register such Registrable
Securities shall terminate as to those Registrable Securities that are no longer
owned by the Holder.
(b) If, at any time after giving such written notice of the
Company's intention to register any of the Registrable Securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to file the
registration statement wherein the Registrable Securities would be registered or
to delay the registration of such Registrable Securities, at its sole election,
the Company may give written notice of such determination to the Holders and
thereupon shall be relieved of its obligation to register any Registrable
Securities issued or issuable in connection with such registration (but not from
its obligation to pay registration expenses in connection therewith or to
register the Registrable Securities in a subsequent registration).
(c) The Company shall not be required to include any of the
Registrable Securities in the registration statement relating to an underwritten
offering of the Company's securities unless the Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it, if any (provided such terms are usual and customary for selling
stockholders) and the Holder agrees to execute and/or deliver such documents in
connection with such registration as the Company or the managing underwriter may
reasonably request. If the Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriters prior to the initial filing of the registration
statement with the SEC. Any Registrable Securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
(d) The Company may, in its sole discretion and without the
consent of the Holder, withdraw such registration statement and abandon the
proposed offering in which the Holder had requested to participate, but such
abandonment shall not preclude subsequent request for registration pursuant to
this Section 2.
(e) The Company shall use its best efforts to maintain the
effectiveness of the registration statement until the earlier of (i) the date
that all of the Registrable Securities included therein have been sold, or (ii)
the date the Holder receives an opinion of counsel to the Company that all of
the Registrable Securities may be freely traded without registration under the
Securities Act, subject only to applicable volume limitations under Rule 144
promulgated by the SEC.
3. COOPERATION WITH THE COMPANY.
(a) The Holder will cooperate with the Company in all respects
in connection with this Agreement, including, without limitation, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
2
<PAGE> 3
(b) The Holder agrees that, upon receipt of any notice from
the Company of the happening of any event as a result of which the prospectus,
as then in effect, would contain an untrue statement of material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the Holder will immediately discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until the Holder's receipt of the copies of a
supplemented or amended prospectus which corrects such untrue statement or
omission and, if so directed by the Company, the Holder shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Holder's possession of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
4. EXPENSES. All expenses incurred by the Company in
registering the Registrable Securities, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of any
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars and costs
of insurance ("Registration Expenses") shall be borne by the Company. However,
Registration Expenses shall not include expenses of counsel for the Holder, any
underwriting discounts, selling commissions and underwriter expense
reimbursement allowances applicable to the sale of the Registrable Securities
("Selling Expenses"). The Company will pay all Registration Expenses in
connection with each registration of the Registrable Securities pursuant to the
provisions of this Agreement. All Selling Expenses in connection with each such
registration statement shall be borne by the participating sellers in proportion
to the number of shares sold by each, or by such participating sellers other
than the Company (except to the extent the Company shall be a seller) as they
may agree.
5. DELAY OF REGISTRATION. The Holder shall not have any right
to take any action to restrain, enjoin, or otherwise delay any registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
6. INDEMNIFICATION. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Holder requesting or joining in a registration, any
underwriter (as defined in the Securities Act) for it, and each person, if any,
who controls such Holder or underwriter within the meaning of the Securities
Act, against any losses, claims, damages, liabilities or expenses, joint or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in such registration statement,
including, without limitation, any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
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misleading, or arise out of any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration; and will reimburse the Holder, such underwriter, or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, expense or action; PROVIDED, HOWEVER, that the Company will not be
liable in any such case if and to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon: (i) a settlement of any
such loss, claim, damage, liability, expense or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld or delayed), (ii) an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by the Holder, any such underwriter or any such controlling person in
writing specifically for use in such registration statement or prospectus; or
(iii) the Holder's failure to deliver a copy of the final prospectus as then
amended or supplemented after the Company has furnished the Holder with a
sufficient number of copies of the same, but only if delivery of same is
required by law and the same would have cured the defect giving rise to any such
loss, claim, damage, liability, expense, or action.
(b) To the extent permitted by law, the Holder requesting or
joining in a registration will indemnify and hold harmless the Company, each of
its directors, each of its officers who signs the registration statement, each
underwriter for the Company (within the meaning of the Securities Act), and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses to which the Company or any such director, officer, controlling
person or underwriter may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereto) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary prospectus or final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished by or on behalf of the Holder expressly for use in
connection with such registration; and will reimburse the Company or any such
director, officer, controlling person or underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, expense or action; PROVIDED,
HOWEVER, that the indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
expense or action if such settlement is effected without the consent of the
Holder (which consent shall not be unreasonably withheld or delayed); and
provided further, that the Holder shall not have any liability under this
Section 6(b) in excess of the net proceeds actually received by the Holder in
the relevant public offering.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 6, notify the indemnifying party in writing of the
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commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties. The failure to notify
an indemnifying party promptly of the commencement of any such action, shall, to
the extent (but only to the extent) actually prejudicial to its ability to
defend such action, relieve such indemnifying party of any liability to the
indemnified party under this Section 6, but the omission so to notify the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 6.
(d) The indemnification provided by this Agreement shall be a
continuing right to indemnification and shall survive the registration and sale
of any Registrable Securities by any person entitled to indemnification
hereunder and the expiration of this Agreement.
7. MISCELLANEOUS
(a) WAIVER. No waiver by any party of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing.
(b) NOTICES. All notices and other communications pursuant to
this Agreement shall be deemed to be sufficient if contained in a written
instrument and shall be deemed given if delivered personally, telecopied, sent
by nationally-recognized, overnight courier or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Company, to:
Miracom Corporation
1180 Spring Centre South Boulevard
Altamonte Springs, Florida 32714
Attention: Shawn D. Lucas
Telecopier: 407-772-8739
(ii) if to the Holder, to the address set forth below the
Holder's signature on the last page of this
Agreement.
Any notice so addressed, when mailed by registered or
certified mail shall be deemed to be given three (3) days after so mailed, when
telecopied shall be deemed to be given when transmitted, or when delivered by
hand or overnight shall be deemed to be given when delivered.
(c) INVALIDITY OF PROVISIONS. If any provisions of this
Agreement shall be determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
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(d) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings, oral or written, between
the parties with respect to the subject matter hereof.
(e) COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in one or more counterparts, each of which shall be an original, but
all of which together shall constitute one and the same agreement. Facsimile
signatures hereon shall have the same legal force and effect as original
signatures.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall be
enforceable by, and shall inure to the benefit of and be binding upon, the
parties and their respective successors and assigns. As used herein, the term
"successors and assigns" shall mean, where the context so permits, heirs,
executors, administrators, trustees and successor trustees and personal and
other representatives.
(g) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida applicable to
contracts made and to be performed therein without otherwise giving effect to
principles of conflicts of laws.
(h) AMENDMENTS. This Agreement may be amended only by the
written consent of all parties hereto.
(i) HEADINGS. The headings set forth in this Agreement have
been inserted for convenience of reference only, shall not be considered a part
of this Agreement and shall not limit, modify or affect in any way the meaning
or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed and delivered as of the ______ day of
__________, 1999.
Print Name of Holder
Address:
-------------------------------
Signature of Holder
If an entity, sign as follows:
By
-----------------------------
(Signature of Officer)
Name:
Title or other capacity:
MIRACOM CORPORATION
By:
-------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 6.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT was entered into the 12th day of February
1999, by and between MIRACOM CORPORATION (hereinafter, the "Employer") and SHAWN
D. LUCAS (hereinafter, the "Employee").
In consideration of the Employee's employment and possibility for
promotion, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employee hereby agrees as
follows:
1. PURPOSE. The purpose of this Agreement is to set forth the terms and
conditions of Employee's employment and to define the obligations between
Employee and Employer regarding trade secrets, as defined in Florida Statutes
Section 688.002(4), including, without limitation, Confidential Information (as
defined herein) belonging to the Employer, inventions and intellectual property
created, in whole or in part, by the Employee, communication with the Employer's
customers and retention of the employees of the Employer. Employee recognizes
that the business of Employer and the nature of Employee's employment will
permit Employee to have access to trade secrets and Confidential Information of
Employer and to its Clients, and that such trade secrets and Confidential
Information are the exclusive property of Employer, disclosure of which would be
prejudicial to Employer's business interests and cause the Employer irreparable
harm. Notwithstanding any other provision of this Agreement, the Employer and
Employee agree that Employee is not prohibited from owning, operating or
performing services for the unrelated business(es) in which he is currently
involved and which are specifically identified on SCHEDULE 1 hereto.
2. DEFINITIONS
(a) "EMPLOYER" shall mean MIRACOM CORPORATION and all of its
divisions, subsidiaries, affiliates and any successors or
assigns.
(b) "CLIENT" shall mean any person or entity with whom Employer
conducts business or from whom Employer or Employee obtains
information concerning the business and industry in which
Employer operates, including, but not limited to, customers,
consultants, advisors and suppliers of the Employer.
(c) "TRADE SECRET" shall have the meaning set forth in Florida
Statutes Section 688.002(4), and shall include, without
limitation, ideas, information, compilations, computer
programs and related data bases which are not described in any
literature published and distributed publicly by Employer and
which are not readily ascertainable from inspection of
commercially available sources, including, but not limited to,
computer programs written by and for the Employer, data bases,
generated reports, related proprietary information
<PAGE> 2
and marketing studies.
(d) "CONFIDENTIAL INFORMATION" shall mean all information
pertaining to the business of Employer or Clients which is of
value to Employer, is not generally known to Employer's
competitors or to the public, and is treated as confidential
by Employer and Clients, including, but not limited to, (i)
information pertaining to product research and development;
(ii) existing and future business and marketing plans; (iii)
financial, accounting, sales and purchasing data; (iv)
customer and supplier identity; (v) personnel matters; (vi)
techniques, policies and procedures related to the operation
of Employer and Clients; (vii) terms of relationships with
Clients; (viii) identity of prospective Clients; (ix) identity
of business opportunities available to Employer; and (x)
inventions and intellectual property of the Employer.
(e) "INVENTION" shall mean any discovery, idea, improvement or
contribution, whether or not patentable, including, but not
limited to, any computer program, process, method, formula or
technique, as well as improvements thereto, which is new or
which Employer reasonably believes may be new.
(f) "WORK" shall mean any written, typed or printed material
prepared, in whole or in part, by Employee during the term of
his employment hereunder including, but not limited to,
technical descriptions of products, computer software, user
guides, illustrations, advertising materials, training
manuals, contracts and any contributions to any such material.
3. TRADE SECRETS. During and at any time subsequent to termination of
his employment by Employer, Employee will not disclose or otherwise
misappropriate any Trade Secret of the Employer for his own use or for the use
of any person, corporation, partnership, firm or other entity.
4. CONFIDENTIAL INFORMATION. During his employment, and for a two (2)
year period following termination of employment, Employee will not disclose or
misappropriate any Confidential Information for his own use or for the use of
any person, corporation, partnership, firm or other entity. Employee shall not
remove any writings containing Confidential Information from the premises or
possession of Employer or its Clients, or make copies or memoranda thereof.
Furthermore, Employee will deliver promptly to Employer, at termination of his
employment, or at any time Employer may so request, all copies and originals of
any writings containing Confidential Information which Employee may possess or
have or have had under his control.
5. NON-SOLICITATION. During his employment, and for a two (2) year
period following termination of employment, Employee will not, either directly
or indirectly, consult, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any actual or targeted prospective Client of
Employer who has been a Client or targeted prospective Client of Employer at any
time during the 12-month period preceding termination of Employee's employment.
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6. NON-SOLICITATION OF EMPLOYEES. During his employment, and for a two
(2) year period following termination of employment, Employee will not hire,
attempt to hire or employ, directly or indirectly, any employee of Employer.
During such period, Employee will not encourage or induce any employee of
Employer to leave the employment of Employer.
7. ASSIGNMENT OF RIGHTS.
(a) INVENTIONS. The Employee agrees that if he conceives of an
Invention or reduces an Invention to practice during his
employment, Employee will promptly provide a written
description of the Invention ("Invention Summary") to an
officer of the Employer (other than Employee). The Employee
shall request that such officer acknowledge in writing the
receipt of such Invention Summary, a copy of which both
Employee and Employer shall retain in their records. The
Employer shall have thirty (30) days to provide written notice
to Employee whether or not it wishes to claim an interest in
the Invention. If timely notice is given to Employee that
Employer claims an interest in the Invention, Employee agrees
that such Invention, and all patent rights to such Invention,
shall become the exclusive property of Employer, and the
Employee hereby irrevocably assigns to Employer any and all of
Employee's rights to such Invention. Employee agrees that
should Employer elect to file an application for patent
protection, either in the United States or in a foreign
country, Employee will execute all necessary papers, including
formal assignments to Employer relating to such patent
applications. The Employee further agrees that he will
cooperate with any attorney or other person, will explain the
nature of the Invention, as required, will review applications
and other papers and will provide any other cooperation
reasonably required for the orderly filing and/or prosecution
of such patent applications.
(b) WORK. The Employee agrees that any Work created by Employee in
the course of performing Employee's duties hereunder and on
behalf of Employer are deemed "work for hire" within the
meaning of Title 17 of the United States Code. Accordingly,
all right, title and interest to the intellectual property
rights for any and all such Work, which have been or will be
prepared by Employee, shall be the property of Employer.
Employee further agrees to assign to Employer any and all
right, title and interest to any copyrights which Employee may
have in any such Work.
8. EMPLOYMENT AND TERM. The Employer agrees to employ and Employee
agrees to be employed by Employer for the period stated herein and upon the
terms and conditions provided in this Agreement. The term of full-time
employment shall be for a period of three (3) years, commencing on October 1,
1998 (the "Commencement Date"), and terminating on the third anniversary
thereof; PROVIDED THAT on each anniversary of the
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Commencement Date, the term shall be extended for an additional one (1) year,
so that on each anniversary date, the remaining term is three (3) years, unless
otherwise terminated in accordance with Section 19 or Section 20, or as mutually
agreed between the parties.
9. COMPENSATION. The Employer shall pay the Employee for all services
contemplated under this Agreement as follows:
(a) A base salary of $124,800 per year, paid on a weekly basis
(the "Base Salary"). The Base Salary shall be increased, but
shall not be decreased, on each October 1st (the "Anniversary
Date") by a percentage which equals the sum of three percent
(3%) plus that percentage by which the Consumer Price Index,
for the Orlando, Florida area, published by the United States
government (the "INDEX"), for the immediately preceding
calendar year exceeds such Index for the next preceding
calendar year. If publication of the Index is discontinued,
the parties hereto shall accept comparable statistics on the
cost of living for the Orlando, Florida area as computed and
published by an agency of the United States government, or if
no such agency computes and publishes such statistics by any
regularly published national financial periodical that does
compute and publish such statistics;
(b) Such other benefits that the Employer may offer to other
senior level management of the Employer and/or members of the
board of directors of the Employer (the "Board of Directors"
or the "Board") from time to time, which benefits may but do
not necessarily include stock options in addition to those
contemplated by Section 17 and performance bonuses;
(c) When a 401(k) plan is established by Employer, a matching
contribution to Employee's 401(k) account equal to a minimum
of twenty-five percent (25%) of Employee's contribution to
such plan, subject to the dollar limitations as provided in
the Internal Revenue Code of 1986, as amended from time to
time; and
(d) A minimum of sixty percent (60%) of the cost of Employee's
medical insurance coverage provided by Employer's medical
plan.
The Employer shall be entitled to deduct and withhold amounts legally required
to be withheld for items such as income taxes, FICA, FUTA, etc.
10. DUTIES. The Employee is bringing unique experience, contacts and a
database to the Employer, which the Employee agrees to use to the benefit of the
Employer in the development of its commercial operations. The Employee is
engaged to act as the Chairman and Co-Chief Executive Officer of the Employer
and shall be responsible for the supervision and, subject to the control of the
Board of Directors, the strategic direction of the Company's affairs, the
development and execution of Employer's business plan, and the coordination of
the efforts of senior management, and such additional responsibilities as the
Board by determine to
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be in the best interest of the Employer, and which are appropriate for a
Chairman and Co-Chief Executive Officer of an organization of the type and size
of the Employer. The Chairman and Co-Chief Executive Officer shall (together
with the other Co-Chief Executive Officer) executive all of the duties of the
President in his absence or his inability to act. The Employee shall report
directly to the Board of Directors. The Employee agrees to serve capacities,
without further compensation, unless the Employee's duties and responsibilities
substantially change or increase, or unless mutually agreed otherwise. Employee
will use his best efforts to promote the interests of the Employer.
11. EXTENT OF SERVICES. The Employee shall not be required to devote
his entire time and attention to the Employer's business; PROVIDED, HOWEVER,
that Employee agrees to provide a minimum of forty (40) hours per week for
services on behalf of Employer (such forty (40) hours shall include time which
the Employee spends traveling from one destination to another destination on
behalf of the Employer but, other than travel time, shall not include time when
the Employee is not actually performing services on behalf of the Employer even
though the Employee may be away from home). Notwithstanding anything herein to
the contrary, the Employee will be called upon from time to time as an element
of his employment to develop business projects which will include the interests
of the Employee and the Employer or its subsidiaries, affiliates or joint
venture interests. Such activities are contemplated in this Agreement and form
an integral part of the Employee's employment.
12. WORKING FACILITIES. The Employee shall have a private and adequate
office, back-up staff, including secretarial assistance in all of the offices of
the Employer in which Employee will be expected to perform his services, and
other adequate services and facilities necessary in order for the Employee to
fulfill the activities contemplated under this Agreement. The Employee will also
have the use of Employer-provided lodging and vehicles and an expense account in
order to fulfill his obligations and responsibilities under this Agreement and
for the development and the commercialization of the Employer's services.
13. DISCLOSURE OF INFORMATION. The Employee and Employer acknowledge
that Employee is coming to his position with unique data, contacts and
experience, distinct from those possessed generally by the Employer. These
contacts, data and information of the Employee are unique to the Employee and
will always be so considered. However, the Employee shall not, during the term
of his employment, disclose or use all or any part of the Employee's unique
knowledge, services or skills that are conceived or reduced to practice during
the term of Employee's employment, to any person, firm, corporation, association
or other entity for any reason or purpose, unless mutually agreed upon in
advance and in writing by the parties to this Agreement. All new projects and
information which are developed by the Employee during his employment with the
Employer shall be considered the Employer's unique knowledge, services or skills
and shall not be taken, disclosed or developed for a project with any third
parties by the Employee, unless agreed upon in advance and in writing by the
Employer upon termination of the Employee's employment.
14. EXPENSES. The Employee may incur reasonable expenses for the
commercialization of the Employer's services and products, including reasonable
expenses for
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entertainment, travel and similar items. The Employer shall reimburse the
Employee for all such reasonable expenses, which have been approved by Employer,
within thirty (30) days of the Employee's presentation of an itemized accounting
of such expenditures. In the event Employee incurs expenses on behalf of the
Employer, or Employer pays for expenses of Employee which are not reimbursable
hereunder, Employee agrees to immediately reimburse Employer for such expenses.
As soon as reasonably practicable, Employer shall secure a corporate charge card
for Employee to use for reimbursable expenses hereunder. The parties hereto
acknowledge that if Employee has loaned funds to the Employer prior to the
execution hereof, the Employer shall repay Employee such loans within ninety
(90) days of the date hereof.
15. VACATIONS. The Employee shall be entitled each year to a vacation,
which period of time and date of scheduling will be mutually agreed upon by the
Employer and Employee; PROVIDED, HOWEVER, the Employee, in any case, shall be
entitled to not less than two (2) weeks vacation time per year, and cumulative
compensation for such vacation time shall be paid each year to the Employee if
such vacation is not taken; PROVIDED, FURTHER, that Employee shall be entitled
to carry over one (1) week of unused vacation from the preceding calendar year
to the current calendar year. Employee shall be paid the pro rata portion of his
regular Base Salary and all other benefits as specified in Section 9, hereunder,
during any vacation period. In the event vacation is not taken or vacation is
rolled over to the next year, compensation for such unused vacation, up to a
maximum of two weeks per calendar year, shall be paid on or before the end of
the calendar year if the Employee so desires and so requests in writing on or
before November 30 of that calendar year; PROVIDED; HOWEVER, that in the event
Employee has rolled over one (1) week's vacation from the preceding calendar
year, the Employee may be compensated for his unused vacation for the then
current calendar year (subject to the two week maximum per calendar year) plus
the one (1) week rolled over from the preceding calendar year and not used in
the then current calendar year.
16. OTHER BENEFITS. Employee shall be entitled to such other benefits
that the Employer may offer to its employees and its Board of Directors from
time to time, including, but not limited to, stock options, medical insurance
and disability insurance. The Employer agrees to pay Employee ten thousand
dollars ($10,000) per year as compensation for the performance of his services
as a member of the Board of Directors, which shall be paid on a pro rata basis
by the fifth (5th) day of the month following the month of board service. Such
compensation shall be in addition to the compensation to which Employee is
entitled under Section 9 hereof.
17. STOCK OPTIONS. Employer shall establish a stock option plan for its
employees, and/or officers (the "Stock Option Plan") and Employee shall be
entitled to participate in such Stock Option Plan.
18. DISABILITY. If the Employee is or becomes, by reason of illness or
incapacity, unable to perform the essential functions of his employment
hereunder, with or without reasonable accommodation, for a period of more than
four (4) weeks (a "Disability"), the compensation thereafter payable to him
during the continued period of such illness
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or incapacity shall be reduced initially by twenty-five percent (25%) for the
period beginning four (4) weeks and ending six (6) months after such illness or
incapacity begins and then by fifty percent (50%) if the incapacity or illness
continues during the period beginning six (6) months and one (1) day and ending
one (1) year after such illness or incapacity begins. If the Employee should be
absent from his employment for a period of more than one (1) year, the Employer
will have the option to terminate this Agreement for impossibility of execution
but the Employer may nonetheless decide to continue this Agreement with
compensation after one (1) year of incapacity. In the event the Employer secures
a disability insurance policy mutually acceptable to Employee and Employer, then
Employer's financial obligations under this Section 18 shall terminate provided
that the disability benefits under such policy equal or exceed the Employer's
financial obligations under this Section 18. In addition to the foregoing
disability payments, Employee shall retain the right to retain any stock options
that are exercisable on the date of termination of employment.
19. TERMINATION OF EMPLOYMENT.
(a) BY EMPLOYER FOR CAUSE. During the term of this Agreement, the
Employer may terminate this Employee's employment for "Cause"
(defined below) upon thirty (30) days' written notice. In the
event that Employee's employment with the Employer is
terminated with Cause, the Employee shall receive only (A) his
Base Salary and benefits earned but unpaid up to the date of
termination of employment, (B) the prorated portion of any
bonuses earned but unpaid up to the date of termination of
employment, calculated based upon a closing of the books of
Employer as of the last day of the month in which termination
occurs and a proration of the annual goals, if any were
established for such year, based upon the portion of the year
that has expired prior to that date, and (C) reimbursement for
any expenses to which Employee is due reimbursement under
Section 14.
For purposes of this Section 19(a), the term "Cause"
shall mean any of the following:
(1) the Employee's willful or negligent failure or
refusal to comply with the written rules and
regulations of Employer from time to time established
by the Board that shall have been previously
delivered to Employee, and that shall not be
inconsistent with the terms or conditions of this
Agreement, and Employee shall not have cured such
failure or refusal within 30 days following receipt
of written notice from Employer of such failure or
refusal; PROVIDED, HOWEVER, that if such failure or
refusal is of such a nature that it cannot be cured
within such 30-day period, then, so long as Employee
shall have commenced such cure within such 30-day
period and shall have thereafter in good faith
continued such cure, Employee shall be deemed to have
cured such failure or refusal; or
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(2) the final (non-appealable or foreclosed
from appeal) conviction of Employee of any felony
materially and adversely affecting the property,
reputation or goodwill of Employer or its successors;
or
(3) the Employee's willful failure or
refusal to perform or Employee's performance in a
grossly negligent manner a material part of his
duties pursuant to the provisions of this Agreement
and Employee shall not have cured such failure or
refusal within 30 days following receipt of written
notice from Employer of such failure or refusal;
PROVIDED, HOWEVER, that if such failure or refusal is
of such a nature that it cannot be cured within such
30-day period, then, so long as Employee shall have
commenced such cure within such 30-day period and
shall have thereafter in good faith continued such
cure, Employee shall be deemed to have cured such
failure or refusal; or
(4) Employee's violation of the terms of
Sections 3, 4, 5, 6, 7 or 13 of this Agreement.
(b) BY EMPLOYER WITHOUT CAUSE. In the event Employer
terminates the Employee's employment without Cause then, in
addition to clauses A through C in Section 19(a), above, (X)
the Employer shall be obligated to pay to the Employee
Employee's annual Base Salary (at the time of termination), on
a weekly basis or consistent with the Employer's payroll
practices at the time, for a period of three (3) years from
and after the date of termination (the "Severance Amount");
(Y) Employee shall have the right to retain any stock options
that were granted to Employee prior to the date of termination
of employment; and (Z) the Employer shall, at its sole cost
(except for Employee dependency coverage contributions, if
any, in effect prior to Employee ceasing to be employed by the
Employer hereunder) maintain in full force and effect from the
date Employee ceases to be employed by the Employer hereunder
and for six (6) months thereafter, all medical, health and
accident, and disability plans, programs, or arrangements in
which Employee is entitled to participate immediately prior to
Employee ceasing to be employed by the Employer hereunder,
provided that Employee's continued participation is possible
under the general terms and provisions of such plans and
programs. In the event that Employee's participation in any
such plan or program is barred (other than as a result of a
misrepresentation or misconduct of Employee), the Employer
shall arrange at its sole expense to provide him with benefits
substantially similar to those which he is entitled to receive
under such plans and programs for the six-month term,
including, without limitation, reimbursement of COBRA premium
payments. To the extent that Employee mitigates his damages
through the accrual or receipt of a salary, or the provision
of health or other benefits referenced hereinabove, through
self-employment or employment with another entity, the
Severance Amount and/or applicable benefits referenced
hereinabove shall be adjusted by off-set of amounts or
benefits received by Employee in
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mitigation. Upon written request by Employer, Employee shall
provide to Employer information as to such mitigation within
ten (10) days of receipt of such request. If Employee's
employment is terminated without Cause, Employee shall be
deemed released from the non-competition provisions of Section
22 of this Agreement upon such termination; PROVIDED, HOWEVER,
Employee shall not be deemed released from his obligations
under Sections 3, 4, 5, 6, 7 or 13 of this Agreement.
(c) VOLUNTARILY BY EMPLOYEE. Employee may, at his option,
terminate his employment under this Agreement at any time upon
ninety (90) days prior written notice to Employer. If Employee
voluntarily terminates employment with Employer, then Employee
shall receive only (i) his Base Salary and benefits earned but
unpaid up to the date of termination of employment, (ii) two
weeks salary, calculated based on Employee's salary then in
effect at the time of termination of employment, (iii) the
prorated portion of any bonuses earned but unpaid at the time
of termination of employment, calculated in accordance with
subsection (a)(ii) above; and, if Employee voluntarily
terminates his employment pursuant to Section 20, Employee
shall also be entitled to retain any exercisable stock
options.
(d) If Employee is terminated for Cause, or if Employee
voluntarily terminates his employment (except in the event of
a Change of Control (defined below), any stock options granted
to Employee under a Stock Option Plan or otherwise shall
terminate immediately upon termination of employment.
(e) Employee's employment with the Company may not be
terminated for Cause under Section 19(a), above, or without
Cause under Section 19(b), above, without the approval of a
majority of the members of the Board of Directors then in
office.
20. TERMINATION BY EMPLOYEE UPON CHANGE OF CONTROL. The Employee may
terminate Employee's employment at any time by giving ten (10) days prior
written notice to the Employer upon a Change of Control. A "Change of Control"
means the occurrence of any of the following events after the date of this
Agreement:
(a) a change in control of the Employer occurring after the
date of this Agreement of a nature that would be required to be reported in
response to Item 1 of the Current Report on Form 8-K (or in response to any
similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the Employer is then subject to
such reporting requirement;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Employer
representing twenty-five percent (25%) or more of the combined voting power of
the Employer's then outstanding securities without the prior
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<PAGE> 10
approval of at least two-thirds of the members of the Board in office
immediately prior to such person attaining such percentage (excluding for this
purpose, any acquisitions by (X) the Employer or its subsidiaries, (Y) any
person, entity or "group" that as of the date of this Agreement owns beneficial
ownership, as defined in Rule 13d-3 of the Act, or (Z) any employee benefit plan
of the Employer or its subsidiaries;
(c) the Employer is a party to a merger, consolidation, sale
of assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or
(d) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Employer's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
21. DEATH DURING EMPLOYMENT. Upon the death of Employee during the term
of employment, the Employer shall pay to Employee's estate the compensation that
would otherwise be payable to the Employee through the end of the month of his
death. In addition, three (3) months further compensation shall be paid in one
(1) lump sum to his surviving spouse or, if there is no surviving spouse, to the
surviving children of the Employee, or to his estate if there are no surviving
children.
22. NON-COMPETITION.
(a) During his employment, and for a period of two (2) years after
the expiration or termination of such employment (the
"Noncompetition Period"), Employee specifically agrees that
Employee shall not (except on the behalf of Employer or any of
its affiliated entities while Employee is employed by
Employer), either directly or indirectly, as a stockholder of
any corporation or partner of any partnership or as an
employee, owner, principal or agent, or in any other manner,
engage in any business within a radius of 100 miles from any
location of Employer's business (the "Geographic Area"), which
competes with, in any manner, any business conducted by
Employer at the time of termination of this Agreement.
Employee agrees that so long as Employee is working for
Employer, Employee shall not undertake the planning or
organizing of any business activity competitive with the
business of Employer. Employee agrees not to directly or
indirectly solicit any of Employer's employees to work for
Employee or for any business which is competitive with any
business conducted by Employer prior to the date on which
Employee's employment with Employer is terminated with
Employer within the Geographic Area and during the
Noncompetition Period.
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(b) The periods of time during which Employee is prohibited from
engaging in such business practices pursuant to this Section
22 shall be extended by any length of time during which
Employee is in breach of any of such covenants. The
restrictive covenants contained within this Section 22 are
essential elements of this Agreement, and that, but for the
agreement of Employee to comply with such covenants, Employer
would not have entered into this Agreement. If any portion of
the covenants set forth in this Section 22 are held by a court
of competent jurisdiction to be unreasonable, arbitrary or
against public policy, then such portion of such covenants
shall be considered divisible both as to time and geographical
area. Employer and Employee agree that, if any court of
competent jurisdiction determines that the Noncompetition
Period or the Geographic Area applicable to this Agreement is
unreasonable, arbitrary and/or against public policy, then a
lesser time period or geographical area which is determined to
be reasonable, non-arbitrary and not against public policy may
be enforced against Employee.
(c) Intentionally Omitted.
(d) Employee acknowledges that any violation of this Section 22
will result in irreparable injury to Employer for which there
is no adequate remedy at law. Employee agrees that, in the
event he breaches or threatens to breach this Section 22,
Employer, without posting a bond, shall be entitled to
injunctive relief, both preliminary and permanent, in addition
to any other remedies at law or in equity available to
Employer.
(e) If Employee's employment with Employer is terminated without
Cause, Employee shall be deemed released from his obligations
under this Section 22 upon such termination.
23. DISPUTES; ATTORNEYS' FEES. Except in the case of Employer's right
to seek injunctive relief under Section 22(d) and Section 24(b) of this
Agreement, the parties mutually agree to submit any controversy or claim arising
out of or proceeding forth from or relating to this Agreement or its breach to
be settled by arbitration (which may be binding if the parties mutually agree at
the time). Such arbitration shall be held in the County of Seminole, State of
Florida, utilizing the procedure and arbitrators acquainted with the American
Arbitration Association rules and procedure for arbitration. If binding
arbitration, judgment upon award rendered may be entered and enforced in any
court of competent jurisdiction. In the event any dispute arises under the terms
hereof, Employer shall continue to pay Employee the Base Salary and benefits to
which he is entitled hereunder until such time that a final determination is
made by an arbitrator hereunder; PROVIDED, HOWEVER, that if it is determined
that the termination of Employee's employment was justified, the Employee hereby
undertakes and agrees to repay to the Employer the amount of Base Salary that
was paid by Employer during the arbitration procedure. The non-prevailing party
shall be responsible for the prevailing party's reasonable legal fees and costs
(including post-judgment collection fees and costs).
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24. ENFORCEMENT.
(a) Whenever there is any conflict between any provision
of this Agreement and any law, statute, governmental
rule, ordinance or regulation, the latter shall
prevail. In such event, the affected provisions of
this Agreement will be curtailed and restricted only
to the extent necessary to bring them within the
legal requirements, and the remainder of this
Agreement shall not be affected. Should it be
determined that any provision of this Agreement is
unenforceable, the Employee specifically requests
that the court or arbitrator making such
determination modify and reform the provision found
to be unenforceable, and in its modified form,
specifically enforce the Agreement.
(b) Employee acknowledges that any violation of Sections
3, 4, 5, 6, 7, 13 or 22 of this Agreement (referred
to individually and collectively in this subsection
(b) as "Sections") will result in irreparable injury
to Employer for which there is no adequate remedy at
law. Employee agrees that, in the event he breaches
or threatens to breach any of such Sections,
Employer, without posting a bond, shall be entitled
to injunctive relief, both preliminary and permanent,
in addition to any other remedies at law or in equity
available to Employer.
25. INDEMNIFICATION. Employee shall be indemnified in accordance with
the terms and provisions of that certain Indemnification Agreement, dated as of
the date hereof, between Employer and Employee.
26. CHOICE OF LAW. This Agreement and the performance hereunder and all
suits and special proceedings hereunder shall be construed in accordance with
the laws of the State of Florida. In any action, special proceeding or other
proceeding that may be brought arising out of, in connection with, or by reason
of this Agreement, the laws of the State of Florida shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which the action or special proceeding may be instituted.
All actions under this Agreement, if not resolved by arbitration, shall be taken
in a court of competent jurisdiction within Seminole County, Florida and
Employee hereby waives and agrees that he shall not assert that such forum is
inconvenient.
27. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing and sent by certified U.S. mail,
or by Federal Express or other overnight delivery service to the Employee's
residence, or to the Employer's principal office, as the case may be.
28. WAIVER OF BREACH. Employer shall waive a breach by the Employee of
any provision of this Agreement only if such waiver is executed in writing by a
duly authorized officer of the Employer. Employee shall waive a breach by the
Employer of any provision of
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this Agreement only if such waiver is executed in writing by Employee.
29. ASSIGNMENT. Both parties acknowledge that the services of the
Employee and the Employer are unique to this Agreement and neither party may
assign the rights or delegate the duties of this Agreement to another.
Notwithstanding anything herein to the contrary, the Employee may perform his
unique services under this Agreement for any of the subsidiaries, affiliates or
joint ventures of the Employer.
30. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties and may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
31. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe the provisions hereof.
32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
33. WAIVER OF CONFLICT OF INTEREST. The parties acknowledge that,
notwithstanding Employee's use of Employer's attorneys for personal legal
matters unrelated to this Agreement, the Employer may continue to use the legal
counsel of its choice in connection with the resolution of any disputes between
the parties hereto without such representation constituting an improper or
ethical conflict of interest.
34. FURTHER ACTIONS. Each party to this Agreement shall take such
further actions to execute, file, record, publish and deliver such additional
certificates, instruments, agreements and other documents as the other party
may, from time to time, reasonably request, in order to accomplish the purposes
of this Agreement.
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35. APPOINTMENT TO BOARD OF DIRECTORS. Employee was appointed to the
Board of Directors in September 1998 and is entitled to receive the prorated
portion of the $10,000 annual director compensation.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date and year indicated above.
EMPLOYEE: /s/ SHAWN D. LUCAS
-------------------------------------
SHAWN D. LUCAS
EMPLOYER: MIRACOM CORPORATION
By: /s/ SCOTT A. ANDERSON
---------------------------------
Name: SCOTT A. ANDERSON
Title: CO-CHIEF EXECUTIVE OFFICER
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") was entered into
effective November 8, 1999, by and between MIRACOM CORPORATION (hereinafter, the
"Employer") and SHAWN D. LUCAS (hereinafter, the "Employee").
RECITALS
A. WHEREAS, on February 12, 1999, Employer and Employee entered into an
employment agreement (the "Employment Agreement"); and
B. WHEREAS, Employer and Employee desire to make certain modifications
to the Employment Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of Employee's employment and
possibility of promotion, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is hereby agreed
that the Employment Agreement is amended in the following particulars:
1. Section 9 (COMPENSATION). Subsection 9(a) of the Employment
Agreement is hereby amended to change Employee's the Base Salary to $72,000 per
year, effective November 8, 1999, payable bi-weekly or otherwise in accordance
with Employer's standard payroll practices. Further amended and in accordance
with Employer's current standard payroll practice at the time, the employee
shall receive a base salary of $89,000 for the period August 30, 1999 through
October 24, 1999 and shall defer payment of the difference between the original
Base Salary ($124,800) and the newly adjusted amount ($89,000) for that same
time period. All other provisions of subsection 9(a) not amended hereby shall
remain the same.
2. Section 10 (DUTIES). In addition to the duties set forth in Section
10 of the Employment Agreement, Employee shall also serve as the President of
Employer with such duties as normally associated with such office for similarly
situated companies as Employer and otherwise as the Board of Directors may
reasonably designate.
3. Section 15 (VACATIONS). Section 15 is hereby amended in its entirety
as follows:
"(a) Employee shall be entitled each year to a vacation, which
period of time and date of scheduling will be mutually agreed
upon by Employer and Employee; PROVIDED, HOWEVER, the
Employee, in any case, shall be entitled to not less than two
weeks vacation time per year, and cumulative compensation for
such vacation time shall be paid each year to the Employee if
such vacation is not taken in the applicable year or if not
carried forward to the next calendar year in accordance with
this Section 15. Employee shall be entitled to carry over one
(1) week of
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unused vacation to the next succeeding calendar year.
(b) Employee shall be paid the pro rata portion of his regular
Base Salary and provided all other benefits as specified in
Section 9 during any vacation period taken. Any payments made
to Employee in respect of vacation not taken or rolled over to
the next calendar year shall be paid to Employee in the last
pay period of the calendar year in which such vacation was not
taken. The maximum compensation payable to Employee in any
calendar year for unused vacation shall be two weeks of unused
vacation in such calendar year plus one week of unused
vacation, if any, that was rolled over as unused vacation from
the previous calendar year."
4. Section 16 (OTHER BENEFITS). Section 16 of the Employment Agreement
is hereby amended to eliminate the $10,000 fee for Employee's service on the
Board of Directors, such fees having terminated effective June 1, 1999. Employee
shall serve on the Board of Directors without additional compensation, except
for reimbursement of expenses incurred in attending meetings of the Board of
Directors and its committees. However, nothing in this Section 16, as amended,
is intended to prevent Employee's participation in any stock option plan as an
employee or as a director of Employer.
5. All other provisions of the Employment Agreement not herein amended
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereby have executed this Amendment to
Employment Agreement as of September 30, 1999 to be effective November 8, 1999.
EMPLOYEE: /s/ Shawn D. Lucas
--------------------------------
SHAWN D. LUCAS
EMPLOYER: MIRACOM CORPORATION
By: /s/ Scott Anderson
-------------------------------------
Name: Scott Anderson
Title: Co-Chief Executive Officer
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<PAGE> 1
EXHIBIT 6.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT was entered into the 12th day of February
1999, by and between MIRACOM CORPORATION (hereinafter, the "Employer") and SCOTT
A. ANDERSON (hereinafter, the "Employee").
In consideration of the Employee's employment and possibility for
promotion, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employee hereby agrees as
follows:
1. PURPOSE. The purpose of this Agreement is to set forth the terms and
conditions of Employee's employment and to define the obligations between
Employee and Employer regarding trade secrets, as defined in Florida Statutes
Section 688.002(4), including, without limitation, Confidential Information (as
defined herein) belonging to the Employer, inventions and intellectual property
created, in whole or in part, by the Employee, communication with the Employer's
customers and retention of the employees of the Employer. Employee recognizes
that the business of Employer and the nature of Employee's employment will
permit Employee to have access to trade secrets and Confidential Information of
Employer and to its Clients, and that such trade secrets and Confidential
Information are the exclusive property of Employer, disclosure of which would be
prejudicial to Employer's business interests and cause the Employer irreparable
harm. Notwithstanding any other provision of this Agreement, the Employer and
Employee agree that Employee is not prohibited from owning, operating or
performing services for the unrelated business(es) in which he is currently
involved and which are specifically identified on SCHEDULE 1 hereto.
2. DEFINITIONS
(a) "EMPLOYER" shall mean MIRACOM CORPORATION and all of its divisions,
subsidiaries, affiliates and any successors or assigns.
(b) "CLIENT" shall mean any person or entity with whom Employer conducts
business or from whom Employer or Employee obtains information
concerning the business and industry in which Employer operates,
including, but not limited to, customers, consultants, advisors and
suppliers of the Employer.
(c) "TRADE SECRET" shall have the meaning set forth in Florida Statutes
Section 688.002(4), and shall include, without limitation, ideas,
information, compilations, computer programs and related data bases
which are not described in any literature published and distributed
publicly by Employer and which are not readily ascertainable from
inspection of commercially available sources, including, but not
limited to, computer programs written by and for the Employer, data
bases, generated reports, related proprietary information and
marketing studies.
<PAGE> 2
(d) "CONFIDENTIAL INFORMATION" shall mean all information pertaining to
the business of Employer or Clients which is of value to Employer,
is not generally known to Employer's competitors or to the public,
and is treated as confidential by Employer and Clients, including,
but not limited to, (i) information pertaining to product research
and development; (ii) existing and future business and marketing
plans; (iii) financial, accounting, sales and purchasing data; (iv)
customer and supplier identity; (v) personnel matters; (vi)
techniques, policies and procedures related to the operation of
Employer and Clients; (vii) terms of relationships with Clients;
(viii) identity of prospective Clients; (ix) identity of business
opportunities available to Employer; and (x) inventions and
intellectual property of the Employer.
(e) "INVENTION" shall mean any discovery, idea, improvement or
contribution, whether or not patentable, including, but not limited
to, any computer program, process, method, formula or technique, as
well as improvements thereto, which is new or which Employer
reasonably believes may be new.
(f) "WORK" shall mean any written, typed or printed material prepared,
in whole or in part, by Employee during the term of his employment
hereunder including, but not limited to, technical descriptions of
products, computer software, user guides, illustrations, advertising
materials, training manuals, contracts and any contributions to any
such material.
3. TRADE SECRETS. During and at any time subsequent to termination of
his employment by Employer, Employee will not disclose or otherwise
misappropriate any Trade Secret of the Employer for his own use or for the use
of any person, corporation, partnership, firm or other entity.
4. CONFIDENTIAL INFORMATION. During his employment, and for a two (2)
year period following termination of employment, Employee will not disclose or
misappropriate any Confidential Information for his own use or for the use of
any person, corporation, partnership, firm or other entity. Employee shall not
remove any writings containing Confidential Information from the premises or
possession of Employer or its Clients, or make copies or memoranda thereof.
Furthermore, Employee will deliver promptly to Employer, at termination of his
employment, or at any time Employer may so request, all copies and originals of
any writings containing Confidential Information which Employee may possess or
have or have had under his control.
5. NON-SOLICITATION. During his employment, and for a two (2) year
period following termination of employment, Employee will not, either directly
or indirectly, consult, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any actual or targeted prospective Client of
Employer who has been a Client or targeted prospective Client of Employer at any
time during the 12-month period preceding termination of Employee's employment.
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<PAGE> 3
6. NON-SOLICITATION OF EMPLOYEES. During his employment, and for a two
(2) year period following termination of employment, Employee will not hire,
attempt to hire or employ, directly or indirectly, any employee of Employer.
During such period, Employee will not encourage or induce any employee of
Employer to leave the employment of Employer.
7. ASSIGNMENT OF RIGHTS.
(a) INVENTIONS. The Employee agrees that if he conceives of an
Invention or reduces an Invention to practice during his employment,
Employee will promptly provide a written description of the
Invention ("Invention Summary") to an officer of the Employer (other
than Employee). The Employee shall request that such officer
acknowledge in writing the receipt of such Invention Summary, a copy
of which both Employee and Employer shall retain in their records.
The Employer shall have thirty (30) days to provide written notice
to Employee whether or not it wishes to claim an interest in the
Invention. If timely notice is given to Employee that Employer
claims an interest in the Invention, Employee agrees that such
Invention, and all patent rights to such Invention, shall become the
exclusive property of Employer, and the Employee hereby irrevocably
assigns to Employer any and all of Employee's rights to such
Invention. Employee agrees that should Employer elect to file an
application for patent protection, either in the United States or in
a foreign country, Employee will execute all necessary papers,
including formal assignments to Employer relating to such patent
applications. The Employee further agrees that he will cooperate
with any attorney or other person, will explain the nature of the
Invention, as required, will review applications and other papers
and will provide any other cooperation reasonably required for the
orderly filing and/or prosecution of such patent applications.
(b) WORK. The Employee agrees that any Work created by Employee in
the course of performing Employee's duties hereunder and on behalf
of Employer are deemed "work for hire" within the meaning of Title
17 of the United States Code. Accordingly, all right, title and
interest to the intellectual property rights for any and all such
Work, which have been or will be prepared by Employee, shall be the
property of Employer. Employee further agrees to assign to Employer
any and all right, title and interest to any copyrights which
Employee may have in any such Work.
8. EMPLOYMENT AND TERM. The Employer agrees to employ and Employee
agrees to be employed by Employer for the period stated herein and upon the
terms and conditions provided in this Agreement. The term of full-time
employment shall be for a period of three (3) years, commencing on October 1,
1998 (the "Commencement Date"), and terminating on the third anniversary
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<PAGE> 4
thereof; PROVIDED THAT on each anniversary of the Commencement Date, the term
shall be extended for an additional one (1) year, so that on each anniversary
date, the remaining term is three (3) years, unless otherwise terminated in
accordance with Section 19 or Section 20, or as mutually agreed between the
parties.
9. COMPENSATION. The Employer shall pay the Employee for all services
contemplated under this Agreement as follows:
(a) A base salary of $124,800 per year, paid on a weekly basis
(the "Base Salary"). The Base Salary shall be increased, but shall
not be decreased, on each October 1st (the "Anniversary Date") by a
percentage which equals the sum of three percent (3%) plus that
percentage by which the Consumer Price Index, for the Orlando,
Florida area, published by the United States government (the
"INDEX"), for the immediately preceding calendar year exceeds such
Index for the next preceding calendar year. If publication of the
Index is discontinued, the parties hereto shall accept comparable
statistics on the cost of living for the Orlando, Florida area as
computed and published by an agency of the United States government,
or if no such agency computes and publishes such statistics by any
regularly published national financial periodical that does compute
and publish such statistics;
(b) Such other benefits that the Employer may offer to other
senior level management of the Employer and/or members of the board
of directors of the Employer (the "Board of Directors" or the
"Board") from time to time, which benefits may but do not
necessarily include stock options in addition to those contemplated
by Section 17 and performance bonuses;
(c) When a 401(k) plan is established by Employer, a matching
contribution to Employee's 401(k) account equal to a minimum of
twenty-five percent (25%) of Employee's contribution to such plan,
subject to the dollar limitations as provided in the Internal
Revenue Code of 1986, as amended from time to time; and
(d) A minimum of sixty percent (60%) of the cost of Employee's
medical insurance coverage provided by Employer's medical plan.
The Employer shall be entitled to deduct and withhold amounts legally required
to be withheld for items such as income taxes, FICA, FUTA, etc.
10. DUTIES. The Employee is bringing unique experience, contacts and a
database to the Employer, which the Employee agrees to use to the benefit of the
Employer in the development of its commercial operations. The Employee is
engaged to act as the Co-Chief Executive Officer and Chief Technical Officer of
the Employer and shall be responsible for (a) rendering assistance to the
Chairman and other Co-Chief Executive Officer and carrying out the
responsibilities delegated to him by the Board of Directors in connection
therewith (b) serving as the Employer's chief technical officer overseeing the
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<PAGE> 5
development of hardware and software, (c) together with the other Co-Chief
Executive Officer, exercising all of the duties of the President in his absence
or his inability to act, and (d) such additional responsibilities as the Board
may determine to be in the best interest of the Employer, and which are
appropriate for a Co-Chief Executive Officer and Chief Technical Officer.
Employee shall report directly to the Board of Directors. The Employee agrees to
serve capacities, without further compensation, unless the Employee's duties and
responsibilities substantially change or increase, or unless mutually agreed
otherwise. Employee will use his best efforts to promote the interests of the
Employer.
11. EXTENT OF SERVICES. The Employee shall not be required to devote his
entire time and attention to the Employer's business; PROVIDED, HOWEVER, that
Employee agrees to provide a minimum of forty (40) hours per week for services
on behalf of Employer (such forty (40) hours shall include time which the
Employee spends traveling from one destination to another destination on behalf
of the Employer but, other than travel time, shall not include time when the
Employee is not actually performing services on behalf of the Employer even
though the Employee may be away from home). Notwithstanding anything herein to
the contrary, the Employee will be called upon from time to time as an element
of his employment to develop business projects which will include the interests
of the Employee and the Employer or its subsidiaries, affiliates or joint
venture interests. Such activities are contemplated in this Agreement and form
an integral part of the Employee's employment.
12. WORKING FACILITIES. The Employee shall have a private and adequate
office, back-up staff, including secretarial assistance in all of the offices of
the Employer in which Employee will be expected to perform his services, and
other adequate services and facilities necessary in order for the Employee to
fulfill the activities contemplated under this Agreement. The Employee will also
have the use of Employer-provided lodging and vehicles and an expense account in
order to fulfill his obligations and responsibilities under this Agreement and
for the development and the commercialization of the Employer's services.
13. DISCLOSURE OF INFORMATION. The Employee and Employer acknowledge
that Employee is coming to his position with unique data, contacts and
experience, distinct from those possessed generally by the Employer. These
contacts, data and information of the Employee are unique to the Employee and
will always be so considered. However, the Employee shall not, during the term
of his employment, disclose or use all or any part of the Employee's unique
knowledge, services or skills that are conceived or reduced to practice during
the term of Employee's employment, to any person, firm, corporation, association
or other entity for any reason or purpose, unless mutually agreed upon in
advance and in writing by the parties to this Agreement. All new projects and
information which are developed by the Employee during his employment with the
Employer shall be considered the Employer's unique knowledge, services or skills
and shall not be taken, disclosed or developed for a project with any third
parties by the Employee, unless agreed upon in advance and in writing by the
Employer upon termination of the Employee's employment.
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14. EXPENSES. The Employee may incur reasonable expenses for the
commercialization of the Employer's services and products, including reasonable
expenses for entertainment, travel and similar items. The Employer shall
reimburse the Employee for all such reasonable expenses, which have been
approved by Employer, within thirty (30) days of the Employee's presentation of
an itemized accounting of such expenditures. In the event Employee incurs
expenses on behalf of the Employer, or Employer pays for expenses of Employee
which are not reimbursable hereunder, Employee agrees to immediately reimburse
Employer for such expenses. As soon as reasonably practicable, Employer shall
secure a corporate charge card for Employee to use for reimbursable expenses
hereunder. The parties hereto acknowledge that if Employee has loaned funds to
the Employer prior to the execution hereof, the Employer shall repay Employee
such loans within ninety (90) days of the date hereof.
15. VACATIONS. The Employee shall be entitled each year to a vacation,
which period of time and date of scheduling will be mutually agreed upon by the
Employer and Employee; PROVIDED, HOWEVER, the Employee, in any case, shall be
entitled to not less than two (2) weeks vacation time per year, and cumulative
compensation for such vacation time shall be paid each year to the Employee if
such vacation is not taken; PROVIDED, FURTHER, that Employee shall be entitled
to carry over one (1) week of unused vacation from the preceding calendar year
to the current calendar year. Employee shall be paid the pro rata portion of his
regular Base Salary and all other benefits as specified in Section 9, hereunder,
during any vacation period. In the event vacation is not taken or vacation is
rolled over to the next year, compensation for such unused vacation, up to a
maximum of two weeks per calendar year, shall be paid on or before the end of
the calendar year if the Employee so desires and so requests in writing on or
before November 30 of that calendar year; PROVIDED; HOWEVER, that in the event
Employee has rolled over one (1) week's vacation from the preceding calendar
year, the Employee may be compensated for his unused vacation for the then
current calendar year (subject to the two week maximum per calendar year) plus
the one (1) week rolled over from the preceding calendar year and not used in
the then current calendar year.
16. OTHER BENEFITS. Employee shall be entitled to such other benefits
that the Employer may offer to its employees and its Board of Directors from
time to time, including, but not limited to, stock options, medical insurance
and disability insurance. The Employer agrees to pay Employee ten thousand
dollars ($10,000) per year as compensation for the performance of his services
as a member of the Board of Directors, which shall be paid on a pro rata basis
by the fifth (5th) day of the month following the month of board service. Such
compensation shall be in addition to the compensation to which Employee is
entitled under Section 9 hereof.
17. STOCK OPTIONS. Employer shall establish a stock option plan for its
employees, and/or officers (the "Stock Option Plan") and Employee shall be
entitled to participate in such Stock Option Plan.
18. DISABILITY. If the Employee is or becomes, by reason of illness or
incapacity, unable to perform the essential functions of his employment
hereunder, with or without reasonable accommodation, for a period of more than
four (4) weeks (a "Disability"), the compensation thereafter payable to him
during the continued period of such illness or incapacity shall be reduced
initially by twenty-five percent (25%) for the period beginning four (4) weeks
and ending six (6) months after such illness or incapacity begins and then by
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<PAGE> 7
fifty percent (50%) if the incapacity or illness continues during the period
beginning six (6) months and one (1) day and ending one (1) year after such
illness or incapacity begins. If the Employee should be absent from his
employment for a period of more than one (1) year, the Employer will have the
option to terminate this Agreement for impossibility of execution but the
Employer may nonetheless decide to continue this Agreement with compensation
after one (1) year of incapacity. In the event the Employer secures a disability
insurance policy mutually acceptable to Employee and Employer, then Employer's
financial obligations under this Section 18 shall terminate provided that the
disability benefits under such policy equal or exceed the Employer's financial
obligations under this Section 18. In addition to the foregoing disability
payments, Employee shall retain the right to retain any stock options that are
exercisable on the date of termination of employment.
19. TERMINATION OF EMPLOYMENT.
(a) BY EMPLOYER FOR CAUSE. During the term of this Agreement, the
Employer may terminate this Employee's employment for "Cause"
(defined below) upon thirty (30) days' written notice. In the event
that Employee's employment with the Employer is terminated with
Cause, the Employee shall receive only (A) his Base Salary and
benefits earned but unpaid up to the date of termination of
employment, (B) the prorated portion of any bonuses earned but
unpaid up to the date of termination of employment, calculated based
upon a closing of the books of Employer as of the last day of the
month in which termination occurs and a proration of the annual
goals, if any were established for such year, based upon the portion
of the year that has expired prior to that date, and (C)
reimbursement for any expenses to which Employee is due
reimbursement under Section 14.
For purposes of this Section 19(a), the term "Cause" shall mean
any of the following:
(1) the Employee's willful or negligent failure or
refusal to comply with the written rules and regulations of
Employer from time to time established by the Board that shall
have been previously delivered to Employee, and that shall not
be inconsistent with the terms or conditions of this
Agreement, and Employee shall not have cured such failure or
refusal within 30 days following receipt of written notice
from Employer of such failure or refusal; PROVIDED, HOWEVER,
that if such failure or refusal is of such a nature that it
cannot be cured within such 30-day period, then, so long as
Employee shall have commenced such cure within such 30-day
period and shall have thereafter in good faith continued such
cure, Employee shall be deemed to have cured such failure or
refusal; or
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<PAGE> 8
(2) the final (non-appealable or foreclosed from appeal)
conviction of Employee of any felony materially and adversely
affecting the property, reputation or goodwill of Employer or
its successors; or
(3) the Employee's willful failure or refusal to perform
or Employee's performance in a grossly negligent manner a
material part of his duties pursuant to the provisions of this
Agreement and Employee shall not have cured such failure or
refusal within 30 days following receipt of written notice
from Employer of such failure or refusal; PROVIDED, HOWEVER,
that if such failure or refusal is of such a nature that it
cannot be cured within such 30-day period, then, so long as
Employee shall have commenced such cure within such 30-day
period and shall have thereafter in good faith continued such
cure, Employee shall be deemed to have cured such failure or
refusal; or
(4) Employee's violation of the terms of Sections 3, 4,
5, 6, 7 or 13 of this Agreement.
(b) BY EMPLOYER WITHOUT CAUSE. In the event Employer terminates
the Employee's employment without Cause then, in addition to clauses
A through C in Section 19(a), above, (X) the Employer shall be
obligated to pay to the Employee Employee's annual Base Salary (at
the time of termination), on a weekly basis or consistent with the
Employer's payroll practices at the time, for a period of three (3)
years from and after the date of termination (the "Severance
Amount"); (Y) Employee shall have the right to retain any stock
options that were granted to Employee prior to the date of
termination of employment; and (Z) the Employer shall, at its sole
cost (except for Employee dependency coverage contributions, if any,
in effect prior to Employee ceasing to be employed by the Employer
hereunder) maintain in full force and effect from the date Employee
ceases to be employed by the Employer hereunder and for six (6)
months thereafter, all medical, health and accident, and disability
plans, programs, or arrangements in which Employee is entitled to
participate immediately prior to Employee ceasing to be employed by
the Employer hereunder, provided that Employee's continued
participation is possible under the general terms and provisions of
such plans and programs. In the event that Employee's participation
in any such plan or program is barred (other than as a result of a
misrepresentation or misconduct of Employee), the Employer shall
arrange at its sole expense to provide him with benefits
substantially similar to those which he is entitled to receive under
such plans and programs for the six-month term, including, without
limitation, reimbursement of COBRA premium payments. To the extent
that Employee mitigates his damages through the accrual or receipt
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<PAGE> 9
of a salary, or the provision of health or other benefits referenced
hereinabove, through self-employment or employment with another
entity, the Severance Amount and/or applicable benefits referenced
hereinabove shall be adjusted by off-set of amounts or benefits
received by Employee in mitigation. Upon written request by
Employer, Employee shall provide to Employer information as to such
mitigation within ten (10) days of receipt of such request. If
Employee's employment is terminated without Cause, Employee shall be
deemed released from the non-competition provisions of Section 22 of
this Agreement upon such termination; PROVIDED, HOWEVER, Employee
shall not be deemed released from his obligations under Sections 3,
4, 5, 6, 7 or 13 of this Agreement.
(c) VOLUNTARILY BY EMPLOYEE. Employee may, at his option,
terminate his employment under this Agreement at any time upon
ninety (90) days prior written notice to Employer. If Employee
voluntarily terminates employment with Employer, then Employee shall
receive only (i) his Base Salary and benefits earned but unpaid up
to the date of termination of employment, (ii) two weeks salary,
calculated based on Employee's salary then in effect at the time of
termination of employment, (iii) the prorated portion of any bonuses
earned but unpaid at the time of termination of employment,
calculated in accordance with subsection (a)(ii) above; and, if
Employee voluntarily terminates his employment pursuant to Section
20, Employee shall also be entitled to retain any exercisable stock
options.
(d) If Employee is terminated for Cause, or if Employee
voluntarily terminates his employment (except in the event of a
Change of Control (defined below), any stock options granted to
Employee under a Stock Option Plan or otherwise shall terminate
immediately upon termination of employment.
(e) Employee's employment with the Company may not be terminated
for Cause under Section 19(a), above, or without Cause under Section
19(b), above, without the approval of a majority of the members of
the Board of Directors then in office.
20. TERMINATION BY EMPLOYEE UPON CHANGE OF CONTROL. The Employee may
terminate Employee's employment at any time by giving ten (10) days prior
written notice to the Employer upon a Change of Control. A "Change of Control"
means the occurrence of any of the following events after the date of this
Agreement:
(a) a change in control of the Employer occurring after the date of
this Agreement of a nature that would be required to be reported in response to
Item 1 of the Current Report on Form 8-K (or in response to any similar item on
any similar schedule or form) promulgated under the Securities Exchange Act of
1934 (the "Act"), whether or not the Employer is then subject to such reporting
requirement;
(b) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Employer representing
twenty-five percent (25%) or more of the combined voting power of the Employer's
then outstanding securities without the prior approval of at least two-thirds of
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<PAGE> 10
the members of the Board in office immediately prior to such person attaining
such percentage (excluding for this purpose, any acquisitions by (X) the
Employer or its subsidiaries, (Y) any person, entity or "group" that as of the
date of this Agreement owns beneficial ownership, as defined in Rule 13d-3 of
the Act, or (Z) any employee benefit plan of the Employer or its subsidiaries;
(c) the Employer is a party to a merger, consolidation, sale of
assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or
(d) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by the Employer's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board.
21. DEATH DURING EMPLOYMENT. Upon the death of Employee during the term
of employment, the Employer shall pay to Employee's estate the compensation that
would otherwise be payable to the Employee through the end of the month of his
death. In addition, three (3) months further compensation shall be paid in one
(1) lump sum to his surviving spouse or, if there is no surviving spouse, to the
surviving children of the Employee, or to his estate if there are no surviving
children.
22. NON-COMPETITION.
(a) During his employment, and for a period of two (2) years after the
expiration or termination of such employment (the "Noncompetition
Period"), Employee specifically agrees that Employee shall not
(except on the behalf of Employer or any of its affiliated entities
while Employee is employed by Employer), either directly or
indirectly, as a stockholder of any corporation or partner of any
partnership or as an employee, owner, principal or agent, or in any
other manner, engage in any business within a radius of 100 miles
from any location of Employer's business (the "Geographic Area"),
which competes with, in any manner, any business conducted by
Employer at the time of termination of this Agreement. Employee
agrees that so long as Employee is working for Employer, Employee
shall not undertake the planning or organizing of any business
activity competitive with the business of Employer. Employee agrees
not to directly or indirectly solicit any of Employer's employees to
work for Employee or for any business which is competitive with any
business conducted by Employer prior to the date on which Employee's
employment with Employer is terminated with Employer within the
Geographic Area and during the Noncompetition Period.
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(b) The periods of time during which Employee is prohibited from
engaging in such business practices pursuant to this Section 22
shall be extended by any length of time during which Employee is in
breach of any of such covenants. The restrictive covenants contained
within this Section 22 are essential elements of this Agreement, and
that, but for the agreement of Employee to comply with such
covenants, Employer would not have entered into this Agreement. If
any portion of the covenants set forth in this Section 22 are held
by a court of competent jurisdiction to be unreasonable, arbitrary
or against public policy, then such portion of such covenants shall
be considered divisible both as to time and geographical area.
Employer and Employee agree that, if any court of competent
jurisdiction determines that the Noncompetition Period or the
Geographic Area applicable to this Agreement is unreasonable,
arbitrary and/or against public policy, then a lesser time period or
geographical area which is determined to be reasonable,
non-arbitrary and not against public policy may be enforced against
Employee.
(c) Intentionally Omitted.
(d) Employee acknowledges that any violation of this Section 22 will
result in irreparable injury to Employer for which there is no
adequate remedy at law. Employee agrees that, in the event he
breaches or threatens to breach this Section 22, Employer, without
posting a bond, shall be entitled to injunctive relief, both
preliminary and permanent, in addition to any other remedies at law
or in equity available to Employer.
(e) If Employee's employment with Employer is terminated without Cause,
Employee shall be deemed released from his obligations under this
Section 22 upon such termination.
23. DISPUTES; ATTORNEYS' FEES. Except in the case of Employer's right
to seek injunctive relief under Section 22(d) and Section 24(b) of this
Agreement, the parties mutually agree to submit any controversy or claim arising
out of or proceeding forth from or relating to this Agreement or its breach to
be settled by arbitration (which may be binding if the parties mutually agree at
the time). Such arbitration shall be held in the County of Seminole, State of
Florida, utilizing the procedure and arbitrators acquainted with the American
Arbitration Association rules and procedure for arbitration. If binding
arbitration, judgment upon award rendered may be entered and enforced in any
court of competent jurisdiction. In the event any dispute arises under the terms
hereof, Employer shall continue to pay Employee the Base Salary and benefits to
which he is entitled hereunder until such time that a final determination is
made by an arbitrator hereunder; PROVIDED, HOWEVER, that if it is determined
that the termination of Employee's employment was justified, the Employee hereby
undertakes and agrees to repay to the Employer the amount of Base Salary that
was paid by Employer during the arbitration procedure. The non-prevailing party
shall be responsible for the prevailing party's reasonable legal fees and costs
(including post-judgment collection fees and costs).
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24. ENFORCEMENT.
(a) Whenever there is any conflict between any provision of this
Agreement and any law, statute, governmental rule, ordinance or
regulation, the latter shall prevail. In such event, the affected
provisions of this Agreement will be curtailed and restricted only
to the extent necessary to bring them within the legal requirements,
and the remainder of this Agreement shall not be affected. Should it
be determined that any provision of this Agreement is unenforceable,
the Employee specifically requests that the court or arbitrator
making such determination modify and reform the provision found to
be unenforceable, and in its modified form, specifically enforce the
Agreement.
(b) Employee acknowledges that any violation of Sections 3, 4, 5, 6, 7,
13 or 22 of this Agreement (referred to individually and
collectively in this subsection (b) as "Sections") will result in
irreparable injury to Employer for which there is no adequate remedy
at law. Employee agrees that, in the event he breaches or threatens
to breach any of such Sections, Employer, without posting a bond,
shall be entitled to injunctive relief, both preliminary and
permanent, in addition to any other remedies at law or in equity
available to Employer.
25. INDEMNIFICATION. Employee shall be indemnified in accordance with
the terms and provisions of that certain Indemnification Agreement, dated as of
the date hereof, between Employer and Employee.
26. CHOICE OF LAW. This Agreement and the performance hereunder and all
suits and special proceedings hereunder shall be construed in accordance with
the laws of the State of Florida. In any action, special proceeding or other
proceeding that may be brought arising out of, in connection with, or by reason
of this Agreement, the laws of the State of Florida shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which the action or special proceeding may be instituted.
All actions under this Agreement, if not resolved by arbitration, shall be taken
in a court of competent jurisdiction within Seminole County, Florida and
Employee hereby waives and agrees that he shall not assert that such forum is
inconvenient.
27. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing and sent by certified U.S. mail,
or by Federal Express or other overnight delivery service to the Employee's
residence, or to the Employer's principal office, as the case may be.
28. WAIVER OF BREACH. Employer shall waive a breach by the Employee of
any provision of this Agreement only if such waiver is executed in writing by a
duly authorized officer of the Employer. Employee shall waive a breach by the
Employer of any provision of this Agreement only if such waiver is executed in
writing by Employee.
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29. ASSIGNMENT. Both parties acknowledge that the services of the
Employee and the Employer are unique to this Agreement and neither party may
assign the rights or delegate the duties of this Agreement to another.
Notwithstanding anything herein to the contrary, the Employee may perform his
unique services under this Agreement for any of the subsidiaries, affiliates or
joint ventures of the Employer.
30. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties and may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
31. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe the provisions hereof.
32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
33. WAIVER OF CONFLICT OF INTEREST. The parties acknowledge that,
notwithstanding Employee's use of Employer's attorneys for personal legal
matters unrelated to this Agreement, the Employer may continue to use the legal
counsel of its choice in connection with the resolution of any disputes between
the parties hereto without such representation constituting an improper or
ethical conflict of interest.
34. FURTHER ACTIONS. Each party to this Agreement shall take such
further actions to execute, file, record, publish and deliver such additional
certificates, instruments, agreements and other documents as the other party
may, from time to time, reasonably request, in order to accomplish the purposes
of this Agreement.
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35. APPOINTMENT TO BOARD OF DIRECTORS. Employee was appointed to the
Board of Directors in September 1998 and is entitled to receive the prorated
portion of the $10,000 annual director compensation.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date and year indicated above.
EMPLOYEE: /s/ SCOTT A. ANDERSON
---------------------------------
SCOTT A. ANDERSON
EMPLOYER: MIRACOM CORPORATION
By: /s/ SHAWN D. LUCAS
---------------------------------
Name: SHAWN D. LUCAS
Title: CO-CHIEF EXECUTIVE OFFICER
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") was entered into
effective November 8, 1999, by and between MIRACOM CORPORATION (hereinafter, the
"Employer") and SCOTT A. ANDERSON (hereinafter, the "Employee").
RECITALS
A. WHEREAS, on February 12, 1999, Employer and Employee entered into an
employment agreement (the "Employment Agreement"); and
B. WHEREAS, Employer and Employee desire to make certain modifications
to the Employment Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of Employee's employment and
possibility of promotion, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is hereby agreed
that the Employment Agreement is amended in the following particulars:
1. Section 9 (COMPENSATION). Subsection 9(a) of the Employment
Agreement is hereby amended to change Employee's the Base Salary to $72,000 per
year, effective November 8, 1999, payable bi-weekly or otherwise in accordance
with Employer's standard payroll practices. Further amended and in accordance
with Employer's current standard payroll practice at the time, the employee
shall receive a base salary of $89,000 for the period August 30, 1999 through
October 24, 1999 and shall defer payment of the difference between the original
Base Salary ($124,800) and the newly adjusted amount ($89,000) for that same
time period. All other provisions of subsection 9(a) not amended hereby shall
remain the same.
2. Section 15 (VACATIONS). Section 15 is hereby amended in its entirety
as follows:
"(a) Employee shall be entitled each year to a vacation, which
period of time and date of scheduling will be mutually agreed upon
by Employer and Employee; PROVIDED, HOWEVER, the Employee, in any
case, shall be entitled to not less than two weeks vacation time per
year, and cumulative compensation for such vacation time shall be
paid each year to the Employee if such vacation is not taken in the
applicable year or if not carried forward to the next calendar year
in accordance with this Section 15. Employee shall be entitled to
carry over one (1) week of unused vacation to the next succeeding
calendar year.
(b) Employee shall be paid the pro rata portion of his regular Base
Salary and provided all other benefits as specified in Section 9
during any vacation period taken. Any payments made to Employee in
respect of vacation not taken or rolled over to the next calendar
year shall be paid to Employee in the last pay period of the
calendar year in which such vacation was not taken. The maximum
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compensation payable to Employee in any calendar year for unused
vacation shall be two weeks of unused vacation in such calendar year
plus one week of unused vacation, if any, that was rolled over as
unused vacation from the previous calendar year."
3. Section 16 (OTHER BENEFITS). Section 16 of the Employment Agreement
is hereby amended to eliminate the $10,000 fee for Employee's service on the
Board of Directors, such fees having terminated effective June 1, 1999. Employee
shall serve on the Board of Directors without additional compensation, except
for reimbursement of expenses incurred in attending meetings of the Board of
Directors and its committees. However, nothing in this Section 16, as amended,
is intended to prevent Employee's participation in any stock option plan as an
employee or as a director of Employer.
4. All other provisions of the Employment Agreement not herein amended
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereby have executed this Amendment to
Employment Agreement as of September 30, 1999 to be effective November 8, 1999.
EMPLOYEE: /s/ SCOTT A. ANDERSON
----------------------------------------
SCOTT A. ANDERSON
EMPLOYER: MIRACOM CORPORATION
By: /s/ SHAWN D. LUCAS
-----------------------------------
Name: Shawn D. Lucas
Title: Co-Chief Executive Officer,
President
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EXHIBIT 6.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT was entered into the 12th day of April 1999,
by and between MIRACOM CORPORATION (hereinafter, the "Employer") and David
Lampert (hereinafter, the "Employee").
In consideration of the Employee's employment and possibility for
promotion, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employee hereby agrees as
follows:
1. PURPOSE. The purpose of this Agreement is to set forth the terms and
conditions of Employee's employment and to define the obligations between
Employee and Employer regarding trade secrets, as defined in Florida Statutes
Section 688.002(4), including, without limitation, Confidential Information (as
defined herein) belonging to the Employer, inventions and intellectual property
created, in whole or in part, by the Employee, communication with the Employer's
customers and retention of the employees of the Employer. Employee recognizes
that the business of Employer and the nature of Employee's employment will
permit Employee to have access to trade secrets and Confidential Information of
Employer and to its Clients, and that such trade secrets and Confidential
Information are the exclusive property of Employer, disclosure of which would be
prejudicial to Employer's business interests and cause the Employer irreparable
harm. Notwithstanding any other provision of this Agreement, the Employer and
Employee agree that Employee is not prohibited from owning, operating or
performing services for the unrelated business(es) in which he is currently
involved and which are specifically identified on Schedule (I) hereto.
2. DEFINITIONS
(a) "EMPLOYER" shall mean MIRACOM CORPORATION and all of its
divisions, subsidiaries, affiliates and any successors or
assigns.
(b) "CLIENT" shall mean any person or entity with whom Employer
conducts business or from whom Employer or Employee obtains
information concerning the business and industry in which
Employer operates, including, but not limited to, customers,
consultants, advisors and suppliers of the Employer.
(c) "TRADE SECRET" shall have the meaning set forth in Florida
Statutes Section 688.002(4), and shall include, without
limitation, ideas, information, compilations, computer
programs and related data bases which are not described in any
literature published and distributed publicly by Employer and
which are not readily ascertainable from inspection of
commercially available sources, including, but not limited to,
computer programs written by and for the Employer, data bases,
generated reports, related proprietary information and
marketing studies.
<PAGE> 2
(d) "CONFIDENTIAL INFORMATION" shall mean all information
pertaining to the business of Employer or Clients which is of
value to Employer, is not generally known to Employer's
competitors or to the public, and is treated as confidential
by Employer and Clients, including, but not limited to, (i)
information pertaining to product research and development;
(ii) existing and future business and marketing plans; (iii)
financial, accounting, sales and purchasing data; (iv)
customer and supplier identity; (v) personnel matters; (vi)
techniques, policies and procedures related to the operation
of Employer and Clients; (vii) terms of relationships with
Clients; (viii) identity of prospective Clients; (ix) identity
of business opportunities available to Employer; and (x)
inventions and intellectual property of the Employer.
(e) "INVENTION" shall mean any discovery, idea, improvement or
contribution, whether or not patentable, including, but not
limited to, any computer program, process, method, formula or
technique, as well as improvements thereto, which is new or
which Employer reasonably believes may be new.
(f) "WORK" shall mean any written, typed or printed material
prepared, in whole or in part, by Employee during the term of
his employment hereunder including, but not limited to,
technical descriptions of products, computer software, user
guides, illustrations, advertising materials, training
manuals, contracts and any contributions to any such material.
3. TRADE SECRETS. During and at any time subsequent to termination of
his employment by Employer, Employee will not disclose (except as required in
connection with his bona fide employment duties with Employer) or otherwise
misappropriate any Trade Secret of the Employer for his own use or for the use
of any person, corporation, partnership, firm or other entity.
4. CONFIDENTIAL INFORMATION. During his employment, and for a two (2)
year period following termination of employment, Employee will not disclose
(except as required in connection with his bona fide employment duties with
Employer) or misappropriate any Confidential Information for his own use or for
the use of any person, corporation, partnership, firm or other entity. Except as
required in connection with his bona fide employment duties with Employer,
employee shall not remove any writings containing Confidential Information from
the premises or possession of Employer or its Clients, or make copies or
memoranda thereof. Furthermore, Employee will deliver promptly to Employer, at
termination of his employment, or at any time Employer may so request, all
copies and originals of any writings containing Confidential Information which
Employee may possess or have or have had under his control.
5. NON-SOLICITATION. During his employment, and for a two (2) year
period following termination of employment, Employee will not, either directly
or indirectly, consult, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any actual or targeted prospective Client of
Employer who has been a Client or targeted prospective Client of
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Employer at any time during the 12-month period preceding termination of
Employee's employment.
6. NON-SOLICITATION OF EMPLOYEES. During his employment, and for a two
(2) year period following termination of employment, Employee will not hire,
attempt to hire or employ, directly or indirectly, any employee of Employer.
During such period, Employee will not encourage or induce any employee of
Employer to leave the employment of Employer.
7. ASSIGNMENT OF RIGHTS.
(a) INVENTIONS. The Employee agrees that if he conceives of an
Invention or reduces an Invention to practice during his
employment, Employee will promptly provide a written
description of the Invention ("Invention Summary") to an
officer of the Employer (other than Employee). The Employee
shall request that such officer acknowledge in writing the
receipt of such Invention Summary, a copy of which both
Employee and Employer shall retain in their records. The
Employer shall have thirty (30) days to provide written notice
to Employee whether or not it wishes to claim an interest in
the Invention. If timely notice is given to Employee that
Employer claims an interest in the Invention, Employee agrees
that such Invention, and all patent rights to such Invention,
shall become the exclusive property of Employer, and the
Employee hereby irrevocably assigns to Employer any and all of
Employee's rights to such Invention. Employee agrees that
should Employer elect to file an application for patent
protection, either in the United States or in a foreign
country, Employee will execute all necessary papers, including
formal assignments to Employer relating to such patent
applications. The Employee further agrees that he will
cooperate with any attorney or other person, will explain the
nature of the Invention, as required, will review applications
and other papers and will provide any other cooperation
reasonably required for the orderly filing and/or prosecution
of such patent applications.
(b) WORK. The Employee agrees that any Work created by
Employee in the course of performing Employee's duties
hereunder and on behalf of Employer are deemed "work for hire"
within the meaning of Title 17 of the United States Code.
Accordingly, all right, title and interest to the intellectual
property rights for any and all such Work, which have been or
will be prepared by Employee, shall be the property of
Employer. Employee further agrees to assign to Employer any
and all right, title and interest to any copyrights which
Employee may have in any such Work.
8. EMPLOYMENT AND TERM. The Employer agrees to employ and Employee
agrees to be employed by Employer for the period stated herein and upon the
terms and conditions provided in this Agreement. The term of full-time
employment shall be for a period of three (3) years, commencing on April 12th,
1999 (the "Commencement Date"), and terminating on the third anniversary
thereof; provided that on each anniversary of the Commencement Date, the
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term shall be extended for an additional one (1) year, so that on each
anniversary date, the remaining term is three (3) years, unless otherwise
terminated in accordance with Section 19 or Section 20, or as mutually agreed
between the parties.
9. COMPENSATION. The Employer shall pay the Employee for all services
contemplated under this Agreement as follows:
(a) A base salary of $ 100,000.00 per year, paid on a weekly basis
(the "Base Salary"). The Base Salary shall be increased, but
shall not be decreased, on each April 12th (the "Anniversary
Date") by a percentage which is no less than the sum of three
percent (3%) plus the increase in the Consumer Price Index,
for the Orlando, Florida area, published by the United States
government (the "Index"), for the immediately preceding
calendar year exceeds such Index for the next preceding
calendar year. If publication of the Index is discontinued,
the parties hereto shall accept comparable statistics on the
cost of living for the Orlando, Florida area as computed and
published by an agency of the United States government, or if
no such agency computes and publishes such statistics by any
regularly published national financial periodical that does
compute and publish such statistics;
(b) Such other benefits that the Employer may offer to other
senior level management of the Employer from time to time,
which benefits may but do not necessarily include stock
options in addition to those contemplated by Section 17 and
performance bonuses;
(c) Intentionally deleted
(d) A minimum of sixty percent (60%) of the cost of Employee's
medical insurance coverage provided by Employer's medical
plan.
The Employer shall be entitled to deduct and withhold amounts legally required
to be withheld for items such as income taxes, FICA, FUTA, etc.
10. DUTIES. The Employee is bringing unique experience, contacts and a
database to the Employer, which the Employee agrees to use to the benefit of the
Employer in the development of its commercial operations. The Employee is
engaged to act as the Executive Vice President of Research and Development &
Director to include such additional responsibilities as the President may
determine to be in the best interest of the Employer, and which are appropriate
for Executive Vice President of Research and Development & Director of an
organization of the type and size of the Employer. Employee shall report
directly to the President. The Employee agrees to serve capacities, without
further compensation, unless the Employee's duties and responsibilities
substantially change or increase, or unless mutually agreed otherwise. Employee
will use his best efforts to promote the interests of the Employer. The Employee
will not be required to travel on behalf of the Employer (outside of travel to &
from the corporate offices) for more than (36) days of the calendar year.
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11. EXTENT OF SERVICES. The Employee shall not be required to devote
his entire time and attention to the Employer's business; provided, however,
that Employee agrees to provide a minimum of forty (40) hours per week for
services on behalf of Employer (such forty (40) hours shall include time which
the Employee spends traveling from one destination to another destination on
behalf of the Employer but, other than travel time, shall not include time when
the Employee is not actually performing services on behalf of the Employer even
though the Employee may be away from home). Notwithstanding anything herein to
the contrary, the Employee will be called upon from time to time as an element
of his employment to develop business projects which will include the interests
of the Employee and the Employer or its subsidiaries, affiliates or joint
venture interests. Such activities are contemplated in this Agreement and form
an integral part of the Employee's employment.
12. WORKING FACILITIES. The Employee shall have a private and adequate
office, back-up staff, including secretarial assistance in all of the offices of
the Employer in which Employee will be expected to perform his services, and
other adequate services and facilities necessary in order for the Employee to
fulfill the activities contemplated under this Agreement. During the first
calendar year, the Employee must perform his job duties in one of the corporate
offices. For subsequent years, the Employee may, at his option work outside of
the corporate offices provided he performs his duties as Employee in an
acceptable manner and has the consent of the Board of Directors. Such consent
may not be unreasonably withheld. The Employee will also have the use of
Employer-provided lodging and vehicles and an expense account in order to
fulfill his obligations and responsibilities under this Agreement and for the
development and the commercialization of the Employer's services.
13. DISCLOSURE OF INFORMATION. The Employee and Employer acknowledge
that Employee is coming to his position with unique data, contacts and
experience, distinct from those possessed generally by the Employer. These
contacts, data and information of the Employee are unique to the Employee and
will always be so considered. However, the Employee shall not, during the term
of his employment, disclose or use all or any part of the Employee's unique
knowledge, services or skills that are conceived or reduced to practice during
the term of Employee's employment, to any person, firm, corporation, association
or other entity except as noted on Exhibit (I) for any reason or purpose, unless
mutually agreed upon in advance and in writing by the parties to this Agreement.
All new projects and information which are developed by the Employee during his
employment with the Employer shall be considered the Employer's unique
knowledge, services or skills and shall not be taken, disclosed or developed for
a project with any third parties by the Employee, unless agreed upon in advance
and in writing by the Employer upon termination of the Employee's employment.
14. EXPENSES. The Employee may incur reasonable expenses for the
commercialization of the Employer's services and products, including reasonable
expenses for entertainment, travel and similar items. The Employer shall
reimburse the Employee for all such reasonable expenses, which have been
approved by Employer, within thirty (30) days of the Employee's presentation of
an itemized accounting of such expenditures. In the event Employee incurs
expenses on behalf of the Employer, or Employer pays for expenses of Employee
which
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are not reimbursable hereunder, Employee agrees to immediately reimburse
Employer for such expenses. As soon as reasonably practicable, Employer shall
secure a corporate charge card for Employee to use for reimbursable expenses
hereunder. The parties hereto acknowledge that if Employee has loaned funds to
the Employer prior to the execution hereof, the Employer shall repay Employee
such loans within ninety (90) days of the date hereof.
15. VACATIONS. The Employee shall be entitled each year to a vacation,
which period of time and date of scheduling will be mutually agreed upon by the
Employer and Employee; provided, however, the Employee, in any case, shall be
entitled to not less than two (2) weeks vacation time per year, and cumulative
compensation for such vacation time shall be paid each year to the Employee if
such vacation is not taken that Employee shall be entitled to carry over one (1)
week of unused vacation from the preceding calendar year to the current calendar
year. Employee shall be paid the pro rata portion of his regular Base Salary and
all other benefits as specified in Section 9, hereunder, during any vacation
period. In the event vacation is not taken or vacation is rolled over to the
next year, compensation for such unused vacation, up to a maximum of two weeks
per calendar year, shall be paid on or before the end of the calendar year if
the Employee so desires and so requests in writing on or before November 30
March 30 of that calendar year; provided; however, that in the event Employee
has rolled over one (1) week's vacation from the preceding calendar year, the
Employee may be compensated for his unused vacation for the then current
calendar year (subject to the two week maximum per calendar year) plus the one
(1) week rolled over from the preceding calendar year and not used in the then
current calendar year.
16. INTENTIONALLY REMOVED
17. STOCK OPTIONS. Employer shall establish a stock option plan for its
employees, and/or officers (the "Stock Option Plan") and Employee shall be
entitled to participate in such Stock Option Plan.
18. DISABILITY. If the Employee is or becomes, by reason of illness or
incapacity, unable to perform the essential functions of his employment
hereunder, with or without reasonable accommodation, for a period of more than
four (4) weeks (a "Disability"), the compensation thereafter payable to him
during the continued period of such illness or incapacity shall be reduced
initially by twenty-five percent (25%) for the period beginning four (4) weeks
and ending six (6) months after such illness or incapacity begins and then by
fifty percent (50%) if the incapacity or illness continues during the period
beginning six (6) months and one (1) day and ending one (1) year after such
illness or incapacity begins. If the Employee should be absent from his
employment for a period of more than one (1) year, the Employer will have the
option to terminate this Agreement for impossibility of execution but the
Employer may nonetheless decide to continue this Agreement with compensation
after one (1) year of incapacity. In the event the Employer secures a disability
insurance policy mutually acceptable to Employee and Employer, then Employer's
financial obligations under this Section 18 shall terminate provided that the
disability benefits under such policy equal or exceed the Employer's financial
obligations under this Section 18. In addition to the foregoing disability
payments, Employee shall retain the right to retain any stock options that are
exercisable on the date of termination of employment.
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19. TERMINATION OF EMPLOYMENT.
(a) By Employer For Cause. During the term of this Agreement,
the Employer may terminate this Employee's employment for
"Cause" (defined below) upon thirty (30) days' written notice;
provided, however, no such termination shall occur if, within
such period, Employee cures the bases for the For Cause
termination. In the event that Employee's employment with the
Employer is properly terminated for Cause, the Employee shall
receive only (A) his Base Salary and benefits earned but
unpaid up to the date of termination of employment, (B) the
prorated portion of any bonuses earned but unpaid up to the
date of termination of employment, calculated based upon a
closing of the books of Employer as of the last day of the
month in which termination occurs and a proration of the
annual goals, if any were established for such year, based
upon the portion of the year that has expired prior to that
date, and (C) reimbursement for any expenses to which Employee
is due reimbursement under Section 14.
For purposes of this Section 19(a), the term "Cause"
shall mean any of the following:
(1) the Employee's willful or negligent
failure or refusal to comply with the written rules
and regulations of Employer, from time to time
established by the Board, that shall have been
previously delivered to Employee, after receiving
written notice of any such failure or refusal to do
so (provided that such written rules and regulations
shall not be inconsistent with the terms or
conditions of this Agreement; or
(2) the final (non-appealable or foreclosed
from appeal) conviction of Employee of any felony
materially and adversely affecting the property,
reputation or goodwill of Employer or its successors;
or
(3) the Employee's willful failure or
refusal to perform or Employee's performance in a
grossly negligent manner a material part of his
duties pursuant to the provisions of this Agreement
and Employee shall not have cured such failure or
refusal within 30 days following receipt of written
notice from Employer of such failure or refusal;
(4) Employee's violation of the terms of
Sections 3, 4, 5, 6, 7 or 13 of this Agreement.
(b) By Employer Without Cause. In the event Employer
terminates the Employee's employment without Cause then, in
addition to clauses A through C in Section 19(a), above, (X)
the Employer shall be obligated to pay to the Employee
Employee's annual Base Salary (at the time of termination), on
a
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weekly basis or consistent with the Employer's payroll
practices at the time, for a period of three (3) years from
and after the date of termination (the "Severance Amount");
(Y) Employee shall have the right to retain any stock options
that were granted to Employee prior to the date of termination
of employment; and (Z) the Employer shall, at its sole cost
(except for Employee dependency coverage contributions, if
any, in effect prior to Employee ceasing to be employed by the
Employer hereunder) maintain in full force and effect from the
date Employee ceases to be employed by the Employer hereunder
and for six (6) months thereafter, all medical, health and
accident, and disability plans, programs, or arrangements in
which Employee is entitled to participate immediately prior to
Employee ceasing to be employed by the Employer hereunder,
provided that Employee's continued participation is possible
under the general terms and provisions of such plans and
programs. In the event that Employee's participation in any
such plan or program is barred (other than as a result of a
misrepresentation or misconduct of Employee), the Employer
shall arrange at its sole expense to provide him with benefits
substantially similar to those which he is entitled to receive
under such plans and programs for the six-month term,
including, without limitation, reimbursement of COBRA premium
payments. To the extent that Employee mitigates his damages
through the accrual or receipt of a salary, or the provision
of health or other benefits referenced hereinabove, through
self-employment or employment with another entity, the
Severance Amount and/or applicable benefits referenced
hereinabove shall be adjusted by off-set of amounts or
benefits received by Employee in mitigation. Upon written
request by Employer, Employee shall provide to Employer
information as to such mitigation within ten (10) days of
receipt of such request. If Employee's employment is
terminated without Cause, Employee shall be deemed released
from the non-competition provisions of Section 22 of this
Agreement upon such termination; provided, however, Employee
shall not be deemed released from his obligations under
Sections 3, 4, 5, 6, 7 or 13 of this Agreement.
(c) Voluntarily By Employee. Employee may, at his option,
terminate his employment under this Agreement anytime after
the second anniversary of the effective date herein upon
ninety (90) days prior written notice to Employer. If Employee
voluntarily terminates employment with Employer, then Employee
shall receive only (i) his Base Salary and benefits earned but
unpaid up to the date of termination of employment, (ii) two
weeks salary, calculated based on Employee's salary then in
effect at the time of termination of employment, (iii) the
prorated portion of any bonuses earned but unpaid at the time
of termination of employment, calculated in accordance with
subsection (a)(ii) above; and, if Employee voluntarily
terminates his employment pursuant to Section 20, Employee
shall also be entitled to retain any exercisable stock
options.
(d) If Employee is terminated for Cause, or if Employee
voluntarily terminates his employment (except in the event of
a Change of Control (defined below), any stock options granted
to Employee under a Stock Option Plan or otherwise shall
terminate immediately upon termination of employment.
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(e) Employee's employment with the Company may not be
terminated for Cause under Section 19(a), above, or without
Cause under Section 19(b), above, without the approval of a
majority of the members of the Board of Directors then in
office.
20. TERMINATION BY EMPLOYEE UPON CHANGE OF CONTROL. The Employee may
terminate Employee's employment at any time by giving ten (10) days prior
written notice to the Employer upon a Change of Control. A "Change of Control"
means the occurrence of any of the following events after the date of this
Agreement:
(a) a change in control of the Employer occurring after the
date of this Agreement of a nature that would be required to be reported in
response to Item 1 of the Current Report on Form 8-K (or in response to any
similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the Employer is then subject to
such reporting requirement;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Employer
representing twenty-five percent (25%) or more of the combined voting power of
the Employer's then outstanding securities without the prior approval of at
least two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage (excluding for this purpose, any acquisitions
by (X) the Employer or its subsidiaries, (Y) any person, entity or "group" that
as of the date of this Agreement owns beneficial ownership, as defined in Rule
13d-3 of the Act, or (Z) any employee benefit plan of the Employer or its
subsidiaries;
(c) the Employer is a party to a merger, consolidation, sale
of assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or
(d) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Employer's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
21. DEATH DURING EMPLOYMENT. Upon the death of Employee during the term
of employment, the Employer shall pay to Employee's estate the compensation that
would otherwise be payable to the Employee through the end of the month of his
death. In addition, three (3) months further compensation shall be paid in one
(1) lump sum to his surviving spouse or, if there is no surviving spouse, to the
surviving children of the Employee, or to his estate if there are no surviving
children.
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22. NON-COMPETITION.
(a) During his employment, and for a period of two (2) years after
the expiration or termination of such employment (the
"Noncompetition Period"), Employee specifically agrees that
Employee shall not (except on the behalf of Employer or any of
its affiliated entities while Employee is employed by
Employer), and accepting those businesses disclosed on Exhibit
(I), either directly or indirectly, as a stockholder of any
corporation or partner of any partnership or as an employee,
owner, principal or agent, or in any other manner, engage in
any business within a radius of 100 miles from any location of
Employer's business (the "Geographic Area"), which competes
with, in any manner, any business conducted by Employer at the
time of termination of this Agreement. Employee agrees that so
long as Employee is working for Employer, Employee shall not
undertake the planning or organizing of any business activity
competitive with the business of Employer. Employee agrees not
to directly or indirectly solicit any of Employer's employees
to work for Employee or for any business which is competitive
with any business conducted by Employer prior to the date on
which Employee's employment with Employer is terminated with
Employer within the Geographic Area and during the
Noncompetition Period.
(b) The periods of time during which Employee is prohibited from
engaging in such business practices pursuant to this Section
22 shall be extended by any length of time during which
Employee is in breach of any of such covenants. The
restrictive covenants contained within this Section 22 are
essential elements of this Agreement, and that, but for the
agreement of Employee to comply with such covenants, Employer
would not have entered into this Agreement. If any portion of
the covenants set forth in this Section 22 are held by a court
of competent jurisdiction to be unreasonable, arbitrary or
against public policy, then such portion of such covenants
shall be considered divisible both as to time and geographical
area. Employer and Employee agree that, if any court of
competent jurisdiction determines that the Noncompetition
Period or the Geographic Area applicable to this Agreement is
unreasonable, arbitrary and/or against public policy, then a
lesser time period or geographical area which is determined to
be reasonable, non-arbitrary and not against public policy may
be enforced against Employee.
(c) Intentionally Omitted.
(d) Employee acknowledges that any violation of this Section 22
will result in irreparable injury to Employer for which there
is no adequate remedy at law. Employee agrees that, in the
event he breaches or threatens to breach this Section 22,
Employer, without posting a bond, shall be entitled to
injunctive relief, both preliminary and permanent, in addition
to any other remedies at law or in equity available to
Employer.
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<PAGE> 11
(e) If Employee's employment with Employer is terminated
without Cause, Employee shall be deemed released from his
obligations under this Section 22 upon such termination.
23. DISPUTES; ATTORNEYS' FEES. Except in the case of Employer's right
to seek injunctive relief under Section 22(d) and Section 24(b) of this
Agreement, the parties mutually agree to submit any controversy or claim arising
out of or proceeding forth from or relating to this Agreement or its breach to
be settled by arbitration (which may be binding if the parties mutually agree at
the time). Such arbitration shall be held in the County of Seminole, State of
Florida, utilizing the procedure and arbitrators acquainted with the American
Arbitration Association rules and procedure for arbitration. If binding
arbitration, judgment upon award rendered may be entered and enforced in any
court of competent jurisdiction. In the event any dispute arises under the terms
hereof, Employer shall continue to pay Employee the Base Salary and benefits to
which he is entitled hereunder until such time that a final determination is
made by an arbitrator hereunder; provided, however, that if it is determined
that the termination of Employee's employment was justified, the Employee hereby
undertakes and agrees to repay to the Employer the amount of Base Salary that
was paid by Employer during the arbitration procedure. The non-prevailing party
shall be responsible for the prevailing party's reasonable legal fees and costs
(including post-judgment collection fees and costs).
24. ENFORCEMENT.
(a) Whenever there is any conflict between any provision of this
Agreement and any law, statute, governmental rule, ordinance
or regulation, the latter shall prevail. In such event, the
affected provisions of this Agreement will be curtailed and
restricted only to the extent necessary to bring them within
the legal requirements, and the remainder of this Agreement
shall not be affected. Should it be determined that any
provision of this Agreement is unenforceable, the Employee
specifically requests that the court or arbitrator making such
determination modify and reform the provision found to be
unenforceable, and in its modified form, specifically enforce
the Agreement.
(b) Employee acknowledges that any violation of Sections 3, 4, 5,
6, 7, 13 or 22 of this Agreement (referred to individually and
collectively in this subsection (b) as "Sections") will result
in irreparable injury to Employer for which there is no
adequate remedy at law. Employee agrees that, in the event he
breaches or threatens to breach any of such Sections,
Employer, without posting a bond, shall be entitled to
injunctive relief, both preliminary and permanent, in addition
to any other remedies at law or in equity available to
Employer.
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25. INDEMNIFICATION. Employee shall be indemnified in accordance with
the terms and provisions of that certain Indemnification Agreement, dated as of
the date hereof, between Employer and Employee.
26. CHOICE OF LAW. This Agreement and the performance hereunder and all
suits and special proceedings hereunder shall be construed in accordance with
the laws of the State of Florida. In any action, special proceeding or other
proceeding that may be brought arising out of, in connection with, or by reason
of this Agreement, the laws of the State of Florida shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which the action or special proceeding may be instituted.
All actions under this Agreement, if not resolved by arbitration, shall be taken
in a court of competent jurisdiction within Seminole County, Florida and
Employee hereby waives and agrees that he shall not assert that such forum is
inconvenient.
27. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing and sent by certified U.S. mail,
or by Federal Express or other overnight delivery service to the Employee's
residence, or to the Employer's principal office, as the case may be.
28. WAIVER OF BREACH. Employer shall waive a breach by the Employee of
any provision of this Agreement only if such waiver is executed in writing by a
duly authorized officer of the Employer. Employee shall waive a breach by the
Employer of any provision of this Agreement only if such waiver is executed in
writing by Employee.
29. ASSIGNMENT. Both parties acknowledge that the services of the
Employee and the Employer are unique to this Agreement and neither party may
assign the rights or delegate the duties of this Agreement to another.
Notwithstanding anything herein to the contrary, the Employee may perform his
unique services under this Agreement for any of the subsidiaries, affiliates or
joint ventures of the Employer.
30. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties and may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
31. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe the provisions hereof.
32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
33. WAIVER OF CONFLICT OF INTEREST. The parties acknowledge that,
notwithstanding Employee's use of Employer's attorneys for personal legal
matters unrelated to this Agreement, the Employer may continue to use the legal
counsel of its choice in connection with the resolution of any disputes between
the parties hereto without such representation constituting an improper or
ethical conflict of interest.
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34. FURTHER ACTIONS. Each party to this Agreement shall take such
further actions to execute, file, record, publish and deliver such additional
certificates, instruments, agreements and other documents as the other party
may, from time to time, reasonably request, in order to accomplish the purposes
of this Agreement.
35. APPOINTMENT TO BOARD OF DIRECTORS. Employee shall be appointed to
the Board of Directors in June 1999.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date and year indicated above.
EMPLOYEE: /s/ David Lampert
-------------------------------------
Name of Employee
EMPLOYER: MIRACOM CORPORATION
By: /s/
-------------------------------------
Name:
Title:
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") was entered into
effective November 8, 1999, by and between MIRACOM CORPORATION (hereinafter, the
"Employer") and DAVID LAMPERT (hereinafter, the "Employee").
RECITALS
A. WHEREAS, on April 12, 1999, Employer and Employee entered into an
employment agreement (the "Employment Agreement"); and
B. WHEREAS, Employer and Employee desire to make certain modifications
to the Employment Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of Employee's employment and
possibility of promotion, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is hereby agreed
that the Employment Agreement is amended in the following particulars:
1. Section 9 (Compensation). Subsection 9(a) of the Employment
Agreement is hereby amended to change Employee's the Base Salary to $72,000 per
year, effective November 8, 1999, payable bi-weekly or otherwise in accordance
with Employer's standard payroll practices. Further amended and in accordance
with Employer's current standard payroll practice at the time, the employee
shall receive a base salary of $50,000 for the period April 12, 1999 through
October 10, 1999 and shall defer payment of the difference between the original
Base Salary ($100,000) and the newly adjusted amount ($50,000) for that same
time period. All other provisions of subsection 9(a) not amended hereby shall
remain the same.
2. Section 10 (Duties). Section 10 is hereby amended in its entirety as
follows:
"The Employee is engaged to act as the Senior Vice President
of Software Development and as such shall be responsible for
supervising the software development activities of Employer,
with such additional responsibilities as the Employer may
determine to be in the best interest of the Employer, and
which are appropriate for a similar position in organizations
of the type and size of Employer. Employee agrees to serve in
such capacity, without further compensation, unless the
Employee's duties and responsibilities substantially change or
increase, or unless mutually agreed otherwise. Employee shall
report directly to the President. Employee will use his best
efforts to promote the interests of the Employer. Employee
will not be required to travel on behalf of the Employer
(outside of travel to and from the corporate offices) for more
than thirty-six (36) days per calendar year."
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3. Section 15 (Vacations). Section 15 is hereby amended in its entirety
as follows:
"(a) Employee shall be entitled each year to a vacation, which
period of time and date of scheduling will be mutually agreed
upon by Employer and Employee; provided, however, the
Employee, in any case, shall be entitled to not less than two
weeks vacation time per year, and cumulative compensation for
such vacation time shall be paid each year to the Employee if
such vacation is not taken in the applicable year or if not
carried forward to the next calendar year in accordance with
this Section 15. Employee shall be entitled to carry over one
(1) week of unused vacation to the next succeeding calendar
year.
(b) Employee shall be paid the pro rata portion of his regular
Base Salary and provided all other benefits as specified in
Section 9 during any vacation period taken. Any payments made
to Employee in respect of vacation not taken or rolled over to
the next calendar year shall be paid to Employee in the last
pay period of the calendar year in which such vacation was not
taken. The maximum compensation payable to Employee in any
calendar year for unused vacation shall be two weeks of unused
vacation in such calendar year plus one week of unused
vacation, if any, that was rolled over as unused vacation from
the previous calendar year."
4. All other provisions of the Employment Agreement not herein amended
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereby have executed this Amendment to
Employment Agreement as of September 30, 1999 to be effective November 8, 1999.
EMPLOYEE: /s/ David Lampert
-------------------------------------
David Lampert
EMPLOYER: MIRACOM CORPORATION
By: /s/ Scott Anderson
-------------------------------------
Name: Scott Anderson
Title: Co-Chief Executive Officer
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<PAGE> 1
EXHIBIT 6.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") dated as of August 16, 1999 between
MIRACOM CORPORATION, a Nevada corporation (the "Company"), having its principal
place of business located at 121 East First Street, Sanford, Florida 32771, and
Ian Hart, residing at 228 Stonecliffe Aisle, Irvine, CA 92612 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has experience in accounting and financial
reporting for publicly held companies; and
WHEREAS, in light of the foregoing, the Company desires to employ the
Executive as its Chief Financial Officer and the Executive desires to accept
such employment.
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive and
the Executive hereby agrees to serve the Company on the terms and conditions set
forth herein.
2. TERM.
2.1 Initial Term. The initial Term of Employment under this
Agreement, and the employment of the Executive hereunder, shall commence on
October 4, 1999 (the "Commencement Date") and shall expire on December 31, 2000
unless sooner terminated in accordance with Section 6 hereof (the "Initial
Term").
2.2 Renewal Terms. At the end of the Initial Term, the Term of
Employment automatically shall renew for successive one year terms (subject to
earlier termination as provided in Section 5 hereof), unless the Company or the
Executive delivers written notice to the other at least ninety (90) days prior
to the Expiration Date of its or his election not to renew the Term of
Employment.
2.3 Term of Employment and Expiration Date. The period during
which the Executive shall be employed by the Company pursuant to the terms of
this Agreement is sometimes referred to in this Agreement as the "Term of
Employment," and the date on which the Term of Employment shall expire
(including the date on which any renewal term shall expire), is sometimes
referred to in this Agreement as the "Expiration Date."
<PAGE> 2
3. COMPENSATION.
3.1 Base Salary. The Executive shall receive a base salary at
the annual rate of One Hundred Thousand Dollars ($100,000) (the "Base Salary")
during the Term of Employment, with such Base Salary payable in installments
consistent with the Company's normal payroll schedule, subject to applicable
withholding and other taxes. The Base Salary shall be reviewed, at least
annually, for merit increases and, by action and in the discretion of the Board
of Directors of the Company (the "Board"), may be increased at any time or from
time to time.
3.2 Bonuses or Incentive Compensation. The Executive shall
receive such bonuses or incentive compensation, if any, as the Board may in its
sole and absolute discretion determine or pursuant to any bonus or incentive
compensation plan adopted by the Board. Any bonuses or incentive compensation
payable pursuant to this Subsection 3.2 are sometimes hereinafter referred to as
"Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt, the Company shall reimburse the Executive
for all reasonable expenses actually paid or incurred by the Executive during
the Term of Employment in the course of and pursuant to the business of the
Company. The Executive shall account to the Company in writing for all expenses
for which reimbursement is sought and shall supply to the Company copies of all
relevant invoices, receipts or other evidence reasonably requested by the
Company.
4.2 Participation in Benefit Programs. The Executive shall be
entitled to participate in or receive benefits under all of the Company's
benefit plans in effect on the date hereof or made available in the future to
employees and key management personnel of the Company, including without
limitation, major medical, dental, life and disability insurance, profit
sharing, stock option and deferred compensation plans, subject to the general
eligibility and participation provisions set forth in such plans. The
commencement of inclusion of Executive as a participant in the Company's
employee benefit plans shall be consistent with the waiting periods, if any, for
the Company's executives generally. With respect to health insurance coverage
for Executive's immediate family (defined as Executive's spouse and children),
if such coverage is provided by the Company for its other executive officers,
such coverage shall be provided on the same basis as it is provided to other
executive officers of the Company.
4.3 Restricted Stock and Stock Option. Upon Executive's
commencement of employment with the Company, the Executive shall be granted ten
thousand (10,000) shares of restricted (Rule 144) stock (the "Restricted
Stock"), which shall be subject to a Restricted Stock Agreement, the form of
which is attached hereto as Schedule A. The Restricted Stock shall be forfeited
to the Company should Executive voluntarily terminate his employment hereunder
prior to April 4, 2000 or be discharged for Cause prior to April 4, 2000.
Further, Executive shall be granted stock options for the purchase of one
hundred twenty thousand (120,000) shares of
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<PAGE> 3
common stock (the "Stock Option") at an exercise price of $1.75 per share, which
Stock Option shall be subject to a separate stock option agreement to be entered
into concurrently herewith. The Stock Option shall become exercisable 33-1/3%
six months from the Commencement Date, 33-1/3% twelve months from the
Commencement Date and 33-1/3% eighteen months from the Commencement Date.
4.4 Other Benefits. The Executive shall be entitled to three
(3) weeks of vacation each calendar year during the Term of Employment, to be
taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by the
Executive during any calendar year may not be carried forward into any
succeeding calendar year. The Executive shall receive such additional benefits,
if any, as the Board of the Company shall from time to time determine.
5. DUTIES OF EXECUTIVE. During the Term of Employment under this
Agreement, the Executive shall serve as the Chief Financial Officer of the
Company, shall diligently perform all services as may be assigned to him by the
Board, and shall exercise such power and authority as may from time to time be
delegated to him by the Board. The Executive shall devote his full time and
attention to the business and affairs of the Company, render such services to
the best of his ability, and use his best efforts to promote the interests of
the Company. It shall not be a violation of this Agreement for the Executive to
(i) serve on corporate, civic or charitable boards or committees, (ii) deliver
lectures, fulfill speaking engagements or teach at educational institutions, or
(iii) manage personal investments, so long as such activities do not interfere
with the performance of the Executive's responsibilities to the Company in
accordance with this Agreement.
6. TERMINATION.
6.1 Termination for Cause Defined. Notwithstanding any other
provision herein, this Agreement shall terminate without any liability to or
upon the Company other than to pay Base Salary for services rendered prior to
the date of termination if Executive's employment is terminated for "Cause." The
following shall constitute grounds for termination of Executive's employment for
Cause: (i) willful or gross neglect by Executive of his duties which continues
for ten (10) days after written notice of such neglect is provided to Executive
by the Company; (ii) conviction of Executive of any felony; (iii) any breach of
Executive's obligations under Section 8 of this Agreement; or (iv) willful
misconduct by Executive in connection with the performance of his duties.
6.2 Death. In the event of the death of the Executive, this
Agreement shall terminate without any liability to or upon the Company other
than to pay Base Salary for services rendered prior to the date of the
Executive's death, and the pro-rata portion of the Incentive Compensation which
Executive has earned through the date of such termination.
6.3 Disability. The Company shall at all times have the right
to terminate the Term of Employment, if the Executive shall become disabled as
the term "Disability" is defined
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<PAGE> 4
below. For purposes of this Agreement, the term "Disability" shall be deemed to
have occurred if Executive becomes entitled to benefits under the Company's
disability insurance plan as then in effect and cannot substantially perform his
duties, or, if the Executive shall as the result of mental or physical
incapacity, illness or disability, become unable to perform his obligations
hereunder for a an aggregate of 90 days in any consecutive 12-month period, or
for a period of sixty (60) consecutive days. The date of the Disability shall be
the on hundred twentieth (90th) or the sixtieth (60th) day, as the case may be.
The Company shall have the sole discretion based upon competent medical advice
to determine whether the Executive continues to be disabled. In the event
Executive's employment is terminated because of a Disability, Executive shall be
entitled to receive Executive's Base Salary for services rendered prior to the
date of termination plus (a) only that compensation which is payable through the
disability policy held by the Company or, if no such policy is in effect, then a
severance equal to three (3) months Base Salary, payable in accordance with the
Company's payroll practices, less withholding and other applicable federal and
state deductions, and (b) the pro-rata portion of the Incentive Compensation
which Executive has earned through the date of such termination.
6.4 Termination without Cause by Company. In the event that
Executive's employment is terminated without Cause by Company, the Company will
continue to pay Executive his Base Salary, and will continue Executive's health
insurance benefits (and life insurance benefits, if any) as described in Section
4.2 of this Agreement for the greater of the balance of the Term of Employment
or eight (8) months. The pro-rata portion of the Incentive Compensation which
Executive has earned through the date of termination of employment shall be
payable in a lump sum on the termination date. Relocation expenses of Seven
Thousand Five Hundred Dollars ($7,500) shall be payable in a lump sum on the
termination date. The Company may terminate Executive's employment under this
Subsection 6.4 upon providing to the Executive at least sixty (60) days prior
notice to that effect.
6.5 Voluntary Termination by Executive. If Executive
voluntarily terminates employment with the Company during the Term of Employment
and the Company has not breached this Agreement, or if the Executive is
discharged for Cause, then Executive will not be eligible to receive, and the
Company shall not be obligated to pay Executive any compensation (including any
Incentive Compensation) or provide any benefits which might otherwise be due
Executive hereunder for the remainder of the Term of Employment following such
date of voluntary termination or discharge.
6.6 Resignation. Upon any termination of employment pursuant
to this Section 6, the Executive shall be deemed to have resigned as an officer,
and if he was then serving as a director of the Company, as a director, and if
required by the Board, the Executive hereby agrees to immediately execute a
resignation letter to the Board.
7. TERMINATION BY EXECUTIVE. Executive may, at his option, terminate
this Agreement at any time, prior to the expiration of the Term, upon giving
ninety (90) days prior written notice to that effect to the Company.
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<PAGE> 5
8. RESTRICTIVE COVENANTS.
8.1 Confidential Information. The Executive hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of the Company. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by the Executive except as
required and authorized in furtherance of the Company's business: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, as defined in Section 688.002(4),
Florida Statute's; financial or corporate records; operational, sales,
promotional, and marketing methods and techniques; computer programs, including
source codes and/or object codes; and/or any other proprietary, competition
sensitive, or technical information or secrets developed with or without the
help of the Executive.
8.2 Non-disclosure. The Executive shall not, during the term
of his employment, or at any time thereafter, either directly or indirectly,
communicate, publish, disclose, divulge, or use, or authorize anyone else to
communicate, publish, disclose, divulge, or use, for the benefit of himself or
any other person, persons, partnership, association, corporation, or other
entity, any Confidential Information which may be communicated to the Executive
or of which the Executive may be apprised by virtue of his employment with the
Company. Any and all information, knowledge, know-how, and techniques which the
Company designates as confidential shall be deemed confidential for purposes of
this Agreement, except information which the Executive can demonstrate came to
his attention prior to disclosure thereof by the Company; or which, at or after
the time of disclosure by the Company to the Executive, lawfully had become a
part of the public domain through lawful publication or communication by others.
8.3 Non-competition. The Executive covenants that, except as
otherwise approved in writing by the Company, the Executive shall not, during
the term of this Agreement, and for a continuous uninterrupted period of
twenty-four (24) months commencing upon the expiration or termination of the
Executive's employment relationship with the Company, regardless of the cause
for termination, other than by the Company without Cause (as defined in
Subsection 6.1 hereof), individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Company's Business
(defined below), regardless of the geographical location of such other business
enterprise, and shall not directly or indirectly act as an officer, director,
employee, partner, contractor, consultant, advisor, principal, agent, or
proprietor, or in any other capacity for, nor lend any assistance (financial,
managerial, consulting or otherwise) to or cooperate with, any such business
enterprise; provided, however, that such provision shall not apply to the
Executive's ownership of Common Stock of the Company or the acquisition by the
Executive, solely as an investment, of securities of any issuer that is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended, and that are listed or admitted for trading on any United States
national securities exchange or that are quoted on the National Association
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<PAGE> 6
of Securities Dealers Automated Quotations System, or any similar system or
automated dissemination of quotations of securities prices in common use, so
long as the Executive does not control, acquire a controlling interest in or
become a member of a group which exercises direct or indirect control of more
than five (5%) percent of any class of capital stock of such corporation. For
purposes of this Subsection 8.3, "Business" shall mean the (i) development and
operation of e-commerce/Internet portals for the automotive parts industry,
including but not limited to the sale of automotive parts to consumers and
automotive parts retailers and wholesalers, and (ii) real time marketing
research utilizing at client sites computerized interactive devices for the
gathering of consumer information.
8.4 Non-solicitation of Employees and Clients. The Executive
specifically acknowledges that he will have access to Confidential Information,
including, without limitation, prospective and existing customers or customer
lists of the Company. The Executive covenants and agrees that during the term of
this Agreement, and for a continuous uninterrupted period of twenty-four (24)
months, commencing upon the expiration or termination of the Executive's
relationship with the Company, except as otherwise approved in writing by the
Company, the Executive shall not, either directly or indirectly, for himself, or
through, on behalf of, or in conjunction with any person, persons, partnership,
association, corporation, or entity:
(a) Divert or attempt to divert or solicit any
prospective or existing customer of the Company to any competitor by direct or
indirect inducement or otherwise; or
(b) Employ or seek to employ any person who is at
that time employed by the Company, any affiliate of the Company, or otherwise
directly or indirectly induce or solicit such person to leave his or her
employment.
8.5 Ownership of Developments. All copyrights, patents, trade
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or
created by the Executive during the course of performing work for the Company or
its clients (collectively, the "Work Product") shall belong exclusively to the
Company and shall, to the extent possible, be considered a work made by the
Executive for hire for the Company within the meaning of Title 17 of the United
States Code. To the extent the Work Product may not be considered work made by
the Executive for hire for the Company, the Executive agrees to assign, and
automatically does assign at the time of creation of the Work Product, without
any requirement of further consideration, any right, title, or interest the
Executive may have in such Work Product. Upon the request of the Company, the
Executive shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment.
8.6 Reasonably Necessary. The Company and the Executive agree
that the Confidential Information set forth in Subsection 8.1 and the
substantial relationships with the Company's specific prospective and existing
customers and vendors: (i) are valuable, special, and a unique asset of the
Company; (ii) have provided and will hereafter provide the Company with a
substantial competitive advantage in the operation of its business; and (iii)
are a legitimate business interest of the Company. The Company and the Executive
also agree that the existence
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<PAGE> 7
of these legitimate business interests justifies the need for the restrictive
covenants set forth in this Section 8, and the restrictive covenants are
reasonably necessary to protect the Company's legitimate business interests.
8.7 Reasonable Restrictions. The Executive agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Section 8 (including without limitation the length of the term of the
provisions of this Section 8) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Section 8 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain employment
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Section 8. It is agreed by
the Executive that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against the Company.
8.8 Continuity of Restrictions. If the Executive shall violate
any of the terms or covenants contained herein, and if any court action is
instituted by the Company to prevent or enjoin such violation, then the period
of time during which the terms or covenants of this Agreement shall apply, as
provided in this Agreement, shall be lengthened by a period of time equal to the
period between the date of the initial breach of the terms or covenants
contained in this Agreement, whether or not the Company had knowledge of the
breach, and the date on which the decree of the court disposing of the issues
upon the merits shall become final and not subject to further appeal.
8.9 Books and Records. All notes, data, reference material,
sketches, drawings, memoranda, files, documents, specifications and any records
in any way relating to any of the Confidential Information or to the Company's
business, whether prepared by the Executive or otherwise coming into the
Executive's possession, shall remain the exclusive property of the Company and
shall not be removed from the premises of the Company under any circumstances
whatsoever without the prior written consent of the Company. Upon the request
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of the Company, or absent such request, upon the termination of the Executive's
employment with the Company for any reason, the Executive shall immediately
return the Company all such property, materials and any and all copies thereof
in the Executive's possession.
8.10 Definition of Company. Solely for purposes of this
Section 8, the term "Company" also shall include any existing or future
subsidiaries of the Company that are operating during the time periods described
herein and any other entities that directly or indirectly, through one or more
intermediaries, control, are controlled by or are under common control with the
Company during the periods described herein.
8.11 Survival. The provisions of this Section 8 shall survive
the termination of this Agreement, as applicable.
9. INJUNCTION. The Executive agrees that a violation or a breach of the
terms, covenants, or provisions contained in Section 8 of this Agreement would
cause irreparable injury to the Company, and that the remedy at law for any
violation or breach would be inadequate and would be difficult to ascertain, and
therefore, in the event of the violation or breach, or threatened violation or
breach of any such terms, covenants, or provisions contained in this Agreement,
the Company shall have the independent right to enjoin the Executive from any
threatened or actual activities in violation thereof. The Executive hereby
consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of the Company providing proof of
actual damages or the posting of a bond. In the event the Company does apply for
such an injunction, the Executive shall not raise as a defense thereto that the
Company has an adequate remedy at law. Such right to injunction shall be
cumulative and in addition to whatever other remedies the Company may have at
law or in equity.
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Orange County, Florida, in accordance with the Rules of the American Arbitration
Association then in effect (except to the extent that the procedures outlined
below differ from such rules). Within thirty (30) days after written notice by
either party has been given that a dispute exists and that arbitration is
required, each party must select an arbitrator and those two arbitrators shall
promptly, but in no event later than thirty (30) days after their selection,
select a third arbitrator. The parties agree to act as expeditiously as possible
to select arbitrators and conclude the dispute. The selected arbitrators must
render their decision in writing. The cost and expenses of the arbitration and
of enforcement of any award in any court shall be borne by the non-prevailing
party. If advances are required, each party will advance one-half of the
estimated fees and expenses of the arbitrators. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. Although arbitration is
contemplated to resolve disputes hereunder, either party may proceed to court to
obtain an injunction to protect its rights hereunder, the parties agreeing that
either could suffer irreparable harm by reason of any breach of this Agreement.
Pursuit of an injunction shall not impair arbitration on all remaining issues.
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11. RELOCATION; LOCATION OF PERFORMANCES.
(a) The parties acknowledge that the Executive is required to
change his place of residence from California to the Orlando, Florida
metropolitan area to perform hereunder. The Company shall pay all the costs and
expenses of the Executive and his family connected with such relocation,
including reasonable moving and travel expenses and reasonable temporary
dwelling costs (for a period not to exceed 60 days), all such expenses not to
exceed $7,500 for moving expenses and $4,500 for temporary dwelling costs.
(b) The Executive's services will be performed in the Seminole
County, Florida area. The Executive's performance hereunder shall be within such
area or its environs. The parties acknowledge, however, that the Executive may
be required to travel in connection with the performance of his duties
hereunder.
12. ASSIGNMENT. This Agreement may not be assigned by any party hereto;
provided that the Company may assign this Agreement: (a) to an affiliate so long
as such affiliate assumes the Company's obligations hereunder; provided that no
such assignment shall discharge the Company of its obligations herein, or (b) in
connection with a merger or consolidation involving the Company or a sale of
substantially all its assets to the surviving corporation or purchaser as the
case may be, so long as such assignee assumes the Company's obligations
thereunder.
13. SEVERABILITY. If all or any portion of a covenant or provision in
this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Executive expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
14. DAMAGES; ATTORNEYS' FEES. Nothing contained herein shall be
construed to prevent the Company or the Executive from seeking and recovering
from the other damages sustained by either or both of them as a result of its or
his breach of any term or provision of this Agreement. In the event that either
party hereto brings suit for the collection of any damages resulting from, or
the injunction of any action constituting, a breach of any of the terms or
provisions of this Agreement, then the prevailing party shall pay all reasonable
court costs and attorneys' fees of the other.
15. GOVERNING LAW. The validity, interpretation and enforcement of this
Agreement shall be governed by and construed in accordance with the local laws
of the State of Florida (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
16. ENTIRE AGREEMENT. This Agreement contains and represents the entire
and complete understanding and agreement concerning and in reference to the
employment
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arrangement between the parties hereto. The parties hereto agree that no prior
statements, representations, promises, agreements, instructions, or
understandings, written or oral, pertaining to this Agreement, other than those
specifically set forth and stated herein, shall be of any force or effect. This
Agreement may be changed only by an agreement in writing signed by a party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
17. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent: (a) if to the Company, addressed to 121 East First Street,
Sanford, Florida 32771, Attention: President, or at such subsequent address of
the headquarters of the Company; and (b) if to the Executive, to his address as
reflected on the payroll records of the Company, or to such other address as
either party hereto may from time to time give notice of to the other.
18. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
19. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
20. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
21. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
22. INDEMNIFICATION.
(a) Subject to limitations imposed by law, the Company shall
indemnify and hold harmless the Executive to the fullest extent permitted by law
from and against any and all claims, damages, expenses (including attorneys'
fees), judgments, penalties, fines, settlements, and all other liabilities
incurred or paid by him in connection with the investigation, defense,
prosecution, settlement or appeal of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and to which the Executive was or is a party or is threatened to
be made a party by reason of the fact that the Executive is or
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was an officer, employee or agent of the Company, or by reason of anything done
or not done by the Executive in any such capacity or capacities, provided that
the Executive acted in good faith, in a manner that was not grossly negligent or
constituted willful misconduct and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The Company also shall pay any and all expenses (including
attorney's fees) incurred by the Executive as a result of the Executive being
called as a witness in connection with any matter involving the Company and/or
any of its officers or directors.
(b) The Company shall pay any expenses (including attorneys'
fees), judgments, penalties, fines, settlements, and other liabilities incurred
by the Executive in investigating, defending, settling or appealing any action,
suit or proceeding described in this Section 22 in advance of the final
disposition of such action, suit or proceeding. The Company shall promptly pay
the amount of such expenses to the Executive, but in no event later than ten
(10) days following the Executive's delivery to the Company of a written request
for an advance pursuant to this Section 22, together with a reasonable
accounting of such expenses.
(c) The Executive hereby undertakes and agrees to repay to the
Company any advances made pursuant to this Section 22 if and to the extent that
it shall ultimately be found that the Executive is not entitled to be
indemnified by the Company for such amounts.
(d) The Company shall make the advances contemplated by this
Section 22 regardless of the Executive's financial ability to make repayment,
and regardless whether indemnification of the Executive by the Company will
ultimately be required. Any advances and undertakings to repay pursuant to this
Section 22 shall be unsecured and interest-free.
(e) The provisions of this Section 22 shall survive the
termination of this Agreement.
23. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
in multiple counterparts, each of which shall be deemed and original and all of
which together shall constitute one and the same instrument. Facsimile
signatures hereon shall have the same legal force and effect as original
signatures.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 12
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
COMPANY:
MIRACOM CORPORATION., a Nevada corporation
By: /s/ Shawn Lucas
--------------------------------------
Shawn Lucas
Chairman/Co-CEO/President
EXECUTIVE:
/s/ Ian Hart
--------------------------------------
Name: Ian Hart
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<PAGE> 13
SCHEDULE A
MIRACOM CORPORATION
FORM OF
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is made September ___, 1999,
by and between Miracom Corporation, a Nevada corporation (the "Company"), and
Ian Hart (the "Employee").
AGREEMENT
1. Award of Restricted Stock. The Board hereby grants, as of September
___, 1999 (the "Date of Grant"), to Employee Ten Thousand (10,000) shares of the
Company's Common Stock, par value $.001 per share (the "Shares"), such Shares
being issued to the Employee under this Agreement are subject to the
restrictions provided under this Agreement and are referred to in this Agreement
as "Restricted Stock." The Shares specified in this Section 1 and (i) all shares
of the Company's capital stock received as a dividend or other distribution upon
such Shares, and (ii) all shares of capital stock or other securities of the
Company into which such Shares may be changed or for which such shares shall be
exchanged, whether through reorganization, recapitalization, stock split-ups or
the like, shall be subject to the provisions of this Agreement.
2. Vesting of Restricted Stock.
(a) Except as otherwise provided in Section 4 hereof, the Restricted
Stock shall become vested after the first to occur of the following:
(i) March 20, 2000;
(ii) on termination of the Employee's employment with the
Company by reason of the Employee's death or
Disability;
(iii) the Company's termination of Employee's employment
with the Company without Cause;
(iv) the sale of substantially all of the assets of the
Company; or
(v) the closing of an initial public offering of
securities by the Company.
(b) Notwithstanding any other provisions of this Agreement, the Board
shall be authorized in its discretion, based upon its review and evaluation of
the performance of the Employee and of the Company, to accelerate the vesting of
any Restricted Stock under this Agreement, at such times and upon such terms and
conditions as the Board shall deem advisable.
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<PAGE> 14
(c) The Shares of Restricted Stock with respect to which the Employee
shall have become vested pursuant to this Section 2 are sometimes referred to as
the "Vested Shares", and any Shares of Restricted Stock with respect to which
the Employee shall not have become vested pursuant to this Section 2 are
sometimes referred to as the "Non-Vested Shares".
(d) Except as provided in Section 6 hereof, the Employee shall not
Transfer any Shares of Restricted Stock unless, until and only to the extent
that the Shares have become Vested Shares, and any attempt to effect a Transfer
of any Non-Vested Shares shall be void ab initio.
3. Delivery of Restricted Stock.
(a) One or more stock certificates evidencing the Restricted
Stock shall be issued in the name of the Employee but shall be held and retained
by the Company until the Shares become Vested Shares. All such stock
certificates shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR STATE SECURITIES LAWS OR, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS AS SET FORTH IN THE RESTRICTED STOCK
AGREEMENT, DATED AUGUST ____, 1999, BETWEEN THE COMPANY AND
THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH
RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES.
(b) The Employee shall deposit with the Company stock powers
or other instruments of transfer or assignment, duly endorsed in blank with
signature guaranteed, corresponding to each certificate for all Shares of
Restricted Stock until such Shares become Vested Shares. If the Employee shall
fail to provide the Company with any such stock power or other instrument of
transfer or assignment, the Employee hereby irrevocably appoints the President
of the Company as his attorney-in-fact to execute and deliver any such power or
other instrument which may be necessary to effectuate the transfer of the
Restricted Stock (or assignment of distributions thereon) on the books and
records of the Company.
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<PAGE> 15
4. Forfeiture. If the Employee's employment with the Company is
terminated by the Company for Cause or voluntarily by the Employee, any
Non-Vested Shares that do not become Vested Shares by reason of such termination
pursuant to Section 2 hereof shall be returned to the Company and shall be
deemed to have been forfeited by the Employee. The Board shall have the power
and authority to enforce on behalf of the Company any rights of the Company
under this Agreement in the event of the Employee's forfeiture of Non-Vested
Shares pursuant to this Section 4.
5. Rights with Respect to Restricted Shares.
(a) Except as otherwise provided in this Agreement, the
Employee shall have, with respect to all Restricted Shares, all the rights of a
shareholder of the Company, including the right to vote such Shares and receive
cash dividends, if any, as may be declared on the Restricted Shares from time to
time. Any shares issued to the Employee as a dividend with respect to the
Restricted Shares shall have the same status and bear the same legends as the
Restricted Shares and shall be held by the Company, of the Restricted Shares are
being so held unless otherwise determined by the Board.
(b) In the event that the Restricted Shares, as a result of a
stock split or stock dividend or combination of shares or any other change or
exchange for other securities, by reclassification, reorganization or otherwise,
is increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another
corporation, the number of Restricted Shares shall be appropriately adjusted to
reflect such change. If any such adjustment shall result in a fractional share,
such fraction shall be disregarded.
6. Taxes.
(a) If the Employee properly elects, within thirty (30) days
of the Date of Grant, to include in gross income for federal income tax purposes
an amount equal to the fair market value (as of the Date of Grant) of the
Restricted Stock pursuant to Section 83(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), the Employee shall make arrangements satisfactory to
the Board to pay to the Company any federal, state or local income taxes
required to be withheld with respect to the Restricted Stock. If the Employee
shall fail to make such tax payments as are required, the Company shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to the Employee any federal, state or local taxes of any kind
required by law to be withheld with respect to the Restricted Stock.
(b) If the Employee does not make the election described in
Subsection 6(a) above, the Employee shall, no later than the date as of which
the Restrictions referred to in this Agreement hereof shall lapse, pay to the
Company, or make arrangements satisfactory to the Board for payment of, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the Restricted Stock, and the Company shall, to the extent permitted
by law, have the right to deduct from any payment of any kind otherwise due to
Employee any federal, state, or local taxes of any kind required by law to be
withheld with respect to the Restricted Stock.
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<PAGE> 16
7. Amendment, Modification and Assignment. No provision of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by the Employee and the Chairman or
other duly authorized member of the Board. No waiver by either party of any
breach by the other party hereto of any condition or provision of this Agreement
shall be deemed a waiver of any other conditions or provisions of this
Agreement. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement shall
not be assigned by the Employee in whole or in part. The rights and obligations
created hereunder shall be binding on the Employee and his heirs and legal
representatives and on the successors and assigns of the Company.
8. Employee's Representations. The Employee shall, if required by the
Company, concurrently with the execution of this Agreement, deliver to the
Company his Investment Representation Statement in the form attached to this
Agreement as Exhibit A or in such other form as the Company may request.
9. Adjustment of Shares. Subject to any required action by the
shareholders of the Company, the number of Shares covered by this Agreement
shall be proportionately adjusted for any increase or decrease in the number of
issued and outstanding shares of Common Stock of this Company resulting from a
stock dividend or through any recapitalization, reclassification, stock
split-up, combination or Company exchange of shares (other than any such
exchange or issuance of shares through which capital stock is issued to effect
an acquisition of another business or entity). Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of Shares
subject to this Agreement. If any such adjustment shall result in a fractional
share, such fraction shall be disregarded.
10. Transactions by the Company. Notwithstanding any term or provision
of this Agreement to the contrary, the existence of this Agreement, or of any
outstanding Shares awarded hereunder, shall not affect in any manner the right,
power or authority of the Company to make, authorize or consummate: (i) any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger, share exchange or
consolidation by or of the Company; (iii) any issue by the Company of debt
securities, or preferred or preference stock, that would rank prior to or on
parity with the Shares; (iv) the dissolution or liquidation of the Company; (v)
any sale, transfer or assignment of all or any part of the stock, assets or
business of the Company; or (vi) any other corporate transaction, act or
proceeding (whether of a similar character or otherwise).
11. Definitions. Unless otherwise defined herein, these terms shall
have the following definitions:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall have the same meaning as in the employment
agreement between the Company and Employee, dated of even date herewith (the
"Employment Agreement").
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<PAGE> 17
(c) "Disability" shall have the same meaning as in the
Employment Agreement.
12. Miscellaneous.
(a) No Right to Employment. The grant of the Restricted Shares
shall not be construed as giving the Employee the right to be retained in the
employ of the Company.
(b) No Limit on Other Compensation Arrangements. Nothing
contained in this Agreement shall preclude the Company from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(c) Severability. If any provision of this Agreement is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify this Agreement or the grant under any applicable law, such
provision shall be construed or deemed amended to conform to applicable law (or
if such provision cannot be so construed or deemed amended without materially
altering the purpose or intent of this Agreement and the grant, such provision
shall be stricken as to such jurisdiction and the remainder of this Agreement
and the grant shall remain in full force and effect).
(d) No Trust or Fund Created. Neither this Agreement nor the
grant of Restricted Shares shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company and
the Employee or any other person. To the extent that the Employee or any other
person acquires a right to receive payments from the Company pursuant to this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of the Company.
(e) Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Florida.
(f) Headings. Headings are given to the Paragraphs and
Subparagraphs of this Agreement solely as a convenience to facilitate reference.
Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of this Agreement or any provision thereof.
13. Complete Agreement; Binding Agreement. This Agreement and those
agreements and documents expressly referred to herein embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
The terms of this Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of Employee.
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<PAGE> 18
14. Notices. Any notice under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Company's offices at 1121 East First Street,
Sanford, Florida 32771, or if the Company should move its principal office, to
such principal office, and, in the case of the Employee, to the Employee's last
permanent address as shown on the Company's records, subject to the right of
either party to designate some other address at any time hereafter in a notice
satisfying the requirements of this Section.
15. Termination of Agreement. Restricted Stock, to the extent not
previously vested, shall become Vested Shares upon the closing of an initial
public offering of common stock by the Company and, in such instance, this
Agreement shall terminate.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
MIRACOM CORPORATION
By:
Shawn Lucas
President
IAN HART, Employee
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EXHIBIT A
INVESTMENT REPRESENTATION STATEMENT
EMPLOYEE : Ian Hart
COMPANY : Miracom Corporation
SECURITY : Restricted Common Stock
AMOUNT : 10,000 Shares (the "Securities")
DATE : September ____, 1999
In connection with the grant of the above-referenced Securities, I, the
Employee, represent to the Company the following:
(a) Employee either:
(i) has a pre-existing personal or business relationship with
the Company or one or more of its officers, directors or controlling persons, or
(ii) by reason of the Employee's business or financial
experience or the business or financial experience of Employee's professional
advisors who are unaffiliated with and who are not compensated by the Company or
any affiliate or selling agent of the Company, directly or indirectly, could be
reasonably assumed to have the capacity to protect Employee's own interests in
connection with the acquisition of the Securities.
(b) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am receiving
the Securities for my own account for investment purposes only and not with a
view to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act").
(c) I understand that the Company's issuance of the Securities has not
been registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of my investment intent as expressed herein. In this connection, I
understand that, in the view of the Securities and Exchange Commission (the
"SEC"), the statutory basis for such exemption may be unavailable if my
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities, or for a period of one year or any other fixed period in the
future.
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(d) I further understand that the Securities must be held indefinitely
unless the transfer is subsequently registered under the Securities Act or
unless an exemption from registration is otherwise available. Moreover, I
understand that the Company is under no obligation to register any transfer of
the Securities. In addition, I understand that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless registered or such registration is not required in the opinion
of counsel for the Company.
-----------------------------
Dated: _______________, 1999 IAN HART
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<PAGE> 1
EXHIBIT 6.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT was entered into the 12th day of February
1999, by and between MIRACOM CORPORATION (hereinafter, the "Employer") and
JEFFREY M. ODATO (hereinafter, the "Employee").
In consideration of the Employee's employment and possibility for
promotion, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employee hereby agrees as
follows:
1. PURPOSE. The purpose of this Agreement is to set forth the terms and
conditions of Employee's employment and to define the obligations between
Employee and Employer regarding trade secrets, as defined in Florida Statutes
Section 688.002(4), including, without limitation, Confidential Information (as
defined herein) belonging to the Employer, inventions and intellectual property
created, in whole or in part, by the Employee, communication with the Employer's
customers and retention of the employees of the Employer. Employee recognizes
that the business of Employer and the nature of Employee's employment will
permit Employee to have access to trade secrets and Confidential Information of
Employer and to its Clients, and that such trade secrets and Confidential
Information are the exclusive property of Employer, disclosure of which would be
prejudicial to Employer's business interests and cause the Employer irreparable
harm. Notwithstanding any other provision of this Agreement, the Employer and
Employee agree that Employee is not prohibited from owning, operating or
performing services for the unrelated business(es) in which he is currently
involved and which are specifically identified on SCHEDULE 1 hereto.
2. DEFINITIONS
(a) "EMPLOYER" shall mean MIRACOM CORPORATION and all of its
divisions, subsidiaries, affiliates and any successors or
assigns.
(b) "CLIENT" shall mean any person or entity with whom Employer
conducts business or from whom Employer or Employee obtains
information concerning the business and industry in which
Employer operates, including, but not limited to, customers,
consultants, advisors and suppliers of the Employer.
(c) "TRADE SECRET" shall have the meaning set forth in Florida
Statutes Section 688.002(4), and shall include, without
limitation, ideas, information, compilations, computer
programs and related data bases which are not described in any
literature published and distributed publicly by Employer and
which are not readily ascertainable from inspection of
commercially available sources, including, but not limited to,
computer programs written by and for the Employer, data bases,
generated reports, related proprietary information
<PAGE> 2
and marketing studies.
(d) "CONFIDENTIAL INFORMATION" shall mean all information
pertaining to the business of Employer or Clients which is of
value to Employer, is not generally known to Employer's
competitors or to the public, and is treated as confidential
by Employer and Clients, including, but not limited to, (i)
information pertaining to product research and development;
(ii) existing and future business and marketing plans; (iii)
financial, accounting, sales and purchasing data; (iv)
customer and supplier identity; (v) personnel matters; (vi)
techniques, policies and procedures related to the operation
of Employer and Clients; (vii) terms of relationships with
Clients; (viii) identity of prospective Clients; (ix) identity
of business opportunities available to Employer; and (x)
inventions and intellectual property of the Employer.
(e) "INVENTION" shall mean any discovery, idea, improvement or
contribution, whether or not patentable, including, but not
limited to, any computer program, process, method, formula or
technique, as well as improvements thereto, which is new or
which Employer reasonably believes may be new.
(f) "WORK" shall mean any written, typed or printed material
prepared, in whole or in part, by Employee during the term of
his employment hereunder including, but not limited to,
technical descriptions of products, computer software, user
guides, illustrations, advertising materials, training
manuals, contracts and any contributions to any such material.
3. TRADE SECRETS. During and at any time subsequent to termination of
his employment by Employer, Employee will not disclose or otherwise
misappropriate any Trade Secret of the Employer for his own use or for the use
of any person, corporation, partnership, firm or other entity.
4. CONFIDENTIAL INFORMATION. During his employment, and for a two (2)
year period following termination of employment, Employee will not disclose or
misappropriate any Confidential Information for his own use or for the use of
any person, corporation, partnership, firm or other entity. Employee shall not
remove any writings containing Confidential Information from the premises or
possession of Employer or its Clients, or make copies or memoranda thereof.
Furthermore, Employee will deliver promptly to Employer, at termination of his
employment, or at any time Employer may so request, all copies and originals of
any writings containing Confidential Information which Employee may possess or
have or have had under his control.
5. NON-SOLICITATION. During his employment, and for a two (2) year
period following termination of employment, Employee will not, either directly
or indirectly, consult, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any actual or targeted prospective Client of
Employer who has been a Client or targeted prospective Client of Employer at any
time during the 12-month period preceding termination of Employee's
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<PAGE> 3
employment.
6. NON-SOLICITATION OF EMPLOYEES. During his employment, and for a two
(2) year period following termination of employment, Employee will not hire,
attempt to hire or employ, directly or indirectly, any employee of Employer.
During such period, Employee will not encourage or induce any employee of
Employer to leave the employment of Employer.
7. ASSIGNMENT OF RIGHTS.
(a) INVENTIONS. The Employee agrees that if he conceives of an
Invention or reduces an Invention to practice during his
employment, Employee will promptly provide a written
description of the Invention ("Invention Summary") to an
officer of the Employer (other than Employee). The Employee
shall request that such officer acknowledge in writing the
receipt of such Invention Summary, a copy of which both
Employee and Employer shall retain in their records. The
Employer shall have thirty (30) days to provide written notice
to Employee whether or not it wishes to claim an interest in
the Invention. If timely notice is given to Employee that
Employer claims an interest in the Invention, Employee agrees
that such Invention, and all patent rights to such Invention,
shall become the exclusive property of Employer, and the
Employee hereby irrevocably assigns to Employer any and all of
Employee's rights to such Invention. Employee agrees that
should Employer elect to file an application for patent
protection, either in the United States or in a foreign
country, Employee will execute all necessary papers, including
formal assignments to Employer relating to such patent
applications. The Employee further agrees that he will
cooperate with any attorney or other person, will explain the
nature of the Invention, as required, will review applications
and other papers and will provide any other cooperation
reasonably required for the orderly filing and/or prosecution
of such patent applications.
(b) WORK. The Employee agrees that any Work created by Employee in
the course of performing Employee's duties hereunder and on
behalf of Employer are deemed "work for hire" within the
meaning of Title 17 of the United States Code. Accordingly,
all right, title and interest to the intellectual property
rights for any and all such Work, which have been or will be
prepared by Employee, shall be the property of Employer.
Employee further agrees to assign to Employer any and all
right, title and interest to any copyrights which Employee may
have in any such Work.
8. EMPLOYMENT AND TERM. The Employer agrees to employ and Employee
agrees to be employed by Employer for the period stated herein and upon the
terms and conditions provided in this Agreement. The term of full-time
employment shall be for a period of three (3) years, commencing on October 1,
1998 (the "Commencement Date"), and terminating on the third anniversary
thereof; PROVIDED THAT on each anniversary of the
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<PAGE> 4
Commencement Date, the term shall be extended for an additional one (1) year, so
that on each anniversary date, the remaining term is three (3) years, unless
otherwise terminated in accordance with Section 19 or Section 20, or as mutually
agreed between the parties.
9. COMPENSATION. The Employer shall pay the Employee for all services
contemplated under this Agreement as follows:
(a) A base salary of $124,800 per year, paid on a weekly basis
(the "Base Salary"). The Base Salary shall be increased, but
shall not be decreased, on each October 1st (the "Anniversary
Date") by a percentage which equals the sum of three percent
(3%) plus that percentage by which the Consumer Price Index,
for the Orlando, Florida area, published by the United States
government (the "INDEX"), for the immediately preceding
calendar year exceeds such Index for the next preceding
calendar year. If publication of the Index is discontinued,
the parties hereto shall accept comparable statistics on the
cost of living for the Orlando, Florida area as computed and
published by an agency of the United States government, or if
no such agency computes and publishes such statistics by any
regularly published national financial periodical that does
compute and publish such statistics;
(b) Such other benefits that the Employer may offer to other
senior level management of the Employer and/or members of the
board of directors of the Employer (the "Board of Directors"
or the "Board") from time to time, which benefits may but do
not necessarily include stock options in addition to those
contemplated by Section 17 and performance bonuses;
(c) When a 401(k) plan is established by Employer, a matching
contribution to Employee's 401(k) account equal to a minimum
of twenty-five percent (25%) of Employee's contribution to
such plan, subject to the dollar limitations as provided in
the Internal Revenue Code of 1986, as amended from time to
time; and
(d) A minimum of sixty percent (60%) of the cost of Employee's
medical insurance coverage provided by Employer's medical
plan.
The Employer shall be entitled to deduct and withhold amounts legally required
to be withheld for items such as income taxes, FICA, FUTA, etc.
10. DUTIES. The Employee is bringing unique experience, contacts and a
database to the Employer, which the Employee agrees to use to the benefit of the
Employer in the development of its commercial operations. The Employee is
engaged to act as the Senior Executive Vice President of Sales and Marketing of
the Employer and shall be responsible for the supervision of the Employer's
sales and marketing departments, with such additional responsibilities as the
President may determine to be in the best interest of the Employer, and which
are appropriate for an Senior Executive Vice President of Sales and Marketing of
an
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<PAGE> 5
organization of the type and size of the Employer. Employee shall report
directly to the President. The Employee agrees to serve capacities, without
further compensation, unless the Employee's duties and responsibilities
substantially change or increase, or unless mutually agreed otherwise. Employee
will use his best efforts to promote the interests of the Employer.
11. EXTENT OF SERVICES. The Employee shall not be required to devote
his entire time and attention to the Employer's business; PROVIDED, HOWEVER,
that Employee agrees to provide a minimum of forty (40) hours per week for
services on behalf of Employer (such forty (40) hours shall include time which
the Employee spends traveling from one destination to another destination on
behalf of the Employer but, other than travel time, shall not include time when
the Employee is not actually performing services on behalf of the Employer even
though the Employee may be away from home). Notwithstanding anything herein to
the contrary, the Employee will be called upon from time to time as an element
of his employment to develop business projects which will include the interests
of the Employee and the Employer or its subsidiaries, affiliates or joint
venture interests. Such activities are contemplated in this Agreement and form
an integral part of the Employee's employment.
12. WORKING FACILITIES. The Employee shall have a private and adequate
office, back-up staff, including secretarial assistance in all of the offices of
the Employer in which Employee will be expected to perform his services, and
other adequate services and facilities necessary in order for the Employee to
fulfill the activities contemplated under this Agreement. The Employee will also
have the use of Employer-provided lodging and vehicles and an expense account in
order to fulfill his obligations and responsibilities under this Agreement and
for the development and the commercialization of the Employer's services.
13. DISCLOSURE OF INFORMATION. The Employee and Employer acknowledge
that Employee is coming to his position with unique data, contacts and
experience, distinct from those possessed generally by the Employer. These
contacts, data and information of the Employee are unique to the Employee and
will always be so considered. However, the Employee shall not, during the term
of his employment, disclose or use all or any part of the Employee's unique
knowledge, services or skills that are conceived or reduced to practice during
the term of Employee's employment, to any person, firm, corporation, association
or other entity for any reason or purpose, unless mutually agreed upon in
advance and in writing by the parties to this Agreement. All new projects and
information which are developed by the Employee during his employment with the
Employer shall be considered the Employer's unique knowledge, services or skills
and shall not be taken, disclosed or developed for a project with any third
parties by the Employee, unless agreed upon in advance and in writing by the
Employer upon termination of the Employee's employment.
14. EXPENSES. The Employee may incur reasonable expenses for the
commercialization of the Employer's services and products, including reasonable
expenses for entertainment, travel and similar items. The Employer shall
reimburse the Employee for all such reasonable expenses, which have been
approved by Employer, within thirty (30) days of the Employee's presentation of
an itemized accounting of such expenditures. In the event Employee incurs
expenses on behalf of the Employer, or Employer pays for expenses of
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<PAGE> 6
Employee which are not reimbursable hereunder, Employee agrees to immediately
reimburse Employer for such expenses. As soon as reasonably practicable,
Employer shall secure a corporate charge card for Employee to use for
reimbursable expenses hereunder. The parties hereto acknowledge that if Employee
has loaned funds to the Employer prior to the execution hereof, the Employer
shall repay Employee such loans within ninety (90) days of the date hereof.
15. VACATIONS. The Employee shall be entitled each year to a vacation,
which period of time and date of scheduling will be mutually agreed upon by the
Employer and Employee; PROVIDED, HOWEVER, the Employee, in any case, shall be
entitled to not less than two (2) weeks vacation time per year, and cumulative
compensation for such vacation time shall be paid each year to the Employee if
such vacation is not taken; PROVIDED, FURTHER, that Employee shall be entitled
to carry over one (1) week of unused vacation from the preceding calendar year
to the current calendar year. Employee shall be paid the pro rata portion of his
regular Base Salary and all other benefits as specified in Section 9, hereunder,
during any vacation period. In the event vacation is not taken or vacation is
rolled over to the next year, compensation for such unused vacation, up to a
maximum of two weeks per calendar year, shall be paid on or before the end of
the calendar year if the Employee so desires and so requests in writing on or
before November 30 of that calendar year; PROVIDED; HOWEVER, that in the event
Employee has rolled over one (1) week's vacation from the preceding calendar
year, the Employee may be compensated for his unused vacation for the then
current calendar year (subject to the two week maximum per calendar year) plus
the one (1) week rolled over from the preceding calendar year and not used in
the then current calendar year.
16. OTHER BENEFITS. Employee shall be entitled to such other benefits
that the Employer may offer to its employees and its Board of Directors from
time to time, including, but not limited to, stock options, medical insurance
and disability insurance. The Employer agrees to pay Employee ten thousand
dollars ($10,000) per year as compensation for the performance of his services
as a member of the Board of Directors, which shall be paid on a pro rata basis
by the fifth (5th) day of the month following the month of board service. Such
compensation shall be in addition to the compensation to which Employee is
entitled under Section 9 hereof.
17. STOCK OPTIONS. Employer shall establish a stock option plan for its
employees, and/or officers (the "Stock Option Plan") and Employee shall be
entitled to participate in such Stock Option Plan.
18. DISABILITY. If the Employee is or becomes, by reason of illness or
incapacity, unable to perform the essential functions of his employment
hereunder, with or without reasonable accommodation, for a period of more than
four (4) weeks (a "Disability"), the compensation thereafter payable to him
during the continued period of such illness or incapacity shall be reduced
initially by twenty-five percent (25%) for the period beginning four (4) weeks
and ending six (6) months after such illness or incapacity begins and then by
fifty percent (50%) if the incapacity or illness continues during the period
beginning six (6) months and one (1) day and ending one (1) year after such
illness or incapacity begins. If the
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Employee should be absent from his employment for a period of more than one (1)
year, the Employer will have the option to terminate this Agreement for
impossibility of execution but the Employer may nonetheless decide to continue
this Agreement with compensation after one (1) year of incapacity. In the event
the Employer secures a disability insurance policy mutually acceptable to
Employee and Employer, then Employer's financial obligations under this Section
18 shall terminate provided that the disability benefits under such policy equal
or exceed the Employer's financial obligations under this Section 18. In
addition to the foregoing disability payments, Employee shall retain the right
to retain any stock options that are exercisable on the date of termination of
employment.
19. TERMINATION OF EMPLOYMENT.
(a) BY EMPLOYER FOR CAUSE. During the term of this Agreement, the
Employer may terminate this Employee's employment for "Cause"
(defined below) upon thirty (30) days' written notice. In the
event that Employee's employment with the Employer is
terminated with Cause, the Employee shall receive only (A) his
Base Salary and benefits earned but unpaid up to the date of
termination of employment, (B) the prorated portion of any
bonuses earned but unpaid up to the date of termination of
employment, calculated based upon a closing of the books of
Employer as of the last day of the month in which termination
occurs and a proration of the annual goals, if any were
established for such year, based upon the portion of the year
that has expired prior to that date, and (C) reimbursement for
any expenses to which Employee is due reimbursement under
Section 14.
For purposes of this Section 19(a), the term "Cause"
shall mean any of the following:
(1) the Employee's willful or negligent
failure or refusal to comply with the written rules
and regulations of Employer from time to time
established by the Board that shall have been
previously delivered to Employee, and that shall not
be inconsistent with the terms or conditions of this
Agreement, and Employee shall not have cured such
failure or refusal within 30 days following receipt
of written notice from Employer of such failure or
refusal; PROVIDED, HOWEVER, that if such failure or
refusal is of such a nature that it cannot be cured
within such 30-day period, then, so long as Employee
shall have commenced such cure within such 30-day
period and shall have thereafter in good faith
continued such cure, Employee shall be deemed to have
cured such failure or refusal; or
(2) the final (non-appealable or foreclosed
from appeal) conviction of Employee of any felony
materially and adversely affecting the property,
reputation or goodwill of Employer or its successors;
or
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(3) the Employee's willful failure or
refusal to perform or Employee's performance in a
grossly negligent manner a material part of his
duties pursuant to the provisions of this Agreement
and Employee shall not have cured such failure or
refusal within 30 days following receipt of written
notice from Employer of such failure or refusal;
PROVIDED, HOWEVER, that if such failure or refusal is
of such a nature that it cannot be cured within such
30-day period, then, so long as Employee shall have
commenced such cure within such 30-day period and
shall have thereafter in good faith continued such
cure, Employee shall be deemed to have cured such
failure or refusal; or
(4) Employee's violation of the terms of
Sections 3, 4, 5, 6, 7 or 13 of this Agreement.
(b) BY EMPLOYER WITHOUT CAUSE. In the event Employer
terminates the Employee's employment without Cause then, in
addition to clauses A through C in Section 19(a), above, (X)
the Employer shall be obligated to pay to the Employee
Employee's annual Base Salary (at the time of termination), on
a weekly basis or consistent with the Employer's payroll
practices at the time, for a period of three (3) years from
and after the date of termination (the "Severance Amount");
(Y) Employee shall have the right to retain any stock options
that were granted to Employee prior to the date of termination
of employment; and (Z) the Employer shall, at its sole cost
(except for Employee dependency coverage contributions, if
any, in effect prior to Employee ceasing to be employed by the
Employer hereunder) maintain in full force and effect from the
date Employee ceases to be employed by the Employer hereunder
and for six (6) months thereafter, all medical, health and
accident, and disability plans, programs, or arrangements in
which Employee is entitled to participate immediately prior to
Employee ceasing to be employed by the Employer hereunder,
provided that Employee's continued participation is possible
under the general terms and provisions of such plans and
programs. In the event that Employee's participation in any
such plan or program is barred (other than as a result of a
misrepresentation or misconduct of Employee), the Employer
shall arrange at its sole expense to provide him with benefits
substantially similar to those which he is entitled to receive
under such plans and programs for the six-month term,
including, without limitation, reimbursement of COBRA premium
payments. To the extent that Employee mitigates his damages
through the accrual or receipt of a salary, or the provision
of health or other benefits referenced hereinabove, through
self-employment or employment with another entity, the
Severance Amount and/or applicable benefits referenced
hereinabove shall be adjusted by off-set of amounts or
benefits received by Employee in mitigation. Upon written
request by Employer, Employee shall provide to Employer
information as to such mitigation within ten (10) days of
receipt of such request. If Employee's employment is
terminated without Cause, Employee shall be deemed released
from the non-competition provisions of
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Section 22 of this Agreement upon such termination; PROVIDED,
HOWEVER, Employee shall not be deemed released from his
obligations under Sections 3, 4, 5, 6, 7 or 13 of this
Agreement.
(c) VOLUNTARILY BY EMPLOYEE. Employee may, at his option,
terminate his employment under this Agreement at any time upon
ninety (90) days prior written notice to Employer. If Employee
voluntarily terminates employment with Employer, then Employee
shall receive only (i) his Base Salary and benefits earned but
unpaid up to the date of termination of employment, (ii) two
weeks salary, calculated based on Employee's salary then in
effect at the time of termination of employment, (iii) the
prorated portion of any bonuses earned but unpaid at the time
of termination of employment, calculated in accordance with
subsection (a)(ii) above; and, if Employee voluntarily
terminates his employment pursuant to Section 20, Employee
shall also be entitled to retain any exercisable stock
options.
(d) If Employee is terminated for Cause, or if Employee
voluntarily terminates his employment (except in the event of
a Change of Control (defined below), any stock options granted
to Employee under a Stock Option Plan or otherwise shall
terminate immediately upon termination of employment.
(e) Employee's employment with the Company may not be
terminated for Cause under Section 19(a), above, or without
Cause under Section 19(b), above, without the approval of a
majority of the members of the Board of Directors then in
office.
20. TERMINATION BY EMPLOYEE UPON CHANGE OF CONTROL. The Employee may
terminate Employee's employment at any time by giving ten (10) days prior
written notice to the Employer upon a Change of Control. A "Change of Control"
means the occurrence of any of the following events after the date of this
Agreement:
(a) a change in control of the Employer occurring after the
date of this Agreement of a nature that would be required to be reported in
response to Item 1 of the Current Report on Form 8-K (or in response to any
similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the Employer is then subject to
such reporting requirement;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Employer
representing twenty-five percent (25%) or more of the combined voting power of
the Employer's then outstanding securities without the prior approval of at
least two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage (excluding for this purpose, any acquisitions
by (X) the Employer or its subsidiaries, (Y) any person, entity or "group" that
as of the date of this Agreement owns beneficial ownership, as defined in Rule
13d-3 of the Act, or (Z) any
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employee benefit plan of the Employer or its subsidiaries;
(c) the Employer is a party to a merger, consolidation, sale
of assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or
(d) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Employer's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
21. DEATH DURING EMPLOYMENT. Upon the death of Employee during the term
of employment, the Employer shall pay to Employee's estate the compensation that
would otherwise be payable to the Employee through the end of the month of his
death. In addition, three (3) months further compensation shall be paid in one
(1) lump sum to his surviving spouse or, if there is no surviving spouse, to the
surviving children of the Employee, or to his estate if there are no surviving
children.
22. NON-COMPETITION.
(a) During his employment, and for a period of two (2) years after
the expiration or termination of such employment (the
"Noncompetition Period"), Employee specifically agrees that
Employee shall not (except on the behalf of Employer or any of
its affiliated entities while Employee is employed by
Employer), either directly or indirectly, as a stockholder of
any corporation or partner of any partnership or as an
employee, owner, principal or agent, or in any other manner,
engage in any business within a radius of 100 miles from any
location of Employer's business (the "Geographic Area"), which
competes with, in any manner, any business conducted by
Employer at the time of termination of this Agreement.
Employee agrees that so long as Employee is working for
Employer, Employee shall not undertake the planning or
organizing of any business activity competitive with the
business of Employer. Employee agrees not to directly or
indirectly solicit any of Employer's employees to work for
Employee or for any business which is competitive with any
business conducted by Employer prior to the date on which
Employee's employment with Employer is terminated with
Employer within the Geographic Area and during the
Noncompetition Period.
(b) The periods of time during which Employee is prohibited from
engaging in such business practices pursuant to this Section
22 shall be extended by any length of time during which
Employee is in breach of any of such covenants. The
restrictive covenants contained within this Section 22 are
essential elements of
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this Agreement, and that, but for the agreement of Employee to
comply with such covenants, Employer would not have entered
into this Agreement. If any portion of the covenants set forth
in this Section 22 are held by a court of competent
jurisdiction to be unreasonable, arbitrary or against public
policy, then such portion of such covenants shall be
considered divisible both as to time and geographical area.
Employer and Employee agree that, if any court of competent
jurisdiction determines that the Noncompetition Period or the
Geographic Area applicable to this Agreement is unreasonable,
arbitrary and/or against public policy, then a lesser time
period or geographical area which is determined to be
reasonable, non-arbitrary and not against public policy may be
enforced against Employee.
(c) Intentionally Omitted.
(d) Employee acknowledges that any violation of this Section 22
will result in irreparable injury to Employer for which there
is no adequate remedy at law. Employee agrees that, in the
event he breaches or threatens to breach this Section 22,
Employer, without posting a bond, shall be entitled to
injunctive relief, both preliminary and permanent, in addition
to any other remedies at law or in equity available to
Employer.
(e) If Employee's employment with Employer is terminated without
Cause, Employee shall be deemed released from his obligations
under this Section 22 upon such termination.
23. DISPUTES; ATTORNEYS' FEES. Except in the case of Employer's right
to seek injunctive relief under Section 22(d) and Section 24(b) of this
Agreement, the parties mutually agree to submit any controversy or claim arising
out of or proceeding forth from or relating to this Agreement or its breach to
be settled by arbitration (which may be binding if the parties mutually agree at
the time). Such arbitration shall be held in the County of Seminole, State of
Florida, utilizing the procedure and arbitrators acquainted with the American
Arbitration Association rules and procedure for arbitration. If binding
arbitration, judgment upon award rendered may be entered and enforced in any
court of competent jurisdiction. In the event any dispute arises under the terms
hereof, Employer shall continue to pay Employee the Base Salary and benefits to
which he is entitled hereunder until such time that a final determination is
made by an arbitrator hereunder; PROVIDED, HOWEVER, that if it is determined
that the termination of Employee's employment was justified, the Employee hereby
undertakes and agrees to repay to the Employer the amount of Base Salary that
was paid by Employer during the arbitration procedure. The non-prevailing party
shall be responsible for the prevailing party's reasonable legal fees and costs
(including post-judgment collection fees and costs).
24. ENFORCEMENT.
(a) Whenever there is any conflict between any provision
of this Agreement and any law, statute, governmental
rule, ordinance or
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regulation, the latter shall prevail. In such event,
the affected provisions of this Agreement will be
curtailed and restricted only to the extent necessary
to bring them within the legal requirements, and the
remainder of this Agreement shall not be affected.
Should it be determined that any provision of this
Agreement is unenforceable, the Employee specifically
requests that the court or arbitrator making such
determination modify and reform the provision found
to be unenforceable, and in its modified form,
specifically enforce the Agreement.
(b) Employee acknowledges that any violation of Sections
3, 4, 5, 6, 7, 13 or 22 of this Agreement (referred
to individually and collectively in this subsection
(b) as "Sections") will result in irreparable injury
to Employer for which there is no adequate remedy at
law. Employee agrees that, in the event he breaches
or threatens to breach any of such Sections,
Employer, without posting a bond, shall be entitled
to injunctive relief, both preliminary and permanent,
in addition to any other remedies at law or in equity
available to Employer.
25. INDEMNIFICATION. Employee shall be indemnified in accordance with
the terms and provisions of that certain Indemnification Agreement, dated as of
the date hereof, between Employer and Employee.
26. CHOICE OF LAW. This Agreement and the performance hereunder and all
suits and special proceedings hereunder shall be construed in accordance with
the laws of the State of Florida. In any action, special proceeding or other
proceeding that may be brought arising out of, in connection with, or by reason
of this Agreement, the laws of the State of Florida shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which the action or special proceeding may be instituted.
All actions under this Agreement, if not resolved by arbitration, shall be taken
in a court of competent jurisdiction within Seminole County, Florida and
Employee hereby waives and agrees that he shall not assert that such forum is
inconvenient.
27. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing and sent by certified U.S. mail,
or by Federal Express or other overnight delivery service to the Employee's
residence, or to the Employer's principal office, as the case may be.
28. WAIVER OF BREACH. Employer shall waive a breach by the Employee of
any provision of this Agreement only if such waiver is executed in writing by a
duly authorized officer of the Employer. Employee shall waive a breach by the
Employer of any provision of this Agreement only if such waiver is executed in
writing by Employee.
29. ASSIGNMENT. Both parties acknowledge that the services of the
Employee and the Employer are unique to this Agreement and neither party may
assign the rights or delegate
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the duties of this Agreement to another. Notwithstanding anything herein to the
contrary, the Employee may perform his unique services under this Agreement for
any of the subsidiaries, affiliates or joint ventures of the Employer.
30. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties and may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
31. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe the provisions hereof.
32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
33. WAIVER OF CONFLICT OF INTEREST. The parties acknowledge that,
notwithstanding Employee's use of Employer's attorneys for personal legal
matters unrelated to this Agreement, the Employer may continue to use the legal
counsel of its choice in connection with the resolution of any disputes between
the parties hereto without such representation constituting an improper or
ethical conflict of interest.
34. FURTHER ACTIONS. Each party to this Agreement shall take such
further actions to execute, file, record, publish and deliver such additional
certificates, instruments, agreements and other documents as the other party
may, from time to time, reasonably request, in order to accomplish the purposes
of this Agreement.
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35. APPOINTMENT TO BOARD OF DIRECTORS. Employee was appointed to the
Board of Directors in September 1998 and is entitled to receive the prorated
portion of the $10,000 annual director compensation.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date and year indicated above.
EMPLOYEE: /s/ JEFFREY M ODATO
---------------------------------
JEFFREY M. ODATO
EMPLOYER: MIRACOM CORPORATION
By: /s/ Shawn D. Lucas
-----------------------------
Name: Shawn D. Lucas
Title: Co-chief Executive Officer
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") was entered into
effective November 8, 1999, by and between MIRACOM CORPORATION (hereinafter, the
"Employer") and JEFFREY M. ODATO (hereinafter, the "Employee").
RECITALS
A. WHEREAS, on February 12, 1999, Employer and Employee entered into an
employment agreement (the "Employment Agreement"); and
B. WHEREAS, Employer and Employee desire to make certain modifications
to the Employment Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of Employee's employment and
possibility of promotion, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is hereby agreed
that the Employment Agreement is amended in the following particulars:
1. Section 9 (COMPENSATION). Subsection 9(a) of the Employment
Agreement is hereby amended to change Employee's the Base Salary to $72,000 per
year, effective November 8, 1999, payable bi-weekly or otherwise in accordance
with Employer's standard payroll practices. Further amended and in accordance
with Employer's current standard payroll practice at the time, the employee
shall receive a base salary of $89,000 for the period August 30, 1999 through
October 24, 1999 and shall defer payment of the difference between the original
Base Salary ($124,800) and the newly adjusted amount ($89,000) for that same
time period. All other provisions of subsection 9(a) not amended hereby shall
remain the same.
2. Section 10 (DUTIES). Section 10 is hereby amended in its entirety as
follows:
"The Employee is engaged to act as the National Sales Manager
of Employer and as such shall be responsible for the
supervision of the Employer's sales and marketing departments,
with such additional responsibilities as the Employer may
determine to be in the best interest of the Employer, and
which are appropriate for a National Sales Manager of an
organization of the type and size of Employer. Employee agrees
to serve in such capacity, without further compensation,
unless the Employee's duties and responsibilities
substantially change or increase, or unless mutually agreed
otherwise. Employee shall report directly to the President.
Employee will use his best efforts to promote the interests of
the Employer."
3. Section 15 (VACATIONS). Section 15 is hereby amended in its entirety
as follows:
"(a) Employee shall be entitled each year to a vacation, which
period of time and
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date of scheduling will be mutually agreed upon by Employer
and Employee; PROVIDED, HOWEVER, the Employee, in any case,
shall be entitled to not less than two weeks vacation time per
year, and cumulative compensation for such vacation time shall
be paid each year to the Employee if such vacation is not
taken in the applicable year or if not carried forward to the
next calendar year in accordance with this Section 15.
Employee shall be entitled to carry over one (1) week of
unused vacation to the next succeeding calendar year.
(b) Employee shall be paid the pro rata portion of his regular
Base Salary and provided all other benefits as specified in
Section 9 during any vacation period taken. Any payments made
to Employee in respect of vacation not taken or rolled over to
the next calendar year shall be paid to Employee in the last
pay period of the calendar year in which such vacation was not
taken. The maximum compensation payable to Employee in any
calendar year for unused vacation shall be two weeks of unused
vacation in such calendar year plus one week of unused
vacation, if any, that was rolled over as unused vacation from
the previous calendar year."
4. Section 16 (OTHER BENEFITS). Section 16 of the Employment Agreement
is hereby amended to eliminate the $10,000 fee for Employee's service on the
Board of Directors, such fees having terminated effective June 1, 1999. Employee
shall serve on the Board of Directors without additional compensation, except
for reimbursement of expenses incurred in attending meetings of the Board of
Directors and its committees. However, nothing in this Section 16, as amended,
is intended to prevent Employee's participation in any stock option plan as an
employee or as a director of Employer.
5. All other provisions of the Employment Agreement not herein amended
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereby have executed this Amendment to
Employment Agreement as of September 30, 1999 to be effective November 8, 1999.
EMPLOYEE: /s/ Jeffrey M. Odato
-----------------------------------------
JEFFREY M. ODATO
EMPLOYER: MIRACOM CORPORATION
By: /s/ Scott Anderson
-------------------------------------
Name: Scott Anderson
Title: Co-Chief Executive Officer
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<PAGE> 1
EXHIBIT 6.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT was entered into the 12th day of February
1999, by and between MIRACOM CORPORATION (hereinafter, the "Employer") and
MICHAEL R. FOUTS (hereinafter, the "Employee").
In consideration of the Employee's employment and possibility for
promotion, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employee hereby agrees as
follows:
1. PURPOSE. The purpose of this Agreement is to set forth the terms and
conditions of Employee's employment and to define the obligations between
Employee and Employer regarding trade secrets, as defined in Florida Statutes
Section 688.002(4), including, without limitation, Confidential Information (as
defined herein) belonging to the Employer, inventions and intellectual property
created, in whole or in part, by the Employee, communication with the Employer's
customers and retention of the employees of the Employer. Employee recognizes
that the business of Employer and the nature of Employee's employment will
permit Employee to have access to trade secrets and Confidential Information of
Employer and to its Clients, and that such trade secrets and Confidential
Information are the exclusive property of Employer, disclosure of which would be
prejudicial to Employer's business interests and cause the Employer irreparable
harm. Notwithstanding any other provision of this Agreement, the Employer and
Employee agree that Employee is not prohibited from owning, operating or
performing services for the unrelated business(es) in which he is currently
involved and which are specifically identified on SCHEDULE 1 hereto.
2. DEFINITIONS
(a) "EMPLOYER" shall mean MIRACOM CORPORATION and all of its
divisions, subsidiaries, affiliates and any successors or
assigns.
(b) "CLIENT" shall mean any person or entity with whom Employer
conducts business or from whom Employer or Employee obtains
information concerning the business and industry in which
Employer operates, including, but not limited to, customers,
consultants, advisors and suppliers of the Employer.
(c) "TRADE SECRET" shall have the meaning set forth in Florida
Statutes Section 688.002(4), and shall include, without
limitation, ideas, information, compilations, computer
programs and related data bases which are not described in any
literature published and distributed publicly by Employer and
which are not readily ascertainable from inspection of
commercially available sources, including, but not limited to,
computer programs written by and for the Employer, data bases,
generated reports, related proprietary information and
<PAGE> 2
marketing studies.
(d) "CONFIDENTIAL INFORMATION" shall mean all information
pertaining to the business of Employer or Clients which is of
value to Employer, is not generally known to Employer's
competitors or to the public, and is treated as confidential
by Employer and Clients, including, but not limited to, (i)
information pertaining to product research and development;
(ii) existing and future business and marketing plans; (iii)
financial, accounting, sales and purchasing data; (iv)
customer and supplier identity; (v) personnel matters; (vi)
techniques, policies and procedures related to the operation
of Employer and Clients; (vii) terms of relationships with
Clients; (viii) identity of prospective Clients; (ix) identity
of business opportunities available to Employer; and (x)
inventions and intellectual property of the Employer.
(e) "INVENTION" shall mean any discovery, idea, improvement or
contribution, whether or not patentable, including, but not
limited to, any computer program, process, method, formula or
technique, as well as improvements thereto, which is new or
which Employer reasonably believes may be new.
(f) "WORK" shall mean any written, typed or printed material
prepared, in whole or in part, by Employee during the term of
his employment hereunder including, but not limited to,
technical descriptions of products, computer software, user
guides, illustrations, advertising materials, training
manuals, contracts and any contributions to any such material.
3. TRADE SECRETS. During and at any time subsequent to termination of
his employment by Employer, Employee will not disclose or otherwise
misappropriate any Trade Secret of the Employer for his own use or for the use
of any person, corporation, partnership, firm or other entity.
4. CONFIDENTIAL INFORMATION. During his employment, and for a two (2)
year period following termination of employment, Employee will not disclose or
misappropriate any Confidential Information for his own use or for the use of
any person, corporation, partnership, firm or other entity. Employee shall not
remove any writings containing Confidential Information from the premises or
possession of Employer or its Clients, or make copies or memoranda thereof.
Furthermore, Employee will deliver promptly to Employer, at termination of his
employment, or at any time Employer may so request, all copies and originals of
any writings containing Confidential Information which Employee may possess or
have or have had under his control.
5. NON-SOLICITATION. During his employment, and for a two (2) year
period following termination of employment, Employee will not, either directly
or indirectly, consult, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any actual or targeted prospective Client of
Employer who has been a Client or targeted prospective Client of Employer at any
time during the 12-month period preceding termination of Employee's employment.
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6. NON-SOLICITATION OF EMPLOYEES. During his employment, and for a two
(2) year period following termination of employment, Employee will not hire,
attempt to hire or employ, directly or indirectly, any employee of Employer.
During such period, Employee will not encourage or induce any employee of
Employer to leave the employment of Employer.
7. ASSIGNMENT OF RIGHTS.
(a) INVENTIONS. The Employee agrees that if he conceives of an
Invention or reduces an Invention to practice during his
employment, Employee will promptly provide a written
description of the Invention ("Invention Summary") to an
officer of the Employer (other than Employee). The Employee
shall request that such officer acknowledge in writing the
receipt of such Invention Summary, a copy of which both
Employee and Employer shall retain in their records. The
Employer shall have thirty (30) days to provide written notice
to Employee whether or not it wishes to claim an interest in
the Invention. If timely notice is given to Employee that
Employer claims an interest in the Invention, Employee agrees
that such Invention, and all patent rights to such Invention,
shall become the exclusive property of Employer, and the
Employee hereby irrevocably assigns to Employer any and all of
Employee's rights to such Invention. Employee agrees that
should Employer elect to file an application for patent
protection, either in the United States or in a foreign
country, Employee will execute all necessary papers, including
formal assignments to Employer relating to such patent
applications. The Employee further agrees that he will
cooperate with any attorney or other person, will explain the
nature of the Invention, as required, will review applications
and other papers and will provide any other cooperation
reasonably required for the orderly filing and/or prosecution
of such patent applications.
(b) WORK. The Employee agrees that any Work created by Employee in
the course of performing Employee's duties hereunder and on
behalf of Employer are deemed "work for hire" within the
meaning of Title 17 of the United States Code. Accordingly,
all right, title and interest to the intellectual property
rights for any and all such Work, which have been or will be
prepared by Employee, shall be the property of Employer.
Employee further agrees to assign to Employer any and all
right, title and interest to any copyrights which Employee may
have in any such Work.
8. EMPLOYMENT AND TERM. The Employer agrees to employ and Employee
agrees to be employed by Employer for the period stated herein and upon the
terms and conditions provided in this Agreement. The term of full-time
employment shall be for a period of three (3) years, commencing on October 1,
1998 (the "Commencement Date"), and terminating on the third anniversary
thereof; PROVIDED THAT on each anniversary of the
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Commencement Date, the term shall be extended for an additional one (1) year, so
that on each anniversary date, the remaining term is three (3) years, unless
otherwise terminated in accordance with Section 19 or Section 20, or as mutually
agreed between the parties.
9. COMPENSATION. The Employer shall pay the Employee for all services
contemplated under this Agreement as follows:
(a) A base salary of $124,800 per year, paid on a weekly basis
(the "Base Salary"). The Base Salary shall be increased, but
shall not be decreased, on each October 1st (the "Anniversary
Date") by a percentage which equals the sum of three percent
(3%) plus that percentage by which the Consumer Price Index,
for the Orlando, Florida area, published by the United States
government (the "INDEX"), for the immediately preceding
calendar year exceeds such Index for the next preceding
calendar year. If publication of the Index is discontinued,
the parties hereto shall accept comparable statistics on the
cost of living for the Orlando, Florida area as computed and
published by an agency of the United States government, or if
no such agency computes and publishes such statistics by any
regularly published national financial periodical that does
compute and publish such statistics;
(b) Such other benefits that the Employer may offer to other
senior level management of the Employer and/or members of the
board of directors of the Employer (the "Board of Directors"
or the "Board") from time to time, which benefits may but do
not necessarily include stock options in addition to those
contemplated by Section 17 and performance bonuses;
(c) When a 401(k) plan is established by Employer, a matching
contribution to Employee's 401(k) account equal to a minimum
of twenty-five percent (25%) of Employee's contribution to
such plan, subject to the dollar limitations as provided in
the Internal Revenue Code of 1986, as amended from time to
time; and
(d) A minimum of sixty percent (60%) of the cost of Employee's
medical insurance coverage provided by Employer's medical
plan.
The Employer shall be entitled to deduct and withhold amounts legally required
to be withheld for items such as income taxes, FICA, FUTA, etc.
10. DUTIES. The Employee is bringing unique experience, contacts and a
database to the Employer, which the Employee agrees to use to the benefit of the
Employer in the development of its commercial operations. The Employee is
engaged to act as the Senior Executive Vice President of Business Affairs and
Human Resources of the Employer and shall be responsible for staffing and
personnel matters, overseeing the administration of the Employer's material
contracts, and such additional responsibilities as the President may determine
to be in the best interest of the Employer, and which are appropriate for an
Senior
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Executive Vice President of Business Affairs and Human Resources of an
organization of the type and size of the Employer. Employee shall report
directly to the President. The Employee agrees to serve capacities, without
further compensation, unless the Employee's duties and responsibilities
substantially change or increase, or unless mutually agreed otherwise.
Employee will use his best efforts to promote the interests of the Employer.
11. EXTENT OF SERVICES. The Employee shall not be required to devote
his entire time and attention to the Employer's business; PROVIDED, HOWEVER,
that Employee agrees to provide a minimum of forty (40) hours per week for
services on behalf of Employer (such forty (40) hours shall include time which
the Employee spends traveling from one destination to another destination on
behalf of the Employer but, other than travel time, shall not include time when
the Employee is not actually performing services on behalf of the Employer even
though the Employee may be away from home). Notwithstanding anything herein to
the contrary, the Employee will be called upon from time to time as an element
of his employment to develop business projects which will include the interests
of the Employee and the Employer or its subsidiaries, affiliates or joint
venture interests. Such activities are contemplated in this Agreement and form
an integral part of the Employee's employment.
12. WORKING FACILITIES. The Employee shall have a private and adequate
office, back-up staff, including secretarial assistance in all of the offices of
the Employer in which Employee will be expected to perform his services, and
other adequate services and facilities necessary in order for the Employee to
fulfill the activities contemplated under this Agreement. The Employee will also
have the use of Employer-provided lodging and vehicles and an expense account in
order to fulfill his obligations and responsibilities under this Agreement and
for the development and the commercialization of the Employer's services.
13. DISCLOSURE OF INFORMATION. The Employee and Employer acknowledge
that Employee is coming to his position with unique data, contacts and
experience, distinct from those possessed generally by the Employer. These
contacts, data and information of the Employee are unique to the Employee and
will always be so considered. However, the Employee shall not, during the term
of his employment, disclose or use all or any part of the Employee's unique
knowledge, services or skills that are conceived or reduced to practice during
the term of Employee's employment, to any person, firm, corporation, association
or other entity for any reason or purpose, unless mutually agreed upon in
advance and in writing by the parties to this Agreement. All new projects and
information which are developed by the Employee during his employment with the
Employer shall be considered the Employer's unique knowledge, services or skills
and shall not be taken, disclosed or developed for a project with any third
parties by the Employee, unless agreed upon in advance and in writing by the
Employer upon termination of the Employee's employment.
14. EXPENSES. The Employee may incur reasonable expenses for the
commercialization of the Employer's services and products, including reasonable
expenses for entertainment, travel and similar items. The Employer shall
reimburse the Employee for all such reasonable expenses, which have been
approved by Employer, within thirty (30) days of the Employee's presentation of
an itemized accounting of such expenditures. In the event
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Employee incurs expenses on behalf of the Employer, or Employer pays for
expenses of Employee which are not reimbursable hereunder, Employee agrees to
immediately reimburse Employer for such expenses. As soon as reasonably
practicable, Employer shall secure a corporate charge card for Employee to use
for reimbursable expenses hereunder. The parties hereto acknowledge that if
Employee has loaned funds to the Employer prior to the execution hereof, the
Employer shall repay Employee such loans within ninety (90) days of the date
hereof.
15. VACATIONS. The Employee shall be entitled each year to a vacation,
which period of time and date of scheduling will be mutually agreed upon by the
Employer and Employee; PROVIDED, HOWEVER, the Employee, in any case, shall be
entitled to not less than two (2) weeks vacation time per year, and cumulative
compensation for such vacation time shall be paid each year to the Employee if
such vacation is not taken; PROVIDED, FURTHER, that Employee shall be entitled
to carry over one (1) week of unused vacation from the preceding calendar year
to the current calendar year. Employee shall be paid the pro rata portion of his
regular Base Salary and all other benefits as specified in Section 9, hereunder,
during any vacation period. In the event vacation is not taken or vacation is
rolled over to the next year, compensation for such unused vacation, up to a
maximum of two weeks per calendar year, shall be paid on or before the end of
the calendar year if the Employee so desires and so requests in writing on or
before November 30 of that calendar year; PROVIDED; HOWEVER, that in the event
Employee has rolled over one (1) week's vacation from the preceding calendar
year, the Employee may be compensated for his unused vacation for the then
current calendar year (subject to the two week maximum per calendar year) plus
the one (1) week rolled over from the preceding calendar year and not used in
the then current calendar year.
16. OTHER BENEFITS. Employee shall be entitled to such other benefits
that the Employer may offer to its employees and its Board of Directors from
time to time, including, but not limited to, stock options, medical insurance
and disability insurance. The Employer agrees to pay Employee ten thousand
dollars ($10,000) per year as compensation for the performance of his services
as a member of the Board of Directors, which shall be paid on a pro rata basis
by the fifth (5th) day of the month following the month of board service. Such
compensation shall be in addition to the compensation to which Employee is
entitled under Section 9 hereof.
17. STOCK OPTIONS. Employer shall establish a stock option plan for its
employees, and/or officers (the "Stock Option Plan") and Employee shall be
entitled to participate in such Stock Option Plan.
18. DISABILITY. If the Employee is or becomes, by reason of illness or
incapacity, unable to perform the essential functions of his employment
hereunder, with or without reasonable accommodation, for a period of more than
four (4) weeks (a "Disability"), the compensation thereafter payable to him
during the continued period of such illness or incapacity shall be reduced
initially by twenty-five percent (25%) for the period beginning four (4) weeks
and ending six (6) months after such illness or incapacity begins and then by
fifty percent (50%) if the incapacity or illness continues during the period
beginning six (6) months
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and one (1) day and ending one (1) year after such illness or incapacity begins.
If the Employee should be absent from his employment for a period of more than
one (1) year, the Employer will have the option to terminate this Agreement for
impossibility of execution but the Employer may nonetheless decide to continue
this Agreement with compensation after one (1) year of incapacity. In the event
the Employer secures a disability insurance policy mutually acceptable to
Employee and Employer, then Employer's financial obligations under this Section
18 shall terminate provided that the disability benefits under such policy equal
or exceed the Employer's financial obligations under this Section 18. In
addition to the foregoing disability payments, Employee shall retain the right
to retain any stock options that are exercisable on the date of termination of
employment.
19. TERMINATION OF EMPLOYMENT.
(a) BY EMPLOYER FOR CAUSE. During the term of this Agreement, the
Employer may terminate this Employee's employment for "Cause"
(defined below) upon thirty (30) days' written notice. In the
event that Employee's employment with the Employer is
terminated with Cause, the Employee shall receive only (A) his
Base Salary and benefits earned but unpaid up to the date of
termination of employment, (B) the prorated portion of any
bonuses earned but unpaid up to the date of termination of
employment, calculated based upon a closing of the books of
Employer as of the last day of the month in which termination
occurs and a proration of the annual goals, if any were
established for such year, based upon the portion of the year
that has expired prior to that date, and (C) reimbursement for
any expenses to which Employee is due reimbursement under
Section 14.
For purposes of this Section 19(a), the term "Cause"
shall mean any of the following:
(1) the Employee's willful or negligent
failure or refusal to comply with the written rules
and regulations of Employer from time to time
established by the Board that shall have been
previously delivered to Employee, and that shall not
be inconsistent with the terms or conditions of this
Agreement, and Employee shall not have cured such
failure or refusal within 30 days following receipt
of written notice from Employer of such failure or
refusal; PROVIDED, HOWEVER, that if such failure or
refusal is of such a nature that it cannot be cured
within such 30-day period, then, so long as Employee
shall have commenced such cure within such 30-day
period and shall have thereafter in good faith
continued such cure, Employee shall be deemed to have
cured such failure or refusal; or
(2) the final (non-appealable or foreclosed
from appeal) conviction of Employee of any felony
materially and adversely affecting the property,
reputation or goodwill of Employer or its successors;
or
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(3) the Employee's willful failure or
refusal to perform or Employee's performance in a
grossly negligent manner a material part of his
duties pursuant to the provisions of this Agreement
and Employee shall not have cured such failure or
refusal within 30 days following receipt of written
notice from Employer of such failure or refusal;
PROVIDED, HOWEVER, that if such failure or refusal is
of such a nature that it cannot be cured within such
30-day period, then, so long as Employee shall have
commenced such cure within such 30-day period and
shall have thereafter in good faith continued such
cure, Employee shall be deemed to have cured such
failure or refusal; or
(4) Employee's violation of the terms of
Sections 3, 4, 5, 6, 7 or 13 of this Agreement.
(b) BY EMPLOYER WITHOUT CAUSE. In the event Employer
terminates the Employee's employment without Cause then, in
addition to clauses A through C in Section 19(a), above, (X)
the Employer shall be obligated to pay to the Employee
Employee's annual Base Salary (at the time of termination), on
a weekly basis or consistent with the Employer's payroll
practices at the time, for a period of three (3) years from
and after the date of termination (the "Severance Amount");
(Y) Employee shall have the right to retain any stock options
that were granted to Employee prior to the date of termination
of employment; and (Z) the Employer shall, at its sole cost
(except for Employee dependency coverage contributions, if
any, in effect prior to Employee ceasing to be employed by the
Employer hereunder) maintain in full force and effect from the
date Employee ceases to be employed by the Employer hereunder
and for six (6) months thereafter, all medical, health and
accident, and disability plans, programs, or arrangements in
which Employee is entitled to participate immediately prior to
Employee ceasing to be employed by the Employer hereunder,
provided that Employee's continued participation is possible
under the general terms and provisions of such plans and
programs. In the event that Employee's participation in any
such plan or program is barred (other than as a result of a
misrepresentation or misconduct of Employee), the Employer
shall arrange at its sole expense to provide him with benefits
substantially similar to those which he is entitled to receive
under such plans and programs for the six-month term,
including, without limitation, reimbursement of COBRA premium
payments. To the extent that Employee mitigates his damages
through the accrual or receipt of a salary, or the provision
of health or other benefits referenced hereinabove, through
self-employment or employment with another entity, the
Severance Amount and/or applicable benefits referenced
hereinabove shall be adjusted by off-set of amounts or
benefits received by Employee in mitigation. Upon written
request by Employer, Employee shall provide to Employer
information as to such mitigation within ten (10) days of
receipt of such request. If Employee's employment is
terminated without Cause,
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Employee shall be deemed released from the non-competition
provisions of Section 22 of this Agreement upon such
termination; PROVIDED, HOWEVER, Employee shall not be deemed
released from his obligations under Sections 3, 4, 5, 6, 7 or
13 of this Agreement.
(c) VOLUNTARILY BY EMPLOYEE. Employee may, at his option,
terminate his employment under this Agreement at any time upon
ninety (90) days prior written notice to Employer. If Employee
voluntarily terminates employment with Employer, then Employee
shall receive only (i) his Base Salary and benefits earned but
unpaid up to the date of termination of employment, (ii) two
weeks salary, calculated based on Employee's salary then in
effect at the time of termination of employment, (iii) the
prorated portion of any bonuses earned but unpaid at the time
of termination of employment, calculated in accordance with
subsection (a)(ii) above; and, if Employee voluntarily
terminates his employment pursuant to Section 20, Employee
shall also be entitled to retain any exercisable stock
options.
(d) If Employee is terminated for Cause, or if Employee
voluntarily terminates his employment (except in the event of
a Change of Control (defined below), any stock options granted
to Employee under a Stock Option Plan or otherwise shall
terminate immediately upon termination of employment.
(e) Employee's employment with the Company may not be
terminated for Cause under Section 19(a), above, or without
Cause under Section 19(b), above, without the approval of a
majority of the members of the Board of Directors then in
office.
20. TERMINATION BY EMPLOYEE UPON CHANGE OF CONTROL. The Employee may
terminate Employee's employment at any time by giving ten (10) days prior
written notice to the Employer upon a Change of Control. A "Change of Control"
means the occurrence of any of the following events after the date of this
Agreement:
(a) a change in control of the Employer occurring after the
date of this Agreement of a nature that would be required to be reported in
response to Item 1 of the Current Report on Form 8-K (or in response to any
similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the Employer is then subject to
such reporting requirement;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Employer
representing twenty-five percent (25%) or more of the combined voting power of
the Employer's then outstanding securities without the prior approval of at
least two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage (excluding for this purpose, any acquisitions
by (X) the Employer or its subsidiaries, (Y) any person, entity or "group" that
as of the date of this
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Agreement owns beneficial ownership, as defined in Rule 13d-3 of the Act, or (Z)
any employee benefit plan of the Employer or its subsidiaries;
(c) the Employer is a party to a merger, consolidation, sale
of assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or
(d) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Employer's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
21. DEATH DURING EMPLOYMENT. Upon the death of Employee during the term
of employment, the Employer shall pay to Employee's estate the compensation that
would otherwise be payable to the Employee through the end of the month of his
death. In addition, three (3) months further compensation shall be paid in one
(1) lump sum to his surviving spouse or, if there is no surviving spouse, to the
surviving children of the Employee, or to his estate if there are no surviving
children.
22. NON-COMPETITION.
(a) During his employment, and for a period of two (2) years after
the expiration or termination of such employment (the
"Noncompetition Period"), Employee specifically agrees that
Employee shall not (except on the behalf of Employer or any of
its affiliated entities while Employee is employed by
Employer), either directly or indirectly, as a stockholder of
any corporation or partner of any partnership or as an
employee, owner, principal or agent, or in any other manner,
engage in any business within a radius of 100 miles from any
location of Employer's business (the "Geographic Area"), which
competes with, in any manner, any business conducted by
Employer at the time of termination of this Agreement.
Employee agrees that so long as Employee is working for
Employer, Employee shall not undertake the planning or
organizing of any business activity competitive with the
business of Employer. Employee agrees not to directly or
indirectly solicit any of Employer's employees to work for
Employee or for any business which is competitive with any
business conducted by Employer prior to the date on which
Employee's employment with Employer is terminated with
Employer within the Geographic Area and during the
Noncompetition Period.
(b) The periods of time during which Employee is prohibited from
engaging in such business practices pursuant to this Section
22 shall be extended by any length of time during which
Employee is in breach of any of such covenants. The
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restrictive covenants contained within this Section 22 are
essential elements of this Agreement, and that, but for the
agreement of Employee to comply with such covenants, Employer
would not have entered into this Agreement. If any portion of
the covenants set forth in this Section 22 are held by a court
of competent jurisdiction to be unreasonable, arbitrary or
against public policy, then such portion of such covenants
shall be considered divisible both as to time and geographical
area. Employer and Employee agree that, if any court of
competent jurisdiction determines that the Noncompetition
Period or the Geographic Area applicable to this Agreement is
unreasonable, arbitrary and/or against public policy, then a
lesser time period or geographical area which is determined to
be reasonable, non-arbitrary and not against public policy may
be enforced against Employee.
(c) Intentionally Omitted.
(d) Employee acknowledges that any violation of this Section 22
will result in irreparable injury to Employer for which there
is no adequate remedy at law. Employee agrees that, in the
event he breaches or threatens to breach this Section 22,
Employer, without posting a bond, shall be entitled to
injunctive relief, both preliminary and permanent, in addition
to any other remedies at law or in equity available to
Employer.
(e) If Employee's employment with Employer is terminated without
Cause, Employee shall be deemed released from his obligations
under this Section 22 upon such termination.
23. DISPUTES; ATTORNEYS' FEES. Except in the case of Employer's right
to seek injunctive relief under Section 22(d) and Section 24(b) of this
Agreement, the parties mutually agree to submit any controversy or claim arising
out of or proceeding forth from or relating to this Agreement or its breach to
be settled by arbitration (which may be binding if the parties mutually agree at
the time). Such arbitration shall be held in the County of Seminole, State of
Florida, utilizing the procedure and arbitrators acquainted with the American
Arbitration Association rules and procedure for arbitration. If binding
arbitration, judgment upon award rendered may be entered and enforced in any
court of competent jurisdiction. In the event any dispute arises under the terms
hereof, Employer shall continue to pay Employee the Base Salary and benefits to
which he is entitled hereunder until such time that a final determination is
made by an arbitrator hereunder; PROVIDED, HOWEVER, that if it is determined
that the termination of Employee's employment was justified, the Employee hereby
undertakes and agrees to repay to the Employer the amount of Base Salary that
was paid by Employer during the arbitration procedure. The non-prevailing party
shall be responsible for the prevailing party's reasonable legal fees and costs
(including post-judgment collection fees and costs).
24. ENFORCEMENT.
(a) Whenever there is any conflict between any provision
of
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this Agreement and any law, statute, governmental
rule, ordinance or regulation, the latter shall
prevail. In such event, the affected provisions of
this Agreement will be curtailed and restricted only
to the extent necessary to bring them within the
legal requirements, and the remainder of this
Agreement shall not be affected. Should it be
determined that any provision of this Agreement is
unenforceable, the Employee specifically requests
that the court or arbitrator making such
determination modify and reform the provision found
to be unenforceable, and in its modified form,
specifically enforce the Agreement.
(b) Employee acknowledges that any violation of Sections
3, 4, 5, 6, 7, 13 or 22 of this Agreement (referred
to individually and collectively in this subsection
(b) as "Sections") will result in irreparable injury
to Employer for which there is no adequate remedy at
law. Employee agrees that, in the event he breaches
or threatens to breach any of such Sections,
Employer, without posting a bond, shall be entitled
to injunctive relief, both preliminary and permanent,
in addition to any other remedies at law or in equity
available to Employer.
25. INDEMNIFICATION. Employee shall be indemnified in accordance with
the terms and provisions of that certain Indemnification Agreement, dated as of
the date hereof, between Employer and Employee.
26. CHOICE OF LAW. This Agreement and the performance hereunder and all
suits and special proceedings hereunder shall be construed in accordance with
the laws of the State of Florida. In any action, special proceeding or other
proceeding that may be brought arising out of, in connection with, or by reason
of this Agreement, the laws of the State of Florida shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which the action or special proceeding may be instituted.
All actions under this Agreement, if not resolved by arbitration, shall be taken
in a court of competent jurisdiction within Seminole County, Florida and
Employee hereby waives and agrees that he shall not assert that such forum is
inconvenient.
27. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing and sent by certified U.S. mail,
or by Federal Express or other overnight delivery service to the Employee's
residence, or to the Employer's principal office, as the case may be.
28. WAIVER OF BREACH. Employer shall waive a breach by the Employee of
any provision of this Agreement only if such waiver is executed in writing by a
duly authorized officer of the Employer. Employee shall waive a breach by the
Employer of any provision of this Agreement only if such waiver is executed in
writing by Employee.
29. ASSIGNMENT. Both parties acknowledge that the services of the
Employee and
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the Employer are unique to this Agreement and neither party may assign the
rights or delegate the duties of this Agreement to another. Notwithstanding
anything herein to the contrary, the Employee may perform his unique services
under this Agreement for any of the subsidiaries, affiliates or joint ventures
of the Employer.
30. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties and may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
31. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe the provisions hereof.
32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
33. WAIVER OF CONFLICT OF INTEREST. The parties acknowledge that,
notwithstanding Employee's use of Employer's attorneys for personal legal
matters unrelated to this Agreement, the Employer may continue to use the legal
counsel of its choice in connection with the resolution of any disputes between
the parties hereto without such representation constituting an improper or
ethical conflict of interest.
34. FURTHER ACTIONS. Each party to this Agreement shall take such
further actions to execute, file, record, publish and deliver such additional
certificates, instruments, agreements and other documents as the other party
may, from time to time, reasonably request, in order to accomplish the purposes
of this Agreement.
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35. APPOINTMENT TO BOARD OF DIRECTORS. Employee was appointed to the
Board of Directors in September 1998 and is entitled to receive the prorated
portion of the $10,000 annual director compensation.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date and year indicated above.
EMPLOYEE: /s/ MICHAEL A. FOUTS
-----------------------------------
MICHAEL R. FOUTS
EMPLOYER: MIRACOM CORPORATION
By: /s/ SHAWN D. LUCAS
-------------------------------
Name: SHAWN D. LUCAS
Title: CO-CHIEF EXECUTIVE OFFICER
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") was entered into
effective November 8, 1999, by and between MIRACOM CORPORATION (hereinafter, the
"Employer") and MICHAEL R. FOUTS (hereinafter, the "Employee").
RECITALS
A. WHEREAS, on February 12, 1999, Employer and Employee entered into an
employment agreement (the "Employment Agreement"); and
B. WHEREAS, Employer and Employee desire to make certain modifications
to the Employment Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of Employee's employment and
possibility of promotion, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is hereby agreed
that the Employment Agreement is amended in the following particulars:
1. Section 9 (COMPENSATION). Subsection 9(a) of the Employment
Agreement is hereby amended to change Employee's the Base Salary to $72,000 per
year, effective November 8, 1999, payable bi-weekly or otherwise in accordance
with Employer's standard payroll practices. Further amended and in accordance
with Employer's current standard payroll practice at the time, the employee
shall receive a base salary of $89,000 for the period August 30, 1999 through
October 24, 1999 and shall defer payment of the difference between the original
Base Salary ($124,800) and the newly adjusted amount ($89,000) for that same
time period. All other provisions of subsection 9(a) not amended hereby shall
remain the same.
2. Section 10 (DUTIES). Section 10 is hereby amended in its
entirety as follows:
"The Employee is engaged to act as the Director of Business
Affairs of Employer and as such shall be responsible for the
administration affairs of Employer, including supervising the
administration of Employer's material contracts, with such
additional responsibilities as the Employer may determine to
be in the best interest of the Employer, and which are
appropriate for a similar position in organizations of the
type and size of Employer. Employee agrees to serve in such
capacity, without further compensation, unless the Employee's
duties and responsibilities substantially change or increase,
or unless mutually agreed otherwise. Employee shall report
directly to the President and the Chief Financial Officer of
Employer. Employee will use his best efforts to promote the
interests of the Employer."
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3. Section 15 (VACATIONS). Section 15 is hereby amended in its entirety
as follows:
"(a) Employee shall be entitled each year to a vacation, which
period of time and date of scheduling will be mutually agreed
upon by Employer and Employee; PROVIDED, HOWEVER, the
Employee, in any case, shall be entitled to not less than two
weeks vacation time per year, and cumulative compensation for
such vacation time shall be paid each year to the Employee if
such vacation is not taken in the applicable year or if not
carried forward to the next calendar year in accordance with
this Section 15. Employee shall be entitled to carry over one
(1) week of unused vacation to the next succeeding calendar
year.
(b) Employee shall be paid the pro rata portion of his regular
Base Salary and provided all other benefits as specified in
Section 9 during any vacation period taken. Any payments made
to Employee in respect of vacation not taken or rolled over to
the next calendar year shall be paid to Employee in the last
pay period of the calendar year in which such vacation was not
taken. The maximum compensation payable to Employee in any
calendar year for unused vacation shall be two weeks of unused
vacation in such calendar year plus one week of unused
vacation, if any, that was rolled over as unused vacation from
the previous calendar year."
4. Section 16 (OTHER BENEFITS). Section 16 of the Employment Agreement
is hereby amended to eliminate the $10,000 fee for Employee's service on the
Board of Directors, such fees having terminated effective June 1, 1999. Employee
shall serve on the Board of Directors without additional compensation, except
for reimbursement of expenses incurred in attending meetings of the Board of
Directors and its committees. However, nothing in this Section 16, as amended,
is intended to prevent Employee's participation in any stock option plan as an
employee or as a director of Employer.
5. All other provisions of the Employment Agreement not herein amended
remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereby have executed this Amendment to
Employment Agreement as of September 30, 1999 to be effective November 8, 1999.
EMPLOYEE: /s/ Michael R. Fouts
---------------------------------------
MICHAEL R. FOUTS
EMPLOYER: MIRACOM CORPORATION
By: /s/ Scott Anderson
-----------------------------------
Name: Scott Anderson
Title: Co-Chief Executive Officer
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Exhibit 6.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT was entered into the 12th day of February
1999, by and between MIRACOM CORPORATION (hereinafter, the "Employer") and DAVID
McCOMAS (hereinafter, the "Employee").
In consideration of the Employee's employment and possibility for
promotion, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employee hereby agrees as
follows:
1. PURPOSE. The purpose of this Agreement is to set forth the terms
and conditions of Employee's employment and to define the obligations between
Employee and Employer regarding trade secrets, as defined in Florida Statutes
Section 688.002(4), including, without limitation, Confidential Information (as
defined herein) belonging to the Employer, inventions and intellectual property
created, in whole or in part, by the Employee, communication with the Employer's
customers and retention of the employees of the Employer. Employee recognizes
that the business of Employer and the nature of Employee's employment will
permit Employee to have access to trade secrets and Confidential Information of
Employer and to its Clients, and that such trade secrets and Confidential
Information are the exclusive property of Employer, disclosure of which would be
prejudicial to Employer's business interests and cause the Employer irreparable
harm. Notwithstanding any other provision of this Agreement, the Employer and
Employee agree that Employee is not prohibited from owning, operating or
performing services for the unrelated business(es) in which he is currently
involved and which are specifically identified on SCHEDULE 1 hereto.
2. DEFINITIONS
(a) "EMPLOYER" shall mean MIRACOM CORPORATION and all of its
divisions, subsidiaries, affiliates and any successors or
assigns.
(b) "CLIENT" shall mean any person or entity with whom Employer
conducts business or from whom Employer or Employee obtains
information concerning the business and industry in which
Employer operates, including, but not limited to, customers,
consultants, advisors and suppliers of the Employer.
(c) "TRADE SECRET" shall have the meaning set forth in Florida
Statutes Section 688.002(4), and shall include, without
limitation, ideas, information, compilations, computer programs
and related data bases which are not described in any literature
published and distributed publicly by Employer and which are not
readily ascertainable from inspection of commercially available
sources, including, but not limited to, computer programs written
by and for the Employer, data bases, generated reports, related
proprietary information and marketing studies.
<PAGE> 2
(d) "CONFIDENTIAL INFORMATION" shall mean all information pertaining
to the business of Employer or Clients which is of value to
Employer, is not generally known to Employer's competitors or to
the public, and is treated as confidential by Employer and
Clients, including, but not limited to, (i) information
pertaining to product research and development; (ii) existing and
future business and marketing plans; (iii) financial, accounting,
sales and purchasing data; (iv) customer and supplier identity;
(v) personnel matters; (vi) techniques, policies and procedures
related to the operation of Employer and Clients; (vii) terms of
relationships with Clients; (viii) identity of prospective
Clients; (ix) identity of business opportunities available to
Employer; and (x) inventions and intellectual property of the
Employer.
(e) "INVENTION" shall mean any discovery, idea, improvement or
contribution, whether or not patentable, including, but not
limited to, any computer program, process, method, formula or
technique, as well as improvements thereto, which is new or which
Employer reasonably believes may be new.
(f) "WORK" shall mean any written, typed or printed material
prepared, in whole or in part, by Employee during the term of his
employment hereunder including, but not limited to, technical
descriptions of products, computer software, user guides,
illustrations, advertising materials, training manuals, contracts
and any contributions to any such material.
3. TRADE SECRETS. During and at any time subsequent to termination
of his employment by Employer, Employee will not disclose or otherwise
misappropriate any Trade Secret of the Employer for his own use or for the use
of any person, corporation, partnership, firm or other entity.
4. CONFIDENTIAL INFORMATION. During his employment, and for a two
(2) year period following termination of employment, Employee will not disclose
or misappropriate any Confidential Information for his own use or for the use of
any person, corporation, partnership, firm or other entity. Employee shall not
remove any writings containing Confidential Information from the premises or
possession of Employer or its Clients, or make copies or memoranda thereof.
Furthermore, Employee will deliver promptly to Employer, at termination of his
employment, or at any time Employer may so request, all copies and originals of
any writings containing Confidential Information which Employee may possess or
have or have had under his control.
5. NON-SOLICITATION. During his employment, and for a two (2) year
period following termination of employment, Employee will not, either directly
or indirectly, consult, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any actual or targeted prospective Client of
Employer who has been a Client or targeted prospective Client of Employer at any
time during the 12-month period preceding termination of Employee's employment.
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<PAGE> 3
6. NON-SOLICITATION OF EMPLOYEES. During his employment, and for a
two (2) year period following termination of employment, Employee will not hire,
attempt to hire or employ, directly or indirectly, any employee of Employer.
During such period, Employee will not encourage or induce any employee of
Employer to leave the employment of Employer.
7. ASSIGNMENT OF RIGHTS.
(a) INVENTIONS. The Employee agrees that if he conceives of an
Invention or reduces an Invention to practice during his
employment, Employee will promptly provide a written description
of the Invention ("Invention Summary") to an officer of the
Employer (other than Employee). The Employee shall request that
such officer acknowledge in writing the receipt of such Invention
Summary, a copy of which both Employee and Employer shall retain
in their records. The Employer shall have thirty (30) days to
provide written notice to Employee whether or not it wishes to
claim an interest in the Invention. If timely notice is given to
Employee that Employer claims an interest in the Invention,
Employee agrees that such Invention, and all patent rights to
such Invention, shall become the exclusive property of Employer,
and the Employee hereby irrevocably assigns to Employer any and
all of Employee's rights to such Invention. Employee agrees that
should Employer elect to file an application for patent
protection, either in the United States or in a foreign country,
Employee will execute all necessary papers, including formal
assignments to Employer relating to such patent applications. The
Employee further agrees that he will cooperate with any attorney
or other person, will explain the nature of the Invention, as
required, will review applications and other papers and will
provide any other cooperation reasonably required for the orderly
filing and/or prosecution of such patent applications.
(b) WORK. The Employee agrees that any Work created by Employee
in the course of performing Employee's duties hereunder and on
behalf of Employer are deemed "work for hire" within the meaning
of Title 17 of the United States Code. Accordingly, all right,
title and interest to the intellectual property rights for any
and all such Work, which have been or will be prepared by
Employee, shall be the property of Employer. Employee further
agrees to assign to Employer any and all right, title and
interest to any copyrights which Employee may have in any such
Work.
8. EMPLOYMENT AND TERM. The Employer agrees to employ and Employee
agrees to be employed by Employer for the period stated herein and upon the
terms and conditions provided in this Agreement. The term of full-time
employment shall be for a period of three (3) years, commencing on October 1,
1998 (the "Commencement Date"), and terminating on the third anniversary
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<PAGE> 4
thereof; PROVIDED THAT on each anniversary of the Commencement Date, the term
shall be extended for an additional one (1) year, so that on each anniversary
date, the remaining term is three (3) years, unless otherwise terminated in
accordance with Section 19 or Section 20, or as mutually agreed between the
parties.
9. COMPENSATION. The Employer shall pay the Employee for all
services contemplated under this Agreement as follows:
(a) A base salary of $124,800 per year, paid on a weekly basis (the
"Base Salary"). The Base Salary shall be increased, but shall not
be decreased, on each October 1st (the "Anniversary Date") by a
percentage which equals the sum of three percent (3%) plus that
percentage by which the Consumer Price Index, for the Orlando,
Florida area, published by the United States government (the
"INDEX"), for the immediately preceding calendar year exceeds
such Index for the next preceding calendar year. If publication
of the Index is discontinued, the parties hereto shall accept
comparable statistics on the cost of living for the Orlando,
Florida area as computed and published by an agency of the United
States government, or if no such agency computes and publishes
such statistics by any regularly published national financial
periodical that does compute and publish such statistics;
(b) Such other benefits that the Employer may offer to other senior
level management of the Employer and/or members of the board of
directors of the Employer (the "Board of Directors" or the
"Board") from time to time, which benefits may but do not
necessarily include stock options in addition to those
contemplated by Section 17 and performance bonuses;
(c) When a 401(k) plan is established by Employer, a matching
contribution to Employee's 401(k) account equal to a minimum of
twenty-five percent (25%) of Employee's contribution to such
plan, subject to the dollar limitations as provided in the
Internal Revenue Code of 1986, as amended from time to time; and
(d) A minimum of sixty percent (60%) of the cost of Employee's
medical insurance coverage provided by Employer's medical plan.
The Employer shall be entitled to deduct and withhold amounts legally required
to be withheld for items such as income taxes, FICA, FUTA, etc.
10. DUTIES. The Employee is bringing unique experience, contacts and
a database to the Employer, which the Employee agrees to use to the benefit of
the Employer in the development of its commercial operations. The Employee is
engaged to act as the President and Chief Operating Officer of the Employer and
shall be responsible for the day to day business operations of Employer, and
such additional responsibilities as the Co-Chief Executive Officers may
determine to be in the best interest of the Employer, and which are appropriate
for the President and Chief Operating Officer of an organization of the type and
size of the Employer. Employee shall report directly to the Co-Chief Executive
Officers. The Employee agrees to serve capacities, without further compensation,
unless the Employee's duties and responsibilities substantially change or
increase, or unless mutually agreed otherwise. Employee will use his best
efforts to promote the interests of the Employer.
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<PAGE> 5
11. EXTENT OF SERVICES. The Employee shall not be required to devote
his entire time and attention to the Employer's business; PROVIDED, HOWEVER,
that Employee agrees to provide a minimum of forty (40) hours per week for
services on behalf of Employer (such forty (40) hours shall include time which
the Employee spends traveling from one destination to another destination on
behalf of the Employer but, other than travel time, shall not include time when
the Employee is not actually performing services on behalf of the Employer even
though the Employee may be away from home). Notwithstanding anything herein to
the contrary, the Employee will be called upon from time to time as an element
of his employment to develop business projects which will include the interests
of the Employee and the Employer or its subsidiaries, affiliates or joint
venture interests. Such activities are contemplated in this Agreement and form
an integral part of the Employee's employment.
12. WORKING FACILITIES. The Employee shall have a private and
adequate office, back-up staff, including secretarial assistance in all of the
offices of the Employer in which Employee will be expected to perform his
services, and other adequate services and facilities necessary in order for the
Employee to fulfill the activities contemplated under this Agreement. The
Employee will also have the use of Employer-provided lodging and vehicles and an
expense account in order to fulfill his obligations and responsibilities under
this Agreement and for the development and the commercialization of the
Employer's services.
13. DISCLOSURE OF INFORMATION. The Employee and Employer acknowledge
that Employee is coming to his position with unique data, contacts and
experience, distinct from those possessed generally by the Employer. These
contacts, data and information of the Employee are unique to the Employee and
will always be so considered. However, the Employee shall not, during the term
of his employment, disclose or use all or any part of the Employee's unique
knowledge, services or skills that are conceived or reduced to practice during
the term of Employee's employment, to any person, firm, corporation, association
or other entity for any reason or purpose, unless mutually agreed upon in
advance and in writing by the parties to this Agreement. All new projects and
information which are developed by the Employee during his employment with the
Employer shall be considered the Employer's unique knowledge, services or skills
and shall not be taken, disclosed or developed for a project with any third
parties by the Employee, unless agreed upon in advance and in writing by the
Employer upon termination of the Employee's employment.
14. EXPENSES. The Employee may incur reasonable expenses for the
commercialization of the Employer's services and products, including reasonable
expenses for entertainment, travel and similar items. The Employer shall
reimburse the Employee for all such reasonable expenses, which have been
approved by Employer, within thirty (30) days of the Employee's presentation of
an itemized accounting of such expenditures. In the event Employee incurs
expenses on behalf of the Employer, or Employer pays for expenses of Employee
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<PAGE> 6
which are not reimbursable hereunder, Employee agrees to immediately reimburse
Employer for such expenses. As soon as reasonably practicable, Employer shall
secure a corporate charge card for Employee to use for reimbursable expenses
hereunder. The parties hereto acknowledge that if Employee has loaned funds to
the Employer prior to the execution hereof, the Employer shall repay Employee
such loans within ninety (90) days of the date hereof.
15. VACATIONS. The Employee shall be entitled each year to a
vacation, which period of time and date of scheduling will be mutually agreed
upon by the Employer and Employee; PROVIDED, HOWEVER, the Employee, in any case,
shall be entitled to not less than two (2) weeks vacation time per year, and
cumulative compensation for such vacation time shall be paid each year to the
Employee if such vacation is not taken; PROVIDED, FURTHER, that Employee shall
be entitled to carry over one (1) week of unused vacation from the preceding
calendar year to the current calendar year. Employee shall be paid the pro rata
portion of his regular Base Salary and all other benefits as specified in
Section 9, hereunder, during any vacation period. In the event vacation is not
taken or vacation is rolled over to the next year, compensation for such unused
vacation, up to a maximum of two weeks per calendar year, shall be paid on or
before the end of the calendar year if the Employee so desires and so requests
in writing on or before November 30 of that calendar year; PROVIDED; HOWEVER,
that in the event Employee has rolled over one (1) week's vacation from the
preceding calendar year, the Employee may be compensated for his unused vacation
for the then current calendar year (subject to the two week maximum per calendar
year) plus the one (1) week rolled over from the preceding calendar year and not
used in the then current calendar year.
16. OTHER BENEFITS. Employee shall be entitled to such other benefits
that the Employer may offer to its employees and its Board of Directors from
time to time, including, but not limited to, stock options, medical insurance
and disability insurance. The Employer agrees to pay Employee ten thousand
dollars ($10,000) per year as compensation for the performance of his services
as a member of the Board of Directors, which shall be paid on a pro rata basis
by the fifth (5th) day of the month following the month of board service. Such
compensation shall be in addition to the compensation to which Employee is
entitled under Section 9 hereof.
17. STOCK OPTIONS. Employer shall establish a stock option plan for
its employees, and/or officers (the "Stock Option Plan") and Employee shall be
entitled to participate in such Stock Option Plan.
18. DISABILITY. If the Employee is or becomes, by reason of illness
or incapacity, unable to perform the essential functions of his employment
hereunder, with or without reasonable accommodation, for a period of more than
four (4) weeks (a "Disability"), the compensation thereafter payable to him
during the continued period of such illness or incapacity shall be reduced
initially by twenty-five percent (25%) for the period beginning four (4) weeks
and ending six (6) months after such illness or incapacity begins and then by
fifty percent (50%) if the incapacity or illness continues during the period
beginning six (6) months and one (1) day and ending one (1) year after such
illness or incapacity begins. If the Employee should be absent from his
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<PAGE> 7
employment for a period of more than one (1) year, the Employer will have the
option to terminate this Agreement for impossibility of execution but the
Employer may nonetheless decide to continue this Agreement with compensation
after one (1) year of incapacity. In the event the Employer secures a disability
insurance policy mutually acceptable to Employee and Employer, then Employer's
financial obligations under this Section 18 shall terminate provided that the
disability benefits under such policy equal or exceed the Employer's financial
obligations under this Section 18. In addition to the foregoing disability
payments, Employee shall retain the right to retain any stock options that are
exercisable on the date of termination of employment.
19. TERMINATION OF EMPLOYMENT.
(a) BY EMPLOYER FOR CAUSE. During the term of this Agreement, the
Employer may terminate this Employee's employment for "Cause"
(defined below) upon thirty (30) days' written notice. In the
event that Employee's employment with the Employer is terminated
with Cause, the Employee shall receive only (A) his Base Salary
and benefits earned but unpaid up to the date of termination of
employment, (B) the prorated portion of any bonuses earned but
unpaid up to the date of termination of employment, calculated
based upon a closing of the books of Employer as of the last day
of the month in which termination occurs and a proration of the
annual goals, if any were established for such year, based upon
the portion of the year that has expired prior to that date, and
(C) reimbursement for any expenses to which Employee is due
reimbursement under Section 14.
For purposes of this Section 19(a), the term "Cause" shall
mean any of the following:
(1) the Employee's willful or negligent failure or
refusal to comply with the written rules and regulations of
Employer from time to time established by the Board that shall
have been previously delivered to Employee, and that shall not
be inconsistent with the terms or conditions of this
Agreement, and Employee shall not have cured such failure or
refusal within 30 days following receipt of written notice
from Employer of such failure or refusal; PROVIDED, HOWEVER,
that if such failure or refusal is of such a nature that it
cannot be cured within such 30-day period, then, so long as
Employee shall have commenced such cure within such 30-day
period and shall have thereafter in good faith continued such
cure, Employee shall be deemed to have cured such failure or
refusal; or
(2) the final (non-appealable or foreclosed from appeal)
conviction of Employee of any felony materially and adversely
affecting the property, reputation or goodwill of Employer or
its successors; or
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<PAGE> 8
(3) the Employee's willful failure or refusal to perform
or Employee's performance in a grossly negligent manner a
material part of his duties pursuant to the provisions of this
Agreement and Employee shall not have cured such failure or
refusal within 30 days following receipt of written notice
from Employer of such failure or refusal; PROVIDED, HOWEVER,
that if such failure or refusal is of such a nature that it
cannot be cured within such 30-day period, then, so long as
Employee shall have commenced such cure within such 30-day
period and shall have thereafter in good faith continued such
cure, Employee shall be deemed to have cured such failure or
refusal; or
(4) Employee's violation of the terms of Sections 3, 4,
5, 6, 7 or 13 of this Agreement.
(b) BY EMPLOYER WITHOUT CAUSE. In the event Employer terminates
the Employee's employment without Cause then, in addition to
clauses A through C in Section 19(a), above, (X) the Employer
shall be obligated to pay to the Employee Employee's annual Base
Salary (at the time of termination), on a weekly basis or
consistent with the Employer's payroll practices at the time, for
a period of three (3) years from and after the date of
termination (the "Severance Amount"); (Y) Employee shall have the
right to retain any stock options that were granted to Employee
prior to the date of termination of employment; and (Z) the
Employer shall, at its sole cost (except for Employee dependency
coverage contributions, if any, in effect prior to Employee
ceasing to be employed by the Employer hereunder) maintain in
full force and effect from the date Employee ceases to be
employed by the Employer hereunder and for six (6) months
thereafter, all medical, health and accident, and disability
plans, programs, or arrangements in which Employee is entitled to
participate immediately prior to Employee ceasing to be employed
by the Employer hereunder, provided that Employee's continued
participation is possible under the general terms and provisions
of such plans and programs. In the event that Employee's
participation in any such plan or program is barred (other than
as a result of a misrepresentation or misconduct of Employee),
the Employer shall arrange at its sole expense to provide him
with benefits substantially similar to those which he is entitled
to receive under such plans and programs for the six-month term,
including, without limitation, reimbursement of COBRA premium
payments. To the extent that Employee mitigates his damages
through the accrual or receipt of a salary, or the provision of
health or other benefits referenced hereinabove, through
self-employment or employment with another entity, the Severance
Amount and/or applicable benefits referenced hereinabove shall be
adjusted by off-set of amounts or benefits received by Employee
in mitigation. Upon written request by Employer, Employee shall
provide to Employer information as to such mitigation within ten
(10) days of receipt of such request. If Employee's employment is
terminated without Cause, Employee shall be deemed released from
the non-competition provisions of Section 22 of this Agreement
upon such termination; PROVIDED, HOWEVER, Employee shall not be
deemed released from his obligations under Sections 3, 4, 5, 6, 7
or 13 of this Agreement.
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(c) VOLUNTARILY BY EMPLOYEE. Employee may, at his option,
terminate his employment under this Agreement at any time upon
ninety (90) days prior written notice to Employer. If Employee
voluntarily terminates employment with Employer, then Employee
shall receive only (i) his Base Salary and benefits earned but
unpaid up to the date of termination of employment, (ii) two
weeks salary, calculated based on Employee's salary then in
effect at the time of termination of employment, (iii) the
prorated portion of any bonuses earned but unpaid at the time
of termination of employment, calculated in accordance with
subsection (a)(ii) above; and, if Employee voluntarily
terminates his employment pursuant to Section 20, Employee
shall also be entitled to retain any exercisable stock
options.
(d) If Employee is terminated for Cause, or if Employee
voluntarily terminates his employment (except in the event of
a Change of Control (defined below), any stock options granted
to Employee under a Stock Option Plan or otherwise shall
terminate immediately upon termination of employment.
(e) Employee's employment with the Company may not be
terminated for Cause under Section 19(a), above, or without
Cause under Section 19(b), above, without the approval of a
majority of the members of the Board of Directors then in
office.
20. TERMINATION BY EMPLOYEE UPON CHANGE OF CONTROL. The Employee
may terminate Employee's employment at any time by giving ten (10) days prior
written notice to the Employer upon a Change of Control. A "Change of Control"
means the occurrence of any of the following events after the date of this
Agreement:
(a) a change in control of the Employer occurring after the
date of this Agreement of a nature that would be required to be reported in
response to Item 1 of the Current Report on Form 8-K (or in response to any
similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934 (the "Act"), whether or not the Employer is then subject to
such reporting requirement;
(b) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Employer
representing twenty-five percent (25%) or more of the combined voting power of
the Employer's then outstanding securities without the prior approval of at
least two-thirds of the members of the Board in office immediately prior to such
person attaining such percentage (excluding for this purpose, any acquisitions
by (X) the Employer or its subsidiaries, (Y) any person, entity or "group" that
as of the date of this Agreement owns beneficial ownership, as defined in Rule
13d-3 of the Act, or (Z) any employee benefit plan of the Employer or its
subsidiaries;
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(c) the Employer is a party to a merger, consolidation, sale
of assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or
(d) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Employer's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
21. DEATH DURING EMPLOYMENT. Upon the death of Employee during the
term of employment, the Employer shall pay to Employee's estate the compensation
that would otherwise be payable to the Employee through the end of the month of
his death. In addition, three (3) months further compensation shall be paid in
one (1) lump sum to his surviving spouse or, if there is no surviving spouse, to
the surviving children of the Employee, or to his estate if there are no
surviving children.
22. NON-COMPETITION.
(a) During his employment, and for a period of two (2) years after
the expiration or termination of such employment (the
"Noncompetition Period"), Employee specifically agrees that
Employee shall not (except on the behalf of Employer or any of
its affiliated entities while Employee is employed by
Employer), either directly or indirectly, as a stockholder of
any corporation or partner of any partnership or as an
employee, owner, principal or agent, or in any other manner,
engage in any business within a radius of 100 miles from any
location of Employer's business (the "Geographic Area"), which
competes with, in any manner, any business conducted by
Employer at the time of termination of this Agreement.
Employee agrees that so long as Employee is working for
Employer, Employee shall not undertake the planning or
organizing of any business activity competitive with the
business of Employer. Employee agrees not to directly or
indirectly solicit any of Employer's employees to work for
Employee or for any business which is competitive with any
business conducted by Employer prior to the date on which
Employee's employment with Employer is terminated with
Employer within the Geographic Area and during the
Noncompetition Period.
(b) The periods of time during which Employee is prohibited from
engaging in such business practices pursuant to this Section
22 shall be extended by any length of time during which
Employee is in breach of any of such covenants. The
restrictive covenants contained within this Section 22 are
10
<PAGE> 11
essential elements of this Agreement, and that, but for the
agreement of Employee to comply with such covenants, Employer
would not have entered into this Agreement. If any portion of
the covenants set forth in this Section 22 are held by a court
of competent jurisdiction to be unreasonable, arbitrary or
against public policy, then such portion of such covenants
shall be considered divisible both as to time and geographical
area. Employer and Employee agree that, if any court of
competent jurisdiction determines that the Noncompetition
Period or the Geographic Area applicable to this Agreement is
unreasonable, arbitrary and/or against public policy, then a
lesser time period or geographical area which is determined to
be reasonable, non-arbitrary and not against public policy may
be enforced against Employee.
(c) Intentionally Omitted.
(d) Employee acknowledges that any violation of this Section 22
will result in irreparable injury to Employer for which there
is no adequate remedy at law. Employee agrees that, in the
event he breaches or threatens to breach this Section 22,
Employer, without posting a bond, shall be entitled to
injunctive relief, both preliminary and permanent, in addition
to any other remedies at law or in equity available to
Employer.
(e) If Employee's employment with Employer is terminated without
Cause, Employee shall be deemed released from his obligations
under this Section 22 upon such termination.
23. DISPUTES; ATTORNEYS' FEES. Except in the case of Employer's
right to seek injunctive relief under Section 22(d) and Section 24(b) of this
Agreement, the parties mutually agree to submit any controversy or claim arising
out of or proceeding forth from or relating to this Agreement or its breach to
be settled by arbitration (which may be binding if the parties mutually agree at
the time). Such arbitration shall be held in the County of Seminole, State of
Florida, utilizing the procedure and arbitrators acquainted with the American
Arbitration Association rules and procedure for arbitration. If binding
arbitration, judgment upon award rendered may be entered and enforced in any
court of competent jurisdiction. In the event any dispute arises under the terms
hereof, Employer shall continue to pay Employee the Base Salary and benefits to
which he is entitled hereunder until such time that a final determination is
made by an arbitrator hereunder; PROVIDED, HOWEVER, that if it is determined
that the termination of Employee's employment was justified, the Employee hereby
undertakes and agrees to repay to the Employer the amount of Base Salary that
was paid by Employer during the arbitration procedure. The non-prevailing party
shall be responsible for the prevailing party's reasonable legal fees and costs
(including post-judgment collection fees and costs).
24. ENFORCEMENT.
(a) Whenever there is any conflict between any provision
of this Agreement and any law, statute, governmental rule,
ordinance or regulation, the latter shall prevail. In such
11
<PAGE> 12
event, the affected provisions of this Agreement will be
curtailed and restricted only to the extent necessary to bring
them within the legal requirements, and the remainder of this
Agreement shall not be affected. Should it be determined that
any provision of this Agreement is unenforceable, the Employee
specifically requests that the court or arbitrator making such
determination modify and reform the provision found to be
unenforceable, and in its modified form, specifically enforce
the Agreement.
(b) Employee acknowledges that any violation of
Sections 3, 4, 5, 6, 7, 13 or 22 of this Agreement (referred
to individually and collectively in this subsection (b) as
"Sections") will result in irreparable injury to Employer for
which there is no adequate remedy at law. Employee agrees
that, in the event he breaches or threatens to breach any of
such Sections, Employer, without posting a bond, shall be
entitled to injunctive relief, both preliminary and permanent,
in addition to any other remedies at law or in equity
available to Employer.
25. INDEMNIFICATION. Employee shall be indemnified in accordance with
the terms and provisions of that certain Indemnification Agreement, dated as of
the date hereof, between Employer and Employee.
26. CHOICE OF LAW. This Agreement and the performance hereunder and all
suits and special proceedings hereunder shall be construed in accordance with
the laws of the State of Florida. In any action, special proceeding or other
proceeding that may be brought arising out of, in connection with, or by reason
of this Agreement, the laws of the State of Florida shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which the action or special proceeding may be instituted.
All actions under this Agreement, if not resolved by arbitration, shall be taken
in a court of competent jurisdiction within Seminole County, Florida and
Employee hereby waives and agrees that he shall not assert that such forum is
inconvenient.
27. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing and sent by certified U.S. mail,
or by Federal Express or other overnight delivery service to the Employee's
residence, or to the Employer's principal office, as the case may be.
28. WAIVER OF BREACH. Employer shall waive a breach by the Employee of
any provision of this Agreement only if such waiver is executed in writing by a
duly authorized officer of the Employer. Employee shall waive a breach by the
Employer of any provision of this Agreement only if such waiver is executed in
writing by Employee.
29. ASSIGNMENT. Both parties acknowledge that the services of the
Employee and the Employer are unique to this Agreement and neither party may
assign the rights or delegate the duties of this Agreement to another.
Notwithstanding anything herein to the contrary, the Employee may perform his
unique services under this Agreement for any of the subsidiaries, affiliates or
joint ventures of the Employer.
12
<PAGE> 13
30. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties and may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
31. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe the provisions hereof.
32. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
33. WAIVER OF CONFLICT OF INTEREST. The parties acknowledge that,
notwithstanding Employee's use of Employer's attorneys for personal legal
matters unrelated to this Agreement, the Employer may continue to use the legal
counsel of its choice in connection with the resolution of any disputes between
the parties hereto without such representation constituting an improper or
ethical conflict of interest.
34. FURTHER ACTIONS. Each party to this Agreement shall take such
further actions to execute, file, record, publish and deliver such additional
certificates, instruments, agreements and other documents as the other party
may, from time to time, reasonably request, in order to accomplish the purposes
of this Agreement.
13
<PAGE> 14
35. APPOINTMENT TO BOARD OF DIRECTORS. Employee was appointed to the
Board of Directors in September 1998 and is entitled to receive the prorated
portion of the $10,000 annual director compensation.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the date and year indicated above.
EMPLOYEE: /s/ DAVID McCOMAS
----------------------------------
DAVID McCOMAS
EMPLOYER: MIRACOM CORPORATION
By: /s/ SHAWN D. LUCAS
----------------------------------
Name: Shawn D. Lucas
Title: Co-Chief Executive Officer
14
<PAGE> 15
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") was entered into
effective November 8, 1999, by and between MIRACOM CORPORATION (hereinafter, the
"Employer") and DAVID McCOMAS (hereinafter, the "Employee").
RECITALS
A. WHEREAS, on February 12, 1999, Employer and Employee entered into an
employment agreement (the "Employment Agreement"); and
B. WHEREAS, Employer and Employee desire to make certain modifications
to the Employment Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of Employee's employment and
possibility of promotion, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is hereby agreed
that the Employment Agreement is amended in the following particulars:
1. Section 9 (COMPENSATION). Subsection 9(a) of the Employment
Agreement is hereby amended to change Employee's the Base Salary to $72,000 per
year, effective November 8, 1999, payable bi-weekly or otherwise in accordance
with Employer's standard payroll practices. Further amended and in accordance
with Employer's current standard payroll practice at the time, the employee
shall receive a base salary of $89,000 for the period August 30, 1999 through
October 24, 1999 and shall defer payment of the difference between the original
Base Salary ($124,800) and the newly adjusted amount ($89,000) for that same
time period. All other provisions of subsection 9(a) not amended hereby shall
remain the same.
2. Section 10 (DUTIES). Section 10 is hereby amended in its entirety as
follows:
"The Employee is engaged to act as the Strategic Business
Development and as such shall be responsible for the new business
development for Employer, with such additional responsibilities as
the Employer may determine to be in the best interest of the
Employer, and which are appropriate for such a position in an
organization of the type and size of Employer. Employee shall report
directly to the Co-Chief Executive Officers. Employee agrees to
serve in such capacity, without further compensation, unless he
Employee's duties and responsibilities substantially change or
increase, or unless mutually agreed otherwise. Employee will use his
best efforts to promote the interests of the Employer."
3. Section 15 (VACATIONS). Section 15 is hereby amended in its entirety
as follows:
15
<PAGE> 16
"(a) Employee shall be entitled each year to a vacation, which
period of time and date of scheduling will be mutually agreed upon
by Employer and Employee; PROVIDED, HOWEVER, the Employee, in any
case, shall be entitled to not less than two weeks vacation time per
year, and cumulative compensation for such vacation time shall be
paid each year to the Employee if such vacation is not taken in the
applicable year or if not carried forward to the next calendar year
in accordance with this Section 15. Employee shall be entitled to
carry over one (1) week of unused vacation to the next succeeding
calendar year.
(b) Employee shall be paid the pro rata portion of his regular Base
Salary and provided all other benefits as specified in Section 9
during any vacation period taken. Any payments made to Employee in
respect of vacation not taken or rolled over to the next calendar
year shall be paid to Employee in the last pay period of the
calendar year in which such vacation was not taken. The maximum
compensation payable to Employee in any calendar year for unused
vacation shall be two weeks of unused vacation in such calendar year
plus one week of unused vacation, if any, that was rolled over as
unused vacation from the previous calendar year."
4. Section 16 (OTHER BENEFITS). Section 16 of the Employment Agreement
is hereby amended to eliminate the $10,000 fee for Employee's service on the
Board of Directors, such fees having terminated effective June 1, 1999. Employee
shall serve on the Board of Directors without additional compensation, except
for reimbursement of expenses incurred in attending meetings of the Board of
Directors and its committees. However, nothing in this Section 16, as amended,
is intended to prevent Employee's participation in any stock option plan as an
employee or as a director of Employer.
5. All other provisions of the Employment Agreement not herein amended
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereby have executed this Amendment to
Employment Agreement as of September 30, 1999 to be effective November 8, 1999.
EMPLOYEE: /s/ DAVID McCOMAS
----------------------------------
DAVID McCOMAS
EMPLOYER: MIRACOM CORPORATION
By: /s/ SCOTT ANDERSON
----------------------------------
Name: Scott Anderson
Title: Co-Chief Executive Officer
16
<PAGE> 1
Exhibit 6.8
(FORM OF)
INDEMNIFICATION AGREEMENT
This Indemnification Agreement dated as of the ____ day of
______________ ("Agreement"), is made and entered into by and between MIRACOM
CORPORATION, a Nevada corporation ("Company"), and
_________________("Indemnitee"):
RECITALS
A. Competent and experienced persons are becoming increasingly
reluctant to serve publicly-held corporations as directors, officers, or in
other capacities unless they are provided with adequate protection through
liability insurance or adequate indemnification against inordinate risks of
claims and actions against them arising out of their service to the
corporation; and
B. The current unavailability, inadequacy, and extraordinary cost of
adequate insurance and the uncertainties relating to indemnification have
increased the difficulty of attracting and retaining such persons; and
C. The Board of Directors of the Company (the "Board") has determined
that the inability to attract and retain such persons is detrimental to the
best interests of the Company's stockholders and that the Company should act to
assure such persons that there will be increased certainty of such protection
in the future; and
D. Sections 78.7502 and 78.751 of the Nevada General Corporation Law
(the "Corporate Law") empower the Company to indemnify its officers, directors,
employees and agents by agreement and to indemnify persons who serve, at the
request of the Company, as directors, officers, employees, or agents or other
corporations or enterprises, and Sections 78.7502 and 78.751 of the Corporate
Law expressly provide that the indemnification provided therein is not
exclusive; and
E. It is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest
extent permitted by applicable law so that they will serve or continue to serve
the Company free from undue concern that they will not be so indemnified; and
F. Indemnitee is willing to serve, or continue to serve and to take on
additional service for or on behalf of the Company
<PAGE> 2
on the condition that he be so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Change of Control" means a change in control of the Company
occurring after the Effective Date (as hereinafter defined) of a nature that
would be required to be reported in response to Item 1 of the Current Report on
Form 8-K (or in response to any similar item on any similar schedule or form)
promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or
not the Company is then subject to such reporting requirement; and, in
addition, a Change of Control shall be deemed to have occurred if after the
Effective Date (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities without the prior approval of at
least two-thirds of the members of the Board in office immediately prior to
such person attaining such percentage; (ii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board (including for this
purpose any new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
(b) "Corporate Status" describes the status of a person who is or
was a director, officer, employee, agent or fiduciary of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the request of the
Company.
(c) "Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding (as hereinafter defined) in respect
of which indemnification is sought by Indemnitee.
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<PAGE> 3
(d) "Effective Date" means the date first above written.
(e) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a proceeding.
(f) "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent: (i) the Company
or Indemnitee in any matter material to either such party, or (ii) any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
(g) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any
other proceeding whether civil, criminal, administrative or investigative,
including any appeal thereof, whether or not initiated prior to the Effective
Date, except a proceeding initiated by an Indemnitee pursuant to Section 11 of
this Agreement to enforce his rights under this Agreement.
2. Agreement to Serve. Indemnitee agrees to serve the Company as
provided for under the terms of that certain Employment Agreement between the
Company and Indemnitee, dated as of the date hereof (the "Employment
Agreement"). Indemnitee may resign from his position with the Company only as
provided for in the Employment Agreement (and subject to any other contractual
obligation or any obligation imposed by operation of law). The Company shall
have no obligation under this Agreement to continue Indemnitee in any position
with the Company.
3. Indemnification - General. The Company shall indemnify, and advance
Expenses to Indemnitee as provided in this Agreement and to the fullest extent
permitted by applicable law in effect on the date hereof and to such greater
extent as applicable law may thereafter from time to time permit. The rights of
Indemnitee provided under the preceding sentence shall include,
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<PAGE> 4
but shall not be limited to, the rights set forth in the other sections of this
Agreement.
4. Third Party Actions. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 4 if, by reason of his Corporate
Status, he is, or is threatened to be made, a party to any threatened, pending
or completed Proceeding, other than a Proceeding by or in the right of the
Company. Pursuant to this Section 4, Indemnitee shall be indemnified against
Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with any such
Proceeding or any claim, issue or matter therein, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.
5. Derivative Actions. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 5 if by reason of his Corporate Status
he is or is threatened to be made, a party to any threatened, pending or
completed Proceeding brought by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section, Indemnitee shall be
indemnified against Expenses actually and reasonably incurred by him or on his
behalf in connection with the defense or settlement of such Proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing, no
indemnification shall by made by Company in respect of any claim, issue or
matter in such Proceeding as to which Indemnitee shall have been adjudged to be
liable to the Company unless and only to the extent that the Court of Chancery
or the court in which such Proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly and reasonably entitled to
indemnity for such Expenses which the Court of Chancery or such other court
shall deem proper.
6. Indemnification for Expenses of an Indemnitee. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a party to and is successful on the merits or
otherwise in defense of any Proceeding, or in defense of any claim, issue or
matter therein, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf
-4-
<PAGE> 5
in connection therewith. If Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall
indemnify Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf in connection with each successfully resolved claim, issue
or matter; provided, however, that this sentence shall not limit or prohibit
Indemnitee's right to indemnification pursuant to Sections 4 and 5 above. For
purposes of this Section 6 and without limitation, the termination of any
claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
7. Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is by reason of his
Corporate Status, a witness in any Proceeding, he shall be indemnified against
all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith.
8. Advancement of Expenses. The Company shall advance all reasonable
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding within twenty (20) days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it
shall ultimately be determined that Indemnitee is not entitled to be
indemnified against such Expenses.
9. Indemnification Procedure.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Secretary of the Company (or to such other officer as may be
designated by the Board) a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary, or other designated officer, of the
Company shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant
to Section 9(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in the specific case:
(i) if a Change of Control (as herein defined) shall have occurred, by
Independent Counsel (as herein defined) (unless Indemnitee shall request that
such determination be made by the Board or the stockholders, in which case by
the person or persons or in the
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<PAGE> 6
manner provided for in clauses (ii) or (iii) of this Section 9(b)) in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee; (ii) if
a Change of Control shall not have occurred, (A) by the Board by a majority
vote of a quorum consisting of Disinterested Directors or (B) if a quorum of
the Board consisting of Disinterested Directors is not obtainable or, even if
obtainable, such quorum of Disinterested Directors so directs, by Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered
to Indemnitee or (C) if directed by the Directors, by the stockholders of the
Company; or (iii) as provided in Section 10(b) of this Agreement; and, if it is
so determined that Indemnitee is entitled to indemnification, payment to or on
behalf of Indemnitee shall be made within ten (10) days after such
determination. Indemnitee shall cooperate with the person, persons or entity
making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
Expenses incurred by Indemnitee in so cooperating with the person, persons or
entity making such determination shall be borne by the Company (irrespective of
the determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 9(b) hereof, the
Independent Counsel shall be selected as provided in this Section 9(c). If a
Change of Control shall not have occurred, the Independent Counsel shall be
selected by the Board, and the Company shall give written notice to Indemnitee
advising him of the identity of the independent counsel so selected. If a
Change of Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board, in which event the preceding sentence shall apply), and
Indemnitee shall give written notice to the Company advising it of the identity
of the Independent Counsel so selected. In either event, Indemnitee or the
Company, as the case may be, may, within seven (7) days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection. Such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of "Independent Counsel" as defined in
Section 1 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, the Independent Counsel so selected may not serve as Independent
-6-
<PAGE> 7
Counsel unless and until a court has determined that such objection is without
merit. If, within twenty (20) days after submission by Indemnitee of a written
request for indemnification pursuant to Section 9(a) hereof, no Independent
Counsel shall have been selected and not objected to, either the Company or
Indemnitee may petition the Court of Chancery of the State of Delaware for
resolution of any objection which shall have been made by the Company or
Indemnitee to the other's selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Court or by such
other person as the Court shall designate, and the person with respect to whom
an objection is so resolved or the person so appointed shall act as Independent
Counsel under Section 9(b) hereof. The Company shall pay any and all reasonable
fees and expenses of Independent Counsel incurred by such Independent Counsel
in connection with acting pursuant to Section 9(b) hereof, and the Company
shall pay all reasonable fees and Expenses incident to the procedures of this
Section 9(c), regardless of the manner in which such Independent Counsel was
selected or appointed. Upon the due commencement of any judicial Proceeding
pursuant to Section 11(a) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
10. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 9(a) of
this Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
(b) If the person, persons or entity empowered or selected under
Section 9 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within sixty (60) days
after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that
-7-
<PAGE> 8
such 60-day period may be extended for a reasonable time, not to exceed an
additional thirty (30) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of documentation
and/or information relating thereto; and provided, further, that the foregoing
provisions of this Section 10(b) shall not apply (i) if the determination of
entitlement to indemnification is to be made by the stockholders pursuant to
Section 9(b) of this Agreement and if (A) within fifteen (15) days after
receipt by the Company of the request for such determination the Board has
resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within seventy-five (75)
days after such receipt and such determination is made thereat or (B) a special
meeting of stockholders is called within fifteen (15) days after such receipt
for the purpose of making such determination, such meeting is held for such
purpose within sixty (60) days after having been so called and such
determination is made thereat, or (ii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 9(b)
of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself, adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company, or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
11. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to
Section 9 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 8 of this Agreement, (iii) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 9(b)
of this Agreement and such determination shall not have been made and delivered
in a written opinion within ninety (90) days after receipt by the Company, of
the request for indemnification, (iv) payment of indemnification is not made
pursuant to Section 5 of this Agreement within ten (10) days after receipt by
the Company of a written request therefor, or (v) payment of indemnification is
not made within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification or such determination is deemed to
have been
-8-
<PAGE> 9
made pursuant to Sections 9 or 10 of this Agreement, Indemnitee shall be
entitled to an adjudication in an appropriate court of the State of Delaware,
or in any other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of expenses. Indemnitee shall commence such
proceeding seeking an adjudication within one hundred eighty (180) days
following the date on which Indemnitee first has the right to commence such
proceeding pursuant to this Section 11(a). The Company shall not oppose
Indemnitee's right to seek any such adjudication.
(b) In the event that a determination shall have been made pursuant
to Section 9 of this Agreement that Indemnitee is not entitled to
indemnification, any judicial Proceeding commenced pursuant to this Section 11
shall be conducted in all respects as a de novo trial on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. If
a Change of Control shall have occurred, in any judicial Proceeding commenced
pursuant to this Section 11 the Company shall have the burden of proving that
Indemnitee is not entitled to indemnification or advancement of Expenses, as
the case may be.
(c) If a determination shall have been made or deemed to have been
made pursuant to Sections 9 or 10 of this Agreement that Indemnitee is entitled
to indemnification, the Company shall be bound by such determination in any
judicial Proceeding commenced pursuant to this Section 11, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
Proceeding commenced pursuant to this Section 11 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of
this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 11,
seeks a judicial adjudication to enforce his rights under, or to recover
damages for breach of, this Agreement, Indemnitee shall be entitled to recover
from the Company, and shall be indemnified by the Company against, any and all
expenses (of the types described in the definition of Expenses in Section 1 of
this Agreement) actually and reasonably incurred by him in such judicial
adjudication, but only if he prevails therein. If it shall be determined in
said judicial adjudication that Indemnitee is entitled to receive part but not
all of the
-9-
<PAGE> 10
indemnification or advancement of expenses sought, the expenses incurred by
Indemnitee in connection with such judicial adjudication shall be appropriately
prorated.
12. Non-Exclusivity: Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Articles of Incorporation, the Bylaws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal.
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company, Indemnitee shall be covered by
such policy or policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director, officer, employee or
agent under such policy or policies.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.
(e) The Company may, to the fullest extent authorized by law,
create a trust fund, grant a security interest and/or use other means
(including, without limitation, letters of credit, surety bonds and other
similar arrangements) to ensure the payment of such amounts as may become
necessary to effect indemnification provided hereunder.
-10-
<PAGE> 11
13. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as a director, officer, employee, agent or fiduciary
of the Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which Indemnitee served at the
request of the Company; or (b) the final termination of all pending Proceedings
in respect of which Indemnitee is granted rights of indemnification or
advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee
pursuant to Section 11 of this Agreement relating thereto. This Agreement shall
be binding upon the Company and its successors and assigns and shall inure to
the benefit of Indemnitee and his heirs executors and administrators.
14. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
15. Exceptions to Indemnification Rights. Notwithstanding any other
provision of this Agreement, Indemnitee shall not be entitled to
indemnification or advancement of Expenses under this Agreement with respect to
any Proceeding, or any claim therein, brought or made by him against the
Company.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought
needs to be produced to evidence the existence of this Agreement.
17. Captions. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
18. Amendment and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in
-11-
<PAGE> 12
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
19. Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
20. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
(i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, or (ii) mailed by certified mail,
return receipt requested, with postage prepaid, and shall be deemed delivered
on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to the address set forth immediately
following Indemnitee's signature hereinbelow;
(b) If to the Company, to 1180 Spring Center South Boulevard, Suite
310, Altamonte Springs, Florida 32714, Attention: Shawn D. Lucas; or to such
other address as may have been furnished to Indemnitee by the Company or to the
Company by Indemnitee, as the case may be.
21. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware.
22. Gender. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
MIRACOM CORPORATION
By:
Name:
Title:
INDEMNITEE:
Print Name:
Address:
-12-
<PAGE> 1
EXHIBIT 6.9.1
CONTRACT FOR SALE AND PURCHASE
THIS CONTRACT FOR SALE AND PURCHASE ("this Contract"), made and entered
into by and among the following parties:
Seller: KARL OWEN STAIRS AND HELEN L. STAIRS, husband and wife (hereinafter
collectively referred to as "Seller")
Address: 1301 East Seminole Blvd., Sanford, Florida 32771
Telephone: (407) __________________
Buyer: MIRACOM CORPORATION, a Nevada corporation authorized to do business
in Florida ("Buyer")
Address: 1180 Spring Centre South Boulevard, Suite 310, Altamonte Springs,
Florida 32714
Telephone: (407) 772-8733; Facsimile: (407) 772-8738
W I T N E S S E T H:
1. AGREEMENT OF PURCHASE AND SALE. The parties hereto acknowledge that
in December, 1997, the Seller had entered into an Agreement for Deed with
Jeffrey M. Odato and Michael R. Fouts A/K/A J & M Investments, a Florida
Partnership, ("Agreement for Deed") for the sale of the Property (as hereinafter
defined). On February 24, 1998, Jeffrey M. Odato and Michael R. Fouts A/K/A J &
M Investments assigned all of their right, title and interest under the
Agreement for Deed in and to the Property (as hereinafter defined) to
Stonestreet Investments, Inc. Thereafter Stonestreet Investments, Inc. assigned
all of its right, title and interest in and to the Property (as hereinafter
defined) to Miracom Corporation. The aforementioned documents have never been
recorded in the public records of Seminole County, Florida.
The parties hereto desire to memorialize the terms and conditions of
the sale and purchase of the Property (as hereinafter defined), as hereinafter
set forth. In consideration of the mutual covenants herein contained and other
good and valuable consideration the receipt and sufficiency of which are
acknowledged by Seller and Buyer, Seller agrees to sell and Buyer agrees to buy
the property described on attached Exhibit "A" (the "Property") upon and subject
to the terms of this Contract.
2. PURCHASE PRICE. The purchase price ("Purchase Price") for the
Property shall be Two Hundred Forty-Five Thousand and 00/100 Dollars ($245,000)
payable by Buyer to Seller as follows:
(a) An initial payment of One Thousand Dollars ($1,000)
was paid to Seller in December, 1997 in accordance
with the Agreement for Deed, the receipt of which is
hereby acknowledged by Seller; and
(b) The balance of the Purchase Price shall be paid to
Seller in immediately available funds on the Closing
Date.
3. TITLE. Prior to the Closing Date, Seller shall furnish a commitment
for a Standard Form Owner's Title Insurance Policy ("Commitment") issued by
Kampf Title and Guaranty Corporation, acceptable to Buyer, in its sole
discretion, agreeing to issue to Buyer, upon recording of the deed to Buyer, an
owner's policy of title insurance in the amount of the Purchase Price insuring
Buyer's title to
<PAGE> 2
the Property, subject only to liens, encumbrances, exceptions
or qualifications set forth in this Contract and those which shall be discharged
by Seller at or before closing. Seller shall convey marketable and insurable
title subject to matters which do not adversely affect Buyer's use of the
Property (collectively, "the Permitted Encumbrances"). Marketable title shall be
determined according to applicable Title Standards adopted by authority of the
Florida Bar and in accordance with law. The Commitment shall provide that all
"standard exceptions" (including standard exceptions for taxes and assessments
not shown in the public records, claims of unrecorded easements, parties other
than owner in possession, mechanic's liens and matters disclosed on accurate
survey, but excluding current real estate taxes) shall be deleted from the title
insurance policy when issued. Seller shall deliver to Title Company at closing
any affidavits or other documents reasonably required by Title Company to delete
said standard exceptions.
4. EXPENSES. Seller shall pay for (a) the documentary stamp taxes on
the deed; (b) preparation and recording of any instruments required to correct
objections to title; (c) the cost of issuing the Commitment and the premium and
other costs incurred in the issuance of the owner's title insurance policy; (d)
except as provided in Paragraph 17, attorneys fees incurred by Seller; and (e)
any other expense agreed herein to be paid by Seller. Buyer shall pay for (v)
recording the deed and any and all other documentation relating to the financing
of the acquisition of the Property; (w) the costs of the inspections of the
Property incurred by Buyer; (x), except as provided in Paragraph 17, attorneys
fees incurred by Buyer; and (y) any other expense agreed herein to be paid by
Buyer.
5. PRORATIONS. The parties hereto acknowledge that the Buyer is
currently in possession of the Property pursuant to the Agreement for Deed, as
assigned, and Buyer has been responsible for the payment of the current real
estate taxes since it took possession of the Property. Consequently the real
estate taxes for the year of Closing shall not be prorated. Certified, confirmed
and ratified special assessment liens as of closing are to be paid by Seller.
Pending liens as of closing shall be assumed by Buyer; provided, however, where
improvements have been substantially completed as of Date of Contract, such
pending liens shall be treated as certified and Seller shall be charged at
closing an amount equal to the last estimate by the public body of the
assessment for the improvement.
6. CONDITION OF PROPERTY. Buyer acknowledges and agrees that it is
buying the Property in its "AS-IS," "WHERE-IS" condition.
7. RISK OF LOSS. Buyer shall bear the risk of loss until closing. If
the Property or any portion or component thereof is damaged by fire or other
casualty before closing, Buyer, at Buyer's expense, shall cause all damage to be
repaired by a licensed contractor prior to closing.
8. BROKERAGE. Seller and Buyer each represents and warrants to the
other that no broker or finder has been engaged by it in connection with this
transaction. In the event a claim for broker's or finder's fee or commission is
asserted in connection with the negotiation, execution or consummation of this
Contract in violation of this representation and warranty, the party at fault
shall indemnify, save harmless and defend the other party from and against such
claim (including reasonable attorneys' fees and court costs at trial and upon
appeal).
9. CLOSING DATE. The Closing of this transaction shall occur on or
before May 6, 1999 ("Closing Date") at the offices of Kampf Title and Guaranty
Corporation, 200 West First Street, Sanford, Florida 32771 at 2:00 p.m.
10. DOCUMENTS AT CLOSING. The following documents shall be executed and
delivered at closing:
2
<PAGE> 3
(a) Warranty Deed. Seller shall deliver a general warranty
deed for the Property (subject only to Permitted Encumbrances) duly executed and
acknowledged by Seller.
(b) Commitment Endorsement. Buyer must be able to obtain at
closing, as a condition to Buyer's obligation to close, an endorsement to the
Commitment which insures against the existence of defects in title which are
recorded between the effective date of the Commitment and the recording of the
Warranty Deed.
(c) Affidavits. Seller shall deliver the Affidavit required by
Paragraph 3 and an affidavit on behalf of Seller attesting to the absence of any
claim or suit (threatened or pending), judgment outstanding against Seller,
pending or anticipated bankruptcy or reorganization, pending or anticipated
assessments, financing statement, claim of lien or potential lienors known to
Seller.
(d) Other Documents. Seller shall deliver all other documents
required by this Contract or reasonably requested by Buyer or Title Company.
11. NON-FOREIGN STATUS. Seller acknowledges that Section 1445 of the
Internal Revenue Code of 1954, as amended, requires that a purchaser of real
property from a "foreign person" withhold at closing and pay to the Internal
Revenue Service a portion of the amount realized by the Seller. Therefore,
Seller agrees to provide at closing an Affidavit of Seller, or Seller's
principal partner, trustee or officer if Seller is not an individual, in form
required by Buyer, setting forth sufficient facts to establish whether or not
Seller is a "foreign person" within the meaning of said Section 1445, including
without limitation Seller's taxpayer identification number and principal
residence or business address. Seller agrees to make available to Buyer at
closing collected funds sufficient to permit compliance by Buyer with the
requirements of Section 1445 if Seller is a "foreign person". Seller represents
and warrants that Seller is not a "foreign person" within the meaning of said
Section 1445.
12. GOVERNING LAW AND VENUE. The laws of the State of Florida
(excluding its conflicts of laws provisions) shall govern the validity,
enforcement and interpretation of this Contract. Venue for any legal action in
connection herewith shall lie in Seminole County or the county wherein the
Property is located.
13. ENTIRETY AND AMENDMENTS. This Contract embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings relating to the Property. This Contract may be amended only by
written instrument executed by the party against whom enforcement of the
Amendment is sought.
14. PARTIES BOUND. This Contract is binding upon and shall inure to the
benefit of Seller and Buyer, and their respective heirs, personal
representatives, successors and assigns.
15. DEFAULT.
(a) By Buyer. If for any reason not expressly authorized by
this Contract Buyer fails to perform timely this Contract, and such failure
continues fifteen (15) days after written notice thereof from Seller, Seller may
declare Buyer in default. In the event of such default by Buyer, Seller may
terminate the Contract and retain the One Thousand Dollar ($1,000.00) deposit in
2(a) as liquidated damages, whereupon all parties shall be relieved of all
obligations under this Contract. The receipt of the One Thousand Dollar ($1,000)
deposit and the termination of Buyer's rights under this Contract shall be
Seller's sole and exclusive remedy and recourse in the event of default by
Buyer. Seller hereby irrevocably waives all other rights and remedies including
without limitation suits for damages and/or specific performance.
3
<PAGE> 4
(b) By Seller. If for any reason not expressly authorized by
this Contract Seller fails to perform timely this Contract, and such failure
continues fifteen (15) days after written notice thereof from Buyer, Buyer may
declare Seller in default. In the event of such default by Seller, Buyer shall
have and may pursue all rights, remedies and recourses available at law or in
equity to an aggrieved party for breach of contract, or Buyer may terminate this
Contract.
16. NOTICES. Whenever this Contract requires or permits any notice or
request by one party to the other, the notice shall be written and deemed given
if sent to the party to be notified at the address set forth on the first page
hereof by (a) personal delivery, (b) overnight commercial courier, (c) certified
United States Mail, return receipt requested, or (d) telephonic facsimile.
Notice shall be deemed to have been given on the date it is given personally,
picked up by the overnight commercial courier, deposited in the mails as
provided above, or upon receipt of telephonic facsimile, whichever is first. In
lieu of notice to any party, notice may be given to the attorney for such party.
17. LITIGATION. In connection with any litigation arising out of this
transaction, the prevailing party shall be entitled to recover from the party
not prevailing the prevailing party's reasonable costs and attorney, paralegal
and expert fees incurred in all proceedings and at all levels.
18. SELLER ASSURANCES. Seller represents and warrants to Buyer as of
Date of Contract and as of closing that: (a) there is no judgment, claim,
litigation or proceeding pending or threatened against Seller or the Property;
(b) Seller received no notice of any violation of any law, ordinance, rule,
regulation or code applicable to the Property, or of any order or requirement of
any governmental agency having jurisdiction over the Property; (c) there are no
contracts, obligations or commitments which have not been disclosed in writing
to Buyer which will bind the Property or Buyer after closing; (d) there are no
attachments, executions or assignments for the benefit of creditors,
receiverships, or voluntary or involuntary proceedings in bankruptcy or pursuant
to any other debtor relief laws contemplated or filed by Seller or pending
against Seller or the Property, (e) there are no contracts outstanding for the
sale, exchange or transfer of the Property; (f) Seller alone holds fee simple
title to the Property free and clear of all defects and encumbrances other than
Permitted Encumbrances; (g) there exists dedicated access to the Property; (h)
this Contract constitutes a legal, valid and binding obligation of Seller and
the person(s) signing this Contract has full authority to do so; and (i) none of
the execution, delivery or performance of this Contract will result in a breach
of, or conflict with, the terms of any agreement to which Seller is a party, or
any judgment, decree, order or award of any court, governmental body or
arbitrator, or any law, rule or regulation applicable to Seller. Seller shall
indemnify, hold harmless and defend Buyer from and against all losses, claims
and liabilities resulting from the inaccuracy or breach of any of the
representations or warranties of Seller set forth in this Contract.
19. BUYER ASSURANCES. Buyer represents and warrants to Seller as of
Date of Contract and as of closing that: (a) Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and is duly qualified and in good standing under the laws of the State of
Florida; (b) this Contract constitutes a legal, valid and binding obligation of
Buyer and the person(s) signing this Contract on behalf of Buyer have full
authority to do so; and (c) none of the execution, delivery or performance of
this Contract will result in a breach of, or conflict with, the terms of any
agreement to which Buyer is a party, or any judgment, decree, order or award of
any court, governmental body or arbitrator, or any law, rule or regulation
applicable to Buyer. Buyer shall indemnify, hold harmless and defend Seller from
and against all losses, claims and liabilities resulting from the inaccuracy or
breach of any of the representations or warranties of Buyer set forth in this
Contract.
4
<PAGE> 5
20. SURVIVAL. Except as otherwise provided in this Contract, all
covenants, representations and warranties of the parties made in this Contract,
as well as any other provisions hereof which relate to matters extending beyond
the closing of this transaction, shall survive closing and delivery of the deed.
21. CONTAMINATION. Seller has not utilized the Property, nor any part
thereof, to treat, deposit, store, dispose of, or place any hazardous
substances, as defined by 41 U.S.C.A. Section 9601(14) and other state and
federal environmental and safety laws; nor has Seller authorized any other
person or entity to treat, deposit, store, dispose of, or place any such
hazardous substance, as defined above, on the Property or any part thereof; and
to the actual knowledge of Seller, no other person or entity has treated,
deposited, stored, disposed of or placed any such hazardous substance on the
Property or any part thereof. If a release or threatened release of a hazardous
substance has occurred or hereafter occurs on the Property prior to closing,
without fault of Buyer, which subjects Buyer to liability, loss or claims under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C.A. Section 9607, under the Florida Resource Recovery and
Management Act, Florida Statute Section 403.727 (1983), or under any other
statutory or common law, Seller agrees to indemnify, hold harmless and defend
Buyer from and against any such liability, loss and claims. Any conflicting
terms of this Contract to the contrary notwithstanding, in the event any
environmental report obtained by Buyer prior to closing discloses contamination
of any portion of the Property, Buyer shall have the option to terminate this
Contract by written notice delivered to Seller before closing and to receive the
Deposit, whereupon all further liabilities and obligations of the parties under
this Contract shall terminate.
22. RADON GAS DISCLOSURE. RADON IS A NATURALLY OCCURRING RADIOACTIVE
GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY
PRESENT HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON
THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN
FLORIDA. ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE
OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT. Note: This paragraph is provided
for informational purposes pursuant to Section 404.056(8), Florida Statutes,
(1988).
23. COUNTERPARTS. This Contract may be executed in any number of
counterparts, any one and all of which shall constitute the Contract of the
parties and each of which shall be deemed an original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
<PAGE> 6
IN WITNESS WHEREOF, Seller and Buyer have executed this Contract on the
dates below.
WITNESSES: SELLER:
/s/ Suzanne Denny /s/ KARL OWEN STAIRS
- -------------------------------- -----------------------------------------
Print Name: KARL OWEN STAIRS
/s/ Barbara A. Meno
- --------------------------------
Print Name:
/s/ HELEN L. STAIRS
-----------------------------------------
Print Name: HELEN L. STAIRS
Print Name:
BUYER:
MIRACOM CORPORATION, a Nevada corporation
/s/ Suzanne Denny By: /s/ David McComas
- -------------------------------- -----------------------------------------
Print Name: Name: David McComas
Title: President
(Corporate Seal)
/s/ Barbara A. Meno
- --------------------------------
Print Name:
6
<PAGE> 7
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
Lot 1 (less the South 37.65 feet) and the East 2.97 feet of Lot 2 (less the
South 37.65 feet), Block 3, Tier 3, FLORIDA LAND AND COLONIZATION COMPANY
LIMITED, E. R. TRAFFORD'S MAP OF THE TOWN OF SANFORD, according to the Plat
thereof as recorded in Plat Book 1, Pages 56 through 64, of the Public Records
of Seminole County, Florida.
TOGETHER WITH, all improvements located thereon.
<PAGE> 8
EXHIBIT "B"
PERMITTED EXCEPTIONS
1. General taxes for the year 1999 and thereafter, not yet due and
payable.
2. All matters as shown on the Plat of said Subdivision of FLORIDA LAND
AND COLONIZATION COMPANY LIMITED, E. R. TRAFFORD'S MAP OF THE TOWN OF
SANFORD, according to the Plat thereof as recorded in Plat Book 1,
Pages 56 through 64, of the Public Records of Seminole County, Florida.
<PAGE> 1
EXHIBIT 6.9.2
CONTRACT FOR SALE AND PURCHASE
THIS CONTRACT FOR SALE AND PURCHASE ("this Contract"), made and entered
into by and among the following parties:
Seller: STONE STREET INVESTMENTS, INC., a Florida corporation ("Seller")
Address: 298 Lake Markham Road, Sanford, Florida 32771
Telephone: (407) 772-8733
Buyer: MIRACOM CORPORATION, a Nevada corporation authorized to do
business in Florida ("Buyer")
Address: 1180 Spring Centre South Boulevard, Suite 310,
Altamonte Springs, Florida 32714
Telephone: (407) 772-8733; Facsimile: (407) 772-8738
W I T N E S S E T H:
1. AGREEMENT OF PURCHASE AND SALE. In consideration of the mutual
covenants herein contained and other good and valuable consideration the receipt
and sufficiency of which are acknowledged by Seller and Buyer, Seller agrees to
sell and Buyer agrees to buy the property described on attached Exhibit "A" (the
"Property") upon and subject to the terms of this Contract.
2. PURCHASE PRICE. The purchase price ("Purchase Price") for the
Property shall be Thirty Thousand and 00/100 Dollars ($30,000.00).
3. TITLE. On or before ten (10) days from Date of Contract, Buyer shall
obtain a title insurance commitment as to the Property ("the Commitment") issued
by a Florida licensed title insurer ("the Title Company"), agreeing to issue to
Buyer, upon recording of the deed to Buyer, an owner's policy of title insurance
in the amount of the Purchase Price insuring Buyer's title to the Property,
subject only to liens, encumbrances, exceptions or qualifications set forth in
this Contract and those which shall be discharged by Seller at or before
closing. Seller shall convey marketable and insurable title subject only to
taxes for the year of closing, and such other matters which do not adversely
affect either Buyer's use of the Property or Buyer's ability to finance,
operate, sell or lease the Property, as determined by Buyer in Buyer's sole
discretion, (collectively, "the Permitted Encumbrances"). Marketable title shall
be determined according to applicable Title Standards adopted by authority of
the Florida Bar and in accordance with law. The Commitment shall include copies
of all documents referenced therein and shall agree to insure any easements
benefiting the Property. The Commitment shall provide that all "standard
exceptions" (including standard exceptions for taxes and assessments not shown
in the public records, claims of unrecorded easements, parties other than owner
in possession, mechanic's liens and matters disclosed on accurate survey, but
excluding current real estate taxes) shall be deleted from the title insurance
policy when issued. Seller shall deliver to Title Company at closing any
affidavits or other documents reasonably required by Title Company to delete
said standard exceptions. Buyer shall have ten (10) days from the date of
receiving the Commitment in which to examine the Commitment. If title is found
to be defective, Buyer shall, within said thirty day period, notify Seller in
writing specifying the defect(s). If any defect is a lien or encumbrance of a
<PAGE> 2
definite or ascertainable amount, then, if not sooner paid, the amount secured
shall be deducted from the Seller's proceeds and paid at closing. Seller will
have ten (10) days from receipt of Buyer's said notice in which to remove the
defects, failing which Buyer shall thereafter deliver written notice to Seller
either: (a) extending the time for a reasonable period not to exceed sixty (60)
days within which Seller shall use diligent effort to remove the defects; or (b)
terminating the Contract, thereby releasing Buyer and Seller from all further
obligations under this Contract. Seller shall, if title is found unmarketable,
use diligent effort to correct defect(s) in the title within the time provided
therefor. If, despite Seller's diligent effort, Seller is unable to remove the
defects within the times allowed therefor, Buyer shall notify Seller in writing
of Buyer's election either to waive the defects or to terminate this Contract.
If Buyer elects to terminate this Contract, then the parties shall thereafter be
relieved of all further obligations under this Contract.
4. SURVEY. Buyer, at Buyer's expense, may have the Property surveyed
prior to closing by a registered land surveyor selected by Buyer. The survey
shall be certified to Buyer, Seller and Title Company. If the survey reflects
any easements, encroachments, rights-of-way, roads, lack of access,
deficiencies, gaps, or violations of any restrictions, Contract covenants or
applicable governmental regulations, or any other adverse matters not
constituting a Permitted Encumbrance, the same shall constitute title defects,
and Buyer shall notify Seller of Buyer's objections to the survey on or before
the later of: (a) ten (10) days after receipt of the final survey, or (b) the
deadline for objecting to the Commitment. Objections to the survey shall be
treated as objections to title in accordance with the procedures set forth in
Paragraph 5.
5. EXPENSES. Seller shall pay for (a) the documentary stamp tax and
surtax, if any, on the deed; (b) preparation and recording of any instruments
required to correct objections to title; (c) the cost of issuing the Commitment
and the premium and other costs incurred in the issuance of the owner's title
insurance policy; (d) except as provided in Paragraph 25, attorneys fees
incurred by Seller; and (e) any other expense agreed herein to be paid by
Seller. Buyer shall pay for (v) recording the deed and any and all other
documentation relating to the financing of the acquisition of the Property; (w)
the cost of the survey; (x) the costs of the inspections of the Property
incurred by Buyer; (y), except as provided in Paragraph 25, attorneys fees
incurred by Buyer; and (z) any other expense agreed herein to be paid by Buyer.
6. PRORATIONS. Any and all expenses and revenues of the Property shall
be prorated through the day before the closing. Cash at closing shall be
increased or decreased as may be required by prorations. All ad valorem real
estate taxes and personal property taxes, if applicable, affecting the Property,
for the year of closing shall be prorated at closing based upon maximum discount
for early payment. If the closing occurs before the millage rate is fixed for
the year, the proration of taxes shall be based upon the millage rate for the
preceding year applied to the latest assessed valuation. Prorations shall be
recalculated and adjusted by way of cash payment at the request of either party
when the actual taxes for the year of closing are known. Certified, confirmed
and ratified special assessment liens as of closing are to be paid by Seller.
Pending liens as of closing shall be assumed by Buyer; provided, however, where
improvements have been substantially completed as of Date of Contract, such
pending liens shall be treated as certified and Seller shall be charged at
closing an amount equal to the last estimate by the public body of the
assessment for the improvement.
7. BUYER'S INSPECTION. The obligation of Buyer to purchase the Property
pursuant to this Contract is contingent upon Buyer's determination, made within
twenty (20) days from the Date of Contract (the "Inspection Period"), that the
Property is suitable to Buyer, in the exercise of Buyer's sole discretion, for
Buyer's use taking into consideration any factor deemed relevant by Buyer,
including without limitation the results of any investigations, inspections and
analyses of the Property and the Intended Use thereof which Buyer may make.
Buyer's investigations, inspections and analyses of the Property and its use
thereof pursuant to this Paragraph 9 shall be for Buyer's purposes only and
shall not waive or limit any representation, warranty, covenant or
responsibility of Seller set forth in this Contract or imposed by law. In the
event that Buyer, for any reason whatsoever, notifies Seller in writing at any
time during the Inspection Period that the Property is not suitable to Buyer,
this Contract shall automatically terminate, and the parties shall be relieved
of all further obligation and liability under this Contract.
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<PAGE> 3
8. ACCESS. Buyer and its agents, architects, engineers, surveyors and
appraisers may enter the Property prior to closing for purpose of conducting
such investigations, inspections, surveys, tests, borings, samplings,
appraisals, etc., as Buyer deems necessary with reference to the physical
condition of the Property, its suitability for the use, and its value. When the
investigations have been completed the Property will be restored to
substantially the same condition as before investigation. Buyer agrees to hold
harmless and indemnify Seller from and against all loss or liability, arising
out of personal injury, death or property damage due to entry upon the Property
by Buyer or its agents, architects, engineers, surveyors or appraisers.
9. MAINTENANCE. Between the Date of Contract and closing, Seller shall
maintain the Property in the condition existing as of the Date of Contract.
10. PROPERTY INFORMATION. Within five (5) days from the Date of
Contract, Seller shall deliver to Buyer, without charge, copies of all
appraisals, surveys, plans, specifications, drawings, studies, tests, reports,
permits, approvals, title information and other relevant information pertaining
to the Property which are in existence and available to Seller (the "Existing
Property Information"). Upon closing, the Existing Property Information shall
become the sole property of Buyer. If this transaction does not close, the
Existing Property Information shall be returned promptly by Buyer to Seller.
11. RISK OF LOSS. Seller shall bear the risk of loss until closing. If
the Property or any portion or component thereof is damaged by fire or other
casualty before closing, Seller, at Seller's expense, shall cause all damage to
be repaired by a licensed contractor prior to closing.
12. BROKERAGE. Seller and Buyer each represents and warrants to the
other that no broker or finder has been engaged by it in connection with this
transaction. In the event a claim for broker's or finder's fee or commission is
asserted in connection with the negotiation, execution or consummation of this
Contract in violation of this representation and warranty, the party at fault
shall indemnify, save harmless and defend the other party from and against such
claim (including reasonable attorneys' fees and court costs at trial and upon
appeal). Seller shall pay to the Brokers all compensation due the Brokers in
connection with this purchase and sale transaction in accordance with a separate
brokerage agreement between Seller and the Brokers, and Seller shall indemnify,
save harmless and defend Buyer from any claims by, or liabilities to, the
Brokers in connection with this transaction.
13. CLOSING AND DELIVERY OF POSSESSION. Subject to any contrary
provision of this Contract, including without limitation the extension
provisions of Subparagraph 3, the closing of this purchase and sale transaction
shall occur, and possession of the Property shall be delivered to Buyer, on or
before May 6, 1999, unless extended by mutual agreement of the parties hereto.
Closing shall take place at the offices of the closing agent designated by
Buyer.
14. DOCUMENTS AT CLOSING. The following documents shall be executed and
delivered at closing:
(a) WARRANTY DEED. Seller shall deliver a general warranty deed for
the Property (subject only to Permitted Encumbrances) duly executed and
acknowledged by Seller.
(b) COMMITMENT ENDORSEMENT. Buyer must be able to obtain at
closing, as a condition to Buyer's obligation to close, an endorsement to the
Commitment which insures against the existence of defects in title which are
recorded between the effective date of the Commitment and the recording of the
Warranty Deed.
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(c) AFFIDAVITS. Seller shall deliver the Affidavit required by
Paragraph 17 and an affidavit on behalf of Seller attesting to the absence of
any claim or suit (threatened or pending), judgment outstanding against Seller,
pending or anticipated bankruptcy or reorganization, pending or anticipated
assessments, financing statement, claim of lien or potential lienors known to
Seller, and further attesting as to whether there have been any improvements to
the Property during the ninety (90) day period preceding closing. If any labor
or materials have been provided within said period (except for labor or
materials provided at the request of Buyer for tests, studies and investigations
of the Property), Seller shall deliver such affidavits, releases and waivers of
lien rights from such persons as shall be required by Title Company so as to
insure against potential liens or claims.
(d) ORGANIZATIONAL DOCUMENTATION. Seller shall deliver
organizational documents, evidence of good standing, and certificates,
resolutions, actions and consents required to establish the authority of Seller
and the agent(s) or officer(s) executing the documents on behalf of Seller to
complete this transaction.
(e) OTHER DOCUMENTS. Seller shall deliver all other documents
required by this Contract or reasonably requested by Buyer or Title Company.
15. NON-FOREIGN STATUS. Seller acknowledges that Section 1445 of the
Internal Revenue Code of 1954, as amended, requires that a purchaser of real
property from a "foreign person" withhold at closing and pay to the Internal
Revenue Service a portion of the amount realized by the Seller. Therefore,
Seller agrees to provide at closing an Affidavit of Seller, or Seller's
principal partner, trustee or officer if Seller is not an individual, in form
required by Buyer, setting forth sufficient facts to establish whether or not
Seller is a "foreign person" within the meaning of said Section 1445, including
without limitation Seller's taxpayer identification number and principal
residence or business address. Seller agrees to make available to Buyer at
closing collected funds sufficient to permit compliance by Buyer with the
requirements of Section 1445 if Seller is a "foreign person". Seller represents
and warrants that Seller is not a "foreign person" within the meaning of said
Section 1445.
16. GOVERNING LAW AND VENUE. The laws of the State of Florida
(excluding its conflicts of laws provisions) shall govern the validity,
enforcement and interpretation of this Contract. Venue for any legal action in
connection herewith shall lie only in Orange County or the county wherein the
Property is located.
17. ENTIRETY AND AMENDMENTS. This Contract embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings relating to the Property. This Contract may be amended only by
written instrument executed by the party against whom enforcement of the
Amendment is sought.
18. PARTIES BOUND. This Contract is binding upon and shall inure to the
benefit of Seller and Buyer, and their respective heirs, personal
representatives, successors and assigns.
19. ASSIGNMENT. This Contract may be assigned by Buyer.
20. DEFAULT.
(a) BY BUYER. If for any reason not expressly authorized by this
Contract Buyer fails to perform timely this Contract, and such failure continues
fifteen (15) days after written notice thereof from Seller, Seller may declare
Buyer in default. In the event of such default by Buyer, Seller may terminate
the Contract, whereupon all parties shall be relieved of all obligations under
this Contract. Termination of Buyer's rights under this Contract shall be
Seller's sole and exclusive remedy and recourse in the event of default by
Buyer. Seller hereby irrevocably waives all other rights and remedies including
without limitation suits for damages and/or specific performance.
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<PAGE> 5
(b) BY SELLER. If for any reason not expressly authorized by this
Contract Seller fails to perform timely this Contract, and such failure
continues fifteen (15) days after written notice thereof from Buyer, Buyer may
declare Seller in default. In the event of such default by Seller, Buyer shall
have and may pursue all rights, remedies and recourses available at law or in
equity to an aggrieved party for breach of contract, or Buyer may terminate this
Contract.
21. NOTICES. Whenever this Contract requires or permits any notice or
request by one party to the other, or to Escrow Agent, the notice shall be
written and deemed given if sent to the party to be notified at the address set
forth on the first page hereof by (a) personal delivery, (b) overnight
commercial courier, (c) certified United States Mail, return receipt requested,
or (d) telephonic facsimile. Notice shall be deemed to have been given on the
date it is given personally, picked up by the overnight commercial courier,
deposited in the mails as provided above, or upon receipt of telephonic
facsimile, whichever is first. In lieu of notice to any party, notice may be
given to the attorney for such party.
22. LITIGATION. In connection with any litigation arising out of this
transaction, the prevailing party shall be entitled to recover from the party
not prevailing the prevailing party's reasonable costs and attorney, paralegal
and expert fees incurred in all proceedings and at all levels.
23. CONDEMNATION. If any condemnation or similar action is instituted
or threatened prior to closing, Buyer may, at its option, either (a) terminate
this Contract, obtain a refund of the Deposit and be released of all further
liability hereunder, or (b) proceed to close and receive all condemnation
proceeds. Immediately upon learning of such pending or threatened action, Seller
shall notify Buyer and Buyer shall be permitted to participate in all
negotiations and proceedings with respect thereto. Seller represents and
warrants that Seller knows of no pending or threatened condemnation affecting
all or any portion of the Property as of the Date of Contract.
24. MORATORIUM. In the event that any judicial decree is entered,
governmental order issued or moratorium imposed prior to closing which would
impair the ability of Buyer to improve or operate the Property fully for the
Intended Use, Buyer may at its option elect either to (a) extend the closing
deadline until such time as the decree, order or moratorium is canceled or
lifted, or (b) terminate the Contract, receive a refund of the Deposit and be
released of all liability whatsoever hereunder. Seller represents that Seller
knows of no such decree, order or moratorium affecting the Property as of the
Date of Contract.
25. SELLER ASSURANCES. Seller represents and warrants to Buyer as of
Date of Contract and as of closing that: (a), if Seller is an entity other than
a natural person, then Seller is duly organized, validly existing and in good
standing under the laws of its state of formation; (b) there is no judgment,
claim, litigation or proceeding pending or threatened against Seller or the
Property; (c) there exists no violation nor has Seller received notice of any
violation of any law, ordinance, rule, regulation or code applicable to the
Property or Seller's use thereof, or of any order or requirement of any
governmental agency having jurisdiction over the Property or Seller's use
thereof, and that the Property and Seller's use thereof fully complies with all
of the foregoing; (d) there are no contracts, obligations or commitments which
have not been disclosed in writing to Buyer which will bind the Property or
Buyer after closing; (e) there are no attachments, executions or assignments for
the benefit of creditors, receiverships, or voluntary or involuntary proceedings
in bankruptcy or pursuant to any other debtor relief laws contemplated or filed
by Seller or pending against Seller or the Property, (f) there are no contracts
outstanding for the sale, exchange or transfer of the Property; (g) Seller alone
holds fee simple title to the Property free and clear of all defects and
encumbrances other than Permitted Encumbrances; (h) no persons other than Seller
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are in possession of the Property and no leases or other tenancies are in force
with respect to the Property; (i) there exists dedicated access to the Property;
(j) there are no facts known to Seller materially affecting the value of the
Property which are not readily observable by Buyer or which have not been
disclosed to Buyer; (l) this Contract constitutes a legal, valid and binding
obligation of Seller and the person(s) signing this Contract on behalf of Seller
have full authority to do so; and (m) none of the execution, delivery or
performance of this Contract will result in a breach of, or conflict with, the
terms of any agreement to which Seller is a party, or any judgment, decree,
order or award of any court, governmental body or arbitrator, or any law, rule
or regulation applicable to Seller. Seller shall indemnify, hold harmless and
defend Buyer from and against all losses, claims and liabilities resulting from
the inaccuracy or breach of any of the representations or warranties of Seller
set forth in this Contract.
26. BUYER ASSURANCES. Buyer represents and warrants to Seller as of
Date of Contract and as of closing that: (a) Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and is duly qualified and in good standing under the laws of the State of
Florida; (b) this Contract constitutes a legal, valid and binding obligation of
Buyer and the person(s) signing this Contract on behalf of Buyer have full
authority to do so; and (c) none of the execution, delivery or performance of
this Contract will result in a breach of, or conflict with, the terms of any
agreement to which Buyer is a party, or any judgment, decree, order or award of
any court, governmental body or arbitrator, or any law, rule or regulation
applicable to Buyer. Buyer shall indemnify, hold harmless and defend Seller from
and against all losses, claims and liabilities resulting from the inaccuracy or
breach of any of the representations or warranties of Buyer set forth in this
Contract.
27. SURVIVAL. Except as otherwise provided in this Contract, all
covenants, representations and warranties of the parties made in this Contract,
as well as any other provisions hereof which relate to matters extending beyond
the closing of this transaction, shall survive closing and delivery of the deed.
28. CONTAMINATION. Seller has not utilized the Property, nor any part
thereof, to treat, deposit, store, dispose of, or place any hazardous
substances, as defined by 41 U.S.C.A. Section 9601(14) and other state and
federal environmental and safety laws; nor has Seller authorized any other
person or entity to treat, deposit, store, dispose of, or place any such
hazardous substance, as defined above, on the Property or any part thereof; and
to the actual knowledge of Seller, no other person or entity has treated,
deposited, stored, disposed of or placed any such hazardous substance on the
Property or any part thereof. If a release or threatened release of a hazardous
substance has occurred or hereafter occurs on the Property prior to closing,
without fault of Buyer, which subjects Buyer to liability, loss or claims under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C.A. Section 9607, under the Florida Resource Recovery and
Management Act, Florida Statute Section 403.727 (1983), or under any other
statutory or common law, Seller agrees to indemnify, hold harmless and defend
Buyer from and against any such liability, loss and claims. Any conflicting
terms of this Contract to the contrary notwithstanding, in the event any
environmental report obtained by Buyer prior to closing discloses contamination
of any portion of the Property, Buyer shall have the option to terminate this
Contract by written notice delivered to Seller before closing and to receive the
Deposit, whereupon all further liabilities and obligations of the parties under
this Contract shall terminate.
29. RADON GAS DISCLOSURE. RADON IS A NATURALLY OCCURRING RADIOACTIVE
GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY
PRESENT HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON
THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN
FLORIDA. ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE
OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT. Note: This paragraph is provided
for informational purposes pursuant to Section 404.056(8), Florida Statutes,
(1988).
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30. SELLER COVENANT. Seller covenants that, during the term of this
Agreement, Seller shall not enter into, permit or suffer any new defect,
mortgage or other lien or encumbrance to be placed against the Property, or
against any interest therein, and Seller shall not transfer or grant to anyone
other than Buyer any right, title or interest in or to any of the Property.
31. ACKNOWLEDGMENT BY SELLER: Seller hereby acknowledges that the law
firm of Greenberg Traurig, P.A. represents Buyer in this transaction.
32. COUNTERPARTS. This Contract may be executed in any number of
counterparts, any one and all of which shall constitute the Contract of the
parties and each of which shall be deemed an original.
IN WITNESS WHEREOF, Seller and Buyer have executed this Contract on the
dates below.
WITNESSES: SELLER:
STONESTREET INVESTMENTS, INC.,
a Florida corporation
/s/ DAVID McCOMAS By:/s/ MICHAEL R. FOUTS
- ------------------------------- ----------------------------
Print Name: David McComas Name: Michael R. Fouts
Title: President
Dated as of and effective April 2, 1999
Print Name: Taxpayer Identification Number:
BUYER:
MIRACOM CORPORATION, a Nevada corporation
/s/ MICHAEL R. FOUTS By:/s/ DAVID McCOMAS
- ------------------------------- ----------------------------
Print Name: Michael R. Fouts Name: David McComas
Title: President
Dated as of and effective April 2, 1999
Print Name: Taxpayer Identification Number:
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<PAGE> 8
EXHIBIT "A"
"THE PROPERTY"
Lot 4, Block 4, Tier 3, FLORIDA LAND AND COLONIZATION COMPANY LIMITED, E. R.
TRAFFORD'S MAP OF THE TOWN OF SANFORD, according to the Plat thereof as recorded
in Plat Book 1, Pages 56 through 64, of the Public Records of Seminole County,
Florida.
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EXHIBIT 6.10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT ("AGREEMENT"), dated as of the 6th day of May,
1999, is made and entered into on the terms and conditions hereinafter set
forth, by and between MIRACOM CORPORATION, a Nevada corporation authorized to do
business in Florida ("BORROWER"), and EUGENE W. GRAMZOW, TRUSTEE FOR THE EUGENE
W. GRAMZOW REVOCABLE TRUST, DATED FEBRUARY 3, 1998 ("LENDER").
W I T N E S S E T H:
WHEREAS, Borrower has requested and Lender has agreed to make available
to Borrower a term loan in the original principal amount of Three Hundred Fifty
Thousand and No/100ths Dollars ($350,000.00) (the "LOAN") on the terms and
conditions hereinafter set forth, and for the purpose(s) hereinafter set forth;
and
WHEREAS, in order to induce Lender to make the Loan to Borrower,
Borrower has made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements
of Borrower, has agreed to make the Loan upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the agreement of Lender to make the
Loan, the mutual covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
ARTICLE I
THE LOAN
Section 1.1 COMMITMENT; EVIDENCE OF LOAN INDEBTEDNESS AND REPAYMENT.
Subject to the terms and conditions hereof, Lender agrees to make the Loan to
Borrower by wire transfer in immediately available funds to Borrower's
Construction Escrow Agent (as hereinafter defined), or other third-party account
as mutually agreed between Lender and Borrower. The Loan shall be evidenced by a
Promissory Note in the original principal amount of Three Hundred Fifty Thousand
and No/100ths Dollars ($350,000.00), substantially in the form of EXHIBIT A
attached hereto and incorporated herein by this reference (the "NOTE"), dated
the Closing Date (as defined in Section 1.3 hereof), executed by Borrower, in
favor of Lender. The Loan shall be conditionally guaranteed by Shawn Lucas and
shall be payable in accordance with the terms of the Note.
Section 1.2 OPERATIVE DOCUMENTS. (a) As further inducement for Lender
to extend the Loan,
(i) Borrower shall execute a Mortgage and Security Agreement in
favor of Lender,
<PAGE> 2
which shall be filed in the public records of Seminole County,
Florida (the "MORTGAGE"), granting to Lender a first lien in
Borrower's real property, together with the fixtures located
thereon or attached thereto, all as more particularly
described in the Mortgage, in the form of EXHIBIT B attached
hereto and incorporated herein by reference ("Property");
(ii) StoneStreet Investments, Inc. and/or Shawn Lucas, David
McComas, Michael Fouts, Scott Anderson and Jeffrey Odato
(hereinafter collectively referred to as "Pledgors") shall
enter into a Pledge and Security Agreement, substantially in
the form of EXHIBIT C attached hereto and incorporated herein
by this reference (the "PLEDGE AGREEMENT") with Lender
pursuant to which Pledgors will grant to Lender a security
interest in and to One Hundred Thousand (100,000) shares of
Common Stock of Borrower owned by Pledgors, which stock shall
be placed in escrow with Greenberg Traurig, P.A. (the "Stock
Escrow Agent"), pursuant to an escrow agreement, the form of
which is attached to the Pledge Agreement. The parties hereto
acknowledge that StoneStreet Investments, Inc. shall pledge
all of its stock in Borrower up to a maximum of One Hundred
Thousand (100,000) shares of Common Stock of Borrower. To the
extent StoneStreet Investments, Inc. holds less than One
Hundred Thousand (100,000) shares of Common Stock of Borrower,
the remaining Pledgors will pledge the number of shares of
Common Stock of Borrower that is equal to the difference
between one hundred thousand (100,000) and the number of
shares pledged by StoneStreet Investments, Inc., pro-rata as
their interests appear in the Borrower. The parties further
acknowledge that because the number of shares which
StoneStreet Investments, Inc. will acquire in Borrower cannot
be determined until such time as Borrower has received an
appraisal on the Property, the shares shall be deposited with
the Stock Escrow Agent and the Stock Pledge Agreement shall be
finalized within thirty (30) days of the Closing. Failure on
the part of the Pledgors to deposit the stock with Stock
Escrow agent shall be an Event of Default hereunder;
(iii) Lender, Borrower and Advanced Investment Corporation, as
escrow agent ("Construction Escrow Agent") shall enter into an
Escrow Agreement, substantially in the form of EXHIBIT D
attached hereto and incorporated herein by this reference the
"ESCROW AGREEMENT"), which shall provide that the loan
proceeds shall be deposited into an account with Escrow Agent
and the funds shall be disbursed in accordance with the terms
and conditions of such Escrow Agreement.
(b) This Agreement, the Note, the Mortgage, the Pledge Agreement and
the Escrow Agreement, and any other instruments and documents executed by
Borrower, including any exhibits thereto, now or hereafter evidencing, securing
or in any way related to the indebtedness evidenced by the Note are herein
individually referred to as an "OPERATIVE DOCUMENT" and collectively referred to
as the "OPERATIVE DOCUMENTS."
Section 1.3 CLOSING DATE. The closing (the "CLOSING") with respect to
the borrowing under this Agreement will take place at the offices of
__________________________________ at 10:00 A.M., Orlando, Florida time on
______________, or such later date as Borrower and Lender shall agree (the
"CLOSING DATE"). Upon the Closing, Lender shall disburse the loan proceeds by
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federal funds wire transfer in immediately available funds and to the accounts
and in the amounts in accordance with Borrower's written instructions, received
twenty-four (24) hours prior to the Closing Date.
Section 1.4 LOAN FEE. Borrower shall pay Lender on the Closing Date a
loan fee payable as follows:
Borrower shall issue to Lender an option to acquire Fifty
Thousand (50,000) shares of Common Stock of Borrower exercisable immediately for
total consideration of ten dollars ($10.00) per option agreement for a period of
three (3) years. Lender acknowledges and agrees that the Common Stock issuable
upon the exercise of the option will be restricted securities and may be sold
only if registered under the Securities Act of 1933, as amended (the "Act") or
if an exemption from registration is available.
Section 1.5 BROKER FEE. Borrower shall be responsible to pay a broker's
fee to Advanced Investment Corp., an Oregon corporation ("Broker") and Patrick
Seber, a licensed employee of Broker, on the Closing Date payable as follows:
(a) Borrower shall issue to Broker Twenty Eight Thousand (28,000)
shares of Common Stock of Borrower.
(b) Borrower shall issue to Patrick Seber Twelve Thousand (12,000)
shares of Common Stock of Borrower.
Section 1.6. PREPAYMENT. Borrower may prepay the indebtedness evidenced
by the Note in whole or in part at any time and from time to time, without
penalty or premium.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower hereby represents and warrants to Lender as follows:
Section 2.1 CORPORATE STATUS. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, is duly qualified and in good standing under the laws of the State of
Florida, and has the corporate power to own and operate its properties, to carry
on its business as now conducted and to enter into and to perform its
obligations under this Agreement, the Note and the other Operative Documents.
Section 2.2 AUTHORIZATION. The Borrower has full legal right, power and
authority to enter into and perform its obligations under this Agreement, the
Note and the other Operative Documents, without the consent or approval of any
other person, firm, governmental agency or other legal entity. The execution and
delivery of this Agreement, the execution and delivery of the Note, the
execution and delivery of each other document in connection herewith or
therewith to which Borrower is a party, and the performance by Borrower of its
obligations hereunder and/or thereunder are within the corporate powers of
Borrower and have been duly authorized by all necessary
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corporate action properly taken. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
and will not contravene or conflict with the articles of incorporation or bylaws
of Borrower or any material agreement to which Borrower is now a party or by
which its properties is bound, or constitute a default thereunder, or results in
the creation or imposition of any lien, charge, security interest, or
encumbrance of any nature upon any of the property or assets of Borrower
pursuant to the terms of any such agreement or instrument. The officer(s)
executing this Agreement, the Note and the other Operative Documents is duly
authorized to act on behalf of Borrower.
Section 2.3 TITLE TO PROPERTY. The Borrower has good and marketable
title to the Property securing the Mortgage, free and clear of all liens,
security interests, pledges, encumbrances, except for the Permitted Exceptions
as set forth in the title commitment issued on Buyer's behalf pertaining to the
acquisition of the Property.
Section 2.4 FEES/COMMISSIONS. Except as disclosed herein, the Borrower
has not agreed to pay any finder's fee, commission, loan fee or other fee or
charge to any person or entity with respect to the loan and investment
transactions contemplated hereunder.
ARTICLE III
COVENANTS AND AGREEMENTS
From and after the Closing Date and continuing during the term of this
Agreement:
Section 3.1 USE OF PROCEEDS. The Borrower shall use the proceeds of the
Note to acquire the Property and to construct the improvements to the building
situated on the Property.
Section 3.2 PAYMENT OF OBLIGATIONS. The Borrower shall pay the
indebtedness evidenced by the Note according to the terms thereof, and shall
timely pay or perform, as the case may be, all of the other obligations of
Borrower to Lender, direct or contingent, however evidenced or denominated, and
however and whenever incurred, including but not limited to indebtedness
incurred pursuant to any present or future commitment of Lender to Borrower,
together with interest thereon, and any extensions, modifications,
consolidations and/or renewals thereof and any notes given in payment thereof.
Section 3.3 CORPORATE EXISTENCE, ETC. The Borrower will preserve and
keep in force and effect its corporate existence and good standing in the State
of Nevada and its qualification to conduct business in the State of Florida, and
all licenses and permits necessary to the proper conduct of its business.
ARTICLE IV
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF LENDER
The obligation of Lender to fund the Loan on Closing Date is subject to
the fulfillment, on or prior to the Closing Date, of each of the following
conditions:
Section 4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of
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<PAGE> 5
Borrower contained in this Agreement and in any Exhibit hereto or any document
or instrument delivered to Lender or its representatives hereunder, shall have
been true and correct when made and shall be true and correct as of the Closing
Date as if made on such date, except to the extent such representations and
warranties expressly relate to a specific date. The Borrower shall have duly
performed all of the covenants and agreements to be performed by it hereunder on
or prior to the Closing Date.
Section 4.2 DELIVERIES BY/ON BEHALF OF BORROWER. The following executed
documents shall have been delivered and received:
(a) NOTE. The Borrower shall have delivered to Lender the Note
executed by Borrower, in the form of EXHIBIT A attached hereto and
incorporated herein by this reference.
(b) MORTGAGE. Borrower shall have delivered to Lender for
recording a Mortgage and Security Agreement in the Form attached hereto
as EXHIBIT B.
(c) STOCK OPTION AGREEMENT. Borrower shall have delivered to
Lender a Stock Option Agreement executed by the Borrower, substantially
in the form of EXHIBIT E attached hereto and incorporated herein by
this reference.
(d) ESCROW AGREEMENT FOR MONEY. The Borrower shall have
delivered to Lender an escrow agreement, executed by Borrower and the
Escrow Agent, substantially in the form of EXHIBIT D attached hereto
and incorporated herein by this reference.
(e) PLEDGE AND SECURITY AGREEMENT. Borrower shall have
delivered to Lender a Pledge and Security Agreement, executed by
Borrower, and related stock certificates and undated stock powers,
executed in blank by Borrower, substantially in the form of EXHIBIT C
attached hereto and incorporated herein by this reference.
(f) ESCROW AGREEMENT FOR STOCK. Borrower shall have delivered
to Lender an escrow agreement for the stock pledged in the form
attached to the Stock Pledge Agreement; provided, however, that the
number of shares shall not be completed and the shares shall not be
deposited with Stock Escrow Agent until thirty (30) days after the
Closing.
(g) EXISTENCE AND AUTHORITY. The Borrower shall have delivered
to Lender the following certificates of public officials, in each case
as of a recent date:
(i) the certificate of incorporation of Borrower,
certified by the Secretary of State or other appropriate
official in the jurisdiction Borrower is incorporated;
(ii) a copy of Borrower's qualification to do
business in Florida, certified by the Secretary of State of
Florida; and
(iii) certificates as to the legal existence and good
standing of Borrower issued by the Secretary of State of
Nevada and the Secretary of State of Florida.
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<PAGE> 6
(h) MISCELLANEOUS DOCUMENTS. Such other documentation as may
be reasonably necessary to effectuate this transaction.
Section 4.3 WAIVER OF CONDITIONS. If on the Closing Date Borrower fails
to execute and deliver to Lender the Note or if the conditions specified in this
ARTICLE IV have not been fulfilled, Lender may thereupon elect to be relieved of
all further obligations under this Agreement. Without limiting the foregoing, if
the conditions specified in this ARTICLE IV have not been fulfilled, Lender may
waive compliance by Borrower with any such condition to such extent as Lender,
in Lender's sole discretion, may determine. Nothing in this Section 4.3 shall
operate to relieve Borrower of any of its obligations hereunder or to waive any
of Lender's rights against Borrower.
ARTICLE V
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BORROWER
The obligation of Borrower to close the Loan on the Closing Date is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions:
Section 5.1 DELIVERIES BY/ON BEHALF OF LENDER. The following executed
documents shall have been delivered and received:
(a) STOCK OPTION AGREEMENT. Lender shall have delivered to
Borrower a Stock Option Agreement executed by Lender, substantially in
the form of EXHIBIT E attached hereto and incorporated herein by this
reference.
(b) ESCROW AGREEMENT FOR CONSTRUCTION. Lender shall have
delivered to Borrower an escrow agreement, executed by Lender and the
Escrow Agent, substantially in the form of EXHIBIT D attached hereto
and incorporated herein by this reference.
(c) PLEDGE AND SECURITY AGREEMENT. Lender shall have delivered
to Borrower a Pledge and Security Agreement, executed by Lender,
substantially in the form of EXHIBIT C attached hereto and incorporated
herein by this reference.
(d) ESCROW AGREEMENT FOR STOCK. Lender shall have delivered to
Borrower an escrow agreement executed by Lender with respect to the
stock pledged pursuant to the Stock Pledge Agreement; provided,
however, that the number of shares shall not be completed and the
shares shall not be deposited with Stock Escrow Agent until thirty (30)
days after the closing.
(e) MISCELLANEOUS DOCUMENTS. Such other documentation as may
be reasonably necessary to effectuate this transaction.
Section 5.2 DELIVERY OF FUNDS. Lender shall wire Three Hundred Fifty
Thousand and No/100ths Dollars ($350,000.00) to Construction Escrow Agent's
account, or such other third-party account as Borrower and Lender may designate.
Section 5.3 WAIVER OF CONDITIONS. If on the Closing Date Lender has not
fulfilled the
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conditions specified in this ARTICLE V, Borrower may thereupon elect to be
relieved of all further obligations under this Agreement. Without limiting the
foregoing, if the conditions specified in this ARTICLE V have not been
fulfilled, Borrower may waive compliance by Lender with any such condition to
such extent as Borrower, in Borrower's sole discretion, may determine. Nothing
in this Section 5.3 shall operate to relieve Lender of any of its obligations
hereunder or to waive any of Borrower's rights against Lender.
ARTICLE VI
DEFAULT AND REMEDIES
Section 6.1 EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an event of default hereunder (an "Event of Default"):
(a) Default in the payment of the principal of or interest on
the indebtedness evidenced by the Note in accordance with the terms of
the Note;
(b) Failure of Pledgors to deliver stock and Stock Pledge
Agreement to Stock Escrow Agent within thirty (30) days of the date of
Closing;
(c) Borrower (i) shall make an assignment for the benefit of
creditors or petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its
assets; or (ii) shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (iii) shall have had a petition in bankruptcy
or insolvency, or for reorganization, or for the appointment of a
receiver or trustee of all or a portion of its property filed against
it in any court, pursuant to any statute of the United States or of any
State, and any such proceeding shall not be dismissed within sixty (60)
days following the commencement thereof;
(d) Borrower shall be liquidated, dissolved, partitioned or
terminated, or the charter thereof shall expire or be revoked; or
(e) An Event of Default shall occur under this Agreement or
any of the other Operative Documents and, if subject to a cure right,
such Event of Default shall not be cured within the applicable cure
period.
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "CURABLE
DEFAULT"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days of notice thereof to Borrower given by Lender in
accordance with the provisions hereof.
Section 6.2 RIGHT TO CURE BY STONESTREET INVESTMENTS, INC. Lender and
Borrower hereby acknowledge that StoneStreet Investments, Inc., as a shareholder
of Borrower, shall benefit from the granting of the Loan from Lender to
Borrower. Consequently, notwithstanding anything contained herein to the
contrary, Lender hereby agrees that StoneStreet Investments, Inc. shall be
provided
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with any and all notices regarding a default under the Note or the Mortgage, so
that StoneStreet Investments, Inc. may, although it is under no obligation to,
remedy such defaults by or on behalf of Borrower.
8
<PAGE> 9
Section 6.3 ACCELERATION OF MATURITY; REMEDIES. Upon the occurrence of
any Event of Default described in subsection 6.1 which is not cured within the
applicable cure period provided therein, the indebtedness evidenced by the Note
shall be immediately due and payable in full, and Lender at any time thereafter
may at its option accelerate the maturity of the indebtedness evidenced by the
Note, with thirty (30) days prior written notice to Borrower and StoneStreet
Investments, Inc. Upon the occurrence of any such Event of Default and the
acceleration of the maturity of the indebtedness evidenced by the Note:
(a) Lender shall exercise any and all remedies it may have
under the Operative Documents with respect to the pledged stock and the
Property;
(b) Thereafter, Lender shall be immediately entitled to
exercise any and all rights and remedies possessed by Lender pursuant
to the terms of the Note and all of the other Operative Documents,
including without limitation filing a foreclosure action with respect
to the Property;
(c) To the extent that Lender has exhausted its remedies in
accordance with provision 6.3(a) and (b) herein, Lender may look to
Shawn Lucas, conditional guarantor of the Loan, to satisfy the
remaining obligations; and
(d) Lender shall have any and all other rights and remedies
that Lender may now or hereafter possess at law, in equity or by
statute.
Section 6.4 REMEDIES CUMULATIVE; NO WAIVER. No right, power or remedy
conferred upon or reserved to Lender by this Agreement or any of the other
Operative Documents is intended to be exclusive of any other right, power or
remedy, but each and every such right, power and remedy shall be cumulative and
concurrent and shall be in addition to any other right, power and remedy given
hereunder, under any of the other Operative Documents or now or hereafter
existing at law, in equity or by statute. No delay or omission by Lender to
exercise any right, power or remedy accruing upon the occurrence of any Event of
Default shall exhaust or impair any such right, power or remedy or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein, and every right, power and remedy given by this Agreement and the other
Operative Documents to Lender may be exercised from time to time and as often as
may be deemed expedient by Lender.
Section 6.5 PROCEEDS OF REMEDIES. Any or all proceeds resulting from
the exercise of any or all of the foregoing remedies shall be applied as set
forth in the Operative Document(s) providing the remedy or remedies exercised;
if none is specified, or if the remedy is provided by this Agreement, then as
follows:
First, to the costs and expenses, including without limitation
reasonable attorney's fees, incurred by Lender in connection with the
exercise of its remedies;
Second, to the expenses of curing the default that has
occurred, in the event that Lender elects, in its sole discretion, to
cure the default that has occurred;
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<PAGE> 10
Third, to the payment of the obligations of Borrower under the
Operative Documents (the "OBLIGATIONS"), including but not limited to
the payment of the principal of and interest on the indebtedness
evidenced by the Note, in such order of priority as Lender shall
determine in its sole discretion; and
Fourth, the remainder, if any, to Borrower or to any other
person lawfully thereunto entitled.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION OF THIS AGREEMENT. This Agreement shall remain
in full force and effect until the payment by Borrower of all amounts owed to
Lender, at which time Lender shall cancel the Note and deliver it to Borrower;
PROVIDED, HOWEVER, that if at any time Borrower has satisfied all obligations to
Lender, Borrower may terminate this Agreement by providing written notice to
Lender.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 PERFORMANCE BY LENDER. If Borrower shall default in the
payment, performance or observance of any covenant, term or condition of this
Agreement, which default is not cured within the applicable cure period by
Borrower or StoneStreet Investments, Inc., then Lender may, at its option, pay,
perform or observe the same, and all payments made or costs or expenses incurred
by Lender in connection therewith (including but not limited to reasonable
attorney's fees), with interest thereon at the highest default rate provided in
the Note (if none, then at the maximum rate from time to time allowed by
applicable law), shall be immediately repaid to Lender by Borrower and shall
constitute a part of the Obligations. Lender shall be the sole judge of the
necessity for any such actions and of the amounts to be paid.
Section 8.2 SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. Whenever in
this Agreement one of the parties hereto is named or referred to, the heirs,
legal representatives, successors, successors-in-title and assigns of such
parties shall be included, and all covenants and agreements contained in this
Agreement by or on behalf of Borrower or by or on behalf of Lender shall bind
and inure to the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
Section 8.3 ASSIGNMENT. The Note, this Agreement and the other
Operative Documents may be endorsed, assigned and/or transferred in whole or in
part by Lender, and any such holder and/or assignee of the same shall succeed to
and be possessed of the rights and powers of Lender under all of the same to the
extent transferred and assigned. Borrower may assign its rights and delegate its
duties hereunder or under any of the other Operative Documents with the prior
written consent of Lender, which shall not be unreasonably withheld; provided,
however, that Borrower may assign its rights and obligations hereunder to an
affiliated entity without the consent of Lender.
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Section 8.4 TIME OF THE ESSENCE. Time is of the essence with respect to
each and every covenant, agreement and obligation of Borrower hereunder and
under all of the other Operative Documents.
Section 8.5 SEVERABILITY. If any provision(s) of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
Section 8.6 INTEREST AND LOAN CHARGES NOT TO EXCEED MAXIMUM ALLOWED BY
LAW. Anything in this Agreement, the Note or any of the other Operative
Documents to the contrary notwithstanding, in no event whatsoever, whether by
reason of advancement of proceeds of the Loan, acceleration of the maturity of
the unpaid balance of the Loan or otherwise, shall the interest and loan charges
agreed to be paid to Lender for the use of the money advanced or to be advanced
hereunder exceed the maximum amounts collectible under applicable laws in effect
from time to time. It is understood and agreed by the parties that, if for any
reason whatsoever the interest or loan charges paid or contracted to be paid by
Borrower in respect of the indebtedness evidenced by the Note shall exceed the
maximum amounts collectible under applicable laws in effect from time to time,
then IPSO FACTO, the obligation to pay such interest and/or loan charges shall
be reduced to the maximum amounts collectible under applicable laws in effect
from time to time, and any amounts collected by Lender that exceed such maximum
amounts shall be applied to the reduction of the principal balance of the
indebtedness evidenced by the Note and/or refunded to Borrower so that at no
time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced by the Note exceed the maximum amounts permitted from
time to time by applicable law.
Section 8.7 ARTICLE AND SECTION HEADINGS; DEFINED TERMS. Numbered and
titled article and section headings and defined terms are for convenience only
and shall not be construed as amplifying or limiting any of the provisions of
this Agreement.
Section 8.8 NOTICES. Any and all notices, elections or demands
permitted or required to be made under this Agreement shall be in writing,
signed by the party giving such notice, election or demand and shall be
delivered personally, telecopied, telexed, or sent by certified mail or
overnight via nationally recognized courier service (such as Federal Express),
to the other party at the address set forth below, or at such other address as
may be supplied in writing and of which receipt has been acknowledged in
writing. The date of personal delivery or telecopy or two (2) business days
after the date of mailing (or the next business day after delivery to such
courier service), as the case may be, shall be the date of such notice, election
or demand. For the purposes of this Agreement:
The Address of Lender is: Eugene W. Gramzow, Trustee for the
Eugene W. Gramzow Revocable Trust
Dated February 3, 1998
c/o Advanced Investment Corp.
321 Good Pasture Island Road
Eugene, Oregon 97401
Attention: Mike Welt
Telecopy No.: (541) 349-2498
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with a copy to: Michael P. Kearney, P.C.
260 Country Club Road
Suite 210
Eugene, Oregon 97401
The Address of Borrower is: Miracom Corporation
1180 Spring Centre South Boulevard
Suite 310
Altamonte Springs, Florida 32714
Attention: David McComas, President
Telecopy No.: (407) 772-8738
with a copy to: StoneStreet Investments, Inc.
298 Lake Markham Road
Sanford, Florida 32771
Attn: Michael Fouts
Telecopy No.: (407) 772-8738
with a copy to: Greenberg Traurig, P.A.
111 North Orange Avenue, Suite 2050
Orlando, Florida 32801
Attention: Sandra C. Gordon, Esq.
Telecopy No.: (407) 420-5909
Section 8.9 ENTIRE AGREEMENT. This Agreement and the other written
agreements between Borrower and Lender represent the entire agreement between
the parties concerning the subject matter hereof, and all oral discussions and
prior agreements are merged herein; provided, if there is a conflict between
this Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision of this Agreement shall control.
Section 8.10 GOVERNING LAW AND AMENDMENTS. This Agreement and all of
the other Operative Documents shall be construed and enforced under the laws of
the State of Florida applicable to contracts to be wholly performed in such
State. No amendment or modification hereof shall be effective except in a
writing executed by each of the parties hereto.
Section 8.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or in any of the Loan documents
or made by or furnished on behalf of Borrower in connection herewith or in any
of the other Operative Documents shall survive the execution and delivery of
this Agreement and all other Operative Documents.
Section 8.12 JURISDICTION AND VENUE. Borrower and Lender hereby consent
to the jurisdiction of the courts located in Seminole County, State of Florida
and the United States District Court for the Middle District of Florida, Orlando
Division, as well as to the jurisdiction of all courts from which an appeal may
be taken from such courts, for the purpose of any suit, action or other
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proceeding arising out of any of its obligations arising under this Agreement or
any other Operative Documents or with respect to the transactions contemplated
hereby, and expressly waives any and all objections it may have as to venue in
any of such courts.
Section 8.13 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
Section 8.14 CONSTRUCTION AND INTERPRETATION. Should any provision of
this Agreement require judicial interpretation, the parties hereto agree that
the court interpreting or construing the same shall not apply a presumption that
the terms hereof shall be more strictly construed against one party by reason of
the rule of construction that a document is to be more strictly construed
against the party that itself or through its agent prepared the same, it being
agreed that Borrower, Lender and their respective agents have participated in
the preparation hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDER:
-------
EUGENE W. GRAMZOW, TRUSTEE FOR THE
EUGENE W. GRAMZOW REVOCABLE TRUST
DATED FEBRUARY 3, 1998
By: /s/ Eugene W. Gramzow
------------------------------
Name: Eugene W. Gramzow
Title: Trustee
BORROWER:
---------
MIRACOM CORPORATION,
a Nevada corporation
By: /s/ David McComas
------------------------------
Name: David McComas
Title: President
(Corporate Seal)
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EXHIBIT 6.10.2
INSTRUMENT PREPARED BY:
D. Helen Ford, Esquire
Greenberg Traurig, P.A.
111 North Orange Avenue, 20th Floor
Orlando, Florida 32801
AND SHOULD BE RETURNED TO:
Kampf Title and Guaranty Corporation
200 West First Street
Suite 101
P.O. Box 1359
Sanford, Florida 32772-1359
- ---------------------SPACE ABOVE THIS LINE FOR RECORDING DATA-------------------
MORTGAGE
--------
THIS MORTGAGE (the "Mortgage"), dated as of May 6, 1999 ("Effective
Date"), by MIRACOM CORPORATION, a Nevada corporation, authorized to do business
in the State of Florida (the "Mortgagor"), to EUGENE W. GRAMZOW, TRUSTEE FOR THE
EUGENE W. GRAMZOW REVOCABLE TRUST DATED FEBRUARY 3, 1998 (the "Mortgagee").
W I T N E S S E T H:
That for good and valuable consideration, and also in consideration of
the aggregate sum named in the Mortgage Note of even date herewith, hereinafter
described, the Mortgagor hereby grants, bargains, sells, aliens, remises,
conveys and confirms unto the Mortgagee, all that certain land of which the
Mortgagor is now seized and in possession situate in Seminole County, Florida,
more particularly described on Exhibit "A" attached hereto and incorporated
herein by reference (the "Land"):
TOGETHER WITH the following, whether now owned or hereafter acquired by
Mortgagor: (a) all improvements now or hereafter attached to or placed, erected,
constructed or developed on the Land (the "Improvements"); (b) all fixtures (the
"Fixtures") now or hereafter attached to or used in or about the Improvements,
or which Fixtures are or may be used in or related to the operation of the Land
and the Improvements, if any; (c) all permits, licenses, approvals and vested
rights, sewer rights, water and water rights, timber, crops, mineral interests,
development rights, franchises, certificates, and all other rights obtained in
connection with the Land, the Improvements or the Fixtures; (d) all plans and
specifications for Improvements; (e) all proceeds arising from the sale, lease
or other disposition of the Land, the Improvements or the Fixtures; (f) all
proceeds from the taking of any of the Land, the Improvements, the Fixtures or
any rights appurtenant thereto by right of eminent domain or by private or other
purchase in lieu
<PAGE> 2
thereof; (g) all right, title and interest of Mortgagor in and to all streets,
roads, public places, easements and rights-of-way, existing or proposed, public
or private, adjacent to or used in connection with the Land; (h) any leases,
rents, profits, revenues or other benefits of the Land, the Improvements or the
Fixtures, (i) all rights, hereditaments and appurtenances pertaining to the
foregoing; and (j) all renewals of or replacements or substitutions for any of
the foregoing. The above-described property is collectively referred to herein
as the "Mortgaged Property".
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances thereto belonging, unto Mortgagee, and its
successors and assigns, forever, and Mortgagor hereby binds itself and its
successors and assigns to warrant and forever defend the Mortgaged Property unto
Mortgagee, and its successors and assigns, against the claims of all persons
claiming or to claim the same or any part thereof.
ARTICLE I
INDEBTEDNESS
This Mortgage is given to secure the indebtedness evidenced by the
Promissory Note ("the Note") of even date herewith in the original principal
amount of THREE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($350,000.00),
executed by Mortgagor, payable to the order of Mortgagee, and bearing interest
and being payable as set forth therein, and all extensions, modifications,
increases, and renewals thereof made from time to time. The obligations herein
described are hereinafter collectively called the "Indebtedness." All payments
on the Indebtedness shall be payable at the address of Mortgagee as set forth
below.
ARTICLE II
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF MORTGAGOR
Mortgagor does hereby covenant, warrant and represent to and agree with
Mortgagee as follows:
2.1 TITLE TO MORTGAGED PROPERTY. Except for those certain items listed
and described on EXHIBIT "B" attached hereto and by this reference made a part
hereof (collectively, the "Permitted Exceptions"), Mortgagor has good and
indefeasible title to the Land and the Improvements, and good and marketable
title to the Fixtures, free and clear of any liens, charges, encumbrances,
security interests, and adverse claims whatsoever.
2.2 TAXES AND ASSESSMENTS. Mortgagor shall pay all taxes and
assessments against or affecting the Mortgaged property as the same become due
and payable.
2.3 INSURANCE. Mortgagor shall keep the Mortgaged Property insured
against loss or damage by fire, and such other risks as Mortgagee in its
reasonable discretion may require. The policy or policies of such insurance
shall be in the form in general use from time to time in the
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<PAGE> 3
locality in which the Mortgaged Property is situated, shall be in such amount as
Mortgagee may reasonably require, shall be issued by a company or companies
reasonably approved by Mortgagee, and shall contain a standard mortgagee clause
with loss payable to Mortgagee.
ARTICLE III
MISCELLANEOUS
3.1 ATTORNEYS' FEES. In the event of a dispute regarding, arising out
of, or in connection with the breach, enforcement, or interpretation of this
Mortgage and the Indebtedness (regardless of whether legal proceedings are
instituted), the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
3.2 RELEASE OF LIEN. If Mortgagor shall perform each and every one of
the covenants and agreements contained in the Note and in this Mortgage, then
this conveyance shall become null and void and shall be released by Mortgagee.
3.3 SUCCESSORS AND ASSIGNS. The covenants herein contained shall bind,
and the benefits and advantages shall inure to, the respective successors and
assigns of the parties.
3.4 SEVERABILITY. If any provision of this Mortgage is held to be
illegal, invalid, or unenforceable under present or future laws effective while
this Mortgage is in effect, the legality, validity and enforceability of the
remaining provisions of this Mortgage shall not be affected thereby.
3.5 NOTICE. Any notice, demand or other instrument authorized or
required by this Mortgage or the Note to be served on or given to Mortgagor or
Mortgagee shall be served on or given to Mortgagor and Stonestreet Investments,
Inc. at the address indicated below:
If to Mortgagee: Eugene W. Gramzow, Trustee for the
Eugene W. Gramzow Revocable Trust,
Dated February 3, 1998
c/o Advanced Investment Corp.
321 Good Pasture Island Road
Eugene, Oregon 97401
Attn.: Mike Welt
Facsimile No.: (541) 349-2498
With a copy to: Michael P. Kearney, P.C.
260 Country Club Road, Suite 210
Eugene, Oregon 97401
Attn.: Michael P. Kearney, Esquire
Facsimile No.: (541) 345-7098
3
<PAGE> 4
If to Mortgagor: Miracom Corporation
1180 Spring Centre South Boulevard
Suite 310
Altamonte Springs, Florida 32714
Attn: David McComas, President
Facsimile No.: (407) 772-8738
With a copy to: Greenberg Traurig, P.A.
111 North Orange Avenue, Suite 2050
Orlando, Florida 32801
Attn.: Sandra C. Gordon, Esquire
Facsimile No.: (407) 420-5909
With a copy to: Stonestreet Investments, Inc.
298 Lake Markham Road
Sanford, Florida 32771
Attn: Michael Fouts, President
Facsimile No.: (407) 772-8738
or at such address as may be furnished from time to time by written notice
conforming herewith.
ARTICLE IV
EVENTS OF DEFAULT
Each and every one of the following shall constitute an "Event of
Default":
4.1 FAILURE TO PAY INDEBTEDNESS. Any of the Indebtedness is not paid
when due by Mortgagor, and remains unpaid after lapse of the curative period
provided in the Note.
4.2 NONPERFORMANCE OF COVENANTS. Any other term or covenant in the Note
or this Mortgage is not fully performed, or any other event of default occurs
thereunder or hereunder, for a period of thirty (30) days after receipt by
Mortgagor of written notice from Mortgagee.
ARTICLE V
REMEDIES
5.1 ACCELERATION. After an Event of Default, Mortgagee may declare the
entire unpaid balance of the Note immediately due and payable without notice.
5.2 RECEIVER OR FORECLOSURE. After an Event of Default, Mortgagee may
apply to any court of competent jurisdiction for the appointment of a receiver
or similar official to manage and operate the Mortgaged Property, or any part
thereof, and to apply the net rents and profits
4
<PAGE> 5
therefrom to the payment of the interest and/or principal of the Note and/or any
other obligations of Mortgagor to Mortgagee hereunder. After an Event of
Default, Mortgagee shall also have the right to foreclose this Mortgage and in
case of sale in an action or proceeding to foreclose this Mortgage, Mortgagee
shall have the right to sell the Mortgaged Property covered hereby in parts or
as an entirety.
ARTICLE VI
RIGHT TO CURE
Stonestreet Investments, Inc. hereby warrants and represents that it
has benefited by Mortgagee's loan to Mortgagor, which loan is evidenced by the
Note which has been executed by Mortgagor. Consequently, upon the default of
Mortgagor, Stonestreet Investments, Inc. shall have the right, but is under no
obligation, to make payments on the Indebtedness when due and perform all of
Mortgagor's covenants, obligations and liabilities under the Note and this
Mortgage.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage and Security
Agreement as of the date first above written.
Signed, sealed and delivered
in the presence of: MORTGAGOR:
MIRACOM CORPORATION,
a Nevada corporation
/s/ Suzanne M. Denny By: /s/ David McComas
- ----------------------------------- --------------------------------
Print Name: Suzanne M. Denny Name: David McComas
Title: President
/s/ Barbara A. Mero (Corporate Seal)
- -----------------------------------
Print Name: Barbara A. Mero
5
<PAGE> 6
STATE OF FLORIDA
COUNTY OF SEMINOLE
The foregoing Mortgage and Security Agreement was acknowledged before
me this 6th day of May, 1999, by DAVID McCOMAS, as President of Miracom
Corporation. He is personally known to me or has produced driver's license as
identification.
/s/ Suzanne M. Denny
---------------------------------------
NOTARY PUBLIC
Print Name: Suzanne M. Denny
My Commission Expires:
6
<PAGE> 7
EXHIBIT "A"
-----------
LEGAL DESCRIPTION OF THE LAND
-----------------------------
PARCEL A:
- ---------
Lot 1 (less the South 37.65 feet) and the East 2.97 feet of Lot 2 (less the
South 37.65 feet), Block 3, Tier 3, FLORIDA LAND AND COLONIZATION COMPANY
LIMITED, E. R. TRAFFORD'S MAP OF THE TOWN OF SANFORD, according to the Plat
thereof as recorded in Plat Book 1, Pages 56 through 64, of the Public Records
of Seminole County, Florida.
PARCEL B:
- ---------
Lot 4, Block 4, Tier 3, FLORIDA LAND AND COLONIZATION COMPANY LIMITED, E. R.
TRAFFORD'S MAP OF THE TOWN OF SANFORD, according to the Plat thereof as recorded
in Plat Book 1, Pages 56 through 64, of the Public Records of Seminole County,
Florida.
7
<PAGE> 8
EXHIBIT "B"
-----------
PERMITTED EXCEPTIONS
--------------------
AS TO PARCELS A AND B:
1. General taxes for the year 1999 and thereafter, not yet due and
payable.
2. All matters as shown on the Plat of said Subdivision of FLORIDA LAND
AND COLONIZATION COMPANY LIMITED, E. R. TRAFFORD'S MAP OF THE TOWN OF
SANFORD, according to the Plat thereof as recorded in Plat Book 1,
Pages 56 through 64, of the Public Records of Seminole County, Florida.
AS TO PARCEL B ONLY:
1. Mortgage executed by StoneStreet Investments, Inc., a Florida
corporation in favor of Louis J. Venturello and Colleen E. Venturello,
Husband and Wife, dated February 15, 1999 and filed for record February
19, 1999 in Official Records Book 3595, Page 1198, of the Public
Records of Seminole County, Florida in the original principal sum of
$20,500.00.
2. Right of Way Agreement to the City of Sanford, a Florida Municipal
Corp., recorded in Official Records Book 3008, Page 1253, of the Public
Records of Seminole County, Florida.
8
<PAGE> 1
EXHIBIT 6.10.3
MORTGAGE NOTE
-------------
$350,000.00 ORLANDO, FLORIDA
MAY 6, 1999
FOR VALUE RECEIVED, MIRACOM CORPORATION, a Nevada corporation,
authorized to do business in the State of Florida (hereinafter the "Maker"),
promises to pay to EUGENE W. GRAMZOW, TRUSTEE FOR THE EUGENE W. GRAMZOW
REVOCABLE TRUST DATED FEBRUARY 3, 1998 (hereinafter the "Payee"), in the manner
hereinafter specified, the principal sum of THREE HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($350,000.00), with interest at the rate of fifteen percent (15%)
per annum on the balance from time to time remaining unpaid. Principal and
interest shall be payable in lawful money of the United States of America at c/o
Advanced Investment Corporation, 321 Good Pasture Island Road, Eugene, Oregon
97401, or at such other place as may hereafter be designated by written notice
from the Payee to the Maker. This Note shall be payable as follows:
Monthly payments of interest only in the amount of Four
Thousand Three Hundred Seventy-five and 00/100 ($4,375.00)
shall be due and payable commencing on June 1, 1999, and
thereafter upon the first (1st) day of each month during the
term of this Note. The first payment due on June 1, 1999 shall
be a prorated amount prorated from the date of execution of
this Note through May 31, 1999.
The outstanding principal balance of this Note, plus any
accrued but unpaid interest shall be due and payable in full
on May 31, 2016; provided however that, if any interest in the
real property securing this Note is transferred or conveyed
(other than a transfer or conveyance to an affiliated entity)
all principal and interest shall become immediately due and
payable at the option of the holder of this Note.
This Note may be prepaid in whole or in part at any time without
penalty. Any such prepayment shall be applied first to unpaid interest, if any,
and then to principal. Interest hereunder shall be calculated on the basis of a
year consisting of three hundred sixty-five (365) days.
This Note, with interest, is secured by a Mortgage of even date
herewith, to be recorded in the Public Records of Seminole County, Florida,
executed by the Maker in favor of Payee ("Mortgage").
In the event any payment or any portion of any payment is made more
than fifteen days after it is due, there shall be a late charge in the amount of
five (5%) percent of the scheduled amount due.
<PAGE> 2
If default be made for thirty (30) days after receipt by Maker and
StoneStreet Investments, Inc. of written notice from Payee in the payment of any
of the sums or interest mentioned herein or in the Mortgage, or in the
performance of any of the agreements contained herein or in the Mortgage, then
the entire principal sum and any unpaid accrued interest shall at the option of
the Payee become at once due and collectible, time being of the essence; and
said principal sum and accrued interest shall both bear interest from such time
until paid at the highest rate allowable under the laws of the State of Florida.
Failure to exercise this option shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default.
Maker hereby waives presentment, protest, notice, notice of protest and
notice of dishonor and agrees to pay all costs, including a reasonable
attorney's fee, whether suit be brought or not, and including reasonable
attorney's fees on appeal of any lower court decision, if, after maturity of
this Note or default hereunder, counsel is employed to collect this Note or to
protect the security of the Mortgage.
Maker, and the undersigned representative of Maker, represents that
Maker has full power, authority and legal right to execute and deliver this Note
and that the indebtedness evidenced hereby constitutes a valid and binding
obligation of Maker.
Maker and Payee hereby acknowledge that StoneStreet Investments, Inc.,
a Florida corporation, as a shareholder of Maker, shall benefit from the
granting of the loan to Maker as evidenced by this Note. Consequently, Payee
hereby agrees that StoneStreet Investments, Inc. shall be provided with a copy
of any and all notices regarding a default under this Note, so that StoneStreet
Investments, Inc. may, although it is under no obligation to, remedy such
defaults by or on behalf of Maker.
The terms of this Note shall be governed by the laws of the State of
Florida.
Whenever used, the singular number shall include the plural, the plural
the singular, as the context may require, and the words "Payee" and "Maker"
shall include their respective successors and assigns.
IN WITNESS WHEREOF, Maker has executed and delivered this instrument
this 6th day of May, 1999, effective as of the day and year first above written.
MAKER:
Maker's Address: MIRACOM CORPORATION,
a Nevada corporation
1180 Spring Centre South Blvd. By: /s/ David McComas
Suite 310 -------------------------------
Altamonte Springs, FL 32714 Name: David McComas
Title: President
(Corporate Seal)
Documentary Stamps in the amount of $1,225.00,
have been paid and affixed to the Mortgage.
2
<PAGE> 3
CONDITIONAL PERSONAL GUARANTY
FOR VALUE RECEIVED, the undersigned, Shawn Lucas (hereinafter referred
to as "Guarantor"), hereby joins herein as an individual for the express purpose
of conditionally guaranteeing Maker's full and timely payment when due of the
principal and interest on the foregoing promissory note sum and all accrued
interest thereon, and the performance of all of Maker's obligations under the
Note. Payee shall look to the Maker, the Real Property described in the Mortgage
and the Pledged Stock as defined in the Stock Pledge and Security Agreement
executed concurrently herewith, to satisfy the indebtedness evidenced by the
Note. Once Payee has exhausted all rights to take any actions against the Maker,
the Real Property and the Pledged Stock, including, without limitation,
completion of a foreclosure action(s) against the Real Property and the Pledged
Stock, Payee may look to Guarantor to satisfy Maker's obligations under this
Note. Guarantor does hereby waive presentment, protest or notice of any kind
whatsoever (including notice of default or non-payment), and hereby consents to
any extension of time or renewal or other modification thereof. This is a
conditional guarantee of payment.
Guarantor's liability hereunder shall terminate completely at such time
as the Maker has paid to Payee all outstanding principal and accrued interest in
accordance with this Note.
/s/ Shawn Lucas
-----------------------------------
Shawn Lucas
3
<PAGE> 1
EXHIBIT 6.11.1
INSTRUMENT PREPARED BY
D. Helen Ford, Esquire
Greenberg Traurig, P.A.
111 North Orange Avenue, 20th Floor
Orlando, Florida 32801
- ---------------------SPACE ABOVE THIS LINE FOR RECORDING DATA-------------------
MORTGAGE
THIS MORTGAGE (the "Mortgage"), dated as of May 6, 1999 ("Effective
Date"), by MIRACOM CORPORATION, a Nevada corporation, authorized to do business
in the State of Florida (the "Mortgagor"), to STONESTREET INVESTMENTS, INC., a
Florida corporation (the "Mortgagee").
W I T N E S S E T H:
That for good and valuable consideration, and also in consideration of
the aggregate sum named in the Mortgage Note of even date herewith, hereinafter
described, the Mortgagor hereby grants, bargains, sells, aliens, remises,
conveys and confirms unto the Mortgagee, all that certain land of which the
Mortgagor is now seized and in possession situate in Seminole County, Florida,
more particularly described on Exhibit "A" attached hereto and incorporated
herein by reference (the "Land"):
TOGETHER WITH the following, whether now owned or hereafter acquired by
Mortgagor: (a) all improvements now or hereafter attached to or placed, erected,
constructed or developed on the Land (the "Improvements"); (b) all fixtures (the
"Fixtures") now or hereafter attached to or used in or about the Improvements,
or which Fixtures are or may be used in or related to the operation of the Land
and the Improvements, if any; (c) all permits, licenses, approvals and vested
rights, sewer rights, water and water rights, timber, crops, mineral interests,
development rights, franchises, certificates, and all other rights obtained in
connection with the Land, the Improvements or the Fixtures; (d) all plans and
specifications for Improvements; (e) all proceeds arising from the sale, lease
or other disposition of the Land, the Improvements or the Fixtures; (f) all
proceeds from the taking of any of the Land, the Improvements, the Fixtures or
any rights appurtenant thereto by right of eminent domain or by private or other
purchase in lieu thereof; (g) all right, title and interest of Mortgagor in and
to all streets, roads, public places, easements and rights-of-way, existing or
proposed, public or private, adjacent to or used in connection with the Land;
(h) any leases, rents, profits, revenues or other benefits of the Land,
1
<PAGE> 2
the Improvements or the Fixtures, (i) all rights, hereditaments and
appurtenances pertaining to the foregoing; and (j) all renewals of or
replacements or substitutions for any of the foregoing. The above-described
property is collectively referred to herein as the "Mortgaged Property".
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances thereto belonging, unto Mortgagee, and its
successors and assigns, forever, and Mortgagor hereby binds itself and its
successors and assigns to warrant and forever defend the Mortgaged Property unto
Mortgagee, and its successors and assigns, against the claims of all persons
claiming or to claim the same or any part thereof.
ARTICLE I
INDEBTEDNESS
This Mortgage is given to secure the indebtedness evidenced by the
Mortgage Note ("the Note") of even date herewith in the original principal
amount of ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00), executed
by Mortgagor, payable to the order of Mortgagee, and bearing interest and being
payable as set forth therein, and all extensions, modifications, increases, and
renewals thereof made from time to time. The obligations herein described are
hereinafter collectively called the "Indebtedness." All payments on the
Indebtedness shall be payable at the address of Mortgagee as set forth below.
ARTICLE II
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF MORTGAGOR
Mortgagor does hereby covenant, warrant and represent to and agree with
Mortgagee as follows:
2.1 Title to Mortgaged Property. Except for those certain items listed
and described on Exhibit "B" attached hereto and by this reference made a part
hereof (collectively, the "Permitted Exceptions"), Mortgagor has good and
indefeasible title to the Land and the Improvements, and good and marketable
title to the Fixtures, free and clear of any liens, charges, encumbrances,
security interests, and adverse claims whatsoever.
2.2 Taxes and Assessments. Mortgagor shall pay all taxes and
assessments against or affecting the Mortgaged property as the same become due
and payable.
2.3 Insurance. Mortgagor shall keep the Mortgaged Property insured
against loss or damage by fire, and such other risks as Mortgagee in its
reasonable discretion may require. The policy or policies of such insurance
shall be in the form in general use from time to time in the locality in which
the Mortgaged Property is situated, shall be in such amount as Mortgagee may
reasonably require, shall be issued by a company or companies reasonably
approved by Mortgagee, and shall contain a standard mortgagee clause with loss
payable to Mortgagee.
2
<PAGE> 3
ARTICLE III
MISCELLANEOUS
3.1 Attorneys' Fees. In the event of a dispute regarding, arising out
of, or in connection with the breach, enforcement, or interpretation of this
Mortgage and the Indebtedness (regardless of whether legal proceedings are
instituted), the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
3.2 Release of Lien. If Mortgagor shall perform each and every one of
the covenants and agreements contained in the Note and in this Mortgage, then
this conveyance shall become null and void and shall be released by Mortgagee.
3.3 Successors and Assigns. The covenants herein contained shall bind,
and the benefits and advantages shall inure to, the respective successors and
assigns of the parties.
3.4 Severability. If any provision of this Mortgage is held to be
illegal, invalid, or unenforceable under present or future laws effective while
this Mortgage is in effect, the legality, validity and enforceability of the
remaining provisions of this Mortgage shall not be affected thereby.
3.5 Notice. Any notice, demand or other instrument authorized or
required by this Mortgage or the Note to be served on or given to Mortgagor or
Mortgagee shall be served on or given to Mortgagor and Stonestreet Investments,
Inc. at the address indicated below:
If to Mortgagee: StoneStreet Investments, Inc.
298 Lake Markham Road
Sanford, Florida 32771
Attn.: Michael Fouts, President
Facsimile No.: (407) 772-8738
If to Mortgagor: Miracom Corporation
1180 Spring Centre South Boulevard
Suite 310
Altamonte Springs, Florida 32714
Attn: David McComas, President
Facsimile No.: (407) 772-8738
With a copy to: Greenberg Traurig, P.A.
111 North Orange Avenue, Suite 2050
Orlando, Florida 32801
Attn.: Sandra C. Gordon, Esquire
Facsimile No.: (407) 420-5909
3
<PAGE> 4
or at such address as may be furnished from time to time by written notice
conforming herewith.
ARTICLE IV
EVENTS OF DEFAULT
Each and every one of the following shall constitute an "Event of
Default":
4.1 Failure to Pay Indebtedness. Any of the Indebtedness is not paid
when due by Mortgagor, and remains unpaid after lapse of the curative period
provided in the Note.
4.2 Nonperformance of Covenants. Any other term or covenant in the Note
or this Mortgage is not fully performed, or any other event of default occurs
thereunder or hereunder, for a period of thirty (30) days after receipt by
Mortgagor of written notice from Mortgagee.
ARTICLE V
REMEDIES
5.1 Acceleration. After an Event of Default, Mortgagee may declare the
entire unpaid balance of the Note immediately due and payable without notice.
5.2 Receiver or Foreclosure. After an Event of Default, Mortgagee may
apply to any court of competent jurisdiction for the appointment of a receiver
or similar official to manage and operate the Mortgaged Property, or any part
thereof, and to apply the net rents and profits therefrom to the payment of the
interest and/or principal of the Note and/or any other obligations of Mortgagor
to Mortgagee hereunder. After an Event of Default, Mortgagee shall also have the
right to foreclose this Mortgage and in case of sale in an action or proceeding
to foreclose this Mortgage, Mortgagee shall have the right to sell the Mortgaged
Property covered hereby in parts or as an entirety.
4
<PAGE> 5
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the date
first above written.
Signed, sealed and delivered
in the presence of: MORTGAGOR:
MIRACOM CORPORATION,
a Nevada corporation
/s/ Michael Fouts By: /s/ David McComas
- -------------------------------- --------------------------------
Print Name: Name: David McComas
--------------------- Title: President
(Corporate Seal)
- --------------------------------
Print Name:
---------------------
STATE OF FLORIDA
COUNTY OF SEMINOLE
The foregoing Mortgage and Security Agreement was acknowledged before
me this 1st day of June, 1999, by DAVID MCCOMAS, as President of Miracom
Corporation. He is personally known to me or has produced _____________________
as identification.
/s/ Jennie I. Mandl
------------------------------------------
NOTARY PUBLIC
Print Name:
My Commission Expires:
5
<PAGE> 6
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
PARCEL A:
Lot 1 (less the South 37.65 feet) and the East 2.97 feet of Lot 2 (less the
South 37.65 feet), Block 3, Tier 3, FLORIDA LAND AND COLONIZATION COMPANY
LIMITED, E. R. TRAFFORD'S MAP OF THE TOWN OF SANFORD, according to the Plat
thereof as recorded in Plat Book 1, Pages 56 through 64, of the Public Records
of Seminole County, Florida.
PARCEL B:
Lot 4, Block 4, Tier 3, FLORIDA LAND AND COLONIZATION COMPANY LIMITED, E. R.
TRAFFORD'S MAP OF THE TOWN OF SANFORD, according to the Plat thereof as recorded
in Plat Book 1, Pages 56 through 64, of the Public Records of Seminole County,
Florida.
6
<PAGE> 7
EXHIBIT "B"
PERMITTED EXCEPTIONS
As to Parcels A and B:
1. General taxes for the year 1999 and thereafter, not yet due and
payable.
2. All matters as shown on the Plat of said Subdivision of FLORIDA LAND
AND COLONIZATION COMPANY LIMITED, E. R. TRAFFORD'S MAP OF THE TOWN OF
SANFORD, according to the Plat thereof as recorded in Plat Book 1,
Pages 56 through 64, of the Public Records of Seminole County, Florida.
3. Mortgage executed by Miracom Corporation, a Nevada corporation, in
favor of Eugene W. Gramzow, Trustee for the Eugene W. Gramzow Revocable
Trust dated February 3, 1998, dated May 6, 1999 and filed for record
May 13, 1999, in Official Records Book 3649, Pages 1271 through 1278
inclusive, of the Public Records of Seminole County, Florida in the
original principal sum of Three Hundred Fifty Thousand Dollars
($350,000.00).
As to Parcel B only:
1. Mortgage executed by StoneStreet Investments, Inc., a Florida
corporation in favor of Louis J. Venturello and Colleen E. Venturello,
Husband and Wife, dated February 15, 1999 and filed for record February
19, 1999 in Official Records Book 3595, Page 1198, of the Public
Records of Seminole County, Florida in the original principal sum of
$20,500.00.
2. Right of Way Agreement to the City of Sanford, a Florida Municipal
Corp., recorded in Official Records Book 3008, Page 1253, of the Public
Records of Seminole County, Florida.
7
<PAGE> 1
EXHIBIT 6.11.2
MORTGAGE NOTE
$182,000.00 ORLANDO, FLORIDA
MAY 6, 1999
FOR VALUE RECEIVED, MIRACOM CORPORATION, a Nevada corporation,
authorized to do business in the State of Florida (hereinafter the "Maker"),
promises to pay to STONESTREET INVESTMENTS, INC., a Florida corporation
(hereinafter the "Payee"), in the manner hereinafter specified, the principal
sum of ONE HUNDRED EIGHTY TWO THOUSAND AND NO/100 DOLLARS ($182,000.00), with
interest at the rate of nine and one-half percent (9 1/2%) per annum on the
balance from time to time remaining unpaid. Principal and interest shall be
payable in lawful money of the United States of America at 298 Lake Markham
Road, Sanford, Florida 32771, or at such other place as may hereafter be
designated by written notice from the Payee to the Maker. This Note shall be
payable as follows:
Monthly payments of interest only in the amount of One
Thousand Four Hundred Forty and 83/100 Dollars ($1,440.83)
shall be due and payable commencing on September 1, 1999, and
thereafter upon the first (1st) day of each consecutive month
thereafter for the next five (5) months. The first payment due
on September 1, 1999 shall be a prorated amount prorated from
the date of execution of this Note through January 30, 1999.
Monthly payments of principal and interest in the amount of
One Thousand Nine Hundred and 49/100 Dollars ($1,900.49) shall
be due and payable commencing February 1, 2000, and thereafter
upon the first (1st) day of each consecutive month thereafter
during the term of this Note. Such payments are amortized over
fifteen (15) years.
The outstanding principal balance of this Note, plus any
accrued but unpaid interest shall be due and payable in full
on July 31, 2002; provided however that, if any interest in
the real property securing this Note is transferred or
conveyed (other than a transfer or conveyance to an affiliated
entity) all principal and interest shall become immediately
due and payable at the option of the holder of this Note.
This Note may be prepaid in whole or in part at any time without
penalty. Any such prepayment shall be applied first to unpaid interest, if any,
and then to principal. Interest hereunder shall be calculated on the basis of a
year consisting of three hundred sixty-five (365) days.
This Note, with interest, is secured by a Mortgage of even date
herewith, to be recorded in the Public Records of Seminole County, Florida,
executed by the Maker in favor of Payee ("Mortgage").
<PAGE> 2
In the event any payment or any portion of any payment is made more
than fifteen days after it is due, there shall be a late charge in the amount of
five (5%) percent of the scheduled amount due.
If default be made for thirty (30) days after receipt by Maker of
written notice from Payee in the payment of any of the sums or interest
mentioned herein or in the Mortgage, or in the performance of any of the
agreements contained herein or in the Mortgage, then the entire principal sum
and any unpaid accrued interest shall at the option of the Payee become at once
due and collectible, time being of the essence; and said principal sum and
accrued interest shall both bear interest from such time until paid at the
highest rate allowable under the laws of the State of Florida. Failure to
exercise this option shall not constitute a waiver of the right to exercise the
same in the event of any subsequent default.
Maker hereby waives presentment, protest, notice, notice of protest and
notice of dishonor and agrees to pay all costs, including a reasonable
attorney's fee, whether suit be brought or not, and including reasonable
attorney's fees on appeal of any lower court decision, if, after maturity of
this Note or default hereunder, counsel is employed to collect this Note or to
protect the security of the Mortgage.
Maker, and the undersigned representative of Maker, represents that
Maker has full power, authority and legal right to execute and deliver this Note
and that the indebtedness evidenced hereby constitutes a valid and binding
obligation of Maker.
The terms of this Note shall be governed by the laws of the State of
Florida.
Whenever used, the singular number shall include the plural, the plural
the singular, as the context may require, and the words "Payee" and "Maker"
shall include their respective successors and assigns.
IN WITNESS WHEREOF, Maker has executed and delivered this instrument
this ____ day of June, 1999, effective as of the day and year first above
written.
MAKER:
Maker's Address: MIRACOM CORPORATION,
a Nevada corporation
By: /s/ David McComas
----------------------------------
Name: David McComas
Title: President
(Corporate Seal)
Documentary Stamps in the amount of $525.00, have been paid and affixed to the
Mortgage.
<PAGE> 1
EXHIBIT 6.12.1
MORTGAGE
THIS MORTGAGE (the "Mortgage"), dated as of August 25, 1999 ("Effective
Date"), by MIRACOM CORPORATION, a Nevada corporation, authorized to do business
in the State of Florida (the "Mortgagor"), to EUGENE W. GRAMZOW, TRUSTEE FOR
THE EUGENE W. GRAMZOW REVOCABLE TRUST DATED FEBRUARY 3, 1998 (the "Mortgagee").
W I T N E S S E T H:
That for good and valuable consideration, and also in consideration of
the aggregate sum named in the Mortgage Note of even date herewith, hereinafter
described, the Mortgagor hereby grants, bargains, sells, aliens, remises,
conveys and confirms unto the Mortgagee, all that certain land of which the
Mortgagor is now seized and in possession situate in Seminole County, Florida,
more particularly described on Exhibit "A" attached hereto and incorporated
herein by reference (the "Land"):
TOGETHER WITH the following, whether now owned or hereafter acquired by
Mortgagor: (a) all improvements now or hereafter attached to or placed,
erected, constructed or developed on the Land (the "Improvements"); (b) all
fixtures (the "Fixtures") now or hereafter attached to or used in or about the
Improvements, or which Fixtures are or may be used in or related to the
operation of the Land and the Improvements, if any; (c) all permits, licenses,
approvals and vested rights, sewer rights, water and water rights, timber,
crops, mineral interests, development rights, franchises, certificates, and all
other rights obtained in connection with the Land, the Improvements or the
Fixtures; (d) all plans and specifications for Improvements; (e) all proceeds
arising from the sale, lease or other disposition of the Land, the Improvements
or the Fixtures; (f) all proceeds from the taking of any of the Land, the
Improvements, the Fixtures or
<PAGE> 2
any rights appurtenant thereto by right of eminent domain or by private or
other purchase in lieu thereof; (g) all right, title and interest of Mortgagor
in and to all streets, roads, public places, easements and rights-of-way,
existing or proposed, public or private, adjacent to or used in connection with
the Land; (h) any leases, rents, profits, revenues or other benefits of the
Land, the Improvements or the Fixtures, (i) all rights, hereditaments and
appurtenances pertaining to the foregoing; and (j) all renewals of or
replacements or substitutions for any of the foregoing. The above-described
property is collectively referred to herein as the "Mortgaged Property".
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances thereto belonging, unto Mortgagee, and its
successors and assigns, forever, and Mortgagor hereby binds itself and its
successors and assigns to warrant and forever defend the Mortgaged Property
unto Mortgagee, and its successors and assigns, against the claims of all
persons claiming or to claim the same or any part thereof.
ARTICLE I
INDEBTEDNESS
This Mortgage is given to secure the indebtedness evidenced by the
Promissory Note ("the Note") of even date herewith in the original principal
amount of THIRTY THOUSAND AND NO/100 DOLLARS ($30,000.00), executed by
Mortgagor, payable to the order of Mortgagee, and bearing interest and being
payable as set forth therein, and all extensions, modifications, increases, and
renewals thereof made from time to time. The obligations herein described are
hereinafter collectively called the "Indebtedness." All payments on the
Indebtedness shall be payable at the address of Mortgagee as set forth below.
ARTICLE II
REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF MORTGAGOR
Mortgagor does hereby covenant, warrant and represent to and agree with
Mortgagee as follows:
2.1 Title to Mortgaged Property. Except for those certain items listed
and described on Exhibit "B" attached hereto and by this reference made a part
hereof (collectively, the "Permitted Exceptions"), Mortgagor has good and
indefeasible title to the Land and the Improvements, and good and marketable
title to the Fixtures, free and clear of any liens, charges, encumbrances,
security interests, and adverse claims whatsoever.
2.2 Taxes and Assessments. Mortgagor shall pay all taxes and
assessments against or affecting the Mortgaged property as the same become due
and payable.
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<PAGE> 3
2.3 Insurance. Mortgagor shall keep the Mortgaged Property insured
against loss or damage by fire, and such other risks as Mortgagee in its
reasonable discretion may require. The policy or policies of such insurance
shall be in the form in general use from time to time in the locality in which
the Mortgaged Property is situated, shall be in such amount as Mortgagee may
reasonably require, shall be issued by a company or companies reasonably
approved by Mortgagee, and shall contain a standard mortgagee clause with loss
payable to Mortgagee.
ARTICLE III
MISCELLANEOUS
3.1 Attorneys' Fees. In the event of a dispute regarding, arising out
of, or in connection with the breach, enforcement, or interpretation of this
Mortgage and the Indebtedness (regardless of whether legal proceedings are
instituted), the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
3.2 Release of Lien. If Mortgagor shall perform each and every one of
the covenants and agreements contained in the Note and in this Mortgage, then
this conveyance shall become null and void and shall be released by Mortgagee.
3.3 Successors and Assigns. The covenants herein contained shall bind,
and the benefits and advantages shall inure to, the respective successors and
assigns of the parties.
3.4 Severability. If any provision of this Mortgage is held to be
illegal, invalid, or unenforceable under present or future laws effective while
this Mortgage is in effect, the legality, validity and enforceability of the
remaining provisions of this Mortgage shall not be affected thereby.
3.5 Notice. Any notice, demand or other instrument authorized or
required by this Mortgage or the Note to be served on or given to Mortgagor or
Mortgagee shall be served on or given to Mortgagor and Stonestreet Investments,
Inc. at the address indicated below:
If to Mortgagee: Eugene W. Gramzow, Trustee for the
Eugene W. Gramzow Revocable Trust,
Dated February 3, 1998
c/o Advanced Investment Corp.
321 Good Pasture Island Road
Eugene, Oregon 97401
Attn.: Mike Welt
Facsimile No.: (541) 349-2498
If to Mortgagor: Miracom Corporation
1180 Spring Centre South Boulevard
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Suite 310
Altamonte Springs, Florida 32714
Attn: David McComas, President
Facsimile No.: (407) 772-8738
With a copy to: Greenberg Traurig, P.A.
111 North Orange Avenue, Suite 2050
Orlando, Florida 32801
Attn.: Sandra C. Gordon, Esquire
Facsimile No.: (407) 420-5909
With a copy to: Stonestreet Investments, Inc.
298 Lake Markham Road
Sanford, Florida 32771
Attn: Michael Fouts, President
Facsimile No.: (407) 772-8738
or at such address as may be furnished from time to time by written notice
conforming herewith.
ARTICLE IV
EVENTS OF DEFAULT
Each and every one of the following shall constitute an "Event of
Default":
4.1 Failure to Pay Indebtedness. Any of the Indebtedness is not paid
when due by Mortgagor, and remains unpaid after lapse of the curative period
provided in the Note.
4.2 Nonperformance of Covenants. Any other term or covenant in the Note
or this Mortgage is not fully performed, or any other event of default occurs
thereunder or hereunder, for a period of thirty (30) days after receipt by
Mortgagor of written notice from Mortgagee.
ARTICLE V
REMEDIES
5.1 Acceleration. After an Event of Default, Mortgagee may declare the
entire unpaid balance of the Note immediately due and payable without notice.
5.2 Receiver or Foreclosure. After an Event of Default, Mortgagee may
apply to any court of competent jurisdiction for the appointment of a receiver
or similar official to manage and operate the Mortgaged Property, or any part
thereof, and to apply the net rents and profits therefrom to the payment of the
interest and/or principal of the Note and/or any other obligations of Mortgagor
to Mortgagee hereunder. After an Event of Default, Mortgagee shall also have
the right to foreclose this Mortgage and in case of sale in an action or
proceeding to foreclose this
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Mortgage, Mortgagee shall have the right to sell the Mortgaged Property covered
hereby in parts or as an entirety.
ARTICLE VI
RIGHT TO CURE
Stonestreet Investments, Inc. hereby warrants and represents that it
has benefited by Mortgagee's loan to Mortgagor, which loan is evidenced by the
Note which has been executed by Mortgagor. Consequently, upon the default of
Mortgagor, Stonestreet Investments, Inc. shall have the right, but is under no
obligation, to make payments on the Indebtedness when due and perform all of
Mortgagor's covenants, obligations and liabilities under the Note and this
Mortgage.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage and Security
Agreement as of the date first above written.
Signed, sealed and delivered
in the presence of: MORTGAGOR:
MIRACOM CORPORATION,
a Nevada corporation
/s/ Claire E. Randle By: /s/ Shawn Lucas
- ---------------------------- ---------------------
Print Name: Claire E. Randle Name: Shawn Lucas
Title: President and CEO
/s/ Diane Pecora (Corporate Seal)
- ------------------------
Print Name: Diane Pecora
5
<PAGE> 6
STATE OF FLORIDA
COUNTY OF SEMINOLE
The foregoing Mortgage was acknowledged before me this 19th day of
August, 1999, by SHAWN LUCAS, as President and CEO of Miracom Corporation. He
is personally known to me or has produced driver's license as identification.
/s/ Deserre A. Rivera
-------------------------------
NOTARY PUBLIC
Print Name: Deserre A. Rivera
My Commission Expires: 7-21-2001
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EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
PARCEL A:
Lot 1 (less the South 37.65 feet) and the East 2.97 feet of Lot 2 (less the
South 37.65 feet), Block 3, Tier 3, FLORIDA LAND AND COLONIZATION COMPANY
LIMITED, E. R. TRAFFORD'S MAP OF THE TOWN OF SANFORD, according to the Plat
thereof as recorded in Plat Book 1, Pages 56 through 64, of the Public Records
of Seminole County, Florida.
PARCEL B:
Lot 4, Block 4, Tier 3, FLORIDA LAND AND COLONIZATION COMPANY LIMITED, E. R.
TRAFFORD'S MAP OF THE TOWN OF SANFORD, according to the Plat thereof as
recorded in Plat Book 1, Pages 56 through 64, of the Public Records of Seminole
County, Florida.
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EXHIBIT "B"
PERMITTED EXCEPTIONS
As to Parcels A and B:
1. General taxes for the year 1999 and thereafter, not yet due and payable.
2. All matters as shown on the Plat of said Subdivision of FLORIDA LAND
AND COLONIZATION COMPANY LIMITED, E. R. TRAFFORD'S MAP OF THE TOWN OF
SANFORD, according to the Plat thereof as recorded in Plat Book 1,
Pages 56 through 64, of the Public Records of Seminole County, Florida.
3. A Mortgage, dated May 6, 1999, executed and delivered by Miracom
Corporation, a Nevada corporation, as Mortgagor, in favor of Eugene W.
Gramzow, Trustee for the Eugene W. Gramzow Revocable Trust, dated
February 3, 1998, as Mortgagee, given to secure payment of a promissory
note in the original principal amount of $350,000.00.
As to Parcel B only:
1. Mortgage executed by StoneStreet Investments, Inc., a Florida
corporation in favor of Louis J. Venturello and Colleen E. Venturello,
Husband and Wife, dated February 15, 1999 and filed for record February
19, 1999 in Official Records Book 3595, Page 1198, of the Public
Records of Seminole County, Florida in the original principal sum of
$20,500.00.
2. Right of Way Agreement to the City of Sanford, a Florida Municipal
Corp., recorded in Official Records Book 3008, Page 1253, of the Public
Records of Seminole County, Florida.
8
<PAGE> 1
EXHIBIT 6.12.2
MORTGAGE NOTE
$30,000.00 ORLANDO, FLORIDA
AUGUST 25, 1999
FOR VALUE RECEIVED, MIRACOM CORPORATION, a Nevada corporation,
authorized to do business in the State of Florida (hereinafter the "Maker"),
promises to pay to EUGENE W. GRAMZOW, TRUSTEE FOR THE EUGENE W. GRAMZOW
REVOCABLE TRUST DATED FEBRUARY 3, 1998 (hereinafter the "Payee"), in the manner
hereinafter specified, the principal sum of THIRTY THOUSAND AND NO/100 DOLLARS
($30,000.00), with interest at the rate of fifteen percent (15%) per annum on
the balance from time to time remaining unpaid. Principal and interest shall be
payable in lawful money of the United States of America at c/o Advanced
Investment Corporation, 321 Good Pasture Island Road, Eugene, Oregon 97401, or
at such other place as may hereafter be designated by written notice from the
Payee to the Maker. This Note shall be payable as follows:
Monthly payments of interest only in the amount of Three Hundred
Seventy-five and 00/100 ($375.00) shall be due and payable
commencing on October 1, 1999, and thereafter upon the first
(1st) day of each month during the term of this Note. The first
payment due on October 1, 1999 shall be a prorated amount
prorated from the date of execution of this Note through
September 30, 1999.
The outstanding principal balance of this Note, plus any accrued
but unpaid interest shall be due and payable in full on May 31,
2016; provided however that, if any interest in the real
property securing this Note is transferred or conveyed all
principal and interest shall become immediately due and payable
at the option of the holder of this Note.
This Note may be prepaid in whole or in part at any time without
penalty. Any such prepayment shall be applied first to unpaid interest, if any,
and then to principal. Interest hereunder shall be calculated on the basis of a
year consisting of three hundred sixty-five (365) days.
This Note, with interest, is secured by a Mortgage of even date
herewith, to be recorded in the Public Records of Seminole County, Florida,
executed by the Maker in favor of Payee ("Mortgage").
In the event any payment or any portion of any payment is made more
than fifteen days after it is due, there shall be a late charge in the amount
of five (5%) percent of the scheduled amount due.
<PAGE> 2
If default be made for thirty (30) days after receipt by Maker and
StoneStreet Investments, Inc. of written notice from Payee in the payment of
any of the sums or interest mentioned herein or in the Mortgage, or in the
performance of any of the agreements contained herein or in the Mortgage, then
the entire principal sum and any unpaid accrued interest shall at the option of
the Payee become at once due and collectible, time being of the essence; and
said principal sum and accrued interest shall both bear interest from such time
until paid at the highest rate allowable under the laws of the State of
Florida. Failure to exercise this option shall not constitute a waiver of the
right to exercise the same in the event of any subsequent default.
Maker hereby waives presentment, protest, notice, notice of protest and
notice of dishonor and agrees to pay all costs, including a reasonable
attorney's fee, whether suit be brought or not, and including reasonable
attorney's fees on appeal of any lower court decision, if, after maturity of
this Note or default hereunder, counsel is employed to collect this Note or to
protect the security of the Mortgage.
Maker, and the undersigned representative of Maker, represents that
Maker has full power, authority and legal right to execute and deliver this
Note and that the indebtedness evidenced hereby constitutes a valid and binding
obligation of Maker.
Maker and Payee hereby acknowledge that StoneStreet Investments, Inc.,
a Florida corporation, as a shareholder of Maker, shall benefit from the
granting of the loan to Maker as evidenced by this Note. Consequently, Payee
hereby agrees that StoneStreet Investments, Inc. shall be provided with a copy
of any and all notices regarding a default under this Note, so that StoneStreet
Investments, Inc. may, although it is under no obligation to, remedy such
defaults by or on behalf of Maker.
The terms of this Note shall be governed by the laws of the State of
Florida.
Whenever used, the singular number shall include the plural, the plural
the singular, as the context may require, and the words "Payee" and "Maker"
shall include their respective successors and assigns.
IN WITNESS WHEREOF, Maker has executed and delivered this instrument this
19th day of August, 1999, effective as of the day and year first above written.
MAKER:
Maker's Address: MIRACOM CORPORATION,
a Nevada corporation
1180 Spring Centre South Blvd. By: /s/ Shawn Lucas
Suite 310 --------------------
Altamonte Springs, FL 32714 Name: Shawn Lucas
Title President
(Corporate Seal)
Documentary Stamps in the amount of $________, have been paid and affixed to
the Mortgage.
<PAGE> 3
CONDITIONAL PERSONAL GUARANTY
FOR VALUE RECEIVED, the undersigned, Shawn Lucas (hereinafter referred
to as "Guarantor"), hereby joins herein as an individual for the express
purpose of conditionally guaranteeing Maker's full and timely payment when due
of the principal and interest on the foregoing promissory note sum and all
accrued interest thereon, and the performance of all of Maker's obligations
under the Note. Payee shall look to the Maker, the Real Property described in
the Mortgage and the Pledged Stock as defined in the Stock Pledge and Security
Agreement executed concurrently herewith, to satisfy the indebtedness evidenced
by the Note. Once Payee has exhausted all rights to take any actions against
the Maker, the Real Property and the Pledged Stock, including, without
limitation, completion of a foreclosure action(s) against the Real Property and
the Pledged Stock, Payee may look to Guarantor to satisfy Maker's obligations
under this Note. Guarantor does hereby waive presentment, protest or notice of
any kind whatsoever (including notice of default or non-payment), and hereby
consents to any extension of time or renewal or other modification thereof.
This is a conditional guarantee of payment.
Guarantor's liability hereunder shall terminate completely at such time
as the Maker has paid to Payee all outstanding principal and accrued interest
in accordance with this Note.
/s/ Shawn Lucas 8/19/99
---------------
Shawn Lucas
<PAGE> 1
EXHIBIT 6.13
ACQUISITION AGREEMENT
Agreement dated as of September 10, 1998 between I.E.L.S., Inc., a
Nevada corporation ("Buyer") on behalf of its shareholders, and Direct Touch
Research, Inc., a Nevada corporation ("Seller") on behalf of its shareholders.
The parties wish to provide for Seller's sale of the Shares to Buyer
and Buyer's purchase of the Shares from Seller on the terms and conditions of
this Agreement.
The parties agree as follows:
1. The Acquisition.
1.1 Purchase and Sale Subject to the terms and conditions of
this Agreement, at the Closing to be held as provided in
Section 2, Seller shall sell the Shares to Buyer, and
Buyer shall purchase the Shares from Seller, free and
clear of all Encumbrances. Buyer shall change its name to
MIRACOM CORPORATION.
1.2 Purchase Price. Purchaser will exchange 6,529,000 shares
of its restricted common stock for each share
representing all of the outstanding capital stock or
ownership interest of Direct Touch Research, Inc.
1.3 It is anticipated that this transaction is a non taxable
share exchange under Rule 368 of the Internal Revenue
Code.
2. The Closing.
2.1 Place and Time. The closing of the sale and purchase of
the Shares (the "Closing") shall take place at the
offices of Shawn Hackman, Esq., 1600 East Desert Inn
Road, #102, Las Vegas, Nevada 89109 no later than the
close of business (Las Vegas time) on 9/10/98, or at such
other place, date and time as the parties may agree in
writing.
2.2 Deliveries by Seller. At the Closing, Seller shall
deliver the following to Buyer:
(a) Certificates representing the Shares, duly
endorsed for transfer to Buyer and accompanied by
any applicable stock transfer tax stamps; Seller
shall cause I.E.L.S., Inc. to change those
certificates for, and to deliver to Buyer at the
Closing, a certificate representing the Shares
registered in the name of Buyer (without any
legend or other reference to any Encumbrance).
<PAGE> 2
(b) The documents contemplated by Section 3.
(c) All other documents, instruments and writings
required by this Agreement to be delivered by
Seller at the Closing and any other documents or
records relating to Direct Touch Research, Inc.'s
business reasonably requested by Buyer in
connection with this Agreement.
2.3 Deliveries by Buyer. At the Closing, Buyer shall deliver
the following to Seller:
(a) The shares as contemplated by Section 1;
(b) The documents contemplated by Section 4;
(c) All other documents, instruments and writings
required by this Agreement to be delivered by
Buyer at the Closing; and
(d) A legal opinion certifying the Buyer
representatives and warranties.
3. Conditions to Buyer's Obligations.
The obligations of Buyer to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by Buyer:
3.1 Representations, Warranties and Agreements.
(a) The representations and warranties of Seller set
forth in this Agreement shall be true and complete
in all material respects as of the Closing Date as
though made at such time,
(b) Seller shall have performed and complied in all
material respects with the agreements contained in
this Agreement required to be performed and
complied with by it at or prior to the Closing,
and
(c) Buyer shall have received a certificate to that
effect signed by an authorized representative of
Seller.
3.2 Resignations of Directors. All directors of I.E.L.S.,
Inc. and its Subsidiaries whose resignations shall have
been requested by Buyer not less than ten Business Days
before the Closing Date shall have submitted their
resignations or been removed effective as of the Closing
Date.
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<PAGE> 3
4. Conditions to Seller's Obligations.
The obligations of Seller to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by Seller:
4.1 Representations, Warranties and Agreements.
(a) The representations and warranties of Buyer set
forth in this Agreement shall be true and complete
in all material respects as of the Closing Date as
though made at such time,
(b) Buyer shall have performed and complied in all
material respects with the agreements contained in
this Agreement required to be performed and
complied with by it prior to or at the Closing,
and
(c) Seller shall have received a certificate to that
effect signed by an officer of Buyer.
5. Representations and Warranties of Seller.
Seller represents and warrants to Buyer that, to the Knowledge of
Seller (which limitation shall not apply to Section 5.3), and except as set
forth in the Disclosure Letter.
5.1 Organization of Seller, Authorization. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of Nevada with full corporate
power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement have been duly
authorized by all necessary corporate action of Seller
and this Agreement constitutes a valid and binding
obligation of Seller, enforceable against it in
accordance with its terms.
5.2 Conflict as to Seller. Neither the execution and delivery
of this Agreement nor the performance of Buyer's
obligations hereunder will (a) violate any provision of
the certificate of incorporation or by-laws of Seller or
(b) violate any statute or law or any judgement, decree,
order, regulation or rule of any court or other
Governmental Body applicable to Seller.
5.3 Ownership of Shares. The delivery of certificates to
Buyer and the payment to Seller will result in Buyer's
immediate acquisition of record and beneficial ownership
of the Shares, free and clear of all Encumbrances. There
are no outstanding options, rights, conversion rights,
agreements or commitments of any kind relating to the
issuance,
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<PAGE> 4
sale or transfer of any Equity Securities or other
securities of Direct Touch Research, Inc.
5.4 Financial Statements. Seller has delivered to Buyer: (a)
consolidated balance sheets of Direct Touch Research,
Inc. and its Subsidiaries as at 5/31/98, and 5/31/98 and
statements of income and changes in financial position
for each of the years in the three-year period ended
5/31/98, together with the report thereon of 5/31/98, and
(b) an unaudited consolidated summary balance sheet of
Direct Touch Research, Inc. and its Subsidiaries as at
5/31/98 (the "Balance Sheet"), as well as consolidated
summary statements of operating results and cash
generation for the three months ending thereon. Such
financial statements and notes fairly present the
consolidated financial condition and results of
operations of Direct Touch Research, Inc. and its
Subsidiaries as at the respective dates thereof and for
the periods therein referred to, all in accordance with
generally accepted United States accounting principles
consistently applied throughout the periods involved,
except as set forth in the notes thereto, except, in the
case of the Balance Sheet and the accompanying
statements, for audit adjustments and the absence of
footnotes.
5.5 Title to Properties. Either Direct Touch Research, Inc.
or one of its Subsidiaries owns all the material
properties and assets that they purport to own (real,
personal and mixed, tangible and intangible), including,
without limitation, all the material properties and
assets reflected in the Balance Sheet (except for
property sold since the date of the Balance Sheet in the
ordinary course of business or leased under capitalized
leases), and all the material properties and assets
purchased or otherwise acquired by Direct Touch Research,
Inc. or any of its Subsidiaries since the date of the
Balance Sheet.
5.6 Buildings, Plants and Equipment. The buildings, plants,
structures and material items of equipment and other
personal property owned or leased by Direct Touch
Research, Inc. or its Subsidiaries are, in all respects
material to the business or financial condition of Direct
Touch Research, Inc. and its Subsidiaries, taken as a
whole, in good operating condition and repair (ordinary
wear and tear excepted) and are adequate in all such
respects for the purposes for which they are being used.
5.7 Litigation. There is no action, suit, inquiry, proceeding
or investigation by or before any court or Governmental
Body pending or threatened in writing against or
involving Direct Touch Research, Inc. or any of its
Subsidiaries which is likely to have a material adverse
effect on the business or financial condition of
I.E.L.S., Inc. and its Subsidiaries, taken as whole, or
which would require a payment by I.E.L.S., Inc. or its
subsidiaries in excess of $2,000 in the aggregate or
which questions or
4
<PAGE> 5
challenges the validity of this Agreement. Neither Direct
Touch Research, Inc. nor any or its Subsidiaries is
subject to any judgment, order or decree that is likely
to have a material adverse effect on the business or
financial condition of I.E.L.S., Inc. and its
Subsidiaries, taken as a whole, or which would require a
payment by I.E.L.S., Inc. or its subsidiaries in excess
of $2,000 in the aggregate.
5.8 Absence of Certain Changes. Since the date of the Balance
Sheet, neither Direct Touch Research, Inc. nor any of its
Subsidiaries has:
(a) suffered the damage or destruction of any of its
properties or assets (whether or not covered by
insurance) which is materially adverse to the
business or financial condition of Direct Touch
Research, Inc. and its Subsidiaries, taken as a
whole, or made any disposition of any of its
material properties or assets other than in the
ordinary course of business;
(b) made any change or amendment in its certificate of
incorporation or by-laws, or other governing
instruments;
(c) issued or sold any Equity Securities or other
securities, acquired, directly or indirectly, by
redemption or otherwise, any such Equity
Securities, reclassified, split-up or otherwise
changed any such Equity Security, or granted or
entered into any options, warrants, calls or
commitments of any kind with respect thereto;
(d) paid, discharged or satisfied any material claim,
liability or obligation (absolute, accrued,
contingent or otherwise), other than in the
ordinary course of business;
(e) prepaid any material obligation having a maturity
of more than 90 days from the date such obligation
was issued or incurred;
(f) cancelled any material debts or waived any
material claims or rights, except in the ordinary
course of business;
(g) made any capital expenditures or additions to
property, plant or equipment or acquired any other
property or assets (other than raw materials and
supplies) at a cost in excess of $2,000 in the
aggregate;
(h) written off or been required to write off any
notes or accounts receivable in an aggregate
amount in excess of $2,000;
5.9 No Material Adverse Change. Since the date of the Balance
Sheet, there
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<PAGE> 6
has not been any material adverse change in the business
or financial condition of Direct Touch Research, Inc. and
its Subsidiaries taken as a whole, other than changes
resulting from economic conditions prevailing in the
United States.
5.10 Brokers or Finders. Seller has not employed any broker or
finder or incurred any liability for any brokerage or
finder's fees or commissions, or similar payments in
connection with the sale of the Shares to Buyer.
5.11 Transactions with Directors and Officers. Direct Touch
Research, Inc. and its Subsidiaries do not engage in
business with any Person (other than Seller) in which any
of Direct Touch Research, Inc.'s directors or officers
has a material equity interest. No director or officer of
Direct Touch Research, Inc. owns any property, asset or
right which is material to the business of Direct Touch
Research, Inc. and its Subsidiaries, taken as a whole.
6. Representations and Warranties of Buyer.
Buyer represents and warrants to Seller as follows:
6.1 Organization of Buyer; Authorization. Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of Nevada, with fall corporate
power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement have been duly
authorized by all necessary corporate action of Buyer and
this Agreement constitutes a valid and binding obligation
of Buyer, enforceable against it in accordance with its
terms.
6.2 Brokers or Finders. Buyer has not employed any broker or
finder or incurred any liability for any brokerage or
finder's fees or commissions or similar payments in
connection with any of the transactions contemplated
hereby.
6.3 Purchase for Investment. Buyer is purchasing the shares
solely for its own account for die purpose of investment
and not with a view to, or for sale in connection with,
any distribution of any portion thereof in violation of
any applicable securities law.
6.4 Conflict as to Buyer. Neither the execution and delivery
of this Agreement nor the performance of Buyer's
obligations hereunder will: (a) violate any provision of
the certificate of incorporation or by-laws of Buyer or
(b) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or other
Governmental Body applicable to Buyer.
6
<PAGE> 7
6.5 Buyer is a publicly traded company which trades on the
OTC:BB under the ticker symbol IELL. Buyer has properly
filed all documentation with the SEC, NASD or other
applicable bodies necessary to become and remain a
publicly traded company.
6.6 There are no pending or threatened legal or regulatory
claims, demands or liabilities of any kind or nature
against buyers of its assets.
6.7 Buyer has filed all federal, state and local income or
other tax returns as required by law, and has paid all
taxes which are due, and has no tax delinquencies of any
kind.
6.8 There are currently 4,200,000 shares issued and
outstanding in Buyer, with 2,590,000 freely tradable. The
shares, when issued were properly distributed under
applicable securities laws, and Buyer has taken no action
to cause said stock to lose its free trading status.
There are no warrants, option agreements or pending
subscription agreements whereby Buyer is obligated to
issue any additional stock to any person. Buyer will, at
closing, cause to be cancelled all certificates
representing the current insider stock (1,610,000 shares)
or transferred.
6.9 Upon closing, seller's shareholders will receive a
controlling interest in and complete management control
over Buyer by virtue of their stock ownership, and there
are no shareholder rights or agreements, or other legal
impediments to the transfer of management control of
Buyers.
7. Access and Reporting; Filings With Governmental Authorities.
7.1 Access. Between the date of this Agreement and the
Closing Date, Seller shall, and shall cause Direct Touch
Research, Inc. to, (a) give Buyer and its authorized
representatives reasonable access to all plants, offices,
warehouse and other facilities and properties of Direct
Touch Research, Inc. and its Subsidiaries and to the
books and records of Direct Touch Research, Inc. and its
Subsidiaries, (b) permit Buyer to make inspections
thereof, and (c) cause its officers and its advisors to
furnish Buyer with such financial and operating data and
other information with respect to the business and
properties of Direct Touch Research, Inc. and its
Subsidiaries and to discuss with Buyer and its authorized
representatives the affairs of Direct Touch Research,
Inc. and its Subsidiaries, all as Buyer may from time to
time reasonably request.
7.2 Exclusivity. From the date hereof until the earlier of
the Closing or the termination of this Agreement, Seller
shall not solicit or negotiate or enter
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into any agreement with any other Person with respect to
or in furtherance of any proposal for a merger or
business combination involving, or acquisition of any
interest in, or (except in the ordinary course of
business) sale of assets by, Direct Touch Research, Inc.,
except for the acquisition of the Shares by Buyer.
7.3 Publicity. Between the date of this Agreement and the
Closing Date, Seller and Buyer shall, and Seller and
Buyer shall cause I.E.L.S., Inc. to, discuss and
coordinate with respect to any public filing or
announcement or any internal or private announcement
(including any general announcement to employees)
concerning the contemplated transaction.
7.4 Confidentiality. Prior to the Closing Date (or at any
time if the Closing does not occur) Buyer shall keep
confidential and not disclose to any Person (other than
its employees, attorneys, accountants and advisors) or
use (except in connection with the transactions
contemplated hereby) all nonpublic information obtained
by Buyer pursuant to Section 7.l. Following the Closing,
Seller shall keep confidential and not disclose to any
Person (other than its employees, attorneys, accountants
and advisors) or use (except in connection with preparing
Tax Returns and conducting proceeds relating to Taxes)
any nonpublic information relating to I.E.L.S., Inc. and
its Subsidiaries. This Section 7.7 shall not be violated
by disclosure pursuant to court order or as otherwise
required by law, on condition that notice of the
requirement for such disclosure is given the other party
prior to making any disclosure and the party subject to
such requirement cooperates as the other may reasonably
request in resisting it. If the Closing does not occur,
Buyer shall return to Seller, or destroy, all information
it shall have received from Seller or Direct Touch
Research, Inc. in connection with this Agreement and the
transactions contemplated hereby, together with any
copies or summaries thereof or extracts therefrom. Seller
and Buyer shall use their best efforts to cause their
respective representatives, employees, attorneys,
accountants and advisors to whom information is disclosed
pursuant to Sections 7.1 and 7.6 to comply with the
provisions of this Section 7.7.
8. Conduct of Direct Touch Research, Inc.'s Business Prior to the
Closing.
8.1 Operation in Ordinary Course. Between the date of this
Agreement and the Closing Date, Seller shall cause Direct
Touch Research, Inc. and its Subsidiaries to conduct
their businesses in all material respects in the ordinary
course.
8.2 Business Organization. Between the date of this Agreement
and the Closing Date, Seller shall use its reasonable
efforts, and shall cause Direct Touch Research, Inc. and
each of its Subsidiaries to use its respective
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reasonable efforts, to (a) preserve substantially intact
the business organization of Direct Touch Research, Inc.
and each of its Subsidiaries and keep available the
services of the present officers and employees of Direct
Touch Research, Inc. and each of its Subsidiaries, and
(b) preserve in all material respects the present
business relationships and good will of Direct Touch
Research, Inc. and each of its Subsidiaries.
8.3 Corporate Organization. Between the date of this
Agreement and the Closing Date, neither Buyer or Seller
shall not cause or permit any amendment of the
certificate of incorporation or by-laws (or other
governing instrument) of Direct Touch Research, Inc. or
any of its Subsidiaries, and shall cause Direct Touch
Research, Inc. and each of its Subsidiaries not to:
(a) issue, sell or otherwise dispose of any of its
Equity Securities, or create, sell or otherwise
dispose of any options, rights, conversion rights
or other agreements or commitments of any kind
relating to the issuance, sale or disposition of
any of its Equity Securities;
(b) sell or otherwise dispose of any Equity Securities
of Direct Touch Research, Inc. or any of its
Subsidiaries, or create or suffer to be created
any Encumbrance thereon, or create, sell or
otherwise dispose of any options, rights,
conversion rights or other agreements or
commitments of any kind relating to the sale or
disposition of any Equity Securities of Direct
Touch Research, Inc. or any of its Subsidiaries;
(c) reclassify, split up or otherwise change any of
its Equity Securities;
(d) be party to any merger, consolidation or other
business combination;
(e) sell, lease, license or otherwise dispose of any
of its properties or assets (including, but not
limited to rights with respect to patents and
registered trademarks and copyrights or other
proprietary rights), in an amount which is
material to the business or financial condition of
Direct Touch Research, Inc. and its Subsidiaries,
taken as a whole, except in the ordinary course of
business.
9. Survival of Representations and Warranties; Indemnification.
9.1 Survival. No representation or warranty contained in this
Agreement or in any certificate or document delivered
pursuant hereto shall survive the Closing, except for
those contained in Sections 5.1, 5.2, 5.3 (only as to
Seller), 5.10, 6.1, 6.2, 6.3, 6.4 (the "Surviving
Representations and Warranties").
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9.2 Indemnification by Seller. Seller shall indemnify and
hold harmless Buyer and I.E.L.S., Inc., and shall
reimburse Buyer and I.E.L.S., Inc. for, any loss,
liability, damage or expense (including reasonable
attorneys fees) (collectively, "Damages") arising from or
in connection with (a) any inaccuracy in any of the
Surviving Representations and Warranties of Seller in
this Agreement or (b) any failure by Seller to perform or
comply with any agreement in this Agreement.
9.3 Indemnification by Buyer. Buyer shall indemnify and hold
harmless Seller, and shall reimburse Seller for, any
Damages arising from or in connection: with (a) any
inaccuracy in any of the Surviving Representations and
Warranties of Buyer in this Agreement, (b) any failure by
Buyer to perform . or comply with any agreement in this
Agreement except that after the Closing no claim shall be
made with respect to the failure. to perform or comply
with any agreement required to have been performed or
complied with prior to the Closing Date, (c) any claims
arising from the conduct of the business of Direct Touch
Research, Inc; and the Subsidiaries after the Closing and
(d) any payments made by Seller after the Closing
pursuant to any guaranty by Seller of any obligation of
I.E.L.S., Inc. or any of its Subsidiaries (other than as
contemplated by Section 2.4). Buyer shall use its best
efforts to obtain Seller's release from any such
guaranties.
10. Termination.
Termination. This Agreement may be terminated before the Closing
occurs only as follows:
(a) By written agreement of Seller and Buyer at
any time.
(b) By Seller, by notice to Buyer at any time, if one
or more of the conditions specified in Section 4
is not satisfied at the time at which the Closing
(as it may be deferred pursuant to Section 2.1)
would otherwise occur or if satisfaction of such a
condition is or becomes impossible.
(c) By Buyer, by notice to Seller at any time, if one
or more of the conditions specified in Section 3
is not satisfied at the time at which the Closing
(as it may be deferred pursuant to Section 2.1),
would otherwise occur or if satisfaction of such a
condition is or becomes impossible.
(d) By Buyer or Seller, by notice to the other at any
time after 12-17-97.
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11. Effect of Termination.
If this Agreement is terminated pursuant to Section 12.1, this
Agreement shall terminate without any liability or further obligation of any
party to another.
12. Notices.
All notices, consents, assignments and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand, (b) sent by telex or telecopier (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and telecopier numbers set
forth below (or to such other addresses, telex numbers and telecopier numbers
as a party may designate as to itself by notice to the other parties).
(a) If to Buyer: (b) If to Seller:
c/o Shawn F. Hackman, Esq. Shawn Lucas
1600 E. Desert Inn Rd. #206-A
Las Vegas, NV 89109
Telecopier No.: 702-732-2253 Telecopier No.:
Attention: Shawn F. Hackman Attention: Shawn Lucas
13. Miscellaneous.
13.1 Expenses. Each party shall bear its own expenses incident
to the preparation, negotiation, execution and delivery
of this Agreement and the performance of its obligations
hereunder.
13.2 Captions. The captions in this Agreement are for
convenience of reference only and shall not be given any
effect in the interpretation of this agreement.
13.3 No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion
shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver
must be in writing.
13.4 Exclusive Agreement; Amendment. This Agreement supersedes
all prior agreements among the parties with respect to
its subject matter and is intended (with the documents
referred to herein) as a complete and exclusive statement
of the terms of the agreement among the parties with
respect thereto and cannot be changed or terminated
orally.
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13.5 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered an
original, but all of which together shall constitute the
same instrument.
13.6 Governing Law. This Agreement and (unless otherwise
provided) all amendments hereof and waivers and consents
hereunder shall be governed by the internal law of the
State of Nevada, without regard to the conflicts of law
principles thereof.
13.7 Binding Effect. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their
respective successors and assigns, provided that neither
party may assign its rights hereunder without the consent
of the other except that Buyer may assign its rights (but
not its obligations) under this Agreement to its
wholly-owned Subsidiary without the consent of Seller,
provided that, after the Closing, no consent of Seller
shall be needed in connection with any merger or
consolidation of Buyer with or into another entity.
I.E.L.S., Inc.
/s/ Diana Gail Ansell
--------------------------------
By: Diana Gail Ansell, Secretary
Direct Touch Research, Inc.
/s/ Shawn D. Lucas
--------------------------------
By: Shawn D. Lucas
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<PAGE> 13
ADDENDUM
The following clauses are hereby incorporated into and become a part of
the Acquisition Agreement dated September 10, 1998 by and between I.E.L.S.,
Inc, and Direct Touch Research, Inc. as if they had been fully included in the
body of the agreement.
1.3 Anti Dilution. Direct Touch Research, Inc. and its officers and
directors hereby agree that for a period of 1 year the merged company
shall not name in any stock splits or reverses. They may not change any
other attributes of any of the company's stock, nor may they issue any
new series of stock without the initial I.E.L.S., Inc. shareholder
approval, other than for acquisitions, employee options or third party
financing, or for other Bona Fide corporate purposes. In the case of
employee options, third party financing and other Bona Fide corporate
proposes such shares must be issued at least 50% of the then current
market price. Direct Touch Research, Inc. and its officers and
directors also agree that for a period of 1 year the percentage of
stock ownership by the initial shareholder of I.E.L.S., shall be
obtained. Thus any additional issuance or sale of stock (of any type or
series, whether common or preferred) by the Company post merger would
require a proportional issuance or sale at the sales price to the
initial shareholders of I.E.L.S., Inc. The proportional holdings of the
I.E.L.S. initial shareholders shall not be deluded ( except for arms
length acquisitions) except with their consent which must not be
unreasonably withheld. The I.E.L.S initial shareholders shall have a
right of first refusal to participate in any sales in relation to third
party financing. This Section 1.3 shall survive the closing of the
merger.
Incorporated into the Acquisition Agreement this 11th day of September, 1998.
I.E.L.S., Inc. Direct Touch Research, Inc.
/s/ Diana Gail Ansell /s/ Shawn D. Lucas
- --------------------------------- ------------------------------
By: Diana Gail Ansell, Secretary By: Shawn D. Lucas, President
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<PAGE> 1
EXHIBIT 6.14.1
ACQUISITION AGREEMENT
THIS PURCHASE AGREEMENT made, entered into, and effective as of this
29th day of September, 1998, by and among MIRACOM Corporation, a Nevada
corporation ("Buyer"), UNITED EQUITY PARTNERS, INC., a Florida corporation(UEP)
and Michael Fouts and Scott Anderson, individuals (Fouts and Anderson):
W I T N E S S E T H:
WHEREAS, Buyer wishes to acquire UNITED EQUITY PARTNERS, INC. as set forth
herein; and
WHEREAS, UNITED EQUITY PARTNERS, INC. has agreed to sell, and Buyer has agreed
to purchase UNITED EQUITY PARTNERS, INC. and to enter into certain other
agreements with UNITED EQUITY PARTNERS, INC., Fouts and Anderson as set forth
and upon the terms and conditions set forth herein below.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, the parties do hereby agree as
follow:
1. DEFINITIONS.
The following definitions shall apply herein and in all other documents executed
in connection herewith unless the contract clearly requires otherwise:
a. "ACTUAL KNOWLEDGE" shall mean those specific facts and that
specific information which is and are actually known by a
person or company. With regard to UNITED EQUITY PARTNERS,
INC., the term "Actual Knowledge" shall mean, the actual
knowledge of the personnel running the day to day business of
UNITED EQUITY PARTNERS, INC.; provided, however, that UNITED
EQUITY PARTNERS, INC., Fouts and Anderson may rely upon
certificates of such personnel as to the knowledge of such
personnel concerning UNITED EQUITY PARTNERS, INC., its
operations and the representations and warranties contained in
this Agreement.
b. "ASSETS" shall mean and refer to those items set forth on
Exhibit "A" attached hereto and hereby made a part hereof.
c. "ASSUMED LIABILITIES" shall mean and refer to those
liabilities and obligations of UNITED EQUITY PARTNERS, INC.
referred to in paragraph 12 below.
d. "BEST KNOWLEDGE" shall mean that level of specific knowledge
and information of a person or company which either is
actually known or reasonably should have been known upon
first, receiving and/or obtaining actual knowledge of specific
<PAGE> 2
information and facts. Second, making the same level of
reasonable inquiry which a reasonable person would be expected
to make upon receiving the same specific information and
facts. With regard to UNITED EQUITY PARTNERS, INC., the term
"Best Knowledge", shall mean to the best knowledge of the
personnel running the day to day business of UNITED EQUITY
PARTNERS, INC.; provided, however, that UNITED EQUITY
PARTNERS, INC., Fouts and Anderson may rely upon certificates
of such personnel as to the knowledge of such personnel
concerning UNITED EQUITY PARTNERS, INC., its operations and
the representations and warranties contained in this
Agreement.
e. "BUSINESS" shall mean the business currently conducted by
UNITED EQUITY PARTNERS, INC. of operating a full service
advertising and marketing company specializing in Internet and
software solutions E Commerce and Y2K Solution.
f. "BUSINESS EQUIPMENT" shall mean and refer to all equipment,
automobiles, trucks and all other machinery, equipment and
personal property regularly used in the Business on the
Closing Date, whether leased or owned by UNITED EQUITY
PARTNERS, INC..
g. "BUSINESS FINANCIAL STATEMENTS" shall mean and refer to those
financial statements for the year 1997 (or UNITED EQUITY
PARTNERS, INC.'s fiscal year commencing in 1997) and each of
the calendar months thereafter ending September 30, 1998,
prepared by UNITED EQUITY PARTNERS, INC., copies of which are
attached hereto and made a part hereof as Exhibit "B".
h. "BUYER" shall mean and refer to MIRACOM Corporation, a Nevada
corporation.
i. "CLOSING" shall mean and refer to the consummation of the
transactions contemplated to occur on the Closing Date.
j. "CLOSING DATE" shall mean and refer to October 22, 1998 or
such later time as shall be mutually agreed by the parties.
k. "CUT OFF TIME" shall mean and refer to 11:59 p.m., October 22,
1998.
l. "FOUTS AND ANDERSON EMPLOYMENT AGREEMENT" shall mean and refer
to that certain Employment Agreement attached hereto and
hereby made a part hereof as Exhibit "C".
m. "UNITED EQUITY PARTNERS, INC." shall mean and refer to United
Equity Partners, Inc., a Florida Corporation.
n. "EQUIPMENT LEASES" shall mean and refer to all leases of
Business Equipment to which UNITED EQUITY PARTNERS, INC. is a
party either as lessor or lessee.
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<PAGE> 3
o. "GOODWILL" shall mean the goodwill associated with the
Business and shall include the Marks, if any.
p. "LEASE" shall mean and refer to that certain lease of real
property referred to in paragraph 10 hereof.
q. "MARKS" shall mean and refer to all patents, trademarks,
service marks, logos, trade names, copyrights, licenses,
sublicenses, fictitious names and agreements pertaining to any
of the foregoing, and any applications for any of the
foregoing, used in the Business, all of which are listed on
Exhibit "D" attached hereto and hereby made a part hereof.
r. "MATERIAL CONTRACTS" shall mean and refer to all agreements,
whether written or oral, which relate to the Business and
which have not been fully performed prior to the Closing,
including but not limited to media orders, licenses, leases
(as landlord or tenant), indentures, loan agreements, notes,
mortgages, undertakings and any other agreements with clients,
suppliers, governmental entities, inter exchange carriers,
local exchange carriers, service bureaus, TV and radio
stations, publications, lenders, producers, directors, talent,
employees, independent contractors and any other person or
entity.
s. "ORDINARY COURSE OF BUSINESS" shall mean and refer to the
ordinary course of conduct of the Business.
t. "PURCHASE PRICE" shall mean the issuance of MIRACOM stock in
the amount of 150,000 shares to Fouts and Anderson together
with employment agreements and Board seat appointment as
described in Exhibit "F'.
u. "RETAINED LIABILITIES" shall mean and refer to all liabilities
and obligations of UNITED EQUITY PARTNERS, INC. other than the
assumed Liabilities.
v. "TRADE ACCOUNTS RECEIVABLE" shall mean and refer to all
accounts receivable owed to UNITED EQUITY PARTNERS, INC. as of
the Closing as a trade creditor in the Ordinary Course of the
Business. Outlined in Exhibit "E".
w. "TRADE RECEIVABLES" shall mean and refer to the Trade Accounts
Receivable listed on Exhibit "EE" attached hereto and hereby
made a part hereof, together with any and all other accounts
receivable generated by the Business.
2. PURCHASE.
At the Closing, the Assets, Goodwill and other rights set forth herein shall be
held by UNITED EQUITY PARTNERS, INC. and purchased by Buyer for a purchase price
as described above in Paragraph 1(t) above.
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<PAGE> 4
The Purchase Price shall be allocated as set forth on Exhibit "F" attached
hereto and hereby made a part hereof.
Each party shall file an IRS Form 8594, if applicable, containing such
allocations with its respective year end tax return, if applicable.
3. PURCHASE OF GOODWILL.
At the Closing, UNITED EQUITY PARTNERS, INC. will assign the Goodwill to Buyer.
The Goodwill shall include, but is limited to, the right of Buyer to use all
Marks associated with the business or used by UNITED EQUITY PARTNERS, INC. in
connection with the business. The Goodwill Shall include the name United Equity
Partners, Incorporated and all other names associated with the business. All
such names are listed on Exhibit "H" attached hereto and hereby made a part
hereof. UNITED EQUITY PARTNERS, INC. will cause all other persons and entities
having an interest in such Marks to execute valid and legally binding agreements
transferring all right to the Marks to Buyer.
4. FOUTS AND ANDERSON EMPLOYMENT AGREEMENT; BOARD APPOINTMENTS DOCUMENTS.
(a) Fouts and Anderson Agreements and Documents: It is essential
and material consideration for buyers acquisition hereunder
that Fouts and Anderson agree to stay on for a period of 7
years pursuant to the terms and conditions of their Employment
Agreement outlined in Exhibit "C". Such agreements is a
material agreement which Seller would not have entered into
this agreement. The parties agree that damage to the business
of the Buyer and Seller by virtue of the violation of this
Covenant is impossible to ascertain with any certainty at the
date hereof. As a result, in addition to any other remedy
permitted by law, the Buyer and Seller shall be entitled to
the remedy of injunction, both temporary and permanent,
restraining the violating party or any other person or entity
acting in concert with them, either directly or indirectly,
from a violation of this Covenant. In addition to such
injunction, the Buyer or Seller shall have all rights and
remedies at law, equity or otherwise and all such rights and
remedies shall be cumulative and non-exclusive and the
exercise of one such remedy shall not bar the exercise of any
other remedy.
5. CLOSING.
The Closing shall be held in the offices, or at such other place within Florida,
as shall be agreed upon by Buyer and UNITED EQUITY PARTNERS, INC.
6. PAYMENTS.
All payments required to be made at Closing shall be made by bank cashier's
check drawn on a banking institution which is a member of the U.S. Federal
Reserve System or by wire transfer of
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<PAGE> 5
funds to an account designated by UNITED EQUITY PARTNERS, INC., if applicable.
Any and all securities which require transfer shall be accomplished pursuant to
all State and Federal requirements and shall be performed in a timely manner.
7. LEASE.
At the Closing, UNITED EQUITY PARTNERS, INC. will assign to Buyer all its rights
(including the security deposit) under, and Buyer will assume all obligations of
UNITED EQUITY PARTNERS, INC. under the Lease. At the Closing, UNITED EQUITY
PARTNERS, INC. shall furnish Buyer with an estoppel letter and consent to the
assignment of the Lease from the current lessor under the Lease in form and
substance reasonably satisfactory to Buyer.
8. EQUIPMENT LEASES.
At the Closing, UNITED EQUITY PARTNERS, INC. will (if applicable) assign to
Buyer all its rights (including the security deposit) under, and Buyer will
assume all obligations of UNITED EQUITY PARTNERS, INC. under, the Equipment
Leases. At the Closing, if applicable, UNITED EQUITY PARTNERS, INC. shall
furnish Buyer with an estoppel letter and consent to the assignment from each
lessor under each Equipment Lease in form and substance reasonably satisfactory
to Buyer. If leases are not assignable then Buyer hereby assumes all
responsibility for same and hold seller harmless.
9. MATERIAL CONTRACTS.
At the Closing, UNITED EQUITY PARTNERS, INC. will assign to Buyer all of its
rights under, and Buyer will assume all obligations of UNITED EQUITY PARTNERS,
INC. under the Material Contracts. The assignment of the Material Contracts
shall be in form and substance reasonably satisfactory to Buyer. At the Closing,
UNITED EQUITY PARTNERS, INC. shall furnish Buyer with an estoppel letter and
consent to the assignment from each contracting party, if requested by Buyer.
10. REPRESENTATIONS AND WARRANTIES OF UNITED EQUITY PARTNERS, INC..
UNITED EQUITY PARTNERS, INC. represents and warrants to Buyer as follows, and
agrees that all such representations and warranties shall survive the Closing
hereunder for a period of three (3) years:
a. EXISTENCE AND GOOD STANDING. UNITED EQUITY PARTNERS, INC. is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Florida; it has the
requisite corporate power and authority to own or lease its
property and to conduct its business as now being conducted.
The State of Florida is the only jurisdictions in which UNITED
EQUITY PARTNERS, INC. is registered to do business.
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<PAGE> 6
b. AUTHORITY RELATIVE TO THIS AGREEMENT AND THE ESCROW AGREEMENT.
UNITED EQUITY PARTNERS, INC. has full corporate power and
authority to execute and deliver this Agreement and the other
agreements delivered pursuant hereto (the "Related
Agreements") (collectively, this Agreement and the Related
Agreements are sometimes referred to herein as the "Closing
Documents ") and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of the Closing
Documents and the consummation of the transactions
contemplated thereby have been duly and validly adopted and
approved by the Board of Directors and shareholders of UNITED
EQUITY PARTNERS, INC. and no other corporate proceedings on
the part of UNITED EQUITY PARTNERS, INC. are necessary to
authorize the Closing Documents or to consummate the
transactions contemplated thereby. The Closing Documents have
each been duly and validly executed and delivered by UNITED
EQUITY PARTNERS, INC. and each constitutes a valid and binding
agreement of UNITED EQUITY PARTNERS, INC. enforceable against
UNITED EQUITY PARTNERS, INC. in accordance with its respective
terms.
c. PERMIT REQUIREMENTS. Except as heretofore disclosed in writing
by UNITED EQUITY PARTNERS, INC. to Buyer, to the actual
knowledge of UNITED EQUITY PARTNERS, INC., no filing with, and
no permit, authorization, consent or approval of, any public
body or authority, the absence of which would, either
individually or in the aggregate, have a material adverse
effect on the Assets, or the operations or financial condition
of the Business, is necessary for the consummation by UNITED
EQUITY PARTNERS, INC. of the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will
not (i) violate any provision of the Certificate of
Incorporation or By-Laws of UNITED EQUITY PARTNERS, INC., or,
to the actual knowledge of UNITED EQUITY PARTNERS, INC., any
statute, rule, regulation, order or decree of any public body
or authority by which UNITED EQUITY PARTNERS, INC. or any of
the Assets is bound, or (ii) to the best knowledge of UNITED
EQUITY PARTNERS, INC. result in a violation or breach of, or
constitute (with or without due notice or lapse of time or
both) a default under, any license, franchise, permit,
indenture, agreement or other instrument to which UNITED
EQUITY PARTNERS, INC. is a party, or by which any of the
Assets and rights being purchased hereunder is bound.
d. SUBSIDIARIES. UNITED EQUITY PARTNERS, INC. owns no shares or
securities of, and has no ownership interest in, any
corporation, partnership, joint venture, trust, association or
other enterprise, other than those outlined in Exhibit "G",
which is conducting the Business or owns or has any interest
in any of the Assets and this Business is presently being and
has heretofore been conducted by UNITED EQUITY PARTNERS, INC..
e. FINANCIAL STATEMENTS AND NO MATERIAL CHANGES. To the best
knowledge of UNITED EQUITY PARTNERS, INC., date line the
Business Financial
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<PAGE> 7
Statements fairly present the results of operation of the
Business for the periods covered in accordance with generally
accepted accounting principles consistently applied. To the
best knowledge of UNITED EQUITY PARTNERS, INC., the Business
Financial Statements do not contain any untrue statements of
any material fact or omit to state any material fact necessary
in order to make the statements contained in this Section or
therein not misleading. To the best knowledge of UNITED EQUITY
PARTNERS, INC., the books and records of UNITED EQUITY
PARTNERS, INC. relating to the Business reflect only valid
transactions. Except as set forth on Exhibit "H" attached
hereto and hereby made a part hereof, to the best knowledge of
UNITED EQUITY PARTNERS, INC. there has not been any material
and adverse change in the assets or liabilities or in the
condition, financial or otherwise, of the Business and there
has not been any change except in the Ordinary Course of the
Business, and, to the actual knowledge of UNITED EQUITY
PARTNERS, INC., no fact or condition exists or is contemplated
or threatened which will cause such a material, adverse change
in the Business in the future.
f. THE LEASE. The only real property utilized in the Business is
the real property subject to the Lease. To the best knowledge
of UNITED EQUITY PARTNERS, INC. all buildings, structures,
appurtenances and all machinery and equipment utilized by
UNITED EQUITY PARTNERS, INC. in connection with the Business
are in good operating condition and are adequate and suitable
for the purposes for which they are presently being used, and
in conformity with all applicable laws, ordinances and
regulations. To the best knowledge of UNITED EQUITY PARTNERS,
INC. the Lease is in full force and effect; all rents and
additional rents due to date on such Lease have been paid;
UNITED EQUITY PARTNERS, INC. has been in peaceable possession
in and to the Lease since February, 1997, and is not in
default thereunder; no waivers, indulgences or postponements
of the lessee's obligations under the Lease have been granted
by the lessor, and there exists no event of default or event,
occurrence, condition or act which, with the giving of notice,
the lapse of time or the happening of any further event or
condition would become a default under such Lease; to the best
knowledge of UNITED EQUITY PARTNERS, INC. neither the lessee,
nor the lessor have violated any of the terms or conditions
under the Lease; and to the best knowledge of UNITED EQUITY
PARTNERS, INC. all of the covenants to be performed under the
Lease have been fully performed. UNITED EQUITY PARTNERS, INC.
has no agreement with the lessor of the Lease other than as
reflected in the Lease.
g. EQUIPMENT. A true, correct and complete list as of the date
hereof of all Equipment containing a description of each item
(and UNITED EQUITY PARTNERS, INC.'s best estimate of the
condition thereof) is set forth on Exhibit "I" attached hereto
and hereby made a part hereof. UNITED EQUITY PARTNERS, INC.
has and will have on the Closing Date good and marketable
title and/or valid leasehold rights to all such property, free
and clear of all liens, claims and encumbrances.
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<PAGE> 8
h. EQUIPMENT LEASES. A true, correct and complete copy of all
Equipment Leases, is attached hereto and hereby made a part
hereof as Exhibit "J." UNITED EQUITY PARTNERS, INC. has no
agreement with any lessor or lessee, if applicable, other than
as set forth in writing in each respective lease. To the best
knowledge of UNITED EQUITY PARTNERS, INC. and except as
described in Exhibit "J": each such lease is in full force and
effect; all rents and additional rents due to date on each
such lease have been paid; in each case the lessee has been in
peaceable possession since the commencement date set forth in
the Exhibit and is not now in default thereunder; no waiver,
indulgence or postponement of the lessee's obligations
thereunder has been granted by the lessor; and to the best
knowledge of UNITED EQUITY PARTNERS, INC. there exists no
event of default or event, occurrence, condition or act which,
with the giving of notice, the lapse of time or the happening
of any further event or condition would become a default under
any such lease; to the best knowledge of UNITED EQUITY
PARTNERS, INC. neither the lessor or the lessee has violated
any of the terms or conditions under any such lease; and to
the best knowledge of UNITED EQUITY PARTNERS, INC. all of the
covenants to be performed under any such lease have been fully
performed .
i. MATERIAL CONTRACTS, ETC. Attached hereto and hereby made a
part hereof as Exhibit "K" is a true, correct and complete
list of all Material Contracts, together with copies thereof
to the extent the same are in writing. To the best knowledge
of UNITED EQUITY PARTNERS, INC., UNITED EQUITY PARTNERS, INC.
is not in default under any Material Contract and knows of no
default by any other party thereto. No consent or approval of
any other party to any Material Contract is required to
transfer UNITED EQUITY PARTNERS, INC.'s rights thereunder to
Buyer pursuant to this Agreement. Attached as part of said
Exhibit "L" is a list of principal suppliers of the Business.
j. CLIENT LIST. Delivered herewith is a true, correct and
complete list of all clients of UNITED EQUITY PARTNERS, INC..
UNITED EQUITY PARTNERS, INC. knows of no dispute arising in
connection with any of the clients. At closing, UNITED EQUITY
PARTNERS, INC. will certify the correctness and completeness
of the Client List.
k. TRADEMARKS. Attached hereto and hereby made a part hereof as
Exhibit "L" is a true, correct and complete list of all
patents, trademarks, service marks, trade names, copyrights,
licenses, sublicenses, fictitious names, and agreements
pertaining to any of the foregoing, and any applications for
any of the foregoing, used in the business. UNITED EQUITY
PARTNERS, INC. is not in default under any agreement relating
to the marks and knows of no default by any other party
thereto. No consent or approval of any other party is required
to transfer the Marks to Buyer.
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<PAGE> 9
l. EMPLOYEE AGREEMENTS AND EMPLOYEE BENEFITS. To the best
knowledge of UNITED EQUITY PARTNERS, INC., and except as set
forth in the Business Financial Statements and on Exhibit "M",
(i) UNITED EQUITY PARTNERS, INC. has no obligation, whether
contingent or otherwise, under any employment contract,
consulting agreement, collective bargaining agreement,
executive compensation agreement, personal, services
agreement, deferred compensation agreement, pension plan,
retirement plan, profit-sharing plan, stock purchase plan,
stock option plan, group life insurance, hospitalization
insurance, vacation pay plan, severance pay plan or any other
similar agreements or employee benefit plans or any other
arrangement or understanding, whether written or otherwise,
with any employee, independent contractor, agent, stockholder,
or any other person relating to the Business; (ii) No labor
unions are representing or attempting to represent employees
of UNITED EQUITY PARTNERS, INC. or any alleged bargaining unit
thereof; and (iii) UNITED EQUITY PARTNERS, INC. has not agreed
to pay any bonuses or made or agreed to make any increase in
the rate of wages, salaries, or other remuneration of any of
its employees, which has not already become effective.
m. LIABILITIES. To the best knowledge of UNITED EQUITY PARTNERS,
INC. and except as set forth on Exhibit "N" attached hereto
and hereby made a part hereof and except for the Retained
Liabilities, UNITED EQUITY PARTNERS, INC. has no outstanding
or threatened claims against it, or liabilities or
indebtedness, whether fixed, contingent (including potential
product liability claims) or otherwise relating to the
Business, other than liabilities incurred in connection with
this transaction.
n. LITIGATION. To the best knowledge of UNITED EQUITY PARTNERS,
INC. and except as set forth on Exhibit "P" attached hereto
and hereby made a part hereof, UNITED EQUITY PARTNERS, INC. is
not engaged in or a party to, or threatened with, any legal
action or other proceeding before any court, tribunal or
administrative agency, or by any action of any local or inter
exchange carrier or service bureau. To the best knowledge of
UNITED EQUITY PARTNERS, INC., UNITED EQUITY PARTNERS, INC. has
complied in all material respects with all federal, local,
state or foreign laws, rules, regulations and orders
applicable to the Business. To the best knowledge of UNITED
EQUITY PARTNERS, INC., UNITED EQUITY PARTNERS, INC. is not
under investigation with respect to any charge concerning any
violation of any law, order, rule, policy or regulation,
whether federal, local, state or foreign, in respect of the
Business.
o. INSURANCE. A true and correct list of all policies of
insurance covering any of the Assets or otherwise relating to
the Business owned by UNITED EQUITY PARTNERS, INC. or in which
UNITED EQUITY PARTNERS, INC. is named as the insured party,
including the amounts thereof, hereto and hereby made a party
hereof as Exhibit "O", knowledge of UNITED EQUITY PARTNERS,
INC.
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<PAGE> 10
and except as disclosed in Exhibit "O", all such policies are
valid, outstanding and enforceable and issued by financially
sound and responsible insurance companies, and will remain in
full force and effect through the Closing Date; UNITED EQUITY
PARTNERS, INC. maintains insurance of the type and amount
adequate for the conduct of the Business; UNITED EQUITY
PARTNERS, INC. has not been refused any insurance, nor has is
attached To the best its coverage been limited, by any
insurance carrier to which it has applied for insurance or
with which it has carried insurance during the last five
years.
p. NO DISPOSITION OF ASSETS OR OTHER CHANGES. There has not been
since October 15, 1998, a sale or any other disposition or
distribution of any Assets of UNITED EQUITY PARTNERS, INC.
except those which were made in the Ordinary Course of
Business or which were not, individually or in the aggregate,
material to the Business.
q. COMPENSATION OF EMPLOYEES, ETC. Attached hereto and hereby
made a part hereof as Exhibit "O" is a true, correct and
complete list of all employees, agents and independent
contractors who are presently rendering services with respect
to the Business, together with a statement of the full amount
paid to such persons during calendar year 1998, a statement of
all amounts payable to each such person in the future, and a
statement of the nature of the services rendered by each such
person.
r. UNITED EQUITY PARTNERS, INC. STOCKHOLDERS. Fouts and Anderson
own one hundred (100%) percent of all classes of issued
outstanding stock of UNITED EQUITY PARTNERS, INC.. All Fouts
and Anderson's ownership interest, if any, directly or
indirectly, in whole or in part, in any and all Assets,
Goodwill and other rights which are required to be conveyed
hereunder are in fact being conveyed to Buyer.
s. OPERATIONS. Except as set forth in Exhibit "L" attached hereto
and hereby made a part hereof, to the Actual Knowledge of
UNITED EQUITY PARTNERS, INC., no labor disputes or work
stoppages involving the Business are pending or, threatened.
To the Actual Knowledge of UNITED EQUITY PARTNERS, INC., no
customer or supplier of the Business is involved in, or
threatened with or affected by, any labor dispute,
arbitration, lawsuit or administrative proceeding which will
adversely affect, or might reasonably be expected to adversely
affect the Business (financial or otherwise).
t. NO MISLEADING STATEMENTS. Neither the representations of
UNITED EQUITY PARTNERS, INC. in this Agreement nor any
exhibit, financial statement, list or other document delivered
by UNITED EQUITY PARTNERS, INC. pursuant hereto contain any
untrue material statement or omit to state a material fact
necessary in order to make the statements contained therein or
herein not misleading. No information material to this
transaction necessary to make any of
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<PAGE> 11
the representations and warranties herein contained not
misleading has been withheld from, or has not been disclosed
in writing to, Buyer.
11. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to UNITED EQUITY PARTNERS, INC. as follows, and
agrees that all such representations and warranties shall survive the Closing
hereunder.
a. EXISTENCE AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Nevada; it has the requisite corporate
power and authority to own or lease its property and to
conduct its business as contemplated herein.
b. AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has full corporate
power and authority to execute and deliver the Closing
Documents and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of the Closing
Documents and the consummation of the transactions
contemplated thereby have been duly and validly authorized and
approved by the Board of Directors of Buyer, and no other
corporate proceedings on the part of Buyer are necessary to
authorize the Closing Documents or to consummate the
transactions contemplated thereby. The Closing Documents have
each been duly and validly executed and delivered by Buyer and
each constitutes a valid and binding agreement of Buyer
enforceable against Buyer in accordance with its respective
terms. The execution and delivery of the Closing Documents and
the consummation of the transactions contemplated thereby will
not (i) violate any provision of the Certificate of
Incorporation or By-Laws of Buyer, or, to the Actual Knowledge
of Buyer, any statute, rule, regulation, order or decree of
any public body or authority by which Buyer or any of the
Assets is bound, or (ii) to the Best Knowledge of Buyer result
in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default under, any
license, franchise, permit, indenture, agreement or other
instrument to which Buyer is a party, or by which any of the
Assets is bound.
12. LIABILITIES.
a. Buyer shall assume and pay for the following disclosed
liabilities and obligations in a timely manner as required by
law, prior agreement between UNITED EQUITY PARTNERS, INC. and
third parties, and/or in the ordinary course of Buyer's
business. These disclosed liabilities and obligations
constitute the Assumed Liabilities:
i. Those accounts payable listed on Exhibit "BB"
attached hereto and hereby made a part hereof.
ii. Liabilities under Leases from and after the Cut Off
Time.
iii. Liabilities under the Equipment Leases from and
after the Cut Off Time.
iv. Liabilities under the Material Contracts from and
after the Cut Off Time.
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<PAGE> 12
13. UNITED EQUITY PARTNERS, INC. INDEMNITY.
a. INDEMNITY. UNITED EQUITY PARTNERS, INC. agrees to indemnify,
defend and hold harmless Buyer from and against any and all
demands, claims, actions, causes of action, debts, dues,
judgments, awards, assessments, losses, damages, liabilities,
costs and expenses, of any type or nature arising out of the
Business, including without limitation interest, penalties,
attorneys' fees (at trial and appellate levels) and expenses
asserted against, resulting to, imposed upon or incurred by
Buyer arising out of or resulting from (i) the breach of any
representation, warranty or covenant made by UNITED EQUITY
PARTNERS, INC. contained in this Agreement, (ii) the Retained
Liabilities, (iii) the failure of UNITED EQUITY PARTNERS, INC.
to qualify to do business in any State in which UNITED EQUITY
PARTNERS, INC. is legally required to do so, (iv) the failure
of UNITED EQUITY PARTNERS, INC. to comply with any Bulk Sales
Act in effect and applicable to UNITED EQUITY PARTNERS, INC.,
and (iv) any action, inaction, misfeasance or malfeasance of
UNITED EQUITY PARTNERS, INC. attributable to the period of
time ending at the Cut Off Time whether or not damage or
injury occurs prior to the Cut Off Time.
B. MONETARY OF INDEMNITY. Buyer shall not make a claim for
indemnity for any amount less than Two Thousand Five Hundred
and 00/100 ($2,500.00) Dollars in the aggregate. The
obligation of the indemnifying parties shall not exceed in the
aggregate Ninety Thousand and 00/100 ($90,000.00) Dollars. A
variance amount not to exceed Fifty Thousand 00/100
($50,000.00) Dollars is acceptable on the not to exceed
aggregate amount outlined above.
14. BUYER'S INDEMNITY.
Buyer agrees to indemnify, defend and hold harmless UNITED EQUITY PARTNERS, INC.
its officers and assigns from and against any and all demands, claims, actions,
causes of action, debts, dues, judgments, awards, assessments, losses, damages,
liabilities, costs and expenses, of any type or nature, including without
limitation interest, penalties, attorneys' fees (at trial and appellate levels)
and expenses asserted against, resulting to, imposed upon or incurred by UNITED
EQUITY PARTNERS, INC., arising out of or resulting from (i) the breach of any
representation, warranty or covenant made by Buyer contained in this Agreement
(ii) the Assumed Liabilities, and (iii) the conduct of the Business by Buyer
after the Closing Date.
15. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of either party with respect to claims for which
it is to be indemnified hereunder resulting from the assertion of liability by
third parties shall be subject to the following terms and conditions:
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<PAGE> 13
a. NOTICE. The Claimant believing itself entitled to indemnity
(the "Claimant") will give the party which it believes must
"Indemnitor" any such notice of indemnify it (the
indemnifiable claim, and the Indemnitor will undertake the
defense thereof by counsel chosen by it and will advise the
Claimant concerning such defense on a timely basis during the
course thereof.
b. FAILURE TO DEFEND. In the event that the Indemnitor, within
ten (10) days from notice of any indemnifiable claim, fails to
a defense, the Claimant engage counsel and commence will, upon
further notice to the Indemnitor have the right to immediately
undertake the defense, compromise or settlement of such
indemnifiable claim on behalf of and for the account and risk
of the Indemnitor.
c. SETTLEMENT BY INDEMNITOR. Indemnitor may at anytime settle any
indemnifiable claim at its sole cost and expense. Indemnitor
shall be required to obtain the prior written consent of the
Claimant only if Claimant reasonably believes that the
settlement of the indemnifiable claim may materially and
adversely affect the ability to do business of the Claimant or
otherwise prejudice the Claimant in its business operations.
Notwithstanding anything contained herein to the contrary, the
consent of Claimant shall be required in the event a
settlement to be entered into the Indemnitor requires the
admission of any wrongdoing on the part of the Claimant or in
the event that any third party in order to settle such
indemnifiable claim requires the execution of any document by
the Claimant.
Claimant shall receive copies of all proposed settlement
documents and shall have a right to review and comment thereon
and consult with Indemnitor concerning the term of such
proposed settlement documents.
d. LIMITATION OF TIME. Any claim for which indemnity is sought
hereunder shall be brought within two years from the date that
such claim matures, but in no vent later than sixty (60) days
following the expiration of the representations and
warranties. The date of maturity of the claim shall be the
later of (i) the date upon which the claimant becomes aware of
the claim, (ii) the date upon which the claimant should have
become aware of the claim in the exercise of reasonable
diligence, or (iii) the date upon which the last element
necessary for the assertion of the claim takes place.
16. TERMINATION.
a. WITHOUT DEFAULT. This Agreement may be terminated at any time
prior to the Closing Date without liability of any party.
i. By mutual consent of the Boards of Directors of
MTV/PINNACLE ADVERTISING GROUP, INC. and Buyer; or
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<PAGE> 14
ii. If the transactions contemplated by this Agreement
shall not have been consummated on or before October
31, 1998, provided that the transactions which were
not due to the breach or default of the party seeking
to were not consummated terminate. In the event of
termination by Buyer, or by UNITED EQUITY PARTNERS,
INC., or both as permitted, written notice thereof
shall forthwith be given to the other and this
Agreement shall terminate without further action by
any of the parties hereto.
If this Agreement is terminated as permitted herein:
(a) Upon request therefore, each party will redeliver all
documents, work papers and other material of any
other party relating to the transactions contemplated
hereby, whether obtained before or after the
execution hereof, to the party furnishing the same;
and
(b) Each party hereto shall have no liability or further
obligation to the other party to this Agreement with
respect to the matters covered by this Agreement
except as provided in paragraph 17.
b. AS A RESULT OF DEFAULT. This Agreement may be terminated at
any time prior to the closing Date as a result of the default
of a party without a prior default by the other party upon
written notice to the defaulting party by the non-defaulting
party after the expiration of any applicable cure period set
forth herein. Reference is made to paragraph 20 of this
Agreement containing events of default by the parties as well
as the remedies of the parties thereafter.
17. COVENANTS OF THE PARTIES.
The parties covenant to one another as follows:
a. ACCESS TO INFORMATION. Between the date of this Agreement and
the Closing Date, UNITED EQUITY PARTNERS, INC. and Fouts and
Anderson will facilitate the access of representatives to
Buyer during normal business hours and in such a manner as not
to unduly disrupt normal activities of UNITED EQUITY PARTNERS,
INC..
b. GOVERNMENTAL AND OTHER APPROVALS. The parties will cooperate
in the preparation and filing by any party of such
applications and/or amendments thereto as shall be necessary
or desirable in order to consummate the transactions
contemplated by this Agreement as soon as reasonably
practicable following the date of this Agreement and will use
their best efforts to have such applications and/or amendments
thereto approved.
c. ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause
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<PAGE> 15
to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the
transactions contemplated by this Agreement. In case at any
time after the Closing Date any further action is necessary or
desirable to carry out the purposes of this Agreement, each
party shall take all such necessary action.
d. CONSENTS. Each party will use their best efforts to obtain
consents of any third parties (such as but not limited to
inter exchange carriers, service bureaus, local exchange
carriers, media and lessors) and governmental authorities
necessary to the consummation of the transactions contemplated
by this Agreement, if any.
e. DISCLOSURE SUPPLEMENTS. From time to time prior to the Closing
Date, each party shall supplement, amend and update all
Exhibits relating to its' respective representations and
warranties contained herein with respect to any matter
hereafter arising which comes to its attention and which may
effect the truth of such representation and warranties.
f. PUBLIC ANNOUNCEMENTS. Except as may be required by law or
regulation, no public disclosure relating to the transactions
contemplated by this Agreement (including disclosure intended
for shareholders and employees of the parties other than those
for whom disclosure is necessary to carry out the proposed
transactions) shall be made by any party prior to the Closing
unless the other parties shall have approved such disclosure.
Except as may be required by law or regulation, any press
release approved by MTV/PINNACLE ADVERTISING GROUP, INC. and
Buyer will not contain the price or any other terms of this
Agreement. UNITED EQUITY PARTNERS, INC. will cooperate with
Buyer after the closing in the issuance of letters to
suppliers, clients, media and all other persons and entities
with whom UNITED EQUITY PARTNERS, INC. has been conducting
business.
g. ACCOUNTS. All communications and funds received by UNITED
EQUITY PARTNERS, INC. pertaining to the Business shall be
referred to Buyer. Neither UNITED EQUITY PARTNERS, INC. nor
Fouts and Anderson shall take any act which is intended to
cause the loss of good will of a client of UNITED EQUITY
PARTNERS, INC. or Buyer or which otherwise adversely affects
Buyer or the Business.
h. USE OF COUNSEL. The parties confirm and agree that both intend
to utilize to be determined, as their corporate counsel for
various aspects of their business. Although they do not
consider that the use of this firm and its lawyers would be a
conflict of interest between them, they confirm that each
party may utilize the firm and its lawyers as its counsel
(other than in connection with a dispute between them).conduct
of Business Prior to the Closing.
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<PAGE> 16
18. DATE.
During the period from prior to the closing Date (the "Transition Period"),
UNITED EQUITY PARTNERS, INC. will conduct the Business in its ordinary and usual
course. During the Transition Period, funds sufficient to pay the payroll and
Trade Accounts Payable shall be deposited in the UNITED EQUITY PARTNERS, INC.
account as necessary by Buyer. During the Transition Period, UNITED EQUITY
PARTNERS, INC. will convert all accounting functions UNITED EQUITY PARTNERS,
INC. to Miracom. All work in progress, all funds, receivables, and entitlements
held by UNITED EQUITY PARTNERS, INC. shall be transferred to Buyer at the
Closing. At closing UNITED EQUITY PARTNERS, INC. shall execute and Buyer shall
file with the Secretary of State of Florida Articles of Amendment to the
Articles of Incorporation of UNITED EQUITY PARTNERS, INC. reflecting the changes
herein.
19. COSTS.
Whether or not the Closing is consummated, each party shall bear its own costs
and expenses in connection with the negotiation, execution and performance of
this Agreement and the transactions contemplated hereby except as provided
herein.
20. DEFAULT PRIOR TO THE CLOSING.
a. DEFAULT BY UNITED EQUITY PARTNERS, INC. The failure of UNITED
EQUITY PARTNERS, INC. to comply in all material respects
without a prior material breach or default by Buyer with any
provision herein or in any document delivered in connection
herewith shall be an event of default by UNITED EQUITY
PARTNERS, INC. hereunder.
b. DEFAULT BY BUYER. The failure of Buyer to comply in all
material respects without a prior material breach or default
by UNITED EQUITY PARTNERS, INC. with any provision herein or
in any document delivered in connection herewith shall be an
event of default by Buyer hereunder.
c. REMEDIES OF UNITED EQUITY PARTNERS, INC. If an event of
default by Buyer shall have occurred and shall not have been
cured within five(5) days from written notice to Buyer from
UNITED EQUITY PARTNERS, INC., without a prior uncured material
default by UNITED EQUITY PARTNERS, INC., UNITED EQUITY
PARTNERS, INC. shall be entitled to pursue all legal and
equitable rights and remedies available under law including,
but not limited to rights to terminate this Agreement, to
recovery of damages, and to specific performance of this
Agreement.
d. REMEDIES OF BUYER. If an event of default by UNITED EQUITY
PARTNERS, INC. shall have occurred and shall not have been to
be cured within five (5) days from written notice to UNITED
EQUITY PARTNERS, INC. from Buyer, without a prior uncured
material default by Buyer, pursue all legal and equitable
rights and remedies available under Buyer shall be entitled to
applicable law including, but
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<PAGE> 17
not limited to rights to terminate this Agreement, to recovery
of damages, and to specific performance of this Agreement.
21. CONSENT TO SERVICE.
UNITED EQUITY PARTNERS, INC., Buyer and Fouts and Anderson consent the
jurisdiction of any geographically situated in Seminole County, Florida, whether
state or Federal, in connection with the subject matter of any dispute arising
under this Agreement and agree further that service of process or notice in any
such action, suit or proceeding shall be effective to confer personal
jurisdiction if given in the manner permitted in this Agreement for notices
hereunder. Each party does hereby appoint the Clerk of the United States
District Court for court of competent jurisdiction to Altamonte Springs, Florida
as its agent to accept service of process issued by that Court or any of the
Courts of the State of Florida in connection with any suit arising under this
Agreement.
22. CLOSING ITEMS.
a. Buyer's Items At the closing, Buyer shall execute and deliver
to UNITED EQUITY PARTNERS, INC., Fouts and Anderson the
following:
i. The Purchase Price or Miracom shares as may be
required.
ii. Assumption Agreement in the form attached hereto and
hereby made a part hereof as Exhibit "S" (the
"Assumption Agreement").
iii. A corporate resolution in the attached hereto and
made a part hereof as Exhibit "T".
iv. A current Certificate of Good standing of Buyer as a
Nevada corporation from the Secretary of State of
Nevada.
b. UNITED EQUITY PARTNERS, INC. and Fouts and Anderson's Items.
At closing, UNITED EQUITY PARTNERS, INC. and Fouts and
Anderson, as applicable, shall execute and deliver to Buyer
the following:
i. A Bill of Sale in the form set forth as Exhibit "U"
attached hereto and hereby made part hereof
transferring all of the Assets to Buyer.
ii. The originals of all contracts which relate to any
liability or obligation of UNITED EQUITY PARTNERS,
INC. which is to be assumed by Buyer hereunder. The
Fouts and Anderson Consulting Agreement duly executed
by Fouts and Anderson.
iii. The employment Agreement duly executed by MIRACOM.
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<PAGE> 18
iv. An Omnibus Assignment in the form attached hereto and
hereby made a part hereof as Exhibit "V" together
with such separate assignments of the Marks as shall
be deemed necessary by Buyer to vest the Marks in
Buyer of record.
v. A list of all suppliers, customers and employees
certified to be true, complete and correct by UNITED
EQUITY PARTNERS, INC..
vi. List of all existing Material Contracts A certified
to be true, complete and correct by UNITED EQUITY
PARTNERS, INC..
vii. A list of all Marks certified to be true, complete
and correct by UNITED EQUITY PARTNERS, INC..
viii. A list of all clients of UNITED EQUITY PARTNERS, INC.
certified to be true, complete and correct by
MTV/PINNACLE ADVERTISING GROUP, INC..
ix. A corporate resolution in the form attached hereto
and hereby Made a part hereof as Exhibit "W".
x. A current Certificate of Good Standing from Secretary
of Florida.
xi. An Indemnity Agreement from MTV/ADVERTISING GROUP,
INC., Attached hereto as Exhibit "Y".
xii. Documentation necessary to notify the state of
Florida of the
xiii. Documentation necessary to notify the State of
Florida of the change of name of UNITED EQUITY
PARTNERS, INC. and documents sufficient to change the
name of MTV/PINNACLE ADVERTISING GROUP, INC., in the
State of Florida.
23. COOPERATION WITH EMPLOYEES.
Buyer shall be free to conduct interviews with all employees of UNITED EQUITY
PARTNERS, INC. to determine which of these employees Buyer will offer
employment. UNITED EQUITY PARTNERS, INC. will use its reasonable best efforts to
obtain full cooperation from the employees utilized in the Business for such
interviews. Buyer shall be free to offer employment to such of the employees of
UNITED EQUITY PARTNERS, INC. engaged in the Business as Buyer shall determine.
Buyer has no obligation to employ any employees of UNITED EQUITY PARTNERS, INC.
and has not agreed to assume any obligations of UNITED EQUITY PARTNERS, INC. to
such employees. Buyer shall not, by employing any of said persons or as a result
of anything set forth herein, assume any liabilities in connection with the
prior employment of such persons by UNITED EQUITY PARTNERS, INC. including, but
not limited
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<PAGE> 19
to, liability for pension plan payments, unemployment compensation, salary,
bonuses, commissions or any other form of remuneration and, all of the employees
of UNITED EQUITY PARTNERS, INC. shall for purposes of this Agreement be deemed
to have been terminated by UNITED EQUITY PARTNERS, INC. as of the Cut Off Time.
24. MISCELLANEOUS.
a. NOTICES. All notices which any party may be required or
permitted to give on any other party in connection with this
Agreement shall be in writing and deemed sufficient if either
mailed by registered or certified mail postage prepaid (return
receipt requested) or delivered by hand to the party whom such
notice is required or permitted to be given at the address set
forth below. Service of any such notice shall be deemed
complete on the date of actual delivery as shown by the
addressee's registry or certification receipt, or when
received if delivered by hand, or five (5) days after the post
office first notifies an intended recipient of an attempt to
deliver such notice. Any party hereto may from time to time,
by notice in writing served upon any other as aforesaid,
designate a different mailing address or a different person to
whom all such notices are thereafter to be addressed; provided
that any and all such addresses shall be street addresses, not
post office or other boxes. All notices to Buyer shall be
addressed as follows:
25. MULTIPLE COUNTERPARTS. THIS AGREEMENT MAY BE SIGNED IN MULTIPLE
COUNTERPARTS ON FACSIMILE PAPER OR WITH ORIGINAL BUT WITH FACSIMILE
TRANSMITTED SIGNATURES. DOCUMENTS WITH FACSIMILE SIGNATURES SHALL BE
CONSIDERED ORIGINAL DOCUMENTS AND BINDING ON THE PARTIES TO THIS
AGREEMENT.
With a copy to.
UNITED EQUITY PARTNERS, INC., A Florida Corporation
1180 Spring Centre South Boulevard, Suite 320
Altamonte Springs, Florida 32714
By Its:
------------------------------- --------------------------------
Miracom, a Nevada Corporation
1180 Spring Centre South Boulevard, Suite 206
Altamonte Springs, Florida 32714
By Its:
------------------------------- --------------------------------
-19-
<PAGE> 20
All notices to UNITED EQUITY PARTNERS, INC. shall be addressed as follows:
Scott Anderson
12956 Maribou Court
Orlando, Florida 32828
Shawn Lucas
8352 Grey Bark Court
Sanford, Florida 32771
Michael Fouts
298 Lake Markham Road
Sanford, Florida 32771
b. GOVERNING LAW. The laws of the State of Florida (without
reference to laws applicable to conflicts of law) shall govern
the interpretation of this Agreement.
c. MODIFICATION AND WAIVER. No provision of this Agreement shall
be amended, waived or modified except by an instrument in
writing signed by the parties hereto.
d. SURVIVAL. All covenants, agreements, representations and
warranties made herein, including but not limited to all
agreements to purchase specific portions of the Business shall
be deemed to have been material and relied upon by each party
and shall survive the execution and delivery of this
Agreement.
e. HEADINGS. All sections and headings of this Agreement are
inserted for convenience only and shall not affect the
construction or interpretation hereof.
f. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered,
shall be an original, but all counterparts shall together
constitute one and the same instrument.
g. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties and no promises,
inducements, assurances, guaranties, warranties,
representations, or solicitations, either expressed or
implied, oral or written, have been made other than as
expressly set forth herein. This Agreement supersedes all such
promises, inducements, assurances, guaranties, warranties,
representations, or solicitations, either expressed or
implied, oral or written, whenever made.
h. SEVERABILITY. Inapplicability or unenforceability of any
provision of this Agreement or any instrument executed and
delivered pursuant thereto shall not limit or impair the
operation or validity of any other provision of this Agreement
or any other such instrument.
i. EXCLUSIVENESS OF AGREEMENT. This Agreement is made for the
sole benefit and protection of the parties and the and their
respective successors and assigns, and
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<PAGE> 21
no other person or entity shall have any right of action
hereunder or right to rely hereon.
j. VENUE. The parties hereby waive the privilege of venue and
agree that the venue of all litigation arising here from shall
be Los Angeles County, California and that the courts of the
State of California shall have exclusive jurisdiction of all
such litigation.
k. WAIVER OF DEFAULTS. The waiver by any party of any breach or
default by any other party under any of the terms of this
Agreement, shall not be deemed to be, nor shall the same
constitute a waiver of any subsequent breach or default on the
part of any other party.
l. AGREEMENT NOT RECORDABLE. This Agreement is not recordable and
shall not be recorded by any party hereto.
m. INTERPRETATION OF AGREEMENT. This Agreement has been
negotiated by each of the parties both as to its substance and
as to its form. There shall not be applied a rule of law or
rule of construction whereby this Agreement or any of the
terms or provisions hereof or documents attached hereto shall
be construed in favor of or against either party by reason of
the stationery upon which it was finalized or the attorney for
the party by whom it was prepared. The language of this
Agreement shall be construed according to its fair meaning and
not strictly for or against any party.
n. CONSTRUCTION OF AGREEMENT. All words in this Agreement refer
to whatever number or gender the context requires; if more
than one party or person is referred to, their obligations and
liabilities shall be joint and several. All the terms and
words used in this Agreement, regardless of the number and
gender in which they are used, shall be deemed and construed
to include any other number (singular or plural) or any other
gender (masculine, feminine or neuter) as the context or sense
of this Agreement, or any section or clause hereof may
require. The locative adverbs "herein," "hereunder," "hereto,"
"hereinafter" and the like words wherever the same appear
therein, mean and refer to this Agreement in its entirety and
not to any specific paragraph, section or subsection hereof
unless otherwise expressly designated in context.
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<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth on the first page hereof.
Witnesses:
/s/ Scott A. Anderson By Its: President
- -----------------------------------------
UNITED EQUITY PARTNERS, INC.
1180 Spring Centre South Boulevard, Suite 320
Altamonte Springs, Florida 32714
/s/ Shawn Lucas By Its: CEO & President
- -----------------------------------------
MIRACOM CORPORATION
1180 Spring Centre South Boulevard, Suite 206
Altamonte Springs, Florida 32714
Miracom/UEP Acquisition Agreement
-22-
<PAGE> 1
EXHIBIT 6.14.2
AMENDMENT NO. 1 TO ACQUISITION AGREEMENT
(MIRACOM CORPORATION/UNITED EQUITY PARTNERS, INC.)
This Amendment No. 1 ("Amendment") made, entered into and effective as
of the 30th day of September, 1998, amends that certain Acquisition Agreement
dated September 29, 1998 ("Acquisition Agreement") by and among Miracom
Corporation, a Nevada corporation ("'Buyer") and United Equity Partners, Inc., a
Florida corporation ("UEP").
RECITALS
WHEREAS, Buyer wishes to acquire all of the assets and business
(including Assumed Liabilities) of UEP for the consideration of 150,000 shares
of Buyer's restricted common stock to be issued to UEP; and
WHEREAS, this Amendment serves to correct and clarify the Acquisition
Agreement.
NOW, THEREFORE, the Acquisition Agreement is hereby amended as follows:
A. Section 1.t. of the Acquisition Agreement is hereby amended in its
entirety as follows:
"t. "Purchase Price" shall mean the issuance of Miracom common
stock in the amount of 150,000 shares to United Equity
Partners, Inc. together with employment agreements for Fouts
and Anderson and Board seat appointment as described in
Exhibit "F."
B. Any reference in the Acquisition Agreement to issuance of Miracom
stock to Fouts and Anderson or to shareholders of UEP shall mean instead the
issuance of Miracom common stock to UEP.
<PAGE> 2
C. With respect to the loans to United Equity Partners, Inc. by its
officers, directors or shareholders as evidenced in the books and records of
United Equity Partners, Inc., such loans may be repaid, upon mutual agreement
between Miracom and the obligee, in the form of Miracom common stock in lieu of
cash, or a combination of cash and Miracom common stock.
D. Notwithstanding anything to the contrary stated in the Acquisition
Agreement, Miracom is acquiring all of the assets and business (including all of
the liabilities) of United Equity Partners, Inc.
E. The Acquisition and Stock Exchange Agreement dated August 20, 1998
by and between Direct Touch Research, Inc. (predecessor to Miracom) and United
Equity Partners, Inc. is null and void and is superseded by the Acquisition
Agreement. Further, any reference in the Acquisition Agreement to a guaranteed
term on Miracom's Board of Directors for the selling shareholders of United
Equity Partners, Inc. and any reference to a guaranteed $3.00 floor for Miracom
common stock (or that of its predecessor) shall be null and void.
F. All other provisions of the Acquisition Agreement shall remain the
same, except as modified by the foregoing Sections A through E. Unless otherwise
defined herein, capitalized terms shall have the same meanings as in the
Acquisition Agreement.
Dated as of and effective the date first written above.
UNITED EQUITY PARTNERS, INC.
By: /s/ Michael R. Fouts
-------------------------------
Name: Michael R. Fouts
As: CEO
MIRACOM CORPORATION
By: /s/ Shawn D. Lucas
-------------------------------
Name: Shawn D. Lucas
As: President
2
<PAGE> 1
EXHIBIT 6.14.3
AMENDED AND RESTATED ASSUMPTION AGREEMENT
This Assumption Agreement ("Agreement") made as of the 30th day of
September, 1998, by and between Miracom Corporation, a Nevada Corporation
("Buyer") and United Equity Partners, Inc., a Florida corporation ("UEP").
W I T N E S S E T H:
WHEREAS, UEP has agreed to sell all of the assets and business of
United Equity Partners, Inc. ("UEP") to Buyer by Agreement dated of even date
herewith (the "Purchase Agreement"); and
WHEREAS, Buyer has agreed to assume certain liabilities of UEP's
business subject to the terms and conditions of the Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. ASSUMPTION. Buyer hereby assumes the Assumed Liabilities as defined
in the Purchase Agreement.
2. INDEMNIFICATION. Buyer hereby agrees to release, indemnify, hold
harmless and defend UEP, its officers and directors of and from any and all
claims, demands, actions, suits, causes of action, obligations, controversies,
debts, costs, expenses, damages, judgments, lawsuits and liabilities of whatever
kind or nature, in law, equity or otherwise, including but not limited to
reasonable counsel fees (at trial and appellate levels) arising out of or in
connection with:
a. The breach of covenant, representation or warranty made by
Buyer in the Purchase Agreement and all documents executed in connection
therewith; or
b. The Assumed Liabilities as defined in the Purchase
Agreement; or
c. Any action, inaction, misfeasance or malfeasance of Buyer
attributable to the period of time beginning after the Cut Off Time (as defined
in the Purchase Agreement).
3. LIMITATION ON UEP. UEP shall not make a claim for indemnity in an
amount less than Two Thousand Five Hundred ($2,500.00) in the aggregate. The
obligation of Buyer shall not exceed in the aggregate the amount of Assumed
Liabilities. Indemnification shall be subject to CONDITIONS OF INDEMNIFICATION,
Paragraph 15 of the Purchase Agreement.
<PAGE> 2
4. MISCELLANEOUS PROVISIONS.
a. ATTORNEY'S FEES. In the event of litigation arising out of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees and costs at trail and appellate levels.
b. NOTICES. All notices required to be given under this
Agreement shall be in writing, sent by certified mail, return receipt requested,
postage prepaid, to the following addresses:
1. If to the Buyer, then: Miracom Corporation
1180 Spring Centre South Blvd.
Altamonte Springs, FL 32714
Attn: Shawn Lucas
2. With a copy to:
3. If to UEP, then: Scott Anderson
12956 Maribon Court
Orlando, FL 32828
and
Michael Fouts
298 Lake Markham Road
Sanford, FL 32771
4. With a copy to:
The foregoing addresses may be changed to any of the
aforesaid persons, and additional persons may be added thereto by notifying all
of the other parties hereto in writing and in the manner hereinabove set forth.
c. GOVERNING LAW: The laws of the State of Florida shall
govern the interpretation and enforcement of this Agreement.
d. MODIFICATION AND WAIVER. No provision of this Agreement
shall be amended, waived or modified except by an instrument in writing signed
by the parties hereto.
e. MATERIALITY. All covenants, agreements, representations and
warranties made herein shall be deemed to have been material and relied upon by
each party and shall survive the execution and delivery of this Agreement.
2
<PAGE> 3
f. HEADINGS. All sections and headings of this Agreement are
inserted for convenience only, and shall not affect the construction or
interpretation hereof.
g. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which, when executed and delivered, shall be an
original, but all counterparts shall together constitute one and the same
instrument.
h. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
no promises, inducements, assurances, guaranties, warranties, representations,
or solicitations, either expressed or implied, oral or written, whenever made.
i. SEVERABILITY. Inapplicability or unenforceability of any
provision of this Agreement or any instrument executed and delivered pursuant
thereto shall not limit or impair the operation or validity of any other
provision of this Agreement or any other such instrument.
j. WAIVER OF DEFAULTS. The waiver by any party of any breach
or default by any other party under any of the terms of this Agreement, shall
not be deemed to be, nor shall the same constitute a waiver of any subsequent
breach or default on the party of any other party.
k. INTERPRETATION OF AGREEMENT. This Agreement has been
negotiated by each of the parties both as to its substance and as to its form.
There shall not be applied a rule of law or rule of construction whereby this
Agreement or any of the terms or provisions hereof shall be construed in favor
of or against wither party by reason of the stationery upon which it was
finalized or the attorney for the party by whom it was prepared. The language of
this Agreement shall be construed according to its fair meaning and not strictly
for or against either party.
l. CONSTRUCTION OF AGREEMENT. All words in this Agreement
refer to whatever number or gender the context requires; if more than one party
or person is referred to, their obligations and liabilities shall be joint and
several. All the terms and words used in this Agreement, regardless of the
number and gender in which they are used, shall be deemed and construed to
include any other number (singular or plural) or any other gender (masculine,
feminine or neuter) as the context or sense of this Agreement, or any section or
clause hereof may require. The locative adverbs "herein," "hereunder," "hereto,"
"hereinafter" and the like words wherever the same appear therein, mean and
refer to this Agreement in its entirety and not to any specific paragraph,
section or subsection hereof unless otherwise expressly designated in context.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
IN THE PRESENCE OF:
(As to UEP) United Equity Partners, Inc.
/s/ By: /s/ Scott Anderson
------------------------------
Scott Anderson
As President
(As to Buyer) MIRACOM CORPORATION
/s/ By: /s/ Shawn Lucas
------------------------------
Shawn Lucas, President
4
<PAGE> 1
EXHIBIT 6.15.1
ACQUISITION AGREEMENT
THIS PURCHASE AGREEMENT made, entered into, and effective as of this
29th day of September, 1998, by and among MIRACOM Corporation, a Nevada
corporation ("Buyer"), MTV/Pinnacle Advertising Group, Inc., a Florida
corporation (MTV/Pinnacle) and Michael Fouts and Jeff Odato, individuals (Fouts
and Odato):
W I T N E S S E T H:
WHEREAS, Buyer wishes to acquire MTV/Pinnacle Advertising Group, Inc. as set
forth herein; and
WHEREAS, MTV/Pinnacle Advertising Group, Inc. has agreed to sell, and Buyer has
agreed to purchase MTV/Pinnacle Advertising Group, Inc. and to enter into
certain other agreements with MTV/Pinnacle Advertising Group, Inc., Fouts and
Odato as set forth and upon the terms and conditions set forth herein below.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, the parties do hereby agree as
follow:
1. DEFINITIONS.
The following definitions shall apply herein and in all other documents
executed in connection herewith unless the contract clearly requires otherwise:
a. "ACTUAL KNOWLEDGE" shall mean those specific facts and that
specific information which is and are actually known by a person
or company. With regard to MTV/Pinnacle Advertising Group, Inc.,
the term "Actual Knowledge" shall mean, the actual knowledge of
the personnel running the day to day business of MTV/Pinnacle
Advertising Group, Inc.; provided, however, that MTV/Pinnacle
Advertising Group, Inc., Fouts and Odato may rely upon
certificates of such personnel as to the knowledge of such
personnel concerning MTV/Pinnacle Advertising Group, Inc., its
operations and the representations and warranties contained in
this Agreement.
b. "ASSETS" shall mean and refer to those items set forth on
Exhibit "A" attached hereto and hereby made a part hereof.
c. "ASSUMED LIABILITIES" shall mean and refer to those liabilities
and obligations of MTV/PINNACLE ADVERTISING GROUP, INC. referred
to in paragraph 12 below.
d. "BEST KNOWLEDGE" shall mean that level of specific knowledge and
information of a person or company which either is actually
known or reasonably should have been known upon first, receiving
and/or obtaining actual knowledge of specific information and
facts. Second, making the same level of reasonable inquiry which
a reasonable person would be expected to make upon receiving the
same specific information and facts. With regard to MTV/PINNACLE
ADVERTISING GROUP, INC., the term "Best
<PAGE> 2
Knowledge," shall mean to the best knowledge of the personnel
running the day to day business of MTV/PINNACLE ADVERTISING
GROUP, INC.; provided, however, that MTV/PINNACLE ADVERTISING
GROUP, INC., Fouts and Odato may rely upon certificates of such
personnel as to the knowledge of such personnel concerning
MTV/PINNACLE ADVERTISING GROUP, INC., its operations and the
representations and warranties contained in this Agreement.
e. "BUSINESS" shall mean the business currently conducted by
MTV/PINNACLE ADVERTISING GROUP, INC. of operating a full service
advertising and marketing company specializing in the retail
advertising and media buying and analysis.
f. "BUSINESS EQUIPMENT" shall mean and refer to all equipment,
automobiles, trucks and all other machinery, equipment and
personal property regularly used in the Business on the Closing
Date, whether leased or owned by MTV/PINNACLE ADVERTISING GROUP,
INC.
g. "BUSINESS FINANCIAL STATEMENTS" shall mean and refer to those
financial statements for the year 1997 (or MTV/PINNACLE
ADVERTISING GROUP, INC.'s fiscal year commencing in 1997) and
each of the calendar months thereafter ending September 30,
1998, prepared by MTV/PINNACLE ADVERTISING GROUP, INC., copies
of which are attached hereto and made a part hereof as Exhibit
"B."
h. "BUYER" shall mean and refer to MIRACOM Corporation, a Nevada
corporation.
i. "CLOSING" shall mean and refer to the consummation of the
transactions contemplated to occur on the Closing Date.
j. "CLOSING DATE" shall mean and refer to October 22, 1998 or such
later time as shall be mutually agreed by the parties.
k. "CUT OFF TIME" shall mean and refer to 11:59 p.m., October 22,
1998,
l. "FOUTS AND ODATO EMPLOYMENT AGREEMENT" shall mean and refer to
that certain Employment Agreement attached hereto and hereby
made a part hereof as Exhibit "C."
m. "MTV/PINNACLE ADVERTISING GROUP, INC." shall mean and refer to
MTV/Pinnacle Advertising Group, Inc., a Florida Corporation.
n. "EQUIPMENT LEASES" shall mean and refer to all leases of
Business Equipment to which MTV/PINNACLE ADVERTISING GROUP, INC.
is a party either as lessor or lessee.
o. "GOODWILL" shall mean the goodwill associated with the Business
and shall include the Marks, if any.
p. "LEASE" shall mean and refer to that certain lease of real
property referred to in paragraph 10 hereof.
q. "MARKS" shall mean and refer to all patents, trademarks, service
marks, logos, trade names, copyrights, licenses, sublicenses,
fictitious names and agreements pertaining to
- 2 -
<PAGE> 3
any of the foregoing, and any applications for any of the
foregoing, used in the Business, all of which are listed on
Exhibit "D" attached hereto and hereby made a part hereof.
r. "MATERIAL CONTRACTS" shall mean and refer to all agreements,
whether written or oral, which relate to the Business and which
have not been fully performed prior to the Closing, including
but not limited to media orders, licenses, leases (as landlord
or tenant), indentures, loan agreements, notes, mortgages,
undertakings and any other agreements with clients, suppliers,
governmental entities, inter exchange carriers, local exchange
carriers, service bureaus, TV and radio stations, publications,
lenders, producers, directors, talent, employees, independent
contractors and any other person or entity.
s. "ORDINARY COURSE OF BUSINESS" shall mean and refer to the
ordinary course of conduct of the Business.
t. "PURCHASE PRICE" shall mean the issuance of MIRACOM stock in the
amount of 582,000 shares to Fouts and Odato together with
employment agreements and Board seat appointment as described in
Exhibit "F."
u. "RETAINED LIABILITIES" shall mean and refer to all liabilities
and obligations of MTV/PINNACLE ADVERTISING GROUP, INC. other
than the assumed Liabilities.
v. "TRADE ACCOUNTS RECEIVABLE" shall mean and refer to all accounts
receivable owed to MTV/PINNACLE ADVERTISING GROUP, INC. as of
the Closing as a trade creditor in the Ordinary Course of the
Business. Outlined in Exhibit "E."
w. "TRADE RECEIVABLES" shall mean and refer to the Trade Accounts
Receivable listed on Exhibit "EE" attached hereto and hereby
made a part hereof, together with any and all other accounts
receivable generated by the Business.
2. PURCHASE.
At the Closing, the Assets, Goodwill and other rights set forth herein shall be
held by MTV/PINNACLE ADVERTISING GROUP, INC. and purchased by Buyer for a
purchase price as described above in Paragraph 1(t) above.
The Purchase Price shall be allocated as set forth on Exhibit "F" attached
hereto and hereby made a part hereof.
Each party shall file an IRS Form 8594, if applicable, containing such
allocations with its respective year end tax return, if applicable.
3. PURCHASE OF GOODWILL.
At the Closing, MTV/PINNACLE ADVERTISING GROUP, INC. will assign the Goodwill
to Buyer. The Goodwill shall include, but is limited to, the right of Buyer to
use all Marks associated with the business or used by MTV/PINNACLE ADVERTISING
GROUP, INC. in connection with the business. The Goodwill Shall include the
name United Equity Partners, Incorporated and all other names associated with
the business. All such names are listed on Exhibit "H" attached hereto and
hereby made a part hereof. MTV/PINNACLE ADVERTISING GROUP, INC. will cause all
other persons and entities
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<PAGE> 4
having an interest in such Marks to execute valid and legally binding
agreements transferring all right to the Marks to Buyer.
4. FOUTS AND ODATO EMPLOYMENT AGREEMENT; BOARD APPOINTMENTS DOCUMENTS.
(a) Fouts and Odato Agreements and Documents: It is essential and
material consideration for buyers acquisition hereunder that
Fouts and Odato agree to stay on for a period of 7 years
pursuant to the terms and conditions of their Employment
Agreement outlined in Exhibit "C." Such agreements is a material
agreement which Seller would not have entered into this
agreement. The parties agree that damage to the business of the
Buyer and Seller by virtue of the violation of this Covenant is
impossible to ascertain with any certainty at the date hereof.
As a result, in addition to any other remedy permitted by law,
the Buyer and Seller shall be entitled to the remedy of
injunction, both temporary and permanent, restraining the
violating party or any other person or entity acting in concert
with them, either directly or indirectly, from a violation of
this Covenant. In addition to such injunction, the Buyer or
Seller shall have all rights and remedies at law, equity or
otherwise and all such rights and remedies shall be cumulative
and non-exclusive and the exercise of one such remedy shall not
bar the exercise of any other remedy.
5. CLOSING.
The Closing shall be held in the offices, or at such other place within
Florida, as shall be agreed upon by Buyer and MTV/PINNACLE ADVERTISING GROUP,
INC.
6. PAYMENTS.
All payments required to be made at Closing shall be made by bank cashier's
check drawn on a banking institution which is a member of the U.S. Federal
Reserve System or by wire transfer of funds to an account designated by
MTV/PINNACLE ADVERTISING GROUP, INC., if applicable. Any and all securities
which require transfer shall be accomplished pursuant to all State and Federal
requirements and shall be performed in a timely manner.
7. LEASE.
At the Closing, MTV/PINNACLE ADVERTISING GROUP, INC. will assign to Buyer all
its rights (including the security deposit) under, and Buyer will assume all
obligations of MTV/PINNACLE ADVERTISING GROUP, INC. under the Lease. At the
Closing, MTV/PINNACLE ADVERTISING GROUP, INC. shall furnish Buyer with an
estoppel letter and consent to the assignment of the Lease from the current
lessor under the Lease in form and substance reasonably satisfactory to Buyer.
8. EQUIPMENT LEASES.
At the Closing, MTV/PINNACLE ADVERTISING GROUP, INC. will (if applicable)
assign to Buyer ail its rights (including the security deposit) under, and
Buyer will assume all obligations of MTV/PINNACLE ADVERTISING GROUP, INC.
under, the Equipment Leases. At the Closing, if applicable, MTV/PINNACLE
ADVERTISING GROUP, INC. shall furnish Buyer with an estoppel letter and consent
to the assignment from each lessor under each Equipment Lease in form and
substance reasonably satisfactory to Buyer. If leases are not assignable then
Buyer hereby assumes all responsibility for same and hold seller harmless.
- 4 -
<PAGE> 5
9. MATERIAL CONTRACTS.
At the Closing, MTV/PINNACLE ADVERTISING GROUP, INC. will assign to Buyer all
of its rights under, and Buyer will assume all obligations of MTV/PINNACLE
ADVERTISING GROUP, INC. under the Material Contracts. The assignment of the
Material Contracts shall be in form and substance reasonably satisfactory to
Buyer. At the Closing, MTV/PINNACLE ADVERTISING GROUP, INC. shall furnish Buyer
with an estoppel letter and consent to the assignment from each contracting
party, if requested by Buyer.
10. REPRESENTATIONS AND WARRANTIES OF MTV/PINNACLE ADVERTISING GROUP, INC.
MTV/PINNACLE ADVERTISING GROUP, INC. represents and warrants to Buyer as
follows, and agrees that all such representations and warranties shall survive
the Closing hereunder for a period of three (3) years:
a. EXISTENCE AND GOOD STANDING. MTV/PINNACLE ADVERTISING GROUP,
INC. is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida; it has the
requisite corporate power and authority to own or lease its
property and to conduct its business as now being conducted. The
State of Florida is the only jurisdictions in which MTV/PINNACLE
ADVERTISING GROUP, INC. is registered to do business.
b. AUTHORITY RELATIVE TO THIS AGREEMENT AND THE ESCROW AGREEMENT.
MTV/PINNACLE ADVERTISING GROUP, INC. has full corporate power
and authority to execute and deliver this Agreement and the
other agreements delivered pursuant hereto (the "Related
Agreements") (collectively, this Agreement and the Related
Agreements are sometimes referred to herein as the "Closing
Documents 11) and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of the Closing
Documents and the consummation of the transactions contemplated
thereby have been duly and validly adopted and approved by the
Board of Directors and shareholders of MTV/PINNACLE ADVERTISING
GROUP, INC. and no other corporate proceedings on the part of
MTV/PINNACLE ADVERTISING GROUP, INC. are necessary to authorize
the Closing Documents or to consummate the transactions
contemplated thereby. The Closing Documents have each been duly
and validly executed and delivered by MTV/PINNACLE ADVERTISING
GROUP, INC. and each constitutes a valid and binding agreement
of MTV/PINNACLE ADVERTISING GROUP, INC. enforceable against
MTV/PINNACLE ADVERTISING GROUP, INC. in accordance with its
respective terms.
c. PERMIT REQUIREMENTS. Except as heretofore disclosed in writing
by MTV/PINNACLE ADVERTISING GROUP, INC. to Buyer, to the actual
knowledge of MTV/PINNACLE ADVERTISING GROUP, INC., no filing
with, and no permit, authorization, consent or approval of, any
public body or authority, the absence of which would, either
individually or in the aggregate, have a material adverse effect
on the Assets, or the operations or financial condition of the
Business, is necessary for the consummation by MTV/PINNACLE
ADVERTISING GROUP, INC. of the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of
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<PAGE> 6
the transactions contemplated hereby will not (i) violate any
provision of the Certificate of Incorporation or By-Laws of
MTV/PINNACLE ADVERTISING GROUP, INC., or, to the actual
knowledge of MTV/PINNACLE ADVERTISING GROUP, INC., any statute,
rule, regulation, order or decree of any public body or
authority by which MTV/PINNACLE ADVERTISING GROUP, INC. or any
of the Assets is bound, or (ii) to the best knowledge of
MTV/PINNACLE ADVERTISING GROUP, INC. result in a violation or
breach of, or constitute (with or without due notice or lapse of
time or both) a default under, any license, franchise, permit,
indenture, agreement or other instrument to which MTV/PINNACLE
ADVERTISING GROUP, INC. is a party, or by which any of the
Assets and rights being purchased hereunder is bound.
d. SUBSIDIARIES. MTV/PINNACLE ADVERTISING GROUP, INC. owns no
shares or securities of, and has no ownership interest in, any
corporation, partnership, joint venture, trust, association or
other enterprise, other than those outlined in Exhibit "G,"
which is conducting the Business or owns or has any interest in
any of the Assets and this Business is presently being and has
heretofore been conducted by MTV/PINNACLE ADVERTISING GROUP,
INC.
e. FINANCIAL STATEMENTS AND NO MATERIAL CHANGES. To the best
knowledge of MTV/PINNACLE ADVERTISING GROUP, INC., date line the
Business Financial Statements fairly present the results of
operation of the Business for the periods covered in accordance
with generally accepted accounting principles consistently
applied. To the best knowledge of MTV/PINNACLE ADVERTISING
GROUP, INC., the Business Financial Statements do not contain
any untrue statements of any material fact or omit to state any
material fact necessary in order to make the statements
contained in this Section or therein not misleading. To the best
knowledge of MTV/PINNACLE ADVERTISING GROUP, INC., the books and
records of MTV/PINNACLE ADVERTISING GROUP, INC. relating to the
Business reflect only valid transactions. Except as set forth on
Exhibit "H" attached hereto and hereby made a part hereof, to
the best knowledge of MTV/PINNACLE ADVERTISING GROUP, INC. there
has not been any material and adverse change in the assets or
liabilities or in the condition, financial or otherwise, of the
Business and there has not been any change except in the
Ordinary Course of the Business, and, to the actual knowledge of
MTV/PINNACLE ADVERTISING GROUP, INC., no fact or condition
exists or is contemplated or threatened which will cause such a
material, adverse change in the Business in the future.
f. THE LEASE. The only real property utilized in the Business is
the real property subject to the Lease. To the best knowledge of
MTV/PINNACLE ADVERTISING GROUP, INC. all buildings, structures,
appurtenances and all machinery and equipment utilized by
MTV/PINNACLE ADVERTISING GROUP, INC. in connection with the
Business are in good operating condition and are adequate and
suitable for the purposes for which they are presently being
used, and in conformity with all applicable laws, ordinances and
regulations. To the best knowledge of MTV/PINNACLE ADVERTISING
GROUP, INC. the Lease is in full force and effect; all rents and
additional rents due to date on such Lease have been paid;
MTV/PINNACLE ADVERTISING GROUP, INC. has been in peaceable
possession in and to the Lease since February, 1997, and is not
in default thereunder; no waivers, indulgences or postponements
of the lessee's obligations under the Lease have been granted by
the lessor. and there exists no event of default or event,
occurrence, condition or act which, with the giving of notice,
the lapse of time or the
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<PAGE> 7
happening of any further event or condition would become a
default under such Lease; to the best knowledge of MTV/PINNACLE
ADVERTISING GROUP, INC. neither the lessee, nor the lessor have
violated any of the terms or conditions under the Lease; and to
the best knowledge of MTV/PINNACLE ADVERTISING GROUP, INC. all
of the covenants to be performed under the Lease have been fully
performed. MTV/PINNACLE ADVERTISING GROUP, INC. has no agreement
with the lessor of the Lease other than as reflected in the
Lease.
g. EQUIPMENT. A true, correct and complete list as of the date
hereof of all Equipment containing a description of each item
(and MTV/PINNACLE ADVERTISING GROUP, INC.'s best estimate of the
condition thereof) is set forth on Exhibit "I" attached hereto
and hereby made a part hereof. MTV/PINNACLE ADVERTISING GROUP,
INC. has and will have on the Closing Date good and marketable
title and/or valid leasehold rights to all such property, free
and clear of all liens, claims and encumbrances.
h. EQUIPMENT LEASES. A true, correct and complete copy of all
Equipment Leases, is attached hereto and hereby made a part
hereof as Exhibit "J." MTV/PINNACLE ADVERTISING GROUP, INC. has
no agreement with any lessor or lessee, if applicable, other
than as set forth in writing in each respective lease. To the
best knowledge of MTV/PINNACLE ADVERTISING GROUP, INC. and
except as described in Exhibit "J": each such lease is in full
force and effect; all rents and additional rents due to date on
each such lease have been paid; in each case the lessee has been
in peaceable possession since the commencement date set forth in
the Exhibit and is not now in default thereunder; no waiver,
indulgence or postponement of the lessee's obligations
thereunder has been granted by the lessor; and to the best
knowledge of MTV/PINNACLE ADVERTISING GROUP, INC. there exists
no event of default or event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the
happening of any further event or condition would become a
default under any such lease; to the best knowledge of
MTV/PINNACLE ADVERTISING GROUP, INC. neither the lessor or the
lessee has violated any of the terms or conditions under any
such lease; and to the best knowledge of MTV/PINNACLE
ADVERTISING GROUP, INC. all of the covenants to be performed
under any such lease have been fully performed.
i. MATERIAL CONTRACTS, ETC. Attached hereto and hereby made a part
hereof as Exhibit "K" is a true, correct and complete list of
all Material Contracts, together with copies thereof to the
extent the same are in writing. To the best knowledge of
MTV/PINNACLE ADVERTISING GROUP, INC., MTV/PINNACLE ADVERTISING
GROUP, INC. is not in default under any Material Contract and
knows of no default by any other party thereto. No consent or
approval of any other party to any Material Contract is required
to transfer MTV/PINNACLE ADVERTISING GROUP, INC.'s rights
thereunder to Buyer pursuant to this Agreement. Attached as part
of said Exhibit "L" is a list of principal suppliers of the
Business.
j. CLIENT LIST. Delivered herewith is a true, correct and complete
list of all clients of MTV/PINNACLE ADVERTISING GROUP INC.
MTV/PINNACLE ADVERTISING GROUP, INC. knows of no dispute arising
in connection with any of the clients. At closing, MTV/PINNACLE
ADVERTISING GROUP, INC. will certify the correctness and
completeness of the Client List.
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<PAGE> 8
k. TRADEMARKS. Attached hereto and hereby made a part hereof as
Exhibit "M" is a true, correct and complete list of all patents,
trademarks, service marks, trade names, copyrights, licenses,
sublicenses, fictitious names, and agreements pertaining to any
of the foregoing, and any applications for any of the foregoing,
used in the business. MTV/PINNACLE ADVERTISING GROUP, INC. is
not in default under any agreement relating to the marks and
knows of no default by any other party thereto. No consent or
approval of any other party is required to transfer the Marks to
Buyer.
l. EMPLOYEE AGREEMENTS AND EMPLOYEE BENEFITS. To the best knowledge
of MTV/PINNACLE ADVERTISING GROUP, INC., and except as set forth
in the Business Financial Statements and on Exhibit "M" (i)
MTV/PINNACLE ADVERTISING GROUP, INC. has no obligation, whether
contingent or otherwise, under any employment contract,
consulting agreement, collective bargaining agreement, executive
compensation agreement, personal, services agreement, deferred
compensation agreement, pension plan, retirement plan,
profit-sharing plan, stock purchase plan, stock option plan,
group life insurance, hospitalization insurance, vacation pay
plan, severance pay plan or any other similar agreements or
employee benefit plans or any other arrangement or
understanding, whether written or otherwise, with any employee,
independent contractor, agent, stockholder, or any other person
relating to the Business; (ii) No labor unions are representing
or attempting to represent employees of MTV/PINNACLE ADVERTISING
GROUP, INC. or any alleged bargaining unit thereof; and (iii)
MTV/PINNACLE ADVERTISING GROUP, INC. has not agreed to pay any
bonuses or made or agreed to make any increase in the rate of
wages, salaries, or other remuneration of any of its employees,
which has not already become effective.
m. LIABILITIES. To the best knowledge of MTV/PINNACLE ADVERTISING
GROUP, INC. and except as set forth on Exhibit "N" attached
hereto and hereby made a part hereof and except for the Retained
Liabilities, MTV/PINNACLE ADVERTISING GROUP, INC. has no
outstanding or threatened claims against it, or liabilities or
indebtedness, whether fixed, contingent (including potential
product liability claims) or otherwise relating to the Business,
other than liabilities incurred in connection with this
transaction.
n. LITIGATION. To the best knowledge of MTV/PINNACLE ADVERTISING
GROUP, INC. and except as set forth on Exhibit "N" attached
hereto and hereby made a part hereof, MTV/PINNACLE ADVERTISING
GROUP, INC. is not engaged in or a party to, or threatened with,
any legal action or other proceeding before any court, tribunal
or administrative agency, or by any action of any local or inter
exchange carrier or service bureau. To the best knowledge of
MTV/PINNACLE ADVERTISING GROUP, INC., MTV/PINNACLE ADVERTISING
GROUP, INC. has complied in all material respects with all
federal, local, state or foreign laws, rules, regulations and
orders applicable to the Business. To the best knowledge of
MTV/PINNACLE ADVERTISING GROUP, INC., MTV/PINNACLE ADVERTISING
GROUP, INC. is not under investigation with respect to any
charge concerning any violation of any law, order, rule, policy
or regulation, whether federal, local, state or foreign, in
respect of the Business.
o. INSURANCE. A true and correct list of all policies of insurance
covering any of the Assets or otherwise relating to the Business
owned by MTV/PINNACLE ADVERTISING GROUP, INC. or in which
MTV/PINNACLE ADVERTISING GROUP, INC. is named as the insured
party, including the amounts thereof, hereto and hereby made a
party
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<PAGE> 9
hereof as Exhibit "O," knowledge of MTV/PINNACLE ADVERTISING
GROUP, INC. and except as disclosed in Exhibit "O," all such
policies are valid, outstanding and enforceable and issued by
financially sound and responsible insurance companies, and will
remain in full force and effect through the Closing Date;
MTV/PINNACLE ADVERTISING GROUP, INC. maintains insurance of the
type and amount adequate for the conduct of the Business;
MTV/PINNACLE ADVERTISING GROUP, INC. has not been refused any
insurance, nor has is attached To the best its coverage been
limited, by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the last
five years.
p. NO DISPOSITION OF ASSETS OR OTHER CHANGES. There has not been
since October 15, 1998, a sale or any other disposition or
distribution of any Assets of MTV/PINNACLE ADVERTISING GROUP,
INC. except those which were made in the Ordinary Course of
Business or which were not, individually or in the aggregate,
material to the Business.
q. COMPENSATION OF EMPLOYEES, ETC. Attached hereto and hereby made
a part hereof as Exhibit "O" is a true, correct and complete
list of all employees, agents and independent contractors who
are presently rendering services with respect to the Business,
together with a statement of the full amount paid to such
persons during calendar year 1998, a statement of all amounts
payable to each such person in the future, and a statement of
the nature of the services rendered by each such person.
r. MTV/PINNACLE ADVERTISING GROUP, INC. STOCKHOLDERS. Fouts and
Odato own one hundred (100%) percent of all classes of issued
outstanding stock of MTV/PINNACLE ADVERTISING GROUP, INC. All
Fouts and Odato's ownership interest, if any, directly or
indirectly, in whole or in part, in any and all Assets, Goodwill
and other rights which are required to be conveyed hereunder are
in fact being conveyed to Buyer.
s. OPERATIONS. Except as set forth in Exhibit "L" attached hereto
and hereby made a part hereof, to the Actual Knowledge of
MTV/PINNACLE ADVERTISING GROUP, INC., no labor disputes or work
stoppages involving the Business are pending or, threatened. To
the Actual Knowledge of MTV/PINNACLE ADVERTISING GROUP, INC., no
customer or supplier of the Business is involved in, or
threatened with or affected by, any labor dispute, arbitration,
lawsuit or administrative proceeding which will adversely
affect, or might reasonably be expected to adversely affect the
Business (financial or otherwise).
t. NO MISLEADING STATEMENTS. Neither the representations of
MTV/PINNACLE ADVERTISING GROUP, INC. in this Agreement nor any
exhibit, financial statement, list or other document delivered
by MTV/PINNACLE ADVERTISING GROUP, INC. pursuant hereto contain
any untrue material statement or omit to state a material fact
necessary in order to make the statements contained therein or
herein not misleading. No information material to this
transaction necessary to make any of the representations and
warranties herein contained not misleading has been withheld
from, or has not been disclosed in writing to, Buyer.
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<PAGE> 10
11. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to MTV/PINNACLE ADVERTISING GROUP, INC. as
follows, and agrees that all such representations and warranties shall survive
the Closing hereunder.
a. EXISTENCE AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Nevada; it has the requisite corporate power and
authority to own or lease its property and to conduct its
business as contemplated herein.
b. AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has full corporate
power and authority to execute and deliver the Closing Documents
and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of the Closing Documents and
the consummation of the transactions contemplated thereby have
been duly and validly authorized and approved by the Board of
Directors of Buyer, and no other corporate proceedings on the
part of Buyer are necessary to authorize the Closing Documents
or to consummate the transactions contemplated thereby. The
Closing Documents have each been duly and validly executed and
delivered by Buyer and each constitutes a valid and binding
agreement of Buyer enforceable against Buyer in accordance with
its respective terms. The execution and delivery of the Closing
Documents and the consummation of the transactions contemplated
thereby will not (i) violate any provision of the Certificate of
Incorporation or By-Laws of Buyer, or, to the Actual Knowledge
of Buyer, any statute, rule, regulation, order or decree of any
public body or authority by which Buyer or any of the Assets is
bound, or (ii) to the Best Knowledge of Buyer result in a
violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default under, any license,
franchise, permit, indenture, agreement or other instrument to
which Buyer is a party, or by which any of the Assets is bound.
12. LIABILITIES.
a. Buyer shall assume and pay for the following disclosed
liabilities and obligations in a timely manner as required by
law, prior agreement between MTV/PINNACLE ADVERTISING GROUP,
INC. and third parties, and/or in the ordinary course of Buyer's
business. These disclosed liabilities and obligations constitute
the Assumed Liabilities:
i. Those accounts payable listed on Exhibit "BB" attached
hereto and hereby made a part hereof.
ii. Liabilities under Leases from and after the Cut Off Time.
iii. Liabilities under the Equipment Leases from and after the
Cut Off Time.
iv. Liabilities under the Material Contracts from and after
the Cut off Time.
13. MTV/PINNACLE ADVERTISING GROUP, INC. INDEMNITY.
a. INDEMNITY. MTV/PINNACLE ADVERTISING GROUP, INC. agrees to
indemnify, defend and hold harmless Buyer from and against any
and all demands, claims, actions, causes of action, debts, dues,
judgments, awards, assessments, losses, damages,
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<PAGE> 11
liabilities, costs and expenses, of any type or nature arising
out of the Business, including without limitation interest,
penalties, attorneys' fees (at trial and appellate levels) and
expenses asserted against, resulting to, imposed upon or
incurred by Buyer arising out of or resulting from (i) the
breach of any representation, warranty or covenant made by
MTV/PINNACLE ADVERTISING GROUP, INC. contained in this
Agreement, (ii) the Retained Liabilities, (iii) the failure of
MTV/PINNACLE ADVERTISING GROUP, INC. to qualify to do business
in any State in which MTV/PINNACLE ADVERTISING GROUP, INC. is
legally required to do so, (iv) the failure of MTV/PINNACLE
ADVERTISING GROUP, INC. to comply with any Bulk Sales Act in
effect and applicable to MTV/PINNACLE ADVERTISING GROUP, INC.,
and (iv) any action, inaction, misfeasance or malfeasance of
MTV/PINNACLE ADVERTISING GROUP, INC. attributable to the period
of time ending at the Cut Off Time whether or not damage or
injury occurs prior to the Cut Off Time.
MONETARY OF INDEMNITY. Buyer shall not make a claim for
indemnity for any amount less than Two Thousand Five Hundred and
00/100 ($2,500.00) Dollars in the aggregate. The obligation of
the indemnifying parties shall not exceed in the aggregate Four
Hundred Ninety Thousand and 00/100 ($490,000.00) Dollars. A
variance amount not to exceed One Hundred Thousand 00/100
($100,000) is acceptable on the not to exceed Aggregate amount
outlined above.
14. BUYER'S INDEMNITY.
Buyer agrees to indemnify, defend and hold harmless MTV/PINNACLE ADVERTISING
GROUP, INC. its officers and assigns from and against any and all demands,
claims, actions, causes of action, debts, dues, judgments, awards, assessments,
losses, damages, liabilities, costs and expenses, of any type or nature,
including without limitation interest, penalties, attorneys' fees (at trial and
appellate levels) and expenses asserted against, resulting to, imposed upon or
incurred by MTV/PINNACLE ADVERTISING GROUP, INC., arising out of or resulting
from (i) the breach of any representation, warranty or covenant made by Buyer
contained in this Agreement (ii) the Assumed Liabilities, and (iii) the conduct
of the Business by Buyer after the Closing Date.
15. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of either party with respect to claims for
which it is to be indemnified hereunder resulting from the assertion of
liability by third parties shall be subject to the following terms and
conditions:
a. NOTICE. The Claimant believing itself entitled to indemnity (the
"Claimant") will give the party which it believes must
"Indemnitor" any such notice of indemnify it (the indemnifiable
claim, and the Indemnitor will undertake the defense thereof by
counsel chosen by it and will advise the Claimant concerning
such defense on a timely basis during the course thereof.
b. FAILURE TO DEFEND. In the event that the Indemnitor, within ten
(10) days from notice of any indemnifiable claim, fails to a
defense, the Claimant engage counsel and commence will, upon
further notice to the Indemnitor have the right to immediately
undertake the defense, for the account and risk of the
Indemnitor.
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<PAGE> 12
c. SETTLEMENT BY INDEMNITOR. Indemnitor may at anytime settle any
indemnifiable claim at its sole cost and expense. Indemnitor
shall be required to obtain the prior written consent of the
Claimant only if Claimant reasonably believes that the
settlement of the indemnifiable claim may materially and
adversely affect the ability to do business of the Claimant or
otherwise prejudice the Claimant in its business operations.
Notwithstanding anything contained herein to the contrary, the
consent of Claimant shall be required in the event --- a
settlement to be entered into the Indemnitor requires the
admission of any wrongdoing on the part of the Claimant or in
the event that any third party in order to settle such
indemnifiable claim requires the execution of any document by
the Claimant.
Claimant shall receive copies of all proposed settlement
documents and shall have a right to review and comment thereon
and consult with Indemnitor concerning the term of such proposed
settlement documents.
d. LIMITATION OF TIME. Any claim for which indemnity is sought
hereunder shall be brought within two years from the date that
such claim matures, but in no vent later than sixty (60) days
following the expiration of the representations and warranties.
The date of maturity of the claim shall be the later of (i) the
date upon which the claimant becomes aware of the claim, (ii)
the date upon which the claimant should have become aware of the
claim in the exercise of reasonable diligence, or (iii) the date
upon which the last element necessary for the assertion of the
claim takes place.
16. TERMINATION.
a. WITHOUT DEFAULT. This Agreement may be terminated at any time
prior to the Closing Date without liability of any party.
i. By mutual consent of the Boards of Directors of
MTV/PINNACLE ADVERTISING GROUP, INC. and Buyer; or
ii. If the transactions contemplated by this Agreement shall
not have been consummated on or before October 31, 1998,
provided that the transactions which were not due to the
breach or default of the party seeking to were not
consummated terminate. In the event of termination by
Buyer, or by MTV/PINNACLE ADVERTISING GROUP, INC., or
both as permitted, written notice thereof shall forthwith
be given to the other and this Agreement shall terminate
without further action by any of the parties hereto.
If this Agreement is terminated as permitted herein:
a. Upon request therefore, each party will redeliver all
documents, work papers and other material of any other
party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to
the party furnishing the same; and
b. Each party hereto shall have no liability or further
obligation to the other party to this Agreement with
respect to the matters covered by this Agreement except
as provided in paragraph 17.
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<PAGE> 13
b. AS A RESULT OF DEFAULT. This Agreement may be terminated at any
time prior to the closing Date as a result of the default of a
party without a prior default by the other party upon written
notice to the defaulting party by the non-defaulting party after
the expiration of any applicable cure period set forth herein.
Reference is made to paragraph 20 of this Agreement containing
events of default by the parties as well as the remedies of the
parties thereafter.
17. COVENANTS OF THE PARTIES.
The parties covenant to one another as follows:
a. ACCESS TO INFORMATION. Between the date of this Agreement and
the Closing Date, MTV/PINNACLE ADVERTISING GROUP, INC. and Fouts
and Odato will facilitate the access of representatives to Buyer
during normal business hours and in such a manner as not to
unduly disrupt normal activities of MTV/PINNACLE ADVERTISING
GROUP, INC.
b. GOVERNMENTAL AND OTHER APPROVALS. The parties will cooperate in
the preparation and filing by any party of such applications
and/or amendments thereto as shall be necessary or desirable in
order to consummate the transactions contemplated by this
Agreement as soon as reasonably practicable following the date
of this Agreement and will use their best efforts to have such
applications and/or amendments thereto approved.
c. ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by
this Agreement. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the
purposes of this Agreement, each party shall take all such
necessary action.
d. CONSENTS. Each party will use their best efforts to obtain
consents of any third parties (such as but not limited to inter
exchange carriers, service bureaus, local exchange carriers,
media and lessors) and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement,
if any.
e. DISCLOSURE SUPPLEMENTS. From time to time prior to the Closing
Date, each party shall supplement, amend and update all Exhibits
relating to its' respective representations and warranties
contained herein with respect to any matter hereafter arising
which comes to its attention and which may effect the truth of
such representation and warranties.
f. PUBLIC ANNOUNCEMENTS. Except as may be required by law or
regulation, no public disclosure relating to the transactions
contemplated by this Agreement (including disclosure intended
for shareholders and employees of the parties other than those
for whom disclosure is necessary to carry out the proposed
transactions) shall be made by any party prior to the Closing
unless the other parties shall have approved such disclosure.
Except as may be required by law or regulation, any press
release approved by MTV/PINNACLE ADVERTISING
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<PAGE> 14
GROUP, INC. and Buyer will not contain the price or any other
terms of this Agreement. MTV/PINNACLE ADVERTISING GROUP, INC.
will cooperate with Buyer after the closing in the issuance of
letters to suppliers, clients, media and all other persons and
entities with whom MTV/PINNACLE ADVERTISING GROUP, INC. has been
conducting business.
g. ACCOUNTS. All communications and funds received by MTV/PINNACLE
ADVERTISING GROUP, INC. pertaining to the Business shall be
referred to Buyer. Neither MTV/PINNACLE ADVERTISING GROUP, INC.
nor Fouts and Odato shall take any act which is intended to
cause the loss of good will of a client of MTV/PINNACLE
ADVERTISING GROUP, INC. or Buyer or which otherwise adversely
affects Buyer or the Business.
h. USE OF COUNSEL. The parties confirm and agree that both intend
to utilize to be determined, as their corporate counsel for
various aspects of their business. Although they do not consider
that the use of this firm and its lawyers would be a conflict of
interest between them, they confirm that each party may utilize
the firm and its lawyers as its counsel (other than in
connection with a dispute between them).conduct of Business
Prior to the Closing.
18. DATE.
During the period from prior to the closing Date(the "Transition Period"
MTV/PINNACLE ADVERTISING GROUP, INC. will conduct the Business in its ordinary
and usual course. During the Transition Period, funds sufficient to pay the
payroll and Trade Accounts Payable shall be deposited in the MTV/PINNACLE
ADVERTISING GROUP, INC. account as necessary by Buyer. During the Transition
Period, MTV/PINNACLE ADVERTISING GROUP, INC. will convert all accounting
functions MTV/PINNACLE ADVERTISING GROUP, INC. to Miracom. All work in
progress, all funds, receivables, and entitlements held by MTV/PINNACLE
ADVERTISING GROUP, INC. shall be transferred to Buyer at the Closing. At
closing MTV/PINNACLE ADVERTISING GROUP, INC. shall execute and Buyer shall file
with the Secretary of State of Florida Articles of Amendment to the Articles of
Incorporation of MTV/PINNACLE ADVERTISING GROUP, INC.
reflecting the changes herein.
19. COSTS.
Whether or not the Closing is consummated, each party shall bear its own costs
and expenses in connection with the negotiation, execution and performance of
this Agreement and the transactions contemplated hereby except as provided
herein.
20. DEFAULT PRIOR TO THE CLOSING.
a. DEFAULT BY MTV/PINNACLE ADVERTISING GROUP, INC. The failure of
MTV/PINNACLE ADVERTISING GROUP, INC. to comply in all material
respects without a prior material breach or default by Buyer
with any provision herein or in any document delivered in
connection herewith shall be an event of default by MTV/PINNACLE
ADVERTISING GROUP, INC. hereunder.
b. DEFAULT BY BUYER. The failure of Buyer to comply in all material
respects without a prior material breach or default by
MTV/PINNACLE ADVERTISING GROUP, INC. with any provision herein
or in any document delivered in connection herewith shall be an
event of default by Buyer hereunder.
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<PAGE> 15
c. REMEDIES OF MTV/PINNACLE ADVERTISING GROUP, INC. If an event of
default by Buyer shall have occurred and shall not have been
cured within five(5) days from written notice to Buyer from
MTV/PINNACLE ADVERTISING GROUP, INC., without a prior uncured
material default by MTV/PINNACLE ADVERTISING GROUP, INC.,
MTV/PINNACLE ADVERTISING GROUP, INC. shall be entitled to pursue
all legal and equitable rights and remedies available under law
including, but not limited to rights to terminate this
Agreement, to recovery of damages, and to specific performance
of this Agreement.
d. REMEDIES OF BUYER. If an event of default by MTV/PINNACLE
ADVERTISING GROUP, INC. shall have occurred and shall not have
been to be cured within five (5) days from written notice to
MTV/PINNACLE ADVERTISING GROUP, INC. from Buyer, without a prior
uncured material default by Buyer, pursue all legal and
equitable rights and remedies available under Buyer shall be
entitled to applicable law including, but not limited to rights
to terminate this Agreement, to recovery of damages, and to
specific performance of this Agreement.
21. CONSENT TO SERVICE.
MTV/PINNACLE ADVERTISING GROUP, INC., Buyer and Fouts and Odato consent the
jurisdiction of any geographically situated in Seminole County, Florida,
whether state or Federal, in connection with the subject matter of any dispute
arising under this Agreement and agree further that service of process or
notice in any such action, suit or proceeding shall be effective to confer
personal jurisdiction if given in the manner permitted in this Agreement for
notices hereunder. Each party does hereby appoint the Clerk of the United
States District Court for court of competent jurisdiction to Altamonte Springs,
Florida as its agent to accept service of process issued by that Court or any
of the Courts of the State of Florida in connection with any suit arising under
this Agreement.
22. CLOSING ITEMS.
a. Buyer's Items At the closing, Buyer shall execute and deliver to
MTV/PINNACLE ADVERTISING GROUP, INC., Fouts and Odato the
following:
i. The Purchase Price or Miracom shares as may be required.
ii. Assumption Agreement in the form attached hereto and
hereby made a part hereof as Exhibit "S" (the "Assumption
Agreement").
iii. A corporate resolution in the attached hereto and made a
part hereof as Exhibit "T."
iv. A current Certificate of Good standing of Buyer as a
Nevada corporation from the Secretary of State of Nevada.
b. MTV/PINNACLE ADVERTISING GROUP, INC. and Fouts and Odato's
Items. At closing, MTV/PINNACLE ADVERTISING GROUP, INC. and
Fouts and Odato, as applicable, shall execute and deliver to
Buyer the following:
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<PAGE> 16
i. A Bill of Sale in the form set forth as Exhibit "U"
attached hereto and hereby made part hereof transferring
all of the Assets to Buyer.
ii. The originals of all contracts which relate to any
liability or obligation of MTV/PINNACLE ADVERTISING
GROUP, INC. which is to be assumed by Buyer hereunder.
The Fouts and Odato Consulting Agreement duly executed by
Fouts and Odato.
iii. The employment Agreement duly executed by MIRACOM.
iv. An Omnibus Assignment in the form attached hereto and
hereby made a part hereof as Exhibit "V" together with
such separate assignments of the Marks as shall be deemed
necessary by Buyer to vest the Marks in Buyer of record.
v. A list of all suppliers, customers and employees
certified to be true, complete and correct by
MTV/PINNACLE ADVERTISING GROUP, INC.
vi. List of all existing Material Contracts A certified to be
true, complete and correct by MTV/PINNACLE ADVERTISING
GROUP, INC.
vii. A list of all Marks certified to be true, complete and
correct by MTV/PINNACLE ADVERTISING GROUP, INC.
viii. A list of all clients of MTV/PINNACLE ADVERTISING GROUP,
INC. certified to be true, complete and correct by
MTV/PINNACLE ADVERTISING GROUP, INC.
ix. A corporate resolution in the form attached hereto and
hereby Made a part hereof as Exhibit "W."
x. A current Certificate of Good Standing from Secretary of
Florida.
xi. An Indemnity Agreement from MTV/ADVERTISING GROUP, INC.,
Attached hereto as Exhibit "Y."
xii. Documentation necessary to notify the state of Florida of
the change of name of MTV/PINNACLE ADVERTISING GROUP,
INC. and documents sufficient to change the name of
MTV/PINNACLE ADVERTISING GROUP, INC., in the State of
Florida.
23. COOPERATION WITH EMPLOYEES.
Buyer shall be free to conduct interviews with all employees of MTV/PINNACLE
ADVERTISING GROUP, INC. to determine which of these employees Buyer will offer
employment. MTV/PINNACLE ADVERTISING GROUP, INC. will use its reasonable best
efforts to obtain full cooperation from the employees utilized in the Business
for such interviews. Buyer shall be free to offer employment to such of the
employees of MTV/PINNACLE ADVERTISING GROUP, INC. engaged in the Business as
Buyer shall determine. Buyer has no obligation to employ any employees of
MTV/PINNACLE ADVERTISING GROUP, INC. and has not agreed to assume any
obligations of MTV/PINNACLE
- 16 -
<PAGE> 17
ADVERTISING GROUP, INC. to such employees. Buyer shall not, by employing any of
said persons or as a result of anything set forth herein, assume any
liabilities in connection with the prior employment of such persons by
MTV/PINNACLE ADVERTISING GROUP, INC. including, but not limited to, liability
for pension plan payments, unemployment compensation, salary, bonuses,
commissions or any other form of remuneration and, all of the employees of
MTV/PINNACLE ADVERTISING GROUP, INC. shall for purposes of this Agreement be
deemed to have been terminated by MTV/PINNACLE ADVERTISING GROUP, INC. as of
the Cut off Time.
24. MISCELLANEOUS.
a. NOTICES. All notices which any party may be required or
permitted to give on any other party in connection with this
Agreement shall be in writing and deemed sufficient if either
mailed by registered or certified mail postage prepaid (return
receipt requested) or delivered by hand to the party whom such
notice is required or permitted to be given at the address set
forth below. Service of any such notice shall be deemed complete
on the date of actual delivery as shown by the addressee's
registry or certification receipt, or when received if delivered
by hand, or five (5) days after the post office first notifies
an intended recipient of an attempt to deliver such notice. Any
party hereto may from time to time, by notice in writing served
upon any other as aforesaid, designate a different mailing
address or a different person to whom all such notices are
thereafter to be addressed; provided that any and all such
addresses shall be street addresses, not post office or other
boxes. All notices to Buyer shall be addressed as follows:
25. MULTIPLE COUNTERPARTS. This Agreement may be signed in multiple
counterparts on facsimile paper or with original, but facsimile
transmitted signatures. Documents with facsimile signatures shall be
considered original documents and binding on the parties to this
Agreement.
With a copy to:
MTV/PINNACLE ADVERTISING GROUP, INC., A Florida Corporation
1180 Spring Centre South Boulevard, Suite 320
Altamonte Springs, Florida 32714
By Its:
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<PAGE> 18
MIRACOM, a Nevada Corporation
1180 Spring Centre South Boulevard, Suite 206
Altamonte Springs, Florida 32714
By Its:
All notices to MTV/PINNACLE ADVERTISING GROUP, INC. shall be addressed as
follows:
Shawn Lucas Jeffrey M. Odato
8352 Grey Bark Court 2343 River Tree Circle
Sanford, Florida 32771 Sanford, Florida 32771
Michael Fouts
298 Lake Markham Road
Sanford, Florida 32771
b. GOVERNING LAW. The laws of the State of Florida (without
reference to laws applicable to conflicts of law) shall govern
the interpretation of this Agreement.
c. MODIFICATION AND WAIVER. No provision of this Agreement shall be
amended, waived or modified except by an instrument in writing
signed by the parties hereto.
d. SURVIVAL. All covenants, agreements, representations and
warranties made herein, including but not limited to all
agreements to purchase specific portions of the Business shall
be deemed to have been material and relied upon by each party
and shall survive the execution and delivery of this Agreement.
e. HEADINGS. All sections and headings of this Agreement are
inserted for convenience only and shall not affect the
construction or interpretation hereof.
f. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall
be an original, but all counterparts shall together constitute
one and the same instrument.
g. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties and no promises, inducements,
assurances, guaranties, representations, or solicitations,
either expressed or implied, oral or written, have been made
other than as expressly set forth herein. This Agreement
supersedes all such promises, inducements, assurances,
guaranties, warranties, representations, or solicitations,
either expressed or implied, oral or written, whenever made.
h. SEVERABILITY. Inapplicability or unenforceability of any
provision of this Agreement or any instrument executed and
delivered pursuant thereto shall not limit or impair the
operation or validity of any other provision of this Agreement
or any other such instrument.
i. EXCLUSIVENESS OF AGREEMENT. This Agreement is made for the sole
benefit and
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<PAGE> 19
protection of the parties and the and their respective
successors and assigns, and no other person or entity shall have
any right of action hereunder or right to rely hereon.
j. VENUE. The parties hereby waive the privilege of venue and agree
that the venue of all litigation arising here from shall be Los
Angeles County, California and that the courts of the State of
California shall have exclusive jurisdiction of all such
litigation.
k. WAIVER OF DEFAULTS. The waiver by any party of any breach or
default by any other party under any of the terms of this
Agreement, shall not be deemed to be, nor shall the same
constitute a waiver of any subsequent breach or default on the
part of any other party.
l. AGREEMENT NOT RECORDABLE. This Agreement is not recordable and
shall not be recorded by any party hereto.
m. INTERPRETATION OF AGREEMENT. This Agreement has been negotiated
by each of the parties both as to its substance and as to its
form. There shall not be applied a rule of law or rule of
construction whereby this Agreement or any of the terms or
provisions hereof or documents attached hereto shall be
construed in favor of or against either party by reason of the
stationery upon which it was finalized or the attorney for the
party by whom it was prepared. The language of this Agreement
shall be construed according to its fair meaning and not
strictly for or against any party.
n. CONSTRUCTION OF AGREEMENT. All words in this Agreement refer to
whatever number or gender the context requires; if more than one
party or person is referred to, their obligations and
liabilities shall be joint and several. All the terms and words
used in this Agreement, regardless of the number and gender in
which they are used, shall be deemed and construed to include
any other number (singular or plural) or any other gender
(masculine, feminine or neuter) as the context or sense of this
Agreement, or any section or clause hereof may require. The
locative adverbs "herein," "hereunder," "hereto," "hereinafter"
and the like words wherever the same appear therein, mean and
refer to this Agreement in its entirety and not to any specific
paragraph, section or subsection hereof unless otherwise
expressly designated in context.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth on the first page hereof.
Witnesses:
/s/ Jeffrey M. Odato By Its: President
- --------------------
MTV/PINNACLE ADVERTISING GROUP, INC.
1180 Spring Centre South Boulevard, Suite 310
Altamonte Springs, Florida 32714
/s/ Shawn Lucas By Its: CEO and President
- --------------------
MIRACOM CORPORATION
1180 Spring Centre South Boulevard, Suite 206
Altamonte Springs, Florida 32714
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<PAGE> 1
EXHIBIT 6.15.2
AMENDMENT NO. 1 TO ACQUISITION AGREEMENT
(MIRACOM CORPORATION/MTV PINNACLE ADVERTISING GROUP, INC.)
This Amendment No. 1 ("Amendment") made, entered into and effective as
of the 30th day of September, 1998, amends that certain Acquisition Agreement
dated September 29, 1998 ("Acquisition Agreement") by and among Miracom
Corporation, a Nevada corporation ("'Buyer") and MTV Pinnacle Advertising Group,
Inc., a Florida corporation ("Pinnacle").
RECITALS
WHEREAS, Buyer wishes to acquire all of the assets and business
(including Assumed Liabilities) of Pinnacle for the consideration of 582,000
shares of Buyer's restricted common stock to be issued to Pinnacle; and
WHEREAS, this Amendment serves to correct and clarify the Acquisition
Agreement.
NOW, THEREFORE, the Acquisition Agreement is hereby amended as follows:
A. Section 1.t. of the Acquisition Agreement is hereby amended in its
entirety as follows:
"t. "Purchase Price" shall mean the issuance of Miracom
common stock in the amount of 582,000 shares to MTV
Pinnacle Advertising Group, Inc., together with
employment agreements for Fouts and Odato and Board
seat appointment as described in Exhibit "F."
B. Any reference in the Acquisition Agreement to issuance of Miracom
stock to Fouts and Odato or to shareholders of Pinnacle shall mean instead the
issuance of Miracom common stock to Pinnacle.
C. Notwithstanding anything to the contrary stated in the Acquisition
Agreement, Miracom is acquiring all of the assets and business (including all of
the liabilities) of MTV Pinnacle Advertising Group, Inc.
<PAGE> 2
D. With respect to the loans to MTV Pinnacle Advertising Group, Inc. by
its officers, directors or shareholders as evidenced in the books and records of
MTV Pinnacle Advertising Group, Inc., such loans may be repaid, upon mutual
agreement between Miracom and the obligee, in the form of Miracom common stock
in lieu of cash, or a combination of cash and Miracom common stock.
E. The Acquisition and Stock Exchange Agreement dated August 20, 1998
by and between Direct Touch Research, Inc. (predecessor to Miracom) and MTV
Pinnacle Advertising Group, Inc. is null and void and is superseded by the
Acquisition Agreement. Further, any reference in the Acquisition Agreement to a
guaranteed term on Miracom's Board of Directors for the selling shareholders of
MTV Pinnacle Advertising Group, Inc. and any reference to a guaranteed $3.00
floor for Miracom common stock (or that of its predecessor) shall be null and
void.
F. All other provisions of the Acquisition Agreement shall remain the
same, except as modified by the foregoing Sections A through E. Unless otherwise
defined herein, capitalized terms shall have the same meanings as in the
Acquisition Agreement.
Dated as of and effective the date first written above.
MTV PINNACLE ADVERTISING
GROUP, INC.
By: /s/ Jeffrey M. Odato
------------------------------------
Name: Jeffrey M. Odato
As: President
MIRACOM CORPORATION
By: /s/ Shawn D. Lucas
------------------------------------
Name: Shawn D. Lucas
As: President
2
<PAGE> 1
EXHIBIT 6.15.3
AMENDED AND RESTATED ASSUMPTION AGREEMENT
This Assumption Agreement ("Agreement") made as of the 30th day of
September, 1998, by and between Miracom Corporation, a Nevada Corporation
("Buyer") and MTV Pinnacle Advertising Group, Inc., a Florida corporation
("MTV").
W I T N E S S E T H:
WHEREAS, MTV has agreed to sell all of the assets and business
(including all of the liabilities) of MTV to Buyer by Agreement dated September
29, 1998 and amendment thereto dated of even date herewith (altogether, the
"Purchase Agreement"); and
WHEREAS, Buyer has agreed to assume all of the liabilities of MTV's
business subject to the terms and conditions of the Purchase Agreement, which
liabilities shall hereinafter be referred to as the "Assumed Liabilities."
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. ASSUMPTION. Buyer hereby assumes the Assumed Liabilities as defined
herein.
2. INDEMNIFICATION. Buyer hereby agrees to release, indemnity, hold
harmless and defend MTV, its officers and directors of and from any and all
claims, demands, actions, suits, causes of action, obligations, controversies,
debts, costs, expenses, damages, judgments, lawsuits and liabilities of whatever
kind or nature, in law, equity or otherwise, including but not limited to
reasonable counsel fees (at trial and appellate levels) arising out of or in
connection with:
a. The breach of covenant, representation or warranty made by
Buyer in the Purchase Agreement and all documents executed in connection
therewith; or
b. The Assumed Liabilities as defined herein; or
c. Any action, inaction, misfeasance or malfeasance of Buyer
attributable to the period of time beginning after the Cut Off Time (as defined
in the Purchase Agreement).
<PAGE> 2
3. LIMITATION ON MTV. MTV shall not make a claim for indemnity in an
amount less than Two Thousand Five Hundred ($2,500.00) in the aggregate. The
obligation of Buyer shall not exceed in the aggregate the amount of the Assumed
Liabilities. Indemnification shall be subject to CONDITIONS OF INDEMNIFICATION,
Paragraph 15 of the Purchase Agreement.
4. MISCELLANEOUS PROVISIONS.
a. ATTORNEY'S FEES. In the event of litigation arising out of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees and costs at trail and appellate levels.
b. NOTICES. All notices required to be given under this
Agreement shall be in writing, sent by certified mail, return receipt requested,
postage prepaid, to the following addresses:
1. If to the Buyer, then: Miracom Corporation
1180 Spring Center South Blvd.
Altamonte Springs, FL 32714
Attention: Shawn Lucas
2. With a copy to:
3. If to MTV, then: c/o Jeffery Odato
2343 River Tree Circle
Sanford, Florida 32771
and
Michael Fouts
298 Lake Markham Road
Sandord, FL 32771
4. With a copy to:
The foregoing addresses may be changed to any of the
aforesaid persons, and additional persons may be added thereto by notifying all
of the other parties hereto in writing and in the manner hereinabove set forth.
2
<PAGE> 3
c. GOVERNING LAW: The laws of the State of Florida shall
govern the interpretation and enforcement of this Agreement.
d. MODIFICATION AND WAIVER. No provision of this Agreement
shall be amended, waived or modified except by an instrument in writing signed
by the parties hereto.
e. MATERIALITY. All covenants, agreements, representations and
warranties made herein shall be deemed to have been material and relied upon by
each party and shall survive the execution and delivery of this Agreement.
f. HEADINGS. All sections and headings of this Agreement are
inserted for convenience only, and shall not affect the construction or
interpretation hereof.
g. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which, when executed and delivered, shall be an
original, but all counterparts shall together constitute one and the same
instrument.
h. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
supersedes and replaces in its entirety any other assumption agreement executed
by Buyer and MTV in connection with the subject matter hereof.
i. SEVERABILITY. Inapplicability or unenforceability of any
provision of this Agreement or any instrument executed and delivered pursuant
thereto shall not limit or impair the operation or validity of any other
provision of this Agreement or any other such instrument.
j. WAIVER OF DEFAULTS. The waiver by any party of any breach
or default by any other party under any of the terms of this Agreement, shall
not be deemed to be, nor shall the same constitute a waiver of any subsequent
breach or default on the party of any other party.
k. INTERPRETATION OF AGREEMENT. This Agreement has been
negotiated by each of the parties both as to its substance and as to its form.
There shall not be applied a rule of law or rule of construction whereby this
Agreement or any of the terms or provisions hereof shall be construed in favor
of or against wither party by reason of the stationery upon which it was
finalized or the attorney for the party by whom it was prepared. The language of
this Agreement shall be construed according to its fair meaning and not strictly
for or against either party.
3
<PAGE> 4
l. CONSTRUCTION OF AGREEMENT. All words in this Agreement
refer to whatever number or gender the context requires; if more than one party
or person is referred to, their obligations and liabilities shall be joint and
several. All the terms and words used in this Agreement, regardless of the
number and gender in which they are used, shall be deemed and construed to
include any other number (singular or plural) or any other gender (masculine,
feminine or neuter) as the context or sense of this Agreement, or any section or
clause hereof may require. The locative adverbs "herein," "hereunder," "hereto,"
"hereinafter" and the like words wherever the same appear therein, mean and
refer to this Agreement in its entirety and not to any specific paragraph,
section or subsection hereof unless otherwise expressly designated in context.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
IN THE PRESENCE OF:
(As to MTV) MTV Pinnacle Advertising Group, Inc.
/s/ By: /s/ Jeffery Odato
----------------------------------
Jeffery Odato, President
(As to Buyer) MIRACOM CORPORATION
/s/ By: /s/ Shawn Lucas
----------------------------------
Shawn Lucas, President
4
<PAGE> 1
EXHIBIT 6.16
ACQUISITION AGREEMENT
THIS PURCHASE AGREEMENT made, entered into, and effective as of this
28th day of May, 1999, by and among MIRACOM Corporation, a Nevada corporation
("Buyer"), LIVECODE, INC., a Florida corporation and Dave Lampert and Dan
Lampert, individuals, hereinafter referred to as "Lampert":
W I T N E S S E T H:
WHEREAS, Buyer wishes to acquire LIVECODE, INC. as set forth herein; and
WHEREAS, LIVECODE, INC. has agreed to sell, and Buyer has agreed to purchase
all of the assets of LIVECODE, INC. and to enter into certain other agreements
with LIVECODE, INC., and Lampert as set forth and upon the terms and conditions
set forth herein below.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, the parties do hereby agree as
follow:
1. DEFINITIONS.
The following definitions shall apply herein and in all other documents
executed in connection herewith unless the contract clearly requires otherwise:
a. "ACTUAL KNOWLEDGE" shall mean those specific facts and that specific
information which is and are actually known by a person or company
without independent investigation or inquiry. With regard to
LIVECODE, INC., and Lampert the term "Actual Knowledge" shall mean,
the actual knowledge of the personnel running the day to day
business of LIVECODE, INC.; provided, however, that LIVECODE, INC.,
and Lampert may rely upon certificates of such personnel as to the
knowledge of such personnel concerning LIVECODE, INC., its
operations and the representations and warranties contained in this
Agreement.
b. "ASSETS" shall mean and refer to those items set forth on Exhibit
"A" attached hereto and hereby made a part hereof.
c. "ASSUMED LIABILITIES" shall mean and refer to those liabilities and
obligations of LIVECODE, INC. referred to in paragraph 12 below.
d. "BEST KNOWLEDGE" shall mean that level of specific knowledge and
information of a person or company which either is actually known or
reasonably should have been known upon first, receiving and/or
obtaining actual knowledge of specific information and facts.
Second, making the same level of reasonable inquiry which a
reasonable person would be expected to make upon receiving the same
specific information and facts. With regard to LIVECODE, INC., the
term "Best Knowledge", shall mean to the best knowledge of the
personnel running the day to day business of LIVECODE, INC.;
provided, however, that LIVECODE, INC., and Lampert may rely upon
certificates of such personnel as to the
<PAGE> 2
knowledge of such personnel concerning LIVECODE, INC., its
operations and the representations and warranties contained in this
Agreement.
e. "BUSINESS" shall mean the business currently conducted by LIVECODE,
INC. of operating a company that develops workflow software which is
also known as document management software.
f. "BUSINESS EQUIPMENT" shall mean and refer to all equipment,
automobiles, trucks and all other machinery, equipment and personal
property regularly used in the Business on the Closing Date, whether
leased or owned by LIVECODE, INC.
g. "BUSINESS FINANCIAL STATEMENTS" shall mean and refer to those
financial Statements for the year 1998 & 1999 (or LIVECODE, INC.'s
fiscal year commencing in 1998) and each of the calendar months
thereafter ending April 31, 1999, prepared by LIVECODE, INC., copies
of which are attached hereto and made a part hereof as Exhibit "B".
h. "BUYER" shall mean and refer to MIRACOM Corporation, a Nevada
corporation.
i. "CLOSING" shall mean and refer to the consummation of the
transactions contemplated to occur on the Closing Date.
j. "CLOSING DATE" shall mean and refer to May 28, 1999 or such later
time as shall be mutually agreed by the parties.
k. "CUT OFF TIME" shall mean and refer to 11:59 P.M., May 28, 1999.
l. "LAMPERT EMPLOYMENT AGREEMENT" shall mean and refer to that certain
Employment Agreement attached hereto and hereby made a part hereof
as Exhibit "C".
m. "LIVECODE, INC." shall mean and refer to LiveCode, Inc. a Florida
Corporation.
n. "EQUIPMENT LEASES" shall mean and refer to all leases of Business
Equipment to which LIVECODE, INC. is a party either as lessor or
lessee.
o. "GOODWILL" shall mean the goodwill associated with the Business and
shall include the Marks, if any.
p. "LEASE" shall mean and refer to that certain lease of real property
referred to in paragraph 10 hereof.
q. "MARKS" shall mean and refer to all patents, trademarks, service
marks, logos, trade names, copyrights, licenses, sublicenses,
fictitious names and agreements pertaining to any of the foregoing,
and any applications for any of the foregoing, used in the Business,
all of which are listed on Exhibit "D" attached hereto and hereby
made a part hereof.
r. "MATERIAL CONTRACTS" shall mean and refer to all agreements, whether
written or oral, which relate to the Business and which have not
been fully performed prior to the Closing, including but not limited
to media orders, licenses, leases (as landlord or tenant),
indentures, loan agreements, notes, mortgages, undertakings and any
other agreements with clients,
2
<PAGE> 3
suppliers, governmental entities, inter exchange carriers, local
exchange carriers, service bureaus, TV and radio stations,
publications, lenders, producers, directors, talent, employees,
independent contractors and any other person or entity.
s. "ORDINARY COURSE OF BUSINESS" shall mean and refer to the ordinary
course of conduct of the Business.
t. "PURCHASE PRICE" shall mean twenty thousand US dollars ($20,000.00)
payable to LiveCode, Inc. on December 3, 1999 and the issuance of
MIRACOM stock in the amount of 600,000 (Six Hundred Thousand) shares
issued to LiveCode, Inc. together with employment agreements and
Board seat appointment as described in Exhibit "F".
u. "RETAINED LIABILITIES" shall mean and refer to all liabilities and
obligations of LIVECODE, INC. other than the assumed Liabilities.
v. "TRADE ACCOUNTS RECEIVABLE" shall mean and refer to all accounts
receivable owed to LIVECODE, INC. as of the Closing as a trade
creditor in the Ordinary Course of the Business. Outlined in Exhibit
"E".
w. "TRADE RECEIVABLES" shall mean and refer to the Trade Accounts
Receivable listed on Exhibit "EE" attached hereto and hereby made a
part hereof, together with any and all other accounts receivable
generated by the Business.
2. PURCHASE.
At the Closing, the Assets, Goodwill and other rights set forth herein shall be
held by LIVECODE, INC. and purchased by Buyer for a purchase price as described
above in Paragraph 1 (t) above.
The Purchase Price shall be allocated as set forth on Exhibit "F" attached
hereto and hereby made a part hereof.
Each party shall file an IRS Form 8594, if applicable, containing such
allocations with its respective year end tax return, if applicable.
3. PURCHASE OF GOODWILL.
At the Closing, LIVECODE, INC. and Lampert will assign the Goodwill to Buyer.
The Goodwill shall include, but is limited to, the right of Buyer to use all
Marks associated with the business or used by LIVECODE, INC. and Lampert in
connection with the business. The Goodwill Shall include the name LIVECODE,
INC. and all other names associated with the business. All such names are
listed on Exhibit "H" attached hereto and hereby made a part hereof. LIVECODE,
INC. and Lampert will cause all other persons and entities having an interest
in such Marks to execute valid and legally binding agreements transferring all
right to the Marks to Buyer.
4. LAMPERT EMPLOYMENT AGREEMENT; BOARD APPOINTMENTS DOCUMENTS.
(a) Lampert Agreements and Documents: It is essential and material
consideration for buyers acquisition hereunder that Lampert agree
to stay on for a period of 3 (three) years pursuant to the terms
and conditions of their Employment
3
<PAGE> 4
Agreement outlined in Exhibit "C". Such agreements is a material
agreement which Seller would not have entered into this agreement.
The parties agree that damage to the business of the Buyer and
Seller by virtue of the violation of this Covenant is impossible to
ascertain with any certainty at the date hereof. As a result, in
addition to any other remedy permitted by law, the Buyer and Seller
shall be entitled to the remedy of injunction, both temporary and
permanent, restraining the violating party or any other person or
entity acting in concert with them, either directly or indirectly,
from a violation of this Covenant. In addition to such injunction,
the Buyer or Seller shall have all rights and remedies at law,
equity or otherwise and all such rights and remedies shall be
cumulative and non-exclusive and the exercise of one such remedy
shall not bar the exercise of any other remedy.
5. CLOSING.
The Closing shall be held in the offices of Greenberg Traurig (111 North Orange
Avenue, 20th Floor, Orlando, Florida 32801), or at such other place within
Florida, as shall be agreed upon by Buyer and LIVECODE, INC.
6. PAYMENTS.
All payments required to be made at Closing, or pursuant to a schedule outlined
in this agreement, shall be made by company check drawn on a banking
institution which is a member of the U.S. Federal Reserve System or by wire
transfer of funds to an account designated by LIVECODE, INC., if applicable.
Any and all securities which require transfer shall be accomplished pursuant to
all State and Federal requirements and shall be performed in a timely manner on
or within fifteen days after the Closing Date.
7. LEASE.
At the Closing, LIVECODE, INC. and Lampert will assign to Buyer all its rights
(including the security deposit) under and Buyer will assume all obligations of
LIVECODE, INC. under the Lease (if applicable). At the Closing, LIVECODE, INC.
shall furnish Buyer with an estoppel letter and consent to the assignment of
the Lease from the current lessor under the Lease in form and substance
reasonably satisfactory to Buyer.
8. EQUIPMENT LEASES.
At the Closing, LIVECODE, INC. and Lampert will (if applicable) assign to Buyer
all its rights (including the security deposit) under, and Buyer will assume
all obligations of LIVECODE, INC. under, the Equipment Leases. At the Closing,
if applicable, LIVECODE, INC. shall furnish Buyer with an estoppel letter and
consent to the assignment from each lessor under each Equipment Lease in form
and substance reasonably satisfactory to Buyer. If leases are not assignable
then Buyer hereby assumes all responsibility for same and hold seller harmless.
9. MATERIAL CONTRACTS.
At the Closing, LIVECODE, INC. and Lampert will assign to Buyer all of its
rights under, and Buyer will assume all obligations of LIVECODE, INC. under the
Material Contracts. The assignment of the Material Contracts shall be in form
and substance reasonably satisfactory to Buyer. At the Closing, LIVECODE, INC.
shall furnish Buyer with an estoppel letter and consent to the assignment from
each contracting party, if requested by Buyer.
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10. REPRESENTATIONS AND WARRANTIES OF LIVECODE, INC..
LIVECODE, INC. and Lampert represents and warrants to Buyer as follows, and
agrees that all such representations and warranties shall survive the Closing
hereunder for a period of one (1) years:
a. EXISTENCE AND GOOD STANDING. LIVECODE, INC. is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Florida; it has the requisite corporate power and
authority to own or lease its property and to conduct its business
as now being conducted. The State of Florida is the only
jurisdictions in which LIVECODE, INC. is registered to do business.
b. AUTHORITY RELATIVE TO THIS AGREEMENT AND THE ESCROW AGREEMENT.
LIVECODE, INC. has full corporate power and authority to execute and
deliver this Agreement and the other agreements delivered pursuant
hereto (the "Related Agreements") (collectively, this Agreement and
the Related Agreements are sometimes referred to herein as the
"Closing Documents") and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of the Closing
Documents and the consummation of the transactions contemplated
thereby have been duly and validly adopted and approved by the Board
of Directors and shareholders of LIVECODE, INC. and no other
corporate proceedings on the part of LIVECODE, INC. are necessary to
authorize the Closing Documents or to consummate the transactions
contemplated thereby. The Closing Documents have each been duly and
validly executed and delivered by LIVECODE, INC. and each
constitutes a valid and binding agreement of LIVECODE, INC.
enforceable against LIVECODE, INC. in accordance with its respective
terms.
c. PERMIT REQUIREMENTS. Except as heretofore disclosed in writing by
LIVECODE, INC. to Buyer, to the actual knowledge of LIVECODE, INC.,
no filing with, and no permit, authorization, consent or approval
of, any public body or authority, the absence of which would, either
individually or in the aggregate, have a material adverse effect on
the Assets, or the operations or financial condition of the
Business, is necessary for the consummation by LIVECODE, INC. of the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not (i) violate any provision of the
Certificate of Incorporation or By-Laws of LIVECODE, INC., or, to
the actual knowledge of LIVECODE, INC., any statute, rule,
regulation, order or decree of any public body or authority by which
LIVECODE, INC. or any of the Assets is bound, or to the best
knowledge of LIVECODE, INC. result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default under, any license, franchise, permit, indenture, agreement
or other instrument to which LIVECODE, INC. is a party, or by which
any of the Assets and rights being purchased hereunder is bound.
d. SUBSIDIARIES. LIVECODE, INC. owns no shares or securities of, and
has no ownership interest in, any corporation, partnership, joint
venture, trust, association or other enterprise, other than those
outlined in Exhibit "G", which is conducting the Business or owns or
has any interest in any of the Assets and this Business is presently
being and has heretofore been conducted by LIVECODE, INC.
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e. FINANCIAL STATEMENTS AND NO MATERIAL CHANGES. To the best knowledge
of LIVECODE, INC., date line the Business Financial Statements
fairly present the results of operation of the Business for the
periods covered in accordance with generally accepted accounting
principles consistently applied. To the best knowledge of LIVECODE,
INC., the Business Financial Statements do not contain any untrue
statements of any material fact or omit to state any material fact
necessary in order to make the statements contained in this Section
or therein not misleading. To the best knowledge of LIVECODE, INC.,
the books and records of LIVECODE, INC. relating to the Business
reflect only valid transactions. Except as set forth on Exhibit "H"
attached hereto and hereby made a part hereof, to the best knowledge
of LIVECODE, INC. there has not been any material and adverse change
in the assets or liabilities or in the condition, financial or
otherwise, of the Business and there has not been any change except
in the Ordinary Course of the Business, and, to the actual knowledge
of LIVECODE, INC., no fact or condition exists or is contemplated or
threatened which will cause such a material, adverse change in the
Business in the future.
f. THE LEASE. LiveCode is not a party to any real property lease and
has no interest, equitable or otherwise in any real property.
g. EQUIPMENT. A true, correct and complete list as of the date hereof
of all Equipment containing a description of each item (and
LIVECODE, INC.'s best estimate of the condition thereof) is set
forth on Exhibit "I" attached hereto and hereby made a part hereof.
LIVECODE, INC. has and will have on the Closing Date good and
marketable title and/or valid leasehold rights to all such property,
free and clear of all liens, claims and encumbrances.
h. EQUIPMENT LEASES. A true, correct and complete copy of all-
Equipment Leases, is attached hereto and hereby made a part hereof
as Exhibit "J." LIVECODE, INC. has no agreement with any lessor or
lessee, if applicable, other than as set forth in writing in each
respective lease. To the best knowledge of LIVECODE, INC. and except
as described in Exhibit "J": each such lease is in full force and
effect; all rents and additional rents due to date on each such
lease have been paid; in each case the lessee has been in peaceable
possession since the commencement date set forth in the Exhibit and
is not now in default thereunder; no waiver, indulgence or
postponement of the lessee's obligations thereunder has been granted
by the lessor; and to the best knowledge of LIVECODE, INC. there
exists no event of default or event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the happening
of any further event or condition would become a default under any
such lease; to the best knowledge of LIVECODE, INC. neither the
lessor or the lessee has violated any of the terms or conditions
under any such lease; and to the best knowledge of LIVECODE, INC.
all of the covenants to be performed under any such lease have been
fully performed.
i. MATERIAL CONTRACTS, ETC. Attached hereto and hereby made a part
hereof as Exhibit "K" is a true, correct and complete list of all
Material Contracts, together with copies thereof to the extent the
same are in writing. To the best knowledge of LIVECODE, INC. and
Lampert, LIVECODE, INC. and Lampert is not in default under any
Material Contract and knows of no default by any other party hereto.
No consent or approval of any other party to any Material Contract
is required to transfer LIVECODE, INC.'s rights thereunder to Buyer
pursuant to this Agreement. Attached as part of said Exhibit "L" is
a list of principal suppliers of the Business.
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j. CLIENT LIST. Delivered herewith is a true, correct and complete
list of all clients of LIVECODE, INC. LIVECODE, INC. knows of no
dispute arisen in connection with any of the clients. At Closing,
LIVECODE, INC. will certify the correctness and completeness of the
Client List.
k. TRADEMARKS. Attached hereto and hereby made a part hereof as Exhibit
"L" is a true, correct and complete list of all patents, trademarks,
service marks, trade names, copyrights, licenses, sublicenses,
fictitious names, and agreements pertaining to any of the foregoing,
and any applications for any of the foregoing, used in the business.
LIVECODE, INC. and Lampert is not in default under any agreement
relating to the Marks and knows of no default by any other party
thereto. No consent or approval of any other party is required to
transfer the Marks to Buyer.
l. EMPLOYEE AGREEMENTS AND EMPLOYEE BENEFITS. To the best knowledge of
LIVECODE, INC., and except as set forth in the Business Financial
Statements and on Exhibit "M". (i) LIVECODE, INC. has no obligation,
whether contingent or otherwise, under any employment contract,
consulting agreement, collective bargaining agreement, executive
compensation agreement, personal, services agreement, deferred
compensation agreement, pension plan, retirement plan,
profit-sharing plan, stock purchase plan, stock option plan, group
life insurance, hospitalization insurance, vacation pay plan,
severance pay plan or any other similar agreements or employee
benefit plans or any other arrangement or understanding, whether
written or otherwise, with any employee, independent contractor,
agent, stockholder, or any other person relating to the Business;
(ii) No labor unions are representing or attempting to represent
employees of LIVECODE, INC. or any alleged bargaining unit thereof;
and (iii) LIVECODE, INC. has not agreed to pay any bonuses or made
or agreed to make any increase in the rate of wages, salaries, or
other remuneration of any of its employees, which has not already
become effective without written consent of Miracom Corporation.
m. LIABILITIES. To the best knowledge of LIVECODE, INC. and Lampert and
except as set forth on Exhibit "N" attached hereto and hereby made a
part hereof and except for the "Retained Liabilities, LIVECODE, INC.
has no outstanding or threatened claims against it, or liabilities
or indebtedness, whether fixed, contingent (including potential
product liability claims) or otherwise relating to the Business,
other than liabilities incurred in connection with this transaction.
n. LITIGATION. To the best knowledge of LIVECODE, INC. and Lampert and
except as set forth on Exhibit "P" attached hereto and hereby made a
part hereof, LIVECODE, INC. is not engaged in or a party to, or
threatened with, any legal action or other proceeding before any
court, tribunal or administrative agency, or by any action of any
local or inter exchange carrier or service bureau. To the best
knowledge of LIVECODE, INC., LIVECODE, INC. has complied in all
material respects with all federal, local, state or foreign laws,
rules, regulations and orders applicable to the Business. To the
best knowledge of LIVECODE, INC., LIVECODE, INC. is not under
investigation with respect to any charge concerning any violation of
any law, order, rule, policy or regulation, whether federal, local,
state or foreign, in respect of the Business.
o. INSURANCE. A true and correct list of all policies of insurance
covering any of the Assets
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or otherwise relating to the Business owned by LIVECODE, INC. or in
which LIVECODE, INC. is named as the insured party, including the
amounts thereof, hereto and hereby made a party hereof as Exhibit
"O." Knowledge of LIVECODE, INC. and except as disclosed in Exhibit
"O," all such policies are valid, outstanding and enforceable and
issued by financially sound and responsible insurance companies, and
will remain in full force and effect through the Closing Date;
LIVECODE, INC. maintains insurance of the type and amount adequate
for the conduct of the Business; LIVECODE, INC. has not been refused
any insurance, nor has its coverage been limited, by any insurance
carrier to which it has applied for insurance or with which it has
carried insurance during the last five years.
p. NO DISPOSITION OF ASSETS OR OTHER CHANGES. There has not been since
December 31st, 1998, a sale or any other disposition or distribution
of any Assets of LIVECODE, INC. except those which were made in the
Ordinary Course of Business or which were not, individually or in
the aggregate, material to the Business.
q. COMPENSATION OF EMPLOYEES, ETC. Attached hereto and hereby made a
part hereof as Exhibit "C" is a true, correct and complete list of
all employees, agents and independent contractors who are presently
rendering services with respect to the Business, together with a
statement of the full amount paid to such persons during calendar
year 1998, 1999, a statement of all amounts payable to each such
person in the future, and a statement of the nature of the services
rendered by each such person.
r. LIVECODE, INC. STOCKHOLDERS. David Lampert and Marla Lampert, his
wife, and Daniel Lampert and Gigi Halo, his wife, collectively own
one hundred (100%) percent of all classes of issued outstanding
stock of LIVECODE, INC.. All Lampert's ownership interest, if any,
directly or indirectly, in whole or in part, in any and all Assets,
Goodwill and other rights which are required to be conveyed
hereunder are in fact being conveyed to Buyer.
s. OPERATIONS. Except as set forth in Exhibit "L" attached hereto and
hereby made a part hereof, to the Actual Knowledge of LIVECODE,
INC., no labor disputes or work stoppages involving the Business are
pending or, threatened. To the Actual Knowledge of LIVECODE, INC.,
no customer or supplier of the Business is involved in, or
threatened with or affected by, any labor dispute, arbitration,
lawsuit or administrative proceeding which will adversely affect, or
might reasonably be expected to adversely affect the Business
(financial or otherwise).
t. NO MISLEADING STATEMENTS. Neither the representations of LIVECODE,
INC. and Lampert in this Agreement nor any exhibit, financial
statement, list or other document delivered by LIVECODE, INC. and
Lampert pursuant hereto contain any untrue material statement or
omit to state a material fact necessary in order to make the
statements contained therein or herein not misleading. No
information material to this transaction necessary to make any of
the representations and warranties herein contained not misleading
has been from, or has not been disclosed in writing to, Buyer.
11. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to LIVECODE, INC. as follows, and agrees that all
such representations and warranties shall survive the Closing hereunder.
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a. EXISTENCE AND GOOD STANDING. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada; it has the requisite corporate power and authority to own or
lease its property and to conduct its business as contemplated
herein.
b. AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has full corporate power
and authority to execute and deliver the Closing Documents and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of the Closing Documents and the consummation
of the transactions contemplated thereby have been duly and validly
authorized and approved by the Board of Directors of Buyer, and no
other corporate proceedings on the part of Buyer are necessary to
authorize the Closing Documents or to consummate the transactions
contemplated thereby. The Closing Documents have each been duly and
validly executed and delivered by Buyer and each constitutes a valid
and binding agreement of Buyer enforceable against Buyer in
accordance with its respective terms. The execution and delivery of
the Closing Documents and the consummation of the transactions
contemplated thereby will not (i) violate any provision of the
Certificate of Incorporation or ByLaws of Buyer, or, to the Actual
Knowledge of Buyer, any statute, rule, regulation, order or decree
of any public body or authority by which Buyer or any of the Assets
is bound, or (ii) to the Best Knowledge of Buyer result in a
violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, any license, franchise,
permit, indenture, agreement or other instrument to which Buyer is a
party, or by which any of the Assets is bound.
c. COMPLIANCE WITH SECURITIES LAWS. Without limitation the generality
of any of the previous representations and warranties, all of the
offers and sales of the securities of Buyer by Buyer as issuer and
its affiliates and agents, and the disclosure of all information
concerning Buyer, has been in compliance with all state and federal
securities laws, rules and regulations, including but not limited to
the Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended, and Section 517, Florida statutes, and the
rules and regulations promulgated under each of the foregoing.
12. LIABILITIES.
a. Buyer shall assume and pay for the following disclosed liabilities
and obligations in a timely manner as required by law, prior
agreement between LIVECODE, INC. and third parties, and/or in the
ordinary course of Buyer's business. These disclosed liabilities and
obligations constitute the Assumed Liabilities:
i. Those accounts payable listed on Exhibit "BB" attached hereto
and hereby made a part hereof.
ii. Liabilities under Leases from and after the Cut Off Time.
iii. Liabilities under the Equipment Leases from and after the Cut
Off Time.
iv. Liabilities under the Material Contracts from and after the
Cut Off Time.
13. LIVECODE, INC. INDEMNITY.
a. INDEMNITY. LIVECODE, INC. and Lampert agree to indemnify, defend and
hold harmless Buyer from and against any and all demands, claims,
actions, causes of action, debts, dues, judgments, awards,
assessments, losses, damages, liabilities, costs and expenses,
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of any type or nature arising out of the Business, including without
limitation interest, penalties, attorneys' fees (at trial and
appellate levels) and expenses asserted against, resulting to,
imposed upon or incurred by Buyer arising out of or resulting from
(i) the breach of any representation, warranty or covenant made by
LIVECODE, INC. contained in this Agreement, (ii) the Retained
Liabilities, (iii) the failure of LIVECODE, INC. to qualify to do
business in any State in which LIVECODE, INC. is legally required to
do so, (iv) the failure of LIVECODE, INC. to comply with any Bulk
Sales Act in effect and applicable to LIVECODE, INC., and (iv) any
action, inaction, misfeasance or malfeasance of LIVECODE, INC.
attributable to the period of time ending at the Cut Off Time
whether or not damage or injury occurs prior to the Cut Off Time.
MONETARY OF INDEMNITY. Buyer shall not make a claim for indemnity
for any amount less than One Thousand ($1,000.00) Dollars in the
aggregate. The obligation of the indemnifying parties shall not
exceed in the aggregate Five Thousand ($2,500.00) Dollars.
14. BUYER'S INDEMNITY.
Buyer agrees to indemnify, defend and hold harmless LIVECODE, INC. its officers
and assigns from and against any and all demands, claims, actions, causes of
action, debts, dues, judgments, awards, assessments, losses, damages,
liabilities, costs and expenses, of any type or nature, including without
limitation interest, penalties, attorneys' fees (at trial and appellate levels)
and expenses asserted against, resulting to, imposed upon or incurred by
LIVECODE, INC., arising out of or resulting from (i) the breach of any
representation, warranty or covenant made by Buyer contained in this Agreement
(ii) the Assumed Liabilities, and (iii) the conduct of the Business by Buyer
after the Closing Date.
15. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of either party with respect to claims for
which it is to be indemnified hereunder resulting from the assertion of by
third parties shall be subject to the following terms and conditions:
a. NOTICE. The Claimant believing itself entitled to indemnify (the
"Claimant") will give the party which it believes must "Indemnitor")
any such notice of indemnify it (the indemnifiable claim, and the
Indemnitor will undertake the defense thereof by counsel chosen by
it and will advise the Claimant concerning such defense on a timely
basis during the course thereof.
b. FAILURE TO DEFEND. In the event that the Indemnitor, within ten (10)
days from notice or any indemnifiable claim, fails to a defense, the
Claimant engage counsel and commence will, upon further notice to
the Indemnitor have the right to immediately undertake the defense,
compromise or settlement of such indemnifiable claim on behalf of
and for the account and risk of the Indemnitor.
c. SETTLEMENT BY INDEMNITOR. Indemnitor may at anytime settle any
indemnifiable claim at its sole cost and expense. Indemnitor shall
be required to obtain the prior written consent of the Claimant only
if Claimant reasonably believes that the settlement of the
indemnifiable claim may materially and adversely affect the ability
to do business of the Claimant or otherwise prejudice the Claimant
in its business operations. Notwithstanding anything contained
herein to the contrary, the consent of Claimant shall be required in
the event a settlement to be entered into the Indemnitor requires
the admission of any wrongdoing on the
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part of the Claimant or in the event that any third party in order
to settle such indemnifiable claim requires the execution of any
document by the Claimant.
Claimant shall receive copies of all proposed settlement documents
and shall have a right to review and comment thereon and consult
with Indemnitor concerning the term of such proposed settlement
documents.
d. LIMITATION OF TIME. Any claim for which indemnity is sought
hereunder shall be brought within two years from the date that such
claim matures, but in no vent later than sixty (60) days following
the expiration of the representations and warranties. The date of
maturity of the claim shall be the later of (i) the date upon which
the claimant becomes aware of the claim, (ii) the date upon which
the claimant should have become aware of the claim in the exercise
of reasonable diligence, or (iii) the date upon which the last
element necessary for the assertion of the claim takes place.
16. TERMINATION.
a. WITHOUT DEFAULT. This Agreement may be terminated at any time prior
to the Closing Date without liability of any party.
i. By mutual consent of the Boards of Directors of LIVECODE, INC.
and Buyer; or
ii. If the transactions contemplated by this Agreement shall not
have been consummated on or before May 28, 1999, provided
that the transactions which were not due to the breach or
default of the party seeking to were not consummated
terminate. in the event of termination by Buyer, or by
LIVECODE, INC., or both as permitted, written notice thereof
shall forthwith be given to the other and this Agreement
shall terminate without further action by any of the parties
hereto.
If this Agreement is terminated as permitted herein:
a) Upon request therefore, each party will redeliver all
documents, work papers and other material of any other party
relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party
furnishing the same; and
b) Each party hereto shall have no liability or further
obligation to the other party to this Agreement with respect
to the matters covered by this Agreement except as provided
in paragraph 17.
b. AS A RESULT OF DEFAULT. This Agreement may be terminated at any time
prior to the Closing Date as a result of the default of a party
without a prior default by the other party upon written notice to
the defaulting party by the non-defaulting party after the
expiration of any applicable cure period set forth herein. Reference
is made to paragraph 20 of this Agreement containing events of
default by the parties as well as the remedies of the parties
thereafter.
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17. COVENANTS OF THE PARTIES.
The parties covenant to one another as follows:
a. ACCESS TO INFORMATION. Between the date of this Agreement and the
Closing Date, LIVECODE, INC. and Lampert will facilitate the access
of representatives to Buyer during normal business hours and in such
a manner as not to unduly disrupt normal activities of LIVECODE,
INC..
b. GOVERNMENTAL AND OTHER APPROVALS. The parties will cooperate in the
preparation and filing by any party of such applications and/or
amendments thereto as shall be necessary or desirable in order to
consummate the transactions contemplated by this Agreement as soon
as reasonably practicable following the date of this Agreement and
will use their best efforts to have such applications and/or
amendments thereto approved.
c. ADDITIONAL AGREEMENTS. Subject to tie terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable
best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. In case at any time
after the Closing Date any further action is necessary or desirable
to carry out the purposes of this Agreement, each party shall take
all such necessary action.
d. CONSENTS. Each party will use their best efforts to obtain consents
of any third parties and governmental authorities, if any, which are
necessary for the consummation of the transactions contemplated by
this Agreement.
e. DISCLOSURE SUPPLEMENTS. From time to time prior to the Closing Date,
each party shall supplement, amend and update all Exhibits relating
to its' respective representations and warranties contained herein
with respect to any matter hereafter arising which comes to its
attention and which may effect the truth of such representation and
warranties.
f. PUBLIC ANNOUNCEMENTS. Except as may be required by law or
regulation, no public disclosure relating to the transactions
contemplated by this Agreement (including disclosure intended for
shareholders and employees of the parties other than those for whom
disclosure is necessary to carry out the proposed transactions or as
required by law, rule or regulation) shall be made by any party
prior to the Closing unless the other party shall have approved such
Disclosure in advance in writing. Except as may be required by law
or regulation, any press release approved by LIVECODE, INC. and
Buyer will not contain the price of this Agreement. LIVECODE, INC.
will cooperate with Buyer after the Closing in the issuance of
letters to suppliers, clients, media and all other persons and
entities with whom LIVECODE, INC. has been conducting business.
g. ACCOUNTS. All communications and funds received by LIVECODE, INC.
pertaining to the Business shall be referred to Buyer. Neither
LIVECODE, INC. nor Lampert shall take any act which is intended to
cause the loss of good will of a client of LIVECODE, INC. or Buyer
or which otherwise adversely affects Buyer or the Business.
h. USE OF COUNSEL. The parties confirm and agree that both intend to
utilize to be determined, as their corporate counsel for various
aspects of their business. Although they do not consider that the
use of this firm and its lawyers would be a conflict of interest
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between them, they confirm that each party may utilize the firm and
its lawyers as its counsel (other than in connection with a dispute
between them).conduct of Business Prior to the Closing.
18. DATE.
During the period from prior to the Closing Date (the "Transition Period"),
LIVECODE, INC. will conduct the Business in its ordinary and usual course.
During the Transition Period, funds sufficient to pay the payroll and Trade
Accounts Payable shall be deposited in the LIVECODE, INC. account as necessary
by Buyer. During the Transition Period, LIVECODE, INC. will convert all
accounting functions LIVECODE, INC. to Miracom. All work in progress, all
receivables, and entitlements held by LIVECODE, INC. shall be transferred to
Buyer at the Closing. Within twelve months after the closing, LIVECODE, INC.
shall execute and Buyer shall file with the Secretary of State of Florida
Articles of Amendment to the Articles of Incorporation of LIVECODE, INC.
reflecting the changes herein.
19. COSTS.
Whether or not the Closing is consummated, each party shall bear its own costs
and expenses in connection with the negotiation, execution and performance of
this Agreement and the transactions contemplated hereby except as provided
herein.
20. DEFAULT PRIOR TO THE CLOSING.
a. DEFAULT BY LIVECODE, INC. The failure of LIVECODE, INC. or Lampert
to comply in all material respects without a prior material breach
or default by Buyer with any provision herein or in any document
delivered in connection herewith shall be an event of default by
LIVECODE, INC. hereunder.
b. DEFAULT BY BUYER. The failure of Buyer to comely in all material
respects without a prior material breach or default by LIVECODE,
INC. with any provision herein or in any document delivered in
connection herewith shall be an event of default by Buyer hereunder.
c. REMEDIES OF LIVECODE, INC. If an event of default by Buyer shall
have occurred and shall not have been cured within five (5) days
from written notice to Buyer from LIVECODE, INC., without a prior
uncured material default by LIVECODE, INC., LIVECODE, INC. shall be
entitled to pursue all legal and equitable rights and remedies
available under law including, but not limited to rights to
terminate this Agreement, to recovery of damages, and to specific
performance of this Agreement.
d. REMEDIES OF BUYER. If an event of default by LIVECODE, INC. or
Lampert shall have occurred and shall not have been to be cured
within five (5) days from written notice to LIVECODE, INC. or
Lampert from Buyer, without a prior uncured material default by
Buyer, pursue all legal and equitable rights and remedies available
under Buyer shall be entitled to applicable law including, but not
limited to rights to terminate this Agreement, to recovery of
damages, and to specific performance of this Agreement.
21. CONSENT TO SERVICE JURISDICTION AND VENUE.
LIVECODE, INC., Lampert and Buyer consent the jurisdiction of any court
geographically situated in
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Orange County, Florida, whether state or Federal, in connection with the
subject matter of any dispute arising under this Agreement and agree further
that service of process or notice in any such action, suit or proceeding shall
be effective to confer personal jurisdiction if given in the manner permitted
in this Agreement for notices hereunder.
22. CLOSING ITEMS.
a. Buyer's Items At the Closing, Buyer shall execute and deliver to
LIVECODE, INC., Lampert the following:
i. The Purchase Price or Miracom shares as may be required.
ii. Assumption Agreement in the form attached hereto and hereby
made a part hereof as Exhibit "S" (the "Assumption
Agreement").
iii. A corporate resolution in the attached hereto and made a part
hereof as Exhibit "T".
iv. A current Certificate of Good standing of Buyer as a Nevada
corporation from the Secretary of State of Nevada.
v. A Certificate of good standing from the Secretary of State of
Florida, certifying that Buyer is authorized to do business
in Florida.
b. LIVECODE, INC. and Lampert's items. At Closing, LIVECODE, INC. and
Lampert, as applicable, shall execute and deliver to Buyer the
following:
i. A Bill of Sale in the form set forth as Exhibit "U" attached
hereto and hereby made part hereof transferring all of the
Assets to Buyer.
ii. The originals of all contracts which relate to any liability
or obligation of LIVECODE, INC. and Lampert which is to be
assumed by Buyer hereunder.
iii. The (3) three employment Agreement duly executed by MIRACOM.
iv. An Omnibus Assignment in the form attached hereto and hereby
made a part hereof as Exhibit "V" together with such separate
assignments of the Marks as shall be deemed necessary by
Buyer to vest the Marks in Buyer of record.
v. A list of all Business suppliers, customers and employees
certified to be true, complete and correct by LIVECODE, INC.
and Lampert.
vi. List of all existing Material Contracts certified to be true,
complete and correct by LIVECODE, INC. and Lampert.
vii. A list of all Marks certified to be true, complete and
correct by LIVECODE, INC. and Lampert.
viii. A list of all clients of LIVECODE, INC. and Lampert certified
to be true,
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complete and correct by LIVECODE, INC. and Lampert.
ix. A corporate resolution in the form attached hereto and hereby
Made a part hereof as Exhibit "W".
x. A current Certificate of Good Standing from Secretary of
Florida.
xi. An Indemnity Agreement from LIVECODE, INC, and Lampert
Attached hereto as Exhibit "Y".
23. COOPERATION WITH EMPLOYEES.
Buyer shall be free to conduct interviews with all employees of LIVECODE, INC.
to determine which of these employees Buyer will offer employment. LIVECODE,
INC. will use its reasonable best efforts to obtain full cooperation from the
employees utilized in the Business for such interviews. Buyer shall be free to
offer employment to such of the employees of LIVECODE, INC. engaged in the
Business as Buyer shall determine. Buyer has no obligation to employ any
employees of LIVECODE, INC. and has not agreed to assume any obligations of
LIVECODE, INC. to such employees. Buyer shall not, by employing any of said
persons or as a result of anything set forth herein, assume any liabilities in
connection with the prior employment of such persons by LIVECODE, INC.
including, but not limited to, liability for pension plan payments,
unemployment compensation, salary, bonuses, commissions or any other form of
remuneration and, all of the employees of LIVECODE, INC. shall for purposes of
this Agreement be deemed to have been terminated by LIVECODE, INC. as of the
Cut Off Time.
24. MISCELLANEOUS.
a. NOTICES. All notices which any party may be required or permitted to
give on any other cart in connection with this Agreement shall be in
writing and deemed sufficient if either mailed by registered or
certified mail postage prepaid (return receipt requested) or
delivered by hand to the party whom such notice is required or
permitted to be given at the address set forth below. Service of any
such notice shall be deemed complete on the date of actual delivery
as shown by the addressee's registry or certification receipt, or
when received if delivered by hand, or five (5) days after the post
office first notifies an intended recipient of an attempt to deliver
such notice. Any party hereto may from time to time, by notice in
writing served upon any other as aforesaid, designate a different
mailing address or a different person to whom all such notices are
thereafter to be addressed; provided that any and all such addresses
shall be street addresses, or post office boxes. All notices to
Buyer shall be addressed as follows:
To LiveCode, Inc.:
Dave Lampert
LiveCode Inc.
P.O. Box 160606
Altamonte Springs, Florida 32716-0606
Dan Lampert
LiveCode Inc.
P.O. Box 160606
Altamonte Springs, Florida 32716-0606
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To Miracom, Inc.:
Miracom, Inc., a Nevada Corporation
1180 Spring Centre South boulevard, Suite 310
Altamonte Springs, Florida 32714
25. MULTIPLE COUNTERPARTS. This Agreement -may be signed in multiple
counterparts on facsimile paper or with original but with facsimile transmitted
signatures. Documents with facsimile signatures shall be considered original
documents and binding on the parties to this Agreement.
With a copy to.
LIVECODE, INC., A Florida Corporation
P. 0. Box 160606
Altamonte Springs, Florida 32716-0606
_______________________________By Its:__________________
Miracom, a Nevada Corporation
1180 Spring Centre South Boulevard, Suite 310
Altamonte Springs, Florida 32714
_______________________________By Its:__________________
All notices to LIVECODE, INC. shall be addressed as follows:
Dave Lampert
LiveCode, Inc.
P. 0. Box 160606
Altamonte Springs, Florida 32716-0606
Dan Lampert
LiveCode, Inc.
P. 0. Box 160606
Altamonte Springs, Florida 32716-0606
b. GOVERNING LAW. The laws of the State of Florida (without reference
to laws applicable to conflicts of law) shall govern the
interpretation of this Agreement.
c. MODIFICATION AND WAIVER. No provision of this Agreement shall be
amended, waived or modified except by an instrument in writing
signed by the parties hereto.
d. SURVIVAL. All covenants, agreements, representations and warranties
made herein, including but not limited to al agreements to purchase
specific portions of the Business shall be deemed to have been
material and relied upon by each party and shall survive the
execution and delivery of this Agreement.
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e. HEADINGS. All sections and headings of this Agreement are inserted
for convenience only and shall not affect the construction or
interpretation hereof.
f. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be
an original, but all counterparts shall together constitute one and
the same instrument.
g. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties and no promises, inducements,
assurances, guaranties, warranties, representations, or
solicitations, either expressed or implied, oral or written, have
been made other than as expressly set forth herein. This Agreement
supersedes all such promises, inducements, assurances, guaranties,
warranties, representations, or solicitations, either expressed or
implied, oral or written, whenever made.
h. SEVERABILITY. Inapplicability or unenforceability of any provision
of this Agreement or any instrument executed and delivered pursuant
thereto shall not limit or impair the operation or validity of any
other provision of this Agreement or any other such instrument.
i. EXCLUSIVENESS OF AGREEMENT. This Agreement is made for the sole
benefit and protection of the parties and the and their respective
successors and assigns, and no other person or entity shall have any
right of action hereunder or right to rely hereon.
j. VENUE. The parties hereby waive the privilege of venue and agree
that the venue of all litigation arising here from shall be Orange
County, Florida, and that the courts of the State of Florida shall
have exclusive jurisdiction of all such litigation.
k. WAIVER OF DEFAULTS. The waiver by any party of any breach or default
by any other party under any of the terms of this Agreement, shall
not be deemed to be, nor shall the same constitute a waiver of any
subsequent breach or default on the part of any other party.
l. AGREEMENT NOT RECORDABLE. This Agreement is not recordable and shall
not be recorded by any party hereto.
m. INTERPRETATION OF AGREEMENT. This Agreement has been negotiated by
each of the parties both as to its substance and as to its form.
There shall not be applied a rule of law or rule of construction
whereby this Agreement or any of the terms or provisions hereof or
documents attached hereto shall be construed in favor of or against
either party by reason of the stationery upon which it was finalized
or the attorney for the party by whom it was prepared. The language
of this Agreement shall be construed according to its fair meaning
and not strictly for or against any party.
n. CONSTRUCTION OF AGREEMENT. All words in this Agreement refer to
whatever number or gender the context requires; if more than one
party or person is referred to, their obligations and liabilities
shall be joint and several. All the terms and words used in this
Agreement, regardless of the number and gender in which they are
used, shall be deemed and construed to include any other number
(singular or plural) or any other gender (masculine, feminine or
neuter) as the context or sense of this Agreement, or any section or
clause hereof may require. The locative adverbs "herein,"
"hereunder," "hereto," "hereinafter" and the like
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words wherever the same appear therein, mean and refer to this
Agreement in its entirety and not to any specific paragraph, section
or subsection hereof unless otherwise expressly designated in
context.
o. ATTORNEYS' FEES. In the event any litigation, mediation,
arbitration, or controversy between the parties hereto arise out of
or in connection with this Agreement or the related Agreements, the
prevailing party in such litigation, mediation, arbitration, or
controversy shall be entitled to recover from the other party all
reasonable attorneys' fees, expenses, and suit costs.
IN WITNESS WHEREOF, the partakes have executed this Agreement as of the date
set forth on the first page hereof.
/s/ By Its: President
- -------------------------------------
LIVECODE, INC., A Florida Corporation
P. 0. Box 160606
Altamonte Springs, Florida 32716-0606
/s/ By Its: President
- -------------------------------------
Miracom, a Nevada Corporation
1180 Spring Centre South Boulevard, Suite 310
Altamonte Springs, Florida 32714
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<PAGE> 1
EXHIBIT 6.17
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") entered into as of
the 21st day of October, 1999 by and between FLEX ACQUISITION, INC., a Florida
corporation (the "TRANSITORY COMPANY"), and a wholly-owned subsidiary of MIRACOM
CORPORATION, a Nevada corporation ("MIRACOM"), and FLEXRADIO, INC. a Florida
corporation (the "TARGET"), and the Shareholders of the Target, the names,
addresses and respective number of shares held by each Shareholder are stated on
SCHEDULE 5.3 attached hereto, which Schedule is incorporated herein by this
reference (collectively, the Target Shareholders shall be known as the
"SHAREHOLDERS").
WITNESSETH:
WHEREAS, this Agreement contemplates a transaction in which ultimately
Miracom will acquire all of the outstanding capital stock of Target for
6,200,000 shares of Miracom common stock, $.001 par value (the "CONSIDERATION
SHARES") through a reverse subsidiary merger of the Transitory Company into the
Target after which the Target shall survive. This transaction is intended to
qualify as a reorganization under Section 368(a)(2)(E), or in the case that the
transaction contemplated hereby fails to comply with such section with any other
subsection of Section 368 of the Internal Revenue Code of 1986, as amended (the
"CODE"); and
WHEREAS, after the completion of the transactions contemplated by this
Agreement, the Transitory Company shall be dissolved and the Target shall
survive as a subsidiary of Miracom in accordance with the provisions contained
in Section 368 of the Code.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein set forth, the parties agree as follows:
SECTION 1 - DEFINITIONS
For the purposes of this Agreement, the following terms have the
meanings set forth below:
1.1 "AFFILIATE" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise. In the case of an individual,
"Affiliate" shall include such Person's spouse, ancestors and descendants
(whether natural or adopted) and any other individual related by marriage to
such Person.
1.2 "CODE" means the Internal Revenue Code of 1986, as amended.
<PAGE> 2
1.3 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.4 "GAAP" means Generally Accepted Accounting Principals as such are
amended from time to time.
1.5 "INSIDER" means, with respect to any Person, any officer, director,
Shareholder, partner or Affiliate.
1.6 "KNOWLEDGE" means, with respect to a Person, (a) the actual
knowledge of such Person (which includes the actual knowledge of all officers,
directors and executive employees of such Person) and (b) the knowledge which a
prudent business person would have obtained in the conduct of his or her
business after making reasonable inquiry and exercising reasonable diligence
with respect to the particular matter in question.
1.7 "LIENS" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereon, any sale of
receivables with recourse against the Company or any Affiliate, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased under a lease which is not in the nature of a conditional sale
or title retention agreement, or any subordination arrangement in favor of
another Person (other than any subordination arising in the ordinary course of
business).
1.8 "LOSS" means, with respect to any Person, any diminution in value,
consequential or other damage, liability, demand, claim, action, cause of
action, cost, damage, deficiency, Taxes, penalty, fine or other loss or expense,
whether or not arising out of a third party claim, including all interest,
penalties, reasonable attorneys' fees and expenses and all amounts paid or
incurred in connection with any action, demand, proceeding, investigation or
claim by any third party (including any governmental entity or any department,
agency or political subdivision thereof) against or affecting such Person or
which, if determined adversely to such Person, would give rise to, evidence the
existence of, or relate to, any other Loss and the investigation, defense or
settlement of any of the foregoing, together with interest thereon (at
prevailing market interest rates at the time) from the date on which such Person
provides the written notice of the related claim as described in this Agreement
through and including the date on which the total amount of the claim, including
such interest, is recovered or recouped pursuant to this Agreement.
1.9 "MATERIAL ADVERSE EFFECT" means, as to any Person, any material
adverse effect on the business, financial condition, operations, results of
operations, employee relations, customer or supplier relations, assets or future
prospects of such Person.
1.10 "ORDINARY COURSE OF BUSINESS" means, with respect to any Person,
the ordinary course of that Person's business consistent with past practice
(including, without limitation, with respect to collection of accounts
receivable, purchases of inventory and supplies, repairs and
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maintenance, payment of accounts payable and accrued expenses, levels of capital
expenditures and operation of cash management practices generally).
1.11 "PARTY" OR "PARTIES" means any party or parties to this Agreement,
as the case may be, first stated at the beginning of this Agreement.
1.12 "PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
1.13 "PROPRIETARY RIGHTS" means all (i) patents, patent applications,
patent disclosures and inventions, (ii) trademarks, service marks, trade dress,
trade names, logos, Internet domain names and corporate names and registrations
and applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, source code and object code, data, data bases and
documentation thereof, (vi) trade secrets and other confidential information
(including, without limitation, ideas, formulas, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial and marketing plans and customer
and supplier lists and information), (vii) other intellectual property rights
and (viii) copies and tangible embodiments thereof (in whatever form or medium).
1.14 "PRO RATA SHARE" means, with respect to any Shareholder, a
fraction, the numerator of which is the number of shares of common stock of the
Target owned by such Shareholder at such time the Shareholder exchanges such
Shareholder's common stock of the Target for such Shareholders' respective share
of the Consideration Shares, and the denominator of which is 322,581,
representing all of the issued and outstanding capital stock of Target.
1.15 "RESTRICTED SECURITIES" means the Consideration Shares issued to
the Shareholders hereunder, and any securities issued with respect to any such
securities by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) otherwise transferred and new certificates for them not bearing any
Securities Act legend have been delivered by the Company. Whenever any
particular securities cease to be Restricted Securities, the holder thereof
shall be entitled to receive from the Company, without expense, new securities
of like tenor not bearing a Securities Act legend.
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1.16 "SECURITIES AND EXCHANGE COMMISSION" includes any governmental
body or agency succeeding to the functions thereof.
1.17 "SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
1.18 "SHAREHOLDERS" shall mean collectively and individually all the
shareholders of the Target, Scott A. Anderson, individually, and to the extent
such Shareholder of Target is a business organization in any form whatsoever,
such entity's partners, shareholders, limited partners or beneficial interest
holders as the case may be. Such term "Shareholders" shall at a minimum include
all the parties, listed on SCHEDULE 5.3 "Shareholders of FlexRadio, Inc.",
attached hereto.
1.19 "SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
1.18 "TAX RETURNS" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
1.19 "TAXES" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, or other tax, fee, assessment or charge of any
kind whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
1.20 "TREASURY REGULATIONS" means the United States Treasury
Regulations promulgated pursuant to the Code.
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SECTION 2 - THE MERGER
2.1 THE MERGER. On and subject to the terms and conditions of this
Agreement, the Target will merge with and into the Transitory Company (the
"MERGER") at the Effective Time (defined below). The Target shall be the
corporation surviving the Merger (the "SURVIVING COMPANY").
2.2 EFFECT OF MERGER.
(a) GENERAL. The Merger shall become effective at the time
(the "EFFECTIVE TIME") the Target and the Transitory Company file the Articles
of Merger with the Department of State of the State of Florida. The Merger will
have the effect set forth in the Florida Business Corporation Act. The Surviving
Company may, at any time after the Effective Time, take any action (including
executing and delivering any document) in the name and on behalf of either the
Target or the Transitory Company in order to carry out and effectuate the
transactions contemplated by this Agreement.
(b) SURVIVING COMPANY. At the Effective Time of the Merger,
the Articles of Incorporation, By-Laws, directors and officers of the Surviving
Company shall be identical to those of the Target as in effect immediately prior
to the effectiveness of such Merger.
(c) STATUS AND CONVERSION OF SHARES. At the Effective Time of
the Merger:
(i) Each share of capital stock held by the Target as
treasury stock immediately prior to the effectiveness of the Merger
shall be canceled and extinguished, and no payment or issuance of any
consideration shall be payable or shall be made in respect thereof;
(ii) Each share of capital stock of the Transitory
Company outstanding immediately prior to the effectiveness of the
Merger shall be converted into and shall become one (1) share of common
stock of the Surviving Company; and
(iii) Each share of capital stock of the Target
issued and outstanding immediately prior to the Effective Time of the
Merger (the "TARGET STOCK") shall be canceled and extinguished and
converted into the right to receive a proportionate amount of the
Consideration Shares payable in respect of all of the outstanding
shares of such Target Stock pursuant to Section III of this Agreement.
Such consideration shall be paid and delivered to the Shareholders, as
the only holders of the outstanding Target Stock, upon surrender to the
Surviving Company of the certificates, representing such shares of
outstanding Target Stock at the time and place of the Closing (defined
below). Upon receipt of the certificates representing the Target Stock,
such certificates shall be delivered to Miracom by the Surviving
Company.
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(d) BOOKS AND RECORDS. On the Closing Date (defined below),
the Shareholders shall deliver, and shall cause the Target to deliver, to
Miracom all of the stock books, records and minute books of the Target, all
financial, accounting and tax books and records of the Target, all Proprietary
Rights of the Target, and all supplier, client, customer, sales and other
business records of the Target.
SECTION 3 - MERGER CONSIDERATION
In consideration for the Shareholders' transfer to the Transitory
Company of 100% of the issued and outstanding Target Stock, Miracom shall
exchange 6,200,000 Consideration Shares with the Shareholders for all of the
Shareholders' Target Stock. The Consideration Shares shall be issued to the
Shareholders Pro Rata in accordance with their respective ownership of the
Target immediately preceding the date of this Agreement.
SECTION 4 - CLOSING
4.1 THE CLOSING. The closing of the Merger (the "Closing") shall take
place at the offices of Greenberg Traurig, P.A., 111 North Orange Avenue, 20th
Floor, Orlando, Florida 32801, commencing at 1:00 p.m. local time on the second
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Parties may mutually determine
(the "Closing Date"); provided, however, that the Closing Date shall be no later
than October 21, 1999.
4.2 At the Closing, Miracom shall deliver to the Shareholders, stock
certificates representing such Shareholders' Pro Rata respective share of the
Consideration Shares for each Shareholder's respective share of Target Stock.
4.3 At the Closing, the Surviving Company shall deliver to Miracom
certificates, registered in the names of the Shareholders, representing all the
issued and outstanding shares of Target Stock which shall constitute all of the
outstanding shares of Capital Stock of the Target. From time to time, at
Miracom's request, whether at or after the Closing and without further
consideration, the Surviving Company and the Shareholders will execute and
deliver such further instruments of conveyance and transfer and take such other
actions as Miracom may reasonably require to more effectively convey and
transfer to the Target and/or Miracom all of the outstanding Target Stock.
4.4 At the Closing, (a) the Target will deliver to Miracom and the
Transitory Company the certificates, instruments, and documents referred to in
this Agreement, (b) Miracom and the Transitory Company will deliver to the
Target the certificates, instruments, and documents referred to in this
Agreement, and (c) the Target and the Transitory Company will file with the
Secretary of State of the State of Florida Articles of Merger in a form
satisfactory to their counsel.
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SECTION 5 - REPRESENTATIONS AND WARRANTIES OF TARGET AND THE SHAREHOLDERS
As a material inducement to Miracom and the Transitory Company to enter
into this Agreement, the Shareholders hereby jointly and severally represent and
warrant to the Transitory Company and Miracom that:
5.1 ORGANIZATION AND CORPORATE POWER. The Target is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and is qualified to do business in every jurisdiction in which its
ownership of property or conduct of business requires it to qualify, which
jurisdictions are listed on SCHEDULE 5.1 attached hereto. The Target possesses
all requisite corporate power and authority and all material licenses, permits
and authorizations necessary to own, lease and operate its properties, to carry
on its businesses as now conducted and presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement.
5.2 AUTHORIZATION OF TRANSACTIONS; TITLE TO TARGET STOCK. The Target
and the Shareholders have duly authorized, executed and delivered this
Agreement. This Agreement constitutes a valid and binding obligation of the
Target and the Shareholders, enforceable in accordance with its terms. The
Shareholders hereby warrant that they are the only Shareholders of the Target
and each Shareholder warrants that such Shareholders' share of the Target Stock
is (and on the Closing Date will be) free of any and all encumbrances, claims,
options, calls and assessments in any form whatsoever and that the Shareholders'
share of the Target Stock may be transferred without any other action, pursuant
to the terms of this Agreement.
5.3 CAPITALIZATION. The authorized capital stock of the Target consists
of 5,000,000 shares of common stock, par value $.01 per share, of which 10,000
shares are issued and outstanding and are owned beneficially and of record as
set forth on SCHEDULE 5.3 attached hereto. The Target has no outstanding stock
or securities convertible or exchangeable for any shares of its capital stock or
containing any profit participation features, nor does it have outstanding any
rights or options to subscribe for or to purchase its capital stock or any stock
or securities convertible into or exchangeable for its capital stock or any
stock appreciation rights or phantom stock plans. The Target is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock. All of the outstanding shares of the Target's
capital stock are validly issued, fully paid and nonassessable. There are no
agreements between the Target's Shareholders with respect to the voting or
transfer of the Target's capital stock or with respect to any other aspect of
the Target's affairs.
5.4 ABSENCE OF CONFLICTS. The execution and delivery by the Target of
this Agreement and the fulfillment of and compliance with the terms hereof, do
not and shall not;
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(a) conflict with or result in a breach of the terms,
conditions or provisions of;
(b) constitute a default under;
(c) result in the creation of any lien, security interest,
charge or encumbrance upon the Target's capital stock or assets pursuant to;
(d) give any third party the right to modify, terminate or
accelerate any obligation under;
(e) result in a violation of; or
(f) require any authorization, consent, approval, exemption or
other action by or notice or declaration to, or filing with,
any court or administrative or governmental body or agency pursuant to, its
charter or bylaws, or any law, statute, rule or regulation to which it is
subject, or any agreement, instrument, order, judgment or decree to which it is
subject.
5.5 SUBSIDIARIES, INVESTMENTS. The Target does not own or hold any
rights to acquire any shares of stock or any other security or interest in any
other Person, and the Target has never had any Subsidiary.
5.6 FINANCIAL STATEMENTS; LIABILITIES.
(a) FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 5.6(A)
are copies of the Target's unaudited balance sheet as of September 30, 1999 (the
"LATEST BALANCE SHEET") and the related statements of income and cash flows from
its inception date to September 30, 1999. Each of the foregoing financial
statements (including in all cases the notes thereto, if any) (the "FINANCIAL
STATEMENTS") is accurate and complete, is consistent with the Target's books and
records (which, in turn, are accurate and complete), presents fairly the
Target's financial condition and results of operations as of the times and for
the periods referred to therein, and has been prepared in accordance with GAAP,
subject to changes resulting from normal year-end adjustments for recurring
accruals (which shall not be material individually or in the aggregate) and to
the absence of footnote disclosure.
(b) LIABILITIES.
(i) Except as set forth in SCHEDULE 5.6(B) hereto
(and to the extent not disclosed in other Schedules to this Agreement),
the Target has no separate indebtedness or payable outstanding which
individually exceed $5,000.00 or outstanding indebtedness or payables
which in the aggregate exceed $10,000.00. There are no material
contingent or actual liabilities of whatever nature, except as set
forth in SCHEDULE 5.6(B), that are not
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disclosed in the Financial Statements, including but not limited to
liabilities for Taxes or payments of any kind due and payable to any
level of government.
(ii) All indebtedness and accounts payable of the
Target as of the date of this Agreement are set forth on SCHEDULE
5.6(B) hereto (to the extent not disclosed in other Schedules to this
Agreement), which obligations are identified by current outstanding
principal balance and accrued and unpaid interest, if any, owed to each
creditor, together with the name, address and telephone number of each
such creditor.
5.7 OPERATIONS; RECEIVABLES AND INVENTORY. The Target has not commenced
commercial operations. The Target does not have, and has never had, any
receivables or inventory.
5.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on the
SCHEDULE 5.8 attached hereto and except as expressly contemplated by this
Agreement, since September 30, 1999, the Target has not:
(a) suffered any change that has had or could reasonably be
expected to have a Material Adverse Effect or suffered any theft, damage,
destruction or casualty loss to its assets, whether or not covered by insurance
or suffered any substantial destruction of its books and records;
(b) paid any dividends or made any other distributions
(whether in cash or in kind) with respect to any shares of its capital stock or
other equity security, except for distributions made to the Shareholders in the
Ordinary Course of Business consistent with past practice to permit the
Shareholders to pay taxes on the income of the Target;
(c) subjected any portion of its properties or assets to any
Lien;
(d) sold, assigned, licensed or transferred (including,
without limitation, transfers to Shareholders or any Insider) any Proprietary
Rights owned by, issued to or licensed to it or disclosed any confidential
information (other than pursuant to agreements requiring the disclosure to
maintain the confidentiality of and preserving all its rights in such
confidential information) or received any confidential information of any third
party in violation of any obligation of confidentiality;
(e) suffered any extraordinary losses or waived any rights of
material value;
(f) entered into any transaction out of the Ordinary Course of
Business or other material transaction, or materially changed any business
practice; or
(g) made any capital expenditures or commitments for capital
expenditures that aggregate in excess of $1,000.00.
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5.9 ASSETS. The Target has good and marketable title to, or a valid
leasehold interest in, the properties and assets used by it, located on its
premises or shown on the Latest Balance Sheet or acquired thereafter, free and
clear of all Liens. The Target's buildings, equipment and other tangible assets
are in good operating condition and are fit for use in the Ordinary Course of
Business. The Target owns or leases all buildings, machinery, equipment, and
other tangible assets necessary for the conduct of its business as presently
conducted.
5.10 LEASED PROPERTIES. Except as disclosed on SCHEDULED 5.10 annexed
hereto, the Target has not entered into any leases or subleases for any real or
personal property.
5.11 REAL PROPERTY DISCLOSURE. Except as disclosed on SCHEDULED 5.10
annexed hereto, there is no real property leased or owned by the Target or used
in its businesses.
5.12 TAXES
(a) TAX RETURNS AND AUDITS.
(i) Except as and to the extent disclosed in Schedule
5.12 annexed hereto: [i] on the date hereof and on the Closing Date,
all federal, state and local tax returns and tax reports required to be
filed by the Target on or before the date of this Agreement or the
Closing Date, as the case may be, have been and will have been timely
filed with the appropriate governmental agencies in all jurisdictions
in which such returns and reports are required to be filed; [ii] all
Taxes due from or with respect to the Target as of the date hereof and
as of the Closing Date have been and will have been fully paid, and
appropriate accruals shall have been made on the Target's books for
Taxes not yet due and payable; [iii] as of the Closing Date, all Taxes
and other assessments and levies which the Target is required by law to
withhold or to collect on or before the Closing Date will have been
duly withheld and collected, and will have been paid over to the proper
governmental authorities to the extent due and payable on or before the
Closing Date; and [iv] there are no outstanding or pending claims,
deficiencies or assessments for Taxes, interest or penalties with
respect to any taxable period of the Target. At and after the Closing
Date, the Target will not have any liability for any federal, state or
local income tax with respect to any taxable period ending on or before
the Closing Date, except as and to the extent disclosed in Schedule
5.12.
(ii) There are no audits pending with respect to any
federal, state or local tax returns of the Target, and no waivers of
statutes of limitations have been given or requested with respect to
any tax years or tax filings of the Target.
(b) TAXABLE STATUS. The Target has not elected to be treated
as an "S Corporation" as such term is defined in the Internal Revenue Code of
1986, as amended, and regulation.
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5.13 CONTRACTS AND COMMITMENTS.
(a) Except as specifically contemplated by this Agreement and
except as set forth and fully described on SCHEDULE 5.13(A) attached hereto, the
Target is not a party to or bound by, whether written or oral, any:
(i) collective bargaining agreement or contract with
any labor union or any bonus, pension, profit sharing, retirement or
any other form of deferred compensation plan or any stock purchase,
stock option, hospitalization insurance or similar plan or practice,
whether formal or informal;
(ii) any contract for the employment of any officer,
individual employee or other person on a full-time or consulting basis
or any severance agreements;
(iii) agreement or indenture relating to the
borrowing of money or to mortgaging, pledging or otherwise placing a
Lien on any of its assets;
(iv) contract under which the Target has advanced or
loaned any other Person amounts in the aggregate exceeding $5,000;
(v) agreement under which the Target has granted any
Person any registration rights (including, without limitation, demand
and piggyback registration rights);
(vi) agreements with respect to the lending or
investing of funds;
(vii) any license or royalty agreements;
(viii) guaranty of any obligation, other than
endorsements made for collection;
(ix) lease or agreement under which it is lessee of,
or holds or operates, any personal property owned by any other party
calling for payments in excess of $5,000 annually;
(x) lease or agreement under which it is lessor of or
permits any third party to hold or operate any property, real or
personal, owned or controlled by it;
(xi) contract or group of related contracts with the
same party continuing over a period of more than six months from the
date or dates thereof, not terminable by it on 30 days or less notice
without penalties or involving more than $10,000;
(xii) contract which prohibits it from freely
engaging in business anywhere in the world;
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(xiii) other agreement material to it whether or not
entered into in the Ordinary Course of Business; or
(xiv) any oral agreements and/or contracts.
(b) Except as disclosed on SCHEDULE 5.13(B):
(i) no contract or commitment has been
breached or canceled by the other party and neither the Target
nor any Shareholder has Knowledge of any anticipated breach by
any other party to any contract other than as set forth on the
SCHEDULE 5.13(B);
(ii) other than as set forth on SCHEDULE
5.13(B), no customer or supplier has indicated in writing or
orally to the Target or any Shareholder that it shall stop or
decrease the rate of business done with the Target or that it
desires to renegotiate its contract or current arrangement
with the Target;
(iii) the Target has performed all the
obligations required to be performed by it in connection with
all of the contracts or commitments that the Target has
entered into is not in default under or in breach of any
contract or commitment, and no event has occurred which with
the passage of time or the giving of notice or both would
result in a default or breach thereunder;
(iv) the Target has no present expectation
or intention of not fully performing any obligation pursuant
to any contract that the Target entered into; and
(v) other than as set forth on SCHEDULE
5.13(B), each agreement is legal, valid, binding, enforceable
and in full force and effect and will continue as such
following the consummation of the transactions contemplated
hereby.
5.14 PROPRIETARY RIGHTS.
(a) The only Proprietary Rights owned or used by the Target or
required to be used by the Target to operate the Target's business are listed on
SCHEDULE 5.14 (the "TARGET PROPRIETARY RIGHTS"). Shawn D. Lucas and Scott A.
Anderson, two of the Shareholders, have filed an application for registration
with the United States Patent Office for the patent designated on SCHEDULE 5.14,
which patent and all rights thereto have been assigned to the Target by Shawn D.
Lucas and Scott A. Anderson. Other than to the Target, the Shareholders have not
assigned, licensed or given any Person the right to use any of the Proprietary
Rights. The Target owns, free of all Liens, all right, title and interest to the
Proprietary Rights. The Proprietary Rights are entirely owned by the Target and
are the only Proprietary Rights necessary for the operation of the businesses of
the Target as presently conducted or as contemplated to be conducted by Miracom.
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(b) Neither the Target nor the Stockholders has received any
notices of invalidity, infringement or misappropriation from any third party
with respect to any of the Proprietary Rights. Neither the Target nor the
Shareholders has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Proprietary Rights of any third parties. To the
Knowledge of the Shareholders, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any of the
Proprietary Rights.
(c) The transactions contemplated by this Agreement shall have
no adverse effect on the Target's right, title and interest in and to any of the
Proprietary Rights. The Target has taken all necessary and desirable actions to
maintain and protect the Proprietary Rights.
5.15 LITIGATION; PROCEEDINGS. There are no actions, suits, proceedings,
orders, investigations or claims pending or, to the Knowledge of the
Shareholders, threatened against or affecting the Target (or to the Knowledge of
the Shareholders, pending or threatened against or affecting any of the
officers, directors or key employees of the Target with respect to its
businesses or proposed business activities) at law or in equity, or before or by
any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suits, proceedings
or investigations with respect to the transactions contemplated by this
Agreement); and the Target is not subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the Knowledge of the
Shareholders, any governmental investigations or inquiries. The Target is not
subject to any judgment, order or decree of any court or other governmental
agency, and the Target has not received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to its
business.
5.16 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of the
Target or the Shareholders.
5.17 GOVERNMENTAL LICENSES AND PERMITS. SCHEDULE 5.17 attached hereto
contains a complete listing and summary description of all permits, licenses,
certificates, approvals and other authorizations of any governmental entity or
any department, agency or political subdivision thereof, or other similar rights
(collectively, the "LICENSES") owned or possessed by the Target or used by it in
the conduct of its businesses. Except as stated on SCHEDULE 5.17, the Target
owns or possesses all right, title and interest in and to all of the Licenses
that are necessary to conduct their businesses as presently conducted,
including, without limitation, all Licenses required under any federal, state or
local law relating to public health and safety, employee health and safety,
pollution or protection of the environment. The Target is in compliance with the
terms and conditions of such Licenses and have not received any notices that
they are in violation of any of the terms or conditions of such Licenses. The
Target has taken all necessary action to maintain such Licenses. No loss or
expiration of any such License is threatened, pending or reasonably foreseeable
other than expiration in accordance with the terms thereof. Except as stated on
SCHEDULE 5.17, all of the Licenses shall survive the transactions contemplated
by the Merger and the transactions contemplated hereby.
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5.18 EMPLOYEES. All employees and independent contractors are disclosed
on SCHEDULE 5.18 annexed hereto. To the Knowledge of the Shareholders, no
employee or independent contractor, if any, of the Target has any plans to
terminate his, her or its employment or relationship as an independent
contractor with the Target. The Target has complied with all applicable laws
relating to the employment of personnel and labor. The Target is not a party to
or bound by any collective bargaining agreement, nor has the Target experienced
any strikes, grievances, unfair labor practices claims or other material
employee or labor disputes. The Target has not engaged in any unfair labor
practice. The Target has no Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Target, if any.
5.19 EMPLOYEE BENEFIT MATTERS. Except as disclosed on SCHEDULE 5.19
annexed hereto, the Target has no employee benefit plans or arrangements (i.e.,
pension plans, employee welfare benefit plans, deferred compensation plans,
stock option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and
policies, whether or not described in ERISA.
5.20 INSURANCE. SCHEDULE 5.20 attached hereto lists and briefly
describes each insurance policy maintained by the Target with respect to its
properties, assets and business, together with a claims history since its
inception. All of such insurance policies are in full force and effect, and the
Target is not in default with respect to its obligations under any such
insurance policies and the Target has not been denied insurance coverage. Except
as set forth on SCHEDULE 5.20, the Target has no self-insurance or co-insurance
programs, and the reserves set forth on the Latest Balance Sheet are adequate to
cover all anticipated liabilities with respect to self-insurance or coinsurance
programs.
5.21 OFFICERS AND DIRECTORS; BANK ACCOUNTS. SCHEDULE 5.21 attached
hereto lists all officers and directors of the Target, and all bank accounts,
safety deposit boxes and lock boxes (designating each authorized signatory with
respect thereto) for the Target.
5.22 AFFILIATE TRANSACTIONS. Except as disclosed on SCHEDULE 5.22
attached hereto, no Insider is a party to any agreement, contract, commitment or
transaction with the Target or which pertains to the business of the Target or
has any interest in any property, real or personal or mixed, tangible or
intangible, used in or pertaining to the business of the Target.
5.23 COMPLIANCE WITH LAWS. The Target and its officers, directors,
partners, agents and employees have complied with and are in compliance with all
applicable laws, regulations and ordinances of foreign, federal, state and local
governments and all agencies thereof which are applicable to the business,
business practices (including, but not limited to, the Target's marketing and
sales of its products and services) or any leased properties of the Target and
to which the Target may be subject, and no claims have been filed against the
Target alleging a violation of any such laws or regulations, and the Target has
not received notice of any such violations.
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5.24 DISCLOSURE. Neither this Agreement nor any of the schedules,
attachments or Exhibits hereto, contain any untrue statement of a material fact
or omit a material fact necessary to make each statement contained herein or
therein, not misleading. There is no fact which has not been disclosed to the
Target of which any Shareholder has Knowledge which has had a Material Adverse
Effect on the Target or could reasonably be anticipated to have a Material
Adverse Effect on the Surviving Company.
5.25 LEGAL REPRESENTATION. The Target and the Shareholders acknowledge
that prior to contemplating entering into this Agreement that they were informed
and understand that Greenberg Traurig, P.A. has acted and continues to act as
counsel for Miracom and that Greenberg Traurig, P.A. informed both the Target
and the Shareholders of their respective need for separate counsel regarding the
matters contemplated in this Agreement.
SECTION 6 - REPRESENTATIONS AND WARRANTIES OF TRANSITORY COMPANY AND MIRACOM
As a material inducement to the Target and the Shareholders to enter
into this Agreement, Miracom hereby represents and warrants to the Target and
the Shareholders that:
6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) Miracom is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada,
with all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby.
(b) The Transitory Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Florida, with all necessary power and authority to consummate
the Merger with the Target as contemplated hereby. The Transitory
Company is a wholly-owned subsidiary of Miracom, and will have no
material assets or liabilities at the time of the Closing.
6.2 AUTHORIZATION OF TRANSACTIONS; BINDING AGREEMENT. Miracom and the
Transitory Company have duly authorized, executed and delivered this Agreement.
This Agreement constitutes a valid and binding obligation of Miracom and the
Transitory Company, enforceable in accordance with its terms.
6.3 ABSENCE OF CONFLICTS. The execution and delivery by Miracom and the
Transitory Company of this Agreement and the fulfillment of and compliance with
the terms hereof, do not and shall not:
(a) conflict with or result in a breach of the terms,
conditions or provisions of;
(b) constitute a default under;
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(c) result in the creation of any lien, security interest,
charge or encumbrance upon their assets pursuant to;
(d) give any third party the right to modify, terminate or
accelerate any obligation under;
(e) result in a violation of; or
(f) require any authorization, consent, approval, exemption or
other action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, its charter or
bylaws, or any law, statute, rule or regulation to which it is subject, or any
agreement, instrument, order, judgment or decree to which it is subject.
6.4 CONSIDERATION SHARES. When transferred or issued to the
Shareholders pursuant to this Agreement, all Consideration Shares delivered to
the Shareholders shall be duly authorized, validly issued and fully paid and
non-assessable.
6.5 INVESTMENT. Miracom will be acquiring ownership of the outstanding
capital stock of the Target for its own account, for investment purposes only,
and not with a view to the resale or distribution thereof.
SECTION 7 - CONDITIONS PRECEDENT TO CLOSING
7.1 CONDITIONS PRECEDENT TO MIRACOM OR TRANSITORY COMPANY'S
PERFORMANCE. The obligations of Miracom to consummate the transactions
contemplated by this Agreement are further subject to the satisfaction, at or
before the Closing Date, of all the following conditions, any one or more of
which may be waived in writing by Miracom:
(a) Accuracy of Representations and Warranties. All
representations and warranties made by the Shareholder in this Agreement, in any
Schedule(s) hereto, and/or in any written statement delivered to Miracom under
this Agreement shall be true and correct in all material respects on and as of
the Closing Date as though such representations and warranties were made on and
as of that date.
(b) Performance. The Target and the Shareholders shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them
on or before the Closing Date.
(c) Certification. Miracom shall have received a certificate,
dated the Closing Date, signed by the Shareholders, certifying, in such detail
as Miracom and its counsel may reasonably request, that the conditions specified
in Sections 7.1(a) and 7.1(b) above have been fulfilled.
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(d) Resolutions. Miracom shall have received certified
resolutions of the Board of Directors and the Shareholders of the Target, in
form reasonably satisfactory to counsel for Miracom, authorizing the Target's
execution, delivery and performance of this Agreement and the Merger, and all
actions to be taken by the Target hereunder (including resolutions which (i)
elect such persons as officers and directors of the Target and (ii) amend the
Articles of Incorporation and By-laws of the Target, as shall be determined by
Miracom).
(e) Good Standing Certificates. The Shareholders shall have
delivered to Miracom a certificate or telephone confirmation issued by the
Secretary of State of Florida, evidencing the good standing of the Target in
Florida as of a date not more than ten (10) calendar days prior to the Closing
Date.
(f) Absence of Litigation. No action, suit or proceeding by or
before any court or any governmental body or authority, against any Shareholder
or the Target or pertaining to the transactions contemplated by this Agreement
or their consummation, shall have been instituted on or before the Closing Date,
which action, suit or proceeding would, if determined adversely, have a Material
Adverse Effect on the business, financial condition, operations or prospects of
the Target, or impair the ability of any of the Shareholders to deliver in the
Merger all of their Target Stock free and clear of all pledges, liens, claims,
charges, options, calls, encumbrances, restrictions and assessments whatsoever.
(g) Consents. All necessary disclosures to and agreements and
consents of (a) any parties to any Material Contracts and/or any licensing
authorities which are material to the Target's business, (including all
outstanding indebtedness and leases) and (b) any governmental authorities or
agencies to the extent required in connection with the transactions contemplated
by this Agreement, shall have been obtained, shall be in such form as shall be
satisfactory to Miracom and true and complete copies thereof shall be delivered
to Miracom on or before the Closing Date.
(h) Settlement of Accounts. All debts, liabilities and other
monetary obligations owed to the Target by any of the Shareholders of the Target
and/or any of their Affiliates on or prior to the Closing Date, shall have been
fully paid to the Target in immediately available funds, such that no such
debts, liabilities or obligations shall be outstanding on and after the Closing
Date.
(i) Condition of Property. Between the date of this Agreement
and the Closing Date, assets of the Target having an aggregate fair market value
of $10,000.00 or more shall not have been lost, destroyed or irreparably damaged
by fire, flood, explosion, theft or any other cause, unless covered by
insurance.
(j) No Material Adverse Change. On the Closing Date, there
shall not have occurred any event or condition materially and adversely
affecting the financial condition, results of operations or business prospects
of the Target from those reflected in the Financial Statements.
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(k) Satisfactory Due Diligence Investigation. Miracom, in its
sole and absolute discretion, shall be satisfied with the results of its due
diligence investigation of, without limitation, the Shareholders, the Target,
the Target's business and its financial condition.
(l) Execution and Delivery of Exhibits. On or before the
Closing Date, the Target shall have executed and delivered to the Transitory
Company the appropriate Articles of Merger, and the Shareholders shall have
executed and delivered to the other parties thereto the Subscription Agreement.
(m) Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions contemplated
by this Agreement, and all documents incidental thereto, shall be reasonably
satisfactory in form and substance to Miracom and its counsel. The Shareholder
shall have submitted to Miracom or its representatives for examination the
originals or true and correct copies of all records and documents relating to
the business and affairs of the Target which Miracom may have requested in
connection with said transactions.
(n) Evidence of Assignment of Patent. Deliver to Miracom prior
to Closing the assignment of patent rights executed by Shawn D. Lucas and Scott
A. Anderson, assigning all their right, title and interest in the provisional
patent identified in Schedule 5.14 hereto (and any ensuing patents and
derivation thereof) to Target.
7.2 CONDITIONS PRECEDENT TO THE TARGET'S AND THE SHAREHOLDERS'
PERFORMANCE. The obligations of the Target to consummate the Merger and of the
Shareholders to consummate the transactions contemplated by this Agreement are
further subject to the satisfaction, at or before the Closing Date, of all of
the following conditions, any one or more of which may be waived in writing by
the Shareholders:
(a) Accuracy of Representations and Warranties. All
representations and warranties made by Miracom in this Agreement and/or in any
written statement delivered by Miracom under this Agreement shall be true and
correct in all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of that date.
(b) Performance. Miracom shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Miracom on or before
the Closing Date.
(c) Certification. The Shareholders shall have received a
certificate, dated the Closing Date, signed by Miracom certifying, in such
detail as the Shareholders and their counsel may reasonably request, that the
conditions specified in Sections 7.2(a) and 7.2(b) above have been fulfilled.
(d) Resolutions. The Shareholders shall have received
certified resolutions of the Board of Directors of Miracom and the Transitory
Company, in form reasonably satisfactory to counsel for the Shareholders,
authorizing the Merger and Miracom's and the Transitory Company's execution,
delivery and performance of this Agreement and all actions to be taken by
Miracom and the Transitory Company hereunder.
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(e) Execution and Delivery of Exhibits. The Transitory Company
shall have executed and delivered to the Target the Articles of Merger.
(f) Proceedings and Instruments Satisfactory. All proceedings
to be taken in connection with the transactions contemplated by this Agreement,
and all documents incidental thereto, shall be reasonably satisfactory in form
and substance to the Shareholders and their counsel.
SECTION 8 - INDEMNIFICATION
8.1 SURVIVAL. All representations, warranties, covenants and agreements
set forth in this Agreement or in any writing or certificate delivered in
connection with this Agreement shall survive the Closing and the consummation of
the transactions contemplated hereby and shall not be affected by any
examination made for or on behalf of any Party, the knowledge of any of such
Party's officers, directors, Shareholders, employees or agents, or the
acceptance of any certificate or opinion. Notwithstanding the foregoing, no
Party shall be entitled to recover for any Loss pursuant to SECTION 8.1 unless
written notice of a claim thereof is delivered to the other Party prior to the
Applicable Limitation Date, as defined below in this SECTION 8.1.
8.2 APPLICABLE LIMITATION DATE. For purposes of this Agreement, the
term "APPLICABLE LIMITATION DATE" shall mean November ___, 2000 (one year from
the Closing Date); provided that the Applicable Limitation Date with respect to
the following Losses shall be as follows:
(a) with respect to any Loss arising from or related
to a breach of the representations and warranties of Target and the
Shareholders set forth in SECTION 5.12 (TAXES) and SECTION 5.19
(EMPLOYEE BENEFITS MATTERS), the Applicable Limitation Date shall be
the 60th day after expiration of the statute of limitations (including
any extensions thereto to the extent that such statute of limitations
may be tolled) applicable to the Tax or ERISA regulation which gave
rise to such Loss; and
(b) with respect to any Loss arising from or related
to a breach of the representations and warranties of Flex and the
Shareholders set forth in SECTION 5.1 (ORGANIZATION AND CORPORATE
POWER), SECTION 5.14 (PROPRIETARY RIGHTS), SECTION 5.23 (AUTHORIZATION
OF TRANSACTIONS), SECTION 5.3 (CAPITALIZATION), SECTION 5.4 (ABSENCE OF
CONFLICTS) and with respect to any Loss arising from or related to a
breach of the representations and warranties of Miracom or the
Transitory Company set forth in there shall be no Applicable Limitation
Date (i.e., such representations and warranties shall survive forever).
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(c) notwithstanding the foregoing, no Party shall be entitled
to recover for any Loss pursuant to this SECTION 8 unless written notice of a
claim thereof is delivered to the other Party prior to the Applicable Limitation
Date.
8.3 INDEMNIFICATION.
(a) TRANSITORY COMPANY AND MIRACOM INDEMNIFICATION. Target and
the Shareholders shall jointly and severally indemnify the Transitory Company
and Miracom, as well as their present and future officers, directors,
Shareholders, employees, agents, representatives, affiliates, successors, heirs
and assigns (collectively, the "TRANSITORY COMPANY PARTIES") and hold each of
them harmless from and against and pay on behalf of or reimburse such Transitory
Company Parties in respect of the entirety of any Losses the Transitory Company
Parties may suffer, sustain or become subject to, through and after the date of
the claim for indemnification resulting from, arising out of, relating to, in
the nature of, or caused by:
(i) the breach of any representation or warranty
made by Target and the Shareholders in SECTION 5 of this Agreement;
(ii) the breach of any covenant or agreement made by
Target and the Shareholders in this Agreement; or
(iii) any Loss arising out of or related to any claim
by any Person that the transactions contemplated by this Agreement
constituted a fraudulent transfer or conveyance of the Assets of
Target.
The Transitory Company Parties' remedy for any indemnification
of Losses hereunder may be satisfied by proceeding against Target or any one or
more Shareholders individually for all or any portion of any such Loss.
(b) TARGET AND SHAREHOLDERS INDEMNIFICATION. The Transitory
Company shall indemnify Target and the Shareholders (collectively, the
"SHAREHOLDER PARTIES") and hold each of them harmless from and against and pay
on behalf of or reimburse such Shareholder Parties in respect of the entirety of
any Losses the Shareholder Parties may suffer, sustain or become subject to,
through and after the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by the breach of any
representation or warranty made by the Transitory Company contained in this
Agreement.
(c) RIGHT TO DEFEND. The Party or Parties seeking
indemnification under this SECTION 8 (the "INDEMNIFIED PARTY") shall give
written notice to the other Party or Parties, as the case may be (the
"INDEMNIFYING PARTY") after receiving written notice of any action, lawsuit,
proceeding, investigation or other claim against it (if by a third party) or
discovering the liability, obligation or facts giving rise to such claim for
indemnification, describing the claim, the amount thereof (if known and
quantifiable), and the basis thereof. The failure to so notify the Indemnified
Party shall not relieve the Indemnifying Party of its or his obligations
hereunder except to the extent such failure shall have prejudiced the Indemnying
Party. If any action,
20
<PAGE> 21
lawsuit, proceeding, investigation or other claim shall be brought or asserted
by any third party which, if adversely determined, would entitle a Party to
indemnity pursuant to this SECTION 8, the Indemnifying Party shall promptly
notify the Indemnified Party of the same in writing, specifying in detail the
basis of such claim and the facts pertaining thereto and the Indemnified Party
shall be entitled to participate in the defense of such action, lawsuit,
proceeding, investigation or other claim giving rise to the indemnitee's claim
for indemnification at its expense, and at its option (subject to the
limitations set forth below), if, but only if, the Indemnifying Party gives
notice of such election to the Indemnified Party within ten (10) business days
after receiving notice of such action, lawsuit, proceeding, investigation or
other claim. Prior to participating in such claim the Indemnifying Party shall:
(i) agree to be fully responsible for all Losses
relating to such claims and that it will provide full indemnification
to the Indemnitor Party for all Losses relating to such claim; and
(ii) unconditionally guarantee the payment and
performance of any liability or obligation which may arise with respect
to such claim or the facts giving rise to such claim for
indemnification; and
(iii) furnish the Indemnified Party with reasonable
evidence that the Indemnified Party will be able to satisfy any such
liability;
and provided further that the Indemnifying Party shall not have the
right to assume control of such defense and shall pay the fees and
expenses of counsel retained by the Indemnified Party, if the claim
which the Indemnifying Party seeks to assume control:
(i) seeks non-monetary relief;
(ii) involves criminal or quasi-criminal allegations
solely against the Party to be indemnified;
(iii) involves a claim as to which the Indemnified
Party reasonably believes an adverse determination would be detrimental
or injurious the Indemnified Party's reputation or future business
prospects; or
(iv) involves a claim which, upon petition by the
Indemnifying Party, the appropriate court rules that the Indemnifying
Party failed or is failing to vigorously prosecute or defend.
(d) SEPARATE COUNSEL. If the Indemnifying Party is permitted
to assume and control the defense and elects to do so, the Indemnified Party
shall have the right to employ counsel separate from counsel employed by the
Indemnifying Party in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel employed by the Indemnified Party
shall be at the expense of the Indemnified Party unless (i) the employment
thereof has been specifically authorized by the Indemnifying Party in writing,
or (ii) the
21
<PAGE> 22
Indemnifying Party has been advised by counsel that a reasonable likelihood
exists of a conflict of interest between the Indemnifying Party and the
Indemnified Party.
(e) SETTLEMENTS. If the Indemnifying Party shall control the
defense of any such claim, the Indemnifying Party shall obtain the prior written
consent of the Indemnified Party (which shall not be unreasonably withheld)
before entering into any settlement of a claim or ceasing to defend such claim,
if pursuant to or as a result of such settlement or cessation, injunction or
other equitable relief will be imposed against the Indemnitee Party or if such
settlement does not expressly unconditionally and irrevocably release the
Indemnitee Party from all liabilities and obligations with respect to such
claim, with prejudice.
(f) PAYMENT. The Indemnifying Party shall pay the Indemnified
Party in immediately available funds promptly after the Indemnified Party
provides the Indemnifying Party with written notice of a claim hereunder and the
Parties reasonably agree that there is a reasonable basis for such claim.
Amounts paid to or on behalf of any Party as indemnification shall be treated as
adjustments to the consideration paid hereunder.
SECTION 9 - ACQUISITION OF SHARES BY THE SHAREHOLDERS
9.1 GENERAL PROVISIONS. The Surviving Company and the Shareholders
acknowledge that the Consideration Shares to be delivered pursuant to this
Agreement will be "RESTRICTED SECURITIES" for purposes of the Federal securities
laws and thus will be transferable only pursuant to;
(a) public offerings registered under the Securities Act;
(b) Rule 144 or Rule 144A of the Securities and Exchange
Commission (or any similar rule or rules then in force) if such rule is
available; and
(c) subject to the conditions specified in SECTION 9.2 below,
any other legally available means of transfer;
(d) a legend will be placed on the shares of Common Stock
issued hereunder in accordance with SECTION 9.3 below.
9.2 OPINION DELIVERY In connection with the subsequent transfer of any
Restricted Securities (other than a transfer described in SECTION 9.1(A) above),
the holder thereof shall deliver written notice to Miracom describing in
reasonable detail the transfer or proposed transfer, together with an opinion of
counsel which (to Miracom's reasonable satisfaction) is knowledgeable in
securities law matters to the effect that such transfer of Restricted Securities
may be effected without registration of such Restricted Securities under the
Securities Act.
9.3 INVESTMENT REPRESENTATIONS. Each of the Shareholders hereby
represents that it is acquiring the Restricted Securities acquired pursuant
hereto for its own account with the
22
<PAGE> 23
present intention of holding such securities for purposes of investment, and
that it has no present intention of selling such securities; provided that
nothing contained herein shall prevent the Shareholders and subsequent holders
of Restricted Securities from transferring such securities in compliance with
the provisions of this SECTION 9. Each certificate or instrument representing
Restricted Securities shall be imprinted with a legend in substantially the
following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES ACT, AND MAY
NOT BE SOLD, PLEDGED, TRANSFERRED OR DISPOSED OF UNLESS THEY
ARE REGISTERED UNDER THE 1933 ACT AND ANY APPLICABLE STATE
SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE."
SECTION 10 - LIQUIDATION AND DISSOLUTION OF THE TRANSITORY COMPANY
From and after the Closing, the Transitory Company will not engage in
any business and at the Closing the Transitory Company shall immediately
distribute the shares of Target Stock to Miracom. The Transitory Company and
Miracom agree that immediately after the Consideration Shares are distributed,
that the shares of the Transitory Company shall be redeemed and cancelled. The
Transitory Company and Miracom agree to comply with all applicable state law
requirements concerning a liquidation and dissolution of a corporation,
including, without limitation any obligation to create a liquidating trust and
provide such trust with assets sufficient to satisfy any liabilities of the
Transitory Company.
SECTION 11 - GENERAL PROVISIONS
11.1 FURTHER ASSURANCES. The Parties agree that, from time to time
hereafter, and upon request, each of them will execute, acknowledge and deliver
such other instruments as may be reasonably required to more effectively carry
out this Agreement's terms and conditions.
11.2 ACCESS TO INFORMATION. All Parties agree to provide reasonable
access to their books, records, and properties prior to Closing and agree to
fully cooperate by making necessary introductions and assisting in the
collection of whatever information is required.
11.3 NON-ASSIGNABILITY; BINDING EFFECT. Other than the assignment of
rights by Miracom to the Transitory Company as and to the extent contemplated by
Section [1] above, neither this Agreement, nor any of the rights or obligations
of the parties hereunder, shall be assignable by any party hereto without the
prior written consent of all other parties hereto. Otherwise, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns.
23
<PAGE> 24
11.4 SEVERABILITY AND REFORMATION. In the event that any provision or
any portion of any provision of this Agreement shall be held invalid, illegal or
unenforceable under applicable law, such provision or portion of the Agreement
shall be stricken and the remainder of this Agreement shall remain valid and
enforceable, unless such invalidity, illegality or unenforceability
substantially either; (i) diminishes the rights and obligations, taken as a
whole, of any party hereunder or (ii) eliminates the ability to treat this
transaction as a tax-free reorganization, under the Code whereby no Party shall
be liable for any Federal Income Tax as a result of the transaction contemplated
by this Agreement. In such case, the Parties agree to take any and all steps
required to minimize the OVERALL income tax effect of the transaction
contemplated by this Agreement by modifying this Agreement to minimize such tax
liability pursuant to Section 11.11 of this Agreement.
11.5 ATTORNEYS' FEES. In the event of suit to enforce the terms of this
Agreement, the prevailing party shall be entitled to collect from the
non-prevailing party reasonable attorneys' fees, costs and expenses (including
those incurred through all trial, appellate and post-judgment collection
proceedings).
11.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without regard to any
conflict of laws provisions.
11.7 NOTICES. All notices, requests, demands and other communications
pursuant to this Agreement shall be in writing, and shall be deemed to have been
duly given if delivered or mailed, certified mail, first class, postage prepaid,
to the Surviving Company at:
Miracom, Inc.
c/o Greenberg Traurig, P.A.
Attention: Sandra Gordon, Esq.
111 North Orange Ave., 20th Floor
Orlando, Florida 32801
With a copy to: Miracom Corporation
121 E. First Street
Sandord, Florida 32771
or if to the Target, at: Flex Radio, Inc.
c/o Shawn Lucas
1995 Bridgewater Drive
Heathrow, Florida 32746
11.8 EXPENSES. Except as provided for in this SECTION 11.8 any expenses
in connection with this Agreement or the transactions herein provided for shall
be paid for by the Party incurring such expenses Miracom agrees to pay the
expenses incurred for the documentation and legal activities required to
complete the transaction contemplated by this
24
<PAGE> 25
Agreement. Notwithstanding the preceding Surviving Company and the Shareholders
shall remain liable for their individual consultants.
11.9 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.10 HEADINGS. The Section headings used in this Agreement and the
titles of the Schedules hereto are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of the provisions
hereof or of the information set forth in such Schedules.
11.11 AMENDMENT, MODIFICATION AND WAIVER. No amendment or modification
of this Agreement or any Exhibit or Schedule hereto shall be valid unless made
in writing and signed by the party to be charged therewith. Each party may waive
any condition intended to be for its benefit. Each amendment, modification,
supplement or waiver shall be in writing and signed by the parties to be
charged.
11.12 ENTIRE AGREEMENT. This Agreement and the Schedules delivered with
it and the other agreements specifically provided for under this Agreement
represent the parties' entire Agreement and no provision or document of any kind
shall be included in, or form a part of, this Agreement unless it is in writing
and is delivered to the other party by the party to be charged.
11.13 ADEQUATE REPRESENTATION.
(a) Each Party hereby understands and acknowledges that
Greenberg Traurig pursuant to the request of Miracom, the Transitory Company and
the Target has agreed to act as counsel for Miracom. Miracom, Transitory Company
and Target further acknowledge that each has been fully apprised of the
implications and possible conflicts of interest of Greenberg Traurig acting as
counsel for Miracom. Each Party hereby acknowledges that it has waived, and
reasserts such waiver of any conflict of interest Greenberg Traurig may have as
a result of such representation.
(b) The Parties acknowledge that Greenberg Traurig fully
informed the Parties of the potential tax implications of the transaction
contemplated by this Agreement. Such Parties agree to hold Greenberg Traurig
harmless for any adverse tax implications resulting from the transaction(s)
contemplated by this Agreement.
(c) With regards to this SECTION 11.13, the Parties agree to
execute any and all waivers and/or indemnitee agreements reasonably requested by
Greenberg Traurig in order to protect Greenberg Traurig pursuant to the terms of
this SECTION 11.13.
25
<PAGE> 26
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
MIRACOM CORPORATION
By: /s/ Ian Hart
-------------------------------------
Print Name: Ian Hart
Title: Chief Financial Officer
"THE TRANSITORY COMPANY"
FLEX ACQUISITION, INC.
By: /s/ Ian Hart
-------------------------------------
Print Name: Ian Hart
Title: Secretary
"THE SURVIVING COMPANY"
FLEXRADIO, INC.
By /s/ Shawn D. Lucas
--------------------------------------
Print Name: Shawn D. Lucas
Title: President
SHAREHOLDERS OF FLEX RADIO, INC.
/s/ Shawn D. Lucas
-----------------------------------------
Individually
SELECT MEDIA, INC.
By: /s/ George Demakos
-------------------------------------
Print Name: George Demakos
Title: President
26
<PAGE> 27
OFFICIAL SPORTS MANAGEMENT, INC.
By: /s/ Ross Reback
-------------------------------------
Print Name: Ross Reback
Title: President
FLEX TECHNOLOGIES, INC.
By: /s/ Scott Anderson
-------------------------------------
Print Name: Scott Anderson
Title: President
27
<PAGE> 1
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports on the combined financial statements of MTV Pinnacle
Advertising Group, Inc. and United Equity Partners, Inc. for the year ended
December 31, 1997 and the nine months ended September 30, 1998 and on the
consolidated financial statements of Miracom Corporation and Subsidiaries for
the period January 27, 1998 (date of inception) through December 31, 1998, both
dated November 10, 1999, included in the Registration Statement (Form 10-SB) of
Miracom Corporation and Subsidiaries dated on or about November 23, 1999.
Certified Public Accountants
Orlando, Florida
November 23, 1999
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<PERIOD-END> SEP-30-1999
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<RECEIVABLES> 110,414
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-27-1998
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