U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
CYBERECORD,INC.
-----------------------------------------------------------------
(Name of Small Business Issuer in its charter)
Florida 91-1985843
- ------------------------------- -----------------
(State or other jurisdiction of (I.R.S. I.D. No.)
incorporation or organization)
10900 N.E. 8th Street, Suite 900, Bellevue, WA 98004
----------------------------------------------------
(Address of principal executive offices) (zip code)
Issuer's telephone number (425) 990-5920
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock $.001 par value
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(Title of class)
<PAGE>
CYBERECORD, INC.
Form 10-SB
Table of Contents Page
PART 1
Item 1. Description of Business .......................... 1
Item 2. Management's Discussion and Analysis
of Financial Conditions and Results of Operation.. 1
Item 3. Description of Property........................... 6
Item 4. Security Ownership of Certain Beneficial
Owners and Management............................. 6
Item 5. Directors, Executive Officers, Promoters
and Control Persons............................... 7
Item 6. Executive Compensation............................ 8
Item 7. Certain Relationships and Related Transactions.... 9
Item 8. Description of Securities......................... 9
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and other Stockholder Matters....... 9
Item 2. Legal Proceedings................................. 10
Item 3. Changes in and Disagreements with Accountants..... 10
Item 4. Recent Sales of Unregistered Securities........... 10
Item 5. Indemnification of Directors and Officers......... 11
PART F/S
Financial Statements............................................... F-1
PART III
Item 1. Index to Exhibits and Description of Exhibits..... 12
Signature Page..................................................... 13
i
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PART 1
Item 1. Description of Business.
CybeRecord, Inc. (the "Company") was incorporated on February 17, 1969 as
Flexi-Built Modular Housing Corporation in the State of Florida. The Company is
engaged in the business of developing, manufacturing and marketing a low-cost
high-speed microfilm scanner. In March 1984, the Company changed its name to
Flexicare, Inc., and in September 1996, the Company changed its name to Pillar
Entertainment Group Inc. In November 1997, the company acquired all of the
issued and outstanding stock of Chrysalis Hotels and Resorts Corp. in a reverse
merger transaction and changed its name to Chrysalis Hotels and Resorts Corp. In
April, 1999, the Company acquired certain assets of James L. Lucas, Glenn and
Paulette Kimball, Marek Niczyporuk, James L. and Barbara Baker Quinn, Herbert
and Patricia Walker and Alva D. and Kirsten Cravens, (collectively the Kristal
Group) in exchange for 6,000,000 shares of the Company's common stock thus
transferring control of the company to the Kristal Group and changed its name to
CybeRecord, Inc.
The Kristal Group assets consisted of the following: The intellectual
property of Kristal Group owned, licensed or otherwise used in the business
conducted by Kristal Group for the microfilm, scanning device design, all
hardware design, and computer programming code and software owned by Kristal
Group including, but not limited to , any and all Software needed to allow the
scanning/ digitizing/reading device to operate in a reliable and commercial
manner, programs software, including all trademarks and the intellectual
property related to the foregoing, in both machine readable and/or human
readable form, including :(i) rights to, and any rights to apply for and/or
register, patents and patent applications, copyrights, trademarks, trade secrets
and all other proprietary rights relating to such intellectual property, (ii)
records and files relating to manufacturing, quality control, sales, marketing
and customer support and designs for such intellectual property, (iii)
Derivative Works of such Kristal Group Intellectual Property, and (iv) all
related Documentation. Other Assets consisting of hardware patents, rights to
hardware patents, customer lists, contracts, agreements, licenses or license
agreements, commitments, warranties, claims and other existing and inchoate
rights, but excluding without limitation, cash, marketable securities,
receivables and rights relating to contractual obligations. At the time of
acquisition, the cost of the assets acquired was changed to expense as research
and development as the asset had not reached technological feasability.
The Company presently has a number of patents which will be formally
pending, shortly. There is no government approval necessary for any of the
Company's business, and there is no projected environmental impact on the
Company's business or government regulations presently in place which would have
any impact on the business of the Company. The Company presently employs six
full-time employees.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion of the results of operations and financial
condition should be read in conjunction with the audited financial statements
and related notes appearing subsequently under the caption "Financial
Statements".
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The Company's business is the development, manufacture and marketing of a
low-cost, high-speed microfilm scanner. Research conducted by Giga Information
Group concluded that the microfilm scanner market would increase substantially
if scanner prices were to fall from the current $100,000 to below $50,000. Giga
estimated market potential of up to 26,486 unites and $1.2 billion for the four
year period following a price drop. Its research indicates that a serious
deterrent to market expansion in microfilm scanners is high unit price and
complex scanner setup.
The Company's business model addresses this problem by offering scanners on
a rental program. Customers can install as many scanners as necessary for the
time they need them, with no capital expenditure. The Company expects 90% of its
revenue to come from this program.
Monthly rental fees will be charged according to the number of images
scanned per unit. This monthly click charge will generate a monthly income of at
least $3,000 per scanner, based on a per-unit minimum of 300,000 images billed
at a minimum rate of a penny per image. In addition, the Company will receive
the first and last two minimum monthly payments of $3,000 with each rental
order.
The Company estimates that 10% of its customers will purchase scanners
rather than rent them. Those customers will pay a purchase price of $129,500
plus a maintenance charge of $500 per month.
If the Company ships 1,250 microfilm scanners during the first four years,
or less than 1/2% of Giga's market estimate of 26,486 units, the Company
projects a combined rental and sales revenue of nearly $97 million during that
period, plus four years of accumulated operating income exceeding $63 million.
The Company is targeting all microfilm users who have been waiting for a
cost effective means to convert microfilm records to digital images.
The typical customer will be an organization with a need to share critical
information in a timely manner that is currently stored on microfilm. Some
applications are:
|_| Banking: mortgage records, customer service and loan records
|_| Insurance: policies, retirement records, personnel records, and
claims.
|_| Government: intelligence data, IRS records, vital statistics,
retirement system, personnel engineering drawings.
|_| Law Enforcement: arrest records, fingerprints, and HR records.
|_| Legal: discovery documents, case files.
|_| Medical: workman's compensation records, x-rays, health records.
|_| Engineering: drawing conversion, plant & facility, maintenance.
|_| Genealogy: records for family history.
|_| Service Bureau: all applications & backfile conversions.
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The Company will reach customers through advertising, direct mail, and
trade shows. The Company will advertise in vertical magazines that communicate
with managers in end user organizations such as, Law Enforcement magazines for
law enforcement, Insurance magazines for insurance, etc. The Company will also
employ web pages with links to related producers of market partners.
The need to access and share information more quickly is causing more and
more microfilm users to consider alternative methods of storing and
disseminating critical information. While microfilm is a cost effective and
secure method of storage, electronic systems offer quicker access to vital
information. With information access becoming more and more critical, the rage
of conversion from microfilm based on information systems to computer based
systems is rapidly increasing.
Conversion from microfilm to computer based systems requires that the
microfilm be converted to digital images using a microfilm scanner. Once
digitized, the images are indexed using special indexing software and
transferred on a large image database for storage and future retrieval. There
are several indexing and image database systems that are sold by system
integrators and Value Added Resellers (VARs).
The Company has also developed relationships with large VARs and system
integrators who are already selling to the Knowledge Management market. The
Company's strategy is to aggressively promote its "click charge" program, ease
of use, high quality digital image output and high productivity.
The relative low monthly cost of the Company's rental program lends itself
to direct response, so its sales strategy is to offer the product direct, as
well as through select VARs.
The Ethernet ready CybeRecord scanner supports the industry popular paper
scanner interface, allowing the many Resellers already selling paper scanners to
sell the Company's scanner with little investment or training.
The Company's strategy is to offer a better product at a lower price.
Customers can install and use the Company's scanner for just a $.01(one cent)
charge for each image that is digitized, up to a minimum of 300,000 images. It
is possible for a scanner to digitize up to 420,000 images per month on a single
shift operation. On two shifts, the user could digitize 840,000 images per
month. The minimum rental and click charge is $3,000 per month. The Company will
replace scanners overnight rather than provide on-site repair. Our rental/click
charge of $.01(one cent) to $.05(five cents) per image is extremely competitive
when compared to outsourced charges ranging from $.07(seven cents)-
$.35(thirty-five cents) per image.
According to information from AIIM, the Company's own research and the
conclusions of market research conducted by the Giga Information Group, the
market for microfilm scanners nationwide was estimated as high as $1.19 billion
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during the period between 1998 and the year 2001. The Giga study estimated that
over 523 billion microfilm images are highly qualified for conversion to digital
images over the next four years. Converting merely 15% of these would create a
$500 million market. With the introduction of the Company's product, the area of
greatest growth in the microfilm scanner market will be in the mid-range of the
market.
The Company will promote its microfilm scanner on a combination monthly
rental/click charge rather than outright purchase, thus creating a repeatable
income based on a charge per converted image.
The Company believes the low cost of microfilm scanner acquisition created
by our rental program, and the ease of use provided by our control software,
will accelerate the frequency of microfilm conversion and consequently stimulate
the growth of the entire document imaging market.
The Company's browser based system tracks and tallies the number of images
scanned each month for each scanner. This information is downloaded to the
Company monthly for customer billing. In addition, the software has a sixty day
clock that must be reset via modem by the Company. If the clock is not reset,
the scanner will cease to operate. Since customers who fail to pay their bills
will be unable to scan, collection problems will be completely eliminated.
The Company will distribute its product through Resellers, VARs and system
integrators, as well as directly to end users. Internationally, and in special
instances in the United States, the Company plans to set up strategic
relationships with leading Knowledge Management sales organizations. Separately,
the reseller and the Company will create a company in a given geographic region
or country covered by our business partner, with the Company owning the majority
interest of the company.
The Company's pricing strategy will encourage customers to rent rather than
purchase. At the minimum monthly charge of $3,000 it would take almost four
years to equal the acquisition cost of $129,000 plus $6,000 annual maintenance.
The Company believes the elimination of significant capital expenditure
approvals will encourage over 90% of the companies to pay by the image scanned
rather the purchase. The Company's direct sales force has previously developed
relationships in key accounts and will focus heavily on government, including
law enforcement, banking, insurance, title companies and service bureaus.
The Company has two new products on the horizon. The first is a low cost
microfilm camera that will create microfilm from digital images, and can be
manufactured for approximately $3,000. The Company's scanner employs a Pentium
II based motherboard, 128 Mgb of RAM memory, a 9 GB hard disk, SCSI and Firewire
interface, and 10/100 base T Ethernet internally. The system consists of a
computer, digital scanner, film transports to accommodate all three kinds of
microfilm, and image enhancement software designed to produce high quality
images from low quality microfilm. The system operates Microsoft NT 4.0 and
employs proprietary image enhancement software. Software enhancements
incorporate medical imaging know-how, which is far ahead of microfilm scanning
imaging, and applies it to the scanning process. For example, the Company
applies a medical imaging algorithm to the function of moving and position film.
4
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The Company is in the process of applying for four patents to protect its
technology and intends to develop lower cost scanners for the library market.
Two prototype scanners will be produced for beta testing before the end of
1999, and volume production can begin immediately after completion of beta
testing.
The Company projects that its product prototype will be completed in
November 1999 for coordination of its hardware-software capabilities and for
testing prior to manufacturing. Based on a successful outcome of the prototype
testing, the first shipments could be readied for distribution as early as
January or February of 2000. Pre-sales of the equipment is now starting.
However, definitive sales activity will not commence until final determination
of cost-pricing and manufacturing capability projections.
The primary product for CybeRecord has already moved into its final
development stage. The principal software with its unique and (imminently)
patent pending features, has already been completed, and the hardware aspect of
the product has moved to the component manufacturing stage in which the various
pieces are produced by several specialty technical manufacturers per engineering
specifications, and testing as to mechanical calibration, etc. will be done.
The CyberVault Concept
The Company will rent scanners to customers for conversion of paper or film
records to CybeRecords. Optionally, the Company will offer the service of
converting records at an extremely competitive one-time charge for the
conversion. Once converted, the CybeRecords will reside at the customer's site
in a CyberServer, supplied by the Company for a monthly charge. The company will
manage the hardware and software for the customer. In addition, the Company will
store a duplicate of the information in a CyberVault for a monthly charge. The
CyberVault will have all records backed up as many times as needed to overcome
the customer's fear. The Company will simply charge a reasonable fee for
customer disc space and access to the CyberVault.
Liquidity and Capital Resources
The Company currently believes that it has adequate cash resources to fund
current operations. There can be no assurance, however, that the Company's
actual capital needs will not exceed anticipated levels, or that the Company
will generate sufficient revenues to fund its operations in the absence of other
sources.
The cash requirements for CybeRecord research and development and
operational start-up was projected at $1 million, half of which has been
received. The Company anticipates receipt of the balance of the funding within
30-45 days. At present, there has not been a demonstrable need to forecast
additional funding requirements and solicitations beyond this start-up budget
range. Current revenue projections show that the availability of product and its
revenue-generated distribution in early 2000 will enable the Company to meet its
financial operational requirements as an on-going entity.
5
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Details regarding manufacturing facility and staffing are still being
determined, based on the on-going analysis of projected market demand for the
product. A decision as to the site of the plant in which component pieces will
be assembled is pending until final assessments are made as to such elements as
labor availability, shipping accessibility, costs and taxes, etc. Another
element of consideration is, of course, the final projected market demand which
will obviously dictate the projected plant capacity requirements and staffing
needs.
Need for Additional Financing
Year 2000 issues are not currently material to the Company's business,
operations or financial condition, and the Company does not currently anticipate
that it will incur any material expenses to remedy Year 2000 issues it may
encounter.
Item 3. Description of Property
The Company leases executive offices at 10900 N.E. 8th Street, Suite 900,
Bellevue, Washington pursuant to a written lease which expired on September 30,
1999, and which continues on a month to month basis at a monthly rental of
$1,300.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
As of September 30, 1999, the Company had 15,401,864 issued and outstanding
shares of Common Stock. The following table sets forth as of September 30, 1999,
certain information regarding beneficial ownership of the Common Stock by (i)
those persons beneficially holding more than five percent of the Company's
Common Stock, (ii) the Company's directors who beneficially own shares of the
Common Stock, (iii) the officers named in the Summary Compensation table below,
and (iv) all of the Company's directors and officers as a group.
Name and Address Amount of Shares Percent
of Beneficial Owner (1) of Beneficial Owner of Class
- ----------------------- ------------------- --------
James J. Lucas 1,500,000 9.74
3419 Evergreen Point Road
Medina, WA 98039
James L. Quinn* 1,100,000 7.14
3419 Evergreen Point Road
Medina, WA 98039
Glenn Kimball** 1,500,000 9.74
2850 College Avenue
Modesto, CA 95350
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Thomas Morikawa 1,115,000 7.24
1737 14th Avenue
Seattle, WA 98122
Brent Nelson 225,000 1.46
5395 176th Place
Bellevue, WA 98004
Marek A. Niczyporuk 1,300,000 8.44
962 Elsinore Drive
Palo Alto, CA 94303
All officers and directors
as a group (4 persons) 5,475,000 35.5
* Shares held jointly with Mr. Quinn's wife, Barbara Quinn
** Shares held jointly with Mr. Kimball's wife, Paulette Quinn
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers of the Company and their ages as of
the date of this document are as follows:
Name Age Position
- ----- ---- ----------
James J. Lucas 57 President, CEO
Thomas M. Morikawa 54 Executive Vice President, COO, Director
James L. Quinn 63 Vice President
Glenn S. Kimball 66 Vice President
Brent Nelson 38 Director
James J. Lucas, President and CEO, has more than 20 years of senior
management experience in digital imaging markets. Career highlights include
positions as vice president of product marketing and vice president of
advertising and public relations for General Electric Company, Calma Division,
and vice president of special markets for Eastman Kodak Company, Atex Division.
In 1981, he developed the original business and product concepts for Qubix
Graphic Systems, a venture-funded company that went public and was subsequently
acquired. He predicted the enormous growth of desktop publishing years before
Apple Computer and Adobe Systems launched products to unlock the massive market.
- ------------------------
(1) For purposes of the table, a person is considered to "beneficially own" any
shares with respect to which he/she directly or indirectly has or shares voting
or investment power or of which he or she has the right to acquire the
beneficial ownership within 60 days. Unless otherwise indicated and subject to
applicable community property law, voting power and investment power are
exercised solely by the person named above or shared with members of his or her
household.
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James Quinn, Vice President of Sales, is a multilingual executive who has
lived and conducted business in all major world markets. He has defined
international marketing strategies for multinational corporations and has served
as president of several overseas subsidiaries.
Thomas Morikawa, Executive Vice President & COO, has more than 25 years of
management experience in corporate operations, sales and marketing. His career
spans a number of industries, including international property development,
manufacturing, advertising and promotion, wholesale distribution, and retail
merchandising. He has also served as director and officer of several companies
and community services organizations.
Glenn Kimball, Vice President of Engineering, has more than 20 years of
experience in imaging product development, primarily for large government
organizations. For the Federal Reserve Bank, he developed image processing
techniques to separate and enhance poor quality, overlapping bank endorsements
and a series of test documents that have become an industry standard in
providing performance of high-speed check reader- sorters. For the United States
Defense Mapping Agency, he managed development and production of seven
multimillion dollar topographic map compilation systems that performed at micron
accuracy.
Brent Nelson has served as a Director of the Company since October, 1997.
He presently serves as the managing director of Northwest Capital Partners,
L.L.C., a venture capital firm located in Bellevue, Washington. Mr. Nelson also
presently serves on the boards of directors of Palmworks, Inc. and Interactive
Objects, Inc., both software development firms. He holds a diploma in marketing
from Douglas College, Vancouver, B.C., Canada. Mr. Nelson has over 15 years of
experience in corporate project financing.
Item 6. Executive Compensation.
Compensation for the officers of the Company is presented below. There are
no other benefits or compensation provided.
The following table shows all the cash compensation paid by the Company as
well as certain other compensation paid during the fiscal years indicated.
Long Term Compensation
<TABLE>
<CAPTION>
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------ --------------------------------- ---------
(a) (b) (c) (d) (e)Other (f) (g) (h) (i)
Name and Annual Restricted All Other
Principal Compen- Stock Options LTIP Compen-
Position Year Salary($)* Bonus($) sation($) Awards($) SARs Payouts($) sation($)
- ---------- ----- ---------- ------- ---------- ---------- ------- ---------- ----------
<S> <C> <C> <C>
James Lucas 1999 $168,000 $12,500
Pres. & CEO
Thomas Morikawa 1999 150,000
Exec. V.P. & COO
Glenn Kimball 1999 108,000 12,500
V.P. Engineering
James Quinn 1999 132,000
V.P. Sales
Marek Niczyporuk 1999 108,000 12,500
</TABLE>
* Ammortized salary - Salary payments commenced May 1, 1999.
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Option/SAR Grants in Last Fiscal Year. There were no option/SAR Grants in
the last fiscal year.
Compensation of Directors
The Company's directors serve without compensation.
Item 7. Certain Relationships and Related Transactions.
No officer, director, promoter, or affiliate of the Company has or proposes
to have any direct or indirect material interest in any asset proposed to be
acquired by the Company through security holdings, contracts, options, or
otherwise.
Item 8. Description of Securities.
Common Stock
The Company has authorized 25,000,000 shares of Common Stock par value
$.001. Each outstanding Share of Common Stock is entitled to one vote, either in
person or by proxy, on all matters that may be voted upon by the owners thereof
at meetings of the stockholders.
The holders of Common Stock (i) have equal ratable rights to dividends from
funds legally available therefor, when, and if declared by the Board of
Directors of the Company; (ii) are entitled to Share ratably in all of the
assets of the Company available for distribution to holders of Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company; (iii) do
not have preemptive, subscription or conversion rights, or redemption or sinking
fund provisions applicable thereto; and (iv) are entitled to one non-cumulative
vote per Share on all matters on which stockholders may vote at all meetings of
stockholders.
All of the issued and outstanding shares of Common stock are, and all
unissued shares when sold will be, duly authorized, validly issued, fully paid
and non-assessable. To the extent that additional shares of the Company's common
stock are issued, the relative interests of the then existing shareholders may
be diluted.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters
(a) Market Information
The Company's Common Stock ($.001 par value), all of which are one class,
is publicly traded on the over the counter market. It is presently traded in the
OTC "Pink Sheets" The Company's principal market makers are Olsen Payne &
Company, Paragon Capital Corporation, Sharpe Capital Corp., and Hill, Thomson
Magid and Company. The high-low bid information for the Company's stock for the
period May, 1998 to September 1999 as provided by CSI, Inc, follows:
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Monthly prices (May 1998 to Oct, 1999)
Date High Low Close
- ---- ---- ---- -----
Sep-99 1 0.5 0.875
Aug-99 1.25 0.938 1
Jul-99 1.563 1.125 1.188
Jun-99 1.875 0.938 1.625
May-99 1.438 0.5 1.094
Apr-99 1 0.406 0.875
Mar-99 0.813 0.125 0.563
Feb-99 0.375 0.188 0.375
Jan-99 0.25 0.125 0.25
Dec-98 0.375 0.125 0.219
Nov-98 0.563 0.219 0.375
Oct-98 0.5 0.219 0.219
Sep-98 0.5 0.24 0.5
Aug-98 0.938 0.625 0.656
Jul-98 1.125 0.75 0.938
Jun-98 1.063 0.688 0.906
May-98 1 0.438 1
(b) Holders
The approximate number of record holders of the Company's Common Stock as
of September 30, 1999 was 346, inclusive of those brokerage firms and/or
clearing houses holding the Company's common shares for their clientele (with
each such brokerage house and/or clearing house being considered as one holder).
The aggregate number of shares of Common Stock outstanding as of September 30,
1999 was 15,401,864 shares.
(c) Dividends
The Company has not paid or declared any dividends upon its Common Stock
since its inception and, by reason of its present financial status and its
contemplated financial requirements, does not contemplate or anticipate paying
any dividends upon its Common Stock in the foreseeable future.
Item 2. Legal Proceedings
The Company is not presently a party to any material litigation, nor to the
Company's knowledge is such litigation threatened.
Item 3. Changes in and Disagreements with Accountants
The Company has had no changes in or disagreements with accountants on
accounting or financial disclosure.
Item 4. Recent Sales of Unregistered Securities
The following unregistered securities of the Company have been issued in
the past three years:
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1. On October 1, 1997, the Company issued 4,000,000 free-trading shares to
fifty-one non-affiliates at a price of $.06 per share for an aggregate
consideration of $240,000 pursuant to an exemption from registration
under Regulation D, Rule 504 of the Act.
2. On October 11, 1997, the Company issued 8,000,000 restricted shares to
seventeen affiliates in a stock for stock reverse merger transaction.
The shares were exempt from registration pursuant to Section 4(2) of
the Act.
3. On March 24, 1999, the Company issued 1,970,000 free-trading shares to
ten non-affiliates pursuant to an exemption from registration under
Regulation D, Rule 504 of the Act, at a price of $.50 per share for a
total considration of $985,000, and issued 46,000 free-trading shares
to two non-affiliates in consideration of legal services rendered,
pursuant to an exemption from registration under Regulation D, Rule 504
of the Act.
4. On April 20, 1999, the Company issued 6,000,000 restricted shares to
seven affiliates in exchange for transfer of assets and 50,000 shares
as a finder's fee in the transaction. The shares were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Act").
Item 5. Indemnification of Directors and Officers
The Certificate of Incorporation and Bylaws of the Company contain
provisions limiting or eliminating the liability of directors of the Company to
the Company or its stockholders to the fullest extent permitted by the General
Corporation law of Florida and indemnifying officers and directors of the
Company to the fullest extent permitted by the General Corporation Law of
Florida. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.
PART F/S
The Financial Statements of CybeRecord, Inc. required by Regulation S-
B commence on page F-1 and are incorporated herein by reference.
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PART III
Items 1 & 2. Index to Exhibits and Description of Exhibits
3(i) Articles of Incorporation with Amendments
3(ii) By-Laws
10 Lease for premises Suite 900, 10900 N.E. 8th St. Bellevue, WA
THIS PAGE INTENTIONALLY LEFT BLANK
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
CYBERECORD, INC.
Date: October 26, 1999 By: /s/ James J. Lucas
---------------- --------------------------
James J. Lucas, CEO
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CYBERECORD, INC.
FINANCIAL REPORT
JUNE 30, 1999
DECEMBER 31, 1998
DECEMBER 31, 1997
<PAGE>
C O N T E N T S
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance sheets 2
Statements of operations 3
Statements of stockholders' equity 4
Statements of cash flows 5
Notes to financial statements 6 - 9
<PAGE>
PETERSON SULLIVAN P.L.L.C.
601 Union Street Suite 2300 Seattle WA 98101 (206) 382-777 Fax 382-7700
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
CybeRecord, Inc.
Bellevue, Washington
We have audited the accompanying balance sheets of CybeRecord, Inc. as of June
30, 1999, December 31, 1998, and December 31, 1997, and the related statements
of operations, stockholders' equity, and cash flows for the six months ended
June 30, 1999, and the years ended December 31, 1998 and 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CybeRecord, Inc. as of June 30,
1999, December 31, 1998, and December 31, 1997, and the results of its
operations and its cash flows for the six months ended June 30, 1999, and the
years ended December 31, 1998 and 1997, in conformity with generally accepted
accounting principles.
/s/ PETERSON SULLIVAN P.L.L.C.
- -------------------------------
PETERSON SULLIVAN P.L.L.C.
September 21, 1999
1
<PAGE>
CYBERECORD, INC.
BALANCE SHEETS
June 30, 1999, December 31, 1998, and December 31, 1997
<TABLE>
<CAPTION>
June 30, December 31, December 31,
ASSETS 1999 1998 1997
----------------- ---------------- ----------------
<S> <C> <C> <C>
Current Assets
Cash $ 323,092 $ 1,307 $ 58
Prepaid expenses 23,101
----------------- ---------------- ----------------
Total current assets 346,193 1,307 58
Furniture and Equipment, at cost,
less accumulated depreciation of $194 6,774
----------------- ---------------- ----------------
$ 352,967 $ 1,307 $ 58
================= ================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 6,713 $ - $ -
Stockholders' Equity
Common stock, par value $.001 at June 30,
1999, and $.01 at December 31, 1998
and 1997 15,402 123,359 123,359
Additional paid-in capital 4,450,086 309,079 225,579
Retained deficit (3,634,234) (431,131) (348,880)
----------------- ---------------- ----------------
831,254 1,307 58
Less: Stock subscriptions receivable (485,000)
----------------- ---------------- ----------------
346,254 1,307 58
----------------- ---------------- ----------------
$ 352,967 $ 1,307 $ 58
================= ================ ================
</TABLE>
See Notes to Financial Statements
2
<PAGE>
CYBERECORD, INC.
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1999,
and Years Ended December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
June 30, December 31, December 31,
1999 1998 1997
----------------- ---------------- ----------------
<S> <C> <C> <C>
Revenues $ - $ - $ -
Expenses
Research and development, including
labor and benefits of $128,317 3,128,317
General and administrative 74,786 82,251 345,688
3,203,103 82,251 345,688
----------------- ---------------- ----------------
Net loss $ (3,203,103) $ (82,251) $ (345,688)
================ =============== ===============
Basic loss per share of common stock $ (0.23) $ (0.01) $ (0.03)
================ =============== ===============
</TABLE>
See Notes to Financial Statements
3
<PAGE>
CYBERECORD, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 1999,
and Years Ended December 31, 1998, and December 31, 1997
<TABLE>
<CAPTION>
Additional
Common Common Paid-in Retained Receivable for
Shares Stock Capital Deficit Shares Sold Total
---------- ----------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1996 9,035,864 $ 12,059 $ 50,179 $ (3,192) $ - $ 59,046
Issuance of common stock,
net of effects of exchange
of Chrysalis shares for Pillar shares 3,300,000 111,300 128,700 240,000
Additional capital contributed
by shareholders 46,700 46,700
Net loss (345,688) (345,688)
---------- ----------- ----------- ------------ ------------ ------------
Balances, December 31, 1997 12,335,864 123,359 225,579 (348,880) 58
Additional capital
contributed by shareholders 83,500 83,500
Net loss (82,251) (82,251)
---------- ----------- ----------- ------------ ------------ ------------
Balances, December 31, 1998 12,335,864 123,359 309,079 (431,131) 1,307
Contribution of shares back
to the corporation
by shareholders (5,000,000) (50,000) 50,000
Issuance of common stock in
exchange for
Kristal Group assets 6,000,000 60,000 2,940,000 3,000,000
Issuance of common stock in
exchange for services 96,000 960 39,040 40,000
Issuance of common stock in
exchange for cash and stock
subscriptions receivable 1,970,000 19,700 965,300 (485,000) 500,000
Additional capital contributed
by shareholders 8,050 8,050
Change in par value of stock (138,617) 138,617
Net loss (3,203,103) (3,203,103)
---------- ----------- ----------- ------------ ----------- ------------
Balances, June 30, 1999 15,401,864 $ 15,402 $ 4,450,086 $ (3,634,234) $ (485,000) $ 346,254
========== =========== =========== ============ =========== ============
</TABLE>
See Notes to Financial Statements
4
<PAGE>
CYBERECORD, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1999,
and Years Ended December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
June 30, December 31, December 31,
1999 1998 1997
----------------- ---------------- ----------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $ (3,203,103) $ (82,251) $ (345,688)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 194
Write-off of assets (primarily intellectual
property) acquired that had not
reached technological feasibility 3,000,000
Professional fees exchanged for
common stock 40,000
Changes in operating assets and liabilities
Prepaid expenses and deposits (23,101) 14,709
Accounts payable 6,713 (5,390)
Other 44,200
Cash used in operating activities (179,297) (82,251) (292,169)
Cash Flows From Investing Activity
Purchase of equipment (6,968)
Cash Flows From Financing Activities
Issuance of common stock 500,000 240,000
Capital contribution 8,050 83,500 46,700
Cash provided by financing activities 508,050 83,500 286,700
Net increase (decrease) in cash 321,785 1,249 (5,469)
Cash, beginning of year 1,307 58 5,527
Cash, end of year $ 323,092 $ 1,307 $ 58
</TABLE>
See Notes to Financial Statements
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies
Organization
CybeRecord, Inc. ("CybeRecord") was previously known as Chrysalis Hotels and
Resorts, Inc. ("Chrysalis"). Chrysalis was previously known as Pillar
Entertainment, Inc. ("Pillar").
Pillar was a corporation with very little financial activity for many years. In
October 1997, Pillar exchanged its common stock for all the outstanding stock of
Chrysalis. As Pillar and Chrysalis were related corporations (Pillar's president
was a major stockholder in Chrysalis), the transaction was accounted for at a
historical cost basis. Pillar then changed its name to Chrysalis. These
financial statements are prepared as if the companies were combined as of
December 31, 1996.
In April 1999, Chrysalis issued common stock to acquire the assets (primarily
intellectual property) of a joint venture called the Kristal Group. Chrysalis
then changed its name to CybeRecord.
In conjunction with the acquisition of the Kristal Group's assets, CybeRecord is
working toward the development of software that will enhance paper and microfilm
records when converted to digital documents. This will allow these records to be
shared electronically over the Internet and within company Intranet systems. As
of June 30, 1999, products developed by CybeRecord have not reached the stage of
technological feasibility as defined by Statements of Financial Accounting
Standards ("SFAS") 86. Accordingly, the cost of the assets acquired from the
Kristal Group and all costs associated with software development have been
charged to expense as research and development. In addition, CybeRecords has not
generated any revenues through June 30, 1999.
CybeRecord intends to market the software it is developing. Revenue recognition
policies for software sales will be established when products are ready for
distribution. Revenue will be recognized when earned and CybeRecord will follow
American Institute of Certified Public Accountants Statements of Position 97-2
and 98-4, "Software Revenue Recognition."
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 the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Accordingly, actual results could differ from the estimates that were used.
6
<PAGE>
Note 1. (Continued)
Cash
Cash includes cash balances held at a bank and all highly liquid debt
instruments with original maturities of three months or less. Cash balances are
in excess of amounts insured by the Federal Deposit Insurance Corporation.
No cash payments for interest or income taxes were made during the six months
ended June 30, 1999, and the years ended December 31, 1998 and 1997.
Stock Subscriptions Receivable
Stock subscriptions receivable are for 970,000 shares of common stock and are
due from five investors. The amounts receivable are expected to be collected
by December 31, 1999.
Furniture and Equipment
Furniture and equipment are depreciated using the straight-line method over the
estimated useful lives of the related assets.
Research and Development
Research and development costs are expensed as incurred. When products being
developed reach technological feasibility, costs associated with these products
will be capitalized and amortized over their estimated useful lives.
Taxes on Income
CybeRecord accounts for income taxes under an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for expected
future tax consequences of events that have been recognized in CybeRecord's
financial statements or tax returns. In estimating future tax consequences,
CybeRecord generally considers all expected future events other than enactments
of changes in the tax laws or rates.
Earnings Per Share
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in the
period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares. There are no potentially dilutive common shares at June 30, 1999,
or at December 31, 1998 and 1997. The weighted average number of shares was
13,693,864, 12,335,864, and 9,860,864 for the six months ended June 30, 1999,
and the years ended December 31, 1998 and 1997.
7
<PAGE>
Note 1. (Continued)
Stock-Based Compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value.
Although there has been no stock-based compensation, CybeRecord has chosen to
account for stock-based compensation using Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees." Accordingly, compensation
cost for stock options granted to employees is measured as the excess, if any,
of the quoted market price of the Corporation's stock at the date of the grant
over the amount an employee is required to pay for the stock.
Comprehensive Income
There are no reconciling items between the net loss presented in the Statement
of Operations and comprehensive loss as defined by SFAS No. 130, "Reporting
Comprehensive Income."
New Accounting Standards
New accounting standards issued through the date of the independent auditors'
report do not have an effect on these financial statements.
Note 2. Capital Stock
June 30, December 31, December 31,
1999 1998 1997
------------ ------------- -----------
Shares authorized 25,000,000 20,000,000 20,000,000
============ ========== ==========
Shares issued and outstanding 15,401,864 12,335,864 12,335,864
============ ========== ==========
Note 3. Non-Cash Transactions
In 1999, CybeRecord issued 6,000,000 shares of common stock in conjunction with
the acquisition of the Kristal Group's assets (See Note 1). The common stock was
valued at $.50 per share. This value was based on stock sales in the same time
period. In addition, in 1999, CybeRecord issued 96,000 shares in exchange for
services valued at $40,000.
8
<PAGE>
Note 4. Income Taxes
The reconciliation of income tax on income computed at the federal statutory
rates to income tax expense is as follows:
June 30, December 31, December 31,
1999 1998 1997
------------ ------------- -----------
Tax at statutory rate $(1,089,055) $ (27,966) $ (117,534)
Change in valuation allowance
for deferred tax asset 1,089,055 27,966 117,534
------------- ----------- -----------
Income tax expense $ - $ - $ -
============= =========== ===========
CybeRecord's deferred tax asset is as follows:
<TABLE>
<CAPTION>
June 30, December 31, December 31,
1999 1998 1997
------------ ------------- -----------
<S> <C> <C> <C>
Net operating loss carryforwards
(before valuation allowance) $ 214,042 $ 144,713 $ 116,067
Research and development costs
expensed for financial statement
purposes, but capitalized for
income tax purposes 1,020,000
Other 1,598 1,872 2,552
Less valuation allowance for deferred
tax asset (1,235,640) (146,585) (118,619)
----------- --------- ---------
Net deferred tax asset $ - $ - $ -
=========== ========= =========
</TABLE>
CybeRecord has net operating loss carryforwards of $629,536 at June 30, 1999.
These losses expire in 2019.
9
ARTICLES OF INCORPORATION
OF
FLEXI-BUILT MODULAR HOUSING CORPORATION
We, the undersigned, hereby associate ourselves for the purpose of
becoming and forming a body corporate under the laws of the State of Florida,
under and by virtue of the following articles of incorporation.
ARTICLE I
The name of the corporation shall be:
FLEXI-BUILT MODULAR HOUSING CORPORATION.
ARTICLE II
The general nature and the objects of the business and the purposes
proposed to be transacted and varied or are to do any and all things mentioned
herein as fully and to the same extent as natural persons might or could do,
viz:
1. To manufacture, buy, sell, transport, erect, or construct
prefabricated homes and buildings, mobile or permanent, of every kind, nature
and description.
2. To exercise any power and authority which may be done by a private
corporation organized and existing under and by virtue of Chapter 608, Florida
Statutes, it being the intention that this corporation may conduct and transact
any business lawfully authorized and not prohibited by Chapter 608, Florida
Statutes.
ARTICLE III
The maximum number of shares of the capital stock which this
corporation shall be authorized to have outstanding at any time is fifty (50)
shares of common with a par value of Ten Dollars ($10.00) per share.
<PAGE>
ARTICLE IV
The amount of capital with which this corporation shall begin business
is not less than Five Hundred ($500.00) Dollars.
ARTICLE V
The existence of this Corporation shall be perpetual.
ARTICLE VI
The business of this corporation shall be conducted by a board of
directors which shall consist of not less than three (3) nor more than seven (7)
members, the exact number to be fixed from time to time by the By-Laws of this
Corporation.
ARTICLE VII
The initial post office address of the corporation shall be 550 Seybold
Building, Miami, Florida, 33132.
ARTICLE VIII
The names and addresses of the first Board of Directors who shall hold
office for the first year of the corporation's existence or until their
successors are elected and have qualified, are as follows:
Martin Fried 550 Seybold Building
Miami, Florida 33132
Joel Rubin 550 Seybold Building
Miami, Florida 33132
Albert D. Greenfield 550 Seybold Building
Miami, Florida 33132
ARTICLE IX
The names and post office address of each subscriber to these
Articles of Incorporation and a statement of the number of shares of stock which
each agrees to take, are as follows:
Name Post Office Address No. of Shares
- ---- ------------------- ---------------
Martin Fried 550 Seybold Building 20 $200.00
Miami, Florida 33132
Joel Rubin 550 Seybold Building 20 $200.00
Miami, Florida 33132
Albert D. Greenfield 550 Seybold Building 20 $100.00
Miami, Florida 33132
<PAGE>
ARTICLE X
A director of this corporation shall not be disqualified by dealing
with or contracting with this corporation.
ARTICLE XI
The By-Laws of this corporation may provide that less than a majority
of the Board of Directors shall constitute a quorum for the transaction of
business.
IN WITNESS WHEREOF, we the undersigned, herein have made, subscribed
and acknowledged these Articles of Incorporation this 11th day of February,
1969.
/s/ Martin Fried
------------------------- (SEAL)
Martin Fried
/s/ Joel Rubin
------------------------- (SEAL)
Joel Rubin
/s/ Albert D. Greenfield
------------------------- (SEAL)
Albert D. Greenfield
STATE OF FLORIDA }
: SS.:
COUNTY OF DADE }
Before me, the undersigned authority, personally appeared MARTIN FRIED,
JOEL RUBIN and ALBERT D. GREENFIELD, to me known to be the persons described in
and who executed the foregoing Articles of Incorporation, and each of them
acknowledged before me, according to law, that he executed the same for the
purposes therein mentioned and set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 11th day
of February, 1969.
/s/ Robert H. Carthill
----------------------
Robert H. Carthill
Notary Public, State of Florida at Large
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
FLEXI-BUILT MODULAR HOUSING CORPORATION, a corporation organized and
existing under and by virtue of the provisions of Chapter 608 of the Florida
Statutes, the Certificate of Incorporation of which was filed in the office of
the Secretary of State on February 17, 1969; the principal office of which
corporation is at 1451 North Bayshore Drive, Miami, Florida 33132; pursuant to
the provisions of Chapter 608.18 of the Florida Statutes, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation unanimously
approved and proposed to the stockholders, and the persons holding all of the
issued and outstanding shares of stock of the said corporation did consent in
writing to the following resolution:
RESOLVED, that the Article III of the Articles of
Incorporation of this corporation is hereby stricken in its
entirety and the following is substituted in lieu thereof as
said Article III.
"ARTICLE III
The total number of shares which this corporation is
authorized to issue is 3,000,000 shares, all of the par
value of one cent ($.01) each. all of one class."
SECOND: That the said amendment was duly adopted in accordance with the
provisions of Chapter 608.18 of the Florida Statutes.
THIRD: That the capital of said corporation will not be reduced under
or by reason of said proposed amendment.
<PAGE>
IN WITNESS WHEREOF, the said FLEXI-BUILD MODULAR HOUSING CORPORATION
has caused its corporate seal to be hereunto affixed and this Certificate signed
by HAROLD GOLDBURG, its President and ALBERT D. GREENFIELD, its Secretary this
day of May, 1969.
FLEXI-BUILT MODULAR HOUSING CORPORATION
By: /s/ Harold Goldberg
--------------------
Harold Goldberg
Attest: /s/ Albert D. Greenfield
-------------------------
Albert D. Greenfield
I, ALBERT D. GREENFIELD, Secretary of FLEXI-BUILT MODULAR HOUSING CORPORATION, a
corporation organized and existing under the laws of the State of Florida, do
hereby certify, as the Secretary of the meeting of all the shareholders of the
said corporation on May 8, 1969 called and held for the purpose of considering
the above Amendment to the Articles of Incorporation of the said corporation,
that all of the shareholders of the said corporation approved, by affirmative
vote, the said Amendment.
By: /s/ Albert D. Greenfield
------------------------
Albert D. Greenfield, Secretary
STATE OF FLORIDA }
: SS.:
COUNTY OF DADE }
Before me personally appeared HAROLD GOLDBERG and ALBERT D. GREENFIELD,
to me well known and known to me to be the individuals described in and who
executed the foregoing instrument as President and Secretary of FLEXI-BUILD
MODULAR HOUSING CORPORATION, and severally acknowledged such instrument as
President and Secretary, respectively of said corporation, and the seal affixed
to the foregoing instrument is the corporate seal of said corporation, and that
it was affixed to said instrument by due and regular corporate authority, and
the said instrument is the free act, deed and agreement of said corporation.
WITNESS my hand and official seal this day of May, 1969.
/s/ Dean Ramey
---------------
Dean Ramey
Notary Public, State of Florida at Large
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
FLEXI-BUILT MODULAR HOUSING CORPORATION, a corporation organized and
existing under and by virtue of the provisions of Chapter 607 of the Florida
Statutes, the Certificate of Incorporation of which was filed in the office of
the Secretary of State on February 17, 1969; the principal office of which
corporation is at Suite 801 Brickell Centre, 799 Brickell Plaza, Miami, Florida
33131; pursuant to the provisions of Chapter 607.181 of the Florida Statutes,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation unanimously
approved and proposed to the stockholders, and the persons holding the majority
of the issued and outstanding shares of stock of the said corporation did
consent at a Special Meeting to the following resolution:
RESOLVED that the name of this corporation shall be changed
to FLEXICARE, INC.
SECOND: That the said amendment was duly adopted in accordance with the
provisions of Chapter 607.181 of the Florida
Statutes.
THIRD: That the capital of said corporation will not be reduced under
or by reason of said proposed amendment.
<PAGE>
IN WITNESS WHEREOF, the said FLEXI-BUILT MODULAR HOUSING CORPORATION
has caused its corporate seal to be hereunto affixed and this certificate signed
by MARCIA LYNN HUNTER, its Vice President and ALBERT D. GREENFIELD, its
Secretary this 12th day of March 1984.
FLEXI-BUILD MODULAR HOUSING CORPORATION
By: /s/ Marcia Lynn Hunter
------------------------
Marcia Lynn Hunter
Attest: /s/ Albert D. Greenfield
---------------------------
Albert D. Greenfield
I, ALBERT D. GREENFIELD, Secretary of FLEXI-BUILD MODULAR HOUSING
CORPORATION, a corporation organized and existing under the laws of the State of
Florida, do hereby certify, as the Secretary of the meeting of all the
shareholders of the said corporation on March 13, 1984 called and held for the
purpose of considering the above Amendment to the Articles of Incorporation of
the said corporation, that in excess of a majority of the Shareholders of the
said corporation approved, by affirmative vote, the said Amendment.
By: /s/ Albert D. Greenfield
--------------------------
Albert D. Greenfield
Secretary
<PAGE>
STATE OF FLORIDA }
COUNTY OF DADE }
Before me personally appeared MARCIA LYNN HUNTER and ALBERT D.
GREENFIELD, to me well known and known to me to be the individuals described in
and who executed the foregoing instrument as Vice President and Secretary of
FLEXI-BUILT MODULAR HOUSING CORPORATION and severally acknowledged such
instrument as Vice President and Secretary, respectively, of said corporation,
and that the seal affixed to the foregoing instrument is the corporate seal of
said corporation, and that it was affixed to said instrument by due and regular
corporate authority, and that said instrument is the free act, deed and
agreement of said corporation.
WITNESS my hand and official seal this 13th day of March 1984.
/s/ Kathlene M. Brandon
--------------------------
Kathlene M. Brandon
Notary Public
State of Florida at Large
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
FLEXI-BUILT MODULAR HOUSING CORPORATION, a corporation organized and
existing under and by virtue of the provisions of Chapter 607 of the Florida
Statutes, the Certificate of Incorporation of which was filed in the office of
the Secretary of State on February 17, 1969 and whose name was changed to
FLEXICARE, INC. by a Name-Change Amendment which was filed on March 14, 1984:
the principal office of which corporation is at Suite 801 Brickell Centre, 799
Brickell Plaza, Miami, Florida 33131; pursuant to the provisions of Chapter
607.181 of the Florida Statutes, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation unanimously
approved and proposed to the stockholders, and the persons holding the majority
of the issued and outstanding shares of stock of the said corporation did
consent at a Special Meeting to the following resolution:
RESOLVED, that the Article III of the Articles of
Incorporation of this corporation is hereby stricken in its
entirety and the following is substituted in lieu thereof as said
Article III.
ARTICLE III.
The total number of shares which this Corporation is
authorized to issue is 10,000,000 shares, all the par value of
one cent ($.01) each, all of one class."
<PAGE>
SECOND: That the said amendment was duly adopted in accordance with the
provisions of Chapter 607.181 of the Florida Statutes.
THIRD: That the capital of said corporation will not be reduced under
or by reason of said proposed amendment.
IN WITNESS WHEREOF, the said FLEXICARE, INC. has caused its corporate
seal to be hereunto affixed and this certificate signed by MARCIA LYNN HUNTER,
its Vice President and ALBERT D. GREENFIELD, its Secretary this 30th day of
March, 1984.
FLEXICARE, INC.
By: /s/ Marcia Lynn Hunter
------------------------
Marcia Lynn Hunter
Attest: /s/ Albert D. Greenfield
---------------------------
Albert D. Greenfield
I, ALBERT D. GREENFIELD, Secretary of FLEXICARE, INC., a corporation
organized and existing under the laws of the State of Florida, do hereby
certify, as the Secretary of the meeting of all the shareholders of the said
corporation on March 12, 1984 called and held for the purpose of considering the
above Amendment to the Articles of Incorporation of the said corporation, that
in excess of a majority of the Shareholders of the said corporation approved, by
affirmative vote, the said Amendment.
By: /s/ Albert D. Greenfield
--------------------------
Albert D. Greenfield
Secretary
<PAGE>
STATE OF FLORIDA }
COUNTY OF DATE }
Before me personally appeared MARCIA LYNN HUNTER and ALBERT D.
GREENFIELD, to me well known and known to me to be the individuals described in
and who executed the foregoing instrument as Vice President and Secretary of
FLEXI-BUILT MODULAR HOUSING CORPORATION and severally acknowledged such
instrument as Vice President and Secretary, respectively, of said corporation,
and that the seal affixed to the foregoing instrument is the corporate seal of
said corporation, and that it was affixed to said instrument by due and regular
corporate authority, and that said instrument is the free act, deed and
agreement of said corporation.
WITNESS my hand and official seal this 30th day of March 1984.
/s/ Kathlene M. Brandon
--------------------------
Kathlene M. Brandon
Notary Public
State of Florida at Large
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
FLEXICARE, INC.
Pursuant to the provisions of the Florida Business Corporation Act, the
undersigned corporation adopts the following amendment to the Corporation's
Articles of Incorporation, which amendment was adopted by the shareholders of
the Corporation on June 13, 1994 by the holders of the outstanding common stock,
the only voting group entitled to vote thereon, by written consent pursuant to
Section 607.0704 of the Florida Business Corporation Act. The number of shares
adopting the amendment was sufficient for approval by that group.
1. The name of the Corporation is FLEXICARE, INC.
2. Article III of the Articles of Incorporation of the Corporation is
hereby amended to read as follows:
ARTICLE III
Capital Stock
The total amount of capital stock which this Corporation has the
authority to issue is as follows:
20,000,000 shares of Common Stock, $.01 par value per share; and
1,500,000 shares of Class B Common Stock, $.10 par value per share.
<PAGE>
The Class B Common Stock shall have the powers, rights, qualifications,
limitations and restrictions as follows:
(i) Dividends and Other Distributions. The Class B Common Stock shall
be entitled to receive a dividend pari passu to any dividends and other
distributions to the Common Stock of the Corporation.
(ii) Liquidation. Upon dissolution, liquidation or winding up of the
Corporation, the holders of the Class B Common Stock shall be entitled to
receive distributions pari passu to any distributions made to the holders of
shares of Common Stock of the Corporation, share for share.
(iii) Voting. Shares of Class B Common Stock shall be entitled to vote
as a class with the Common Stock.
(iv) Conversion.
(a) Subject to the provisions for adjustment hereinafter set forth,
shares of Class B Common Stock shall be convertible at anytime at the option of
the holder thereof, upon surrender of certificate or certificates evidencing the
shares so to be converted, into fully paid and nonassessable shares of Common
Stock of the Corporation at the rate of ten (10) shares of Common Stock for each
shares of Class B Common Stock so surrendered for conversion provided, however,
that any such shares issued in connection with any corporation acquisition may
not be converted until such shares have been released from any escrow agreement
in connection with such acquisition.
(b) The number of shares of Common Stock into which a share of Class B
Common Stock is convertible shall be subject to adjustment from time to time
only as follows:
<PAGE>
(i) If after the date on which shares of Class B Common Stock are first
issued the number of outstanding shares of Common Stock is increased by a
dividend declared payable in shares of Common Stock to all holders of its Common
Stock or by a subdivision of shares of Common Stock, the number of shares of
Common Stock into which a share of Class B Common Stock is convertible shall be
increased in proportion to such increase in the outstanding shares of Common
Stock. Such adjustment shall become effective immediately after the opening to
business on the day following the date on which the Corporation takes a record
of the holders of Common Stock for the purpose of entitling them to receive such
dividend or the day upon which such subdivision becomes effective.
(ii) If after the date on which shares of Class B Common Stock are
first issued the number of outstanding shares of Common Stock is decreased by a
combination of shares of Common Stock, the number of shares of Common Stock into
which a share of Class B Common Stock is convertible shall be decreased in
proportion to such decrease in the outstanding shares of Common Stock. Such
adjustment shall become effective immediately after the opening of business on
the day upon which such combination becomes effective.
(iii) For the purposes of making the adjustments referred to in
subparagraphs (i) and (ii) above, the books of the Corporation shall control
absolutely in determining the number of outstanding shares of Common Stock and
the number of additional shares issued or decreased in shares as a result of any
stock dividend, subdivision or combination.
<PAGE>
(iv) In case of any consolidation or merger of the Corporation with or
into another corporation or in case of any sale or conveyance to another
corporation of all or substantially all the assets of the Corporation or in case
the Corporation issues by reclassification or recapitalization of its Common
Stock any shares of the Corporation, the holder of each share of Class B Common
Stock then outstanding shall have the right thereafter, so long as his
conversion right hereunder shall exist, to convert such share into the kind and
amount of shares of stock and other securities and property receivable upon such
consolidation, merger, sale, conveyance, reclassification or recapitalization by
a holder of the number of shares of Common Stock into which such share might
have been converted immediately prior to such consolidation, merger, sale,
conveyance, reclassification or recapitalization and shall have no other
conversion rights under these provisions; provided, that effective provision
shall be made, in the Articles or Certificate of Incorporation of the resulting
or surviving corporation or otherwise, so that the provisions set forth herein
for the protection of the conversions rights of the shares of Class B Common
Stock shall thereafter be applicable, as nearly as reasonably may be, to any
such other shares of stock and other securities and property deliverable upon
conversion of the shares of Class B Common Stock remaining outstanding or other
convertible securities received by the holders in place thereof; and provided
further that any such resulting or surviving corporation shall expressly assume
the obligation to deliver, upon the exercise of the conversion privilege, such
shares, other securities or property as the holders of the shares of Class B
Common Stock remaining outstanding, or other convertible securities received by
the holders in place thereof, shall be entitled to receive pursuant to these
provisions, and to make provisions for the protection of the conversion right as
above provided. In case securities or property other than Common Stock shall be
issuable or deliverable upon conversion, then all references in this Section (v)
shall be deemed to apply, so far as appropriate and as nearly as may be, to such
other securities or property.
<PAGE>
(v) No fractional shares of Common Stock shall be issued upon any
conversion but, in lieu thereof, there shall be paid to the holder of the shares
of Class B Common Stock surrendered for conversion as soon as practicable after
the date such shares are surrendered for conversion, an amount in cash equal to
the same fraction of the current market price per share of Common Stock, unless
the Board of Directors shall determine to adjust fractional shares in some other
manner.
(vi) No adjustment in the number of shares of Common Stock into which
each share of Class B Common Stock is convertible shall be required unless such
adjustment would require an increase or decrease of at least 1/25th of a share
in the number of shares of Common Stock into which such share is then
convertible; provided, however, that any adjustments which by reason of this sub
paragraph are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(vii) Whenever an adjustment is required in the shares into which each
share of Class B Common Stock is convertible, the Corporation shall forthwith
(i) file with the transfer agent, if any, for the Class B Common Stock a
statement describing in reasonable detail the adjustment and the method of
calculation used and (ii) cause a copy of such notice to be mailed to the
holders of record of the shares of Class B Common Stock.
<PAGE>
(c) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares the full number of shares of Common Stock
into which all shares of Class B Common Stock from time to time outstanding are
convertible.
(d) The Corporation will pay any and all issue and other taxes that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of shares of Class B Common Stock. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of Common Stock in a name other than
that in which the shares of Class B Common Stock is converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax, or
has established, to the satisfaction of the Corporation, that such tax has been
paid.
FLEXICARE, INC.
By: /s/ Dominick Inodara
---------------------
Dominick Inodara
President
June 15, 1994
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
FLEXICARE, INC.
Pursuant to the provision of section 607.1005, Florida Statutes, the undersigned
corporation adopts the following articles of amendment to its articles of
incorporation:
FIRST: Amendment ($) adopted: Name Change to Pillar Entertainment Group, Inc.
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the amendment if not
contained in the amendment itself, are as follows:
THIRD: The date of each amendment's adoption: 3-15-96.
FOURTH: Adoption of Amendment(s) (check one)
____ The amendment(s) was/were adopted by the incorporators or board of
directors without shareholder action and shareholder action was not
required.
___X___ The amendment(s) was/were approved by the shareholders. The number of
votes cast for the amendment(s) was/were sufficient for approval.
______ The amendment(s) was/were approved by the shareholders through voting
groups.
(The following statement must be separately provided for each voting
group entitled to vote separately on the amendment(s).)
The number of votes cast for the amendment(s) was/were sufficient for
approval by _________. (voting groups)
(continued)
<PAGE>
Signed this 18 day of March 1996.
FLEXICARE, INC.
-------------------------
Corporation Name
By: /s/ G.F. Labrozzi
----------------------
G.F. Labrozzi
Secretary/Director
<PAGE>
CERTIFICATE OF DESIGNATION REGISTERED
AGENT/REGISTERED OFFICE
Pursuant to the provisions of section 007.0501 or 617.0501, Florida Statutes,
the undersigned corporation organized under the laws of the state of Florida,
submits the following statement in designating the registered office/registered
agent, in the state of Florida.
1. The name of the Corporation is FLEXICARE, INC.
Changed Name: PILLAR ENTERTAINMENT GROUP, INC.
2. The name and address of the registered agent and office is:
G.F. Labrozzi
81 Brickell Ave.
Miami, Florida 33129
Having been named as registered agent and to accept service of process for the
above stated corporation at the place designated in this certificate, I hereby
accept the appointment as registered agent and agree to act in this capacity. I
further agree to comply with the provisions of all statutes relating to the
proper and complete performance of my duties and I am familiar with and accept
the obligations of my position as registered agent.
/s/ G.F. Labrozzi Date: 3-18-96
---------------------
G.F. Labrozzi
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PILLAR ENTERTAINMENT GROUP, INC.
Pursuant to the provisions of section 607.1006, Florida Statutes, This Florida
profit corporation adopts the following articles of amendment to its articles of
incorporation:
FIRST: Amendment(s) adopted:
Name change to: FLEXICARE, INC.
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the amendment if not
contained in the amendment itself, are as follows:
<PAGE>
THIRD: The date of each amendment's adoption : 7-10-96.
FOURTH: Adoption of Amendment(s) (CHECK ONE)
_X_ The amendment(s) was/were approved by the shareholders. The number of
votes cast for the amendment(s) was/were sufficient for approval.
___ The amendment(s) was/were approved by the shareholders through voting
groups. The following statement must be separately provided for each voting
group entitled to vote separately on the amendment(s):
" The number of votes cast the amendment(s) was/were sufficient
for approval by _________________________________________."
voting group
___ The amendment(s) was/were adopted by the board of directors without
shareholder action and shareholder action was not required.
___ The amendment(s) was/were adopted by the incorporators without shareholder
action and shareholder action was not required.
Signed this 31 day of July, 1996
By: /s/ M. Fried
--------------------
M. Fried
Secretary/Director
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
FLEXICARE, INC.
Pursuant to the provisions of Section 607.1006 Florida Statutes, the
undersigned corporation adopts the following articles of amendment to its
articles of incorporation:
FIRST: Amendments adopted:
Name change to PILLAR ENTERTAINMENT GROUP, INC.
Officers and Directors
G.F. Labrozzi Chief Executive Officer, Chairman of the Board
Gregory L. Paige President, Director
Address for each is 801 Brickell Ave, Suite 932, Miami FL 13131
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the amendment if not
contained in the amendment itself, are as follows:
THIRD: The date of each amendment's adoption: September 9, 1996.
FOURTH: Adoption of Amendment(s) (CHECK ONE)
___ The amendment(s) was/were adopted by the incorporators or board of directors
without shareholder action and shareholder action was not required.
___ The amendment(s) was/were approved by the shareholders. The number of
votes cast for the amendment(s) was/were sufficient for approval.
___ The amendment(s) was/were approved by the shareholders through voting
groups.
The following statement must be separately provided for each voting
group entitled to vote separately on the amendment(s)
" The number of votes cast the amendment(s) was/were sufficient
for approval by _________________________________________."
voting group
(Continued)
<PAGE>
Signed this day 9th day of September, 1996.
FLEXICARE, INC.
By: /s/ G.F. Labrozzi
-----------------------
G.F. Labrozzi
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
PILLAR ENTERTAINMENT GROUP, INC.
THE UNDERSIGNED, the President of Pillar Entertainment Group, Inc. a Florida
Corporation, does hereby certify that:
FIRST: "That the Board of Directors of said Corporation, by written consent
filed with the minutes of the Board, adopted the following resolution proposing
and declaring advisible the following amendment to the Certificate of
Incorporation of said Corporation:
"That Article FIRST of the Certificate of Incorporation be amended and, as
amended, read a follows:
"FIRST: The name of the Corporation is "CHRYSALIS HOTELS AND RESORTS
CORP.";
SECOND: That the aforesaid amendment was duly adopted by consent of the
requisite majority of the shareholders of this Corporation in accordance with
the applicable provisions of Section 607 of the Business Corporation Act of the
State of Florida.
The number of votes cast by the shareholders was sufficient for approval.
THIRD: Prompt notice of the taking of this corporate action is being given
to all stockholders who did not consent in writing, in accordance with Section
607 of the Business Corporation Act of the State of Florida.
The date of adoption was October 31, 1997.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by
Brent Nelson, its President and Secretary this 3rd day of November 1997.
PILLAR ENTERTAINMENT GROUP, INC.
By: /s/ Brent Nelson
------------------------
Brent Nelson, President
ATTEST:
By: /s/ Brent Nelson
-------------------------
Brent Nelson, Secretary
<PAGE>
STATE OF WASHINGTON
COUNTY OF KING
On this 3rd day of November, 1997 before me the undersigned officer,
personally appeared BRENT NELSON who, being first duly sworn by me, declared
that he is the President of the PILLAR ENTERTAINMENT GROUP, INC., and that he
being authorized to do so, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by himself as such
officer; and that the statements therein contained are true.
IN WITNESS WHEREOF I have hereunto set me hand and official seal.
By: /s/ Carol A. Barden
------------------------------
Carol A. Barden, Notary Public
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
CHRYSALIS HOTELS & RESORTS, CORP.
THE UNDERSIGNED, the President of CHRYSALIS HOTELS & RESORTS, CORP. a
Florida corporation, does hereby certify that:
FIRST: That the Board of Directors of said Corporation, by written
consent filed with the minutes of the Board, adopted the following resolution
proposing and declaring advisable the following amendment to the Certificate of
Incorporation of said Corporation:
"That Article I of the Articles of Incorporation be amended and, as
amended, read as follows:
"I - NAME: The name of the Corporation is "CYBERECORD, INC.";
SECOND: That the aforesaid amendment was duly adopted by consent of the
requisite majority of the shareholders of this Corporation in accordance with
the applicable provisions of Section 607 of the Business Corporation Act of the
State of Florida, on May 6, 1999.
FORTH: Prompt notice of the taking of this corporate action is being
given to all stockholders who did not consent in writing, in accordance with
Section 607 of the Business Corporation Act of the State of Florida.
IN WITNESS WHEREOF, the Corporation has caused this Articles of
Amendment to be signed by Thomas Morikawa, its President, this 6th day of May
1999.
CHRYSALIS HOTELS & RESORTS, CORP.
By: /s/ Thomas Morikawa
--------------------
Thomas Morikawa, President
BYLAWS OF
FLEXI-BUILT MODULAR HOUSING CORPORATION
ARTICLE A.
OFFICES
The Corporation may have offices at such places within or without the
State of Florida as the board may, from time to time, establish.
ARTICLE B.
SHAREHOLDERS
1. Annual Meeting. The annual meeting of the Shareholders of this
Corporation shall be held annually on a date and a time and place designated
from time to time by the Board of Directors of the Corporation. Business
transacted at the annual meeting shall include the election of Directors of the
Corporation and the transaction of any other proper business. If the designated
day shall fall on a Sunday or legal holiday, then the meeting shall be held on
the first business day thereafter.
2. Special Meetings. Special Meetings of the Shareholders shall be held
when directed by the President or the Board of Directors, or when requested in
writing by the holders of not less than ten percent (10%) of all the shares
entitled to vote at the meeting. Such written request must be signed, dated and
delivered to the Secretary of the Corporation. A meeting requested by
Shareholders shall be called for a date not less than ten (10) nor more than
sixty (60) days after the request is made unless the Shareholders requesting the
meeting designate a later date. The call for the Special Meeting shall be issued
by the Secretary, unless the President, Board of Directors, or Shareholders
requesting the Special Meeting shall designate another person to do so. Such a
request for a Special Meeting shall state the purpose of the proposed Special
Meeting. Business transacted at any Special Meeting shall be limited to the
purpose stated in the notice thereof.
3. Place of Meeting. Meetings of Shareholders shall be held at the
principal place of business of the Corporation or at such other place as may be
designated by the Board of Directors.
4. Notice of Meeting. Written notice to each Shareholder of record
entitled to vote stating the place, day and hour of the meeting and, in the case
of a Special Meeting, the purpose or purposes for which the meeting is called,
shall be delivered not less than ten (10) nor more than sixty (60) days before
the meeting either personally, by mail, telegram or overnight carrier. if
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the Shareholder at the Shareholder's address as it
appears on the stock transfer books of the Corporation, with postage prepaid. If
notice is given by telegram or overnight courier, such notice shall be deemed to
be delivered when the telegram or overnight carrier is delivered to the
telegraph company or overnight carrier. If any Shareholder shall transfer such
Shareholder's stock after notice, it shall not be necessary to notify the
transferee. Any Shareholder may waive notice of any meeting either before,
during or after the meeting. The attendance of a Shareholder at a meeting shall
constitute a waiver of notice of such meeting, except where a Shareholder
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
5. Notice of Adjourned Meeting. When a meeting is adjourned to another
time or place, it shall not be necessary to give any notice of the adjourned
meeting if the time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken; and any business may be
transacted at.the adjourned meeting that might have been transacted on the
original date of the meeting. If, however, after adjournment the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given as provided in paragraph 4 of this Article to
each Shareholder of record on the new record date entitled to vote at such
meeting.
1
<PAGE>
6. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make, at least ten (10) days
before each meeting of Shareholders, a complete list of Shareholders entitled to
vote at such meeting, or any adjournment thereof, arranged in alphabetical
order, with the address and number of shares held by each, which list, for a
period of ten (10) days prior to such meeting, shall be kept on file at the
principal office of the Corporation and shall be subject to inspection by any
Shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Shareholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
Shareholders entitled to examine such list or to vote at any meeting of the
Shareholders.
7. Transfer Books and Record Date. For the purposes of determining
Shareholders entitled to notice of, or 'to vote at any meeting, or entitled to
receive payment of any dividend, or in order to make a determination of
Shareholders for any other purpose, the Board of Directors may close the stock
transfer books of the Corporation as provided by law.
8. Quorum. Except as otherwise provided in these Bylaws, or as required
by the Articles of Incorporation, the majority of the shares entitled to vote
(50% + 1), represented in person or by Proxy, shall constitute a Quorum at a
meeting of Shareholders, but in no event shall a Quorum consist of less than one
third (1/3) of the shares entitled to vote at the meeting.
After a Quorum has been established at a Shareholders, meeting, the
subsequent withdrawal of Shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a Quorum, shall
not effect the validity of any action taken at the meeting or any adjournment
thereof.
9. Voting of Shares. Each Shareholder entitled to vote shall at every
meeting of Shareholders be entitled to one (1) vote for each share of voting
stock held by them.
10. Proxy. Every Shareholder entitled to vote at a meeting of
Shareholders, or to express consent or dissent without a meeting, or the
Shareholder's duly authorized attorney-in-fact, may authorize another person or
persons to act for the Shareholder by Proxy. The Proxy must be signed by the
Shareholders or their attorney-in-fact. No Proxy shall be valid after the
expiration of eleven (11) months from the date thereof, unless otherwise
provided in the Proxy or by Florida law.
ii. Informal Action by Shareholders. Unless otherwise provided by law or
by the Articles of Incorporation, any action required to be taken at a regular
meeting of the Shareholders, or any other action which may be taken at a Special
Meeting of the Shareholders may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize such action at a meeting at which all shares entitled to
vote thereon were present and voted. Within ten (10) days after obtaining such
authorization by written consent, notice must be given to those Shareholders who
have not consented in writing. The notice shall fairly summarize the material
features of the authorized action and, if the action shall have been such that
dissenters, rights are provided under Florida law, the notice shall contain a
clear statement of the right of Shareholders dissenting therefrom to be paid the
fair value of their shares upon compliance with certain further provisions of
such Florida law regarding the rights of dissenting Shareholders.
2
<PAGE>
ARTICLE C.
BOARD OF DIRECTORS
1. General Powers. The business of the Corporation shall be managed and
its corporate powers exercised by its Board of Directors.
2. Number, Tenure and Qualifications. The Board of Directors shall
consist of at least one (1) director. The number may be altered from time to
time by the Shareholders. Directors shall be elected at the annual meeting of
Shareholders and each Director elected shall hold office until such Director's
successor has been elected and qualified, or until their prior resignation or
removal. It shall not be necessary for Directors to be Shareholders.
3. Vacancies. If the office of any Director, member of a committee or
other officer becomes vacant, the remaining Directors in office, by a majority
(50% + 1) vote, though this may constitute less than a quorum of the Board of
Directors, may appoint any qualified person to fill such vacancy, who shall hold
office for the unexpired term and until their successor shall be duly elected
and has qualified.
4. Removal of Directors. Any or all of the Directors may be removed
with or without cause by vote of a majority (50% + 1) of all of the shares
outstanding and entitled to vote at a Special Meeting of Shareholders called for
that purpose.
5. Resignation. A Director may resign at any time by giving written
notice to the Board, the President or the Secretary of the Corporation. Unless
otherwise specified in the notice, the resignation shall take effect upon
receipt thereof by the Board of Directors or of such officer, and the acceptance
of the resignation shall not be necessary to make it effective.
6. Quorum of Directors. A majority of the Directors (50% + 1) shall
constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum is obtained, and no further
notice thereof need be given other than by announcement at the meeting which
shall be so adjourned. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
7. Place and Time of Board Meetings. The Board may hold its meetings at
the office of the Corporation or at such other place, either within or without
the State of Florida as it may, from time to time, determine.
8. Notice of Meetings of The Board. A regular annual meeting of the
Board may be held without notice at such time and place as it shall, from time
to time, determine. Special Meetings of the Board shall be held upon notice to
the Directors and may be called by the President upon two (2) days, notice to
each Director, either personally or by mail or by wire. Special Meetings shall
be called by the President or by the Secretary in a like manner on written
request of a Director. Any Special Meeting may be held by telephone conference
as set forth in Section 11 hereof. Notice of a meeting need not be given to any
Director who submits a waiver of notice whether before or after the meeting, or
who attends the meeting without protesting prior thereto, or at its
commencement, the lack of notice to him.
9. Annual Meeting. An annual meeting of the Board shall be held
immediately following, and at the same place as, the annual meeting of
Shareholders.
10. Compensation. No compensation shall be paid to Directors, as such,
for their services, but by resolution of the Board, a fixed sum and expenses for
actual attendance, at each regular or Special Meeting of the Board may be
authorized. Nothing herein contained shall be construed to preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefor.
3
<PAGE>
11. Action by Telephonic Conference. The Directors may act at a meeting
by means of a conference by telephone or similar communications equipment by
means of which all persons participating in the meeting can communicate with
each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
12. Presumption of Assent. A Director of the Corporation who is present
at a meeting of the Board of Directors at which action on any corporate matter
is taken shall be presumed to have assented to the action unless he voted
against such action or abstains from voting in respect thereto because of an
asserted conflict of interest.
13. Informal Action by Board. Any action required or permitted to be
taken by any provision of law, of the Articles of Incorporation or of these
Bylaws at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting, if a written consent thereto is signed by all
members of the Board or of such committee, as the case may be.
ARTICLE D.
OFFICERS
1. Officers, Election and Term. The Board may elect or appoint a
President, one or more Vice Presidents, a Secretary, a Treasurer, and such other
officers as it may determine, who shall have such duties and powers as
hereinafter provided.
All officers shall be elected or appointed to hold office until the
meeting of the Board following the next annual meeting of Shareholders and until
their successors have been elected or appointed and qualified.
Any two (2) or more offices may be held by the same person.
2. Removal, Resignation. Salary. Etc. Any officer elected or appointed
by the Board may be removed by the Board with or without cause.
In the event of the death, resignation or removal of an officer, the
Board, in its discretion, may elect or appoint a successor to fill the unexpired
term.
Any officer elected by the Shareholders may be removed only by vote of
the Shareholders unless otherwise provided by the Shareholders.
The salaries of all officers shall be fixed by the Board.
The Directors may require any Officer to give security for the faithful
performance of his duties.
3. Duties. The officers of this Corporation shall have the following
duties:
The President shall be the chief executive officer of the Corporation
and shall have general and active management of the business and affairs of the
Corporation subject to the directions of the Board of Directors, and shall
preside at all meetings of the Shareholders and Board of Directors.
The Vice-President shall possess and may exercise, such power and
authority, and shall perform such duties as may from time to time be assigned to
him or her by the Board of Directors or the President.
The Secretary shall have custody of and maintain all of the corporate
records except the financial records; shall record the minutes of all meetings
of the Shareholders and Board of Directors, and send all notices of all meetings
4
<PAGE>
and perform such other duties as may be prescribed by the Board of Directors or
the President and shall perform such duties as may from time to time be assigned
to him or her by the Board of Directors or the President.
The Treasurer shall have custody of all corporate funds and maintain all
of the financial records and shall keep accurate financial records and shall
render reports thereof of the annual meetings of Shareholders and at other times
when requested to do so by the Board of Directors and shall perform such duties
as may from time to time be assigned to him or her by the Board of Directors or
the President.
4. Removal of officers. An officer or agent elected or appointed by the
Board of Directors may be removed with or without cause by the Board whenever in
the Board's judgment, the best interests of the Corporation will be served
thereby.
Any vacancy in any office may be filled by the Board of Directors for
the unexpired term.
ARTICLE E.
EXECUTIVE AND OTHER COMMITTEES
1. Creation of Committees. The Board of Directors may, by resolution,
passed by a majority of the Board, designate an executive committee and one or
more other committees, each to consist of two (2) or more of the Directors of
the Corporation.
2. Executive Committee. The executive committee, if there shall be one,
shall consult with and advise the officers of the Corporation in the management
of its business and shall have and may exercise, to the extent provided in the
resolution of the Board of Directors creating such executive committee, such
powers of the Board of Directors as can be lawfully delegated by the Board.
3. Other Committees. Such other committees shall have such functions
and may exercise the powers of the Board of Directors as can be lawfully
delegated and to the extent provided in the resolution or resolutions creating
such"committee or committees.
4. Meetings of Committees. Regular meetings of the executive committee
and other committees may be held without notice at such time and at such place
as shall from time to time be determined by the executive committee or such
other committees, and Special Meetings of the executive committee or such other
committees may be called by any member thereof upon two (2) days' notice to each
of the other members of such committee, or on such shorter notice as may be
agreed to in writing by each of the members of such committee, given either
personally or in the manner provided in Section 8 of Article III of these Bylaws
(pertaining to notice for Directors, meetings).
5. Vacancies on Committees. Vacancies on the executive committee or on
such other committees shall be filled by the Board of Directors then in office
at any regular or Special Meeting.
6. Quorum on Committees. At all meetings of the executive committee or
such other committees, a majority (50% + 1) of the committee's members then in
office shall constitute a quorum for the transaction of business.
7. Manner of Action of Committees. The acts of a majority (50% + 1) of
the members of the executive committee or such other committees, present at any
meeting at which there is a quorum, shall be the act of such committee.
8. Minutes of Committees. The executive committee, if there shall be
one, and such other committees shall keep regular minutes of their proceedings
and report the same to the Board of Directors when requested.
5
<PAGE>
9 Compensation. Members of the executive committee and such other
committees may be paid compensation in accordance with the provisions of
Articles III, Section 10 of these bylaws (pertaining to compensation of
Directors).
ARTICLE F.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify any person made or 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) , brought to impose a liability or
penalty on such person in his capacity of Director, officer, employee or agent
of this Corporation, or of any other corporation which such person serves as
such at the request of this Corporation, against judgments, fines, amounts paid
in settlement and expenses, including attorney's fees, actually and reasonably
incurred as a result of such action, suit or proceeding, or any appeal thereof,
if they acted in good faith in the reasonable belief that such action was in the
best interest of this Corporation, and in criminal actions or proceedings
without reasonable ground for belief that such action was unlawful. The
termination of any such civil or criminal action, suit or proceedings by
judgment, settlement, conviction or upon a plea of nolo contenders shall not in
itself create a presumption that any Director or officer did not act in good
faith in the reasonable belief that such action was in the best interests of
this Corporation or that they had reasonable ground for belief that such action
was unlawful. The foregoing rights of indemnification shall apply to the heirs
and personal representatives of any such Director, officer, employee or agent
and shall not be exclusive of other rights to which they may be entitled.
ARTICLE G.
CERTIFICATE OF STOCK
1. Issuance. Unless otherwise determined by the Board of Directors,
every holder of shares in this Corporation shall be entitled to have a
certificate representing all shares of which they are entitled. No certificate
shall be issued for any share until such share is fully paid.
2. Form. Certificates representing shares in this Corporation shall be
signed by the President or Vice President and the Secretary or an Assistant
Secretary and may be sealed with the seal of this Corporation or a facsimile
thereof.
3. Transfer of Shares. Transfers of shares of the Corporation shall be
made upon the Corporation's books by the holder of the shares in person or by
the holder's lawfully constituted representative, upon surrender of the
certificate of stock for cancellation. The person in whose name shares stand on
the books of the Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes and the Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person whether or not the Corporation shall have express or other notice
thereof, unless otherwise provided by the laws of the State of Florida. Every
certificate representing shares which are restricted as to sale, disposition or
other transfer shall state that such shares are restricted as to such transfer
or disposition and shall set forth or fairly summarize upon the certificate, or
state that the Corporation will furnish to any holder thereof, upon request and
without charge, a full statement of such restrictions.
4. Facsimile Signature. Where a certificate is signed (1) by a transfer
agent or an assistant transfer agent or (2) by a transfer clerk acting on behalf
of the Corporation and a registrar, the signature of any such Chairman of the
Board, President, Vice President, Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary may be facsimile. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates and have ceased to be such officer or officers then
such certificate or certificates may nevertheless be adopted by the Corporation
6
<PAGE>
and be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have been
used thereon had not ceased to be such officer or officers of the Corporation.
5. Lost, Stolen or Destroyed Certificates. If a Shareholder shall claim
to have lost or destroyed a certificate of shares issued by the Corporation, a
new certificate shall be issued upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost, stolen or destroyed,
and, at the discretion of the Board of Directors, upon the deposit of a bond or
other indemnity in such amount and with such sureties, if any, as the Board may
reasonable require.
ARTICLE H.
BOOKS AND RECORDS
1. General. This Corporation shall keep correct and complete books and
records of account and shall keep minutes of the proceedings of its
Shareholders, Board of Directors and committees of Directors.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
2. Inspection. All Shareholders who are entitled to inspect the
Corporation's books and records pursuant to Florida law shall have such
inspection rights as prescribed by the most recent Florida law available when
the request is made.
ARTICLE I.
DISTRIBUTIONS
The Board of Directors of the Corporation may, from time to time,
declare, and the Corporation may make, distributions to the Shareholders,
subject to the restrictions of applicable law.
ARTICLE J.
CORPORATE SEAL
The seal of the Corporation shall be circular in form and bear the name
of the Corporation, the year of its organization and the words "CORPORATE SEAL,
FLORIDA." The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed thereto.
The seal on the certificates for shares or on any corporate obligation for the
payment of money may be facsimile, engraved or printed.
ARTICLE K.
EXECUTION
All corporate instruments and documents shall be signed or
countersigned, executed, verified or acknowledged by such officer or officers or
other person or persons as the Board may, from time to time, designate.
7
<PAGE>
ARTICLE L.
FISCAL YEAR
The fiscal year of the Corporation shall be the 12-month period selected
by the Board of Directors as the taxable year of the Corporation for federal
income tax purposes.
ARTICLE M.
NOTICE AND WAIVER OF NOTICE
Whenever any notice is required by these Bylaws to be given, personal
notice is not meant unless expressly so stated, and any notice so required shall
be deemed to be sufficient if given by depositing the same in the post office
box in a sealed post-paid wrapper, addressed to the person entitled thereto at
his last known post office address, and such notice shall be deemed to have been
given on the day of such mailing. Shareholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
Florida Law.
Whenever any notice is required to be given under the provisions of any
law or under the provisions of the Articles of incorporation of the Corporation,
or these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE N.
CONSTRUCTION
Whenever a conflict arises between the language of these Bylaws and the
Articles of Incorporation, the Articles of Incorporation shall govern.
ARTICLE 0.
BUSINESS
1. Conduct of Business Without Meetings. Any action of the
Shareholders, Directors and any committee may be taken without a meeting if
consent in writing setting forth the action so taken shall be signed by all
persons who would be entitled to vote on such action at a meeting and filed with
the Secretary of the Corporation as part of the proceedings of the Shareholders,
Directors or committees, as the case may be.
2. Management by Shareholder. In the event the Shareholders are named
in the Articles of Incorporation and are empowered therein to manage the affairs
of the Corporation in lieu of Directors, the Shareholders of the Corporation
shall be deemed Directors for the purposes of these Bylaws, and wherever the
words "directors, 11 "Board of Directors" or "Board" appear in these Bylaws,
those words shall be taken to mean Shareholders.
The Shareholders may, by majority vote (50!k + 1) , create a Board of
Directors to manage the business of the Corporation and exercise its corporate
powers.
ARTICLE P.
AMENDMENTS
1. By Shareholders. The Bylaws shall be subject to alteration or
repeal, and new Bylaws may be made, by the affirmative vote of Shareholders
holding of record in the aggregate at least a majority of the outstanding shares
entitled to vote,in the election of Directors at any annual or Special Meeting
of Shareholders, provided that the notice or waiver of notice of such meeting
shall have summarized or set forth in full therein the proposed amendment.
8
<PAGE>
2. By Directors. The Board of Directors shall have power to make,
adopt, alter, amend and repeal, from time to time, the Bylaws of the
Corporation; provided, however, that the Shareholders entitled to vote with
respect thereto as in this Article XVI above provided, may alter, amend or
repeal Bylaws made by the Board of Directors, except that the Board of Directors
shall have no power to change the quorum for meetings of Shareholders or of the
Board of Directors, or the change any provisions of the Bylaws with respect to
the removal of Directors or the filling of vacancies in the Board resulting from
the removal by the Shareholders. If any Bylaw regulating an impending election
of Directors is adopted, amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of shareholders for the
election of Directors, the bylaw so adopted, amended or repealed together with a
concise statement of the changes made.
9
Business Service Center
OF BELLEVUE
LEASE AGREEMENT
PARTIES
This lease made this seventh day of June 1 between Certus Corporation, dba
Business Service Center of Bellevue1 hereinafter referred to as Landlord, and
CybeRecord. Inc. hereinafter referred to as Tenant.
TERM
The term of this lease shall be three months, commencing on the first day of
July 1999, and terminating on the last day of the third month, September 1999 If
Tenant shall occupy the premises for permitted uses prior to the date set forth
herein, the commencement date for rent purposes shall be prorated and charged
accordingly as part of the first month's rent. The termination date shall not be
affected by early occupancy. If either Landlord or Tenant desires to terminate
the lease at the end of the term1 the party desiring to terminate shall, 30 days
prior to the expiration date, give the other written notice of its intention to
do so. Should written notice of intention to terminate not be given by either
party, the lease shall be extended under the same terms and conditions for a
like period of time. The lease shall continue to renew itself under the same
terms and conditions until one party notifies the other, as set forth above, of
its intent to terminate.
PREMISES
Premises shall consist of Suite No.915 & 916 on the ninth/tenth floor of the
Plaza Center Building, Bellevue, Washington. In addition to Suite No. 915&916.
Tenant shall have use of the common area on the ninth/tenth floor, Including the
conference moms on a reasonable and shared basis with other ninth/tenth floor
tenants as outlined under the Conference Room section. Tenant agrees to abide by
the prevailing conference room rules.
RENT
The rent amount for the term of this lease shall be $1300.00 per month. Tenant
shall pay Landlord the monthly rent, In advance, on the first day of each
calendar month during said term. Rent shall be delivered to the Landlord's
office in the Plaza Center Building. If the monthly rent is not paid by the
tenth of the month in which it is due, a late charge of ten percent of the rent,
including prorations, will be payable by the Tenant as a special handling
charge. Delinquent rent shall be cause for termination of this agreement at the
discretion of the Landlord. Acceptance of late rent and forbearance of
collection and/or eviction action on the part of the Landlord shall not
constitute a waiver of any of Landlord's rights under the lease.
DEPOSIT AND FIRST MONTH'S CHARGES
Concurrent with the execution of this Agreement, Tenant shall deliver to
Landlord the sum of $3185.00 in payment of the first month's charges and
deposits as follows: First month's rent $1300.00. rent deposit $1300.00;
telephone installation fee $200.00; first month telephone service $285.00; and
telephone service and long distance deposit $100.00.
REPAIRS AND ALTERATIONS
Tenant agrees by taking possession of premises that premises are then in a
tenantable and good condition; that Tenant will take good care of premises, and
the same will not be altered or changed without written consent of the Landlord.
Tenant shall not make changes to locks on doors or add or in any way change any
- --------------------------------------------------------------------------------
10900 NE 8th Street, (Plaza Center Building),
Suite 900, Bellevue, WA 98004 (425) 454-3077
Email address: [email protected]
<PAGE>
Page 2
shelving, wall covering, or any fixtures without first obtaining written consent
of Landlord. Any wall hangings should be carefully hung with small nails, first
applying scotch tape to the wall so the paint will not chip when the nail is
removed.
Any repairs of the walls necessary because of damage caused by wall decorations
installed by Tenant shall be paid for by Tenant. All damage or injury done to
premises by Tenant or by any persons who may be In or upon premises with the
consent of Tenant, shall be paid for by Tenant, and Tenant shall pay for all
damage to the building caused by Tenant's misuse of premises or the
appurtenances thereto. Tenant shall pay for the replacement of doors or windows
of premises which are cracked, broken or damaged by Tenant, its employees, agent
or Invitee and Tenant shall not put any curtains, draperies, or other hangings
on or beside the windows In premises without first obtaining Landlord's consent.
All alterations, additions, and improvements, except fixtures Installed by
Tenant and which are removable without damage to the building, shall become the
property of Landlord. Tenant shall, at the termination of this lease by the
expiration of time or otherwise, surrender and deliver up premises to Landlord
in as good a condition as when received by Tenant from Landlord. Tenant agrees
that if they move out prior to one year from date of this lease, Landlord shall
be entitled to add a One Hundred Dollars ($100) charge to Tenant's closing
statement to cover the expense of Landlord's repainting Tenant's office.
SIGNS
No sign, picture, sticker, advertisement, or notice shall be displayed,
inscribed, painted or affixed to any of the glass, wails, sign plaques, or
woodwork of the office or build-outs without the prior written consent of
Landlord. Tenant agrees that if they decide to have their name displayed on the
office directory, or outside their door, Tenant's name display shall be on a
sign approved, built, and installed by Landlord. The total charge for the
design, construction, and installation of Tenant's directory sign and office
sign shall be In conformity with prevailing prices for signs at time of ordering
said signs. Should Tenant decide to order a directory sign or office sign,
Tenant will indicate such affirmative decision and the exact wording to appear
on the sign order form. Tenant further agrees that Landlord shall be entitled to
bill Tenant for said sign(s) on Tenant's first monthly statement following the
installation of the sign(s), and that Tenant shall pay Landlord for said sign(s)
on the same date the rent is next paid.
ENTRY AND INSPECTION
Tenant will permit Landlord and its agents to enter into and upon premises at
all reasonable times for the purpose of inspecting the same or for the purpose
of cleaning, repairing, altering or improving premises or building. The Landlord
shall have the right to enter premises for the purpose of showing premises to
prospective tenants for a period of 30 days prior to the expiration of the
Rental Agreement term.
ACCIDENTS. INDEMNITY AND WAIVER OF SUBROGATION
Tenant shall defend and indemnify Landlord and save it harmless from and against
any and all liability, damages, costs, or expenses, Including attorneys' fees,
arising from any act, omission, or negligence of Tenant, or the officers,
contractors, licensees, agents, servants, employees, guests, invitee, or
visitors of Tenant in or about the premises, or arising from any accident,
injury, or damage, howsoever and by whomsoever caused, to any person or
property, occurring in or about the premises. Whether the loss or damage is due
to the negligence of either Tenant or Landlord, their agents or employees, or
any other cause, Landlord and Tenant do each herewith and hereby release and
relieve the other from responsibility for, and waive their entire claim of
recovery for (i) any loss or damage to the real or personal property of either
located anywhere in the building and including the building itself, arising out
of or incident to the occurrence of any of the perils which may be covered by
fire and lightning insurance policy, with extended coverage endorsement, in
common use in the Bellevue locality, and policies covering any loss by theft or
<PAGE>
Page 3
water damage, and ~i) loss resulting from business interruption at premises
arising out of or incident to the occurrence of any of the perils which may be
covered by the business Interruption insurance policy in common use in the
Bellevue locality; to the extent that such risks under (1) and (1i) are, in
fact, covered by Insurance, each party shall cause its insurance carriers to
consent to such waiver and to waive all rights of subrogation against the other
party.
DEFAULT AND RE-ENTRY
If Tenant fails to pay any installment of rent within ten (10) days after it is
due, or to perform any other covenant under this Rental Agreement within ten
(10) days after written notice from Landlord stating the nature of default,
Landlord may cancel this Rental Agreement and re-enter and take possession of
premises using all legal means to do so; provided, however, that if the nature
of such default other than for nonpayment of rent is such that the same cannot
reasonably be cured within such ten-day period, Tenant shall not be deemed to be
In default if Tenant shall within such period commence such cure and thereafter
diligently prosecute the same to completion. Notwithstanding such retaking of
possession by Landlord, Tenant's liability for the rent provided herein shall
not be extinguished for the balance of the term of this Rental Agreement
SUPPORT SERVICES
Complete administrative support services are provided by Business Service Center
of Bellevue at the rates indicated on the price list which will be provided by
Business Service Center of Bellevue. These rates are subject to change. Services
include telephone answering, voice mail, word processing, personal computer data
entry, secretarial, dictation, facsimile, mail handling, and other
administrative services. Tenant will be assigned a copier access code and
charged for copies made at published rates.
Support services and telephone answering service are dosed on those holidays
normally observed by the business community.
Tenant may employ his/her own secretary; however, Tenant shall not offer for
sale/trade to any other tenants of Business Service Center of Bellevue, any of
the administrative support services offered by Business Service Center.
MAIL
Mail is delivered to Tenant's mailbox each day at no additional charge to
Tenant. Outgoing mail should be deposited in the mail basket prior to 4:30 p.m.
for posting that evening. Outgoing mail service will be charged at the cost of
postage plus 20% processing fee (minimum fee $2.50) or at rates specified on the
price list.
CONFERENCE ROOMS
The conference rooms on the ninth and tenth floors may be used by all Tenants
for up to ten hours per month, per office at no charge. These conference rooms
are assigned on a first-come, first-served basis. Reservations may be made by
contacting the receptionist at the front desk.
In addition, the Plaza Center Building conference room, which will accommodate
up to 60 people, is located on the second floor. This conference room may be
rented for an hourly charge of $20. Reservations are made through the Business
Service Center receptionist.
<PAGE>
Page 4
TELEPHONE
Landlord agrees to rent to Tenant a telephone instrument(s) and line(s) for
Tenant's use at rates published on a separate telephone service agreement Tenant
agrees that Business Service Center of Bellevue will be the sole supplier of
telephone lines for all offices at its location.
Should any of Tenant's telephone instruments become defective in the normal
course of business, Landlord shall, upon notification by Tenant and at the
earliest opportunity, replace or repair the Instrument at no charge to Tenant
Tenant agrees to exercise reasonable care of rented telephone Instrument Should
the telephone instrument fail due to abuse and/or misuse, tenant will be charged
for repair or replacement. Should Tenant develop any problems with their
telephone lines, they shall ImmedIately notify Landlord of the same, after which
Landlord shall take immediate action to correct the problem. Tenant agrees that
telephone instrument or line failure shall not relieve Tenant of their
obligations under this Lease Agreement, provided Landlord takes reasonable steps
to correct the same. Tenant shall purchase their long-distance service through
Landlord, which shall be at a rate competitive with that charged by AT&T.
Tenant agrees to pay Landlord any and all telephone instrument rental charges
and telephone line charges in advance under the same terms as stated for rent
under the paragraph entitled rent and to pay telephone long-distance charges,
and telephone instrument/line installation charges within ten business days of
being blued by Landlord for the same. Should Tenant fail to do so, Landlord
shall be entitled, without notice or liability to Tenant, to terminate the
Tenant's telephone service and Landlord shall not be required to reconnect the
same until Tenant's account has been brought current and Tenant pays Landlord a
reconnection fee of $50.00 per line. In addition, at the Landlord's sole option,
such failure to pay may be deemed to be an event of default of this Lease
Agreement. Tenant acknowledges that there will be a charge associated for taking
their telephone number with them, if they desire, upon terminating their
tenancy. in such event, Tenant shall pay to Business Service Center of Bellevue
a service charge of $125.00 and pay to the applicable vendor(s) any service
charges which they may impose therefor.
Tenant shall be responsible for their own directory listings and advertising and
shall arrange for direct billing to Tenant regarding the same.
PARKING
Parking is available to tenants in the Plaza Center parking garage. Tenants may
park in any available space, except space designated "visitor," on a first-come,
first-served basis. One parking permit will be issued per office at a reduced
rate.
KEYS
Tenant will receive one key to the individual office suite for each person who
occupies the office up to two keys. Additional keys may be issued at Tenant's
expense. Any keys issued shall be returned at the end of the rental period, or
the Tenant will be charged $5.00 for each key that is not returned. In addition,
each occupant of the office will receive a card key which allows access to the
building front door and elevator after hours. If the card keys are lost or
broken, a replacement card key can be obtained at Tenant's expense from the
Building Manager.
SPECIAL IMPROVEMENTS
Any special improvements requested by the Tenant shall be made in writing to the
Landlord. Performance of said special improvements shall be at the discretion of
the' Landlord. In the event Landlord makes special improvements on behalf of
<PAGE>
Page 5
Tenant, Tenant shall reimburse Landlord for Landlord's costs of making said
special improvements requested by Tenant within ten days of receipt of statement
from Landlord for special Improvements.
COSTS AND ATTORNEYS' FEES
Tenant agrees that all payments for any rent or other services or other products
provided under the terms of this agreement by Landlord are the sole
responsibility of Tenant. Tenant understands all payments are due ten (10)
calendar days after date of Invoice. Tenant agrees to pay a late fee of 1.5% per
month on all past due amounts. Tenant also agrees to pay all collection agency
fees In the event Tenant's past due accounts are assigned to a collection agency
to enforce payment by Tenant.
If Tenant or Landlord shall engage the services of an attorney to collect monies
due or to bring any action for any relIef against the other, declaratory or
otherwise, arising out of this lease, including any suit by Landlord for
recovery of rent, additional rent or other payments hereunder or possession of
the premises, each party shall, and hereby does, to the extent permitted by law,
waive trail by jury and the losing party shall pay the prevailing party a
reasonable sum for attorneys1 fees in such suit, at trial and on appeal, and
such attorneys' fees shall be deemed to have accrued on the commencement of such
action.
NOTICE
Any notice required to be given by either party to the other pursuant to the
provisions of this lease or any law, present or future, shall be In witting and
shall be deemed to have been duly given or sent if either delivered personally
or deposited in the United States mail, postage prepaid, registered or
certified, return receipt requested, and addressed to the Landlord or Tenant at
their respective office addresses in the Plaza Center Building, Bellevue,
Washington.
ENTIRE AGREEMENT
it is expressly understood and agreed by Landlord and Tenant that there are no
promises, agreements, conditions, understandings, induces, warranties or
representations, oral or written, express or Implied, between them, other than
as herein set forth and that this Lease shall not be modified in any manner
except by an instrument in writing executed by the parties.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement on the day
and year first above set forth.
LANDLORD:
CERTUS CORPORATION, dba
Business Service Center of Bellevue TENANT:CYBERECORD, INC.
------------------------
By By: T. Morikawa
------------------------------- --------------------------------
Title: Title: Executive Vice President
Leasing and Client Services Manager
<PAGE>
ADDENDUM A
TELEPHONE SERVICE AGREEMENT
As agreed in the Lease Agreement subsection Telephone page 3), the Lessor agrees
to rent the Lessee telephone instruments and lines as defined in this addendum.
QTY. UNIT PRICE TOTAL
_1_ Initial telephone port and Instrument,
with telephone answering service and one
voice mailbox $142.50 142.50
___ Additional line appearances of the same $10.00
phone number
___ Additional line appearances of an additional
phone number $40.00
_1_ Additional telephone port with one voice mailbox $72.50 72.50
_1_ Telephone ports for wild lines (modems & fax) $45.00 45.00
___ Additional Directory Listings $5.00
ADDITIONAL TELEPHONE ANSWERING & VOICE MAIL OPTIONS
_X_ Call Announcing $25.00 25.00
___ Voice Mail Paging $2.00
___ Automatic Message Delivery $6.00
___ Additional Voice Mailboxes $10.00
___ Message storage capacity increased
from 35 to 50 messages $2.00
___ Other
Monthly Telephone Service Fee 285.00
INSTALLATION SERVICE
_1_ First telephone port, instrument and telephone
answering and voice mailbox $100.00 100.00
_1_ Additional telephone ports, instruments and
voice mail configuration $50.00 50.00
_1_ Wild line ports for modems and fax $50.00 50.00
Total One-time Installation Fee 200.00
DEPOSITS
X Monthly Telephone Service Fee Deposit $100.00
Estimated Intralata (within 425) long distance
Estimated Interlata (outside 425) long distance
Telephone Service Deposit 100.00
The undersigned agrees to all terms and conditions stated in the Lease Agreement
under subsection Telephone (page 3). The lessee understands that telephones will
not be installed until the appropriate first month's Telephone Fee, Installation
Fees, and Telephone Service Deposits are paid In accordance with the Lease
Agreement subsection Deposits and First Month's Charges (page 1).
/s/ T. Morikawa June 7, 1999
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T. Morikawa Date
Tenant Signature
