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
INTERNATIONAL COSMETICS MARKETING CO.
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(Name of Small Business Issuer in its charter)
FLORIDA 65-0598868
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(State of incorporation) (I.R.S. Employer Identification No.)
6501 N.W. Park of Commerce Boulevard, Suite 205, Boca Raton, Florida 33487
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(Address of principal executive offices)
Issuer's Telephone Number: (561) 999-8878
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Securities to be registered pursuant to 12(b) of the Act: None
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Securities to be registered pursuant to 12(g) of the Act:
Common Stock $.001 Par Value
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(Title of Class)
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Page of pages
Exhibit Index begin page
TABLE OF CONTENTS
Page No.
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PART I
Item 1. Description of Business..................................................................................1
Item 2. Management's Discussion and Analysis or
Plan of Operation...............................................................................7
Item 3. Description of Property..................................................................................8
Item 4. Security Ownership of Certain Beneficial
Owners and Management...........................................................................8
Item 5. Directors, Executive Officers, Promoters and Control Persons.............................................9
Item 6. Executive Compensation..................................................................................14
Item 7. Certain Relationships and Related Transactions..........................................................15
Item 8. Description of Securities...............................................................................15
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters....................................................18
Item 2. Legal Proceedings.......................................................................................19
Item 3. Changes in and Disagreements with Accountants...........................................................19
Item 4. Recent Sales of Unregistered Securities.................................................................19
Item 5. Indemnification of Directors and Officers...............................................................19
PART FS
Table of Contents.......................................................................................XX
Financial Statements....................................................................................F-1
PART III
Item 1. Index to Exhibits.......................................................................................XX
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This discussion in this Registration Statement regarding International
Cosmetics Marketing Co. and its business and operations contains
"forward-looking statements." Such statements consist of any statement other
than a recitation of historical fact and can be identified by the use of
forward- looking terminology such as "may," "expect," "anticipate," "estimate"
or "continue" or the negative thereof or other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward looking statements. International Cosmetics Marketing Co. does not
have a policy of updating or revising forward-looking statements and thus it
should not be assumed that silence by its management over time means that actual
events are bearing out as estimated in such forward looking statements.
PART I
ITEM 1. Description of Business.
Our History
We were incorporated in Florida on July 14, 1995 under the name
CindyCo., Inc. for the purpose of providing non-legal services to organizational
and start-up companies. Between October, 1998 and January 1999, we sold an
aggregate of 18,800 shares of our Common Stock to certain accredited or
otherwise sophisticated investors with whom we had pre-existing relationships
and who had access to relevant information concerning the Company in a private
placement exempt from registration under the Securities Act of 1933, as amended
(the "Securities Act") in reliance on Section 4(2) and Rule 506 of Regulation D
of the Securities Act. We received gross proceeds of $470 in this transaction.
Our prior management subsequently determined to narrow the scope of our
stated business purposes to concentrate in the area of marketing. In August
1999, we changed our name to International Cosmetics Marketing Co., our original
officers and directors resigned, and our current officers and directors were
elected to their positions. Concurrently, we entered into an agreement with
Beverly Sassoon International, Inc., Beverly Sassoon and Elan Sassoon which
grant us various rights which are described below related to the manufacturing,
marketing and distribution of products utilizing the "Beverly Sassoon" or "Elan
Sassoon" names.
We anticipate the cost of funding our proposed business plan could
range between $1-$2 million dollars. Our Board of Directors has approved the
issuance of convertible debentures in the principal amount not to exceed $2
million dollars which may be sold from time to time by the Company to raise
start-up capital. To date, we have sold to one accredited investor an aggregate
of $795,000 in the form of a convertible debenture in a private placement exempt
from registration under the Securities Act in reliance on Section 4(2) of the
Securities Act. See Part I., Item 8. Description of Securities. While no
commitments have been received to provide the balance of the
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funding, we believe that there are persons or entities that will provide the
balance of any needed financing on terms offered by us.
We have not been involved in any bankruptcy, receivership or similar
proceeding. Except as set forth herein, we have not been involved in any
material reclassification, merger, consolidation, or purchase or sale of a
significant amount of assets not in the ordinary course of business.
Our Business Plan
We are a development stage company and our business is the development,
marketing and distribution of a broad range of consumer products. To date, we
have generated no revenues from operations. We will seek to develop and
distribute a variety of products which have wide range of consumer appeal in
areas from skin care and cosmetics to nutrition and human wellness products to
apparel and other disposable goods. In order to build a database from which we
might select products to market and distribute, we presently anticipate that we
will solicit proposals from inventors who have substantially completed their
product development but lack the expertise or capital to market or distribute
it. We expect that we will utilize advertisements in trade and other
publications, networking, referrals from persons with whom we may have
pre-existing relationships and our Web site as methods of soliciting these
proposals. We may also acquire existing businesses with complimentary operations
as a method of expanding our business and operations.
Our business plan focuses our efforts and resources on the marketing
and distribution of our products. We will out source the manufacturing of these
products to one or more contract manufacturers. We are presently in the early
stages of implementing our business plan, including establishing various
relationships with other companies to assist us in the implementation of our
business plan.
Under the terms of the Exclusive License Agreement with Beverly Sassoon
International, LLC. which we entered into in August 1999, we received the
exclusive rights to manufacture, market and distribute the line of skin care
products and cosmetics which Beverly Sassoon International, LLC. had previously
developed. These products, which include a complete line of skin care products
including moisturizers, treatments and masks, will be marketed and distributed
by us utilizing the name and likeness of Beverly Sassoon. We are in the
preliminary stages of designing packaging and the development of a marketing
campaign. As a result of the early stages of these discussions, we do not
presently have a timetable for the introduction of these products to the market.
Our distribution strategy will include direct selling and marketing
utilizing independent sales representatives much like Avon Products, Inc., Amway
and Mary Kay, Inc. Our business plan provides that these representatives, who
will be independent contractors, will purchase our products directly from us and
sell them directly to their customers. We will be responsible for the
recruitment and training of the independent sales representatives. We anticipate
that we will develop sales promotion and sales development activities which will
be directed towards giving selling assistance to the independent sales
representatives through aids such as brochures, product samples and
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demonstration products. We will establish a Web site which will serve both as an
additional marketing tool, and will provide a platform from which we will be
able to provide various support services to our independent sales
representatives. We also anticipate that we will seek to motivate our
independent sales representatives through the use of special incentive programs
that reward superior sales performance.
License Agreement
In August 1999 we entered into an Exclusive License Agreement with
Beverly Sassoon, Elan Sassoon and Beverly Sassoon International, LLC. which
granted us the following rights:
* We have an exclusive license to utilize Ms. Sassoon's name and
likeness in connection with the manufacture, marketing,
promotion and sale of certain of our products.
* Likewise, we have an exclusive license to utilize Mr.
Sassoon's name and likeness in connection with the
manufacture, marketing, promotion and sale of our products.
* We have an exclusive, worldwide license to manufacture, market
and distribute certain skin care products developed by Beverly
Sassoon International, LLC.
* Upon the expiration of certain existing licenses granted by
Ms. Sassoon to third parties related to the use of her name
and likeness in the marketing and promotion of pet care
products and slimming products, we will have the exclusive
license to also utilize Ms. Sassoon's name and likeness in
relation to these types of products.
The term of this Exclusive License Agreement is 99 years, with a 99
year renewal at our option. We retain full control over the manufacturing,
development and marketing of our products. Through Beverly Sassoon
International, LLC., Ms. Sassoon and Mr. Sassoon will consult with us in the
areas of product development and marketing, and we will utilize their names
and/or likenesses in promoting certain of our products and in the development of
certain of our brands. The consideration for the rights we received under this
Exclusive License Agreement included:
* Aggregate cash payment to Beverly Sassoon International, LLC
of up to $200,000.
* Issuance of 900,000 shares of our Common Stock to Beverly
Sassoon International, LLC.
* The future payment of royalties equal to the greater of 2% of
gross revenues from the sales of any of our products which are
marketed or distributed subject to the terms of the Exclusive
License Agreement, or $25,000 per month. These royalty
payments will end if either Summer Camp West Limited
Partnership, a Georgia limited partnership controlled by
Beverly Sassoon, Romana DOD Limited Partnership, a
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Georgia limited partnership controlled by Elan Sassoon or
Capital Distributors, LLC, which is controlled by Beverly
Sassoon and Elan Sassoon, exercises certain options to
purchase an aggregate of 4,850,000 shares of our Common Stock
which are described in Item 8. Description of Securities which
appears later in this Registration Statement.
The foregoing is a summary of certain material terms of the Exclusive
License Agreement and a copy of the Exclusive License Agreement is included as
an exhibit to this Registration Statement. We encourage you to read this
agreement in its entirety. See Part III., Item 1. Index to Exhibits.
We anticipate that we will also seek to license the use of the names
and likeness of other well-known individuals to assist us in the development,
marketing and establishment of certain of our brands. We have not, however,
entered into any discussions with any additional well-known individuals as of
the date of this Registration Statement.
Marketing Consulting Agreements
In September 1999, we entered into two separate Consulting Agreements
to provide the Company with marketing services. The one (1) year Consulting
Agreement with Viking Holding Company ("Viking"), provides that the consultant
will provide management, network marketing strategic organization and structure
recruiting experienced personnel and financial matters in connection with the
general sales, marketing and operation of the Company's business and products,
and expansion of services and products. The Company issued 200,000 shares of its
Common Stock for the marketing services to be provided by Viking. The shares are
subject to waiver and forfeiture, termination and cancellation in the event the
Company has not within the term of the agreement (i) attained sales in excess of
$5,000,000; and (ii) secured at least 5,000 distributors ("Performance Goals").
The Company may in its sole discretion, waive the satisfaction of the
Performance Goals. The Shares will be held in escrow pending satisfaction of the
performance goals.
The eighteen (18) month Consulting Agreement with Hatteras Investment
Company ("Hatteras") provides that the consultant will provide management,
network marketing strategic organization and structure recruiting experienced
personnel and financial matters in connection with the general sales, marketing
and operation of the Company's business and products, and expansion of services
and products. The Company issued 200,000 shares of its Common Stock for the
marketing services to be provided by Hatteras. The shares are subject to waiver
and forfeiture, termination and cancellation in the event the Company has not
within the term of the agreement (i) attained sales in excess of $10,000,000;
and (ii) secured at least 10,000 distributors ("Performance Goals"). The Company
may in its sole discretion, waive the satisfaction of the Performance Goals. The
Shares will be held in escrow pending satisfaction of the performance goals.
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Competition
We will be operating in a very competitive industry, dominated by
national and international companies with well-established brands. Our primary
competitors will be companies such as Amway, Avon Products, Inc. and Mary Kay,
Inc., all of whom are better capitalized, have more experience in our industry
and have established varying degrees of consumer loyalty. There are no
assurances we will ever be successful in establishing our brands or penetrating
our target markets.
Intellectual Property
Under the terms of the Exclusive License Agreement, we have the rights
to all trademarks, copyrights, trade names and other intellectual property
related to the use of the names and likeness of Beverly Sassoon or Elan Sassoon
for products marketed and distributed under the terms of that agreement. We are
in the process of filing certain fictitious name applications with the state of
Florida in order to conduct business under the names "Beverly Sassoon" and
"Beverly Sassoon & Company" and are currently awaiting confirmation from the
state. Ms. Sassoon and Mr. Sassoon have agreed to execute such additional
documents as we deem reasonably necessary to register and protect these
intellectual property rights. As we develop other trademarks, trade names,
copyrights or other intellectual property rights, we may seek to protect these,
as well as those related to Ms. Sassoon and Mr. Sassoon, by registration in the
United States and other countries where these products may be marketed.
Depending upon the development of our business, we may also wish to develop and
market products which incorporate patented or patent-pending formulations, as
well as products covered by design patents or other patent applications. While
we may seek to protect our intellectual property, in general, there can be no
assurance that our efforts to protect our intellectual property rights through
copyright, trademark and trade secret laws will be effective to prevent
misappropriation of our products. Our failure or inability to protect our
proprietary rights could materially adversely affect our business, financial
condition and results of operations.
Special Matters Related to Our Use of Independent Sales Representatives
Because our independent sales representatives are will classified as
independent contractors, and not as our employees, we are unable to provide them
the same level of direction and oversight as our employees. While we have
policies and rules in place governing the conduct of our independent sales
representatives, and we will periodically review the sales tactics of these
independent sales representatives, it is difficult to enforce our policies and
rules for the independent sales representatives.
Government Regulation
As our business strategy includes the development, marketing and
distribution of a wide range of consumer products, we may from time to time
become subject to compliance with various federal or state laws, rules and
regulations related to these products, including regulation by the Food and Drug
Administration and the Federal Trade Commission in the United States, as well as
various
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other federal, state and local or foreign regulatory authorities. Such
regulations would relate principally to the ingredients, labeling, packaging and
marketing of our products. It is also possible that certain of our products may
also be classified as over-the-counter drugs. Additional regulatory requirements
for such products would include additional labeling requirements, registration
of the manufacturer and semi-annual update of the drug list. In the event we
should fail to comply with the foregoing, or other as yet unidentified, federal
and state laws, rules and regulations, our business and operations could be
materially and adversely impacted.
Our network marketing system is subject to a number of federal and
state regulations administered by the FTC and various state agencies.
Regulations applicable to network marketing organizations are generally directed
at ensuring that product sales are ultimately made to consumers, and that
advancement within such organizations be based on sales of the organizations'
products rather than investments in the organizations or other non-retail sales
related criteria. Various government agencies monitor direct selling activities,
and we may be requested from time to time to supply information regarding our
marketing plan to these agencies. Although we believe our network marketing
system is in substantial compliance with the laws and regulation relating to
direct selling activities, we cannot be certain that legislation and regulations
adopted in particular jurisdictions in the future will not adversely affect our
operations. In this regard, our policies and procedures were designed to be in
compliance with the "Amway Decision," the rules by which most network marketing
standards are measured. We could also be found to be in non-compliance with
existing statutes or regulations as a result of, among other things, misconduct
by our independent sales representatives, the ambiguous nature of certain
regulations, and the considerable interpretative and enforcement discretion
given to regulators. Any assertion or determination that we or our independent
sales representatives are not in compliance with existing statutes or regulation
could have a material adverse affect on our business and operations. In
addition, an adverse determination by any one state could influence the
decisions of regulatory authorities in other jurisdictions.
We may also be subject to the risk of private party challenges to the
legality of our network marketing system. For example, in Webster v. Omnitrition
International, Inc., 79 F.3d 776 (9th Cir. 1996), the "multi-level marketing"
program of Omnitrition International, Inc. was challenged in a class action by
certain Omnitrition distributors who alleged that Omnitrition was operating an
illegal "pyramid scheme" in violation of federal and state laws. We believe that
our network marketing system satisfies the standards set forth in the
Omnitrition case and other applicable statutes and case law defining a legal
marketing system, in part based upon significant differences between our
marketing system and that described in the Omnitrition case. However, the
regulatory requirements concerning network marketing systems do not include
"bright line" rules, and are inherently fact-based. An future challenge and
subsequent adverse judicial determination with respect to our network marketing
system could have a material adverse effect on our business and operations.
Among other things, such a determination could require us to make modifications
to our network marketing system and result in negative publicity. In addition,
adverse rulings by courts in any proceedings challenging the legality of
multi-level marketing systems, even in those not involving us, could have a
material adverse effect on our business and operations.
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Employees
As of the date of this Registration Statement, we have three full time
employees. As we implement our business plan, we anticipate we will be hiring
additional full-time employees in the areas of sales and marketing.
Why We Filed This Registration Statement
We are registering a class of securities on this Form 10-SB
Registration Statement on a voluntary basis. We have no obligation to file a
Form 10-SB Registration Statement pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Upon effectiveness of this Registration
Statement we will voluntarily become subject to the reporting requirements of
the Exchange Act in order to provide public information about us to our
shareholders and other interested members of the general public. We will also
endeavor to have our Common Stock approved for quotation on the OTC Bulletin
Board following the effectiveness of this Form 10-SB. There can be no assurance,
however, that even if our Common Stock is approved for quotation, that any
meaningful public market in our Common Stock will develop. See Part II, Item 1.,
Market Price of and Dividends on the Registrant's Common Equity and Other
Stockholder Matters.
Availability of Additional Information
This Registration Statement, as filed by us, can be read and copied at
the public reference facilities maintained by the Securities and Exchange
Commission (SEC) at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
Information about the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330. The Registration Statement is also available to the
public from commercial document retrieval services or via EDGAR on the SEC's Web
site at www.sec.gov.
Prior to the effective date of this Registration Statement, we were not
subject to the reporting requirements of the Exchange Act and did not file
quarterly and annual reports with the SEC. Commencing with the quarterly report
for the period ending September 30, 1999, we will file these and other reports
with the SEC. These reports can be accessed via EDGAR at the SEC's Web site,
www.sec.gov. In addition, we will furnish our shareholders with annual reports
containing audited financial statements, and may distribute quarterly reports
containing unaudited summary financial information for each of the first three
quarters of each fiscal year.
ITEM 2. Management's Discussion and Analysis or Plan of Operations.
Plan of Operation.
We are a development stage company and we have not engaged in any
operations or had any revenues from operations since inception. In the next
twelve months, we plan to undertake and complete the establishment of our
distribution organization and a product roll-out of the skin care
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products which are partially the subject of the Exclusive Licensing Agreement,
as well as identifying and securing the rights to additional product lines. In
this first year we will also seek to develop and launch a Web site which will
have the dual purpose of serving as an additional marketing tool for our
products and providing various support services to our independent sales
representatives. Lastly, during the next 12 months we plan to complete the
establishment of our infrastructure and hire up to 30 additional employees in
the areas of marketing, sales, management and operations. We intend to engage a
fulfillment service to assist us in order processing and fulfillment, and a Web
design firm to develop and host our Web site. We believe we currently have
sufficient working capital to fund the above described undertakings planned for
our next 12 months of operation.
ITEM 3. Description of Property.
Our principal offices will be located at 6501 N.W. Park of Commerce
Boulevard, Suite 205, Boca Raton, Florida 33487. The Company has entered into a
lease agreement with an unrelated third party for this location of approximately
4,251 square feet of commercial office space. The Company will relocate its
principal offices to this location on November 1, 1999. The lease is for a term
of five (5) years, commencing on November 1, 1999 and expiring on October 31,
2004. The Company will pay a $50,000 security deposit, to be paid $10,000 at
lease execution and $40,000 prior to occupancy. The Company will pay a base
rent, ranging from $5,313.75 per month to $5,977.25 per month over the term of
the lease, along with its pro rata share of certain common area maintenance,
operating expenses, taxes and insurance. While awaiting our relocation to our
principal offices, the Company has conducted its business from our Chief
Financial Officer's home located at 2909 South Ocean Boulevard, Apartment 1-C,
Highland Beach, Florida 33348.
ITEM 4. Security Ownership of Certain Beneficial Owners and Management.
As of October 20, 1999, there are 4,778,200 shares of our Common Stock
issued and outstanding. There are no shares of preferred stock currently issued
and outstanding, and the outstanding warrants (see Item 8. Description of
Securities below) are not presently exercisable. The following table sets forth,
as of the close of business on October 20, 1999, (a) the name, address and
number of shares of each person known by us to be the beneficial owner of more
than five percent of our Common Stock; and (b) the number of shares of our
Common Stock owned by each officer and director, and all officers and directors
as a group, together with their respective percentage holdings of such shares.
Unless otherwise indicated, the address for each person is 6501 N.W. Park of
Commerce Boulevard, Suite 205, Boca Raton, Florida 33487.
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Name and Amount of Percentage
Address of Beneficial of
Beneficial Owner(1) Ownership of Stock Class
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Stephanie McAnly(2) 33,333 *
Sonny Spoden(3) 25,000 *
Beverly Sassoon
International, LLC (4) 900,000 18.8%
All Executive Officers
and Directors as a Group
(two people)(2)(3) 58,333 1.2%
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* less than one percent
(1) Pursuant to Rule 13-d-3 under the Exchange Act, beneficial
ownership of a security consists of sole or shared voting power (including the
power to vote or direct the voting) and/or sole or shared investment power
(including the power to dispose or direct the disposition) with respect to a
security whether through a contract, arrangement, understanding, relationship or
otherwise. Unless otherwise indicated, each person indicated has sole power to
vote, or dispose or direct the disposition of all shares beneficially owned,
subject to applicable unity property laws.
(2) Includes 33,333 shares issuable upon exercise of options granted
under the Company's 1997 Stock Option Plan exercisable for five (5) years at an
exercise price of $2.50 per share. Does not include 66,667 shares issuable upon
exercise of options which shall be granted and vest at a rate of 25,000 options
on each August 19, 2001 and August 19, 2002 under the Company's 1997 Stock
Option Plan which options will be exercisable for five (5) years at an exercise
price equal to the then fair market value of the stock commencing upon vesting
at 33,333 shares on August 19, 2000 and 33,334 shares on August 19, 2001.
(3) Includes 25,000 shares issuable upon exercise of options granted
under the Company's 1997 Stock Option Plan exercisable for five (5) years at an
exercise price of $2.50 per share. Does not include 50,000 shares issuable upon
exercise of options which shall be granted and vest at a rate of 25,000 options
on each August 19, 2001 and August 19, 2002 under the Company's 1997 Stock
Option Plan which options will be exercisable for five (5) years at an exercise
price equal to the then fair market value of the stock commencing upon vesting
at 25,000 shares on August 19, 2000 and 25,000 shares on August 19, 2001.
(4) Beverly Sassoon International, LLC. is a Florida limited liability
company whose principal place of business is P.O. Box 267145, Weston, FL
33326-7145. Beverly Sassoon, Elan Sassoon and Paul Lambert are the managing
members and control persons of Beverly Sassoon International, LLC.
ITEM 5. Directors, Executive Officers, Promoters and Control Persons.
The following table sets forth information concerning our executive
officers and directors Members of our Board of Directors will be elected at our
annual meeting of shareholders, and will
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serve for one year or until their successors are elected and qualify. Our
officers are elected by the Board of Directors, and their terms of office are at
the discretion of the Board of Directors.
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Name Age Position
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Stephanie McAnly 56 Director and President
Celestine (Sonny) F. Spoden 54 Director and Chief Financial Officer
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Ms. McAnly has been an officer and director since August 1999.
Stephanie McAnly has served as the Company's President since August 19, 1999.
From July 1998 through August 1999, Ms. McAnly held the position of Director of
Marketing and Training for 1-800-PARTYSHop, Inc., a multilevel marketing company
offering theme party supplies, gifts and accessories. She developed and
implemented the 1-800-PARTYSHop, Inc. national training program, wrote the
policy and training manuals and served as a seminar instructor nationwide. She
was a Master Distributor and Corporate Trainer from April 1998 to July 1998 for
Premier Plus, Inc., a multilevel marketing company promoting telecommunications
products, travel packages and golf equipment. And previously, for the period of
October 1995 to April 1998, Ms. McAnly was the Top Money Earner and Corporate
Trainer for Strategic Telecom Systems, Inc., a multilevel marketing company
promoting telecommunications products. She also served on the Strategic Telecom
President's Advisory Board. From June 1985 through April 1996, Ms. McAnly was
President of the corporation, The Bear Facts, Inc., a childcare center and
preschool educational facility in DeSoto County, Florida. Ms. McAnly holds both
a B.A. in English from the University of Florida and a B.A. in education from
the University of South Florida.
Mr. Spoden has been an officer and director since August 1999. From
January 1996 until May 1999, Mr. Spoden was Chief Financial Officer of Easy
Access International, Inc. (OTCBB: EZZZ), a publicly-owned holding company with
subsidiaries engaged in the development, marketing, and distribution of
telecommunication products and services. From 1993 until January 1996, Mr.
Spoden was an independent business and financial advisor in Boca Raton, Florida.
From 1969 until 1993, Mr. Spoden was employed by Ernst & Young LLP, and was a
general partner and an accounting and auditing partner for the period 1982 to
1993. During his career with Ernst & Young LLP, Mr. Spoden was based in the
Baltimore, Maryland office and the National office in New York City (1978 to
1980 and 1988 to 1993). Mr. Spoden received a B. S. with high honors, and a
major in finance, from the University of Maryland in 1969, and has been licensed
as a Certified Public Accountant in three states. For the period 1963 to 1967,
Mr. Spoden served in the U. S. Navy, primarily with the Naval Security Group in
Washington, D.C.
Employment Agreements
In August 1999 we entered into employment agreements with Stephanie
McAnly, our President, and Celestine (Sonny) Spoden, our Chief Financial
Officer. The three year agreement with Ms. McAnly provides that we will pay her
an annual base salary of $102,000 subject to
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performance increases. Specifically, if we should report $15 million in sales
during the first year of the agreement, her base salary will be increased by
$24,000 annually for the remainder of the term; likewise, should we report $50
million in sales during the second year of the agreement, her base salary will
be increased by an additional $24,000 for the final year of the agreement. As
additional compensation, we paid Ms. McAnly a signing bonus of $10,000, and we
granted her five year options under our 1997 Stock Option Plan to purchase up to
100,000 shares of our Common Stock at an exercise price of $2.50, vesting 33,333
options on the signing of the agreement, an additional 33,333 options on the
first annual anniversary date of the agreement, and the remaining 33,334 options
on the second annual anniversary date of the agreement. Subject to her continued
employment with us, Ms. McAnly shall be granted options to purchase an
additional 100,000 shares of our Common Stock at the then fair market value of
the stock. These additional options shall be granted and shall immediately vest,
at the rate of, subject to her continued employment, of 50,000 options on the
second annual anniversary date of the agreement and the remaining 50,000 options
on the third annual anniversary date of the agreement. These additional five
year options will also be granted under our 1997 Stock Option Plan.
The three year employment agreement with Mr. Spoden provides that we
will pay him an annual base salary of $90,000 during the first year of the
agreement, with the base salary for years two and three of the agreement to be
mutually determined by Mr. Spoden and us. As additional compensation, we granted
Mr. Spoden five year options under our 1997 Stock Option Plan to purchase up to
75,000 shares of our Common Stock at an exercise price of $2.50, vesting 25,000
options on each of the signing of the agreement, and the first and second annual
anniversary date of the agreement. Subject to his continued employment with us,
Mr. Spoden shall be granted options to purchase an additional 60,000 shares of
our Common Stock at the then fair market value of the stock. These additional
options shall be granted and shall immediately vest, at the rate of, subject to
his continued employment, of 30,000 options on the second annual anniversary
date of the agreement and 30,000 options on the third annual anniversary date of
the agreement. These additional five year options will also be granted under our
1997 Stock Option Plan.
The agreements also provide, among other things, for (i) participation
in any profit-sharing or retirement plan and in other employee benefits
applicable to our employees and executives, and (ii) benefits in the event of
disability and contain certain non-disclosure and non-competition provisions.
Under the terms of the agreements, we may terminate the employment of Ms. McAnly
or Mr. Spoden with cause, as defined in the agreement. To the extent that either
Ms. McAnly or Mr. Spoden are terminated for cause, no severance benefits shall
be paid.
The foregoing is a summary of certain of the material terms of these
employment agreements, copies of which are included as exhibits to this
Registration Statement. We encourage you to read these agreements in their
entirety. See Part III., Item 1. Index to Exhibits.
11
<PAGE>
1997 Stock Option Plan
Our 1997 Stock Option Plan ("Plan") was adopted by our Board of
Directors and the holders of a majority of our issued and outstanding capital
stock on October 1, 1997, effective as of that date. Under the Plan, we have
reserved an aggregate of 1,000,000 shares of Common Stock for issuance pursuant
to options granted under the Plan ("Plan Options"), of which options to acquire
an aggregate of 175,000 shares have been granted to Ms. McAnly and Mr. Spoden as
discussed above. The purpose of the Plan is to encourage stock ownership by our
officers, directors and key employees, and to give such persons a greater
personal interest in our success and an added incentive. The Board of Directors
will administer the Plan including, without limitation, the selection of the
persons who will be granted Plan Options under the Plan, the type of Plan
Options to be granted, the number of shares subject to each Plan Option and the
Plan Option price.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended, or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of Common Stock owned
by the eligible person, and receive a new Plan Option to purchase shares of
Common Stock equal in number to the tendered shares. Any Incentive Option
granted under the Plan must provide for an exercise price of not less than 100%
of the fair market value of the underlying shares on the date of such grant, but
the exercise price of any Incentive Option granted to an eligible employee
owning more than 10% of the outstanding Common Stock must not be less than 110%
of such fair market value as determined on the date of the grant. The term of
each Plan Option and the manner in which it may be exercised is determined by
the Board of Directors. provided that no Plan Option may be exercisable more
than 10 years after the date of its grant and, in the case of an Incentive
Option granted to an eligible employee owning more than 10% of the Common Stock,
no more than five years after the date of the grant.
The Plan provides that, if our outstanding shares are increased,
decreased, exchanged or otherwise adjusted due to a share dividend, forward or
reverse share split, recapitalization, reorganization, merger, consolidation,
combination or exchange of shares, an appropriate and proportionate adjustment
shall be made in the number or kind of shares subject to the Plan or subject to
unexercised Plan Options and in the purchase price per share under such Plan
Options. Any adjustment, however, does not change the total purchase price
payable for the shares subject to outstanding Plan Options. In the event of our
proposed dissolution or liquidation, a proposed sale of all or substantially all
of our assets, a merger or tender offer for our shares of Common Stock, the
Board of Directors may declare that each Option granted under this Plan shall
terminate as of a date to be fixed by the Board of Directors; provided that not
less than 30 days written notice of the date so fixed shall be given to each
Eligible Person holding an Option, and each such Eligible Person shall have the
right, during the period of 30 days proceeding such termination, to exercise his
Option as to all or any part of the shares, including shares of stock as to
which such Option would not otherwise be exercisable.
12
<PAGE>
The Plan provides that the Plan Options granted thereunder shall be
exercisable from time to time in whole or in part, unless otherwise specified in
the agreement representing the Plan Options or by the Board of Directors. Each
Plan Option may be exercised in whole or in part at any time during the period
from the date of the grant until the end of the period covered by the Plan
Option period. The Plan provides that, with respect to Incentive Stock Options,
the aggregate fair market value (determined as of the time the option is
granted) of the shares of Common Stock, with respect to which Incentive Stock
Options are first exercisable by any option holder during any calendar year
(including all of our incentive stock option plans or any parent or any
subsidiary which are qualified under Section 422 of the Internal Revenue Code of
1986) shall not exceed $100,000.
All Plan Options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution, and during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee's employment is
terminated for any reason, other than his death or disability or termination for
cause, or if an optionee is not our employee but is a member of the Board of
Directors and his service as a director is terminated for any reason, other than
death or disability, the Plan Option granted to him shall lapse to the extent
unexercised on the earlier of the expiration date or 30 days following the date
of termination. If the optionee dies during the term of his employment, the Plan
Option granted to him shall lapse to the extent unexercised on the earlier of
the expiration date of the Plan Option or the date one year following the date
of the optionee's death. If the optionee is permanently and totally disabled
within the meaning of Section 22(c)(3) of the Internal Revenue Code of 1986, the
Plan Option granted to him lapses to the extent unexercised on the earlier of
the expiration date of the option or one year following the date of such
disability.
The Board of Directors may amend, suspend or terminate the Plan at any
time. However, no such action may prejudice the rights of any optionee who has
prior thereto been granted options under this Plan. Further, no amendment to
this Plan which has the effect of (a) increasing the aggregate number of shares
subject to the Plan (except for adjustments due to changes in our
capitalization), or (b) changing the definition of "Eligible Person" under this
Plan, may be effective unless and until approved by our stockholders in the same
manner as approval of the Plan was required. Any such termination of the Plan
shall not affect the validity of any Plan Options previously granted thereunder.
Unless the Plan shall theretofore have been suspended or terminated by the Board
of Directors, the Plan shall terminate on October 1, 2007.
The foregoing is a summary of certain of the material terms of Plan, a
copy of which is included as an exhibit to this Registration Statement. We
encourage you to read the Plan in its entirety. See Part III., Item 1. Index to
Exhibits.
13
<PAGE>
ITEM 6. Executive Compensation.
Cash Compensation
The following table summarizes all compensation recorded by the Company
in each of the last two fiscal years for the Company's Chief Executive Officer
and each other executive officers serving as such whose annual compensation
exceeded $100,000.
<TABLE>
<CAPTION>
Long - Term
Annual Compensation Compensation Awards
------------------- -------------------
Name and Other Annual Restricted Options All Other
Principal Position Year Salary Bonus Compensation Stk Awds SARs(#) LTIP Compen.
- ------------------ ---- ------ ----- ------------ -------- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles B. Pearlman 1998 $0 $0 0 0 0 0
President, Chief 1997 $0 $0 0 0 0 0
Executive Officer,
and Director(1)
</TABLE>
- -----------
(1) Mr. Pearlman served as our Chief Executive Officer and a director
from our inception in 1995 until August 1999.
<TABLE>
<CAPTION>
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1998
Individual Grants
-----------------
No. of Securities % of Total Options
Underlying Granted to Employees Exercise Expiration
Name Options Granted in Fiscal Year Price Date
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles B. Pearlman
President and Director(1) 0 0 0 0
</TABLE>
- -----------
(1) Mr. Pearlman served as our President and a director from our
inception in 1995 until August 1999.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN YEAR ENDED DECEMBER 31, 1998
AND YEAR-END OPTION VALUES
No. of Securities
Underlying Options Value of Unexercised
Shares Options at In-the-Money options at
Acquired on Value December 31, 1998 December 31, 1998
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles B. Pearlman
President, Chief
Executive Officer and
Director (1) 0 n/a n/a n/a n/a n/a
</TABLE>
14
<PAGE>
- -----------
(1) Mr. Pearlman served as our Chief Executive Officer and a director
from our inception in 1995 until August 1999.
ITEM 7. Certain Relationships and Related Transactions.
There have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which we were or are to be a party, in which the amount
involved exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to us to own of record or beneficially more than
five percent of our Common Stock, or any member of the immediate family of any
of the foregoing persons, had a material interest.
ITEM 8. Description of Securities.
Our capitalization consists of 25,000,000 shares of Common Stock, par
value $.001 per share, and 5,000,000 shares of preferred stock, par value $.001
per share, of which 4,778,200 shares of Common Stock and no shares of preferred
stock were issued and outstanding as of October 20, 1999.
Common Stock
The issued and outstanding shares of Common Stock are fully paid and
nonassessable. Holders of the shares are entitled to one vote per share on each
matter submitted to a vote at a meeting of shareholders. The shares of Common
Stock do not have cumulative voting rights or preemptive rights and there are no
redemption or conversion privileges attached thereto. Holders of Common Stock
are entitled to receive ratably such dividends as may be declared by us and to
participate ratably in the distribution of any assets legally available for
distribution with respect to the Common Stock.
Preferred Stock
The shares of preferred stock are issuable in such series and bearing
such voting, dividend, conversion, liquidation and other rights and preferences
as the Board of Directors may determine. As of the date of this Registration
Statement, we have not created any series of preferred stock.
Dividend Policy
We have never paid cash dividends on our Common Stock and our present
intention is to retain future earnings, if any, to finance the expansion of our
business. We do not anticipate that any cash dividends will be paid in the
foreseeable future. The future dividend policy will depend on our earnings,
capital requirements, expansion plans, financial condition and other relevant
factors.
15
<PAGE>
Options and Warrants
We presently have outstanding options to purchase 4,850,000 shares of
our Common Stock, at an exercise price of $.001 per share, which are held by the
following individuals and entity:
<TABLE>
<CAPTION>
Holder No. of Shares Underlying Warrant
------ --------------------------------
<S> <C> <C>
Summer Camp West Limited
Partnership (1) 2,250,000
Romana DOD Limited Partnership (2) 2,000,000
Capital Distributors, LLC (3) 600,000
</TABLE>
- -----------
(1) On August 19, 1999, options to purchase these shares were
issued to Beverly Sassoon which she subsequently transferred
to Summer Camp West Limited Partnership, a Georgia limited
partnership controlled by Beverly Sassoon.
(2) On August 19, 1999, options to purchase these shares were
issued to Elan Sassoon which he subsequently transferred to
Romana DOD Limited Partnership, a Georgia limited partnership
controlled by Elan Sassoon.
(3) Capital Distributions, LLC is a Florida limited liability
company controlled by Beverly Sassoon and Elan Sassoon.
The terms of these options provide that they are exercisable for a two
year period commencing on the earlier of August 19, 2001 or the 18th month
anniversary date of the date on which our securities are first traded on The
Nasdaq Stock Market, Inc. or other national exchange. The OTC Bulletin Board is
not considered a "national exchange" and, accordingly, these options will not
become exercisable by their terms should we succeed in obtaining a quotation of
our Common Stock on the OTC Bulletin Board. In the event that all or any of
these options are exercised, the royalty payments payable by us under the
Exclusive License Agreement described above shall terminate.
We granted the holders of these options piggy-back registration rights
during the exercise period should we file one or more registration statements
under the Securities Act for a public offering of our equity or debt securities.
The exercise price for the options may be paid by cashier's or official bank
check or by the delivery of an unexercised portion of the option to the Company
for cancellation having a market value, as determined by the spread as of the
date of Common Stock underlying the option, equal to the aggregate exercise
price of the portion of the option desired to be then exercised. These options
contain customary anti-dilution provisions in the event of a stock split, stock
dividend or other recapitalization, and the holders cannot sell, transfer,
pledge or otherwise encumber the options without our prior written consent
except the holder may transfer any or all of his or her options to members of
such holder's immediate family, which shall include spouse and children and
grandchildren over the age of 21 or in trust for the benefit of any such persons
or any members of the holder's immediate family under the age of 21 so long as,
in either case, the trustee is over the age of 21. In addition, the holders of
the options have pre-emptive rights until August 19, 2001.
16
<PAGE>
The foregoing is a summary of certain of the material terms of these
options, copies of which are included as exhibits to this Registration
Statement. We encourage you to read these options in their entirety. See Part
III., Item 1. Index to Exhibits.
Convertible Debentures
The Board of Directors has approved the issuance of convertible
debentures in the principal amount not to exceed $2 million dollars which may be
sold from time to time by us. As of October 20, 1999, the Company has sold
$795,000 in the form of a convertible debenture. The convertible debenture bears
no interest and is due and payable on October 11, 2002. We do not have the right
to prepay the principal amount. All, but not less then all of the convertible
debentures are convertible into shares of our Common Stock at a conversion price
of $5.00 per Share, subject to stock splits, stock dividends, rights offerings
by the Company in certain combinations, capitalizations, distributions and other
similar events. In the event that we decline to repay in full, the convertible
debenture will be automatically converted. The convertible debentures provide
certain restrictions on the Company, unless prior written consent is received by
a majority of the holders of the convertible debentures. Such actions the
Company is restricted to take without the approval of a majority of the
debentures are: (i) declaring, ordering or paying any dividends; (ii) redeeming
any securities; (iii) adjusting the salary and benefits of employees that are
officers of the corporation; (iv) selling all or substantial assets of the
Company; (v) undertaking a merger, consolidation, liquidation or capitalization;
(vi) increasing or decreasing the number of directors of the Company; (vii)
commencing any new business venture, new office, or investment or acquisition of
any new entity which would require an investment of $25,000 or more; (viii)
authorize or issue new Shares of Common Stock of the Company; (ix) entering into
or approving any agreement or contract for the purchase of goods, services or
other items between the Company, a shareholder or a member of a shareholder's
immediate family; or (x) entering into a contract for employment or for a
consultant.
Florida Anti-Takeover Statutes; Indemnification
Florida has enacted legislation that may deter or frustrate a take-over
of a Florida corporation. The Florida Control Share Act generally provides that
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless such voting rights are approved by a majority of the
corporation's disinterested shareholders. The Florida Affiliated Transactions
Act generally requires super majority approval by disinterested directors or
shareholders of certain specified transactions between a corporation and holders
of more than 10% of the outstanding voting shares of the corporation (or their
affiliates). The Florida law permits the our Articles of Incorporation to
require that we indemnify our directors, officers, employees and agents.
17
<PAGE>
PART II
ITEM 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Stockholder Matters
There has never been any public market for shares of our Common Stock.
Following the effectiveness of this Registration Statement, we intend seek a
market maker who is a broker-dealer and a member of the National Association of
Securities Dealers, Inc. who will submit an application for quotation of our
Common Stock on the OTC Bulletin Board. As of the date of this Registration
Statement, we have not identified the market maker. We do not know if we will be
successful in inducing a market maker to make such application, or if our Common
Stock will be accepted for quotation on the OTC Bulletin Board. Even if our
Common Stock is accepted for quotation, no assurance can be given that any
market will develop or, if developed, will be sustained. If a public market ever
develops in the future, the sale of unregistered and restricted shares of our
Common Stock pursuant to Rule 144 of the Securities Act by our management may
have a substantial adverse impact on any such public market.
Penny Stock Considerations
Assuming our Common Stock is ever publicly-traded, we may become
subject to certain rules related to "penny stocks" as adopted by the SEC, and
trading in our Common Stock would become subject to broker-dealer practices in
connection with transactions in penny stocks which are regulated by certain
rules adopted by the SEC. Penny stocks are generally defined as equity
securities with a price of less than $5.00. Penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks, and the risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction will receive, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules generally require that prior to a transaction in
penny stock, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser, and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock rules. Our shares of
Common Stock may be subject to these penny stock rules, in which event our
shareholders will in all likelihood find it difficult to sell their securities.
Rule 144 Considerations
All of the 4,778,200 shares of Common Stock issued and outstanding, are
restricted securities as defined under Rule 144 of the Securities Act, and may
only be sold under Rule 144 or otherwise under an effective Registration
Statement or an exemption from
18
<PAGE>
registration, if available. Rule 144 provides, in part, that a person who is not
our affiliate (an officer, director or principal shareholder) and who holds
restricted securities for a period of one year may sell all or part of such
securities in ordinary brokerage transactions, subject to certain volume
limitations and the availability of current public information on the Company.
Likewise, our affiliates who have held restricted securities for a period of at
least two years may sell such securities in ordinary brokerage transactions,
subject to both volume limitations and availability of current public
information on the company. We cannot predict the effect, if any, that any such
sales of Common Stock, or the availability of such Common Stock for sale, may
have on the market value of our Common Stock prevailing from time to time,
assuming a market develops for the shares, of which there can be no assurance.
Sales of substantial amounts of Common Stock by our shareholders, particularly
if they are our affiliates, could have a material adverse effect upon the market
value of our Common Stock. As of the date of this Registration Statement,
3,431,200 shares of our outstanding Common Stock are restricted shares for which
the applicable holding periods have expired. Any future sale of such shares by
our shareholders, whether under Rule 144 or otherwise, may have a depressing
effect upon the price of our Common Stock in any market that might develop.
Holders
The number of record holders of shares of our Common Stock as of the
date of this Registration Statement is approximately 67.
ITEM 3. Legal Proceedings.
Not Applicable.
ITEM 4. Changes in and Disagreements with Accountants.
Not Applicable.
ITEM 5. Recent Sales of Unregistered Securities.
On July 14, 1995, we issued 7,431,200 shares of our common stock to 16
individuals and entities for services rendered in the formation of the Company,
4,000,000 of which were returned to the Company on August 19, 1999 for
cancellation in connection with the resignation of former management and the
transaction relating to the Exclusive License Agreement.
Between October 1998 and January 1999, we sold an aggregate of 18,800
shares of our Common Stock to 47 persons who were either accredited or otherwise
sophisticated investors with whom we had pre-existing relationships and access
to relevant information concerning the Company in a private placement exempt
from registration under the Securities Act in reliance on Section 4(2) and Rule
506 of Regulation D of the Securities Act. We received gross proceeds of $470 in
this
19
<PAGE>
transaction. We did not utilize the services of an underwriter and we paid no
commissions or other compensation for sales made in this private placement.
On August 19, 1999, we issued 900,000 shares of our Common Stock to
Beverly Sassoon International, L.L.C. in connection with entering into the
Exclusive License Agreement. Inasmuch as Beverly Sassoon International, L.L.C.
had a preexisting relationship with us and access to relevant information
concerning us, the issuance of such securities was exempt from the registration
requirements of the Securities Act pursuant to the exemption set forth in
Section 4(2) of the Securities Act.
On August 19, 1999, the Company issued 28,200 Shares of its Common
Stock to Atlas, Pearlman, Trop & Borkson, P.A. for legal services. Inasmuch as
Atlas, Pearlman, Trop & Borkson, P.A. had a preexisting relationship with us and
access to relevant information concerning us, the issuance of such securities
was exempt from the registration requirements of the Securities Act pursuant to
the exemption set forth in Section 4(2) of the Securities Act.
In September, 1999, the Company issued an aggregate of 200,000 shares
to Viking Holding Company, in connection with a certain business, advisory and
other marketing consulting services to be performed on behalf of the Company.
Inasmuch as the consultant had a preexisting relationship with us and access to
relevant information concerning us, the issuance of such securities was exempt
from the registration requirements of the Securities Act pursuant to the
exemption set forth in Section 4(2) of the Securities Act.
In September, 1999, the Company issued an aggregate of 200,000 shares
to Hatteras Investment Company in connection with a certain business, advisory
and other marketing consulting services to be performed on behalf of the
Company. Inasmuch as the consultant had a preexisting relationship with us and
access to relevant information concerning us, the issuance of such securities
was exempt from the registration requirements of the Securities Act pursuant to
the exemption set forth in Section 4(2) of the Securities Act.
In October 1999, the Company issued a convertible debenture in an
aggregate principal amount of $795,000 to one (1) accredited investor. The
investor had a preexisting relationship with us and access to relevant
information concerning us, and, accordingly, the issuance of such securities was
exempt from the registration requirements of the Securities Act pursuant to the
exemption set forth in Section 4(2) of the Securities Act.
ITEM 6. Indemnification of Directors and Officers.
The Florida Business Corporation Act permits the indemnification of
directors, employees, officers and agents of Florida corporations. Our Articles
of Incorporation and Bylaws provide that the we shall indemnify our directors
and officers to the fullest extent permitted by the Florida Business Corporation
Act. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers or controlling persons pursuant to
the foregoing provisions, we have been informed that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
20
<PAGE>
PART F/S
Following are our (i) audited financial statements for the years ended
December 31, 1998 and 1997 and the period from July 14, 1995 (date of inception)
to December 31, 1998, including the independent auditors' report, the balance
sheets as of December 31, 1998 and 1997 and the related statements of
operations, changes in stockholders' equity and cash flows for the years then
ended and for the period from inception to December 31, 1998, and (ii) compiled
financial statements for the six months ended June 30, 1999 and 1998 and the
period from July 14, 1995 (date of inception) to June 30, 1999, including the
accountants' report, the balance sheets as of June 30, 1999 and 1998, and the
related statements of operations, changes in stockholders' equity and cash flows
for the six months then ended and for the period from inception to June 30,
1999.
21
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
AUDITED FINANCIAL STATEMENTS
For the Years Ended December 31, 1998 and 1997 and the Period
From July 14, 1995 (Date of Inception) to December 31, 1998
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
--------
INDEPENDENT AUDITORS' REPORT F-1
- ----------------------------
FINANCIAL STATEMENTS
- --------------------
BALANCE SHEETS F-2
STATEMENTS OF OPERATIONS F-3
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY F-4
STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6-12
- -----------------------------
<PAGE>
LONDON WITTE & COMPANY, P.A.
3101 NORTH FEDERAL HIGHWAY, SUITE 700
FORT LAUDERDALE, FL 33306
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
INTERNATIONAL COSMETICS MARKETING CO.
We have audited the accompanying balance sheet of International Cosmetics
Marketing Co. (a development stage company) as of December 31, 1998 and 1997 and
the related statements of operations, changes in stockholders' equity, and cash
flows for the years then ended and the period from inception to December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of International Cosmetics
Marketing Co.(a development stage company) as of December 31, 1998 and 1997 and
the results of its operations and its cash flows for the years then ended and
for the period from inception to December 31, 1998 in conformity with generally
accepted accounting principles.
/s/ LONDON WITTE & COMPANY, P.A.
LONDON WITTE & COMPANY, P.A.
Certified Public Accountants
September 1, 1999, except for Note 8,
As to which the date is October 11, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31, 1998 and 1997
A S S E T S
1998 1997
-------- --------
<S> <C> <C>
CURRENT ASSETS
Cash $ 240 $ 0
-------- --------
TOTAL CURRENT ASSETS 240 0
-------- --------
TOTAL ASSETS $ 240 $ 0
======== ========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
LIABILITIES $ 0 $ 0
-------- --------
STOCKHOLDERS' EQUITY
Common stock, par value $.001 per share;
25,000,000 shares authorized; 7,441,600
shares issued and outstanding 7,442 7,431
Preferred stock, par value $.001 per share;
5,000,000 shares authorized; no shares
issued and outstanding 0 0
Additional paid-in capital 764 365
Deficit accumulated during the development
stage (7,966) (7,796)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 240 0
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 240 $ 0
======== ========
</TABLE>
See accompanying notes to financial statements and independent auditors' report.
F-2
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998 and 1997
and the Period From July 14, 1995 (Date of Inception) to December 31, 1998
INCEPTION
TO
1998 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $ 0 $ 0 $ 0
OPERATING EXPENSES:
General and administrative 170 165 7,966
----------- ----------- -----------
NET LOSS BEFORE INCOME TAXES (170) (165) (7,966)
INCOME TAX EXPENSE (BENEFIT) 0 0 0
----------- ----------- -----------
NET LOSS $ (170) $ (165) $ (7,966)
=========== =========== ===========
NET LOSS PER SHARE - BASIC (0.000023) (0.000022)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Basic 7,441,600 7,431,200
=========== ===========
</TABLE>
See accompanying notes to financial statements and independent auditors' report.
F-3
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1998 and 1997
and the Period From July 14, 1995 (Date of Inception) to December 31, 1998
COMMON STOCK AND TOTAL
CAPITAL IN EXCESS ACCUMULATED STOCKHOLDERS'
SHARES OF PAR VALUE DEFICIT EQUITY
------ ------------ ------- ------
<S> <C> <C> <C> <C>
BALANCES AT JULY 14, 1995 0 $ 0 $ 0 $ 0
Issuance of common stock
for organizational costs 7,431,200 7,431 0 7,431
Contributions of capital 0 200 0 200
Net Loss 0 0 (7,631) (7,631)
----------- ---------- ---------- ----------
BALANCES AT DECEMBER 31, 1996 7,431,200 7,631 (7,631) 0
Contributions of capital 0 165 0 165
Net Loss 0 0 (165) (165)
----------- ---------- ---------- ----------
BALANCES AT DECEMBER 31, 1997 7,431,200 7,796 (7,796) 0
Issuance of common stock
at $.025 per share 10,400 260 0 260
Contribution of capital 0 150 0 150
Net Loss 0 0 (170) (170)
----------- ---------- ---------- ----------
BALANCES AT DECEMBER 31, 1998 7,441,600 $ 8,206 $ (7,966) $ 240
=========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements and independent auditors' report.
F-4
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997
and the Period From July 14, 1995 (Date of Inception) to December 31, 1998
INCEPTION
TO
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (170) $ (165) $ (7,966)
--------- --------- ---------
Adjustments to reconcile net
loss to net cash used by
operating activities 0 0 0
--------- --------- ---------
Net cash used by operating activities (170) (165) (7,966)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used by investing activities 0 0 0
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions of capital 150 165 515
Proceeds from common stock issuance 260 0 7,691
--------- --------- ---------
Net cash provided by financing
activities 410 165 8,206
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH 240 0 240
CASH AND EQUIVALENTS, BEGINNING 0 0 0
--------- --------- ---------
CASH AND EQUIVALENTS, ENDING $ 240 $ 0 $ 240
========= ========= =========
</TABLE>
See accompanying notes to financial statements and independent auditors' report.
F-5
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Nature of Operations
International Cosmetics Marketing Co. (formerly CindyCo, Inc.) is a Florida
corporation formed on July 14, 1995. The Company is in the development stage and
has no operating history. The subsistence of the Company is dependent upon
sufficient proceeds being raised through financing or capital contributions. The
Company intends to develop, market and distribute a broad range of consumer
products in the areas of skin care and cosmetic, nutrition and human wellness
products, various apparel and other goods.
Basis of Presentation
The Company prepares its financial statements on the accrual basis of
accounting, recognizing income when earned and expenses when incurred.
Cash and Cash Equivalents
For purposes of these financial statements, the Company considers all
unrestricted highly liquid investments with original maturities of three months
or less to be cash equivalents. Cash equivalents are carried at cost, which
approximates market value.
Income Taxes
Deferred tax assets and liabilities are determined based upon differences
between financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which differences are expected to
reverse.
The Company provides a valuation allowance against deferred tax assets if, based
on the weight of evidence available, it is more likely than not that some or all
of the deferred tax assets will not be realized.
Financial Statement Estimates
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
F-6
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
- ------------------------------------------------------------
Loss Per Share
Basic net income (loss) per common share is computed by dividing net income
(loss) available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted income (loss) per common share
reflects the maximum dilution that would have resulted from the assumed exercise
related to dilutive securities and is computed by dividing net income (loss) by
the weighted average number of common shares and all dilutive securities
outstanding. No dilutive securities existed as of the balance sheet dates.
NOTE 2 - COMMON AND PREFERRED STOCK
- -----------------------------------
Common Stock
The Company is authorized to issue 25,000,000 shares of common stock with a per
share par value of $.001. On July 14, 1995, the Board of Directors authorized
the issuance of 7,431,200 common shares in exchange for organizational services
valued at $7,431.20. Subsequent to the balance sheet date, as a part of the
transactions described in Note 8, 4,000,000 of these shares were returned to and
canceled by the Company.
Between October 1998 and February 1999, the Company sold 18,800 shares of common
stock to various individuals pursuant to Rule 506 of Regulation D of the
Securities Act at $.025 per share, for a total of $470 (10,400 shares for total
of $260 as of December 31, 1998).
Each share of common stock entitles its owner to one vote. The common shares
carry no preemptive rights and are not redeemable. Cumulative voting is not
permitted.
Preferred Stock
The Company has authorized the issuance of 5,000,000 shares of preferred stock
with a par value of $.001 per share, bearing such voting, dividend, conversion,
liquidation and other rights and preferences as the Board of Directors may
determine. No shares of preferred stock have been issued.
F-7
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 3 - STOCK OPTION PLAN
- --------------------------
On October 1, 1997, the Board of Directors and shareholders approved a stock
option plan entitled the "1997 Stock Option Plan" (the "plan"). Under the plan,
the Company has reserved an aggregate of 1,000,000 shares of common stock for
issuance pursuant to options granted under the plan. The Stock Options Committee
of the Board of Directors of the Company will administer the plan. Options
granted under the plan may either be options qualifying as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified options. The term and recipient of each option granted under the
plan, and the manner in which it may be exercised, will be determined by the
Board of Directors or the Stock Option Committee. No plan options have been
granted as of December 31, 1998.
NOTE 4 - DEFERRED TAXES
- -----------------------
Under current tax law, all start up costs must be amortized over a period of not
less than 60 months, starting with the month in which business commences. As of
December 31, 1998 and 1997, the amount of start up costs was $7,431.20. Since
operations have not commenced as of December 31, 1998, these costs are a
non-amortizable asset for income tax reporting purposes. Based on the evidence
available, the Company has provided a valuation allowance to offset any deferred
tax asset arising from the future tax benefits from the amortization of its
start up costs.
NOTE 5 - LEASES
- ---------------
On November 1, 1999, the Company entered into a lease agreement with an
unrelated third party to rent approximately 4,251 square feet of commercial
office space at 6501 N.W. Park of Commerce Boulevard, Suite 205, Boca Raton,
Florida for its principal offices. The lease is for a term of 5 years,
commencing on November 1, 1999 and expiring on October 31, 2004. The Company
will pay a $50,000 security deposit, to be paid $10,000 at lease execution and
$40,000 prior to occupancy. The Company will pay a base rent, ranging from
$5,313.75 per month to $5,977.25 per month over the term of the lease, along
with it's pro rata share of certain common area maintenance, operating expenses,
taxes and insurance.
F-8
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 5 - LEASES (cont'd)
- ------------------------
Minimum Future Lease Payments
1999 $ 10,628
2000 63,765
2001 64,190
2002 66,758
2003 69,428
2004 59,773
--------
Total $334,542
========
NOTE 6 - NON-MONETARY TRANSACTIONS
- ----------------------------------
Certain founders of the Company performed organizational services and incurred
certain costs during the initial formation of the Company. On July 14, 1995, the
Board of Directors authorized the issuance of an aggregate of 7,431,200 shares
of common stock for these services, 4,000,000 of which were subsequently
returned to the Company for cancellation in connection with the transactions
described in Note 8.
NOTE 7 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Refer to Note 6, which describes the issuance of founder shares of the Company's
common stock for organizational services. No other related party transactions
occurred during the period of these financial statements.
NOTE 8 - SUBSEQUENT EVENTS
- --------------------------
On August 19, 1999, the Company entered into an Exclusive License Agreement with
Beverly Sassoon International, LLC, Ms. Beverly Sassoon and Mr. Elan Sassoon.
The agreement granted the Company the following rights: 1) an exclusive license
to utilize Ms. Sassoon's name and likeness with the manufacturing, promotion and
sale of certain products, 2) an
F-9
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 8 - SUBSEQUENT EVENTS
- --------------------------
exclusive license to utilize Mr. Sassoon's name and likeness with the
manufacturing, promotion and sale of certain products, 3) an exclusive,
worldwide license to manufacture, market and distribute certain skin care
products developed by Beverly Sassoon International, LLC, and 4) upon the
expiration of certain existing licenses granted by Ms. Sassoon to third parties
related to the use of her name and likeness in the marketing and promotion of
pet care and slimming products, the exclusive license to utilize Ms. Sassoon's
name and likeness with regards to these types of products. The term of this
Exclusive License Agreement is 99 years, with a 99 year renewal at the Company's
option.
The Company will retain full control over the manufacturing, development and
marketing of the Company's products. Also, Ms. Sassoon and Mr. Sassoon, through
Beverly Sassoon International, LLC, will consult with the Company in connection
with product development and marketing. As consideration for the rights granted
under this agreement, Beverly Sassoon International, LLC will receive a payment
of $150,000 and an aggregate of up to $50,000 of payments for certain expenses
and 900,000 shares of the Company's common stock.
The Company will pay future royalty payments equal to the greater of 2% of gross
revenues from sales of any products which are marketed or distributed under the
terms of the Exclusive License Agreement, or $25,000 per month. These royalty
payments will end if Summer Camp West Limited Partnership, a Georgia limited
partnership controlled by Beverly Sassoon, Romana DOD Limited Partnership, a
Georgia limited partnership controlled by Elan Sassoon and/or Capital
Distributors, LLC, a Florida limited liability company controlled by Beverly
Sassoon and Elan Sassoon exercise certain options to purchase 4,850,000 shares
of the Company's common stock. The options are exercisable for a period of two
years commencing on the earlier of August 19, 2001 or the 18th month anniversary
of the date the Company's securities are first traded on the Nasdaq Stock Market
in the following quantities: 1) 2,250,000 shares for Summer Camp West Limited
Partnership, 2) 2,000,000 shares for Romana DOD Limited Partnership, 3) 600,000
shares for Capital Distributors, LLC.
F-10
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 8 - SUBSEQUENT EVENTS (cont'd)
- -----------------------------------
As stated above in Note 6, subsequent to the balance sheet date, certain
founders returned 4,000,000 shares of the Company's common stock to the Company
for cancellation.
Subsequent to the above referenced transactions, the Company issued a total of
400,000 shares of the Company's common stock to consultants for future services
and 28,200 shares to counsel for the Company for legal services rendered.
The 400,000 shares of stock issued to consultants were issued pursuant to
consulting agreements with Hatteras Investment Company and Viking Holding
Company, which were entered into in September 1999. The Company agreed to issue
200,000 shares of common stock to each consultant as compensation for future
services. The consultants will provide advice to and consult with the Company
relating to management, network marketing, strategic planning, corporate
organization and structure, recruiting experienced personnel and financial
matters relating to the Company's general sales, marketing and operations.
The term of the agreement with Hatteras Investment Company is for 18 months from
the date of the agreement and may be extended for an additional 18 months
subsequent to the original term upon the mutual agreement of both parties.
Shares of stock issued as compensation for this agreement are subject to
termination and cancellation in the event that within 18 months after this
agreement the Company has not attained sales in excess of $10,000,000 and the
Company does not have at least 10,000 distributors.
The term of the agreement with Viking Holding Company is for 12 months from the
date of the agreement and may be renewed subsequent to the original term for an
additional 12 months upon the written mutual consent of both parties. Shares of
stock issued as compensation for this agreement are subject to termination and
cancellation in the event that within 12 months after this agreement the Company
has not attained sales in excess of $5,000,000 and the Company does not have at
least 5,000 distributors.
In August 1999, the Company changed its name from CindyCo, Inc. to International
Cosmetics Marketing Co. At the same time, the original officer and director
resigned, and the Company's current officers and directors were elected to their
current positions.
F-11
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 8 - SUBSEQUENT EVENTS
- --------------------------
On August 19, 1999, the Company entered into an Employment Agreement with its
President for a term of three years. The Company will pay the Employee a base
salary of $102,000 per year. In the event that the Company has $15 million in
sales during the first year, the base salary will be increase $24,000 for the
second year, and in the event that the Company has $50 million in sales during
the second year, the base salary will be increased an additional $24,000 for the
third year. The Company has granted the Employee, subject to certain vesting
provisions, 100,000 options to purchase shares of the Company's common stock at
an exercise price of $2.50 per share under the 1997 Stock Option Plan discussed
in Note 3. The options are exercisable for a period of five years from the date
of vesting, subject to continued employment with the Company. The Employee may
also be granted an additional 100,000 options to purchase, subject to certain
restrictions, shares of the Company's common stock at fair market value at the
date of the grant.
On August 19, 1999, the Company also entered into an Employment Agreement with
its Chief Financial Officer for a term of three years. The Company will pay the
Employee a base salary of $90,000 per year. The Company has granted the
Employee, subject to certain vesting provisions, 75,000 options to purchase
shares of the Company's common stock at an exercise price of $2.50 per share
under the 1997 Stock Option Plan discussed in Note 3. The options are
exercisable for a period of five years from the date of vesting, subject to
continued employment with the Company. The Employee may also be granted an
additional 60,000 options to purchase, subject to certain restrictions, shares
of the Company's common stock at fair market value at the date of the grant.
In August 1999, The Board of Directors authorized and approved the private
offering of up to $2,000,000 principal amount of 0% convertible debentures to
finance its business plan. Each debenture issued is due and payable in full
three years from the date of issuance and is convertible into shares of the
Company's common stock at a conversion price of $5.00 per share, subject to
adjustment in certain circumstances. As of October 11, 1999, $795,000 of
debentures have been sold.
F-12
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
UNAUDITED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 1999 and
1998 and the Period From July 14, 1995 (Date of Inception) to June 30, 1999
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
--------
ACCOUNTANTS' REPORT F-13
- -------------------
FINANCIAL STATEMENTS
- --------------------
BALANCE SHEETS F-14
STATEMENTS OF OPERATIONS F-15
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY F-16
STATEMENTS OF CASH FLOWS F-17
NOTES TO FINANCIAL STATEMENTS F-18-21
- -----------------------------
<PAGE>
LONDON WITTE & COMPANY, P.A.
3101 NORTH FEDERAL HIGHWAY, SUITE 700
FORT LAUDERDALE, FL 33306
ACCOUNTANTS' REPORT
To the Shareholders
INTERNATIONAL COSMETICS MARKETING CO.
The accompanying balance sheet of International Cosmetics Marketing Co. (a
development stage company) as of June 30, 1999 and 1998 and the related
statements of operations, changes in stockholders' equity, and cash flows for
the six months then ended and for the period from inception to June 30, 1999
were not auditied by us and, accordingly, we do not express an opionion on them.
/S/ LONDON WITTE & COMPANY, P.A.
LONDON WITTE & COMPANY, P.A.
Certified Public Accountants
September 1, 1999, except for Note 3,
As to which the date is October 11, 1999
F-13
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, 1999 and December 31, 1998
(Unaudited)
A S S E T S
June 30, December 31,
1999 1998
---------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 450 $ 240
Deferred offering costs 9,340 0
---------- ----------
TOTAL CURRENT ASSETS 9,790 240
---------- ----------
TOTAL ASSETS $ 9,790 $ 240
========== ==========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES
Accrued expenses $ 9,340 $ 0
---------- ----------
TOTAL CURRENT LIABILITIES 9,340 0
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, par value $.001 per share;
25,000,000 shares authorized; 7,450,000
shares issued and outstanding 7,450 7,442
Preferred stock, par value $.001 per share;
5,000,000 shares authorized; no shares
issued and outstanding 0 0
Additional paid-in capital 1,116 764
Deficit accumulated during the development
stage (8,116) (7,966)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 450 240
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,790 $ 240
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-14
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Periods Ended June 30, 1999 and 1998
and the Period From July 14, 1995 (Date of Inception) to June 30, 1999
(Unaudited)
INCEPTION
TO
June 30, June 30, June 30,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $ 0 $ 0 $ 0
OPERATING EXPENSES:
General and administrative 150 150 8,116
----------- ----------- -----------
NET LOSS BEFORE INCOME TAXES (150) (150) (8,116)
INCOME TAX EXPENSE (BENEFIT) 0 0 0
----------- ----------- -----------
NET LOSS $ (150) $ (150) $ (8,116)
=========== =========== ===========
NET LOSS PER SHARE - BASIC (0.000020) (0.000020)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Basic 7,450,000 7,431,200
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-15
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Periods Ended June 30, 1999 and 1998
and the Period From July 14, 1995 (Date of Inception) to June 30, 1999
(Unaudited)
COMMON STOCK AND TOTAL
CAPITAL IN EXCESS ACCUMULATED STOCKHOLDERS'
SHARES OF PAR VALUE DEFICIT EQUITY
------- ----------------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCES AT JULY 14, 1995 0 $ 0 $ 0 $ 0
Issuance of common stock
for organizational costs 7,431,200 7,431 0 7,431
Contribution of capital 0 200 0 200
Net Loss 0 0 (7,631) (7,631)
---------- ---------- --------- ---------
BALANCES AT DECEMBER 31, 1996 7,431,200 7,631 (7,631) 0
Contribution of capital 0 165 0 165
Net Loss 0 0 (165) (165)
---------- ---------- --------- ---------
BALANCES AT DECEMBER 31, 1997 7,431,200 7,796 (7,796) 0
Issuance of common stock
at $.025 per share 10,400 260 0 260
Contribution of capital 0 150 0 150
Net Loss 0 0 (170) (170)
---------- ---------- --------- ---------
BALANCES AT DECEMBER 31, 1998 7,441,600 8,206 (7,966) 240
Issuance of common stock
at $.025 per share 8,400 210 0 210
Contribution of capital 0 150 0 150
Net Loss 0 0 (150) (150)
---------- ---------- --------- ---------
BALANCES AT JUNE 30, 1999 7,450,000 $ 8,566 $ (8,116) $ 450
========== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-16
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Periods Ended June 30, 1999 and 1998
and the Period From July 14, 1995 (Date of Inception) to June 30, 1999
(Unaudited)
INCEPTION
TO
June 30, June 30, June 30,
1999 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (150) $ (150) $ (8,116)
--------- --------- ---------
Adjustments to reconcile net loss to net
cash used by operating activities:
Changes in operating assets and liabilities:
Deferred offerring costs (9,490) 0 (9,490)
Accrued expenses 9,490 0 9,490
--------- --------- ---------
Net cash used by operating activities (150) (150) (8,116)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used by investing activities 0 0 0
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contribution of capital 150 150 665
Proceeds from common stock issuance 210 0 7,901
--------- --------- ---------
Net cash provided by financing
activities 360 150 8,566
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH 210 0 450
CASH AND EQUIVALENTS, BEGINNING 240 0 0
--------- --------- ---------
CASH AND EQUIVALENTS, ENDING $ 450 $ 0 $ 450
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-17
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)
NOTE 1 - GENERAL
- ----------------
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary for a fair
statement of the Company's financial position.
The information contained in these financial statements should be read in
conjunction with the Notes to the Company's Financial Statements for the year
ended December 31, 1998.
NOTE 2 - DEFERRED OFFERING COSTS
- --------------------------------
Deferred offering costs represent costs incurred pending completion of a
proposed public offering.
NOTE 3 - SUBSEQUENT EVENTS
- --------------------------
On August 19, 1999, the Company entered into an Exclusive License Agreement with
Beverly Sassoon International, LLC, Ms. Beverly Sassoon and Mr. Elan Sassoon.
The agreement granted the Company the following rights: 1) an exclusive license
to utilize Ms. Sassoon's name and likeness with the manufacturing, promotion and
sale of certain products, 2) an exclusive license to utilize Mr. Sassoon's name
and likeness with the manufacturing, promotion and sale of certain products, 3)
an exclusive, worldwide license to manufacture, market and distribute certain
skin care products developed by Beverly Sassoon International, LLC, and 4) upon
the expiration of certain existing licenses granted by Ms. Sassoon to third
parties related to the use of her name and likeness in the marketing and
promotion of pet care and slimming products, the exclusive license to utilize
Ms. Sassoon's name and likeness with regards to these types of products. The
term of this Exclusive License Agreement is 99 years, with a 99 year renewal at
the Company's option.
The Company will retain full control over the manufacturing, development and
marketing of the Company's products. Also, Ms. Sassoon and Mr. Sassoon, through
Beverly Sassoon International, LLC, will consult with the Company in connection
with product development and marketing. As
F-18
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)
NOTE 3 - SUBSEQUENT EVENTS (cont'd)
- -----------------------------------
consideration for the rights granted under this agreement, Beverly Sassoon
International, LLC will receive a payment of $150,000 and an aggregate of up to
$50,000 of payments for certain expenses and 900,000 shares of the Company's
common stock.
The Company will pay future royalty payments equal to the greater of 2% of gross
revenues from sales of any products which are marketed or distributed under the
terms of the Exclusive License Agreement, or $25,000 per month. These royalty
payments will end if Summer Camp West Limited Partnership, a Georgia limited
partnership controlled by Beverly Sassoon, Romana DOD Limited Partnership, a
Georgia limited partnership controlled by Elan Sassoon and/or Capital
Distributors, LLC, a Florida limited liability company controlled by Beverly
Sassoon and Elan Sassoon exercise certain options to purchase 4,850,000 shares
of the Company's common stock. The options are exercisable for a period of two
years commencing on the earlier of August 19, 2001 or the 18th month anniversary
of the date the Company's securities are first traded on the Nasdaq Stock Market
in the following quantities: 1) 2,250,000 shares for Summer Camp West Limited
Partnership, 2) 2,000,000 shares for Romana DOD Limited Partnership, 3) 600,000
shares for Capital Distributors, LLC.
Subsequent to the balance sheet date, certain founders returned 4,000,000 shares
of the Company's common stock to the Company for cancellation.
Subsequent to the above referenced transactions, the Company issued a total of
400,000 shares of the Company's common stock to consultants for future services
and 28,800 shares to counsel for the Company for legal services rendered.
The 400,000 shares of stock issued to consultants were issued pursuant to
consulting agreements with Hatteras Investment Company and Viking Holding
Company, which were entered into in September 1999. The Company agreed to issue
200,000 shares of common stock to each consultant as compensation for future
services. The consultants will provide advice to and consult with the Company
relating to management, network marketing, strategic planning, corporate
organization and structure, recruiting experienced personnel and financial
matters relating to the Company's general sales, marketing and operations.
F-19
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)
NOTE 3 - SUBSEQUENT EVENTS (cont'd)
- -----------------------------------
The term of the agreement with Hatteras Investment Company is for 18 months from
the date of the agreement and may be extended for an additional 18 months
subsequent to the original term upon the mutual agreement of both parties.
Shares of stock issued as compensation for this agreement are subject to
termination and cancellation in the event that within 18 months after this
agreement the Company has not attained sales in excess of $10,000,000 and the
Company does not have at least 10,000 distributors.
The term of the agreement with Viking Holding Company is for 12 months from the
date of the agreement and may be renewed subsequent to the original term for an
additional 12 months upon the written mutual consent of both parties. Shares of
stock issued as compensation for this agreement are subject to termination and
cancellation in the event that within 12 months after this agreement the Company
has not attained sales in excess of $5,000,000 and the Company does not have at
least 5,000 distributors.
In August 1999, the Company changed its name from CindyCo, Inc. to International
Cosmetics Marketing Co. At the same time, the original officer and director
resigned, and the Company's current officers and directors were elected to their
current positions.
On August 19, 1999, the Company entered into an Employment Agreement with its
President for a term of three years. The Company will pay the Employee a base
salary of $102,000 per year. In the event that the Company has $15 million in
sales during the first year, the base salary will be increase $24,000 for the
second year, and in the event that the Company has $50 million in sales during
the second year, the base salary will be increased an additional $24,000 for the
third year. The Company has granted the Employee, subject to certain vesting
provisions, 100,000 options to purchase shares of the Company's common stock at
an exercise price of $2.50 per share under the 1997 Stock Option Plan. The
options are exercisable for a period of five years from the date of vesting,
subject to continued employment with the Company. The Employee may also be
granted an additional 100,000 options to purchase shares, subject to certain
restrictions, of the Company's common stock at fair market value at the date of
the grant.
F-20
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)
NOTE 3 - SUBSEQUENT EVENTS (cont'd)
- -----------------------------------
On August 19, 1999, the Company also entered into an Employment Agreement with
its Chief Financial Officer for a term of three years. The Company will pay the
Employee a base salary of $90,000 per year. The Company has granted the
Employee, subject to certain vesting provisions, 75,000 options to purchase
shares of the Company's common stock at an exercise price of $2.50 per share
under the 1997 Stock Option Plan. The options are exercisable for a period of
five years from the date of vesting, subject to continued employment with the
Company. The Employee may also be granted an additional 60,000 options to
purchase, subject to certain restrictions, shares of the Company's common stock
at fair market value at the date of the grant.
In August 1999, The Board of Directors authorized and approved the private
offering of up to $2,000,000 principal amount of 0% convertible debentures to
finance its business plan. Each debenture issued is due and payable in full
three years from the date of issuance and is convertible into shares of the
Company's common stock at a conversion price of $5.00 per share, subject to
adjustment in certain circumstances. As of October 11, 1999, $795,000 of
debentures has been sold.
F-21
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit Description of Document
- ------- -----------------------
3(i) Articles of Incorporation, as amended
3(ii) By-Laws
4(i) Option to Purchase Common Stock held by
Beverly Sassoon
4(ii) Option to Purchase Common Stock held by
Elan Sassoon
4(iii) Option to Purchase Common Stock held by
Capital Distributors, LLC.
4(iv) Form of Convertible Debenture
10(i) Exclusive License Agreement dated as of August 19,
1999 by and between Beverly Sassoon, Elan Sassoon,
Beverly Sassoon International, LLC and International
Cosmetics Marketing Co.
10(ii) Employment Agreement dated as of August 19, 1999
by and between International Cosmetics Marketing
Co. and Stephanie McAnly
10(iii) Employment Agreement dated as of August 19, 1999
by and between International Cosmetics Marketing
Co. and Sonny Spoden
10(iv) 1997 Stock Option Plan
10(v) Consulting Agreement between the Company and Viking
Holding Company
10(vi) Consulting Agreement between the Company and Hatteras
Investment Company
10(vii) Office Lease between International Cosmetics
Marketing Co. and Brookwood Meridian Partners Ltd.
dated September 9, 1999
<PAGE>
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.
INTERNATIONAL COSMETICS MARKETING CO.
By: /s/ Stephanie McAnly
------------------------
Stephanie McAnly, President and
Principal Executive Officer
Date: October 22, 1999
ARTICLES OF INCORPORATION
-------------------------
OF
--
CINDYCO, INC.
-------------
The undersigned, a natural person competent to contract, does hereby
make, subscribe and file these Articles of Incorporation for the purpose of
organizing a corporation under the laws of the State of Florida.
ARTICLE I
CORPORATE NAME
--------------
The name of this Corporation shall be: CINDYCO, INC.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
------------------------------------
The principal office and mailing address of the Corporation is 200 East
Las Olas Boulevard, suite 1900, Fort Lauderdale, Florida 33301.
ARTICLE III
NATURE OF CORPORATE BUSINESS AND POWERS
---------------------------------------
The general nature of the business to be transacted by this Corporation
shall be to engage in any and all lawful business permitted under the laws of
the United States and the State of Florida.
CHARLES B. PEARLMAN, ESQ., FL BAR # 235547
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 EAST LAS OLAS BOULEVARD, SUITE 1900
FORT LAUDERDALE, FL 33301
PHONE NO.: (305) 763-1200
1
<PAGE>
ARTICLE IV
CAPITAL STOCK
-------------
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any on e time shall be 20,000,000 shares of
common stock, par value$.001 per share and 2,000,000 preferred stock at $.01 per
share.
ARTICLE V
TERM OF EXISTENCE
-----------------
This Corporation shall have perpetual existence.
ARTICLE VI
REGISTERED AGENT AND
INITIAL REGISTERED OFFICE IN FLORIDA
------------------------------------
The Registered Agent and the street address of the Initial Registered
Office of this Corporation in the State of Florida shall be:
Charles B. Pearlman
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
ARTICLE VII
BOARD OF DIRECTORS
------------------
This Corporation shall have one (1) Director initially.
ARTICLE VIII
INITIAL DIRECTORS
-----------------
The name and address of the initial Directors of this Corporation are:
2
<PAGE>
Charles B. Pearlman
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
The person named as initial Director shall hold office for the first
year of existence of this Corporation, or until his successor is elected or
appointed and has qualified, whichever occurs first.
ARTICLE IX
INCORPORATOR
------------
The name of the person signing these Articles of Incorporation as the
Incorporator is Charles B. Pearlman.
ARTICLE X
INDEMNIFICATION
---------------
This Corporation may indemnify any director, officer, employee or agent
of the Corporation to the fullest extent permitted by Florida law.
ARTICLE XI
AFFILIATED TRANSACTIONS
-----------------------
This Corporation expressly elects not to be governed by Section
607.0901 of the Florida Business Corporation At, as amended from time to time,
relating to affiliated transactions.
IN WITNESS WHEREOF, the undersigned Incorporator has executed the
foregoing Articles of Incorporation on the 14th day of July, 1995.
/s/Charles B. Pearlman
---------------------------------
Charles B. Pearlman, Incorporator
3
<PAGE>
CERTIFICATE DESIGNATING REGISTERED AGENT
AND OFFICE FOR SERVICE OF PROCESS
---------------------------------
CINDYCO, INC., a corporation existing under the laws of the State of
Florida with its principal office and mailing address at 200 East Las Olas
Boulevard, Suite 1900, Fort Lauderdale, Florida 33301 has named Charles B.
Pearlman whose address is 200 East Las Olas Boulevard, Suite 1900, Fort
Lauderdale, Florida 33301 to accept service of process within the State of
Florida.
ACCEPTANCE:
-----------
Having been named to accept service of process for the above named
Corporation, at the place designated in this Certificate, I hereby accept the
appointment as Registered Agent, and agree to comply with all applicable
provisions of law. In addition, I hereby am familiar with and accept the duties
and responsibilities as Registered Agent for said Corporation.
/s/Charles B. Pearlman
---------------------------
Charles B. Pearlman
4
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
CINDYCO, INC.
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned, being the President of CINDYCO, INC., a
corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida (the "Corporation"), bearing document
number P95000054666, does hereby certify:
FIRST: That pursuant to written consent of all of the members of the
Board of Directors and majority consent of the Shareholders of the Corporation,
dated August 10, 1999, the Board of Directors and a majority of the Shareholders
approved the Amendment to the Corporation's Articles of Incorporation as
follows:
Article I of the Corporation's Articles of Incorporation shall be
deleted in its entirety and replaced with the following:
ARTICLE I
CORPORATE NAME
The name of this Corporation shall be: INTERNATIONAL COSMETICS
MARKETING CO.
Article IV of the Corporation's Articles of Incorporation shall be
deleted in its entirety and replaced with the following:
ARTICLE IV
CAPITAL STOCK
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be 25,000,000 shares of
common stock, par value $.001 per share and 5,000,000 shares of Preferred Stock,
par value $.001 per share. Series of the Preferred Stock may be created and
issued from time to time, with such designations, preferences, conversion
rights, cumulative, relative, participating, optional or other rights, including
voting rights, qualifications, limitations or restrictions thereof as shall be
stated and expressed in the resolution or resolutions providing for the creation
and issuance of such series of Preferred Stock as adopted by the Board of
Directors pursuant to the authority in this paragraph given.
ROXANNE K. BEILLY, ESQ., FLA. BAR #851450
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Phone No.: (954) 763-1200
<PAGE>
SECOND: The foregoing amendment was adopted by the Board of Directors
of the Corporation pursuant to a Written Consent of all of the members of the
Board of Directors of the Corporation and by a majority of the Shareholders of
the Common Stock of the Corporation, dated August 10, 1999, acting by Written
Consent pursuant to Sections 607.0821 and 607.0704 of the Florida Business
Corporation Act. Therefore, the number of votes cast for the amendment to the
Corporation's Articles of Incorporation was sufficient for approval.
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment as of August 10, 1999.
CINDYCO, INC.
By: /s/ Charles B. Pearlman
---------------------------
Charles B. Pearlman, President
BY-LAWS
OF
CINDYCO, INC.
a Florida corporation
<PAGE>
<TABLE>
<CAPTION>
INDEX
PAGE
ARTICLE I
Offices
<S> <C> <C>
Section 1.01 Principal Office........................................................ 1
Section 1.02 Registered Office....................................................... 1
Section 1.03 Other Offices........................................................... 1
ARTICLE II
Meetings of Shareholders
Section 2.01 Annual Meeting.......................................................... 1
Section 2.02 Special Meetings........................................................ 2
Section 2.03 Shareholders' List for Meeting.......................................... 2
Section 2.04 Record Date............................................................. 3
Section 2.05 Notice of Meetings and Adjournment...................................... 3
Section 2.06 Waiver of Notice........................................................ 4
ARTICLE III
Shareholder Voting
Section 3.01 Voting Group Defined.................................................... 5
Section 3.02 Quorum and Voting Requirements for
Voting Groups........................................................... 5
Section 3.03 Action by Single and Multiple Voting
Groups.................................................................. 5
Section 3.04 Shareholder Quorum and Voting; Greater
or Lesser Voting Requirements........................................... 6
i
<PAGE>
Section 3.05 Voting for Directors; Cumulative Voting................................. 6
Section 3.06 Voting Entitlement of Shares............................................ 7
Section 3.07 Proxies................................................................. 8
Section 3.08 Shares Held by Nominees................................................. 9
Section 3.09 Corporation's Acceptance of Votes....................................... 10
Section 3.10 Action by Shareholders Without Meeting.................................. 11
ARTICLE IV
Board of Directors and Officers
Section 4.01 Qualifications of Directors............................................. 11
Section 4.02 Number of Directors..................................................... 11
Section 4.03 Terms of Directors Generally............................................ 12
Section 4.04 Staggered Terms for Directors........................................... 12
Section 4.05 Vacancy on Board........................................................ 12
Section 4.06 Compensation of Directors............................................... 12
Section 4.07 Meetings................................................................ 13
Section 4.08 Action by Directors Without a Meeting................................... 13
Section 4.09 Notice of Meetings...................................................... 13
Section 4.10 Waiver of Notice........................................................ 13
Section 4.11 Quorum and Voting....................................................... 14
Section 4.12 Committees.............................................................. 14
Section 4.13 Loans to Officers, Directors and
Employees; Guaranty of Obligations...................................... 15
Section 4.14 Required Officers....................................................... 15
ii
<PAGE>
Section 4.15 Duties of Officers...................................................... 16
Section 4.16 Resignation and Removal of Officers..................................... 16
Section 4.17 Contract Rights of Officers............................................. 16
Section 4.18 General Standards for Directors......................................... 16
Section 4.19 Director Conflicts of Interest.......................................... 17
Section 4.20 Resignation of Directors................................................ 18
ARTICLE V
Indemnification of Directors, Officers,
Employees and Agents
Section 5.01 Directors, Officers, Employees
and Agents.............................................................. 18
ARTICLE VI
Office and Agent
Section 6.01 Registered Office and Registered Agent.................................. 22
Section 6.02 Change of Registered Office or Registered
Agent; Resignation of Registered Agent.................................. 23
ARTICLE VII
Shares, Option, Dividends and Distributions
Section 7.01 Authorized Shares....................................................... 24
Section 7.02 Terms of Class or Series Determined
by Board of Directors................................................... 24
Section 7.03 Issued and Outstanding Shares........................................... 25
Section 7.04 Issuance of Shares...................................................... 25
Section 7.05 Form and Content of Certificates........................................ 26
iii
<PAGE>
Section 7.06 Shares Without Certificates............................................. 27
Section 7.07 Restriction on Transfer of Shares
and Other Securities.................................................... 27
Section 7.08 Shareholder's Pre-emptive Rights........................................ 27
Section 7.09 Corporation's Acquisition of its
Own Shares.............................................................. 28
Section 7.10 Share Options........................................................... 28
Section 7.11 Terms and Conditions of Stock Rights
and Options............................................................. 28
Section 7.12 Share Dividends......................................................... 29
Section 7.13 Distributions to Shareholders........................................... 29
ARTICLE VIII
Amendment of Articles and Bylaws
Section 8.01 Authority to Amend the Articles of
Incorporation........................................................... 31
Section 8.02 Amendment by Board of Directors......................................... 31
Section 8.03 Amendment of Bylaws by Board of
Directors............................................................... 32
Section 8.04 Bylaw Increasing Quorum or Voting
Requirements for Directors.............................................. 32
ARTICLE IX
Records and Report
Section 9.01 Corporate Records....................................................... 33
Section 9.02 Financial Statements for Shareholders................................... 34
Section 9.03 Other Reports to Shareholders........................................... 34
iv
<PAGE>
Section 9.04 Annual Report for Department of State................................... 35
ARTICLE X
Miscellaneous
Section 10.01 Definition of the "Act"................................................. 35
Section 10.02 Application of Florida Law.............................................. 36
Section 10.03 Fiscal Year............................................................. 36
Section 10.04 Conflicts with Articles of
Incorporation........................................................... 36
</TABLE>
v
<PAGE>
ARTICLE I
Offices
Section 1.01. Principal Office.
The principal office of the corporation in the State of Florida shall
be established at such places as the board of directors from time to time
determine.
Section 1.02. Registered Office.
The registered office of the corporation in the State of Florida shall
be at the office of its registered agent as stated in the articles of
incorporation or as the board of directors shall from time to time determine.
Section 1.03. Other Offices.
The corporation may have additional offices at such other places,
either within or without the State of Florida, as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
Meetings of Shareholders
Section 2.01. Annual Meeting.
(1) The corporation shall hold a meeting of shareholders annually, for
the election of directors and for the transaction of any proper business, at a
time stated in or fixed in accordance with a resolution of the board of
directors.
(2) Annual shareholders' meeting may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution by the
board of directors or, when not inconsistent with the board of directors'
resolution stated in the notice of the annual meeting. If no place is stated in
or fixed in accordance with these bylaws, or stated in the notice of the annual
meeting, annual meetings shall be held at the corporation's principal office.
(3) The failure to hold the annual meeting at the time stated in or
fixed in accordance with these bylaws or pursuant to the Act does not affect the
validity of any corporate action and shall not work a forfeiture of or
dissolution of the corporation.
1
<PAGE>
Section 2.02. Special Meeting.
(1) The corporation shall hold a special meeting of shareholders:
(a) On call of its board of directors or the person or persons
authorized to do so by the board of directors; or
(b) If the holders of not less than 10% of all votes entitled
to be cast on any issue proposed to be considered at the proposed special
meeting sign, date and deliver to the corporation's secretary one or more
written demands for the meeting describing the purpose or purposes for which it
is to be held.
(2) Special shareholders' meetings may be held in or out of the State
of Florida at a place stated in or fixed in accordance with a resolution of the
board of directors, or, when not inconsistent with the board of directors'
resolution, in the notice of the special meeting. If no place is stated in or
fixed in accordance with these bylaws or in the notice of the special meeting,
special meetings shall be held at the corporation's principal office.
(3) Only business within the purpose or purposes described in the
special meeting notice may be conducted at a special shareholders' meeting.
Section 2.03. Shareholders' List for Meeting.
(1) After fixing a record date for a meeting, a corporation shall
prepare a list of the names of all its shareholders who are entitled to notice
of a shareholders' meeting, in accordance with the Florida Business Corporation
Act (the "Act"), or arranged by voting group, with the address of, and the
number and class and series, if any, of shares held by, each.
(2) The shareholders' list must be available for inspection by any
shareholder for a period of ten days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list (subject to the
requirements of Section 607.1602(3) of the Act), during regular business hours
and at his expense, during the period it is available for inspection.
(3) The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.
2
<PAGE>
Section 2.04. Record Date.
(1) The board of directors may set a record date for purposes of
determining the shareholders entitled to notice of and to vote at a
shareholders' meeting; however, in no event may a record date fixed by the board
of directors be a date preceding the date upon which the resolution fixing the
record date is adopted.
(2) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to demand a special meeting is the date
the first shareholder delivers his demand to the corporation. In the event that
the board of directors sets the record date for a special meeting of
shareholders, it shall not be a date preceding the date upon which the
corporation receives the first demand from a shareholder requesting a special
meeting.
(3) If no prior action is required by the board of directors pursuant
to the Act, and, unless otherwise fixed by the board of directors, the record
date for determining shareholders entitled to take action without a meeting is
the date the first signed written consent is delivered to the corporation under
Section 607.0704 of the Act. If prior action is required by the board of
directors pursuant to the Act, the record date for determining shareholders
entitled to take action without a meeting is at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
(4) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to notice of and to vote at an annual or
special shareholders' meeting is the close of business on the day before the
first notice is delivered to shareholders.
(5) A record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
(6) A determination of shareholders entitled to notice of or to vote at
a shareholders' meeting is effective for any adjournment of the meeting unless
the board of directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than one 120 days after the date fixed for the
original meeting.
Section 2.05. Notice of Meetings and Adjournment.
(1) The corporation shall notify shareholders of the date, time and
place of each annual and special shareholders' meeting no fewer than 10 or more
than 60 days before the meeting date. Unless the Act requires otherwise, the
corporation is required to give notice only to shareholders entitled to vote at
the meeting. Notice shall be given in the manner provided in Section 607.0141 of
the Act, by or at the direction of the president, the secretary, of the officer
or persons calling the meeting. If the notice is mailed at least 30 days before
the date of the meeting, it may be done by a class of United States mail other
than first class. Notwithstanding Section 607.0141, if mailed, such notice shall
be deemed to be delivered when deposited in the United Statement mail addressed
to the shareholder
3
<PAGE>
at his address as it appears on the stock transfer books of the corporation,
with postage thereon prepaid.
(2) Unless the Act or the articles of incorporation requires otherwise,
notice of an annual meeting need not include a description of the purpose or
purposes for which the meeting is called.
(3) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(4) If an annual or special shareholders meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
or place if the new date, time or place is announced at the meeting before
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
a new record date is or must be fixed under Section 607.0707 of the Act,
however, notice of the adjourned meeting must be given under this section to
persons who are shareholders as of the new record date who are entitled to
notice of the meeting.
(5) Notwithstanding the foregoing, no notice of a shareholders' meeting
need be given if: (a) an annual report and proxy statements for two consecutive
annual meetings of shareholders, or (b) all, and at least two checks in payment
of dividends or interest on securities during a 12-month period, have been sent
by first-class United States mail, addressed to the shareholder at his address
as it appears on the share transfer books of the corporation, and returned
undeliverable. The obligation of the corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
corporation has received a new address for such shareholder for entry on its
share transfer books.
Section 2.06. Waiver of Notice.
(1) A shareholder may waive any notice required by the Act, the
articles of incorporation, or bylaws before or after the date and time stated in
the notice. The waiver must be in writing, be signed by the shareholder entitled
to the notice, and be delivered to the corporation for inclusion in the minutes
or filing with the corporate records. Neither the business to be transacted at
nor the purpose of any regular or special meeting of the shareholders need be
specified in any written waiver of notice.
(2) A shareholder's attendance at a meeting: (a) Waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting; or (b) waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to considering the matter when it
is presented.
4
<PAGE>
ARTICLE III
Shareholder Voting
Section 3.01. Voting Group Defined.
A "voting group" means all shares of one or more classes or series that
under the articles of incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the articles of incorporation or the Act to vote generally on
the matter are for that purpose a single voting group.
Section 3.02. Quorum and Voting Requirements for Voting Groups.
(1) Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. Unless the articles of incorporation or the Act provides otherwise,
a majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
(2) Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
(3) If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation or the Act requires a greater number of affirmative
votes.
Section 3.03. Action by Single and Multiple Voting Groups.
(1) If the articles of incorporation or the Act provides for voting by
a single voting group on a matter, action on that matter is taken when voted
upon by that voting group as provided in Section 3.02 of these bylaws.
(2) If the articles of incorporation or the Act provides for voting by
two or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately as provided in
Section 3.02 of these bylaws. Action may be taken by one voting group on a
matter even though no action is taken by another voting group entitled to vote
on the matter.
5
<PAGE>
Section 3.04. Shareholder Quorum and Voting; Greater or Lesser Voting
Requirements.
(1) A majority of the shares entitled to vote, 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 of the shares entitled to
vote. When a specified item of business is required to be voted on by a class or
series of stock, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such item of business by that class
or series.
(2) An amendment to the articles of incorporation that adds, changes or
deletes a greater or lesser quorum or voting requirement must meet the same
quorum requirement and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirements then in effect or proposed
to be adopted, whichever is greater.
(3) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by the Act or the articles of
incorporation.
(4) 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 affect the validity of any action taken at the meeting or any adjournment
thereof.
(5) The articles of incorporation may provide for a greater voting
requirement or a greater or lesser quorum requirement for shareholders (or
voting groups of shareholders) than is provided by the Act, but in no event
shall a quorum consist of less than one-third of the shares entitled to vote.
Section 3.05. Voting for Directors; Cumulative Voting.
(1) Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present.
(2) Each shareholder who is entitled to vote at an election of
directors has the right to vote the number of shares owned by him for as many
persons as there are directors to be elected and for whose election he has a
right to vote. Shareholders do not have a right to cumulate their votes for
directors unless the articles of incorporation so provide.
6
<PAGE>
Section 3.06. Voting Entitlement of Shares.
(1) Unless the articles of incorporation or the Act provides otherwise,
each outstanding share, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of shareholders. Only shares are
entitled to vote.
(2) The shares of the corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
the first corporation owns, directly or indirectly, a majority of shares
entitled to vote for directors of the second corporation.
(3) This section does not limit the power of the corporation to vote
any shares, including its own shares, held by it in a fiduciary capacity.
(4) Redeemable shares are not entitled to vote on any matter, and shall
not be deemed to be outstanding, after notice of redemption is mailed to the
holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
(5) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of the
corporate shareholder may prescribe or, in the absence of any applicable
provision, by such person as the board of directors of the corporate shareholder
may designate. In the absence of any such designation or in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
(6) Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
(7) Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
(8) If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating
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the relationship wherein it is so provided, then acts with respect to voting
have the following effect:
(a) If only one votes, in person or in proxy, his act binds
all;
(b) If more than one vote, in person or by proxy, the act of
the majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote
is evenly split on any particular matter, each faction is entitled to vote the
share or shares in question proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or objections and for the
purpose of ascertaining the presence of a quorum;
(f) Subject to Section 3.08 of these bylaws, nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or their fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
Section 3.07. Proxies.
(1) A shareholder, other person entitled to vote on behalf of a
shareholder pursuant to Section 3.06 of these bylaws, or attorney in fact may
vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for him
by signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is a sufficient appointment form.
(3) An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An appointment
is valid for up to 11 months unless a longer period is expressly provided in the
appointment form.
(4) The death or incapacity of the shareholder appointing a proxy does
not affect the right of the corporation to accept the proxy's authority unless
notice of the death or
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incapacity is received by the secretary or other officer or agent authorized to
tabulate votes before the proxy exercises his authority under the appointment.
(5) An appointment of a proxy is revocable by the shareholder unless
the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest. Appointments coupled with an interest
include the appointment of: (a) a pledgee; (b) a person who purchased or agreed
to purchase the shares; (c) a creditor of the corporation who extended credit to
the corporation under terms requiring the appointment; (d) an employee of the
corporation whose employment contract requires the appointment; or (e) a party
to a voting agreement created in accordance with the Act.
(6) An appointment made irrevocable under this section becomes
revocable when the interest with which it is coupled is extinguished and, in a
case provided for in Subsection 5(c) or 5(d), the proxy becomes revocable three
years after the date of the proxy or at the end of the period, if any, specified
herein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided in this
section. This does not affect the duration of a proxy under subsection (3).
(7) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the certificate representing the shares or on the
information statement for shares without certificates.
(8) Subject to Section 3.09 of these bylaws and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, a corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment.
(9) If an appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
Section 3.08. Shares Held by Nominees.
(1) The corporation may establish a procedure by which the beneficial
owner of shares that are registered in the name of a nominee is recognized by
the corporation as the shareholder. The extent of this recognition may be
determined in the procedure.
(2) The procedure may set forth (a) the types of nominees to which it
applies; (b) the rights or privileges that the corporation recognizes in a
beneficial owner; (c) the manner in which the procedure is selected by the
nominee; (d) the information that must be provided when the procedure is
selected; (e) the period for which selection of the procedure is effective; and
(f) other aspects of the rights and duties created.
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Section 3.09. Corporation's Acceptance of Votes.
(1) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent waiver, or proxy appointment and
give it effect as the act of the shareholder.
(2) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the corporation if acting in
good faith is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if: (a) the
shareholder is an entity and the name signed purports to be that of an officer
or agent of the entity; (b) the name signed purports to be that of an
administrator, executor, guardian, personal representative, or conservator
representing the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment; (c) the name signed purports
to be that of a receiver, trustee in bankruptcy, or assignee for the benefit of
creditors of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, or proxy appointment; (d) the name signed purports to be
that of a pledgee, beneficial owner, or attorney in fact of the shareholder and,
if the corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder has been presented with
respect to the vote, consent, waiver, or proxy appointment; or (e) two or more
persons are the shareholder as covenants or fiduciaries and the name signed
purports to be the name of at least one of the co-owners and the person signing
appears to be acting on behalf of all the co-owners.
(3) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(4) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(5) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
Section 3.10. Action by Shareholders Without Meeting.
(1) Any action required or permitted by the Act to be taken at any
annual or special meeting of shareholders of the corporation may be taken
without a meeting, without
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prior notice and without a vote, if the action is taken by the holders of
outstanding stock of each voting group entitled to vote thereon having not less
than the minimum number of votes with respect to each voting group that would be
necessary to authorize or take such action at a meeting at which all voting
groups and shares entitled to vote thereon were present and voted. In order to
be effective, the action must by evidenced by one or more written consents
describing the action taken, dated and signed by approving shareholders having
the requisite number of votes of each voting group entitled to vote thereon, and
delivered to the corporation by delivery to its principal office in this state,
its principal place of business, the corporate secretary, or another office or
agent of the corporation having custody of the book in which proceedings of
meetings of shareholders are recorded. No written consent shall be effective to
take the corporate action referred to therein unless, within 60 days of the date
of the earliest dated consent is delivered in the manner required by this
section, written consent signed by the number of holders required to take action
is delivered to the corporation by delivery as set forth in this section.
(2) Within 10 days after obtaining such authorization by written
consent, notice in accordance with Section 607.0704(3) of the Act must be given
to those shareholders who have not consented in writing.
ARTICLE IV
Board of Directors and Officers
Section 4.01. Qualifications of Directors.
Directors must be natural persons who are 18 years of age or older but
need not be residents of the State of Florida or shareholders of the
corporation.
Section 4.02. Number of Directors.
(1) The board of directors shall consist of not less than one nor more
than nine individuals.
(2) The number of directors may be increased or decreased from time to
time by amendment to these bylaws.
(3) Directors are elected at the first annual shareholders' meeting and
at each annual meeting thereafter unless their terms are staggered under Section
4.04 of these bylaws.
Section 4.03. Terms of Directors Generally.
(1) The terms of the initial directors of the corporation expire at the
first shareholders' meeting at which directors are elected.
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(2) The terms of all other directors expire at the next annual
shareholders' meeting following their election unless their terms are staggered
under Section 4.04 of these bylaws.
(3) A decrease in the number of directors does not shorten an incumbent
director's term.
(4) The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected.
(5) Despite the expiration of a director's term, he continues to serve
until his successor is elected and qualifies or until there is a decrease in the
number of directors.
Section 4.04. Staggered Terms for Directors.
The directors of any corporation organized under the Act may, by the
articles of incorporation, or by amendment to these bylaws adopted by a vote of
the shareholders, be divided into one, two or three classes with the number of
directors in each class being as nearly equal as possible; the term of office of
those of the first class to expire at the annual meeting next ensuing; of the
second class one year thereafter; at the third class two years thereafter; and
at each annual election held after such classification and election, directors
shall be chosen for a full term, as the case may be, to succeed those whose
terms expire. If the directors have staggered terms, then any increase or
decrease in the number of directors shall be so apportioned among the classes as
to make all classes as nearly equal in number as possible.
Section 4.05. Vacancy on Board.
(1) Whenever a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, it may be filled
by the affirmative vote of a majority of the remaining directors.
(2) A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
Section 4.06. Compensation of Directors.
The board of directors may fix the compensation of directors.
Section 4.07. Meetings.
(1) The board of directors may hold regular or special meetings in or
out of the State of Florida.
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(2) A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the board of directors to another time and
place. Notice of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other directors.
(3) Meetings of the board of directors may be called by the chairman of
the board or by the president.
(4) The board of directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
Section 4.08. Action by Directors Without a Meeting.
(1) Action required or permitted by the Act to be taken at a board of
directors' meeting or committee meeting may be taken without a meeting if the
action is taken by all members of the board or of the committee. The action must
be evidenced by one or more written consents describing the action taken and
signed by each director or committee member.
(2) Action taken under this section is effective when the last director
signs the consent, unless the consent specifies a different effective date.
(3) A consent signed under this section has the effect of a meeting
vote and may be described as such in any document.
Section 4.09. Notice of Meetings.
Regular and special meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meeting.
Section 4.10. Waiver of Notice.
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting or promptly upon
arrival at the meeting, any objection to the transaction of business because the
meeting is not lawfully called or convened.
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Section 4.11. Quorum and Voting.
(1) A quorum of a board of directors consists of a majority of the
number of directors prescribed by the articles of incorporation or these bylaws.
(2) If a quorum is present when a vote is taken, the affirmative vote
of a majority of directors present is the act of the board of directors.
(3) A director of a corporation who is present at a meeting of the
board of directors or a committee of the board of directors when corporate
action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting specified business at the
meeting; or
(b) He votes against or abstains from the action taken.
Section 4.12. Committees.
(1) The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution, shall have and may exercise all the authority of the board
of directors, except that no such committee shall have the authority to:
(a) Approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders.
(b) Fill vacancies on the board of directors or any committee
thereof.
(c) Adopt, amend, or repeal these bylaws.
(d) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors.
(e) Authorize or approve the issuance or sale or contract for
the sale of shares, or determine the designation and relative rights,
preferences, and limitations of a voting group except that the board of
directors may authorize a committee (or a senior executive officer of the
corporation) to do so within limits specifically prescribed by the board of
directors.
(2) The sections of these bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the board of directors
apply to committees and their members as well.
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(3) Each committee must have two or more members who serve at the
pleasure of the board of directors. The board, by resolution adopted in
accordance herewith, may designate one or more directors as alternate members of
any such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
(4) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any member of the board of directors not a
member of the committee in question with his responsibility to act in good
faith, in a manner he reasonably believes to be in the best interests of the
corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
Section 4.13. Loans to Officers, Directors, and Employees; Guaranty of
Obligations.
The corporation may lend money to, guaranty any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing in this section shall be deemed to deny, limit, or restrict the powers
of guaranty or warranty of any corporation at common law or under any statute.
Loans, guaranties, or other types of assistance are subject to section 4.19.
Section 4.14. Required Officers.
(1) The corporation shall have such officers as the board of directors
may appoint from time to time.
(2) A duly appointed officer may appoint one or more assistant
officers.
(3) The board of directors shall delegate to one of the officers
responsibility for preparing minutes of the directors' and shareholders'
meetings and for authenticating records of the corporation.
(4) The same individual may simultaneously hold more than one office in
the corporation.
Section 4.15. Duties of Officers.
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Each officer has the authority and shall perform the duties set forth
in a resolution or resolutions of the board of directors or by direction of any
officer authorized by the board of directors to prescribe the duties of other
officers.
Section 4.16. Resignation and Removal of Officers.
(1) An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation accepts the future effective date, the board of
directors may fill the pending vacancy before the effective date if the board of
directors provides that the successor does not take office until the effective
date.
(2) The board of directors may remove any officer at any time with or
without cause. Any assistant officer, if appointed by another officer, may
likewise be removed by the board of directors or by the officer which appointed
him in accordance with these bylaws.
Section 4.17. Contract Rights of Officers.
The appointment of an officer does not itself create contract rights.
Section 4.18. General Standards for Directors.
(1) A director shall discharge his duties as a director, including his
duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like
position would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best
interests of the corporation.
(2) In discharging his duties, a director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
(a) One or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the persons' professional or
expert competence; or
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(c) A committee of the board of directors of which he is not a
member if the director reasonably believes the committee merits confidence.
(3) In discharging his duties, a director may consider such factors as
the director deems relevant, including the long-term prospects and interests of
the corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
(4) A director is not acting in good faith if he has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) unwarranted.
(5) A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
Section 4.19. Director Conflicts of Interest.
No contract or other transaction between a corporation and one or more
interested directors shall be either void or voidable because of such
relationship or interest, because such director or directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction, or because his or their votes
are counted for such purpose, if:
(1) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves or ratifies the
contract or transactions by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors;
(2) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(3) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at the meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
For the purpose of paragraph (2) above, a conflict of interest
transaction is authorized, approved or ratified if it receives the vote of a
majority of the shares entitled to be counted under this subsection. Shares
owned by or voted under the control of a director who has a relationship or
interest in the conflict of interest transaction may not be counted in a vote of
shareholders to determine whether to authorize, approve or ratify a
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conflict of interest transaction under paragraph (2). The vote of those shares,
however, is counted in determining whether the transaction is approved under
other sections of the Act. A majority of the shares, whether or not present,
that are entitled to be counted in a vote on the transaction under this
subsection constitutes a quorum for the purpose of taking action under this
section.
Section 4.20. Resignation of Directors.
A director may resign at any time by delivering written notice to the
board of directors or its chairman or to the corporation.
A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date, the board of directors may fill the pending vacancy before the
effective date if the board of directors provides that the successor does not
take office until the effective date.
ARTICLE V
Indemnification of Directors, Officers,
Employees and Agents
Section 5.01. Directors, Officers, Employees and Agents.
(1) The corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall have power to indemnify any person, who was
or is a party to any proceeding by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the
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judgment of the board of directors, the estimated expense of litigating the
proceeding to conclusion, actually and reasonably incurred in connection with
the defense or settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made under this
subsection in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable unless, and only to the extent that, the
court in which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper.
(3) To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsections (1) or (2), or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith.
(4) Any indemnification under subsections (1) or (2), unless pursuant
to a determination by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (1) or (2).
Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable,
by majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
(i) Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
(ii) If a quorum of the directors cannot be obtained
for paragraph (a) and the committee cannot be designed under paragraph (b),
selected by majority vote of the full board of directors (in which directors who
are parties may participate); or
(d) By the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding or, if no
such quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
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(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and the corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee,
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Section 607.0834 under the Act are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
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(9) Notwithstanding the failure of the corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent if entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether such person met
the standard of conduct set forth in subsection (1), subsection (2) or
subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or agent of a
constituent corporation, or is or was serving at the request of a constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit
plans;
(b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to any employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding;
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(d) The term "proceeding" includes any threatened, pending, or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation"
includes any service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including duties relating to an
employee benefit plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith and in a
manner he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.
(12) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this section.
ARTICLE VI
Office and Agent
Section 6.01. Registered Office and Registered Agent.
(1) The corporation shall have and continuously maintain in the State
of Florida:
(a) A registered office which may be the same as its place of
business; and
(b) A registered agent, who, may be either:
(i) An individual who resides in the State of Florida
whose business office is identical with such registered office; or
(ii) Another corporation or not-for-profit
corporation as defined in Chapter 617 of the Act, authorized to transact
business or conduct its affairs in the State of Florida, having a business
office identical with the registered office; or
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(iii) A foreign corporation or not-for-profit foreign
corporation authorized pursuant to chapter 607 or chapter 617 of the Act to
transact business or conduct its affairs in the State of Florida, having a
business office identical with the registered office.
Section 6.02. Change of Registered Office or Registered Agent; Resignation
of Registered Agent.
(1) The corporation may change its registered office or its registered
agent upon filing with the Department of State of the State of Florida a
statement of change setting forth:
(a) The name of the corporation;
(b) The street address of its current registered office;
(c) If the current registered office is to be changed, the
street address of the new registered office;
(d) The name of its current registered agent;
(e) If its current registered agent is to be changed, the name
of the new registered agent and the new agent's written consent (either on the
statement or attached to it) to the appointment;
(f) That the street address of its registered office and the
street address of the business office of its registered agent, as changed, will
be identical;
(g) That such change was authorized by resolution duly adopted
by its board of directors or by an officer of the corporation so authorized by
the board of directors.
ARTICLE VII
Shares, Options, Dividends and Distributions
Section 7.01. Authorized Shares.
(1) The articles of incorporation prescribe the classes of shares and
the number of shares of each class that the corporation is authorized to issue,
as well as a distinguishing designation for each class, and prior to the
issuance of shares of a class the preferences, limitations, and relative rights
of that class must be described in the articles of incorporation.
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(2) The articles of incorporation must authorize:
(a) One or more classes of shares that together have unlimited
voting rights, and
(b) One or more classes of shares (which may be the same class
or classes as those with voting rights) that together are entitled to receive
the net assets of the corporation upon dissolution.
(3) The articles of incorporation may authorize one or more classes of
shares that have special, conditional, or limited voting rights, or no rights,
or no right to vote, except to the extent prohibited by the Act;
(a) Are redeemable or convertible as specified in the articles
of incorporation;
(b) Entitle the holders to distributions calculated in any
manner, including dividends that may be cumulative, non-cumulative, or partially
cumulative;
(c) Have preference over any other class of shares with
respect to distributions, including dividends and distributions upon the
dissolution of the corporation.
(4) Shares which are entitled to preference in the distribution of
dividends or assets shall not be designated as common shares. Shares which are
not entitled to preference in the distribution of dividends or assets shall be
common shares and shall not be designated as preferred shares.
Section 7.02. Terms of Class or Series Determined by Board of Directors.
(1) If the articles of incorporation so provide, the board of directors
may determine, in whole or part, the preferences, limitations, and relative
rights (within the limits set forth in Section 7.01) of:
(a) Any class of shares before the issuance of any shares of
that class, or
(b) One or more series within a class before the issuance of
any shares of that series.
(2) Each series of a class must be given a distinguishing designation.
(3) All shares of a series must have preferences, limitations, and
relative rights identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the series, of
those of other series of the same class.
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(4) Before issuing any shares of a class or series created under this
section, the corporation must deliver to the Department of State of the State of
Florida for filing articles of amendment, which are effective without
shareholder action, in accordance with Section 607.0602 of the Act.
Section 7.03. Issued and Outstanding Shares.
(1) A corporation may issue the number of shares of each class or
series authorized by the articles of incorporation. Shares that are issued are
outstanding shares until they are reacquired, redeemed, converted, or canceled.
(2) The reacquisition, redemption, or conversion of outstanding shares
is subject to the limitations of subsection (3) and to Section 607.06401 of the
Act.
(3) At all times that shares of the corporation are outstanding, one or
more shares that together have unlimited voting rights and one or more shares
that together are entitled to receive the net assets of the corporation upon
dissolution must be outstanding.
Section 7.04. Issuance of Shares.
(1) The board of directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
corporation.
(2) Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and non-assessable. When it
cannot be determined that outstanding shares are fully paid and non-assessable,
there shall be a conclusive presumption that such shares are fully paid and
non-assessable if the board of directors makes a good faith determination that
there is no substantial evidence that the full consideration for such shares has
not been paid.
(3) When the corporation receives the consideration for which the board
of directors authorized the issuance of shares, the shares issued therefor are
fully paid and non-assessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
(4) The corporation may place in escrow shares issued for a contract
for future services or benefits or a promissory note, or make other arrangements
to restrict the transfer of the shares, and may credit distributions in respect
of the shares against their purchase price, until the services are performed,
the note is paid, or the benefits received.
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If the services are not performed, the shares escrowed or restricted and the
distributions credited may be canceled in whole or part.
Section 7.05. Form and Content of Certificates.
(1) Shares may but need not be represented by certificates. Unless the
Act or another statute expressly provides otherwise, the rights and obligations
of shareholders are identical whether or not their shares are represented by
certificates.
(2) At a minimum, each share certificate must state on its face:
(a) The name of the issuing corporation and that the
corporation is organized under the laws of the State of Florida;
(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the
series, if any, the certificate represents.
(3) If the shares being issued are of different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder a full statement of this information on request and
without charge.
(4) Each share certificate:
(a) Must be signed (either manually or in facsimile) by an
officer or officers designated by the board of directors, and
(b) May bear the corporate seal or its facsimile.
(5) If the person who signed (either manually or in facsimile) a share
certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
(6) Nothing in this section may be construed to invalidate any share
certificate validly issued and outstanding under the Act on July 1, 1990.
Section 7.06. Shares Without Certificates.
(1) The board of directors of the corporation may authorize the issue
of some or all of the shares of any or all of its classes or series without
certificates. The authorization
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does not affect shares already represented by certificates until they are
surrendered to the corporation.
(2) Within a reasonable time after the issue or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by the Act.
Section 7.07. Restriction on Transfer of Shares and Other Securities.
(1) The articles of incorporation, these bylaws, an agreement among
shareholders, or an agreement between shareholders and the corporation may
impose restrictions on the transfer or registration of transfer of shares of the
corporation. A restriction does not affect shares issued before the restriction
was adopted unless the holders of such shares are parties to the restriction
agreement or voted in favor of the restriction.
(2) A restriction on the transfer or registration of transfer of shares
is valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section, and effected in compliance with the
provisions of the Act, including having a proper purpose as referred to in the
Act.
Section 7.08. Shareholder's Pre-emptive Rights.
The shareholders of the corporation do not have a pre-emptive right to
acquire the corporation's unissued shares.
Section 7.09. Corporation's Acquisition of its Own Shares.
(1) The corporation may acquire its own shares, and, unless otherwise
provided in the articles of incorporation or except as provided in subsection
(4), shares so acquired constitute authorized but unissued shares of the same
class but undesignated as to series.
(2) If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation.
(3) Articles of amendment may be adopted by the board of directors
without shareholder action, shall be delivered to the Department of State of the
State of Florida for filing, and shall set forth the information required by
Section 607.0631 of the Act.
(4) Shares of the corporation in existence on June 30, 1990, which are
treasury shares under Section 607.004(18), Florida Statutes (1987), shall be
issued, but not outstanding, until canceled or disposed of by the corporation.
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Section 7.10. Share Options.
(1) Unless the articles of incorporation provide otherwise, the
corporation may issue rights, options, or warrants for the purchase of shares of
the corporation. The board of directors shall determine the terms upon which the
rights, options, or warrants are issued, their form and content, and the
consideration for which the shares are to be issued.
(2) The terms and conditions of stock rights and options which are
created and issued by the corporation, or its successor, and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized by unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.11. Terms and Conditions of Stock Rights and Options.
The terms and conditions of the stock rights and options which are
created and issued by the corporation [or its successor], and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions or conditions that preclude or limit the exercise, transfer,
receipt or holding of such rights or options by any person or persons, including
any person or persons owning or offering to acquire a specified number or
percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.12. Share Dividends.
(1) Shares may be issued pro rata and without consideration to the
corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend
in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize,
(b) A majority of the votes entitled to be cast by the class
or series to be issued approves the issue, or
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(c) There are no outstanding shares of the class or series to
be issued.
(3) If the board of directors does not fix the record date for
determining shareholders entitled to a share dividend, it is the date of the
board of directors authorizes the share dividend.
Section 7.13. Distributions to Shareholders.
(1) The board of directors may authorize and the corporation may make
distributions to its shareholders subject to restriction by the articles of
incorporation and the limitations in subsection (3).
(2) If the board of directors does not fix the record date for
determining shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), it is
the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they
become due in the usual course of business; or
(b) The corporation's total assets would be less than the sum
of its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
(4) The board of directors may base a determination that a distribution
is not prohibited under subsection (3) either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the shareholders concurrent with their receipt
of the distribution.
(5) Except as provided in subsection (7), the effect of a distribution
under subsection (3) is measured;
(a) In the case of distribution by purchase, redemption, or
other acquisition of the corporation's shares, as of the earlier of:
(i) The date money or other property is transferred
or debt incurred by the corporation, or
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(ii) The date the shareholder ceases to be a
shareholder with respect to the acquired shares;
(b) In the case of any other distribution of indebtedness, as
of the date the indebtedness is distributed;
(c) In all other cases, as of:
(i) The date the distribution is authorized if the
payment occurs within 120 days after the date of authorization, or
(ii) The date the payment is made if it occurs more
than 120 days after the date of authorization.
(6) A corporation's indebtedness to a shareholder incurred by reason of
a distribution made in accordance with this section is at parity with the
corporation's indebtedness to its general, unsecured creditors except to the
extent subordinated by agreement.
(7) Indebtedness of the corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations under
subsection (3) if its terms provide that payment of principal and interest are
made only if and to the extent that payment of a distribution to shareholders
could then be made under this section. If the indebtedness is issued as a
distribution, each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the payment is
actually made.
ARTICLE VIII
Amendment of Articles and Bylaws
Section 8.01. Authority to Amend the Articles of Incorporation.
(1) The corporation may amend its articles of incorporation at any time
to add or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment.
(2) A shareholder of the corporation does not have a vested property
right resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.
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Section 8.02. Amendment by Board of Directors.
The corporation's board of directors may adopt one or more amendments
to the corporation's articles of incorporation without shareholder action:
(1) To extend the duration of the corporation if it was incorporated at
a time when limited duration was required by law;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the Department of
State of the State of Florida;
(4) To delete any other information contained in the articles of
incorporation that is solely of historical interest;
(5) To change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the corporation has
only shares of that class outstanding;
(6) To delete the authorization for a class or series of shares
authorized pursuant to Section 607.0602 of the Act, if no shares of such class
or series have been issued;
(7) To change the corporate name by substituting the word
"corporation," "incorporated," or "company," or the abbreviation "corp.," Inc.,"
or Co.," for a similar word or abbreviation in the name, or by adding, deleting,
or changing a geographical attribution for the name; or
(8) To make any other change expressly permitted by the Act to be made
without shareholder action.
Section 8.03. Amendment of Bylaws by Board of Directors.
The corporation's board of directors may amend or repeal the
corporation's bylaws unless the Act reserves the power to amend a particular
bylaw provision exclusively to the shareholders.
Section 8.04. Bylaw Increasing Quorum or Voting Requirements for Directors.
(1) A bylaw that fixes a greater quorum or voting requirement for the
board of directors may be amended or repealed:
(a) If originally adopted by the shareholders, only by the
shareholders;
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(b) If originally adopted by the board of directors, either by
the shareholders or by the board of directors.
(2) A bylaw adopted or amended by the shareholders that fixes a greater
quorum or voting requirement for the board of directors may provide that it may
be amended or repealed only by a specified vote of either the shareholders or
the board of directors.
(3) Action by the board of directors under paragraph (1)(b) to adopt or
amend a bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the same vote
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
ARTICLE IX
Records and Reports
Section 9.01. Corporate Records.
(1) The corporation shall keep as permanent records minutes of al
meetings of its shareholders and board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, and a record
of all actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation.
(2) The corporation shall maintain accurate accounting records.
(3) The corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares showing
the number and series of shares held by each.
(4) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
(5) The corporation shall keep a copy of the following records:
(a) Its articles or restated articles of incorporation and all
amendments to them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them
currently in effect;
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(c) Resolutions adopted by the board of directors creating one
or more classes or series of shares and finding their relative rights,
preferences, and limitations, if shares issued pursuant to those resolutions are
outstanding;
(d) The minutes of all shareholders' meetings and records of
all action taken by shareholders without a meeting for the past three years;
(e) Written communications to all shareholders generally or
all shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years;
(f) A list of the names and business street addresses of its
current directors and officers; and
(g) Its most recent annual report delivered to the Department
of State of the State of Florida.
Section 9.02. Financial Statements for Shareholders.
(1) Unless modified by resolution of the shareholders within 120 days
of the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If financial
statements are prepared for the corporation on the basis of generally- accepted
accounting principles, the annual financial statements must also be prepared on
that basis.
(2) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were
prepared on the basis of generally-accepted accounting principles and, if not,
describing the basis of preparation; and
(b) Describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year.
(3) The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements, if for reasons beyond the corporation's
control, it is unable to prepare its financial statements within the prescribed
period. Thereafter, on written request from a
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shareholder who was not mailed the statements, the corporation shall mail him
the latest annual financial statements.
Section 9.03. Other Reports to Shareholders.
(1) If the corporation indemnifies or advances expenses to any
director, officer, employee or agent otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time such meeting is held, which
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
(2) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
Section 9.04. Annual Report for Department of State.
(1) The corporation shall deliver to the Department of State of the
State of Florida for filing a sworn annual report on such forms as the
Department of State of the State of Florida prescribes that sets forth the
information prescribed by Section 607.1622 of the Act.
(2) Proof to the satisfaction of the Department of State of the State
of Florida on or before July 1 of each calendar year that such report was
deposited in the United States mail in a sealed envelope, properly addressed
with postage prepaid, shall be deemed in compliance with this requirement.
(3) Each report shall be executed by the corporation by an officer or
director or, if the corporation is in the hands of a receiver or trustee, shall
be executed on behalf of the corporation by such receiver or trustee, and the
signing thereof shall have the same legal effect as if made under oath, without
the necessity of appending such oath thereto.
(4) Information in the annual report must be current as of the date the
annual report is executed on behalf of the corporation.
(5) Any corporation failing to file an annual report which complies
with the requirements of this section shall not be permitted to maintain or
defend any action in any court of this state until such report is filed and all
fees and taxes due under the Act are paid and shall be subject to dissolution or
cancellation of its certificate of authority to do business as provided in the
Act.
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ARTICLE X
Miscellaneous
Section 10.01. Definition of the "Act".
All references contained herein to the "Act" or to sections of the
"Act" shall be deemed to be in reference to the Florida Business Corporation
Act.
Section 10.02. Application of Florida Law.
Whenever any provision of these bylaws is inconsistent with any
provision of the Florida Business Corporation Act, Statutes 607, as they may be
amended from time to time, then in such instance Florida law shall prevail.
Section 10.03. Fiscal Year.
The fiscal year of the corporation shall be determined by resolution of
the board of directors.
Section 10.04. Conflicts with Articles of Incorporation.
In the event that any provision contained in these bylaws conflicts
with any provision of the corporation's articles of incorporation, as amended
from time to time, the provisions of the articles of incorporation shall prevail
and be given full force and effect, to the full extent permissible under the
Act.
35
OPTION TO PURCHASE COMMON STOCK
Date of Issuance: As of August 19,1999 Option to Purchase 2,250,000
shares of Common Stock
FOR VALUE RECEIVED, International Cosmetics Marketing, Co., a Florida
corporation (the "Company"), promises to issue in the name of, and sell and
deliver to BEVERLY SASSOON (the "Holder"), a certificate or certificates for an
aggregate of 2,250,000 shares of the Company's common stock, par value $.001 per
share (the "Common Stock"), upon payment by the Holder of the exercise price of
$.001 per share (the "Exercise Price") in lawful funds of the United States of
America, with the Exercise Price being subject to adjustment in the
circumstances set forth below.
Section 1.
Exercise of Option
1.1 Exercise Period. The Holder may exercise this Option during the two
(2) year period, in whole and not in part (but not as to fractional shares),
commencing upon the earlier of (i) the second annual anniversary date of the
date hereof; or (ii) the eighteenth month anniversary date of the date the
Company's securities are first traded on the Nasdaq Stock Market, Inc. or
another national exchange (the "Exercise Period").
1.2 Exercise Procedure.
a. This Option will be deemed to have been exercised at such
time as the Company has received all of the following items (the "Exercise
Date"):
i. a completed Exercise Agreement, in the form
attached hereto as Exhibit 1 hereto, executed by the Holder (the "Purchaser");
and
ii. a cashier's or official bank check or other
immediately available funds payable to the Company in an amount equal to the sum
of the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise. Notwithstanding anything
contained herein to the contrary, at the option of the Holder, and subject to
the provisions of Subsection 1.1, the Exercise Price for the Option may be
satisfied by the delivery of an unexercised portion of this Option to the
Company for cancellation having a market value, as determined by the spread as
of the date of Common Stock underlying this Option, equal to the aggregate
Exercise Price of the portion of this Option desired to be then exercised.
b. Certificates for the shares of Common Stock purchased upon
exercise of this Option will be delivered by the Company to the Purchaser within
five (5) business
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days after the Exercise Date. Unless this Option has expired or all of the
purchase rights represented hereby have been exercised, the Company will prepare
a new Option representing the rights formerly represented by this Option that
have not expired or been exercised. The Company will, within such five (5) day
period, deliver such new Option to the Holder at the address set forth in this
Option.
c. The shares of Common Stock issuable upon the exercise of
this Option will be deemed to have been transferred to the Purchaser on the
Exercise Date, and the Purchaser will be deemed for all purposes to have become
the record holder of such Common Stock on the Exercise Date.
d. The issuance of certificates for shares of Common Stock
upon the exercise of this Option will be made without charge to the Purchaser
for any issuance tax in respect thereof or any other cost incurred by the
Company in connection with such exercise and related transfer of the shares;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any certificate or instrument in a name other than that of the Holder of this
Option, and that the Company shall not be required to issue or deliver any such
certificate or instrument unless and until the person or persons requiring the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
e. Unless the Company shall have registered the shares of
Common Stock underlying this Option pursuant to the provisions of Section 6
hereof, the shares of Common Stock issuable upon the exercise of this Option
have not been registered under the Securities Act of 1933, as amended (the
"Act") and, accordingly, will be "restricted securities" as that term is defined
in the Act. The Company may insert the following or similar legend on the face
of the certificates evidencing shares of Common Stock if required in compliance
with state securities laws:
"These securities have not been registered under any state
securities laws and may not be sold or otherwise transferred
or disposed of except pursuant to an effective registration
statement under any applicable state securities laws, or an
opinion of counsel satisfactory to counsel to the Company that
an exemption from registration under any applicable state
securities laws is available."
f. Upon exercise of this Option, the royalty payments under
that certain Exclusive License Agreement dated August 19, 1999 by and between
Beverly Sassoon, Elan Sassoon, Beverly Sassoon International, LLC and the
Company shall terminate.
1.3 Fractional Shares. If a fractional share of Common Stock would, but
for the provisions of Subsection 1.1, be issuable upon exercise of the rights
represented by this Option, the Company will, within 30 days after the Exercise
Date, deliver to the Purchaser
2
<PAGE>
a check payable to the Purchaser, in lieu of such fractional share, in an amount
equal to the value of such fractional share as determined by the closing bid
price of the Company's Common Stock as reported on The Nasdaq Stock Market, or
the principal exchange on which the Company's Common Stock is then traded, as of
the close of business on the Exercise Date.
Section 2.
Effect of Reorganization, Reclassification, Consolidation, Merger or Sale
2.1 Recapitalization or Reclassification of Common Stock. In case the
Company shall at any time prior to the exercise or termination of this Option
effect a recapitalization or reclassification of such character that its Common
Stock shall be changed into or become exchangeable for a larger or smaller
number of shares, then, upon the effective date thereof, the number of shares of
Common Stock that the Holder of this Option shall be entitled to purchase upon
exercise hereof shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in such number of shares of Common Stock
by reason of such recapitalization or reclassification, and the Exercise Price
of such recapitalized or reclassified Common Stock shall, in the case of an
increase in the number of shares, be proportionately decreased and, in the case
of a decrease in the number of shares, be proportionately increased.
2.2 Consolidation, Merger or Sale. In case the Company shall at any
time prior to the exercise of this Option, or the expiration of the Exercise
Period, whichever first occurs, consolidate or merge with any other corporation
(unless the Company shall be the surviving entity) or transfer all or
substantially all of its assets to any other corporation preparatory to a
dissolution, then the Company shall, as a condition precedent to such
transaction, cause effective provision to be made so that the Holder of this
Option, upon the exercise thereof after the effective date of such transaction,
shall be entitled to receive the kind and amount of shares, evidences of
indebtedness, and/or other property receivable on such transaction by a holder
of the number of shares of Common Stock as to which the Option was exercisable
immediately prior to such transaction (without giving effect to any restriction
upon such exercise); and, in any such case, appropriate provision shall be made
with respect to the rights and interests of the Holder hereof to the effect that
the provisions of this Option shall thereafter be applicable (as nearly as may
be practicable) with respect to any shares, evidences of indebtedness, or other
securities or assets thereafter deliverable upon exercise of this Option.
2.3 Notice of Adjustment. Whenever the number of shares of Common Stock
purchasable upon exercise of this Option shall be adjusted as provided herein,
the Company shall file with its corporate records a certificate of its Chief
Financial Officer setting forth the computation and the adjusted number of
shares of Common Stock purchasable hereunder resulting from such adjustments,
and a copy of such certificate shall be mailed to the Holder. Any such
certificate or letter shall be conclusive evidence as to the correctness of the
adjustment or adjustments referred to therein and shall be available for
inspection by the holders of the Options on any day during normal business
hours.
3
<PAGE>
Section 3.
Reservation of Common Stock
The Company will at all time reserve and keep available such number of
shares of Common Stock as will be sufficient to permit the exercise in full of
this Option. Upon exercise of this Option pursuant to its terms, the Holder will
acquire fully paid and non-assessable ownership rights of the Common Stock, free
and clear of any liens, claims or encumbrances.
Section 4.
No Shareholder Rights or Obligations
This Option will not entitle the Holder hereof to any voting rights or
other rights as a shareholder of the Company. Until the shares of Common Stock
issuable upon the exercise of this Option are recorded as issued on the books
and records of the Company's transfer agent, the Holder shall not be entitled to
any voting rights or other rights as a shareholder; provided, however, the
Company uses its bests efforts to ensure that, upon receipt of the Exercise
Agreement and payment of the Exercise Price, the appropriate documentation
necessary to effectuate the exercise of the Option and the issuance of the
Common Stock is accomplished as expeditiously as possible. No provision of this
Option, in the absence of affirmative action by the Holder to purchase Common
Stock, and no enumeration in this Option of the rights or privileges of the
Holder, will give rise to any obligation of such Holder for the Exercise Price
or as a stockholder of the Company.
Section 5.
Transferability
Except as otherwise provided herein, the Holder hereof shall not
mortgage, pledge, hypothecate, encumber, deliver as collateral or security,
transfer, or sell any or all of his or her Options without the prior express
written consent of the Company provided, however, the Holder may transfer any or
all of his or her Options to members of such Holder's immediate family, which
shall include spouse and children and grandchildren over the age of 21 or in
trust for the benefit of any such persons or any members of the Holder's
immediate family under the age of 21 so long as, in either case, the trustee is
over the age of 21.
Subject to the terms hereof, this Option and all rights hereunder are
transferrable, in whole or in part, upon surrender of this Option with a
properly executed Assignment in the form of Exhibit 2 hereto at the principal
offices of the Company. This Option and the underlying shares of Common Stock
may not be offered, sold or transferred except in compliance with the Act, and
any applicable state securities laws, and then only against receipt of an
agreement of the person to whom such offer or sale or transfer is made to
4
<PAGE>
comply with the provisions of this Option with respect to any resale or other
disposition of such securities; provided that no such agreement shall be
required from any person purchasing this Option or the underlying shares of
Common Stock pursuant to a registration statement effective under the Act. The
Holder of this Option agrees that, prior to the disposition of any security
purchased on the exercise hereof other than pursuant to a registration statement
then effective under the Act, or any similar statute then in effect, the Holder
shall give written notice to the Company, expressing his intention as to such
disposition. Upon receiving such notice, the Company shall present a copy
thereof to its securities counsel. If, in the sole opinion of such counsel,
which such opinion shall not be unreasonably withheld, the proposed disposition
does not require registration of such security under the Act, or any similar
statute then in effect, the Company shall, as promptly as practicable, notify
the Holder of such opinion, whereupon the Holder shall be entitled to dispose of
such security in accordance with the terms of the notice delivered by the Holder
to the Company.
Section 6.
Registration Rights
If at any time during the Exercise Period, the Company shall prepare
and file one or more registration statements under the Act with respect to a
public offering of equity or debt securities of the Company, or of any such
securities of the Company held by its security holders, other than a
registration statement on Forms S-4, S-8, or similar form, the Company will
include in any such registration statement such information as is required, and
such number of shares of Common Stock held by, or shares of Common Stock
underlying outstanding Options held by, the Holder to permit a public offering
of such shares of Common Stock as required; provided, however, that if, in the
sole discretion of the Company, the inclusion of the shares requested to be
registered, when added to the securities being registered by the Company or the
selling security holder(s), would exceed, in the opinion of management of the
Company, the maximum amount of the Company's securities that can be marketed
without otherwise materially and adversely affecting the entire offering, then
the Company may exclude from such offering that portion of the shares required
to be so registered so that the total number of securities to be registered is
within the maximum number of shares that may be marketed without otherwise
materially and adversely affecting the entire offering. The Company shall have
sole and absolute discretion in making such determination. The Company shall use
its best efforts to obtain promptly the effectiveness of such registration
statement and maintain the effectiveness thereof for at least 180 days and to
register or qualify the subject shares of Common Stock underlying this Option
for sale in the State of Florida. The Company shall bear all fees and expenses
other than the fees and expenses of Holder's counsel incurred in the preparation
and filing of such registration statement and related state registrations, to
the extent permitted by applicable law, and the furnishing of copies of the
preliminary and final prospectus thereof to such Holder.
5
<PAGE>
Section 7.
Preemptive Rights
The Holder shall have preemptive rights for a period of two (2) years
from the date hereof.
Section 8.
Miscellaneous
8.1 Notices. Any notices, requests or consents hereunder shall be
deemed given, and any instruments delivered, two days after they have been
mailed by first class mail, postage prepaid, or upon receipt if delivered
personally or by facsimile transmission, as follows:
If to the Company: International Cosmetics Marketing Co.
501 Brickell Key Drive
Suite 505
Miami, FL 33131
With a copy to: Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard
Suite 1900
Fort Lauderdale, Florida 33301
Attention: Roxanne K. Beilly, Esq.
If to the Holder: Beverly Sassoon
1923 Selby Avenue
Apt. 203
Los Angeles, CA 90025
With a copy to: Freund & Brackey,LLP
427 N. Camden Drive
Beverly Hills, CA 90210
Attention: Jonathan D. Freund, Esq.
except that any of the foregoing may from time to time by written notice to the
other designate another address which shall thereupon become its effective
address for the purposes of this paragraph.
8.2 Entire Agreement. This Option, including the exhibits and documents
referred to herein which are a part hereof, contain the entire understanding of
the parties
6
<PAGE>
hereto with respect to the subject matter and may be amended only by a written
instrument executed by the parties hereto or their successors or assigns. Any
paragraph headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Option.
8.3 Governing Law. This Option is governed by, interpreted under and
construed in all respects in accordance with the substantive laws of the State
of Florida, without regard to the conflicts of law provision thereof, and
irrespective of the place of domicile or resident of the party. In the event of
a controversy arising out of the interpretation, construction, performance or
breach of this Option, the parties hereby agree and consent to the jurisdiction
and venue of the Courts of the State of Florida, or the United States District
Court for the Southern District of Florida; and further agree and consent that
personal service of process in any such action or preceding outside the State of
Florida shall be tantamount to service in person in Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
INTERNATIONAL COSMETICS MARKETING, CO.
By: /s/ Stephanie McAnly
-------------------------
Stephanie McAnly
ATTEST:
/s/ Sonny Spoden
- ----------------
Sonny Spoden
7
<PAGE>
EXHIBIT 1
---------
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned record Holder, pursuant to the provisions set forth in
the within Option, hereby subscribed for and purchases shares of Common Stock
covered by such Option and hereby makes full cash payment of $ for such shares
at the Exercise Price provided by such Option.
____________________________
(Signature)
____________________________
(Print or type name)
____________________________
(Address)
____________________________
____________________________
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Option, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement or
any change whatsoever.
8
<PAGE>
EXHIBIT 2
---------
ASSIGNMENT
----------
FOR VALUE RECEIVED, , the undersigned Holder hereby sell, assigns, and
transfer all of the rights of the undersigned under the within Option with
respect to the number of shares of Common Stock issuable upon the exercise of
such Option set forth below, unto the Assignee identified below, and does hereby
irrevocable constituted and appoint to effect such transfer of rights on the
books of the Company, with full power of substitution:
Number of Shares
Name of Assignee Address of Assignee of Common Stock
- ---------------- ------------------- ---------------
Dated: __________________ _________________________
(Signature of Holder)
_________________________
(Print or type name)
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Option, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement or
any change whatsoever.
CONSENT OF ASSIGNEE
-------------------
I HEREBY CONSENT to abide by the terms and conditions of the within
Option.
Dated: __________________ _________________________
(Signature of Holder)
_________________________
(Print or type name)
9
OPTION TO PURCHASE COMMON STOCK
Date of Issuance: As of August 19,1999 Option to Purchase 2,000,000
shares of Common Stock
FOR VALUE RECEIVED, International Cosmetics Marketing, Co., a Florida
corporation (the "Company"), promises to issue in the name of, and sell and
deliver to ELAN SASSOON (the "Holder"), a certificate or certificates for an
aggregate of 2,000,000 shares of the Company's common stock, par value $.001 per
share (the "Common Stock"), upon payment by the Holder of the exercise price of
$.001 per share (the "Exercise Price") in lawful funds of the United States of
America, with the Exercise Price being subject to adjustment in the
circumstances set forth below.
Section 1.
Exercise of Option
1.1 Exercise Period. The Holder may exercise this Option during the two
(2) year period, in whole and not in part (but not as to fractional shares),
commencing upon the earlier of (i) the second annual anniversary date of the
date hereof; or (ii) the eighteenth month anniversary date of the date the
Company's securities are first traded on the Nasdaq Stock Market, Inc. or
another national exchange (the "Exercise Period").
1.2 Exercise Procedure.
a. This Option will be deemed to have been exercised at such
time as the Company has received all of the following items (the "Exercise
Date"):
i. a completed Exercise Agreement, in the form
attached hereto as Exhibit 1 hereto, executed by the Holder (the "Purchaser");
and
ii. a cashier's or official bank check or other
immediately available funds payable to the Company in an amount equal to the sum
of the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise. Notwithstanding anything
contained herein to the contrary, at the option of the Holder, and subject to
the provisions of Subsection 1.1, the Exercise Price for the Option may be
satisfied by the delivery of an unexercised portion of this Option to the
Company for cancellation having a market value, as determined by the spread as
of the date of Common Stock underlying this Option, equal to the aggregate
Exercise Price of the portion of this Option desired to be then exercised.
b. Certificates for the shares of Common Stock purchased upon
exercise of this Option will be delivered by the Company to the Purchaser within
five (5) business
1
<PAGE>
days after the Exercise Date. Unless this Option has expired or all of the
purchase rights represented hereby have been exercised, the Company will prepare
a new Option representing the rights formerly represented by this Option that
have not expired or been exercised. The Company will, within such five (5) day
period, deliver such new Option to the Holder at the address set forth in this
Option.
c. The shares of Common Stock issuable upon the exercise of
this Option will be deemed to have been transferred to the Purchaser on the
Exercise Date, and the Purchaser will be deemed for all purposes to have become
the record holder of such Common Stock on the Exercise Date.
d. The issuance of certificates for shares of Common Stock
upon the exercise of this Option will be made without charge to the Purchaser
for any issuance tax in respect thereof or any other cost incurred by the
Company in connection with such exercise and related transfer of the shares;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any certificate or instrument in a name other than that of the Holder of this
Option, and that the Company shall not be required to issue or deliver any such
certificate or instrument unless and until the person or persons requiring the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
e. Unless the Company shall have registered the shares of
Common Stock underlying this Option pursuant to the provisions of Section 6
hereof, the shares of Common Stock issuable upon the exercise of this Option
have not been registered under the Securities Act of 1933, as amended (the
"Act") and, accordingly, will be "restricted securities" as that term is defined
in the Act. The Company may insert the following or similar legend on the face
of the certificates evidencing shares of Common Stock if required in compliance
with state securities laws:
"These securities have not been registered under any state
securities laws and may not be sold or otherwise transferred
or disposed of except pursuant to an effective registration
statement under any applicable state securities laws, or an
opinion of counsel satisfactory to counsel to the Company that
an exemption from registration under any applicable state
securities laws is available."
f. Upon exercise of this Option, the royalty payments under
that certain Exclusive License Agreement dated August 19, 1999 by and between
Beverly Sassoon, Elan Sassoon, Beverly Sassoon International, LLC and the
Company shall terminate.
1.3 Fractional Shares. If a fractional share of Common Stock would, but
for the provisions of Subsection 1.1, be issuable upon exercise of the rights
represented by this Option, the Company will, within 30 days after the Exercise
Date, deliver to the Purchaser
2
<PAGE>
a check payable to the Purchaser, in lieu of such fractional share, in an amount
equal to the value of such fractional share as determined by the closing bid
price of the Company's Common Stock as reported on The Nasdaq Stock Market, or
the principal exchange on which the Company's Common Stock is then traded, as of
the close of business on the Exercise Date.
Section 2.
Effect of Reorganization, Reclassification, Consolidation, Merger or Sale
2.1 Recapitalization or Reclassification of Common Stock. In case the
Company shall at any time prior to the exercise or termination of this Option
effect a recapitalization or reclassification of such character that its Common
Stock shall be changed into or become exchangeable for a larger or smaller
number of shares, then, upon the effective date thereof, the number of shares of
Common Stock that the Holder of this Option shall be entitled to purchase upon
exercise hereof shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in such number of shares of Common Stock
by reason of such recapitalization or reclassification, and the Exercise Price
of such recapitalized or reclassified Common Stock shall, in the case of an
increase in the number of shares, be proportionately decreased and, in the case
of a decrease in the number of shares, be proportionately increased.
2.2 Consolidation, Merger or Sale. In case the Company shall at any
time prior to the exercise of this Option, or the expiration of the Exercise
Period, whichever first occurs, consolidate or merge with any other corporation
(unless the Company shall be the surviving entity) or transfer all or
substantially all of its assets to any other corporation preparatory to a
dissolution, then the Company shall, as a condition precedent to such
transaction, cause effective provision to be made so that the Holder of this
Option, upon the exercise thereof after the effective date of such transaction,
shall be entitled to receive the kind and amount of shares, evidences of
indebtedness, and/or other property receivable on such transaction by a holder
of the number of shares of Common Stock as to which the Option was exercisable
immediately prior to such transaction (without giving effect to any restriction
upon such exercise); and, in any such case, appropriate provision shall be made
with respect to the rights and interests of the Holder hereof to the effect that
the provisions of this Option shall thereafter be applicable (as nearly as may
be practicable) with respect to any shares, evidences of indebtedness, or other
securities or assets thereafter deliverable upon exercise of this Option.
2.3 Notice of Adjustment. Whenever the number of shares of Common Stock
purchasable upon exercise of this Option shall be adjusted as provided herein,
the Company shall file with its corporate records a certificate of its Chief
Financial Officer setting forth the computation and the adjusted number of
shares of Common Stock purchasable hereunder resulting from such adjustments,
and a copy of such certificate shall be mailed to the Holder. Any such
certificate or letter shall be conclusive evidence as to the correctness of the
adjustment or adjustments referred to therein and shall be available for
inspection by the holders of the Options on any day during normal business
hours.
3
<PAGE>
Section 3.
Reservation of Common Stock
The Company will at all time reserve and keep available such number of
shares of Common Stock as will be sufficient to permit the exercise in full of
this Option. Upon exercise of this Option pursuant to its terms, the Holder will
acquire fully paid and non-assessable ownership rights of the Common Stock, free
and clear of any liens, claims or encumbrances.
Section 4.
No Shareholder Rights or Obligations
This Option will not entitle the Holder hereof to any voting rights or
other rights as a shareholder of the Company. Until the shares of Common Stock
issuable upon the exercise of this Option are recorded as issued on the books
and records of the Company's transfer agent, the Holder shall not be entitled to
any voting rights or other rights as a shareholder; provided, however, the
Company uses its bests efforts to ensure that, upon receipt of the Exercise
Agreement and payment of the Exercise Price, the appropriate documentation
necessary to effectuate the exercise of the Option and the issuance of the
Common Stock is accomplished as expeditiously as possible. No provision of this
Option, in the absence of affirmative action by the Holder to purchase Common
Stock, and no enumeration in this Option of the rights or privileges of the
Holder, will give rise to any obligation of such Holder for the Exercise Price
or as a stockholder of the Company.
Section 5.
Transferability
Except as otherwise provided herein, the Holder hereof shall not
mortgage, pledge, hypothecate, encumber, deliver as collateral or security,
transfer, or sell any or all of his or her Options without the prior express
written consent of the Company provided, however, the Holder may transfer any or
all of his or her Options to members of such Holder's immediate family, which
shall include spouse and children and grandchildren over the age of 21 or in
trust for the benefit of any such persons or any members of the Holder's
immediate family under the age of 21 so long as, in either case, the trustee is
over the age of 21.
Subject to the terms hereof, this Option and all rights hereunder are
transferrable, in whole or in part, upon surrender of this Option with a
properly executed Assignment in the form of Exhibit 2 hereto at the principal
offices of the Company. This Option and the underlying shares of Common Stock
may not be offered, sold or transferred except in compliance with the Act, and
any applicable state securities laws, and then only against receipt of an
agreement of the person to whom such offer or sale or transfer is made to
4
<PAGE>
comply with the provisions of this Option with respect to any resale or other
disposition of such securities; provided that no such agreement shall be
required from any person purchasing this Option or the underlying shares of
Common Stock pursuant to a registration statement effective under the Act. The
Holder of this Option agrees that, prior to the disposition of any security
purchased on the exercise hereof other than pursuant to a registration statement
then effective under the Act, or any similar statute then in effect, the Holder
shall give written notice to the Company, expressing his intention as to such
disposition. Upon receiving such notice, the Company shall present a copy
thereof to its securities counsel. If, in the sole opinion of such counsel,
which such opinion shall not be unreasonably withheld, the proposed disposition
does not require registration of such security under the Act, or any similar
statute then in effect, the Company shall, as promptly as practicable, notify
the Holder of such opinion, whereupon the Holder shall be entitled to dispose of
such security in accordance with the terms of the notice delivered by the Holder
to the Company.
Section 6.
Registration Rights
If at any time during the Exercise Period, the Company shall prepare
and file one or more registration statements under the Act with respect to a
public offering of equity or debt securities of the Company, or of any such
securities of the Company held by its security holders, other than a
registration statement on Forms S-4, S-8, or similar form, the Company will
include in any such registration statement such information as is required, and
such number of shares of Common Stock held by, or shares of Common Stock
underlying outstanding Options held by, the Holder to permit a public offering
of such shares of Common Stock as required; provided, however, that if, in the
sole discretion of the Company, the inclusion of the shares requested to be
registered, when added to the securities being registered by the Company or the
selling security holder(s), would exceed, in the opinion of management of the
Company, the maximum amount of the Company's securities that can be marketed
without otherwise materially and adversely affecting the entire offering, then
the Company may exclude from such offering that portion of the shares required
to be so registered so that the total number of securities to be registered is
within the maximum number of shares that may be marketed without otherwise
materially and adversely affecting the entire offering. The Company shall have
sole and absolute discretion in making such determination. The Company shall use
its best efforts to obtain promptly the effectiveness of such registration
statement and maintain the effectiveness thereof for at least 180 days and to
register or qualify the subject shares of Common Stock underlying this Option
for sale in the State of Florida. The Company shall bear all fees and expenses
other than the fees and expenses of Holder's counsel incurred in the preparation
and filing of such registration statement and related state registrations, to
the extent permitted by applicable law, and the furnishing of copies of the
preliminary and final prospectus thereof to such Holder.
5
<PAGE>
Section 7.
Preemptive Rights
The Holder shall have preemptive right for a period of two (2) years
from the date hereof.
Section 8.
Miscellaneous
8.1 Notices. Any notices, requests or consents hereunder shall be
deemed given, and any instruments delivered, two days after they have been
mailed by first class mail, postage prepaid, or upon receipt if delivered
personally or by facsimile transmission, as follows:
If to the Company: International Cosmetics Marketing Co.
501 Brickell Key Drive
Suite 505
Miami, FL 33131
With a copy to: Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard
Suite 1900
Fort Lauderdale, Florida 33301
Attention: Roxanne K. Beilly, Esq.
If to the Holder: Elan Sassoon
7863 S.W. 89th Lane
Miami, FL 33156
With a copy to: Freund & Brackey, LLP
427 N. Camden Drive
Beverly Hills, CA 90210
Attention: Jonathan D. Freund, Esq.
except that any of the foregoing may from time to time by written notice to the
other designate another address which shall thereupon become its effective
address for the purposes of this paragraph.
8.2 Entire Agreement. This Option, including the exhibits and documents
referred to herein which are a part hereof, contain the entire understanding of
the parties hereto with respect to the subject matter and may be amended only by
a written instrument executed by the parties hereto or their successors or
assigns. Any paragraph headings
6
<PAGE>
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Option.
8.3 Governing Law. This Option is governed by, interpreted under and
construed in all respects in accordance with the substantive laws of the State
of Florida, without regard to the conflicts of law provision thereof, and
irrespective of the place of domicile or resident of the party. In the event of
a controversy arising out of the interpretation, construction, performance or
breach of this Option, the parties hereby agree and consent to the jurisdiction
and venue of the Courts of the State of Florida, or the United States District
Court for the Southern District of Florida; and further agree and consent that
personal service of process in any such action or preceding outside the State of
Florida shall be tantamount to service in person in Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
INTERNATIONAL COSMETICS MARKETING, CO.
By: /s/ Stephanie McAnly
--------------------------
Stephanie McAnly
ATTEST:
/s/ Sonny Spoden
- ----------------
Sonny Spoden
7
<PAGE>
EXHIBIT 1
---------
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned record Holder, pursuant to the provisions set forth in
the within Option, hereby subscribed for and purchases ______ shares of Common
Stock covered by such Option and hereby makes full cash payment of $_____ for
such shares at the Exercise Price provided by such Option.
______________________________
(Signature)
______________________________
(Print or type name)
______________________________
(Address)
______________________________
______________________________
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Option, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement or
any change whatsoever.
8
<PAGE>
EXHIBIT 2
---------
ASSIGNMENT
----------
FOR VALUE RECEIVED, , the undersigned Holder hereby sell, assigns, and
transfer all of the rights of the undersigned under the within Option with
respect to the number of shares of Common Stock issuable upon the exercise of
such Option set forth below, unto the Assignee identified below, and does hereby
irrevocable constituted and appoint to effect such transfer of rights on the
books of the Company, with full power of substitution:
Number of Shares
Name of Assignee Address of Assignee of Common Stock
- ---------------- ------------------- ---------------
Dated: ____________ ____________________________
(Signature of Holder)
____________________________
(Print or type name)
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Option, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement or
any change whatsoever.
CONSENT OF ASSIGNEE
-------------------
I HEREBY CONSENT to abide by the terms and conditions of the within
Option.
Dated: ____________ ____________________________
(Signature of Holder)
____________________________
(Print or type name)
9
OPTION TO PURCHASE COMMON STOCK
Date of Issuance: As of August 19,1999 Option to Purchase 600,000
shares of Common Stock
FOR VALUE RECEIVED, International Cosmetics Marketing, Co., a Florida
corporation (the "Company"), promises to issue in the name of, and sell and
deliver to CAPITAL DISTRIBUTORS, LLC., a limited liability corporation
("Holder"), a certificate or certificates for an aggregate of 600,000 shares of
the Company's common stock, par value $.001 per share (the "Common Stock"), upon
payment by the Holder of the exercise price of $.001 per share (the "Exercise
Price") in lawful funds of the United States of America, with the Exercise Price
being subject to adjustment in the circumstances set forth below.
Section 1.
Exercise of Option
1.1 Exercise Period. The Holder may exercise this Option during the two
(2) year period, in whole and not in part (but not as to fractional shares),
commencing upon the earlier of (i) the second annual anniversary date of the
date hereof; or (ii) the eighteenth month anniversary date of the date the
Company's securities are first traded on the Nasdaq Stock Market, Inc. or
another national exchange (the "Exercise Period").
1.2 Exercise Procedure.
a. This Option will be deemed to have been exercised at such
time as the Company has received all of the following items (the "Exercise
Date"):
i. a completed Exercise Agreement, in the form
attached hereto as Exhibit 1 hereto, executed by the Holder (the "Purchaser");
and
ii. a cashier's or official bank check or other
immediately available funds payable to the Company in an amount equal to the sum
of the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise. Notwithstanding anything
contained herein to the contrary, at the option of the Holder, and subject to
the provisions of Subsection 1.1, the Exercise Price for the Option may be
satisfied by the delivery of an unexercised portion of this Option to the
Company for cancellation having a market value, as determined by the spread as
of the date of Common Stock underlying this Option, equal to the aggregate
Exercise Price of the portion of this Option desired to be then exercised.
b. Certificates for the shares of Common Stock purchased upon
exercise of this Option will be delivered by the Company to the Purchaser within
five (5) business
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days after the Exercise Date. Unless this Option has expired or all of the
purchase rights represented hereby have been exercised, the Company will prepare
a new Option representing the rights formerly represented by this Option that
have not expired or been exercised. The Company will, within such five (5) day
period, deliver such new Option to the Holder at the address set forth in this
Option.
c. The shares of Common Stock issuable upon the exercise of
this Option will be deemed to have been transferred to the Purchaser on the
Exercise Date, and the Purchaser will be deemed for all purposes to have become
the record holder of such Common Stock on the Exercise Date.
d. The issuance of certificates for shares of Common Stock
upon the exercise of this Option will be made without charge to the Purchaser
for any issuance tax in respect thereof or any other cost incurred by the
Company in connection with such exercise and related transfer of the shares;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any certificate or instrument in a name other than that of the Holder of this
Option, and that the Company shall not be required to issue or deliver any such
certificate or instrument unless and until the person or persons requiring the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
e. Unless the Company shall have registered the shares of
Common Stock underlying this Option pursuant to the provisions of Section 6
hereof, the shares of Common Stock issuable upon the exercise of this Option
have not been registered under the Securities Act of 1933, as amended (the
"Act") and, accordingly, will be "restricted securities" as that term is defined
in the Act. The Company may insert the following or similar legend on the face
of the certificates evidencing shares of Common Stock if required in compliance
with state securities laws:
"These securities have not been registered under any state
securities laws and may not be sold or otherwise transferred
or disposed of except pursuant to an effective registration
statement under any applicable state securities laws, or an
opinion of counsel satisfactory to counsel to the Company that
an exemption from registration under any applicable state
securities laws is available."
f. Upon exercise of this Option, the royalty payments under
that certain Exclusive License Agreement dated August 19, 1999 by and between
Beverly Sassoon, Elan Sassoon, Beverly Sassoon International, LLC and the
Company shall terminate.
1.3 Fractional Shares. If a fractional share of Common Stock would, but
for the provisions of Subsection 1.1, be issuable upon exercise of the rights
represented by this Option, the Company will, within 30 days after the Exercise
Date, deliver to the Purchaser
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<PAGE>
a check payable to the Purchaser, in lieu of such fractional share, in an amount
equal to the value of such fractional share as determined by the closing bid
price of the Company's Common Stock as reported on The Nasdaq Stock Market, or
the principal exchange on which the Company's Common Stock is then traded, as of
the close of business on the Exercise Date.
Section 2.
Effect of Reorganization, Reclassification, Consolidation, Merger or Sale
2.1 Recapitalization or Reclassification of Common Stock. In case the
Company shall at any time prior to the exercise or termination of this Option
effect a recapitalization or reclassification of such character that its Common
Stock shall be changed into or become exchangeable for a larger or smaller
number of shares, then, upon the effective date thereof, the number of shares of
Common Stock that the Holder of this Option shall be entitled to purchase upon
exercise hereof shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in such number of shares of Common Stock
by reason of such recapitalization or reclassification, and the Exercise Price
of such recapitalized or reclassified Common Stock shall, in the case of an
increase in the number of shares, be proportionately decreased and, in the case
of a decrease in the number of shares, be proportionately increased.
2.2 Consolidation, Merger or Sale. In case the Company shall at any
time prior to the exercise of this Option, or the expiration of the Exercise
Period, whichever first occurs, consolidate or merge with any other corporation
(unless the Company shall be the surviving entity) or transfer all or
substantially all of its assets to any other corporation preparatory to a
dissolution, then the Company shall, as a condition precedent to such
transaction, cause effective provision to be made so that the Holder of this
Option, upon the exercise thereof after the effective date of such transaction,
shall be entitled to receive the kind and amount of shares, evidences of
indebtedness, and/or other property receivable on such transaction by a holder
of the number of shares of Common Stock as to which the Option was exercisable
immediately prior to such transaction (without giving effect to any restriction
upon such exercise); and, in any such case, appropriate provision shall be made
with respect to the rights and interests of the Holder hereof to the effect that
the provisions of this Option shall thereafter be applicable (as nearly as may
be practicable) with respect to any shares, evidences of indebtedness, or other
securities or assets thereafter deliverable upon exercise of this Option.
2.3 Notice of Adjustment. Whenever the number of shares of Common Stock
purchasable upon exercise of this Option shall be adjusted as provided herein,
the Company shall file with its corporate records a certificate of its Chief
Financial Officer setting forth the computation and the adjusted number of
shares of Common Stock purchasable hereunder resulting from such adjustments,
and a copy of such certificate shall be mailed to the Holder. Any such
certificate or letter shall be conclusive evidence as to the correctness of the
adjustment or adjustments referred to therein and shall be available for
inspection by the holders of the Options on any day during normal business
hours.
3
<PAGE>
Section 3.
Reservation of Common Stock
The Company will at all time reserve and keep available such number of
shares of Common Stock as will be sufficient to permit the exercise in full of
this Option. Upon exercise of this Option pursuant to its terms, the Holder will
acquire fully paid and non-assessable ownership rights of the Common Stock, free
and clear of any liens, claims or encumbrances.
Section 4.
No Shareholder Rights or Obligations
This Option will not entitle the Holder hereof to any voting rights or
other rights as a shareholder of the Company. Until the shares of Common Stock
issuable upon the exercise of this Option are recorded as issued on the books
and records of the Company's transfer agent, the Holder shall not be entitled to
any voting rights or other rights as a shareholder; provided, however, the
Company uses its bests efforts to ensure that, upon receipt of the Exercise
Agreement and payment of the Exercise Price, the appropriate documentation
necessary to effectuate the exercise of the Option and the issuance of the
Common Stock is accomplished as expeditiously as possible. No provision of this
Option, in the absence of affirmative action by the Holder to purchase Common
Stock, and no enumeration in this Option of the rights or privileges of the
Holder, will give rise to any obligation of such Holder for the Exercise Price
or as a stockholder of the Company.
Section 5.
Transferability
Except as otherwise provided herein, the Holder hereof shall not
mortgage, pledge, hypothecate, encumber, deliver as collateral or security,
transfer, or sell any or all of his or her Options without the prior express
written consent of the Company provided, however, the Holder may transfer any or
all of his or her Options to members of such Holder's immediate family, which
shall include spouse and children and grandchildren over the age of 21 or in
trust for the benefit of any such persons or any members of the Holder's
immediate family under the age of 21 so long as, in either case, the trustee is
over the age of 21.
Subject to the terms hereof, this Option and all rights hereunder are
transferrable, in whole or in part, upon surrender of this Option with a
properly executed Assignment in the form of Exhibit 2 hereto at the principal
offices of the Company. This Option and the underlying shares of Common Stock
may not be offered, sold or transferred except in compliance with the Act, and
any applicable state securities laws, and then only against receipt of an
agreement of the person to whom such offer or sale or transfer is made to
4
<PAGE>
comply with the provisions of this Option with respect to any resale or other
disposition of such securities; provided that no such agreement shall be
required from any person purchasing this Option or the underlying shares of
Common Stock pursuant to a registration statement effective under the Act. The
Holder of this Option agrees that, prior to the disposition of any security
purchased on the exercise hereof other than pursuant to a registration statement
then effective under the Act, or any similar statute then in effect, the Holder
shall give written notice to the Company, expressing his intention as to such
disposition. Upon receiving such notice, the Company shall present a copy
thereof to its securities counsel. If, in the sole opinion of such counsel,
which such opinion shall not be unreasonably withheld, the proposed disposition
does not require registration of such security under the Act, or any similar
statute then in effect, the Company shall, as promptly as practicable, notify
the Holder of such opinion, whereupon the Holder shall be entitled to dispose of
such security in accordance with the terms of the notice delivered by the Holder
to the Company.
Section 6.
Registration Rights
If at any time during the Exercise Period, the Company shall prepare
and file one or more registration statements under the Act with respect to a
public offering of equity or debt securities of the Company, or of any such
securities of the Company held by its security holders, other than a
registration statement on Forms S-4, S-8, or similar form, the Company will
include in any such registration statement such information as is required, and
such number of shares of Common Stock held by, or shares of Common Stock
underlying outstanding Options held by, the Holder to permit a public offering
of such shares of Common Stock as required; provided, however, that if, in the
sole discretion of the Company, the inclusion of the shares requested to be
registered, when added to the securities being registered by the Company or the
selling security holder(s), would exceed, in the opinion of management of the
Company, the maximum amount of the Company's securities that can be marketed
without otherwise materially and adversely affecting the entire offering, then
the Company may exclude from such offering that portion of the shares required
to be so registered so that the total number of securities to be registered is
within the maximum number of shares that may be marketed without otherwise
materially and adversely affecting the entire offering. The Company shall have
sole and absolute discretion in making such determination. The Company shall use
its best efforts to obtain promptly the effectiveness of such registration
statement and maintain the effectiveness thereof for at least 180 days and to
register or qualify the subject shares of Common Stock underlying this Option
for sale in the State of Florida. The Company shall bear all fees and expenses
other than the fees and expenses of Holder's counsel incurred in the preparation
and filing of such registration statement and related state registrations, to
the extent permitted by applicable law, and the furnishing of copies of the
preliminary and final prospectus thereof to such Holder.
5
<PAGE>
Section 7.
Miscellaneous
The Holder shall have preemptive rights for a period of two (2) years
from the date hereof.
Section 8.
Miscellaneous
8.1 Notices. Any notices, requests or consents hereunder shall be
deemed given, and any instruments delivered, two days after they have been
mailed by first class mail, postage prepaid, or upon receipt if delivered
personally or by facsimile transmission, as follows:
If to the Company: International Cosmetics Marketing Co.
501 Brickell Key Drive
Suite 505
Miami, FL 33131
With a copy to: Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard
Suite 1900
Fort Lauderdale, Florida 33301
Attention: Roxanne K. Beilly, Esq.
If to the Holder: Capital Distributors, LLC
501 Brickell Key Drive
Suite 505
Miami, FL 33131
With a copy to: Freund & Brackey, LLP
427 N. Camden Drive
Beverly Hills, CA 90210
Attention: Jonathan D. Freund, Esq.
except that any of the foregoing may from time to time by written notice to the
other designate another address which shall thereupon become its effective
address for the purposes of this paragraph.
8.2 Entire Agreement. This Option, including the exhibits and documents
referred to herein which are a part hereof, contain the entire understanding of
the parties hereto with respect to the subject matter and may be amended only by
a written instrument
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<PAGE>
executed by the parties hereto or their successors or assigns. Any paragraph
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Option.
8.3 Governing Law. This Option is governed by, interpreted under and
construed in all respects in accordance with the substantive laws of the State
of Florida, without regard to the conflicts of law provision thereof, and
irrespective of the place of domicile or resident of the party. In the event of
a controversy arising out of the interpretation, construction, performance or
breach of this Option, the parties hereby agree and consent to the jurisdiction
and venue of the Courts of the State of Florida, or the United States District
Court for the Southern District of Florida; and further agree and consent that
personal service of process in any such action or preceding outside the State of
Florida shall be tantamount to service in person in Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
INTERNATIONAL COSMETICS MARKETING, CO.
By: /s/ Stephanie McAnly
---------------------------
Stephanie McAnly
ATTEST:
/s/ Sonny Spoden
- ----------------
Sonny Spoden
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<PAGE>
EXHIBIT 1
---------
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned record Holder, pursuant to the provisions set forth in
the within Option, hereby subscribed for and purchases _____ shares of Common
Stock covered by such Option and hereby makes full cash payment of $_____ for
such shares at the Exercise Price provided by such Option.
__________________________________
(Signature)
__________________________________
(Print or type name)
__________________________________
(Address)
__________________________________
__________________________________
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Option, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement or
any change whatsoever.
8
<PAGE>
EXHIBIT 2
---------
ASSIGNMENT
----------
FOR VALUE RECEIVED, , the undersigned Holder hereby sell, assigns, and
transfer all of the rights of the undersigned under the within Option with
respect to the number of shares of Common Stock issuable upon the exercise of
such Option set forth below, unto the Assignee identified below, and does hereby
irrevocable constituted and appoint to effect such transfer of rights on the
books of the Company, with full power of substitution:
Number of Shares
Name of Assignee Address of Assignee of Common Stock
- ---------------- ------------------- ---------------
Dated: _______________ __________________________
(Signature of Holder)
__________________________
(Print or type name)
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Option, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement or
any change whatsoever.
CONSENT OF ASSIGNEE
-------------------
I HEREBY CONSENT to abide by the terms and conditions of the within
Option.
Dated: _______________ __________________________
(Signature of Holder)
__________________________
(Print or type name)
9
0 % CONVERTIBLE DEBENTURE
(This Convertible Debenture is one of a series of
Convertible Debentures of like tenor and terms)
August _____, 1999 $________________
FOR VALUE RECEIVED, the undersigned, INTERNATIONAL COSMETICS MARKETING
CO., a Florida corporation (f/k/a CindyCo, Inc.), ("Maker"), hereby promises to
pay to the order of _______________ ("Payee"), the principal sum of
____________________________________ Dollars ($___________) with the principal
balance being due and payable three (3) years from the date of this Debenture,
all as hereinafter provided (the "Debenture").
1. Payments of Principal. Upon the expiration of three (3) years from
the date of this Debenture ("Maturity Date"), all outstanding principal shall be
due and payable, and shall be paid to Payee.
2. Place of Payment. So long as Payee shall hold this Debenture, all
payments of principal shall be made to the Payee at the address of Maker as
specified herein upon presentment of this Debenture.
3. Conversion.
(a) Conversion. All, but not less than all, of this Debenture
is subject to conversion (the "Conversion") into shares of the Maker's common
stock ("Common Stock") at any time, at the option of the Payee, at a conversion
price of $5.00 per share of Common Stock ("Conversion Price") of the Maker in
accordance with the provisions of Paragraph 3(b) hereof; provided, however, that
such Conversion must be effected by the holder on or prior to 36 months from the
date hereof (the "Conversion Period"). In the event such Conversion does not
occur within the Conversion Period or payment does not occur on the Maturity
Date, this Debenture shall be automatically converted.
(b) Conversion Procedure. Before the Payee shall be entitled
to convert all or any portion of this Debenture into shares of Common Stock, it
shall surrender this Debenture at the office of the Maker and shall give written
notice by mail, postage prepaid, to the Maker at its principal corporate office
of the election to convert the same and shall state therein the name or names
and the amounts in which the certificate or certificates for shares of Common
Stock are to be issued, provided however, that such issuance is in compliance
with federal and applicable state securities laws. Such conversion shall be
1
<PAGE>
deemed to have been made immediately prior to the close of business on the date
of such surrender of this Debenture. The person entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holder of such shares of Common Stock as of such date.
(c) All shares of Common Stock acquired by conversion of the
Debenture ("Conversion Shares"), upon issuance, will be duly authorized, validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issue thereof, provided that the Maker shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the holder
of the Debenture which is being converted.
(d) Delivery of Stock Certificates. As promptly as practical
after the conversion of this Debenture, the Maker at its expense will issue and
deliver to the Payee of this Debenture a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion.
(e) Mechanics and Effect of Conversion. No fractional shares
of Common Stock shall be issued upon conversion of this Debenture. In lieu of
the Maker issuing any fractional shares to the Payee upon the conversion of this
Debenture, the Maker shall round such number of shares to be issued to the Payee
to the next highest number of shares.
4. Adjustments for Stock Splits and Subdivisions. In the event the
Company should at any time or from time to time after the date of issuance
hereof fix a record date for the effectuation of a split or subdivision of the
outstanding shares if Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter referred to as the "Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents then, as of
such record date, (or the date of such dividend distribution, split or
subdivision if no record date is fixed), the Conversion Price of this Debenture
shall be appropriately decreased so that the number of shares of Common Stock
issuable upon conversion of this Debenture shall be increased in proportion to
such increase of outstanding shares.
If the number of shares of Common Stock outstanding any time
after the date hereof is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the
Conversion Price of this Debenture shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion hereof shall be
decreased in proportion to such decrease in outstanding shares.
2
<PAGE>
5. Sale, Exchange, Tender Offer, Redemption or Buyout. In case of any
sale, exchange, tender offer, redemption or buyout of the Company's shares, or
any consolidation of the Company with or merger of the Company into another
corporation, or in case of any sale, transfer or lease to another corporation of
all or substantially all the property of the Company, the Company or such
successor or purchasing corporation, as the case may be, shall execute with the
Lender an agreement that the Lender shall have the right thereafter, upon
payment of the per share Conversion Price in effect immediately prior to such
action, to convert on the same basis which it would have or have been entitled
to receive after the happening of such consolidation, merger, sale, transfer or
lease had such conversion been accomplished immediately prior to such action.
Such agreement shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided herein. These
provisions shall similarly apply to successive consolidations, mergers, sales,
transfers or leases.
6. No Prepayment. This Debenture may not be prepaid prior to the
Maturity Date.
7. Restriction on Transfer. The shares of Common Stock issuable upon
conversion of the Debenture will be subject to any restrictions on transfer or
disposition imposed by (i) an underwriter for any public offering of the
Company's securities; (i) the National Association of Securities Dealers (NASD);
or (ii) any national exchange including the National Association of Securities
Dealers Automated Quotation System ("NASDAQ").
8. Reservation of Stock Issuable upon Conversion. The Maker shall
reserve and keep available out of its authorized but unissued shares of Common
Stock solely for the purposes of effecting the conversion of this Debenture such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of this Debenture.
9. Investment Intent. Payee represents and warrants that Payee is
acquiring this Debenture for investment purposes and not with a view to, for
resale in connection with, or with an intent of participating directly or
indirectly in any distribution within the meaning of the Securities Act of 1933,
as amended (the "Act"). Payee shall not divide its participation with others or
resell, assign or otherwise dispose of all or any part of this Debenture.
Notwithstanding the foregoing provisions of this paragraph 7, The Payee may not
sell, transfer, pledge or hypothecate the Debenture or the shares issuable upon
the conversion of the Debenture unless: (i) said Debenture and the shares
issuable upon conversion of the Debenture shall have first been registered under
the Act and all applicable state securities laws; or (ii) the Payee shall have
first delivered to the Maker a written opinion of counsel (in form and substance
reasonably satisfactory to the Company), to the effect that the proposed sale or
transfer of the Debenture or the shares issuable upon conversion of the
Debenture are exempt from the registration provisions of the Act, and the rules
promulgated thereunder, and all applicable state securities laws.
3
<PAGE>
10. Certain Restrictions. The Maker shall not, without the prior
written consent of the holders of a majority of Debentures:
(i) declare, order or pay any dividend (other than dividends
payable solely in shares of stock);
(ii) redeem any securities;
(iii) adjust the salary and benefits (increase or decrease)
for employees that are officers of the Corporation;
(iv) sell all or substantially all of the assets of the Maker;
(v) restructure the Maker, including a merger, consolidation,
liquidation, recapitalization, or other such actions;
(vi) increase or decrease the number of directors of the
Maker;
(vii) commence any new business venture, new office, or invest
or acquire any new entity which would require an investment of Twenty Five
Thousand ($25,000) Dollars or more in a one year period;
(viii) authorize and/or issue new shares of stock of the
Maker;
(ix) enter into and approve any agreement or contract for the
purchase of goods, services or other items between the Maker, a Stockholder, or
a member of a Stockholder's immediate family; or
(x) enter into a contract for employment or for a consultant.
11. Miscellaneous.
(a) Waivers. No waiver of any term or condition of this
Debenture shall be construed to be a waiver of any succeeding breach of the same
term or condition. No failure or delay of Payee to exercise any power hereunder,
or to insist upon strict compliance by Maker of any obligations hereunder, and
no custom or other practice at variance with the terms hereof shall constitute a
waiver of the right of Payee to demand exact compliance with such terms.
(b) Invalid Terms. In the event any provision contained in
this Debenture shall, for any reason, be held invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Debenture,
4
<PAGE>
and this Debenture shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
(c) Successors. This Debenture shall be binding upon Maker,
its legal representatives, successors and assigns, and inure to the benefit of
Payee, its legal representatives, successors and assigns.
(d) Controlling Law. This Debenture shall be read, construed
and governed in all respects in accordance with the laws of the State of
Florida.
(e) Amendments. Any provision in this Debenture to the
contrary notwithstanding, changes in or additions to this Debenture may be made
by the Maker, and compliance with any covenant or condition herein set forth may
be omitted, if the Maker shall obtain from the holder of this Debenture their
consent thereto in writing.
(f) Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be sufficiently
given if addressed to the Maker at its executive offices, and to Payee at
_________________________________, posted in the U.S. mail by certified or
registered mail, return receipt requested. Any party may change said address by
giving the other party hereto notice of such change of address. Notice given as
hereinabove prescribed shall be deemed given on the date of its deposit in the
United States mail and, unless sooner received, shall be deemed received by the
party to whom it is addressed on the fifth calendar day following the date on
which said notice is deposited in the mail.
(g) Construction of Terms. Whenever the context so requires,
any gender is deemed to include any other, and the singular is deemed to include
the plural, and conversely.
(h) Headings. All section and subsection headings herein,
wherever they appear, are for convenience only and shall not affect the
construction of any terms herein.
(i) No Shareholder Rights. Nothing contained in this Debenture
shall be construed as conferring upon the Payee or any other person the right to
vote or to consent or to receive notice as a shareholder in respect of meetings
of shareholders for the election of directors of the Maker or any other matters
or any other rights whatsoever as a shareholder of the Maker; and no dividends
or interest shall be payable or accrued in respect to this Debenture or the
interest represented thereby or the Conversion Shares obtainable hereunder
until, and only to the extent that, this Debenture shall have been converted.
IN WITNESS WHEREOF, the undersigned has caused this Debenture to be
executed by its duly authorized officer and its seal affixed hereto, as of the
day and year first above written.
5
<PAGE>
INTERNATIONAL COSMETICS MARKETING CO.
By:_________________________________
Stephanie McAnly, President
6
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (the "Agreement"), dated as of the
19th day of August, 1999 (the "Effective Date") is made by and between Beverly
Sassoon, an individual currently residing at 1923 Selby Avenue, Apt. 203, Los
Angeles, CA 90025 ("B. Sassoon"), Elan Sassoon, an individual currently residing
at 7863 S.W. 89th Lane, Miami, FL 33156 ("E. Sassoon"), Beverly Sassoon
International, L.L.C., a Florida limited liability company, whose principal
office is located at 501 Brickell Key Drive, Suite 505, Miami, FL 33131 ("BSI"),
and International Cosmetics Marketing, Co., a Florida corporation, whose
principal office is located at 501 Brickell Key Drive, Suite 505, Miami, FL
33131 ("ICM"). B. Sassoon, E. Sassoon, BSI and ICM are hereinafter collectively
referred to as the "Parties."
RECITALS
A. B. Sassoon and BSI have previously entered into that certain
Licensing Agreement dated September 1, 1998 (the "BSI License") whereby B.
Sassoon (i) granted BSI an exclusive license to use her name and likeness for
purposes of promoting skin care products, nutritional products and other
consumer goods under the name of Beverly Sassoon International, and (ii) agreed
not to use her name or likeness for commercial purposes during the term of the
BSI License, other than the pet care and slimming products hereinafter described
to which she had previously licensed her name. A copy of the BSI License is
attached hereto as Exhibit A and incorporated herein by such reference.
B. BSI has developed certain skin care and cosmetic products (the "BSI
Skin Care Products") which it intended to market bearing the likeness and/or
name of B. Sassoon; however, as of the date of this Agreement, BSI has not
commenced the manufacture or marketing of the BSI Skin Care Products.
C. ICM has been formed to engage in the business (the "ICM Business")
of manufacturing, marketing and distributing a broad range of consumer products
(collectively, the "ICM Products").
D. ICM desires to obtain an assignment of the BSI License, together
with an expanded license from B. Sassoon and a license from E. Sassoon which
will grant ICM the exclusive, worldwide license to use B. Sassoon's and E.
Sassoon's name and likeness in connection with the manufacture, market,
distribution and/or sale of ICM Products which are marketed or promoted
utilizing the likeness and/or name of B. Sassoon and E. Sassoon (the "ICM
Sassoon Products").
E. Sassoon consents to the assignment to ICM of the rights to use her
name and likeness as granted under the BSI License and to the retention by BSI
of its obligation to pay to her all compensation obligations under the BSI
License, and is further willing to grant ICM an additional license to use her
name and likeness as hereinafter described.
F. ICM desires to obtain an exclusive, worldwide license to
manufacture, market and distribute the BSI Skin Care Products.
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G. BSI is willing to assign ICM its rights under the BSI License, and
to grant ICM an exclusive, worldwide license to manufacture, market and
distribute the BSI Skin Care Products, both as hereinafter described.
H. Sassoon is a member of BSI.
NOW THEREFORE, in consideration of the mutual agreements set forth
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereby agree as follows:
1. Recitals. The above recitals are true, correct and are incorporated
herein.
2. Assignment of BSI License Rights and Granting of Exclusive License.
a. BSI hereby assigns to ICM all of its rights and interest in and to
BSI License, including any tradenames, trademarks, copyrights or other
intellectual property related thereto. ICM, however, shall assume no liabilities
of BSI under the terms of the BSI License including, but not limited to, the
compensation payable to Sassoon as set forth in Paragraph 2 of the BSI License.
b. Sassoon grants to ICM an exclusive, worldwide license (the "ICM
Sassoon License"), with the right to grant sub-licenses, to use the name
"Beverly Sassoon" or any variation thereof, as well as the image, voice,
likeness, signature and/or picture of Sassoon, and any trademarks, trade names,
copyrights or other intellectual property related thereto, through or by way of
any media known now or in the future, in connection with the advertising,
merchandising, promotion, manufacture, sale and distribution of ICM Sassoon
Products (as hereinafter defined), other than in connection with (i) the
promotion, endorsement or sale of hair care products including, but not limited
to, shampoos, conditioners, hairsprays, rinses, wigs, hair decorations and
ornaments, coloring, permanent waves, hairblowers, scissors, combs and brushes
(collectively, the "Hair Care Products"); (ii) [BSI attorney: insert description
of pet care products from that license] (collectively, the "Pet Products"); or
(iii) [BSI attorney: insert description of slimming products from that license]
(collectively, the "Slimming Products").
c. BSI grants ICM the exclusive license to manufacture, contract for
manufacture, market, distribute or contract for distribution, the BSI Skin Care
Products, including the unfettered use of any trademarks, trade names,
copyrights or other intellectual property related thereto, through or by way of
any media known now or in the future, in connection with the manufacturing,
distribution, sale, advertising, merchandising or promotion, and sale of the BSI
Skin Care Products (the "ICM Manufacturing License").
d. It is the specific understanding of the Parties that the total
compensation payable by ICM to either BSI or Sassoon for the rights granted to
ICM pursuant to this Section 2 shall be as set forth in Section 6 of this
Agreement.
e. Upon the assignment of its rights under the BSI License, and
providing that this Agreement remains in full force and effect, BSI shall have
no further right to use Sassoon's name
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or likeness for the purpose of promoting the BSI Skin Care Products or
otherwise. Likewise, upon the granting of the ICM Manufacturing License, and
providing this Agreement remains in full force and effect, BSI shall have no
further right to manufacture, market or distribute, or contract for the
manufacture, marketing or distribution, of the BSI Skin Care Products.
3. Scope of the Licenses. The ICM Sassoon License and the ICM
Manufacturing License (collectively, the "ICM Licenses") grant ICM the sole and
exclusive rights to develop, manufacture, market, distribute and promote any
form of consumer product, through or by way of any media known now or in the
future, other than Hair Care Products, the Pet Products and the Slimming
Products, which incorporate either the name or image of Sassoon (collectively,
the "ICM Sassoon Products"). A copy of the license for the Pet Products is
attached hereto as Exhibit 3.1 and a copy of the license for the Slimming
Products is attached hereto as Exhibit 3.2, each of which are incorporated
herein by such reference. Except as may be set forth on Schedule 3, each such
license is in full force and effect. Upon the expiration of each such license
pursuant to its terms, or otherwise, Sassoon shall not renew either the Pet
Products license nor the Slimming Products license, nor enter into any license
or other agreement covering the products which are the subject to such licenses.
Upon such expiration, and without any further action by any Party hereto, the
ICM Sassoon License and the description of ICM Sassoon Products shall be
expanded to include [describe pet product license and slimming product licence
scope].
4. Promotional Activities.
a. In addition to the obligations of Sassoon described elsewhere
herein, Sassoon will cooperate in all manner of advertising, promotion and
publicity of the ICM Sassoon Products as may reasonably be determined by ICM,
and shall devote her full time and attention to the development of the ICM
Sassoon Products and the promotion thereof. Upon the request of ICM, Sassoon
will furnish, or cooperate with ICM in obtaining, a record of Sassoon's voice,
photographs, cuts, and slides of Sassoon, and a specimen or reproduction of
Sassoon's signature or such other actions as ICM shall reasonably request.
Sassoon acknowledges such items will be used in connection with the ICM Sassoon
Products including, but not limited to, use with endorsements and testimonials
by Sassoon exclusively for ICM with respect to the advertising, merchandising,
promotion, sale or distribution of ICM Sassoon Products. Sassoon expressly
authorizes ICM to send out sales and promotion literature and advertisements
under the name of "Beverly Sassoon".
b. Sassoon will cooperate on all sales and all merchandising,
promotional advertising and publicity ideas and campaigns (the "Appearances").
If Sassoon makes any personal appearance for ICM, she shall be paid for her
actual traveling in business class, food and lodging expenses, but shall not
receive a separate appearance fee. ICM shall not be liable for any cost or
expense under this Section unless such cost or expense is approved in writing by
ICM in advance of its being incurred.
5. Control by ICM of Business. Notwithstanding anything herein
to the contrary, ICM shall have the sole authority to determine, after
discussion with Sassoon, the mode and method of advertising, merchandising,
promoting, manufacturing, selling and distributing the ICM Sassoon Products or
the BSI Skin Care Products, and the sole authority to fix the process,
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discounts, and terms of sale to all purchasers, whether consumers, dealers or
distributors of any and all such products.
6. Compensation. As full and complete compensation for the services
provided and rights granted to ICM pursuant to Sections 2 and 20 hereof, ICM
shall:
a. Pay BSI an aggregate cash payment in the amount of $150,000, of
which $25,000 shall be paid upon the Effective Date of this Agreement, and the
remaining amount, in installments of $12,500, shall be due and payable on the
15th day of each month thereafter;
b. pay up to an aggregate cash payment in the amount of $50,000 which
shall be due and payable during the six (6) month period following the Effective
Date and which shall be used toward the satisfaction of the outstanding
obligations of BSI as set forth on Schedule 6(b);
c. issue to BSI an aggregate of 900,000 shares of the Common Stock, par
value $.001, of ICM (the "Shares");
d. pay BSI a royalty of the greater of (i) 2% of gross revenues of the
ICM Sassoon Products or the BSI Skin Care Products which are marketed or
distributed pursuant to the terms of this Agreement; or (ii) $25,000 per month.
For the purposes of this Section, "gross revenues" shall mean the total
revenues, monies and consideration actually received by ICM from the sale of the
subject products or through the use of the B. Sassoon and/or E. Sassoon names,
less rebates, discounts and returns. Such royalty payments shall be due and
payable on the 15th day of each month following the month in which ICM received
payment from the sale of the ICM Sassoon Products or the BSI Skin Care Products;
e. This Section notwithstanding, to the extent that Sassoon is unable
or unwilling to make an Appearance, ICM shall deduct from any royalty fees to
BSI for or in connection with that Appearance $5,000; and
f. Notwithstanding anything contained herein to the contrary, upon the
exercise of any options granted to Elan Sassoon to purchase 2,000,000 shares,
Beverly Sassoon to purchase 2,250,000 shares or to Capital Distributors, LLC to
purchase 600,000 shares, each dated of even date herewith, the royalty payments
due hereunder and the consulting services provided in Section 20 of this
Agreement shall terminate; provided, however, that the Parties shall negotiate
in good faith and enter into employment agreements on mutually determined terms.
7. Investment Intent.
BSI is acquiring the Shares for its own account, for investment
purposes only and not with a view to resale or other distribution thereof, nor
with the intention of selling, transferring or otherwise disposing of all or any
part of such Shares, or any interest therein, for any particular event or
circumstances, except in full compliance with all applicable provisions of the
Securities Act of 1933, the Securities Exchange Act of 1934, and the Rules and
Regulations promulgated by the Securities and Exchange Commission thereunder,
all as amended. The Shares are "restricted
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securities" as that term is defined in the Securities Act of 1933, and the
certificate representing the Shares will have the following or similar legend:
"These securities have not been registered under any state
securities laws and may not be sold or otherwise transferred
or disposed of except pursuant to an effective registration
statement under any applicable state securities laws, or an
opinion of counsel satisfactory to counsel to International
Cosmetics Marketing, Co. that an exemp tion from registration
under any applicable state securities laws is available."
Notwithstanding anything contained herein to the contrary, BSI shall be
entitled to Transfer the Shares to certain of its note holders upon the consent
of ICM, and providing such note holders take such Shares subject to the
provisions of this Section 7.
8. Life Insurance on Sassoon. In the event ICM should elect to obtain a
life insurance policy on Sassoon, Sassoon shall fully cooperate with ICM in such
undertaking including, but not limited to, having a physical exam if so required
by the insurance company. All costs and expenses related to such insurance
policy shall be borne by ICM, and it shall be the sole beneficiary thereof.
9. Reports and Records.
a. ICM will furnish BSI with monthly reports of all sales of all
products subject to this Agreement by the 15th day of the month immediately
after the month in which the sale occurred, and copies of all sub-licensing
agreements ICM may grant hereunder.
b. BSI shall have the right, through a certified public accountant
acceptable to ICM, to inspect the books and records of ICM relating to sales of
all products subject to this Agreement, and to all sub-licensing agreements
hereunder. Such inspection shall not be made more frequently than once every
fiscal quarter, BSI shall give ICM 15 days prior written notice of its intent to
inspect the books and records of ICM, such inspection shall occur at the
principal offices of ICM during normal business hours and shall be at BSI's sole
cost and expense unless such inspection results in an increased adjustment to a
royalty payment in which event the cost and expense shall be paid by ICM.
10. Representations and Warranties. BSI and Sassoon, jointly and
severally, make the representations and warranties to ICM set forth below.
a. BSI is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Florida. Each of BSI and
Sassoon have the full legal right and power and all authority and approval
required to enter into, execute and deliver this Agreement and to perform fully
each of their obligations hereunder. This Agreement has been duly executed and
delivered and is the valid and binding obligation of each of BSI and Sassoon,
enforceable in accordance with its terms.
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b. Each of BSI and Sassoon have all power and authority necessary to
enable them to carry out the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by it have been authorized by all necessary corporate
action on the part of BSI, including shareholder approval, if required. Neither
the execution and delivery of this Agreement by BSI or Sassoon, nor the
consummation of the transactions contemplated by this Agreement will violate,
result in a breach of, or constitute a default under, any agreement or
instrument to which either BSI or Sassoon is a party or by which either BSI or
Sassoon is bound, or any order, rule or regulation of any court or governmental
agency having jurisdiction over either BSI or Sassoon.
c. No governmental filings, authorizations, approvals or consents are
required to permit either BSI or Sassoon to fulfill all each of their
obligations under this Agreement.
d. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) violate any
provision of the Articles of Incorporation or By-Laws of BSI; (ii) violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of, otherwise give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time or both) a default
under any contract or other agreement to which either BSI or Sassoon is a party;
(iii) violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon either
BSI or Sassoon, or upon the properties or business of either BSI or Sassoon; or
(iv) violate any statute, law or regulation of any jurisdiction applicable to
either BSI or Sassoon.
e. BSI is the exclusive owner of the BSI License, that such license is
in full force and effect, enforceable against Sassoon in accordance with its
terms; the BSI License, in whole or in part, does not infringe upon or violate
the rights of any person or entity, including but not limited to, any
copyrights, trademark rights, trade secrets or any other proprietary rights; BSI
has the right to assign, and Sassoon consents to the assignment of, BSI's rights
(but not its obligations) under the BSI License as set forth elsewhere herein;
BSI has not executed any agreement in conflict herewith, and has not granted to
any other person, firm or corporation any right, license or privilege under or
in any manner relating to, directly or indirectly, the BSI License and the BSI
License is free and clear from all claims, liens, licenses, and encumbrances
whatsoever.
f. Sassoon has the full right and authority, subject to the terms of
the Pet Products license and the Slimming Products license, to grant the ICM
Sassoon License and to perform her obligations thereunder. Upon the expiration
of the Pet Products license and the Slimming Products license, Sassoon has the
full right and authority to elect not to renew either such license, and to
expand the scope of the ICM Sassoon License to include such products. The ICM
Sassoon License, in whole or in part, does not infringe upon or violate the
rights of any person or entity, including but not limited to, any copyrights,
trademark rights, trade secrets or any other proprietary rights; and Sassoon has
not executed any agreement in conflict herewith, and has not granted to any
other person, firm or corporation any right, license or privilege under or in
any manner relating to, directly or indirectly, the ICM Sassoon License, other
than the BSI License which is being assigned hereunder.
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g. BSI is the exclusive owner of all rights to be granted to ICM under
the ICM Manufacturing License; the ICM Manufacturing License, in whole or in
part, does not infringe upon or violate the rights of any person or entity
including, but not limited to, any copyrights, trademark rights, trade secrets
or any other proprietary rights; BSI has the right to grant the ICM
Manufacturing License; BSI has not executed any agreement in conflict herewith,
and has not granted to any other person, firm or corporation any right, license
or privilege under or in any manner relating to, directly or indirectly, the ICM
Manufacturing License and such license is free and clear from all claims, liens,
licenses, and encumbrances whatsoever.
h. Except as set forth on Schedule 10(h) hereof, (i) there is no
outstanding order, judgment, injunction, award or decree of any court,
governmental or regulatory body or arbitration tribunal against or involving the
BSI License, or BSI or Sassoon in respect of, or in connection with, the BSI
License or the ICM Licenses; (ii) there is no action, suit, claim or legal,
administrative or arbitration proceeding or, to the best knowledge of either BSI
or Sassoon after due inquiry, any investigation (whether or not the defense
thereof or liabilities in respect thereof are covered by insurance) pending or,
to the best knowledge of either BSI or Sassoon, after due inquiry, threatened
against or involving BSI, Sassoon, the BSI License, the ICM Licenses or the
rights granted to ICM hereby; (iii) none of the actions, suits, claims,
proceedings or investigations set forth on Schedule 10(h), individually or
together with any other, will have a material adverse effect on BSI, Sassoon,
the BSI License or the ICM Licences, or the contemplated operations or condition
(financial or otherwise) of ICM taken as a whole; and (iv) except as set forth
on Schedule 10(h), to the best knowledge of BSI and Sassoon, after due inquiry,
there is no fact, event or circumstances that is likely to give rise to any
suit, action, claim, investigation or proceeding that would be required to be
set forth on Schedule 10(h) if currently pending or threatened. In the event any
information should come to the attention of either BSI or Sassoon during the
Term of this Agreement which would be required to be set forth on Schedule 10(h)
hereof if current pending or threatened, or if there is a change in the status,
from time to time, of any of the information as may be set forth on Schedule
10(h), BSI and/or Sassoon shall notify ICM in writing within ten (10) business
days of the date it first becomes aware of such event, providing ICM with
sufficient detail regarding the event so that ICM may determine, in its sole
discretion, the severity thereof. Further, BSI hereby represents and warrants
that it shall continue to provide the Company on an immediate basis with all
information concerning BSI and its principals in connection with and relating to
BSI, its business and any and all services to be performed hereunder. In
addition, upon the request of ICM, BSI and/or Sassoon shall make their attorneys
available to ICM and its counsel, at the sole cost and expense of either BSI or
Sassoon, as the case may be, and instruct such attorneys to provide ICM with
such information as ICM's counsel deems reasonably necessary in connection with
any such matters as may be set forth, from time to time, on Schedule 10(h)
hereof.
i. Schedule 10(i) sets forth any patent, trademark, service mark and
any application for any of the foregoing owned by BSI or Sassoon or used in
connection with the BSI License or the BSI Skin Care Products or the ICM
Licenses and which is material to the licenses granted to ICM hereunder (the
"Intellectual Property"). Except as set forth on Schedule 10(i), to the best
knowledge of BSI and Sassoon, after due inquiry, there has been no notice given
to either BSI or Sassoon of any adverse claim of any other person relating to
any of the Intellectual Property set forth on Schedule 10(i) inclusive of any
patent, trademark, service mark or trade name.
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j. Except as specifically set forth herein, ICM will not acquire or be
liable for direct or indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, known or unknown, fixed or unfixed,
liquidated or unliquidated, secured or unsecured, accrued or absolute,
contingent or otherwise including, without limitation, any liability on account
of taxes, any other governmental charge or lawsuit brought, whether or not of a
kind required by generally accepted accounting principles to be set forth on a
financial statement (all of the foregoing being collectively referred to herein
as "Liabilities"), arising out of or in connection with the BSI License or the
ICM Licenses except as specifically set forth herein; and (ii) to the best
knowledge of BSI and Sassoon, after due inquiry, there is no circumstance,
condition, event or arrangement which may hereafter give rise to Liabilities not
in the ordinary course of business subsequent to the date of this Agreement.
k. No representation or warranty given by either BSI or Sassoon in this
Agreement or in any document to be delivered by the same pursuant hereto, and no
statement, list, certificate or instrument furnished or to be furnished to ICM
pursuant hereto or in connection with the negotiation, execution or performance
of this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state any fact necessary to make any statement
herein or therein not materially misleading; and to the best knowledge of BSI
and Sassoon, there is no fact, development or threatened development which BSI
and/or Sassoon has not disclosed to ICM in writing and which materially
adversely affects or, so far as that BSI or Sassoon can now reasonably foresee,
may materially adversely affect the rights granted to ICM hereunder.
l. BSI acknowledges its understanding that (i) the Shares are a
speculative investment which involve a high degree of risk of loss; (ii) there
is no public market for the Shares and no assurances any public market will ever
develop; and (ii) that there are substantial restrictions on the transferability
of the Shares.
11. Representations and Warranties of ICM. ICM represents and warrants
to each of BSI and Sassoon as follows:
a. ICM is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida. ICM has the full legal right
and power and all authority and approval required to enter into, execute and
deliver this Agreement and to perform fully its obligations hereunder. This
Agreement has been duly executed and delivered and is the valid and binding
obligation of ICM enforceable in accordance with its terms.
b. ICM has all power and authority necessary to enable it to carry out
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated by it have
been authorized by all necessary corporate action on the part of ICM, including
shareholder approval, if required. Neither the execution and delivery of this
Agreement by ICM nor the consummation of the transactions contemplated by this
Agreement will violate, result in a breach of, or constitute a default under,
any agreement or instrument to which ICM is a party or by which ICM is bound, or
any order, rule or regulation of any court or governmental agency having
jurisdiction over ICM.
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c. No governmental filings, authorizations, approvals or consents are
required to permit ICM to fulfill all its obligations under this Agreement.
d. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) violate any
provision of the Articles of Incorporation or By-Laws of ICM; (ii) violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of, otherwise give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time or both) a default
under any contract or other agreement to which ICM is a party; (iii) violate any
order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon ICM, or upon the
properties or business of ICM; or (iv) violate any statute, law or regulation of
any jurisdiction applicable to ICM.
13. Trademark and Copyright Notices. Sassoon covenants that she will,
subject to ICM's prior written approval, provide a legally sufficient trademark
and/or copyright notice, if applicable, on the ICM Sassoon Products and/or the
packaging, wrapping, advertising and promotional material bearing any
reproductions covered under the ICM Licenses, or such other format as ICM shall
from time to time reasonably direct.
14. Goodwill and Conduct by Sassoon.
a. The Parties hereto acknowledges that the rights granted under the
BSI License and the ICM Licenses are unique and original and that upon execution
and delivery of this Agreement by the Parties, ICM is the owner of such rights.
Neither BSI nor Sassoon shall, during the Term, or anytime thereafter, dispute
or contest, directly or indirectly, ICM's ownership of the BSI License or the
ICM Licenses, ICM's exclusive right to use such licenses, the validity of the
registrations pertaining thereto, nor shall either BSI or Sassoon assist or aid
others in doing so.
b. Sassoon acknowledges that the value to ICM of the rights granted
under the BSI License and the ICM Licenses are dependent, in part, upon the
public perception of Sassoon and that her image and the trademarks and other
intellectual property rights relating to these are integral to ICM's marketing
efforts. Sassoon will use her best efforts to conduct herself at all times, and
in all situations, in a manner which shall reasonably ensure that neither her
public image nor reputation are tarnished.
15. Promotion and Advertising/Style Guidelines. All advertisements and
promotional materials which ICM intends to use to promote the ICM Sassoon
Products shall be of high quality and shall be submitted to Sassoon for her
approval prior to publication by ICM, which approval shall not be unreasonably
withheld. Sassoon shall have five (5) business days from the date of receipt of
any such materials in which to approve or reject such advertisements and
promotional materials. Once such approval is granted, it shall be deemed granted
for all continuing use of such advertising and promotional materials for
substantially the same future use by ICM, unless such approval is specifically
withdrawn by Sassoon in writing. ICM shall use its best efforts to follow the
style guidelines specified by Sassoon in advertising, labeling and promotion.
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16. Non-Disclosure of Confidential Information.
a. Each of BSI and Sassoon acknowledge that during the Term of this
Agreement, they will each have access to confidential information and trade
secrets including, but not limited to, financial information relating to ICM,
promotions, hiring plans, market and advertising plans, concepts, strategies,
new products, ICM's business decisions, technical information, plans regarding
ICM's structure, manufacturing, marketing, distribution, financing, personnel,
acquisitions, information relating to customers of ICM, pricing, technical
information or methods of doing business and other "know how" or business
information which is not in the public domain, which said information BSI and
Sassoon acknowledge to be a valuable trade asset of ICM, except for common
general practices in the industry or knowledge in the public domain. Neither BSI
nor Sassoon shall at any time during the Term of this Agreement, or at any time
after termination of this Agreement for any reason, directly or indirectly, use
for itself or others, or divulge to others any said trade secrets or
confidential information or data of ICM obtained as a result of this Agreement.
Each of BSI and Sassoon acknowledge and agree that ICM's remedy at law for a
breach or threatened breach of any of the provisions of this Section 16 would be
inadequate and the breach shall be per se deemed as causing irreparable harm to
ICM. In recognition of this fact, in the event of a breach or threatened breach
by either BSI or Sassoon of any of the provisions of this Section 16, the
breaching party agrees that, in addition to any remedy at law available to ICM,
including, but not limited to monetary damages, ICM, without posting any bond,
shall be entitled to obtain, and the breaching party agrees not to oppose ICM's
request for equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available to ICM
b. Upon termination for any reason or the natural expiration of the
Term, BSI and Sassoon shall turn over immediately to ICM any property belonging
to the ICM, including but not limited to, products, samples, computers, computer
disks and records, all business correspondence, letters, papers, reports, files,
customers' lists, financial data or any other writings; records or property in
the possession or control of BSI or Sassoon which relates to the business of the
ICM, all of which writings and records are and will continue to be the sole and
exclusive property of ICM.
17. Term and Termination.
a. Unless terminated pursuant to Sections 17(b) and 17(c) of this
Agreement , the term of the ICM License granted hereby shall commence as of the
Effective Date and shall continue for ninety-nine (99) years thereafter (the
"Term"). Notwithstanding this Section 17(a), this Agreement shall be
automatically renewed at the sole option of ICM for successive ninety-nine (99)
year periods and all provisions hereof shall remain in full force and effect.
For the purpose of this Agreement, the Term shall include all extensions and
renewals.
b. Without prejudice and in addition to any other rights, ICM shall
have the right to terminate this Agreement upon prior written notice to BSI and
Sassoon, at any time upon the occurrence of the following:
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(1) If at any time this Agreement is in effect, Sassoon
conducts herself in any manner offensive to reasonable standards of decency or
morality or resulting in public scandal including, without limitation, an arrest
or conviction of a felony;
(2) The death of Sassoon;
(3) The "disability" of Sassoon, which shall mean that Sassoon
shall be unable to perform Sassoon's duties and obligations, at any time, as
required pursuant to this Agreement;
(4) If Sassoon shall not make an Appearance; provided that
Sassoon had previously agreed to make such Appearance and Sassoon's inability to
make such Appearance is as a result of an event described in Section 17 or for
medical reasons;
(5) Any assignment of this Agreement in contravention of
Section 26;
(6) BSI or Sassoon's breach of any material provision,
representation, warranty or covenant of this Agreement, each of which is
considered to be the essence of this Agreement.
c. In addition to any other rights, BSI shall have the right to
terminate this Agreement after thirty (30) days written notice to ICM if ICM
fails to make any payments due pursuant to Section 6, unless such breach is
cured within such thirty (30) day period.
d. The licenses and rights granted under this Agreement shall terminate
thirty (30) days after mailing of such written notice unless such breach is
cured within such time period. Immediately upon the expiration or termination of
the Agreement, the rights and obligations described in this Agreement, for
whatever reason, ICM shall have no further obligations to pay any Royalties to
BSI (other than those that have occurred through the date of termination) and
subject to Section 18, ICM shall have no further rights to use the ICM License.
e. Notwithstanding anything contained herein to the contrary, ICM may
terminate the services to be provided pursuant to paragraph 20 of this Agreement
for cause, as defined herein, prior to the Termination Date upon 30 days' prior
written notice to the Consultant. In the event of such earlier termination, upon
its effective date the parties hereto will have no further obligations to each
other except as specifically set forth herein. For purposes hereof, "Cause"
shall mean (A) committing or participating in an injurious act of fraud, gross
neglect, misrepresentation, embezzlement or dishonesty against the Company; (B)
committing or participating in any other injurious act or omission wantonly,
willfully, recklessly or in a manner which was grossly negligent against the
Company, monetarily or otherwise; (C) engaging in a criminal enterprise
involving moral turpitude; (D) an act or acts (1) constituting a felony under
the laws of the United States or any state thereof; or (2) if applicable, loss
of any state or federal license required for the Consultant to perform the
Consultant's duties or responsibilities for the Company; or (E) failure to
provide services as requested by the Company.
f. This Agreement shall not be cancellable by the BSI or Sassoon,
except as expressly provided herein.
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18. Use of Marketing Materials and ICM Products after Termination.
a. Any other provisions of this Agreement notwithstanding, for a period
of six (6) months from the expiration or termination of this Agreement, ICM
shall have the right to use up its supplies of marketing, advertising, and
promotional materials, BSI Skin Care Products and ICM Sassoon Products on which
any of rights granted under the BSI License or the ICM Licenses have been
applied prior to the date of expiration or termination of this Agreement,
provided that such use of the rights shall otherwise be in accordance with the
provisions of this Agreement.
b. In the event of the expiration, cancellation or termination of this
Agreement, ICM shall be entitled to fulfill its existing orders for BSI Skin
Care Products or ICM Sassoon Products and to sell its stock-on-hand of such
products in accordance with the provisions of this Agreement, subject to payment
to BSI of the Royalties in accordance with the provisions of this Agreement. ICM
shall not, without the prior written consent of BSI, which consent shall not be
unreasonably withheld, sell any remaining BSI Skin Care Products or ICM Sassoon
Products which incorporate the licenses granted hereunder pursuant to a
"distress sale," or other than in the ordinary course of business. For purposes
of this Section 18(b), a "distress sale" shall mean one in which either the BSI
Skin Care Products or the ICM Sassoon Products are sold for less than
seventy-five percent (75%) of the ICM's standard wholesale selling price.
19. BSI Right to Purchase Products. BSI shall have the right to
purchase, from time to time, any of the BSI Skin Care Products and ICM Sassoon
Products directly from ICM at a mutually agreed upon price, net of any Royalties
otherwise payable pursuant to this Agreement, subject to availability of such
products; provided, however, that BSI shall have no right to resell such BSI
Skin Care Products or ICM Sassoon Products to any third party, except with the
prior written approval of ICM.
20. Consulting Services. BSI is hereby retained by ICM to provide
consulting services to ICM, as said services relate to the advertising,
merchandising, marketing, promotion, manufacture, sale and distribution of the
products under the ICM License. BSI agrees to provide such consulting services
on an exclusive basis and as reasonably requested by and at the direction of ICM
during the Term of this Agreement, and to cause Beverly Sassoon and Elan Sassoon
to devote substantially all of their time and attention to rendering such
consulting services, subject to performance of their other duties under this
Agreement. Unless otherwise agreed to by ICM, all services hereunder shall be
performed by BSI at its principal place of business or other offices.
21. Indemnification.
a. BSI and Sassoon jointly and severally agree to indemnify, defend and
hold harmless ICM and its directors, officers, employees, shareholders, agents
and affiliates, and each of their successors and assigns, from and against any
losses, liabilities, damages, deficiencies, costs or expenses (including
interest, penalties and reasonable attorneys' fees and disbursements) ("Loss")
based upon, arising out of, or otherwise due to:
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i. Any inaccuracy in or any breach of any material
representation, warranty, covenant or agreement of BSI or Sassoon contained in
this Agreement or in any document or other writing delivered pursuant to this
Agreement;
ii. Facts or circumstances existing on or prior to the date
hereof which give rise to claims by any third parties against the BSI License or
the ICM Licenses; and
iii. Gross negligence or willful misconduct in the performance
of any activities or services performed hereunder.
b. Promptly after receipt by ICM of notice of any demand, claim or
circumstances which, with the lapse or time, would give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a Loss, ICM shall
give notice thereof (the "Claims Notice") to BSI and Sassoon. The Claims Notice
shall described the Asserted Liability in reasonable detail, and shall indicate
the amount (if stated) of the Loss that has been or may be suffered by ICM.
c. BSI and Sassoon may elect to compromise or defend, at their own
expense and by their own counsel, any Asserted Liability. If BSI and Sassoon
elect to compromise or defend such Asserted Liability, they shall, within thirty
(30) days (or sooner, if the nature of the Asserted Liability so requires),
notify ICM of their intent to do so, and ICM shall cooperate, at the expense of
BSI and Sassoon, in the compromise of, or defense against, such Asserted
Liability. ICM may elect to participate, at its own expense, in the defense of
such Asserted Liability. If BSI and Sassoon elect not to compromise or defend
the Asserted Liability, fail to notify ICM of their election as herein provided,
contest their obligations to indemnify under this Agreement, or at any time
fails to pursue in good faith the resolution of any Asserted Liability, in the
sole opinion of ICM, as the case may be, then ICM may, upon thirty (30) days'
notice to BSI and Sassoon, pay, compromise or defend any such Asserted
Liability. ICM shall have the right of offset for such amount so tendered to
pay, compromise or defend such Asserted Liability against the Royalties which
may be due and payable pursuant to Section 6 hereof. If BSI and Sassoon choose
to defend any claim, ICM shall make available to BSI and Sassoon any books,
records or other documents or personnel within its control that are necessary or
appropriate for such defense.
22. Suits for Third-Party Infringements. In the event that ICM learns
of any infringement or threatened infringement of any of the BSI License and/or
the ICM Licenses or any passing off or that any third party alleges or claims
that any of the license rights granted hereunder are liable to cause deception
or confusion to the public, or is liable to dilute or infringe any of ICM's
rights therein, ICM shall forthwith notify BSI and Sassoon or its authorized
representatives giving particulars thereof (the "Infringement Notice") and ICM
shall provide necessary information and assistance to BSI and Sassoon and/or
their authorized representatives. BSI and Sassoon shall defend any and all such
suits or actions and pay all expenses of defending such suits or actions,
including attorney's fees provided (i) notice of claim is made within two (2)
years from the Effective Date, and (ii) that the conduct of ICM has not caused
the action that gave rise to the claim.
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23. Claims Against ICM. If a claim is presented against ICM alleging
that either the BSI License or the ICM Licenses are an infringement of the
rights of third parties, BSI and Sassoon, on behalf of ICM, shall jointly
negotiate, compromise, or settle such claim, or defend the institution of any
action thereunder. All expenses of defense in such action, including compromise
or settlement of the claim or action and attorney's fees, shall be borne by BSI
and/or Sassoon.
24. Force Majeure. If a party is prevented from performing any of its
obligations set forth in this Agreement by reason of an act of God, strike,
labor dispute, injunctions, judgments, adverse claims, fire, flood, delay in
transportation, public disaster or any other cause or reason beyond the control
of BSI and Sassoon or ICM, as the case may be, such condition shall be deemed a
valid excuse for failure on its part to perform or for delay in the performance
of such obligations, and in the event of a delay, the Term of this Agreement
shall be deemed extended for a period co-extensive with the delay caused by such
condition.
25. No Partnership or Joint Venture. This Agreement does not constitute
and shall not be construed as constituting a partnership or joint venture
between BSI and Sassoon or ICM. A party shall have no right to obligate or bind
any other party in any manner whatsoever and nothing herein contained shall give
or is intended to give any rights of any kind to any third party.
26. Remedies. All specific remedies provided for in this Agreement
shall be cumulative and shall not be exclusive of one another or any other
remedies available in law or equity. The failure of a party to insist upon the
strict performance of any of the covenants or terms hereof to be performed by
any other party shall not be construed as a waiver of such covenants or terms.
If any portion of this Agreement shall be ruled as invalid or unenforceable, the
remainder of the Agreement shall survive and be enforced as if such invalid
portion was not originally a part hereof.
27. Assignment. This Agreement is binding upon and shall inure to the
benefit of the parties and their respective representative and permitted
successors. This Agreement may not be assigned by BSI and/or Sassoon, but may be
assigned by ICM with the consent of Sassoon, which consent shall not be
unreasonably withheld.
28. Waiver and Modification. No waiver or modification of any of the
terms of this Agreement shall be valid unless in writing and signed by the
parties. No waiver by one party of a breach hereof or a default hereunder shall
be deemed a waiver by any other party of a subsequent breach or default of like
or similar nature. No delay by one party in exercising its rights hereunder
shall be deemed a waiver of such rights.
29. Notices. Whenever notice is required to be given under this
Agreement, it shall be deemed to be good and sufficient notice if in writing,
signed by an officer or an authorized agent of the party serving such notice and
sent by registered or certified mail, postage prepaid, return receipt requested,
to any other party at the address stated above, unless notification of a change
of address has been given in writing pursuant to this Section 29. Notice shall
be deemed given five (5) business days after mailing.
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30. Venue and Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, without and application of the
principles of conflicts of laws. If it becomes necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
and such legal action results in a final judgment in favor of such party
("Prevailing Party"), then the party or parties against whom said final judgment
is obtained shall reimburse the Prevailing Party for all direct, indirect or
incidental expenses incurred, including, but not limited to, all attorney's's
fees, court costs and other expenses incurred throughout all negotiations,
trials or appeals undertaken in order to enforce the Prevailing Party's rights
hereunder. Any suit, action or proceeding with respect to this Agreement shall
be brought in the state or federal courts located in Broward County in the State
of Florida. The parties hereto hereby accept the exclusive jurisdiction and
venue of those courts for the purpose of any such suit, action or proceeding.
The parties hereto hereby irrevocably waive, to the fullest extent permitted by
law, any objection that any of them may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Agreement or any judgment entered by any court in respect thereof brought in
Broward County, Florida, and hereby further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County, Florida, has been brought
in an inconvenient forum.
31. Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes and
replaces any prior agreements, if any, between the parties. There are no
representations, warranties, promises, covenants or understandings other than
those contained herein.
32. Headings. Any paragraph or section heading used in this Agreement
are for reference purposes only, are not a substantive part of this Agreement
and are not to be considered in its interpretation or construction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BEVERLY SASSOON INTERNATIONAL, LLC
By: /s/ Elan Sassoon
--------------------
Elan Sassoon, Chief Executive Officer
BEVERLY SASSOON
/s/ Beverly Sassoon
-------------------
INTERNATIONAL COSMETICS MARKETING, CO.
By: /s/ Stephanie McAnly
------------------------
Stephanie McAnly, President
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Schedule 6(b)
Shimokochi & Reeves 8,500
John Freund, Atty. 14,000
Nextel Phone 800
Bell South - reconnect office 2,000
Mary Molano 1,000
Doria Wood 5,000
Hotels & airfare 3,000
Susan O'Neil (expenses) 1,300
Sonny Spoden 10,000
Beverly - apartment rental 2,000
Jim Behan - severance 2,000
Susan O'Neil - severance
<PAGE>
Schedule 10(h)
1. In the matter of International Cosmetics Company, P.D.M., Inc., Beverly
Sassoon, Richard Attas, Philip Leitner and all persons in control of, employed
by or otherwise affiliated with those persons or entities, Cease and Desist
Order issued by the Arkansas Securities Department dated December 12, 1998
2. United States Securities and Exchange Commission v. Gateway Technologies,
Inc.; the Cheyenne Holding Corp., Randolph S. Ross and Timothy J. Kavanagh,
Civil Action No. 99-8378
<PAGE>
Schedule 10(i)
1. Trademark: Beverly Sassoon filed April 9, 1999
2. Trademark: Common Sense Nutrition filed June 10, 1999
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 19th day of August, 1999 (the "Effective Date"), between International
Cosmetics Marketing, Inc., a Florida corporation, whose principal place of
business is 501 Brickell Key Drive, Suite 505, Miami, Florida 33131 and any of
its successors or affiliated companies (collectively, the "Company") and
Stephanie McAnly, an individual whose address is 714 N. Manatee Avenue, Apt. 3,
Arcadia, Florida 34266 (the "Employee").
RECITALS
WHEREAS, the Company is a Florida corporation and is principally
engaged in the business of marketing, distributing and selling consumer products
(the "Business").
WHEREAS, the Company desires to employ the Employee and the Employee
desires to enter into the employ of the Company.
WHEREAS, the Company has established a valuable reputation and goodwill
in its business, with expertise in all aspects of the Business.
WHEREAS, the Employee, by virtue of the Employee's employment with the
Company, will become familiar with and possessed with the manner, methods, trade
secrets and other confidential information pertaining to the Company's Business,
including the Company's client base and product sources and pricing.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Employee do hereby agree as follows:
a. Recitals. The above recitals are true, correct, and are herein
incorporated by reference.
b. Employment. The Company hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and conditions hereinafter
set forth.
c. Authority and Power During Employment Period.
i. Duties and Responsibilities. During the term of this
Agreement, the Employee shall serve as President of the Company and shall have
such responsibilities and duties as are customarily undertaken by individuals in
similar positions as are requested by the Company's Board of Directors.
b. Time Devoted. Throughout the Term of the Agreement, the
Employee shall devote substantially all of the Employee's business time and
attention to the business
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and affairs of the Company consistent with the Employee's position with the
Company, except for reasonable vacations and except for illness or incapacity.
4. Term. The Term of employment hereunder will commence on the
Effective Date as set forth above and end three (3) years from the Effective
Date, unless this Agreement shall have been earlier terminated pursuant to
Section 6 of this Agreement.
5. Compensation and Benefits.
a. Salary. The Employee shall be paid a base salary, payable
in accordance with the Company's policies from time to time for salaried
employees, at the rate of One Hundred Two Thousand Dollars ($102,000) per annum:
provided, however, in the event that the Company has $15 Million in sales during
the first year of this Agreement, then the base salary for the second year shall
be increased by $24,000, and in the event that the Company has $50 Million in
sales during the second year of this Agreement, then the base salary for the
third year shall be increased by an additional $24,000.
b. Options. The Employee is granted 100,000 options (the
"Options") to purchase shares of the Company's Common Stock at an exercise price
of $2.50 per share. Such Options are granted under the Company's 1997 Stock
Option Plan and pursuant to the form of Option attached hereto as Exhibit A and
incorporated herein by such reference. The Options shall be exercisable for a
five (5) year period from the date of vesting and shall vest, subject to
continued employment of the Employee, (A) 33,333 Options on the date of this
Agreement, (B) 33,333 Options one year following the date of this Agreement, and
(C) 33,334 Options two years following the date of this Agreement.
c. Additional Options.
i. The Employee shall be granted up to 100,000
Options to purchase shares of the Company's Common Stock at the Fair Market
Value (as hereinafter defined) of the Company's Common Stock on the trading day
immediately preceding the date of grant. Such Options will be granted under the
Company's 1997 Stock Option Plan and pursuant to the form of Option attached
hereto as Exhibit A and incorporated herein by such reference. The Options shall
be granted and immediately exercisable for a five (5) year period from the date
of grant, subject to continued employment of the Employee as follows: (a) 50,000
Option two years following the date of this Agreement; and (b) 50,000 Options
three years following the date of this Agreement.
ii. For the purposes of this Agreement, "Fair Market
Value" shall be equal to the closing bid price of the Company's Common Stock as
reported on the OTC Bulletin Board or the primary exchange on which the
Company's Common Stock shall be quoted.
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d. Signing Bonus. Upon the signing of this Agreement, the
Employee shall be paid a signing bonus of Ten Thousand Dollars ($10,000).
e. Employee Benefits. The Employee shall be entitled to
participate in all benefit programs of the Company currently existing or
hereafter made available to salaried employees including, but not limited to,
stock option plans, pension and other retirement plans, group life insurance,
hospitalization, surgical and major medical coverage, sick leave, salary
continuation, vacation and holidays, long-term disability, and other fringe
benefits.
f. Vacation. During each fiscal year of the Company, the
Employee shall be entitled to such amount of vacation as determined by the Board
of Directors of the Company consistent with the Employee's position and length
of service to the Company.
6. Consequences of Termination of Employment.
a. Disability. In the event of the Employee's disability, the
Employee shall be entitled to compensation in accordance with the Company's
disability compensation practice for its salaried employees. "Disability," for
the purposes of this Agreement, shall be deemed to have occurred in the event
(A) the Employee is unable by reason of sickness or accident, to perform his
duties under this Agreement for an aggregate of 90 days in any 12-month period
or 45 consecutive days, or (B) the Employee has a guardian of the person or
estate appointed by a court of competent jurisdiction. Termination due to
disability shall be deemed to have occurred upon the first day of the month
following the determination of disability as defined in the preceding sentence.
b. Termination by the Company for Cause.
i. Nothing herein shall prevent the Company from
terminating the Employee for "Cause," as hereinafter defined. The Employee shall
continue to receive salary only for the period ending with the date of such
termination as provided in this Section 6(b). Any rights and benefits the
Employee may have in respect of any other compensation shall be determined in
accordance with the terms of such other compensation arrangements or such plans
or programs.
ii. "Cause" shall mean (A) committing or
participating in an injurious act of fraud, gross neglect, misrepresentation,
embezzlement or dishonesty against the Company; (B) committing or participating
in any other injurious act or omission wantonly, willfully, recklessly or in a
manner which was grossly negligent against the Company, monetarily or otherwise;
(C) engaging in a criminal enterprise involving moral turpitude; (D) an act or
acts (1) constituting a felony under the laws of the United States or any state
thereof or (2) if applicable, loss of any state or federal license required for
the Employee to perform the Employee's material duties or responsibilities for
the Company;
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or (E) any assignment of this Agreement by the Employee in violation of Section
13 of this Agreement.
iii. Notwithstanding anything else contained in this
Agreement, this Agreement will not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Employee a notice of
termination stating that the Employee committed one of the types of conduct
described in (ii) above. Notwithstanding, anything contained herein to the
contrary, this Agreement may be terminated (i) at any time upon the mutual
written consent of the Company and the Employee; or (ii) by the Company giving
30 days' prior written notice to Employee. During such 30 day period, the
Employee shall continue to perform the Employee's duties pursuant to this
Agreement, and the Company shall continue to compensate the Employee in
accordance with this Agreement.
d. Death. In the event of the death of the Employee during the
Term of the Agreement, compensation shall be paid to the Employee's designated
beneficiary, or, in the absence of such designation, to the estate or other
legal representative of the Employee for a period of thirty (30) days from and
after the date of death. Other death benefits will be determined in accordance
with the terms of the Company's benefit programs and plans.
7. Covenant Not to Compete and Non-Disclosure of Information.
a Covenant Not to Compete. The Employee acknowledges and
recognizes the highly competitive nature of the Company's Business and the
goodwill, continued patronage, and specifically the names and addresses of the
Company's Clients and the Company's Sources (as hereinafter defined) constitute
a substantial asset of the Company having been acquired through considerable
time, money and effort. Accordingly, in consideration of the execution of this
Agreement, the Employee agrees to the following:
i. That during the Restricted Period (as hereinafter
defined) and within the Restricted Area (as hereinafter defined), the Employee
will not, individually or in conjunction with others, directly or indirectly,
engage in any Business Activities (as hereinafter defined), whether as an
officer, director, proprietor, employer, partner, independent contractor,
investor (other than as a holder solely as an investment of less than one
percent (1%) of the outstanding capital stock of a publicly traded corporation),
consultant, advisor, agent or otherwise.
ii. That during the Restricted Period and within the
Restricted Area, the Employee will not, directly or indirectly, compete with the
Company by soliciting, inducing or influencing any of the Company's Clients
which have a business relationship with the Company at the time during the
Restricted Period to discontinue or reduce the extent of such relationship with
the Company.
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iii. That during the Restricted Period and within the
Restricted Area, the Employee will not (A) directly or indirectly recruit,
solicit or otherwise influence any employee or agent of the Company to
discontinue such employment or agency relationship with the Company, or (B)
employ or seek to employ, or cause or permit any business which competes
directly or indirectly with the Business Activities of the Company (the
"Competitive Business") to employ or seek to employ for any Competitive Business
employs or seeks to employ such person) employed by the Company.
iv. That during the Restricted Period the Employee
will not interfere with, or disrupt or attempt to disrupt any past, present or
prospective relationship, contractual or otherwise, between the Company and any
supplier, customer, employee or agent of the Company.
b. Non-Disclosure of Information. The Employee acknowledges
that the Company's trade secrets, private or secret processes, methods and
ideas, as they exist from time to time, customer lists and information
concerning the Company's products, Company Sources, services, training methods,
development, technical information, marketing activities and procedures, credit
and financial data concerning the Company and/or the Company's Clients and the
Company's Sources (the "Proprietary Information") are valuable, special and
unique assets of the Company, access to and knowledge of which are essential to
the performance of the Employee hereunder. In light of the highly competitive
nature of the industry in which the Company's Business is conducted, the
Employee agrees that all Proprietary Information, heretofore or in the future
obtained by the Employee as a result of the Employee's association with the
Company shall be considered confidential.
In recognition of this fact, the Employee agrees that the Employee,
during the Restricted Period, will not use or disclose any of such Proprietary
Information for the Employee's own purposes or for the benefit of any person or
other entity or organization (except the Company) under any circumstances unless
such Proprietary Information has been publicly disclosed generally or, unless
upon written advice of legal counsel reasonably satisfactory to the Company, the
Employee is legally required to disclose such Proprietary Information. Documents
(as hereinafter defined) prepared by the Employee or that come into the
Employee's possession during the Employee's association with the Company are and
remain the property of the Company, and when this Agreement terminates, such
Documents shall be returned to the Company at the Company's principal place of
business, as provided in the Notices provision (Section 9) of this Agreement.
c. Documents. "Documents" shall mean all original written,
recorded, or graphic matters whatsoever, and any and all copies thereof
including, but not limited to: papers; email; books; records; tangible things;
correspondence; communications; telex messages; memoranda; work-papers; reports;
affidavits; statements; summaries; analyses; evaluations; client records and
information; agreements; agendas; advertisements; instructions; charges;
manuals; brochures; publications; directories; industry lists;
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schedules; price lists; client lists; statistical records; training manuals;
computer printouts; books of account, records and invoices reflecting business
operations; all things similar to any of the foregoing however denominated. In
all cases where originals are not available, the term "Documents" shall also
mean identical copies of original documents or non-identical copies thereof.
d. Company's Clients. The "Company's Clients" shall be deemed
to be any persons, partnerships, corporations, professional associations or
other organizations for whom the Company has performed Business Activities.
e. Company's Sources. The "Company's Sources" shall be deemed
to be any person, partnership, corporation, professional association or other
organization from whom the Company has, before and during the term of this
Agreement, directly or indirectly purchased products from time to time.
f. Restrictive Period. The "Restrictive Period" shall be
deemed to be eighteen (18) months following termination or expiration of this
Agreement.
g. Restricted Area. The Restricted Area shall be deemed to
mean within Broward County, Dade County, Monroe County and Palm Beach County,
Florida and within any other county of any state in which the Company is
providing service at the time of termination.
h. Business Activities. "Business Activities" shall be deemed
to include the Business, any business activities concerning marketing,
distributing and selling skin care, nutritional and other consumer products
provided by the Company and any additional activities which the Company or any
of its affiliates may engage in during the term of this Agreement.
h. Covenants as Essential Elements of this Agreement. It is
understood by and between the parties hereto that the foregoing covenants
contained in Sections 7a and 7b are essential elements of this Agreement, and
that but for the agreement by the Employee to comply with such covenants, the
Company would not have agreed to enter into this Agreement. Such covenants by
the Employee shall be construed to be agreements independent of any other
provisions of this Agreement. The existence of any other claim or cause of
action, whether predicated on any other provision in this Agreement, or
otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of such covenants against the Employee.
i. Survival After Termination of Agreement. Notwithstanding
anything to the contrary contained in this Agreement, the covenants in Sections
7a and 7b shall survive the termination of this Agreement and the Employee's
employment with the Company.
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j. Remedies.
i. The Employee acknowledges and agrees that the
Company's remedy at law for a breach or threatened breach of any of the
provisions of Section 7a or 7b herein would be inadequate and the breach shall
be per se deemed as causing irreparable harm to the Company. In recognition of
this fact, in the event of a breach or threatened breach by the Employee of any
of the provisions of Section 7a or 7b, the Employee agrees that, in addition to
any remedy at law available to the Company, including, but not limited to
monetary damages, all rights of the Employee to payment or otherwise under this
Agreement and all amounts then or thereafter due to the Employee from the
Company under this Agreement may be terminated and the Company, without posting
any bond, shall be entitled to obtain, and the Employee agrees not to oppose the
Company's request for equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available to the Company.
ii. The Employee acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Proprietary Information would not be an adequate remedy
upon breach or threatened breach of Section 7a or 7b and consequently agrees,
upon proof of any such breach, to the granting of injunctive relief prohibiting
any form of competition with the Company. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach.
8. Withholding. Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the Employee or the
Employee's estate or beneficiaries shall be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as the Company may
reasonably determine, the Company may accept other arrangements pursuant to
which it is satisfied that such tax and other payroll obligations will be
satisfied in a manner complying with applicable law or regulation.
9. Notices. Any notice required or permitted to be given under
the terms of this Agreement shall be sufficient if in writing and if sent
postage prepaid by registered or certified mail, return receipt requested; by
overnight delivery; by courier; or by confirmed telecopy, in the case of the
Employee to the Employee's last place of business or residence as shown on the
records of the Company, or in the case of the Company to its principal office as
set forth in the first paragraph of this Agreement, or at such other place as it
may designate.
10. Waiver. Unless agreed in writing, the failure of either
party, at any time, to require performance by the other of any provisions
hereunder shall not affect its right thereafter to enforce the same, nor shall a
waiver by either party of any breach of any provision hereof be taken or held to
be a waiver of any other preceding or succeeding breach of any term or provision
of this Agreement. No extension of time for the
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performance of any obligation or act shall be deemed to be an extension of time
for the performance of any other obligation or act hereunder.
11. Completeness and Modification. This Agreement constitutes
the entire understanding between the parties hereto superseding all prior and
contemporaneous agreements or understandings among the parties hereto concerning
the Employment Agreement. This Agreement may be amended, modified, superseded or
canceled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties or, in the case of a waiver, by the party to be charged.
12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute but one agreement.
13. Binding Effect/Assignment. This Agreement shall be binding
upon the parties hereto, their heirs, legal representatives, successors and
assigns. This Agreement shall not be assignable by the Employee but shall be
assignable by the Company in connection with the sale, transfer or other
disposition of its business or to any of the Company's affiliates controlled by
or under common control with the Company.
14. Governing Law. This Agreement shall become valid when
executed and accepted by Company. The parties agree that it shall be deemed made
and entered into in the State of Florida and shall be governed and construed
under and in accordance with the laws of the State of Florida. Anything in this
Agreement to the contrary notwithstanding, the Employee shall conduct the
Employee's business in a lawful manner and faithfully comply with applicable
laws or regulations of the state, city or other political subdivision in which
the Employee is located.
15. Further Assurances. All parties hereto shall execute and
deliver such other instruments and do such other acts as may be necessary to
carry out the intent and purposes of this Agreement.
16. Headings. The headings of the sections are for convenience
only and shall not control or affect the meaning or construction or limit the
scope or intent of any of the provisions of this Agreement.
17. Survival. Any termination of this Agreement shall not,
however, affect the ongoing provisions of this Agreement which shall survive
such termination in accordance with their terms.
18. Severability. The invalidity or unenforceability, in whole
or in part, of any covenant, promise or undertaking, or any section, subsection,
paragraph, sentence,
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clause, phrase or word or of any provision of this Agreement shall not affect
the validity or enforceability of the remaining portions thereof.
19. Enforcement. Should it become necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
the successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
20. Venue. Company and Employee acknowledge and agree that the
U.S. District for the Southern District of Florida, or if such court lacks
jurisdiction, the 17th Judicial Circuit (or its successor) in and for Broward
County, Florida, shall be the venue and exclusive proper forum in which to
adjudicate any case or controversy arising either, directly or indirectly, under
or in connection with this Agreement and the parties further agree that, in the
event of litigation arising out of or in connection with this Agreement in these
courts, they will not contest or challenge the jurisdiction or venue of these
courts.
21. Construction. This Agreement shall be construed within the
fair meaning of each of its terms and not against the party drafting the
document.
22. Independent Legal Counsel. The parties have either (i)
been represented by independent legal counsel in connection with the negotiation
and execution of this Agreement, or (ii) each has had the opportunity to obtain
independent legal counsel, has been advised that it is in their best interests
to do so, and by execution of this Agreement has waived such right.
THE EMPLOYEE ACKNOWLEDGES THAT THE EMPLOYEE HAS READ ALL OF THE
TERMS OF THIS AGREEMENT, UNDERSTANDS THE AGREEMENT, AND AGREES TO
ABIDE BY ITS TERMS AND CONDITIONS.
IN WITNESS WHEREOF, the parties have executed this Agreement as of date
set forth in the first paragraph of this Agreement.
THE COMPANY:
INTERNATIONAL COSMETICS MARKETING, INC.
By: /s/ Sonny Spoden
--------------------
Sonny Spoden, Chief Financial Officer
THE EMPLOYEE
/s/ Stephanie McAnly
--------------------
Stephanie McAnly
9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 19th day of August, 1999 (the "Effective Date"), between International
Cosmetics Marketing, Inc., a Florida corporation, whose principal place of
business is 501 Brickell Key Drive, Suite 505, Miami, Florida 33131 and any of
its successors or affiliated companies (collectively, the "Company") and Sonny
Spoden, an individual whose address is 2909 S. Ocean Blvd., Apt. 1-C, Highland
Beach, Florida 33487 (the "Employee").
RECITALS
WHEREAS, the Company is a Florida corporation and is principally
engaged in the business of marketing, distributing and selling consumer products
(the "Business").
WHEREAS, the Company desires to employ the Employee and the Employee
desires to enter into the employ of the Company.
WHEREAS, the Company has established a valuable reputation and goodwill
in its business, with expertise in all aspects of the Business.
WHEREAS, the Employee, by virtue of the Employee's employment with the
Company, will become familiar with and possessed with the manner, methods, trade
secrets and other confidential information pertaining to the Company's Business,
including the Company's client base and product sources and pricing.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Employee do hereby agree as follows:
a. Recitals. The above recitals are true, correct, and are herein
incorporated by reference.
b. Employment. The Company hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and conditions hereinafter
set forth.
c. Authority and Power During Employment Period.
a. Duties and Responsibilities. During the term of this
Agreement, the Employee shall serve as Chief Financial Officer of the Company
and shall have such responsibilities and duties as are customarily undertaken by
individuals in similar positions as are requested by the Company's Board of
Directors.
b. Time Devoted. Throughout the Term of the Agreement, the
Employee shall devote substantially all of the Employee's business time and
attention to the business
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and affairs of the Company consistent with the Employee's position with the
Company, except for reasonable vacations and except for illness or incapacity.
4. Term. The Term of employment hereunder will commence on the
Effective Date as set forth above and end three (3) years from the Effective
Date, unless this Agreement shall have been earlier terminated pursuant to
Section 6 of this Agreement.
5. Compensation and Benefits.
a. Salary. The Employee shall be paid a base salary, payable
in accordance with the Company's policies from time to time for salaried
employees, at the rate of Ninety Thousand Dollars ($90,000) per annum for the
first year, which salary for the second and third year shall be mutually
determined by the parties no later than 90 days prior to the expiration of the
first and second year, respectively.
b. Options. The Employee is granted 75,000 options (the
"Options") to purchase shares of the Company's Common Stock at an exercise price
of $2.50 per share. Such Options are granted under the Company's 1997 Stock
Option Plan and pursuant to the form of Option attached hereto as Exhibit A and
incorporated herein by such reference. The Options shall be exercisable for a
five (5) year period from the date of vesting and shall vest, subject to
continued employment of the Employee, (A) 25,000 Options on the date of this
Agreement, (B) 25,000 Options one year following the date of this Agreement, and
(C) 25,000 Options two years following the date of this Agreement.
c. Additional Options.
i. The Employee shall be granted up to 60,000 Options
to purchase shares of the Company's Common Stock at the Fair Market Value (as
hereinafter defined) of the Company's Common Stock on the trading day
immediately preceding the date of grant. Such Options will be granted under the
Company's 1997 Stock Option Plan and pursuant to the form of Option attached
hereto as Exhibit A and incorporated herein by such reference. The Options shall
be granted and immediately exercisable for a five (5) year period from the date
of grant, subject to continued employment of the Employee as follows: (a) 30,000
Option two years following the date of this Agreement; and (b) 30,000 Options
three years following the date of this Agreement.
ii. For the purposes of this Agreement, "Fair Market
Value" shall be equal to the closing bid price of the Company's Common Stock as
reported on the OTC Bulletin Board or the primary exchange on which the
Company's Common Stock shall be quoted.
d. Employee Benefits. The Employee shall be entitled to
participate in all benefit programs of the Company currently existing or
hereafter made available to salaried employees including, but not limited to,
stock option plans, pension and other
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retirement plans, group life insurance, hospitalization, surgical and major
medical coverage, sick leave, salary continuation, vacation and holidays,
long-term disability, and other fringe benefits.
e. Vacation. During each fiscal year of the Company, the
Employee shall be entitled to such amount of vacation as determined by the Board
of Directors of the Company consistent with the Employee's position and length
of service to the Company.
6. Consequences of Termination of Employment.
a. Disability. In the event of the Employee's disability, the
Employee shall be entitled to compensation in accordance with the Company's
disability compensation practice for its salaried employees. "Disability," for
the purposes of this Agreement, shall be deemed to have occurred in the event
(A) the Employee is unable by reason of sickness or accident, to perform his
duties under this Agreement for an aggregate of 90 days in any 12-month period
or 45 consecutive days, or (B) the Employee has a guardian of the person or
estate appointed by a court of competent jurisdiction. Termination due to
disability shall be deemed to have occurred upon the first day of the month
following the determination of disability as defined in the preceding sentence.
b. Termination by the Company for Cause.
i. Nothing herein shall prevent the Company from
terminating the Employee for "Cause," as hereinafter defined. The Employee shall
continue to receive salary only for the period ending with the date of such
termination as provided in this Section 6(b). Any rights and benefits the
Employee may have in respect of any other compensation shall be determined in
accordance with the terms of such other compensation arrangements or such plans
or programs.
ii. "Cause" shall mean (A) committing or
participating in an injurious act of fraud, gross neglect, misrepresentation,
embezzlement or dishonesty against the Company; (B) committing or participating
in any other injurious act or omission wantonly, willfully, recklessly or in a
manner which was grossly negligent against the Company, monetarily or otherwise;
(C) engaging in a criminal enterprise involving moral turpitude; (D) an act or
acts (1) constituting a felony under the laws of the United States or any state
thereof or (2) if applicable, loss of any state or federal license required for
the Employee to perform the Employee's material duties or responsibilities for
the Company; or (E) any assignment of this Agreement by the Employee in
violation of Section 13 of this Agreement.
iii. Notwithstanding anything else contained in this
Agreement, this Agreement will not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Employee a notice of
termination stating that the Employee committed one of the types of conduct
described in (ii) above. Notwithstanding,
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<PAGE>
anything contained herein to the contrary, this Agreement may be terminated (i)
at any time upon the mutual written consent of the Company and the Employee; or
(ii) by the Company giving 30 days' prior written notice to Employee. During
such 30 day period, the Employee shall continue to perform the Employee's duties
pursuant to this Agreement, and the Company shall continue to compensate the
Employee in accordance with this Agreement.
d. Death. In the event of the death of the Employee during the
Term of the Agreement, compensation shall be paid to the Employee's designated
beneficiary, or, in the absence of such designation, to the estate or other
legal representative of the Employee for a period of thirty (30) days from and
after the date of death. Other death benefits will be determined in accordance
with the terms of the Company's benefit programs and plans.
7. Covenant Not to Compete and Non-Disclosure of Information.
a Covenant Not to Compete. The Employee acknowledges and
recognizes the highly competitive nature of the Company's Business and the
goodwill, continued patronage, and specifically the names and addresses of the
Company's Clients and the Company's Sources (as hereinafter defined) constitute
a substantial asset of the Company having been acquired through considerable
time, money and effort. Accordingly, in consideration of the execution of this
Agreement, the Employee agrees to the following:
i. That during the Restricted Period (as hereinafter
defined) and within the Restricted Area (as hereinafter defined), the Employee
will not, individually or in conjunction with others, directly or indirectly,
engage in any Business Activities (as hereinafter defined), whether as an
officer, director, proprietor, employer, partner, independent contractor,
investor (other than as a holder solely as an investment of less than one
percent (1%) of the outstanding capital stock of a publicly traded corporation),
consultant, advisor, agent or otherwise.
ii. That during the Restricted Period and within the
Restricted Area, the Employee will not, directly or indirectly, compete with the
Company by soliciting, inducing or influencing any of the Company's Clients
which have a business relationship with the Company at the time during the
Restricted Period to discontinue or reduce the extent of such relationship with
the Company.
iii. That during the Restricted Period and within the
Restricted Area, the Employee will not (A) directly or indirectly recruit,
solicit or otherwise influence any employee or agent of the Company to
discontinue such employment or agency relationship with the Company, or (B)
employ or seek to employ, or cause or permit any business which competes
directly or indirectly with the Business Activities of the Company (the
"Competitive Business") to employ or seek to employ for any Competitive Business
employs or seeks to employ such person) employed by the Company.
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<PAGE>
iv. That during the Restricted Period the Employee
will not interfere with, or disrupt or attempt to disrupt any past, present or
prospective relationship, contractual or otherwise, between the Company and any
supplier, customer, employee or agent of the Company.
b. Non-Disclosure of Information. The Employee acknowledges
that the Company's trade secrets, private or secret processes, methods and
ideas, as they exist from time to time, customer lists and information
concerning the Company's products, Company Sources, services, training methods,
development, technical information, marketing activities and procedures, credit
and financial data concerning the Company and/or the Company's Clients and the
Company's Sources (the "Proprietary Information") are valuable, special and
unique assets of the Company, access to and knowledge of which are essential to
the performance of the Employee hereunder. In light of the highly competitive
nature of the industry in which the Company's Business is conducted, the
Employee agrees that all Proprietary Information, heretofore or in the future
obtained by the Employee as a result of the Employee's association with the
Company shall be considered confidential.
In recognition of this fact, the Employee agrees that the Employee,
during the Restricted Period, will not use or disclose any of such Proprietary
Information for the Employee's own purposes or for the benefit of any person or
other entity or organization (except the Company) under any circumstances unless
such Proprietary Information has been publicly disclosed generally or, unless
upon written advice of legal counsel reasonably satisfactory to the Company, the
Employee is legally required to disclose such Proprietary Information. Documents
(as hereinafter defined) prepared by the Employee or that come into the
Employee's possession during the Employee's association with the Company are and
remain the property of the Company, and when this Agreement terminates, such
Documents shall be returned to the Company at the Company's principal place of
business, as provided in the Notices provision (Section 9) of this Agreement.
c. Documents. "Documents" shall mean all original written,
recorded, or graphic matters whatsoever, and any and all copies thereof
including, but not limited to: papers; email; books; records; tangible things;
correspondence; communications; telex messages; memoranda; work-papers; reports;
affidavits; statements; summaries; analyses; evaluations; client records and
information; agreements; agendas; advertisements; instructions; charges;
manuals; brochures; publications; directories; industry lists; schedules; price
lists; client lists; statistical records; training manuals; computer printouts;
books of account, records and invoices reflecting business operations; all
things similar to any of the foregoing however denominated. In all cases where
originals are not available, the term "Documents" shall also mean identical
copies of original documents or non-identical copies thereof.
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d. Company's Clients. The "Company's Clients" shall be deemed
to be any persons, partnerships, corporations, professional associations or
other organizations for whom the Company has performed Business Activities.
e. Company's Sources. The "Company's Sources" shall be deemed
to be any person, partnership, corporation, professional association or other
organization from whom the Company has, before and during the term of this
Agreement, directly or indirectly purchased products from time to time.
f. Restrictive Period. The "Restrictive Period" shall be
deemed to be eighteen (18) months following termination or expiration of this
Agreement.
g. Restricted Area. The Restricted Area shall be deemed to
mean within Broward County, Dade County, Monroe County and Palm Beach County,
Florida and within any other county of any state in which the Company is
providing service at the time of termination.
h. Business Activities. "Business Activities" shall be deemed
to include the Business, any business activities concerning marketing,
distributing and selling skin care, nutritional and other consumer products
provided by the Company and any additional activities which the Company or any
of its affiliates may engage in during the term of this Agreement.
h. Covenants as Essential Elements of this Agreement. It is
understood by and between the parties hereto that the foregoing covenants
contained in Sections 7a and 7b are essential elements of this Agreement, and
that but for the agreement by the Employee to comply with such covenants, the
Company would not have agreed to enter into this Agreement. Such covenants by
the Employee shall be construed to be agreements independent of any other
provisions of this Agreement. The existence of any other claim or cause of
action, whether predicated on any other provision in this Agreement, or
otherwise, as a result of the relationship between the parties shall not
constitute a defense to the enforcement of such covenants against the Employee.
i. Survival After Termination of Agreement. Notwithstanding
anything to the contrary contained in this Agreement, the covenants in Sections
7a and 7b shall survive the termination of this Agreement and the Employee's
employment with the Company.
j. Remedies.
i. The Employee acknowledges and agrees that the
Company's remedy at law for a breach or threatened breach of any of the
provisions of Section 7a or 7b herein would be inadequate and the breach shall
be per se deemed as causing irreparable harm to the Company. In recognition of
this fact, in the event of a breach or
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threatened breach by the Employee of any of the provisions of Section 7a or 7b,
the Employee agrees that, in addition to any remedy at law available to the
Company, including, but not limited to monetary damages, all rights of the
Employee to payment or otherwise under this Agreement and all amounts then or
thereafter due to the Employee from the Company under this Agreement may be
terminated and the Company, without posting any bond, shall be entitled to
obtain, and the Employee agrees not to oppose the Company's request for
equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which may
then be available to the Company.
ii. The Employee acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Proprietary Information would not be an adequate remedy
upon breach or threatened breach of Section 7a or 7b and consequently agrees,
upon proof of any such breach, to the granting of injunctive relief prohibiting
any form of competition with the Company. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach.
8. Withholding. Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the Employee or the
Employee's estate or beneficiaries shall be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as the Company may
reasonably determine, the Company may accept other arrangements pursuant to
which it is satisfied that such tax and other payroll obligations will be
satisfied in a manner complying with applicable law or regulation.
9. Notices. Any notice required or permitted to be given under
the terms of this Agreement shall be sufficient if in writing and if sent
postage prepaid by registered or certified mail, return receipt requested; by
overnight delivery; by courier; or by confirmed telecopy, in the case of the
Employee to the Employee's last place of business or residence as shown on the
records of the Company, or in the case of the Company to its principal office as
set forth in the first paragraph of this Agreement, or at such other place as it
may designate.
10. Waiver. Unless agreed in writing, the failure of either
party, at any time, to require performance by the other of any provisions
hereunder shall not affect its right thereafter to enforce the same, nor shall a
waiver by either party of any breach of any provision hereof be taken or held to
be a waiver of any other preceding or succeeding breach of any term or provision
of this Agreement. No extension of time for the performance of any obligation or
act shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
11. Completeness and Modification. This Agreement constitutes
the entire understanding between the parties hereto superseding all prior and
contemporaneous agreements or understandings among the parties hereto concerning
the Employment
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Agreement. This Agreement may be amended, modified, superseded or canceled, and
any of the terms, covenants, representations, warranties or conditions hereof
may be waived, only by a written instrument executed by the parties or, in the
case of a waiver, by the party to be charged.
12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute but one agreement.
13. Binding Effect/Assignment. This Agreement shall be binding
upon the parties hereto, their heirs, legal representatives, successors and
assigns. This Agreement shall not be assignable by the Employee but shall be
assignable by the Company in connection with the sale, transfer or other
disposition of its business or to any of the Company's affiliates controlled by
or under common control with the Company.
14. Governing Law. This Agreement shall become valid when
executed and accepted by Company. The parties agree that it shall be deemed made
and entered into in the State of Florida and shall be governed and construed
under and in accordance with the laws of the State of Florida. Anything in this
Agreement to the contrary notwithstanding, the Employee shall conduct the
Employee's business in a lawful manner and faithfully comply with applicable
laws or regulations of the state, city or other political subdivision in which
the Employee is located.
15. Further Assurances. All parties hereto shall execute and
deliver such other instruments and do such other acts as may be necessary to
carry out the intent and purposes of this Agreement.
16. Headings. The headings of the sections are for convenience
only and shall not control or affect the meaning or construction or limit the
scope or intent of any of the provisions of this Agreement.
17. Survival. Any termination of this Agreement shall not,
however, affect the ongoing provisions of this Agreement which shall survive
such termination in accordance with their terms.
18. Severability. The invalidity or unenforceability, in whole
or in part, of any covenant, promise or undertaking, or any section, subsection,
paragraph, sentence, clause, phrase or word or of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
portions thereof.
19. Enforcement. Should it become necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
the successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs.
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20. Venue. Company and Employee acknowledge and agree that the
U.S. District for the Southern District of Florida, or if such court lacks
jurisdiction, the 17th Judicial Circuit (or its successor) in and for Broward
County, Florida, shall be the venue and exclusive proper forum in which to
adjudicate any case or controversy arising either, directly or indirectly, under
or in connection with this Agreement and the parties further agree that, in the
event of litigation arising out of or in connection with this Agreement in these
courts, they will not contest or challenge the jurisdiction or venue of these
courts.
21. Construction. This Agreement shall be construed within the
fair meaning of each of its terms and not against the party drafting the
document.
22. Independent Legal Counsel. The parties have either (i)
been represented by independent legal counsel in connection with the negotiation
and execution of this Agreement, or (ii) each has had the opportunity to obtain
independent legal counsel, has been advised that it is in their best interests
to do so, and by execution of this Agreement has waived such right.
THE EMPLOYEE ACKNOWLEDGES THAT THE EMPLOYEE HAS READ ALL OF THE
TERMS OF THIS AGREEMENT, UNDERSTANDS THE AGREEMENT, AND AGREES TO
ABIDE BY ITS TERMS AND CONDITIONS.
IN WITNESS WHEREOF, the parties have executed this Agreement as of date
set forth in the first paragraph of this Agreement.
THE COMPANY:
INTERNATIONAL COSMETICS MARKETING, INC.
By:/s/ Stephanie McAnly
-----------------------
Stephanie McAnly, President
THE EMPLOYEE
/s/ Sonny Spoden
----------------
Sonny Spoden
9
CINDYCO, INC.
1997 STOCK OPTION PLAN
1. Grant of Options; Generally. In accordance with the provisions
hereinafter set forth in this stock option plan, the name of which is the
CINDYCO, INC. 1997 STOCK OPTION PLAN (the "Plan"), the Board of Directors (the
"Board") or, the Compensation Committee (the "Stock Option Committee") of
CindyCo., Inc., a Florida corporation, (the "Corporation") is hereby authorized
to issue from time to time on the Corporation's behalf to any one or more
Eligible Persons, as hereinafter defined, options to acquire shares of the
Corporation's Common Stock, $.001 par value (the "Stock").
2. Type of Options. The Board or the Stock Option Committee is
authorized to issue Incentive Stock Options ("ISOs") which meet the requirements
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
which options are hereinafter referred to collectively as ISOs, or singularly as
an ISO. The Board or the Stock Option Committee is also, in its discretion,
authorized to issue options which are not ISOs, which options are hereinafter
referred to collectively as Non Statutory Options ("NSOs"), or singularly as an
NSO. The Board or the Stock Option Committee is also authorized to issue "Reload
Options" in accordance with Paragraph 8 herein, which options are hereinafter
referred to collectively as Reload Options, or singularly as a Reload Option.
Except where the context indicates to the contrary, the term "Option" or
"Options" means ISOs, NSOs and Reload Options.
3. Amount of Stock. The aggregate number of shares of Stock which may
be purchased pursuant to the exercise of Options shall be One Million
(1,000,000) shares. Of this amount, the Board or the Stock Option Committee
shall have the power and authority to designate whether any Options so issued
shall be ISOs or NSOs, subject to the restrictions on ISOs contained elsewhere
herein. If an Option ceases to be exercisable, in whole or in part, the shares
of Stock underlying such Option shall continue to be available under this Plan.
Further, if shares of Stock are delivered to the Corporation as payment for
shares of Stock purchased by the exercise of an Option granted under this Plan,
such shares of Stock shall also be available under this Plan. If there is any
change in the number of shares of Stock due to the declaration of stock
dividends, recapitalization resulting in stock split-ups, or combinations or
exchanges of shares of Stock, or otherwise, the number of shares of Stock
available for purchase upon the exercise of Options, the shares of Stock subject
to any Option and the exercise price of any outstanding Option shall be
appropriately adjusted by the Board or the Stock Option Committee. The Board or
the Stock Option Committee shall give notice of any adjustments to each Eligible
Person granted an Option under this Plan, and such adjustments shall be
effective and binding on all Eligible Persons. If because of one or more
recapitalizations, reorganizations or other corporate events, the holders of
outstanding Stock receive something other than shares of Stock then, upon
exercise of an Option, the Eligible Person will receive what the holder would
have owned if the holder had exercised the Option immediately before the first
such corporate event and not disposed of anything the holder received as a
result of the corporate event.
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4. Eligible Persons.
(a) With respect to ISOs, an Eligible Person means any individual who
has been employed by the Corporation or by any subsidiary of the Corporation,
for a continuous period of at least six month.
(b) With respect to NSOs, an Eligible Person means (i) any individual
who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least six months, (ii) any director
of the Corporation or any subsidiary of the Corporation, or (iii) any consultant
of the Corporation or any subsidiary of the Corporation.
5. Grant of Options. The Board or the Stock Option Committee has the
right to issue the Options established by this Plan to Eligible Persons. The
Board or the Stock Option Committee shall follow the procedures prescribed for
it elsewhere in this Plan. A grant of Options shall be set forth in writing
signed on behalf of the Corporation or by a majority of the members of the Stock
Option Committee. The writing shall identify whether the Option being granted is
an ISO or an NSO and shall set forth the terms which govern the Option. The
terms shall be determined by the Board or the Stock Option Committee, and may
include, among other terms, the number of shares of Stock that may be acquired
pursuant to the exercise of the Options, when the Options may be exercised, the
period for which the Option is granted and including the expiration date, the
effect on the Options if the Eligible Person terminates employment and whether
the Eligible Person may deliver shares of Stock or exchange the Option for a
cashless exercise to pay for the shares of Stock to be purchased by the exercise
of the Option. However, no term shall be set forth in the writing which is
inconsistent with any of the terms of this Plan. The terms of an Option granted
to an Eligible Person may differ from the terms of an Option granted to another
Eligible Person, and may differ from the terms of an earlier Option granted to
the same Eligible Person.
6. Option Price. The option price per share shall be determined by the
Board or the Stock Option Committee at the time any Option is granted, and shall
be not less than (i) in the case of an ISO, the fair market value, (ii) in the
case of an ISO granted to a ten percent or greater stockholder, 110 percent of
the fair market value, or (iii) in the case of an NSO, not less than the fair
market value (but in no event less than the par value) of one share of Stock on
the date the Option is granted, as determined by the Board or the Stock Option
Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or
over-the-counter market, the mean between the high and low sales prices of Stock
on such exchange or over-the-counter market on which such shares shall be traded
on that date, or if such exchange or over-the-counter market is closed or if no
shares shall have traded on such date, on the last preceding date on which such
shares shall have traded.
(b) If shares of Stock shall not be traded on an exchange or
over-the-counter market, the value as determined by a recognized appraiser as
selected by the Board or the Stock Option Committee or pursuant to Section 12
herein.
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7. Purchase of Shares. An Option shall be exercised by the tender to
the Corporation of the full purchase price of the Stock with respect to which
the Option is exercised and written notice of the exercise. The purchase price
of the Stock shall be in United States dollars, payable in cash, check,
Promissory Note secured by the Shares issued through exercise of the related
Options, or in property, or Corporation stock or by Option exchange for a
cashless exercise, if so permitted by the Board or the Stock Option Committee in
accordance with the discretion granted in Paragraph 5 hereof, having a value
equal to such purchase price. The Corporation shall not be required to issue or
deliver any certificates for shares of Stock purchased upon the exercise of an
Option prior to (i) if requested by the Corporation, the filing with the
Corporation by the Eligible Person of a representation in writing that it is the
Eligible Person's then present intention to acquire the Stock being purchased
for investment and not for resale, and/or (ii) the completion of any
registration or other qualification of such shares under any government
regulatory body, which the Corporation shall determine to be necessary or
advisable.
8. Grant of Reload Options. In granting an Option under this Plan, the
Board or the Stock Option Committee may include a Reload Option provision
therein, subject to the provisions set forth in Paragraphs 20 herein. A Reload
Option provision provides that if the Eligible Person pays the exercise price of
shares of Stock to be purchased by the exercise of an ISO, NSO or another Reload
Option (the "Original Option") by delivering to the Corporation shares of Stock
already owned by the Eligible Person (the "Tendered Shares"), the Eligible
Person shall receive a Reload Option which shall be a new Option to purchase
shares of Stock equal in number to the tendered shares. The terms of any Reload
Option shall be determined by the Board or the Stock Option Committee consistent
with the provisions of this Plan.
9. Stock Option Committee. The Stock Option Committee may be appointed
from time to time by the Corporation's Board of Directors. The Board may from
time to time remove members from or add members to the Stock Option Committee.
The Stock Option Committee shall be constituted so as to permit the Plan to
comply in all respects with the provisions set forth in Paragraph 20 herein. The
members of the Stock Option Committee may elect one of its members as its
chairman. The Stock Option Committee shall hold its meetings at such times and
places as its chairman shall determine. A majority of the Stock Option
Committee's members present in person shall constitute a quorum for the
transaction of business. All determinations of the Stock Option Committee will
be made by the majority vote of the members constituting the quorum. The members
may participate in a meeting of the Stock Option Committee by conference
telephone or similar communications equipment by means of which all members
participating in the meeting can hear each other. Participation in a meeting in
that manner will constitute presence in person at the meeting. Any decision or
determination reduced to writing and signed by all members of the Stock Option
Committee will be effective as if it had been made by a majority vote of all
members of the Stock Option Committee at a meeting which is duly called and
held.
10. Administration of Plan. In addition to granting Options and to
exercising the authority granted to it elsewhere in this Plan, the Board or the
Stock Option Committee is granted the full right and authority to interpret and
construe the provisions of this Plan, promulgate, amend and rescind rules and
procedures relating to the implementation of the Plan and to make all other
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<PAGE>
determinations necessary or advisable for the administration of the Plan,
consistent, however, with the intent of the Corporation that Options granted or
awarded pursuant to the Plan comply with the provisions of Paragraph 20 and 21
herein. All determinations made by the Board or the Stock Option Committee shall
be final, binding and conclusive on all persons including the Eligible Person,
the Corporation and its stockholders, employees, officers and directors and
consultants. No member of the Board or the Stock Option Committee will be liable
for any act or omission in connection with the administration of this Plan
unless it is attributable to that member's willful misconduct.
11. Provisions Applicable to ISOs. The following provisions shall apply
to all ISOs granted by the Board or the Stock Option Committee and are
incorporated by reference into any writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from the
date of this Plan, which is the date that this Plan was originally adopted by
the Corporation's Board of Directors.
(b) An ISO may not be exercised after the expiration of ten
(10) years from the date the ISO is granted.
(c) The option price may not be less than the fair market
value of the Stock at the time the ISO is granted.
(d) An ISO is not transferrable by the Eligible Person to whom
it is granted except by will, or the laws of descent and distribution, and is
exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the time
of the grant stock possessing more than ten (10%) percent of the total combined
voting power of all classes of stock of the employer corporation or of its
parent or subsidiary corporation (as those terms are defined in the Code), then
the option price shall be at least 110% of the fair market value of the Stock,
and the ISO shall not be exercisable after the expiration of five (5) years from
the date the ISO is granted.
(f) The aggregate fair market value (determined at the time
the ISO is granted) of the Stock with respect to which the ISO is first
exercisable by the Eligible Person during any calendar year (under this Plan and
any other incentive stock option plan of the Corporation) shall not exceed
$100,000.
(g) Even if the shares of Stock which are issued upon exercise
of an ISO are sold within one year following the exercise of such ISO so that
the sale constitutes a disqualifying disposition for ISO treatment under the
Code, no provision of this Plan shall be construed as prohibiting such a sale.
(h) This Plan was adopted by the Corporation on __________, by
virtue of its approval by the Corporation's Board of Directors and the sole
shareholder of the Corporation.
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<PAGE>
12. Determination of Fair Market Value. In granting ISOs under this
Plan, the Board or the Stock Option Committee shall make a good faith
determination as to the fair market value of the Stock at the time of granting
the ISO.
13. Restrictions on Issuance of Stock. The Corporation shall not be
obligated to sell or issue any shares of Stock pursuant to the exercise of an
Option unless the Stock with respect to which the Option is being exercised is
at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted in
accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such exercise
it is his or her then present intention to acquire the shares of Stock for
investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, "distribution" shall be defined to exclude distribution by will
or under the laws of descent and distribution. Prior to issuing any shares of
Stock pursuant to the exercise of an Option, the Corporation shall take such
steps as it deems necessary to satisfy any withholding tax obligations imposed
upon it by any level of government.
14. Exercise in the Event of Death or Termination of Employment.
(a) If an optionee shall die (i) while an employee of the
Corporation or a Subsidiary; or (ii) within three months after termination of
his employment with the Corporation or a Subsidiary because of his disability or
retirement, his Options may be exercised, to the extent that the optionee shall
have been entitled to do so on the date of his death, by the person or persons
to whom the optionee's right under the Option pass by will or applicable law, or
if no such person has such right, by his executors or administrators, at any
time, or from time to time. In the event of termination of employment because of
his death while an employee or because of disability or retirement, his Options
may be exercised not later than the expiration date specified in Paragraph 5 or
one year after the optionee's death, whichever date is earlier.
(b) If an optionee's employment by the Corporation or a
Subsidiary shall terminate because of his disability and such optionee has not
died within the following three months, he may exercise his Options, to the
extent that he shall have been entitled to do so at the date of the termination
of his employment, at any time, or from time to time, but not later than the
expiration date specified in Paragraph 5 hereof or one year after termination of
employment, whichever date is earlier.
(c) If an optionee's employment shall terminate by reason of
his retirement in accordance with the terms of the Corporation's tax-qualified
retirement plans if any, or with the consent of the Board or the Stock Option
Committee or involuntarily other than by termination for cause, and such
optionee has not died within the following three months, he may exercise his
Option to the extent he shall have been entitled to do so at the date of the
termination of his employment, at any time and from to time, but not later than
the expiration date specified in Paragraph 5 hereof or thirty (30) days after
termination of employment, whichever date is earlier. For purposes of this
Paragraph 14, termination for cause shall mean; (i) termination of employment
for cause as defined
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in the optionee's Employment Agreement; or (ii) in the absence of an Employment
Agreement for the optionee, termination of employment by reason of the
optionee's commission of a felony, fraud or willful misconduct which has
resulted, or is likely to result, in substantial and material damage to the
Corporation or a Subsidiary, all as the Board or the Stock Option Committee in
its sole discretion may determine.
(d) If an optionee's employment shall terminate for any
reason, voluntarily or otherwise, other than by death, disability or retirement,
all right to exercise his Option shall terminate at the date of such termination
of employment absent specific provisions in the optionee's Option Agreement.
15. Corporate Events. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock, the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and each
such Eligible Person shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Option as to all or any part of the
shares of Stock covered thereby, including shares of Stock as to which such
Option would not otherwise be exercisable. Nothing set forth herein shall extend
the term set for purchasing the shares of Stock set forth in the Option.
16. No Guarantee of Employment. Nothing in this Plan or in any writing
granting an Option will confer upon any Eligible Person the right to continue in
the employ of the Eligible Person's employer, or will interfere with or restrict
in any way the right of the Eligible Person's employer to discharge such
Eligible Person at any time for any reason whatsoever, with or without cause.
17. Nontransferability. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by him.
18. No Rights as Stockholder. No optionee shall have any rights as a
stockholder with respect to any shares subject to his Option prior to the date
of issuance to him of a certificate or certificates for such shares.
19. Amendment and Discontinuance of Plan. The Corporation's Board of
Directors may amend, suspend or discontinue this Plan at any time. However, no
such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan. Further, no amendment to this Plan
which has the effect of (a) increasing the aggregate number of shares of Stock
subject to this Plan (except for adjustments pursuant to Paragraph 3 herein), or
(b) changing the definition of Eligible Person under this Plan, may be effective
unless and until approval of the stockholders of the Corporation is obtained in
the same manner as approval of this Plan is required. The Corporation's Board of
Directors is authorized to seek the approval of the Corporation's
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<PAGE>
stockholders for any other changes it proposes to make to this Plan which
require such approval; however, the Board of Directors may modify the Plan, as
necessary, to effectuate the intent of the Plan as a result of any changes in
the tax, accounting or securities laws treatment of Eligible Persons and the
Plan, subject to the provisions set forth in this Paragraph 19, and Paragraph
20.
20. Compliance with Code. The aspects of this Plan on ISOs is intended
to comply in every respect with Section 422 of the Code and the regulations
promulgated thereunder. In the event any future statute or regulation shall
modify the existing statute, the aspects of this Plan on ISOs shall be deemed to
incorporate by reference such modification. Any stock option agreement relating
to any Option granted pursuant to this Plan outstanding and unexercised at the
time any modifying statute or regulation becomes effective shall also be deemed
to incorporate by reference such modification and no notice of such modification
need be given to optionee.
If any provision of the aspects of this Plan on ISOs is determined to
disqualify the shares purchasable pursuant to the Options granted under this
Plan from the special tax treatment provided by Code Section 422, such provision
shall be deemed null and void and to incorporate by reference the modification
required to qualify the shares for said tax treatment.
21. Compliance With Other Laws and Regulations. The Plan, the grant and
exercise of Options thereunder, and the obligation of the Corporation to sell
and deliver Stock under such Options, shall be subject to all applicable federal
and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Corporation shall not be required
to issue or deliver any certificates for shares of Stock prior to (a) the
listing of such shares on any stock exchange or over-the-counter market on which
the Stock may then be listed, if applicable, and (b) the completion of any
registration or qualification of such shares under any federal or state law, or
any ruling or regulation of any government body which the Corporation shall, in
its sole discretion, determine to be necessary or advisable. Moreover, no Option
may be exercised if its exercise or the receipt of Stock pursuant thereto would
be contrary to applicable laws.
22. Disposition of Shares. In the event any share of Stock acquired by
an exercise of an Option granted under the Plan shall be transferable other than
by will or by the laws of descent and distribution within two years of the date
such Option was granted or within one year after the transfer of such Stock
pursuant to such exercise, the optionee shall give prompt written notice thereof
to the Corporation or the Stock Option Committee.
23. Name. The Plan shall be known as the "CindyCo, Inc. 1997 Stock
Option Plan."
24. Notices. Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to the
Corporation or the Committee shall be sent to it at its office, 200 E. Las Olas
Boulevard, Suite 1900, Fort Lauderdale, FL 33301, subject to the right of either
party to designate at any time hereafter in writing some other address,
facsimile number or person to whose attention such notice shall be sent.
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<PAGE>
25. Headings. The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.
26. Effective Date. This Plan, the CindyCo., Inc. 1997 Stock Option
Plan, was adopted by the Board of Directors of the Corporation on October 1,
1997. The effective date of the Plan shall be the same date.
Dated as of October 1, 1997.
CINDYCO., INC.
By: /s/ Charles B. Pearlman
-------------------------------
Charles B. Pearlman, President
8
<PAGE>
[NSO GRANT FORM]
CINDYCO., INC.
200 E. Las Olas Boulevard
Fort Lauderdale, FL 33301
Date: ________________
______________________
______________________
______________________
Dear ______________:
The Board of Directors of CindyCo., Inc. (the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 1997 Stock Option Plan
(the "Plan"). This letter will describe the Option granted to you. Attached to
this letter is a copy of the Plan. The terms of the Plan also set forth
provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this letter
is an acknowledgment to us that you have read and under-stand the Plan and that
you agree to abide by its terms. All terms not defined in this letter shall have
the same meaning as in the Plan.
1. Type of Option. You are granted an NSO. Please see in particular
Section 11 of the Plan.
2. Rights and Privileges. Subject to the conditions hereinafter set
forth, we grant you the right to purchase __________ shares of Class B
Non-Voting Common Stock ("Stock") at $__________ per share, the current fair
market value of a share of Stock. The right to purchase the shares of Stock
accrues in __________ installments over the time periods described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
3. Time of Exercise. The Option may be exercised at any time and from
time to time beginning when the right to purchase the shares of Stock accrues
and ending when they terminate as provided in Section 5 of this letter.
4. Method of Exercise. The Options shall be exercised by written
notice to the Chairman of the Board of Directors at the Corporation's principal
place of business. The notice shall set forth the number of shares of Stock to
be acquired and shall contain a check payable to the Corporation in full payment
for the Stock or that number of already owned shares of Stock equal in value to
the total Exercise Price of the Option. We shall make delivery of the shares of
Stock subject to the conditions described in Section 13 of the Plan.
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5. Termination of Option. To the extent not exercised, the Option
shall terminate upon the first to occur of the following dates:
(a) __________, 199___, being __________ years from the date
of grant pursuant to the provisions of Section 2 of this Agreement; or
(b) Except as otherwise provided for herein, upon the
termination of your employment with the Corporation and any of its subsidiaries
Plan for any reason.
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death,
permanent disability (as defined herein) or retirement. As used herein,
"permanent disability" means your inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months
6. Securities Laws. The Option and the shares of Stock underlying the
Option have not been registered under the Securities Act of 1933, as amended
(the "Act"). The Corporation has no obligations to ever register the Option or
the shares of Stock underlying the Option. All shares of Stock acquired upon the
exercise of the Option shall be "restricted securities" as that term is defined
in Rule 144 promulgated under the Act. The certificate representing the shares
shall bear an appropriate legend restricting their transfer. Such shares cannot
be sold, transferred, assigned or otherwise hypothecated without registration
under the Act or unless a valid exemption from registration is then available
under applicable federal and state securities laws and the Corporation has been
furnished with an opinion of counsel satisfactory in form and substance to the
Corporation that such registration is not required.
7. Binding Effect. The rights and obligations described in this letter
shall inure to the benefit of and be binding upon both of us, and our respective
heirs, personal representatives, successors and assigns.
8. Date of Grant. The Option shall be treated as having been granted
to you on the date of this letter even though you may sign it at a later date.
Very truly yours,
By: __________________________
________________, President
AGREED AND ACCEPTED:
- -------------------------
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<PAGE>
[ISO GRANT FORM]
CINDYCO., INC.
200 E. Las Olas Boulevard
Fort Lauderdale, FL 33301
Date: ________________
______________________
______________________
______________________
Dear _______________:
The Board of Directors of CindyCo., Inc. (the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 1997 Stock Option Plan
(the "Plan"). This letter will describe the Option granted to you. Attached to
this letter is a copy of the Plan. The terms of the Plan also set forth
provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this letter
is an acknowledgment to us that you have read and under-stand the Plan and that
you agree to abide by its terms. All terms not defined in this letter shall have
the same meaning as in the Plan.
1. Type of Option. You are granted an ISO. Please see in particular
Section 11 of the Plan.
2. Rights and Privileges. Subject to the conditions hereinafter set
forth, we grant you the right to purchase __________ shares of Stock at
$__________ per share, the current fair market value of a share of Stock. The
right to purchase the shares of Stock accrues in __________ installments over
the time periods described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
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3. Time of Exercise. The Option may be exercised at any time and from
time to time beginning when the right to purchase the shares of Stock accrues
and ending when they terminate as provided in Section 5 of this letter.
4. Method of Exercise. The Options shall be exercised by written
notice to the Chairman of the Board of Directors at the Corporation's principal
place of business. The notice shall set forth the number of shares of Stock to
be acquired and shall contain a check payable to the Corporation in full payment
for the Stock or that number of already owned shares of Stock equal in value to
the total Exercise Price of the Option. We shall make delivery of the shares of
Stock subject to the conditions described in Section 13 of the Plan.
5. Termination of Option. To the extent not exercised, the Option
shall terminate upon the first to occur of the following dates:
(a) _____________, 199___, being __________ years from the
date of grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of thirty (30) days following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or by
reason of your permanent disability (as defined above).
6. Securities Laws.
The Option and the shares of Stock underlying the Option have
not been registered under the Securities Act of 1933, as amended (the "Act").
The Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired upon the exercise of
the Option shall be "restricted securities" as that term is defined in Rule 144
promulgated under the Act. The certificate representing the shares shall bear an
appropriate legend restricting their transfer. Such shares cannot be sold,
transferred, assigned or otherwise hypothecated without registration under the
Act or unless a valid exemption from registration is then available under
applicable federal and state securities laws and the Corporation has been
furnished with an opinion of counsel satisfactory in form and substance to the
Corporation that such registration is not required.
7. Binding Effect. The rights and obligations described in this letter
shall inure to the benefit of and be binding upon both of us, and our respective
heirs, personal representatives, successors and assigns.
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<PAGE>
8. Date of Grant. The Option shall be treated as having been granted
to you on the date of this letter even though you may sign it at a later date.
Very truly yours,
By: _________________________
_______________, President
AGREED AND ACCEPTED:
- -------------------------
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<PAGE>
[NSO GRANT FORM
WITH RELOAD OPTIONS]
CINDYCO., INC.
200 E. Las Olas Boulevard
Fort Lauderdale, FL 33301
Date: ________________
______________________
______________________
______________________
Dear __________:
The Board of Directors of CindyCo., Inc. (the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 1997 Stock Option Plan
(the "Plan"). This letter will describe the Option granted to you. Attached to
this letter is a copy of the Plan. The terms of the Plan also set forth
provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this letter
is an acknowledgment to us that you have read and understand the Plan and that
you agree to abide by its terms. All terms not defined in this letter shall have
the same meaning as in the Plan.
1. Type of Option. You are granted an NSO. Please see in particular
Section 11 of the Plan.
2. Rights and Privileges.
(a) Subject to the conditions hereinafter set forth, we grant
you the right to purchase __________ shares of Stock at $__________ per share,
the current fair market value of a share of Stock. The right to purchase the
shares of Stock accrues in __________ installments over the time periods
described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
(b) In addition to the Option granted hereby (the "Underlying
Option"), the Corporation will grant you a reload option (the "Reload Option")
as hereinafter provided. A Reload Option is hereby granted to you if you acquire
shares of Stock pursuant to the exercise of the Underlying Option and pay for
such shares of Stock with shares of Common Stock already owned by you (the
"Tendered Shares"). The Reload Option grants you the right to purchase shares of
Stock equal in number to the number of Tendered Shares. The date on which the
Tendered Shares are tendered to the Corporation in full or partial payment of
the purchase price for the shares of Stock acquired pursuant to the exercise of
the Underlying Option is the Reload Grant Date. The exercise
1
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price of the Reload Option is the fair market value of the Tendered Shares on
the Reload Grant Date. The fair market value of the Tendered Shares shall be the
low bid price per share of the Corporation's Common Stock on the Reload Grant
Date. The Reload Option shall vest equally over a period of __________ (___)
years, commencing on the first anniversary of the Reload Grant Date, and on each
anniversary of the Reload Grant Date thereafter; however, no Reload Option shall
vest in any calendar year if it would allow you to purchase for the first time
in that calendar year shares of Stock with a fair market value in excess of
$100,000, taking into account ISOs previously granted to you. The Reload Option
shall expire on the earlier of (i) __________ (___) years from the Reload Grant
Date, or (ii) in accordance with Paragraph 5(b), or (iii) in accordance with
Paragraph 5(c) as set forth herein. If vesting of the Reload Option is deferred,
then the Reload Option shall vest in the next calendar year, subject, however,
to the deferral of vesting previously provided. Except as provided herein the
Reload Option is subject to all of the other terms and provisions of this
Agreement governing Options.
3. Time of Exercise. The Option may be exercised at any time and from
time to time beginning when the right to purchase the shares of Stock accrues
and ending when they terminate as provided in Section 5 of this letter.
4. Method of Exercise. The Options shall be exercised by written
notice to the Chairman of the Board of Directors at the Corporation's principal
place of business. The notice shall set forth the number of shares of Stock to
be acquired and shall contain a check payable to the Corporation in full payment
for the Stock or that number of already owned shares of Stock equal in value to
the total Exercise Price of the Option. We shall make delivery of the shares of
Stock subject to the conditions described in Section 13 of the Plan.
5. Termination of Option. To the extent not exercised, the Option
shall terminate upon the first to occur of the following dates:
(a) __________, 199_, being __________ years from the date of
grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of three months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or by
reason of your permanent disability (as defined above).
6. Securities Laws.
The Option and the shares of Stock underlying the Option have
not been registered under the Securities Act of 1933, as amended (the "Act").
The Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired
2
<PAGE>
upon the exercise of the Option shall be "restricted securities" as that term is
defined in Rule 144 promulgated under the Act. The certificate representing the
shares shall bear an appropriate legend restricting their transfer. Such shares
cannot be sold, transferred, assigned or otherwise hypothecated without
registration under the Act or unless a valid exemption from registration is then
available under applicable federal and state securities laws and the Corporation
has been furnished with an opinion of counsel satisfactory in form and substance
to the Corporation that such registration is not required.
7. Binding Effect. The rights and obligations described in this letter
shall inure to the benefit of and be binding upon both of us, and our respective
heirs, personal representatives, successors and assigns.
8. Date of Grant. The Option shall be treated as having been granted
to you on the date of this letter even though you may sign it at a later date.
Very truly yours,
By: __________________________
_______________, President
AGREED AND ACCEPTED:
- -------------------------
3
<PAGE>
[ISO GRANT FORM
WITH RELOAD OPTIONS]
CINDYCO., INC.
200 E. Las Olas Boulevard
Fort Lauderdale, FL 33301
Date: ________________
______________________
______________________
______________________
Dear __________:
The Board of Directors of CindyCo., Inc. (the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 1997 Stock Option Plan
(the "Plan"). This letter will describe the Option granted to you. Attached to
this letter is a copy of the Plan. The terms of the Plan also set forth
provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this letter
is an acknowledgment to us that you have read and understand the Plan and that
you agree to abide by its terms. All terms not defined in this letter shall have
the same meaning as in the Plan.
1. Type of Option. You are granted an ISO. Please see in particular
Section 11 of the Plan.
2. Rights and Privileges.
(a) Subject to the conditions hereinafter set forth, we grant
you the right to purchase __________ shares of Stock at $__________ per share,
the current fair market value of a share of Stock. The right to purchase the
shares of Stock accrues in __________ installments over the time periods
described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
(b) In addition to the Option granted hereby (the "Underlying
Option"), the Corporation will grant you a reload option (the "Reload Option")
as hereinafter provided. A Reload Option is hereby granted to you if you acquire
shares of Stock pursuant to the exercise of the Underlying Option and pay for
such shares of Stock with shares of Common Stock already owned by you (the
"Tendered Shares"). The Reload Option grants you the right to purchase shares of
Stock equal in number to the number of Tendered Shares. The date on which the
Tendered Shares are tendered to the Corporation in full or partial payment of
the purchase price for the shares of Stock acquired pursuant to the exercise of
the Underlying Option is the Reload Grant Date. The exercise
1
<PAGE>
price of the Reload Option is the fair market value of the Tendered Shares on
the Reload Grant Date. The fair market value of the Tendered Shares shall be the
low bid price per share of the Corporation's Common Stock on the Reload Grant
Date. The Reload Option shall vest equally over a period of __________ (___)
years, commencing on the first anniversary of the Reload Grant Date, and on each
anniversary of the Reload Grant Date thereafter; however, no Reload Option shall
vest in any calendar year if it would allow you to purchase for the first time
in that calendar year shares of Stock with a fair market value in excess of
$100,000, taking into account ISOs previously granted to you. The Reload Option
shall expire on the earlier of (i) __________ (___) years from the Reload Grant
Date, or (ii) in accordance with Paragraph 5(b), or (iii) in accordance with
Paragraph 5(c) as set forth herein. If vesting of the Reload Option is deferred,
then the Reload Option shall vest in the next calendar year, subject, however,
to the deferral of vesting previously provided. Except as provided herein the
Reload Option is subject to all of the other terms and provisions of this
Agreement governing Options.
3. Time of Exercise. The Option may be exercised at any time and from
time to time beginning when the right to purchase the shares of Stock accrues
and ending when they terminate as provided in Section 5 of this letter.
4. Method of Exercise. The Options shall be exercised by written
notice to the Chairman of the Board of Directors at the Corporation's principal
place of business. The notice shall set forth the number of shares of Stock to
be acquired and shall contain a check payable to the Corporation in full payment
for the Stock or that number of already owned shares of Stock equal in value to
the total Exercise Price of the Option. We shall make delivery of the shares of
Stock subject to the conditions described in Section 13 of the Plan.
5. Termination of Option. To the extent not exercised, the Option
shall terminate upon the first to occur of the following dates:
(a) __________, 199_, being __________ years from the date of
grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of three months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or by
reason of your permanent disability (as defined above).
6. Securities Laws.
The Option and the shares of Stock underlying the Option have
not been registered under the Securities Act of 1933, as amended (the "Act").
The Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired
2
<PAGE>
upon the exercise of the Option shall be "restricted securities" as that term is
defined in Rule 144 promulgated under the Act. The certificate representing the
shares shall bear an appropriate legend restricting their transfer. Such shares
cannot be sold, transferred, assigned or otherwise hypothecated without
registration under the Act or unless a valid exemption from registration is then
available under applicable federal and state securities laws and the Corporation
has been furnished with an opinion of counsel satisfactory in form and substance
to the Corporation that such registration is not required.
7. Binding Effect. The rights and obligations described in this letter
shall inure to the benefit of and be binding upon both of us, and our respective
heirs, personal representatives, successors and assigns.
8. Date of Grant. The Option shall be treated as having been granted
to you on the date of this letter even though you may sign it at a later date.
Very truly yours,
By: __________________________
_________________, President
AGREED AND ACCEPTED:
- -------------------------
3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made as of this day of
September, 1999 by and between International Cosmetics Marketing Co., a Florida
corporation (the "Company"), with its principal place of business to be located
at 6501 N.W. Park of Commerce Boulevard, Suite 205, Boca Raton, Florida 33487
and Viking Holding Company, with an address of 1454 Stepstone Way,
Lawrenceville, Georgia 30043 (the "Consultant").
R E C I T A L S:
WHEREAS, Consultant has extensive contacts and experience in
multi-level network marketing of consumer products; and
WHEREAS, the Company is in the business of developing, marketing and
distributing consumer products particularly at this time cosmetics using the
name and image of "Beverly Sassoon"; and;
WHEREAS, the Company desires to engage Consultant and Consultant
desires to be engaged as a consultant to the Company on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Consulting Services. During the term of this Consulting Agreement,
Consultant shall provide advice to, undertake for and consult with the Company
concerning management, network marketing, strategic planning, corporate
organization and structure, recruiting experienced personnel and financial
matters in connection with the general sales, marketing and operation of the
business and products of the Company and expansion of services and products, and
shall review and advise the Company regarding its overall progress, needs and
condition ("Consultant Duties"). The Consultant agrees to provide on a timely
basis the following enumerated services plus any additional services
contemplated thereby.
(a) The implementation of short range and long term strategic
planning to fully develop and enhance the Company's assets,
resources, products and services;
(b) The implementation of a marketing program to enable the
Company to broaden the markets for its products and products
and promote the image of the Company and its business and
products;
1
<PAGE>
(c) The undertaking of training programs to enhance the sales
and promotional skills of key marketing employees and
independent contractors of the Company;
(d) As may from time to time be agreed upon in writing, study
the products, of the Company and conduct market surveys for
the products in order to maintain market share and market
penetration;
(e) Prepare preliminary plans for marketing and advertising
the Company's product including responsibility for creative
design and lay-out of all marketing materials;
(f) Prepare rough or finished lay-outs as required and all
actual copy to be used in advertisements of all types,
including radio and television scripts and media
presentations;
(g) Assist the Company in the monitoring of services provided
by the Company's advertising firm, public relations firm and
other professionals to be employed by the Company;
(h) Advise the Company relative to the continued development
of a customer relations program;
(i) Advise the Company relative to the recruitment and
employment of personnel consistent with the marketing and
expansion of operations and products of the Company; and
(j) Advise and recommend to the Company additional products
relating to the present business of the Company.
The Consultant shall provide such consulting services as reasonably may be
required in order for the Consultant to achieve the goals contemplated by the
preceding sentence and Section 4 of this Agreement. The Consultant shall be
responsible to, and shall report to, the Company's Board of Directors.
2. Term. The term of this Agreement shall be for 12 months commencing
on the date first written above. Thereafter, this Agreement may be renewed for a
subsequent term of 12 months upon the mutual written agreement of the parties.
3. Compensation. As compensation for Consultant performing Consultant's
Duties, Consultant shall receive 200,000 shares of common stock of the Company
(the "Common Stock"). These shares of Common Stock shall be deemed earned
subject to divestiture pursuant to paragraph 4 of this Agreement.
2
<PAGE>
The Common Stock has not been registered under the Securities Act of
1933, as amended (the "Act"), or the laws of any state and may not be resold
unless the Common Stock is registered under the Act or an exemption from such
registration is available. The Consultant is acquiring the Common Stock for its
own account, for investment, and not with a view to the sale or distribution.
Each certificate representing the Common Stock will have a legend thereon
incorporating language as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act").
The securities have been acquired for investment and may not be sold or
transferred in the absence of an effective Registration Statement for
the securities under the Act unless in the opinion of counsel,
satisfactory to the Company, registration is not required under the
Act."
4. Performance Goals. The Consultant agrees that the shares of Common
Stock issued as full compensation for services rendered under this Agreement are
subject to waiver and forfeiture, termination and cancellation in the event
Consultant has not attained certain agreed financial and service goals as
determined by the Company's Board of Directors. The financial and service goals
shall be based upon the following having occurred no later than 12 months from
the date hereof: (i) the Company having attained sales in excess of $5,000,000;
and (ii) the Company having at least 5,000 distributors. Accordingly, in the
event the Consultant does not attain such goals, Consultant will be entitled to
no consideration related to this Agreement for the term hereof and agrees to
return and forfeit the shares of Common Stock to the Company. The Consultant
further agrees that the shares of Common Stock will be held in escrow pending
fulfillment of the performance goals set forth herein pursuant to an Escrow
Agreement dated the date hereof and attached hereto as Exhibit A, between the
Company, Consultant and Atlas, Pearlman, Trop & Borkson, P.A. Notwithstanding
the foregoing, the Company may, in its sole discretion, waive the provisions of
this Paragraph 4 as it relates to attaining the service and financial goals.
5. Representations and Warranties of the Consultant. The Consultant
hereby represents and warrants that this Agreement and the transactions
contemplated hereunder have been duly and validly authorized by all requisite
action; that the Consultant has the full right, power and capacity to execute
and deliver this Agreement and perform its obligations hereunder; that the
execution and delivery of this Agreement and the performance by the Consultant
of its obligations pursuant to this Agreement do not constitute a breach of or a
default under any agreement or instrument to which the Consultant is a party or
by which it or any of its assets are bound; and that this Agreement, upon
execution and delivery of the same by the Consultant, will represent the valid
and binding obligation of the Consultant enforceable in accordance with its
terms. The representations and warranties set forth herein shall survive the
termination of this Agreement.
6. Confidentiality. The Consultant agrees that all non-public
information pertaining to the prior, current or contemplated business of the
Company constitutes
3
<PAGE>
valuable and confidential assets of the Company. Such information shall include,
without limitation, information relating to customer lists, products, product
formulas, intellectual property, patents, trademarks, trade secrets, financing
techniques and sources and such financial statements of the Company as are not
available to the public. Consultant, his employees, agents and representatives
shall hold all such information in trust and confidence for the Company and
shall not use or disclose any such information and shall be liable for damages
incurred by the Company as a result of the use or disclosure of such information
other than in furtherance of the Company's business.
7. Amendment or Assignment. No modification, waiver, amendment,
discharge or change of this Agreement shall be valid unless the same is
evidenced by a written instrument, executed by the party against which such
modification, waiver, amendment, discharge, or change is sought. This Agreement
is not assignable by the Consultant without the prior written consent of the
Company, which such consent may not be forthcoming.
8. Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given on the
day when delivered in person or transmitted by confirmed facsimile transmission
or on the third calendar day after being mailed by United States registered or
certified mail, return receipt requested, postage prepaid, to the addresses
herein above first mentioned or to such other address as any party hereto shall
designate to the other for such purpose in the manner herein set forth.
9. Relationship of the Parties. The relationship of the Consultant to
the Company shall be that of independent contractor, and not employee. The
Consultant shall have no authority to bind, and shall not undertake to bind, the
Company as to any third party.
10. Entire Agreement. This Agreement contains all of the understandings
and agreements of the parties with respect to the subject matter discussed
herein. All prior agreements, whether written or oral, are merged herein and
shall be of no force or effect.
11. Severability. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision of
this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any one or
more of the provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Construction and Enforcement. This Agreement shall be construed in
accordance with the laws of the State of Florida, without and application of the
principles of conflicts of laws. Any suit, action or proceeding with respect to
this Agreement shall be
4
<PAGE>
brought in the state or federal courts located in Broward County in the State of
Florida. The parties hereto hereby accept the exclusive jurisdiction and venue
of those courts for the purpose of any such suit, action or proceeding. The
parties hereto hereby irrevocably waive, to the fullest extent permitted by law,
any objection that any of them may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or any judgment entered by any court in respect thereof brought in Broward
County, County Florida, and hereby further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County, Florida, has been brought
in an inconvenient forum.
13. Binding Nature, No Third Party Beneficiary. The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties, and their respective successors and assigns, and is made solely and
specifically for their benefit. No other person shall have any rights, interest
or claims hereunder or be entitled to any benefits under or on account of this
Agreement as a third-party beneficiary or otherwise.
14. Counterparts. This Agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as original
signatures. All executed counterparts shall constitute one Agreement,
notwithstanding that all signatories are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INTERNATIONAL COSMETICS MARKETING CO.
By: /s/ Sonny Spoden
--------------------
Sonny Spoden, Chief Financial Officer
VIKING HOLDING COMPANY
By: /s/ John Bird
-----------------
John Bird
Title: Managing Partner
5
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made as of this day of
September, 1999 by and between International Cosmetics Marketing Co., a Florida
corporation (the "Company"), with its principal place of business to be located
at 6501 N.W. Park of Commerce Boulevard, Suite 205, Boca Raton, Florida 33487
and Hatteras Investment Company, with an address of 1454 Stepstone Way,
Lawrenceville, Georgia 30043 (the "Consultant").
R E C I T A L S:
WHEREAS, Consultant has extensive contacts and experience in
multi-level network marketing of consumer products; and
WHEREAS, the Company is in the business of developing, marketing and
distributing consumer products particularly at this time cosmetics using the
name and image of "Beverly Sassoon"; and;
WHEREAS, the Company desires to engage Consultant and Consultant
desires to be engaged as a consultant to the Company on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Consulting Services. During the term of this Consulting Agreement,
Consultant shall provide advice to, undertake for and consult with the Company
concerning management, network marketing, strategic planning, corporate
organization and structure, recruiting experienced personnel and financial
matters in connection with the general sales, marketing and operation of the
business and products of the Company and expansion of services and products, and
shall review and advise the Company regarding its overall progress, needs and
condition ("Consultant Duties"). The Consultant agrees to provide on a timely
basis the following enumerated services plus any additional services
contemplated thereby.
(a) The implementation of short range and long term strategic
planning to fully develop and enhance the Company's assets,
resources, products and services;
(b) The implementation of a marketing program to enable the
Company to broaden the markets for its products and products
and promote the image of the Company and its business and
products;
1
<PAGE>
(c) The undertaking of training programs to enhance the sales
and promotional skills of key marketing employees and
independent contractors of the Company;
(d) As may from time to time be agreed upon in writing, study
the products, of the Company and conduct market surveys for
the products in order to maintain market share and market
penetration;
(e) Prepare preliminary plans for marketing and advertising
the Company's product including responsibility for creative
design and lay-out of all marketing materials;
(f) Prepare rough or finished lay-outs as required and all
actual copy to be used in advertisements of all types,
including radio and television scripts and media
presentations;
(g) Assist the Company in the monitoring of services provided
by the Company's advertising firm, public relations firm and
other professionals to be employed by the Company;
(h) Advise the Company relative to the continued development
of a customer relations program;
(i) Advise the Company relative to the recruitment and
employment of personnel consistent with the marketing and
expansion of operations and products of the Company; and
(j) Advise and recommend to the Company additional products
relating to the present business of the Company.
The Consultant shall provide such consulting services as reasonably may be
required in order for the Consultant to achieve the goals contemplated by the
preceding sentence and Section 4 of this Agreement. The Consultant shall be
responsible to, and shall report to, the Company's Board of Directors.
2. Term. The term of this Agreement shall be for 12 months commencing
on the date first written above. Thereafter, this Agreement may be renewed for a
subsequent term of 12 months upon the mutual written agreement of the parties.
3. Compensation. As compensation for Consultant performing Consultant's
Duties, Consultant shall receive 200,000 shares of common stock of the Company
(the "Common Stock"). These shares of Common Stock shall be deemed earned
subject to divestiture pursuant to paragraph 4 of this Agreement.
2
<PAGE>
The Common Stock has not been registered under the Securities Act of
1933, as amended (the "Act"), or the laws of any state and may not be resold
unless the Common Stock is registered under the Act or an exemption from such
registration is available. The Consultant is acquiring the Common Stock for its
own account, for investment, and not with a view to the sale or distribution.
Each certificate representing the Common Stock will have a legend thereon
incorporating language as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act").
The securities have been acquired for investment and may not be sold or
transferred in the absence of an effective Registration Statement for
the securities under the Act unless in the opinion of counsel,
satisfactory to the Company, registration is not required under the
Act."
4. Performance Goals. The Consultant agrees that the shares of Common
Stock issued as full compensation for services rendered under this Agreement are
subject to waiver and forfeiture, termination and cancellation in the event
Consultant has not attained certain agreed financial and service goals as
determined by the Company's Board of Directors. The financial and service goals
shall be based upon the following having occurred no later than 12 months from
the date hereof: (i) the Company having attained sales in excess of $10,000,000;
and (ii) the Company having at least 10,000 distributors. Accordingly, in the
event the Consultant does not attain such goals, Consultant will be entitled to
no consideration related to this Agreement for the term hereof and agrees to
return and forfeit the shares of Common Stock to the Company. The Consultant
further agrees that the shares of Common Stock will be held in escrow pending
fulfillment of the performance goals set forth herein pursuant to an Escrow
Agreement dated the date hereof and attached hereto as Exhibit A, between the
Company, Consultant and Atlas, Pearlman, Trop & Borkson, P.A. Notwithstanding
the foregoing, the Company may, in its sole discretion, waive the provisions of
this Paragraph 4 as it relates to attaining the service and financial goals.
5. Representations and Warranties of the Consultant. The Consultant
hereby represents and warrants that this Agreement and the transactions
contemplated hereunder have been duly and validly authorized by all requisite
action; that the Consultant has the full right, power and capacity to execute
and deliver this Agreement and perform its obligations hereunder; that the
execution and delivery of this Agreement and the performance by the Consultant
of its obligations pursuant to this Agreement do not constitute a breach of or a
default under any agreement or instrument to which the Consultant is a party or
by which it or any of its assets are bound; and that this Agreement, upon
execution and delivery of the same by the Consultant, will represent the valid
and binding obligation of the Consultant enforceable in accordance with its
terms. The representations and warranties set forth herein shall survive the
termination of this Agreement.
6. Confidentiality. The Consultant agrees that all non-public
information pertaining to the prior, current or contemplated business of the
Company constitutes
3
<PAGE>
valuable and confidential assets of the Company. Such information shall include,
without limitation, information relating to customer lists, products, product
formulas, intellectual property, patents, trademarks, trade secrets, financing
techniques and sources and such financial statements of the Company as are not
available to the public. Consultant, his employees, agents and representatives
shall hold all such information in trust and confidence for the Company and
shall not use or disclose any such information and shall be liable for damages
incurred by the Company as a result of the use or disclosure of such information
other than in furtherance of the Company's business.
7. Amendment or Assignment. No modification, waiver, amendment,
discharge or change of this Agreement shall be valid unless the same is
evidenced by a written instrument, executed by the party against which such
modification, waiver, amendment, discharge, or change is sought. This Agreement
is not assignable by the Consultant without the prior written consent of the
Company, which such consent may not be forthcoming.
8. Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given on the
day when delivered in person or transmitted by confirmed facsimile transmission
or on the third calendar day after being mailed by United States registered or
certified mail, return receipt requested, postage prepaid, to the addresses
herein above first mentioned or to such other address as any party hereto shall
designate to the other for such purpose in the manner herein set forth.
9. Relationship of the Parties. The relationship of the Consultant to
the Company shall be that of independent contractor, and not employee. The
Consultant shall have no authority to bind, and shall not undertake to bind, the
Company as to any third party.
10. Entire Agreement. This Agreement contains all of the understandings
and agreements of the parties with respect to the subject matter discussed
herein. All prior agreements, whether written or oral, are merged herein and
shall be of no force or effect.
11. Severability. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision of
this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any one or
more of the provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Construction and Enforcement. This Agreement shall be construed in
accordance with the laws of the State of Florida, without and application of the
principles of conflicts of laws. Any suit, action or proceeding with respect to
this Agreement shall be
4
<PAGE>
brought in the state or federal courts located in Broward County in the State of
Florida. The parties hereto hereby accept the exclusive jurisdiction and venue
of those courts for the purpose of any such suit, action or proceeding. The
parties hereto hereby irrevocably waive, to the fullest extent permitted by law,
any objection that any of them may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or any judgment entered by any court in respect thereof brought in Broward
County, County Florida, and hereby further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County, Florida, has been brought
in an inconvenient forum.
13. Binding Nature, No Third Party Beneficiary. The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties, and their respective successors and assigns, and is made solely and
specifically for their benefit. No other person shall have any rights, interest
or claims hereunder or be entitled to any benefits under or on account of this
Agreement as a third-party beneficiary or otherwise.
14. Counterparts. This Agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as original
signatures. All executed counterparts shall constitute one Agreement,
notwithstanding that all signatories are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INTERNATIONAL COSMETICS MARKETING CO.
By: /s/ Sonny Spoden
--------------------
Sonny Spoden, Chief Financial Officer
HATTERAS INVESTMENT COMPANY
By: /s/ Bruce Scott
-------------------
Bruce Scott
Title: Partner
5
OFFICE LEASE
between
BROOKWOOD MERIDIAN PARTNERS LTD.
LANDLORD
and
INTERNATIONAL COSMETICS MARKETING CO., A FLORIDA CORPORATION
d/b/a BEVERLY SASSOON WORLDWIDE
TENANT
Date:_____________
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
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<S> <C> <C>
ARTICLE 1. BASIC LEASE INFORMATION......................................................................1
1.1 Basic Lease Information................................................................1
1.2 Definitions............................................................................3
1.3 Exhibits...............................................................................3
ARTICLE 2. AGREEMENT....................................................................................5
ARTICLE 3. TERM, DELIVERY, AND ACCEPTANCE OF PREMISES...................................................5
3.1 Delivery of Possession.................................................................5
3.2 Early Entry............................................................................5
ARTICLE 4. MONTHLY RENT.................................................................................5
ARTICLE 5. .............................................................................................6
5.1 General................................................................................6
5.2 Definitions............................................................................6
5.3 Share of Taxes.........................................................................8
5.4 Final Determinations..................................................................10
5.5 Operating Expenses....................................................................10
5.6 Disputes..............................................................................11
5.7 Audit.................................................................................12
5.8 Survival After Termination............................................................12
ARTICLE 6. INSURANCE...................................................................................12
6.1 Landlord's Insurance..................................................................12
6.2 Tenant's Insurance....................................................................13
6.3 Forms of Policies.....................................................................13
6.4 Waiver of Subrogation.................................................................14
6.5 Adequacy of Coverage..................................................................14
ARTICLE 8. REQUIREMENTS OF LAW; FIRE INSURANCE.........................................................14
8.1 General...............................................................................14
8.2 Hazardous Materials...................................................................14
8.3 Certain Insurance Risks...............................................................15
ARTICLE 9. ASSIGNMENT AND SUBLETTING..................................................................16
9.1 General...............................................................................16
9.2 Submission of Information.............................................................16
9.3 Payments to Landlord..................................................................16
9.4 Prohibited Transfers..................................................................17
9.5 Landlord's Options....................................................................17
9.6 Permitted Transfer....................................................................17
ARTICLE 10. RULES AND REGULATIONS......................................................................17
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Page
----
ARTICLE 11. COMMON AREAS...............................................................................18
ARTICLE 12. LANDLORD'S SERVICES........................................................................18
12.1 Landlord's Repair and Maintenance.....................................................18
12.2 Landlord's Other Services.............................................................19
12.3 Tenant's Costs........................................................................19
12.4 Limitation on Liability...............................................................19
ARTICLE 13. TENANT'S CARE OF THE PREMISES..............................................................20
ARTICLE 14. ALTERATIONS................................................................................20
14.1 General...............................................................................20
14.2 Free-Standing Partitions..............................................................21
14.3 Removal...............................................................................21
ARTICLE 15. MECHANICS' LIENS...........................................................................21
ARTICLE 16. END OF TERM................................................................................22
ARTICLE 17. EMINENT DOMAIN.............................................................................22
ARTICLE 18. DAMAGE AND DESTRUCTION.....................................................................23
ARTICLE 19. SUBORDINATION.............................................................................24
19.1 General...............................................................................24
19.2 Attornment............................................................................24
ARTICLE 20. ENTRY BY LANDLORD..........................................................................25
ARTICLE 21. INDEMNIFICATION, WAIVER, AND RELEASE.......................................................26
21.1 Indemnification.......................................................................26
21.2 Waiver and Release....................................................................26
ARTICLE 22. SECURITY DEPOSIT...........................................................................26
ARTICLE 23. QUIET ENJOYMENT............................................................................27
ARTICLE 24. EFFECT OF SALE.............................................................................27
ARTICLE 25. DEFAULT....................................................................................27
25.1 Event of Default......................................................................27
25.2 Landlord's Remedies...................................................................28
25.3 Certain Damages.......................................................................29
25.4 Continuing Liability After Termination................................................30
25.5 Cumulative Remedies...................................................................30
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Page
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25.6 Waiver of Redemption..................................................................31
ARTICLE 26. PARKING.....................................................................................31
ARTICLE 27. MISCELLANEOUS..............................................................................32
27.1 No Offer..............................................................................32
27.2 Joint and Several Liability...........................................................32
27.3 No Construction Against Drafting Party................................................32
27.4 Time of the Essence...................................................................32
27.5 No Recordation........................................................................32
27.6 No Waiver.............................................................................32
27.7 Limitation on Recourse................................................................32
27.8 Estoppel Certificates.................................................................32
27.9 Attorneys' Fees.......................................................................33
27.10 No Merger.............................................................................33
27.11 Holding Over..........................................................................33
27.12 Notices...............................................................................33
27.13 Severability..........................................................................34
27.14 Written Amendment Required............................................................34
27.15 Entire Agreement......................................................................34
27.16 Captions..............................................................................34
27.17 Notice of Landlord's Default..........................................................34
27.18 Authority.............................................................................34
27.19 Brokers...............................................................................34
27.20 Governing Law.........................................................................34
27.21 Late Payments.........................................................................34
27.22 No Easements for Air or Light.........................................................35
27.23 Tax Credits...........................................................................35
27.24 Relocation of the Premises............................................................35
27.25 Financial Reports.....................................................................35
27.27 Binding Effect........................................................................35
27.28 Terms.................................................................................35
27.29 Definition of Landlord................................................................35
27.30 Rights Cumulative.....................................................................36
27.31 Change of Building Name...............................................................36
27.32 Force Majeure.........................................................................36
27.33 Third Party Beneficiary...............................................................36
27.34 No Joint Venture......................................................................36
27.35 Remedies..............................................................................36
27.36 Waiver of Jury Trial..................................................................36
</TABLE>
iii
<PAGE>
OFFICE LEASE
THIS OFFICE LEASE ("Lease") is entered into by Landlord and Tenant as
described in the following basic lease information on the date that is set forth
for reference only in the following basic lease information. Landlord and Tenant
agree:
ARTICLE 1. BASIC LEASE INFORMATION
1.1 Basic Lease Information. In addition to the terms that are defined
elsewhere in this Lease, these terms are used in this Lease:
(a) LEASE DATE: NOVEMBER 1, 1999.
(b) LANDLORD: BROOKWOOD MERIDIAN PARTNERS LTD.
(c) LANDLORD'S ADDRESS:
TRAMMELL CROW COMPANY, AS AGENT
1515 SOUTH FEDERAL HIGHWAY SUITE 113
BOCA RATON, FLORIDA 33432
with a copy at the same time to: N/A
(d) TENANT: INTERNATIONAL COSMETICS MARKETING CO., A
FLORIDA CORPORATION d/b/a BEVERLY SASSOON
WORLDWIDE
(e) TENANT'S ADDRESS: The
Premises as defined in this
Lease with a copy at the
same time to:
6501 PARK OF COMMERCE BLVD., SUITE 205
BOCA RATON, FLORIDA 33487
(f) BUILDING ADDRESS: 6501 PARK OF COMMERCE BLVD.
BOCA RATON, FLORIDA 33487
(g) PREMISES: The premises shown on Exhibit A to this
Lease, known as Suite 205
(h) RENTABLE AREA OF THE PREMISES:. For purposes of this
Lease the rentable square footage of the Premises
shall be deemed to be approximately 4,251 square
feet.
(i) RENTABLE AREA OF THE BUILDING: For purposes of this
lease the rentable square footage of the building
shall be deemed to be 51,006 square feet.
1
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(j) TERM: 60 months beginning on the Commencement Date
and expiring on the Expiration Date.
(k) COMMENCEMENT DATE: November 1, 1999.
(l) EXPIRATION DATE: October 31, 2004.
(m) SECURITY DEPOSIT: $ 50,000.00. To be paid $10,000.00
at lease execution and $40,000 prior to occupancy.
(n) YEARLY & MONTHLY RENT:
<TABLE>
<CAPTION>
Amount Per Year Amount Per Month Commencing On Ending On
- --------------- ---------------- ------------- ---------
<S> <C> <C> <C>
Year 1 - $63,765.00 $5,313.75 NOVEMBER 1, 1999 OCTOBER 31, 2000
Year 2 - $63,765.00 $5,313.75 NOVEMBER 1, 2000 OCTOBER 31, 2001
Year 3 - $66,315.60 $5,526.30 NOVEMBER 1, 2001 OCTOBER 31, 2002
Year 4 - $68,968.22 $5,747.35 NOVEMBER 1, 2002 OCTOBER 31, 2003
Year 5 - $71,726.95 $5,977.25 NOVEMBER 1, 2003 OCTOBER 31, 2004
</TABLE>
*plus sales tax and additional rent.
FIRST MONTH'S AND LAST MONTH'S RENT SHALL BE DUE UPON EXECUTION OF THE LEASE
(o) BASE YEAR: 1999
(p) TENANT'S SHARE: 8.33% percent (determined by dividing
the Rentable Area of the Premises by the Rentable
Area of the Building, multiplying the resulting
quotient by 100, and rounding to the 3rd decimal
place).
(q) PARKING SPACES: 15 spaces according to Article 26.
(r) PARKING CHARGE: $N/A per parking space per month,
subject to adjustments specified in Article 26.
(s) BROKER: TRAMMELL CROW COMPANY, DUNCAN M. BLACK, AGENT
(to be paid by landlord)
(t) BUSINESS HOURS: N/A a.m. to _______ p.m. on
Monday through Friday.
N/A a.m. to _______ p.m. on
Saturday.
(u) USE: TENANT SHALL USE THE PREMISES AS OFFICE SPACE
ONLY IN PURSUIT OF THEIR BUSINESS.
(v) SIGNAGE: TENANT SHALL HAVE THE RIGHT
TO HAVE ITS NAME ON THE TENANT
DIRECTORY AND ENTRYWAY TO ITS
PREMISES AT TENANT'S EXPENSE.
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<PAGE>
(w) OPERATING EXPENSE STOP: BUDGETED 1999 OPERATING
EXPENSES ARE PROJECTED AT $4.36/S.F. AND ARE INCLUDED
IN THE ANNUAL BASE RENT QUOTED ABOVE. TENANT SHALL BE
RESPONSIBLE FOR ANY INCREASE IN THE OPERATING
EXPENSES OVER AND ABOVE THIS AMOUNT. TENANT SHALL
ALSO BE RESPONSIBLE FOR ELECTRICITY AND JANITORIAL
SERVICE.
(x) TENANT IMPROVEMENTS: Landlord is not responsible to
perform any improvements to the premises. Tenant may
make improvements to the premises and/or lobby area
at their own expense and provided that Landlord has
approved in writing plans and specifications of said
improvements.
(y) GUARANTY: N/A
1.2 Definitions.
(a) ADDITIONAL RENT: Any amounts that this Lease requires
Tenant to pay in addition to Monthly Rent.
(b) BUILDING: The building located on the Land and of
which the Premises are a part.
(c) LAND: The land on which the Project is located and
which is described on Exhibit B. 4.
(d) PRIME RATE: The rate of interest from time to time
announced by The Wall Street Journal as the "prime
rate." If The Wall Street Journal or any reasonable
successor to it ceases to announce the prime rate,
the Prime Rate will be a comparable interest rate
designated by Landlord to replace the Prime Rate.
(e) PROJECT: The development consisting of the Land and
all improvements built on the Land, including without
limitation the Building, parking lot, parking
structure, if any, walkways, driveways, fences, and
landscaping.
(f) RENT: The Monthly Rent and Additional Rent.
(g) WORKLETTER: The workletter attached to this Lease as
Exhibit C (if any).
If any other provision of this Lease contradicts any definition of this Article
1, the other provision will prevail.
1.3 Exhibits. The following exhibits and addenda are attached to this
Lease and are made a part of this Lease:
EXHIBIT A - The Premises EXHIBIT B - Legal Description of the Land
EXHIBIT C - Intentionally Omitted EXHIBIT D - Rules and Regulations
EXHIBIT E - Commencement Date and Estoppel Certificate
EXHIBIT F - Intentionally Omitted
EXHIBIT G - Intentionally Omitted
EXHIBIT H - Intentionally Omitted
EXHIBIT I - Intentionally Omitted
EXHIBIT J - Florida Provisions
* * * [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE>
ARTICLE 2. AGREEMENT
In consideration for the Rent and other covenants and agreements made
by Tenant, Landlord leases the Premises to Tenant, and Tenant leases the
Premises from Landlord, according to this Lease. The duration of this Lease will
be the Term. The Term will commence on the Commencement Date and will expire on
the Expiration Date unless terminated earlier pursuant to the terms of this
Lease.
ARTICLE 3. TERM, DELIVERY, AND ACCEPTANCE OF PREMISES
3.1 Delivery of Possession. Landlord will be deemed to have delivered
possession of the Premises to Tenant on the Commencement Date, as it may be
adjusted pursuant to the Workletter. Landlord will construct or install in the
Premises the Improvements as defined in the Workletter to be constructed or
installed by Landlord according to the Workletter. Except as expressly set forth
in the Workletter, Landlord shall deliver to Tenant possession of the Premises
AS IS in its present condition on the Commencement Date. Tenant acknowledges
that neither Landlord nor its agents or employees have made any representations
or warranties as to the suitability or fitness of the Premises for the conduct
of Tenant's business or for any other purpose, nor has Landlord or its agents or
employees agreed to undertake any alterations or construct any Tenant
improvements to the Premises except as expressly provided in this Lease and the
Workletter. If for any reason Landlord cannot deliver possession of the Premises
to Tenant on the Commencement Date, this Lease will not be void or voidable, and
Landlord will not be liable to Tenant for any resultant loss or damage. Tenant
will execute and deliver to Landlord the Commencement Date and Estoppel
Certificate attached to this Lease as Exhibit E within 3 days of Landlord's
request.
3.2 Early Entry. If Tenant is permitted entry to the Premises prior to
the Commencement Date for the purpose of installing fixtures or any other
purpose permitted by Landlord, the early entry will be at Tenant's sole risk and
subject to all the terms and provisions of this Lease as though the Commencement
Date had occurred, except for the payment of Rent, which will commence on the
Commencement Date. Tenant, its agents, or employees will not interfere with or
delay Landlord's completion of construction of the improvements. Tenant hereby
agrees to indemnify Landlord against any injury, and loss or damage which may
occur to any person or to any of the Tenant's work or installations made in such
Premises, Building or Project, or to any personal property placed therein, the
same being at Tenant's sole risk, and, prior to any early entry by Tenant,
provide Landlord with proof of insurance coverages described in this Lease.
Landlord has the right to impose additional conditions on Tenant's early entry
that Landlord, in its reasonable discretion, deems appropriate and Landlord will
further have the right to require that Tenant execute an early entry agreement
containing those conditions prior to Tenant's early entry.
ARTICLE 4. MONTHLY RENT
Throughout the Term of this Lease, Tenant will pay Monthly Rent to
Landlord as rent for the Premises. Monthly Rent will be paid in advance on or
before the first day of each calendar month of the Term. If the Tenn commences
on a day other than the first day of a calendar month or ends on a day other
than the last day of a calendar month, then Monthly Rent will be appropriately
prorated by Landlord based on the actual number of calendar in such month. If
the Term commences on a day other than the first day of a calendar month, then
the prorated Monthly Rent for such month will be paid on or before the first day
of the Term. Monthly Rent will be paid to Landlord, without written notice or
demand, and without deduction or offset, in lawful money of the
4
<PAGE>
United States of America at landlord's address, or to such other address as
Landlord may from time to time designate in writing.
ARTICLE 5. INCREASES IN TAXES AND OPERATING EXPENSES
5.1 General. During each calendar year of the original and any
additional term hereof (pro-rated for any period less than a year) Tenant shall
pay to Landlord as addition rent, "Tenant's Share of Taxes" (as hereinafter
defined) and "Tenant's Share of Operating Expenses" (as hereinafter defined) for
each such calendar year which is in excess of Tenant's Share of Taxes or
Tenant's Share of Operating Expenses (either or both, as the case may be) for
the Base Year as more fully described in this Article 5.
5.2 Definitions. As used in this Article 5, or elsewhere in this Lease,
the following terms shall be defined as hereinafter set forth:
(a) "Taxes" shall mean all real estate taxes and
assessments, general or special, ordinary or
extraordinary, foreseen or unforeseen, imposed upon
the Project, and any existing or future improvements
of whatever kind thereto or thereon. Taxes shall
include, without limitation, any assessment imposed
by any public or private entity by reason of the
Project being located in a special services district
or similar designation. If, due to a future change in
the method of taxation, any franchise, income, profit
or other tax, however designated, shall be levied or
imposed in substitution, in whole or in part, for (or
in lieu of) any tax which would otherwise be included
within the definition of Taxes, such other tax shall
be deemed to be included within Taxes as defined
herein.
(b) (1) "Operating Expenses" shall mean the actual
expenses paid or incurred by Landlord in the
operation, maintenance and management of the
Project (after deducting any reimbursement,
discount, credit, insurance proceeds,
reduction or other allowance received by
Landlord) and shall include, without
limitation: (A) service, repair, replacement
and other maintenance to the Building and
components thereof (excluding the leasehold
premises, said expenses other than HVAC
shall be borne separately by the Tenant) ;
(B) wages and salaries (and taxes and other
charges imposed upon employers with respect
to such wages and salaries) and fringe
benefits paid to persons employed by
Landlord for rendering service in the
operation, maintenance, and repair of the
Building and related facilities and
amenities; (C) costs of independent
contractors hired for the operation,
maintenance and repair of the Building and
related facilities and amenities; (D) costs
of electricity, steam, water, fuel, heating,
lighting, air conditioning, sewer and other
utilities chargeable to the operation and
maintenance of the Building; (but excluding
the interior of the leasehold premises - see
Article 12.3) (E) cost of insurance for and
relating to the Project, including fire and
extended coverage (or such greater coverages
as Landlord may elect to carry), elevator,
boiler, sprinkler leakage, water damage,
public liability and property damage, plate
glass, and rent protection, but excluding
any charge for increased premiums due to
acts or omissions of other occupants of the
Building because of extra risk
5
<PAGE>
which are reimbursed to Landlord by such
other occupants (or if Landlord self insures
the Project or any part thereof, a sum in
lieu thereof which is not in excess of the
then prevailing rates for such insurance for
comparable projects; (F) costs of supplies;
(G) costs of window cleaning, security
services, landscaping, snow and ice removal
and painting; (H) sales or use taxes on
supplies and services; (1) consulting,
accounting fees, legal, tax appeal,
engineering and other professional fees and
expenses; (J) management fees, or if no
managing agent is employed by Landlord a sum
in lieu thereof which is not in excess of
the then prevailing rates for management
fees for comparable projects; (K)
alterations and improvements to the Project
which are not capital in nature made by
reason of any requirement of any insurance
underwriters or any federal, state, or local
statutes, regulations, ordinances, or any
other duly constituted public authorities
having jurisdiction over the Premises
(hereinafter Governmental Requirement); and
(L) without limiting any of the foregoing,
any other expense or charge which, in
accordance with sound accounting and
management principles generally accepted,
would be construed as an operating expense.
The term "Operating Expenses" shall not
include: (A) the cost of redecorating or
repairing, or special cleaning or other
services, not provided on a regular basis to
office tenants of the Building including but
not limited to the air conditioning and
heating unit within the leasehold premises;
(B) wages, salaries or fees paid to
executive personnel of Landlord; (C) the
cost of any replacement item which, by
standard accounting practice, should be
capitalized (except as other provided in
subsection (3) below; (D) any charge for
depreciation or interest paid or incurred by
Landlord; (E) any charge for Landlord's
income tax, excess profit taxes; franchise
taxes or similar taxes on Landlord's
business; (F) leasing commissions; (G) real
estate taxes; or (H) legal fees for the
negotiation or enforcement of leases. If
Landlord is not furnishing any particular
work or service (the cost of which, if
performed by Landlord, would constitute an
Operating Expense) to a tenant who has
undertaken to perform such work or service
in lieu of performance by Landlord,
Operating Expenses shall nevertheless be
deemed to include the amount Landlord would
reasonably have incurred if Landlord had in
fact performed the work or service at its
expense.
(2) Tenant's Expense Share is a fixed percentage
and does not vary with changing occupancy
levels of the Building. Operating Expenses
are computed for the Building as a whole.
Accordingly, in order to stabilize the
calculation of increase in Operating
Expenses on a square foot basis for the
Demised Premises, a further adjustment is to
be made as follows: In determining Operating
Expenses for any year, if the Building was
less than 95% occupied during such entire
year, or was not in operation during such
entire year, then Operating Expenses shall
be annualized by Landlord (taking into
account seasonal variations) and adjusted to
reflect the amount that such expenses would
normally be expected to have been, in the
reasonable estimate of Landlord, had the
Building been 95%
6
<PAGE>
occupied and operational throughout such
year, except that in no event shall such
adjustment result in an amount less than the
actual Operating Expenses.
(3) In the event Landlord shall make a capital
expenditure for an "Essential Capital
Improvement", as hereinafter defined in this
subsection (3), during any year, the annual
amortization of such expenditure (determined
by dividing the amount of the expenditure by
the useful life of the improvement, as
determined by the Landlord), together with
interest at the greater of the Prime Rate
prevailing plus 2% or Landlord's actual
borrowing rate for such Essential Capital
Improvement, shall be deemed in Operating
Expenses for each year of such useful life.
As used herein, an "Essential Capital
Improvement" means any of the following:
(A) a labor saving device, energy saving
device or other installation,
improvement or replacement which
reduces Operating Expenses as
referred to above, whether or not
voluntary or required by
governmental mandate; or
(B) an installation, change,
improvement, addition, alteration or
removal of any architectural
barriers, whether or not the
foregoing are structural in nature,
made by reason of any Governmental
Requirements whether or not such
Governmental Requirements existed on
the date of execution of this Lease
if such Governmental Requirement is
or will be applicable generally to
similar office buildings; or
(C) an installation or improvement which
directly enhances the health or
safety of tenants in the Building
generally, whether or not voluntary
or required by governmental mandate
(as, for example, but without
limitation, for fire safety or
security).
5.3 Share of Taxes.
(a) Increase in Taxes. For and with respect to each
calendar year within which the term of this Lease
(and any renewal or extension thereof) falls, there
shall accrue, as additional rent, the amount, if any,
by which Tenant's Share of Taxes for such calendar
year (annualized for any partial year) exceeds the
Tenant's Share of Taxes for the Base Year. Such
additional rent shall be prorated on a per-diem basis
for any partial calendar year included within the
term. Such additional rent for any calendar year is
hereinafter referred to as an "Increase in Taxes",
and one-twelfth (1/12) of such amount is hereinafter
referred to as a "Monthly Tax Increase."
(b) Payment of Increase in Taxes. At Landlord's option,
each Increase in Taxes shall be paid with respect to
each calendar year in either or both of the following
manners:
(1) Within thirty (30) days after receipt from
Landlord of a Statement of Taxes (defined
below) containing the amount due from Tenant
on
7
<PAGE>
account of the Increase in Taxes, but in any
event at least thirty (30) days prior to the
last date the tax in question is payable by
Landlord to the taxing authority with
discount; or
(2) At any time during the term of this Lease,
or any extension or renewal hereof, Landlord
may decide that in lieu of a one time
payment of the Increase in Taxes provided in
Subparagraph (5.3)(1) above, Landlord may
require Tenant to pay any Increase in Taxes
in accordance with Subparagraph (5.3)(d)
below.
(c) Statement of Tax Increases. On or before sixty (60)
days after Landlord receives any Statement of Taxes
due from the applicable governmental agency (or as
soon thereafter as practicable), Landlord shall
furnish to Tenant a "Statement of Taxes" setting
forth, in reasonable detail:
(1) The Amount of Taxes for the calendar Year
for which Taxes are payable to the taxing
authority;
(2) The Increase in Taxes for such calendar
Year;
(3) The amount, if any, previously paid by
Tenant to Landlord on account of any
Increase in Taxes for such calendar year;
(4) The amount due from Tenant on account of any
Increase in Taxes; and
(5) If applicable, the Monthly Tax Increase
payable during the calendar year.
(d) Payment of Increase in Taxes on a Monthly Basis. At
Landlord's option, payment of additional rent on
account of an increase in Taxes for any given
calendar year shall be made in advance as follows:
(1) On the first day of the first month
following either receipt by Tenant of the
Statement of Taxes or, if later, notice of
Landlord's election to have an Increase in
Taxes paid on a monthly basis, Tenant shall
pay to Landlord an amount equal to the
Monthly Tax Increase multiplied by the
number of months fully or partially elapsed
in the calendar year (including the month in
which the payment is made); and
(2) Commencing on the first day of the second
month following either receipt by Tenant of
the Statement of Taxes or, if later, notice
of Landlord's election, and continuing until
the receipt by Tenant of the next Statement
of Taxes, the minimum monthly installments
of rent due hereunder shall be increased by
an amount equal to the Monthly Tax Increase,
subject to the provisions set forth in
Subparagraph 5.3(e) below; and
(3) Any overpayment by Tenant of additional rent
due on account of the Increase in Taxes
shall be adjusted by a credit to Tenant
given
8
<PAGE>
contemporaneously with the furnishings of
the next Statement of Taxes.
(e) Optional Billing for Taxes. At Landlord's option,
exercisable with respect to any one or more calendar
years during the term of this Lease, Landlord may
include, within the Statement of Taxes furnished to
Tenant pursuant to Subparagraphs 5.3(c) and 5.3(d)
above, Landlord's good faith estimate of Taxes for
the following calendar year, and the estimated annual
Increase in Taxes based thereon. In such case, the
"Monthly Tax Increase" as used in Subparagraph 5.3(d)
above, for the computation of Tenant's payments to
Landlord during the calendar year on account of the
Increase in Taxes payable to the taxing authority for
the following calendar year shall be equal to
one-twelfth (1/12) of the aforesaid estimated
Increase in Taxes.
5.4 Final Determinations. For purposes of Section 5.3 above, any
assessment upon which Tenant's Share of Taxes is based shall be deemed to be the
amount initially assessed until such time as an abatement, refund, rebate or
increase, if any (retroactive or otherwise), shall be finally determined to be
due, and upon such final determination, Landlord shall promptly notify Tenant of
the amount if any due to Tenant or Landlord, as the case may be, as a result of
the adjustment, and appropriate payment to Landlord or Tenant, as the case may
be, shall thereafter be promptly made. Landlord shall have no duty to Tenant to
contest, appeal or otherwise challenge any Taxes. In the event of any reduction
in Taxes by reason of legal or other action taken by Landlord, there shall be
added to and be deemed a part of the Taxes in question the amount of Landlord's
legal and other costs and expenses in obtaining the reduction (but not an amount
in excess of the tax savings).
5.5 Operating Expenses.
(a) Share of Operating Expenses. For and with respect to
each calendar year of the term of this Lease (and any
renewals or extensions thereof) there shall accrue,
as additional rent, the amount, if any, by which
Tenant's Share of Operating Expenses for such
calendar year exceeds Tenant's Share of Operating
Expenses for the Base Year. Such additional rent
shall be prorated on a per-diem basis for any partial
calendar year. Such additional rent for any calendar
year is hereinafter referred to as the "Operating
Expense Increase", and one-twelfth of such amount is
hereinafter referred to as the "Monthly Increase."
(b) Comparative Statements. Payments. On or before April
30 (or as soon thereafter as practicable) of each
calendar year during the term hereof, and any
renewals and extensions thereof, Landlord shall
furnish to Tenant a statement of Operating Expenses
prepared by Landlord setting forth, in reasonable
detail: (1) Operating Expenses for the preceding
calendar year, (2) the Operating Expense Increase for
the preceding calendar year, (3) the amount, if any,
paid by Tenant to Landlord during the preceding
calendar year on account of said Operating Expense
Increase, (4) the amount due by Tenant on account of
the Operating Expense Increase, and (5) the Monthly
Increase. Payment of the additional rent due on
account of the Operating Expense Increase for the
preceding calendar year shall be made by Tenant
within fifteen (15) days after receipt by Tenant of
such statement.
9
<PAGE>
Tenant shall also make payments to Landlord, on
account of the Operating Expense Increase for the
then current calendar year, as follows:
(1) On the first day of the first month
following receipt by Tenant of the annual
statement, Tenant shall pay to Landlord an
amount equal to the Monthly Increase
multiplied by the number of months fully or
partially elapsed in the current calendar
year (including the month in which the
payment is made), less any payments which
may have been made for such elapsed months
pursuant to Subparagraph 5.5(c) below;
(2) Commencing on the first day of the second
month following receipt by Tenant of the
annual comparative statement, and continuing
until the receipt by Tenant of the next
annual statement, the minimum monthly
installments of rent due hereunder shall be
increased by an amount equal to the Monthly
Increase, subject to the provisions set
forth in Subparagraph 5.5(c) below. Any
overpayment by Tenant of additional rent due
on account of the Operating Expense Increase
shall be adjusted by a credit to Tenant
given contemporaneously with the furnishing
of the next comparative statement.
(c) Optional Billing for Operating Expenses. At
Landlord's option, exercisable with respect to any
one or more calendar years during the term of this
Lease, Landlord may include, within the comparative
statement furnished to Tenant pursuant to
Subparagraph 5.5(b) above, Landlord's good faith
estimate of Operating Expenses for the then current
calendar year, and the estimated annual Operating
Expense Increase based thereon. In such case, the
"Monthly Increase" as used in Subparagraph 5.5(b)
above for the computation of Tenant's payments on
account of the Operating Expense Increase for the
current year, shall be equal to one-twelfth of the
aforesaid estimated Operating Expense Increase.
5.6 Disputes. The information set forth on each Comparative Statement
of Operating Expenses and on each Statement of Taxes furnished to Tenant as
provided hereinabove shall be deemed approved by Tenant unless, within thirty
(30) days after submission to Tenant, Tenant shall notify Landlord that it
disputes the correctness thereof, specifying in detail the basis for such
assertion. Pending the resolution of any dispute, however, Tenant shall continue
to make payments in accordance with the information contained in the comparative
statement. Landlord agrees to promptly provide to Tenant, upon request, extracts
from Landlord's books and records which are relevant to any items in dispute.
5.7 Audit. In the event Tenant elects to audit Landlord's Comparative
Statement of Operating Expenses or Statement of Taxes in accordance with this
clause, such audit must be (i) conducted by an independent reputable mutually
agreeable accounting firm that is not being compensated by Tenant on a
contingency fee basis. and (ii) completed within sixty (60) days following
Tenant's notice disputing the correctness of the Comparative Statement of
Operating Expenses pursuant to Section 5.6 above. Furthermore, all of the
information obtained through the Tenant's audit with respect to financial
matters (including, without limitation, costs, expenses, income) and any other
matters pertaining to the Landlord and/or the Project as well as any compromise,
settlement, or adjustment reached between Landlord and Tenant relative to the
results of the audit shall be held in strict confidence by the Tenant and its
officers, agents, and
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employees; and Tenant shall cause its auditor and any of its officers, agents,
and employees to be similarly bound. As a condition precedent to Tenant's
exercise of its right to audit, Tenant must deliver to Landlord a signed
confidentiality agreement from the auditor (in form acceptable to Landlord)
acknowledging that all of the results of such audit as well as any compromise,
settlement, or adjustment reached between Landlord and Tenant shall be held in
strict confidence and shall not be revealed in any manner to any person except
upon the prior written consent of the Landlord. Tenant understands and agrees
that this provision is of material importance to the Landlord and that any
violation of the terms of this provision shall result in immediate and
irreparable harm to the Landlord. Landlord shall have all rights allowed by law
or equity if Tenant, its officers, agents, or employees and/or the auditor
violate the terms of this provision, including, without limitation, the right to
terminate this Lease or the right to terminate Tenant's right to audit.
5.8 Survival After Termination. If upon termination of this Lease for
any cause, the amount of any additional rent due pursuant to Article 5 has not
yet been determined, an appropriate payment from Tenant to Landlord, or refund
from Landlord to Tenant, shall be made within thirty (30) days after Tenant's
receipt of such determination from Landlord.
ARTICLE 6. INSURANCE
6.1 Landlord's Insurance. At all times during the Term, Landlord will
carry and maintain:
(a) Fire and extended coverage insurance covering the
Project, its equipment, common area furnishings, and
leasehold improvements in the Premises to the extent
of the Tenant Finish Allowance (as that term is
defined in the Workletter);
(b) Bodily injury and property damage liability
insurance; and
(c) Such other insurance as Landlord reasonably
determines from time to time.
The insurance coverages and amounts in this Section 6.1 will
be reasonably determined by Landlord.
6.2 Tenant's Insurance. At all times during the Term, Tenant will carry
and maintain, at Tenant's expense, the following insurance, in the amounts
specified below or such other amounts as Landlord may from time to time
reasonably request, with insurance companies and on forms satisfactory to
Landlord:
(a) Bodily injury and property damage liability
insurance, with a combined single occurrence limit of
not less than $3,000,000 per occurrence. All such
insurance will be equivalent to coverage offered by a
commercial comprehensive general liability form,
including without limitation personal injury,
products and completed operations, broad form
property damage, and contractual liability coverage
for the performance by Tenant of the indemnity
agreements set forth in Article 21 of this Lease;
(b) Insurance covering all of Tenant's furniture and
fixtures, machinery, equipment, stock, and any other
personal property owned and used in Tenant's business
and found in, on or about the Project, and any
leasehold improvements to the Premises other than
those provided by Landlord at the
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beginning of the Term, if any, provided pursuant to
the Workletter in an amount not less than the full
replacement cost. Property forms will provide
coverage on a broad form basis insuring against "all
risks of direct physical loss." All policy proceeds
will be used for the repair or replacement of the
property damaged or destroyed; however, if this Lease
ceases under the provisions of Article 18, Tenant
will be entitled to any proceeds resulting from
damage to Tenant's furniture and fixtures, machinery,
equipment, stock, and any other personal property;
(c) Worker's compensation insurance insuring against and
satisfying Tenant's obligations and liabilities under
the worker's compensation laws of the state in which
the Project is located, including employer's
liability insurance in the limits required by the
laws of the state in which the Project is located;
and
(d) Owned, hired, or non-owned comprehensive automobile
liability at a limit of liability not less than
$3,000,000 combined bodily injury and property damage
per occurrence.
If Tenant fails to obtain or maintain any insurance required
hereunder, Landlord shall have the option, without assuming
any obligation in connection therewith, to effect such
insurance at the sole cost of the Tenant and all outlays by
Landlord shall be reimbursed by Tenant to Landlord as
Additional Rent.
6.3 Forms of Policies. Certificates of insurance, together with copies
of the endorsements, when applicable, naming Landlord and any others specified
by Landlord as additional insurers, will be delivered to Landlord prior to
Tenant's occupancy of the Premises and from time to time at least 10 days prior
to the expiration of the term of each such policy. All commercial general
liability or comparable policies maintained by Tenant will name Landlord and
such other persons or firms as Landlord specifies from time to time as
additional insurers, entitling them to recover under such policies for any loss
sustained by them, their agents, and employees, including those losses sustained
as a result of the negligent acts or omissions of Tenant. All such policies
maintained by Tenant will provide that they may not be terminated nor may
coverage be reduced except after 30 days prior written notice to Landlord. All
commercial general liability, automobile, and property policies maintained by
Tenant will be written as primary policies, not contributing with and not
supplemental to the coverage that Landlord may carry.
6.4 Waiver of Subrogation. Landlord and Tenant each waive any and all
rights to recover against the other or against any other tenant or occupant of
the Project, or against the officers, directors, shareholders, partners, joint
venturers, employees, agents, customers, invitees, or business visitors of such
other party or of such other tenant or occupant of the Project, for any loss or
damage to such waiving party arising from any cause covered by any property
insurance required to be carried by such party pursuant to this Article 6 or any
other property insurance actually carried by such party to the extent of the
limits of such policy. Landlord and Tenant from time to time will cause their
respective insurers to issue appropriate waiver of subrogation rights
endorsements to all property insurance policies carried in connection with the
Project or the Premises or the contents of the Project or the Premises. Tenant
agrees to cause all other occupants of the Premises claiming by, under, or
through Tenant to execute and deliver to Landlord such a waiver of claims and to
obtain such waiver of subrogation rights endorsements.
6.5 Adequacy of Coverage. Landlord, its agents and employees make no
representation that the limits of liability specified to be carried by Tenant
pursuant to this Article 6
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are adequate to protect Tenant. If Tenant believes that any of such insurance
coverage is inadequate, Tenant shall obtain such additional insurance coverage
as Tenant deems adequate, at Tenant's sole expense. Tenant covenants that the
Premises will be used only for general business office purposes and purposes
incidental to that use, and for no other purpose. Tenant will use the Premises
in a careful, safe, and proper manner. Tenant will not use or permit the
Premises to be used or occupied for any purpose or in any manner prohibited by
any applicable laws. Tenant will not commit waste or suffer or permit waste to
be committed in, on, or about the Premises. Tenant will conduct its business and
control its employees, agents, and invitees in such a manner as not to create
any nuisance or interfere with, annoy, or disturb any other Tenant or occupant
of the Project or Landlord in its operation of the Project. Tenant agrees to
take possession of and occupy the entire Premises no later than 60 days after
the Commencement Date, and Tenant further agrees to continue to occupy the
Premises throughout the remainder of the Tenn of this Lease until 90 days prior
to the Expiration Date.
ARTICLE 8. REQUIREMENTS OF LAW; FIRE INSURANCE
8.1 General. At its sole cost and expense, Tenant will promptly comply
with all laws, statutes, ordinances, codes, and governmental rules, regulations,
or requirements of federal, state, county, and local governmental authorities
now in force or in force at any given time after the Lease Date, with the
requirements of any board of fire underwriters or other similar body constituted
now or after the Lease Date, with any direction or occupancy certificate issued
pursuant to any law by any public officer or officers, as well as with the
provisions of all recorded documents affecting the Premises, insofar as they
relate to the condition, use, or occupancy of the Premises, excluding
requirements of structural changes to the Building, unless required by the
unique nature of Tenant's use or occupancy of the Premises.
8.2 Hazardous Materials.
(a) For purposes of this Lease, "hazardous materials"
means any explosives, radioactive materials,
hazardous wastes, or hazardous substances, including
without limitation asbestos containing materials,
PCB's, CFC's, or substances defined as "hazardous
substances" in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 6901-6987; or any other
federal, state, or local statute, law, ordinance,
code, rule, regulation, order, or decree regulating,
relating to, or imposing liability or standards of
conduct concerning hazardous materials, waste, or
substances now or at any time hereafter in effect
(collectively, "hazardous materials laws").
(b) Tenant will not cause or permit the storage, use,
generation, release, or disposition of any hazardous
materials in, on, or about the Premises or the
Project by Tenant, its agents, employees, or
contractors. Tenant will not permit the Premises to
be used or operated in a manner that may cause the
Premises or the Project to be contaminated by any
hazardous materials in violation of any hazardous
materials laws. Tenant will immediately advise
Landlord in writing of (1) any and all enforcement,
cleanup, remedial, removal, or other governmental or
regulatory actions instituted, completed, or
threatened pursuant to any hazardous materials laws
relating to any hazardous materials affecting the
Premises; and (2) all claims made or threatened by
any third party against Tenant, Landlord, the
Premises or the Project relating to damage,
contribution, cost recovery, compensation, loss,
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or injury resulting from any hazardous materials on
or about the Premises. Without Landlord's prior
written consent, Tenant will not take any remedial
action or enter into any agreements or settlements in
response to the presence of any hazardous materials
in, on, or about the Premises.
(c) Tenant will be solely responsible for and will
defend, indemnify and hold Landlord, its agents, and
employees harmless from and against all claims,
costs, expenses, damages, and liabilities, including
attorneys' fees and costs, arising out of or in
connection with Tenant's breach of its obligations in
this Article 8. Tenant will be solely responsible for
and will defend, indemnify, and hold Landlord, its
agents, and employees harmless from and against any
and all claims, costs, and liabilities, including
attorneys' fees and costs, arising out of or in
connection with the removal, cleanup, and restoration
work and materials necessary to return the Premises
and any other property of whatever nature located on
the Project to their condition existing prior to the
appearance of Tenant's hazardous materials on the
Premises. Tenant's obligations under this Article 8
will survive the expiration or other termination of
this Lease.
8.3 Certain Insurance Risks. Tenant will not do or permit to be done
any act or thing upon the Premises or the Project which would (a) jeopardize or
be in conflict with fire insurance policies covering the Project and fixtures
and property in the Project; (b) increase the rate of fire insurance applicable
to the Project to an amount higher than it otherwise would be for general office
use of the Project; or (c) subject Landlord to any liability or responsibility
for injury to any person or persons or to property by reason of any business or
operation being carried on upon the Premises. If the conduct of the Tenant, or
any acts or omissions of the Tenant shall cause or result in any increase in
premiums for insurance carried by the Landlord, whether or not Landlord allows
such act or omission to continue, Tenant shall pay any increase in premium as
Additional Rent.
ARTICLE 9. ASSIGNMENT AND SUBLETTING
9.1 General. Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors, and assigns, covenants and
agrees that it will not assign, mortgage, or encumber this Lease, or sublease,
nor otherwise permit the Premises or any part of the Premises to be used or
occupied by others, without the prior written consent of Landlord in each
instance, which consent may not be unreasonably withheld. Landlord may condition
its consent upon, among other things, execution by the subtenant or assignee, as
the case may be, of an instrument confirming the restrictions on further
subleasing or assignment contained herein and joining in the waivers and
indemnities made by Tenant hereunder. Any assignment or sublease in violation of
this Article 9 will be void. If this Lease is assigned, or if the Premises or
any part of the Premises are subleased or occupied by anyone other than Tenant,
Landlord may, after any default by Tenant, collect rent from assignee,
subtenant, or occupant, and apply the net amount collected to Rent. No
assignment, sublease, occupancy, or collection will be deemed (a) a waiver of
the provisions of this Section 9.1; (b) the acceptance of the assignee,
subtenant, or occupant as Tenant; or (c) a release of Tenant from the further
performance by Tenant of covenants on the part of Tenant contained in this
Lease. The consent by Landlord to an assignment or sublease will not be
construed to relieve Tenant from obtaining Landlord's prior written consent to
any further assignment or sublease. No permitted subtenant may assign or
encumber its sublease or further sublease all or any portion of its subleased
space, or otherwise permit the subleased space or any part of its subleased
space to be used or occupied by others, without Landlord's prior written
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consent in each instance. Any assignee approved by Landlord must assume all of
the obligations and duties of Tenant under this Lease pursuant to an assumption
agreement satisfactory to Landlord of which Landlord is the beneficiary.
9.2 Submission of Information. If Tenant requests Landlord's consent to
a specific assignment or subletting, Tenant will submit in writing to Landlord
(a) the name and address of the proposed assignee or subtenant; (b) the business
terms of the proposed assignment or sublease; (c) reasonably satisfactory
information as to the nature and character of the business of the proposed
assignee or subtenant, and as to the nature of its proposed use of the space;
(d) banking, financial, or other credit information sufficient to enable
Landlord to determine the financial responsibility and character of the proposed
assignee or subtenant; (e) the proposed form of assignment (including lease
assumption provisions) or sublease for Landlord's approval; and (f) any other
information reasonably required by Landlord.
9.3 Payments to Landlord. If Landlord consents to a proposed assignment
or sublease, then Landlord will have the right to require Tenant to pay to
Landlord a sum equal to (a) any rent or other consideration paid to Tenant by
any proposed transferee that (after deducting the costs of Tenant, if any, in
effecting the assignment or sublease, including reasonable alterations costs,
commissions and legal fees) is in excess of the Rent allocable to the
transferred space then being paid by Tenant to Landlord pursuant to this Lease;
(b) any other profit or gain (after deducting any necessary expenses incurred)
realized by Tenant from any such sublease. or assignment; and (c) Landlord's
reasonable attorneys' fees and costs incurred in connection with negotiation,
review, and processing of the transfer. All such sums owed to Landlord under
93(c), above, will be payable to Landlord at the time the next payment of
Monthly Rent is due.
9.4 Prohibited Transfers. The transfer of a majority of the issued and
outstanding capital stock of any corporate Tenant or subtenant of this Lease, or
a majority of the total interest in any partnership Tenant or subtenant, however
accomplished, and whether in a sin-le transaction or in a series of related or
unrelated transactions, will be deemed an assignment of this Lease or of such
sublease requiring Landlord's consent in each instance. For purposes of this
Article 9, the transfer of outstanding capital stock of any corporate Tenant
will not include any sale of such stock by persons other than those deemed
"insiders" within the meaning of the Securities Exchange Act of 1934, as
amended, effected through the "over-the-counter market" or through any
recognized stock exchange.
9.5 Landlord's Options. In the event Tenant proposes to transfer this
Lease or all or any part of the Premises, Landlord in addition to any rights
contained herein, shall have the following options at its discretion:
(a) to give Tenant written notice of Landlord's intention
to terminate this Lease as to all or any portion of
the Premises on the date such notice is given or on
any later date specified therein, whereupon, on the
date specified in such notice, Tenant's right to
possession of the Premises or such portion of the
Premises shall cease and this Lease shall thereupon
be terminated, except as to any incompleted
obligations of Tenant; or
(b) to re-enter and take possession of the Premises or
the part thereof subject to such transfer, and to
enforce all rights of Tenant, in accordance with such
sublet or assignment of the Premises; or any part
thereof, as if Landlord was
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the sublessor or assignor, and to do whatever Tenant
is permitted to do pursuant to the terms of such
sublease or assignment.
9.6 Permitted Transfer. Landlord consents to an assignment of this
Lease or sublease of all or part of the Premises to a wholly-owned subsidiary of
Tenant or the parent of Tenant or to any corporation into or with which Tenant
may be merged or consolidated; provided that (a) Tenant promptly provides
Landlord with a fully executed copy of such assignment or sublease; (b) Tenant
is not released from liability under this Lease and (c) the assignee assumes in
writing all of the obligations of Tenant under this Lease.
ARTICLE 10. RULES AND REGULATIONS
Tenant and its employees, agents, licensees, and visitors will at all
times observe faithfully, and comply strictly with, the rules and regulations
set forth in Exhibit D. Landlord may from time to time reasonably amend, delete,
or modify existing rules and regulations, or adopt reasonable new rules and
regulations for the use, safety, cleanliness, and care of the Premises, the
Building, and the Project, and the comfort, quiet, and convenience of occupants
of the Project. Modifications or additions to the rules and regulations will be
effective upon 30 days' prior written notice to Tenant from Landlord. In the
event of any breach of any rules or regulations or any amendments or additions
to such rules and regulations, Landlord will have all remedies that this Lease
provides for default by Tenant, and will in addition have any remedies available
at law or in equity, including the right to enjoin any breach of such rules and
regulations. Landlord will not be liable to Tenant for violation of such rules
and regulations by any other tenant, its employees, agents, visitors, or
licensees or any other person. In the event of any conflict between the
provisions of this Lease and the rules and regulations, the provisions of this
Lease will govern.
ARTICLE 11. COMMON AREAS
As used in this Lease, the term "common areas" means, without
limitation, the hallways, entryways, stairs, elevators, driveways, roadways,
parking areas, walkways, terraces, docks, loading areas, restrooms, trash
facilities, and all other areas and facilities in the Project that are provided
and designated from time to time by Landlord for the general nonexclusive use
and convenience of Tenant with Landlord and other tenants of the Project and
their respective employees, invitees, licensees, or other visitors. Landlord
grants Tenant, its employees, invitees, licensees, and other visitors a
nonexclusive license for the Tenn to use the common areas in common with others
entitled to use the common areas, subject to the terms and conditions of this
Lease. Without advance written notice to Tenant, except with respect to matters
covered by subsection (a) below, and without any liability to Tenant in any
respect, Landlord will have the right to:
(a) Close off any of the common areas to whatever extent required
in the opinion of Landlord and its counsel to prevent a
dedication of any of the common areas or the accrual of any
rights by any person or the public to the common areas;
(b) Temporarily close any of the common areas for maintenance,
alteration, or improvement purposes; and
(c) Change the size, use, shape, or nature of any such common
areas, including erecting additional buildings on the common
areas, expanding the existing Building or other buildings to
cover a portion of the common areas, converting common areas
to a portion of the Building or other buildings, or converting
any portion of the
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Building (excluding the Premises) or other buildings to common
areas. Upon erection of any additional buildings or change in
common areas, the portion of the Project upon which buildings
or structures have been erected will no longer be deemed to be
a part of the common areas. In the event of any such changes
in the size or use of the Building or common areas of the
Building or Project, Landlord will make an appropriate
adjustment in the Rentable Area of the Building or the
Building's pro rata share of exterior common areas of the
Project, as appropriate, and a corresponding adjustment to
Tenant's Share of the operating expenses payable pursuant to
Article 5 of this Lease.
ARTICLE 12. LANDLORD'S SERVICES
12.1 Landlord's Repair and Maintenance. Subject to the condemnation and
casualty provisions contained in this Lease and except as otherwise expressly
provided herein, Landlord will maintain and repair the common areas of the
Project, including lobbies, stairs, elevators, corridors, and restrooms, the
windows in the Building, the mechanical, plumbing and electrical equipment
serving the Building, and the structure and the roof of the Building in
reasonably good order and condition.
12.2 Landlord's Other Services.
(a) Landlord will furnish the Premises with services,
including without limitation, (1) electricity for
lighting and the operation of low-wattage office
machines (such as desktop micro-computers, desktop
calculators, and typewriters) reasonably required
during Business Hours; (2) heat and air conditioning
reasonably required for the comfortable occupation of
the Premises during business hours; and (3) access
and elevator service . Landlord will not be obligated
to furnish more power to the Premises than is
proportionally allocated to the Premises under the
Building design. The Tenant shall be responsible for
the payment of all electrical services and repairs.
(b) Tenant will have the right to purchase for use during
business and non-business hours the services
described in clauses (a)(1) and (2) in excess of the
amounts Landlord has agreed to furnish so long as (1)
Tenant gives Landlord reasonable prior notice of its
desire to do so; (2) the excess services are
reasonably available to Landlord and to the Premises;
and (3) Tenant pays as additional rent (at the time
the next monthly rent is due) the cost of such excess
service from time to time charged by Landlord;
subject to the procedures established by the Landlord
from time to time for providing such additional or
excess services.
12.3 Tenant's Costs. Landlord shall be solely responsible for all
repairs, maintenance and improvements to air conditioning and heating equipment,
lighting within the leasehold premises. Tenants shall be responsible for
electrical utilities payment, janitorial and maintenance services rendered to
the leasehold premises, and all other maintenance-related services related to
the leasehold premises.
12.4 Limitation on Liability. Landlord will not be in default under
this Lease or be liable to Tenant or any other person for direct or
consequential damage, or otherwise, for any failure to supply any heat, air
conditioning, elevator, cleaning, lighting, or security; for surges or
interruptions of electricity; or for interruptions to other services Landlord
has agreed to supply. Landlord will use
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reasonable efforts to diligently remedy any interruption in the furnishing of
such services. Landlord reserves the right temporarily to discontinue such
services at such times as may be necessary by reason of accident; repairs,
alterations or improvements; strikes; lockouts; riots; acts of God; governmental
preemption in connection with a national or local emergency; any rule, order, or
regulation of any governmental agency; conditions of supply and demand that make
any product unavailable; Landlord's compliance with any mandatory governmental
energy conservation or environmental protection program, or any voluntary energy
conservation program at the request of or with consent or acquiescence of
Tenant; or any other happening beyond the control of Landlord. Landlord will not
be liable to Tenant or any other person or entity for direct or consequential
damages resulting from the admission to or exclusion from the Building or
Project of any person. In the event of invasion, mob, riot, public excitement,
strikes, lockouts, or other circumstances rendering such action advisable in
Landlord's sole opinion, Landlord will have the right to prevent access to the
Building or Project during the continuance of the same by such means as
Landlord, in its sole discretion, may deem appropriate, including without
limitation locking doors and closing parking areas and other common areas.
Landlord will not be liable for damages to person or property or for injury to,
or interruption of, business for any discontinuance permitted under this Article
12, nor will such discontinuance in any way be construed as an eviction of
Tenant or cause an abatement of Rent or operate to release Tenant from any of
Tenant's obligations under this Lease.
ARTICLE 13. TENANT'S CARE OF THE PREMISES
Tenant will maintain the Premises (including Tenant's equipment,
personal property, and trade fixtures located in the Premises) in their
condition at the time they were delivered to Tenant, reasonable wear and tear
excluded. Tenant will immediately advise Landlord of any damage to the Premises
or the Project. All damage or injury to the Premises, the Project, or the
fixtures, appurtenances, and equipment in the Premises of the Project that is
caused by Tenant, its agents, employees, or invitees may be repaired, restored,
or replaced by Landlord, at the expense of Tenant. Such expense (plus 15% of
such expense for Landlord's overhead) will be collectible as Additional Rent and
will be paid by Tenant within 10 days after delivery of a statement for such
expense.
ARTICLE 14. ALTERATIONS
14.1 General.
(a) Tenant will not make or allow to be made any
alterations, additions, or improvements to or of the
Premises or any part of the Premises, or attach any
fixtures or equipment to the Premises, without first
obtaining Landlord's written consent. In no event
shall the work of Tenant affect or impair the
structure, the elevators, or utility systems of the
Building. Landlord's approval of the plans,
specifications, and working drawings for Tenant's
alterations shall create no responsibility or
liability on the part of the Landlord for their
completeness, design sufficiency, or compliance with
all laws, ordinances, rules, requirements, and
regulations of governmental agencies or authorities,
or the use and occupancy permit for the Building. All
such alterations, additions, and improvements
consented to by Landlord, and capital improvements
that are required to be made to the Project as a
result of the nature of Tenant's use of the Premises:
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(1) Will be performed by contractors approved by
Landlord and subject to conditions specified
by Landlord (which may include requiring the
posting of performance and payment bonds);
(2) At Landlord's option, will be made by
Landlord for Tenant's account, and Tenant
will reimburse Landlord for their cost
(including 15% for Landlord's overhead)
within 10 days after receipt of a statement
of such cost;
(3) Will be done in a good and workmanlike
manner and shall be completed promptly;
(4) Shall not cause a loss or diminution of
electric power or other utilities or
services to tenants of the Building;
(5) Will be performed according to plans,
specifications, and working drawings
approved by Landlord; and
(6) Will be in accordance with all applicable
federal, state, county and local laws,
rules, regulations, ordinances and codes.
At all times between the start and completion of the
work, in addition to the other policies of insurance
required by this Lease, Tenant shall maintain a
policy of "All Risk" Builder's Risk Insurance
covering the full replacement value of all work done
and fixtures and equipment installed or to be
installed at the Premises pursuant to this Article
14. Tenant herewith agrees to be responsible for all
damages to persons or property, including loss of
life, as a result of occurrences connected with
activities undertaken by Tenant, its agents,
contractors, and employees pursuant hereto, and
hereby indemnifies Landlord and shall defend and hold
Landlord harmless from and against any and all loss,
cost or expense in connection with its
responsibilities hereunder.
(b) Subject to Tenant's rights in Article 16, all
alterations, additions, fixtures, and improvements,
whether temporary or permanent in character, made in
or upon the Premises either by Tenant or Landlord,
will immediately become Landlord's property and at
the end of the Term will remain on the Premises
without compensation to Tenant, unless Landlord at
anytime advises Tenant in writing that such
alterations, additions, fixtures, or improvements
must be removed at the expiration or other
termination of this Lease.
14.2 Free-Standing Partitions. Tenant will have the right to install
free-standing work station partitions, without Landlord's prior written consent,
so long as no building or other governmental permit is required for their
installation or relocation; however, if a permit is required, Landlord will not
unreasonably withhold its consent to such relocation or installation. The
free-standing work station partitions for which Tenant pays will be part of
Tenant's trade fixtures for all purposes under this Lease. All other partitions
installed in the Premises are and will be Landlord's property for all purposes
under this Lease.
14.3 Removal. If Landlord has required Tenant to remove any or all
alterations, additions, fixtures, and improvements that are made in or upon the
Premises pursuant to this
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Article 14 prior to the Expiration Date, Tenant will remove such alterations,
additions, fixtures, and improvements at Tenant's sole cost and will restore the
Premises to the condition in which they were before such alterations, additions,
fixtures, improvements, and additions were made.
ARTICLE 15. MECHANICS' LIENS
Tenant will pay or cause to be paid all costs and charges for work (a)
done by Tenant or caused to be done by Tenant, in or to the Premises, and (b)
for all materials furnished for or in connection with such work. Tenant will
indemnify Landlord against and defend and hold Landlord, the Premises, and the
Project free, clear and harmless of and from all mechanics' liens and claims of
liens, and all other liabilities, liens, claims, and demands on account of such
work by or on behalf of Tenant, other than work performed by Landlord pursuant
to the Workletter. If any such lien, at any time, is filed against the Premises
or any part of the Project, Tenant will cause such lien to be discharged of
record within 10 days after the filing of such lien, except that if Tenant
desires to contest such lien, it will furnish Landlord, within such 10-day
period, security reasonably satisfactory to Landlord of at least 150% of the
amount of the claim, plus estimated costs and interest, or comply with such
statutory procedures as may be available to release the lien. If a final
judgment establishing the validity or existence of a lien for any amount is
entered, Tenant will pay and satisfy the same at one. If Tenant fails to pay any
charge for which a mechanics' lien has been filed, and has not given Landlord
security as described above, or has not complied with such statutory procedures
as may be available to release the lien, Landlord may, at its option, pay such
charge and related costs and interest, and the amount so paid, together with
reasonable attorneys' fees incurred in connection with such lien, will be
immediately due from Tenant to Landlord as Additional Rent. Nothing contained in
this Lease will be deemed the consent or agreement of Landlord to subject
Landlord's interest in the Project to liability under any mechanics' or other
lien law. If Tenant receives written notice that a lien has been or is about to
be filed against the Premises or the Project, or that any action affecting title
to the Project has been commenced on account of work done by or for or materials
furnished or for Tenant, it will immediately give Landlord written notice of
such notice. At least 15 days prior to the commencement of any work (including
but not limited to any maintenance, repairs, alterations, additions,
improvements, or installations) in or to the Premises, by or for Tenant, Tenant
will give Landlord written notice of the proposed work and the names and
addresses of the persons supplying labor and materials for the proposed work.
Landlord will have the right to post notices of non-responsibility or similar
written notices on the Premises in order to protect the Premises against any
such liens.
ARTICLE 16. END OF TERM
At the end of this Lease, Tenant will promptly quit and surrender the
Premises broom-clean, in good order and repair, ordinary wear and tear excepted
and deliver all keys to the Premises and the Building to Landlord. If Tenant is
not then in default Tenant may remove from the Premises any trade fixtures,
equipment, and movable furniture placed in the Premises by Tenant, whether or
not such trade fixtures or equipment are fastened to the Building; Tenant will
not remove any trade fixtures or equipment without Landlord's prior written
consent if such fixtures or equipment are used in the operation of the Building,
or if the removal of such fixtures or equipment will result in impairing the
structural strength of the Building. Whether or not Tenant is in default, Tenant
will remove such alterations, additions, improvements, trade fixtures,
equipment, and furniture as Landlord has requested in accordance with Article
14. Tenant will fully repair any damage occasioned by the removal of any trade
fixtures, equipment, furniture, alterations, additions, and improvements. All
trade fixtures, equipment, furniture, inventory, effects, alterations,
additions, and improvements on the Premises after the end of the Term will be
deemed conclusively to have been abandoned and may be appropriated, sold,
stored, destroyed, or otherwise disposed of by Landlord
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without notice to Tenant or any other person and without obligation to account
for them. Tenant will pay Landlord for all expenses incurred in connection with
the removal of such property, including but not limited to the cost of storage,
and the cost of repairing any damage to the Building or Premises caused by the
removal of such property. Tenant's obligation to observe and perform this
covenant will survive the expiration or other termination of this Lease.
ARTICLE 17. EMINENT DOMAIN
If all of the Premises are taken by exercise of the power of eminent
domain (or conveyed by Landlord in lieu of such exercise) this Lease will
terminate on a date (the "termination date") which is the earlier of the date
upon which the condemning authority takes possession of the Premises or the date
on which title to the Premises is vested in the condemning authority. If more
that 25% of the Rentable Area of the Premises is so taken, Tenant will have the
right to cancel this Lease by written notice to Landlord given within 20 days
after the termination date. If less than 25% of the Rentable Area of the
Premises is so taken, or if the Tenant does not cancel this Lease according to
the preceding sentence, the Monthly Rent will be abated in the proportion of the
Rentable Area of the Premises so taken to the Rentable Area of the Premises
immediately before such taking, and Tenant's Share will be appropriately
recalculated. If 25% or more of the Building or the Project is so taken,
Landlord may cancel this Lease by written notice to Tenant given within 30 days
after the termination date. In the event of any such taking, the entire award
will be paid to Landlord, and Tenant will have no right or claim to any part of
such award; however, Tenant will have the right to assert a claim against the
condemning authority in a separate action, so long as Landlord's award is not
reduced as a consequence of such claim, for Tenant's moving expenses and trade
fixtures owned by Tenant.
ARTICLE 18. DAMAGE AND DESTRUCTION
(a) If the Premises or the Building is damaged by fire or other
insured casualty, Landlord will give Tenant written notice of
the time which will be needed to repair such damage, as
determined by Landlord in its reasonable discretion, and the
election (if any) which Landlord has made according to this
Article 18. Such notice will be given before the 60th day (the
"notice date") after the fire or other insured casualty.
(b) If the Premises or the Building is damaged by fire or other
insured casualty to an extent which may be repaired within 270
days after the notice date, as reasonably determined by
Landlord, Landlord will promptly begin to repair the damage
after the notice date and will diligently pursue the
completion of such repair. In that event this Lease will
continue in full force and effect except that Monthly Rent
will be abated on a pro rata basis from the date of the damage
until the date of the completion of such repairs (the "repair
period") based on the proportion of the Rentable Area of the
Premises Tenant is unable to use during the repair period.
(c) If the Premises or the Building is damaged by fire or other
insured casualty to an extent that may not be repaired within
270 days after the notice date, as reasonably determined by
Landlord, then (1) Landlord may cancel this Lease as of the
date of such damage by written notice given to Tenant on or
before the notice date or (2) Tenant may cancel this Lease as
of the date of such damage by written notice given to Landlord
within such 270-day period. If neither Landlord nor Tenant so
elects to cancel this Lease, Landlord will diligently proceed
to repair the Building and Premises and Monthly Rent will be
abated on a pro rata basis during the repair
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period based on the proportion of the Rentable Area of the
Premises Tenant is unable to use during the repair period.
(d) Notwithstanding the provisions of subparagraphs (a), (b), and
(c) above, if the Premises or the Building or the Project are
damaged by uninsured casualty, or if the proceeds of insurance
are insufficient to pay for the repair of any damage to the
Premises or the Building or the Project, Landlord will have
the option to repair such damage or cancel this Lease as of
the date of such casualty by written notice to Tenant on or
before the notice date.
(e) If any such damage by fire or other casualty is the result of
the willful conduct or negligence or failure to act of Tenant,
its agents, contractors, employees, or invitees, there will be
no abatement of Monthly Rent as otherwise provided for in this
Article 18. Tenant will have no rights to terminate this Lease
on account of any damage to the Premises, the Building, or the
Project, except as set forth in this Lease.
(f) For purposes of this Article 18 and subject to subsections (a)
through (e) hereof, Landlord shall repair or restore any
portion of the alterations, additions, improvements in the
Premises or the decorations thereto to the extent that such
alterations, additions, improvements and decorations were
provided by Landlord at the beginning of the Term. Landlord
shall have no further obligations pursuant to this Lease to
repair or restore any alterations, additions or improvements
in the Premises or the decorations thereto. If Tenant desires
any other or additional repairs or restoration and if Landlord
consents thereto, the same shall be done at Tenant's sole cost
and expense. Tenant acknowledges that Landlord shall be
entitled to the full proceeds of any insurance coverage,
carried by Landlord for damage to alterations, additions,
improvements or decorations.
ARTICLE 19. SUBORDINATION
19.1 General. This Lease and Tenant's rights under this Lease are
subject and subordinate to any ground or underlying lease, mortgage, indenture,
deed of trust, or other lien encumbrance (each a "superior lien"), together with
any renewals, extensions, modifications, consolidations, and replacements of
such superior lien, now or in the future affecting or placed, charged, or
enforced against the Land, the Building, or all or any portion of the Project or
any interest of Landlord in them or Landlord's interest in this Lease and the
leasehold estate created by this Lease (except to the extent any such instrument
expressly provides that this Lease is superior to such instrument). This
provision will be self-operative and no further instrument of subordination will
be required in order to effect it. Notwithstanding the foregoing, Tenant will
execute, acknowledge, and deliver to Landlord, within 20 days after written
demand by Landlord, such documents as may be reasonably requested by Landlord or
the holder of any superior lien to confirm or effect any such subordination or
superiority, as applicable.
19.2 Attornment. Tenant agrees that in the event that any holder of a
superior lien succeeds to Landlord's interest in the Premises, Tenant will pay
to such holder all Rent subsequently payable under this Lease. Further, Tenant
agrees that in the event of the enforcement by the holder of a superior lien of
the remedies provided for by law or by such superior lien, Tenant will, upon
request of any person or party succeeding to the interest of Landlord as a
result of such enforcement, automatically become the Tenant of an attorn to such
successor in
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interest without change in the terms or provisions of this Lease. Such successor
interest will not be bound by:
(a) Any payment of Rent for more than one month in
advance, except prepayments in the nature of security
for the performance by Tenant of its obligations
under this Lease that are actually received by such
successor in interest;
(b) Any amendment or modification of this Lease made
without the written consent of such successor in
interest (if such consent was required under the
terms of such superior lien);
(c) Any claim against Landlord arising prior to the date
on which such successor in interest succeeded to
Landlord's interest; or
(d) Any claim or offset of Rent against the Landlord.
Upon request by such successor in interest and
without cost to Landlord or such successor in
interest, Tenant will, within 20 days after written
demand, execute, acknowledge, and deliver an
instrument or instruments confirming the attornment.
If Tenant shall fail to execute and deliver any such
documents provided for in this Article 19, then
Tenant hereby appoints Landlord its attorney-in-fact
for the purpose of executing, acknowledging, and
delivering such documents on behalf of Tenant.
ARTICLE 20. ENTRY BY LANDLORD
Landlord, its agents, employees, and contractors may enter the Premises
at any time in response to an emergency and at any other reasonable time to:
(a) Inspect the Premises;
(b) Exhibit the Premises to prospective purchasers, lenders, or
tenants;
(c) Determine whether Tenant is complying with all its obligations
in this Lease;
(d) Supply cleaning service and any other service to be provided
by Landlord to Tenant according to this Lease;
(e) Post written notices of non-responsibility or similar notices;
or
(f) Make repairs required of Landlord under the terms of this
Lease or make repairs to any adjoining space or utility
services or make repairs, alterations, or improvements to any
other portion of the Building.
Tenant, by this Article 20, waives any claim against Landlord, its
agents, employees, or contractors for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of
occupancy or quiet enjoyment of the Premises, or any other loss
occasioned by any entry in accordance with this Article 20. Landlord
will at all times have
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and retain a key with which to unlock all of the doors in, on, or about
the Premises (excluding Tenant's vaults, safes, and similar areas
designated in writing by Tenant in advance). Landlord will have the
right to use any and all means Landlord may deem proper to open doors
in and to the Premises in an emergency in order to obtain entry to the
Premises, provided that Landlord will promptly repair any damages
caused by any forced entry. Any entry to the Premises by Landlord in
accordance with this Article 20 will not be construed or deemed to be a
forcible or unlawful entry into or a detainer of the Premises or an
eviction, actual or constructive, of Tenant from the Premises or any
portion of the Premises, nor will any such entry entitle Tenant to
damages or an abatement of Monthly Rent, Additional Rent, or other
charges that this Lease requires Tenant to pay.
ARTICLE 21. INDEMNIFICATION, WAIVER, AND RELEASE
21.1 Indemnification. To the extent no prohibited by law, Landlord, its
employees and agents shall not be liable for damage to person, property or
business or resulting from the loss of use thereof sustained by Tenant or other
persons due to the Building or any part thereof becoming out of repair or due to
an accident or due to any act or neglect of any tenant, occupant or other
person. Tenant further agrees that all personal property upon the Premises,
loading dock, holding areas, and freight elevators shall be at the sole risk of
Tenant.
Tenant will neither hold nor attempt to hold Landlord, its employees,
or agents liable for, and Tenant will indemnify and defend and hold harmless
Landlord, its employees, and agents from and against, any and all demands,
claims, causes of action, fines, penalties, damages (including consequential
damages), liabilities, judgments, and expenses (including without limitation
reasonable attorneys' fees) incurred in connection with or arising from:
(a) the use or occupancy or manner of use or occupancy of
the Premises or any common areas by Tenant or any
person claiming under Tenant;
(b) any activity, work, or thing done or permitted by
Tenant in or about the Premises, the Building, or the
Project;
(c) any breach by Tenant or its employees, agents
contractors, or invitees of this Lease; and
(d) any injury or damage to the person, property, or
business of Tenant, its employees, agents,
contractors, or invitees entering upon the Premises
under the express or implied invitation of Tenant.
If any action or proceeding is brought against Landlord, its employees,
or agents by reason of any such claim for which Tenant has indemnified
Landlord, Tenant, upon written notice from Landlord, will defend the
same at Tenant's expense, with counsel reasonably satisfactory to
Landlord.
21.2 Waiver and Release. Tenant, as a material part of the
consideration to Landlord for this Lease, by this Section 21.2 waives and
releases all claims against Landlord, its employees, and agents with respect to
all matters for which Landlord has disclaimed liability pursuant to the
provisions of this Lease.
ARTICLE 22. SECURITY DEPOSIT
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Tenant shall deposit $10,000 upon lease execution, and shall deposit
$40,000 prior to occupancy for a total of $50,000.00 as the security deposit
with Landlord as security for the full, faithful, and timely performance of
every provision of this Lease to be performed by Tenant. If Tenant defaults with
respect to any provision of this Lease, including but not limited to the
provisions relating to the payment of Rent, Landlord may use, apply, or retain
all or any part of the security deposit for the payment of any Rent, or any
other sum in default, or for the payment of any other amount Landlord may spend
or become obligated to spend by reason of Tenant's default, or to compensate
Landlord for any other loss or damage Landlord may suffer by reason of Tenant's
default. If any portion of the security deposit is so used, applied, or
retained, Tenant will within 5 days after written demand deposit cash with
Landlord in an amount sufficient to restore the security deposit to its original
amount. Landlord will be required to keep the security deposit separate from its
general funds, and Tenant will be entitled to actual interest earned on the
security deposit. The security deposit will not be deemed a limitation on
Landlord's damages or a payment of liquidated damages or a payment of the
Monthly Rent due for the last month of the Term. If Tenant fully, faithfully,
and timely performs every provision of this Lease to be performed by it, the
$40,000.00 of the security deposit will be returned to Tenant within 60 days
after the end of the second lease year. If Tenant fully, faithfully, and timely
performs every provision of this Lease to be performed by it, the remaining
$10,000 of the security deposit or any balance of the security deposit will be
returned to Tenant within 60 days after the expiration of the Tenn. Landlord may
deliver the balance of the security deposit then held by Landlord to the
purchaser of the Building in the event the Building is sold or to any transferee
or assignee from Landlord, and after such time Landlord will have no further
liability to Tenant with respect to the security deposit.
ARTICLE 23. QUIET ENJOYMENT
Landlord covenants and agrees with Tenant that so long as Tenant pays
the Rent and observes and performs all the terms, covenants, and conditions of
this Lease on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the Premises subject, nevertheless, to the terms and
conditions of this Lease, and Tenant's possession will not be disturbed by
anyone claiming by, through, or under Landlord.
ARTICLE 24. EFFECT OF SALE
A sale, conveyance, or assignment of the Building or the Project will
operate to release Landlord from liability from and after the effective date of
such sale, conveyance, or assignment upon all of the covenants, terms, and
conditions of this Lease, express or implied, except those liabilities that
arose prior to such effective, and, after the effective date of such sale,
conveyance, or assignment, Tenant will look solely to Landlord's successor in
interest in and to this Lease. This Lease will not be affected by any such sale,
conveyance, or assignment, and Tenant will attorn to Landlord's successor in
interest to this Lease from and after such effective date.
ARTICLE 25. DEFAULT
25.1 Event of Default. The following events are referred to,
collectively, as "events of default" or, individually, as an "event of default":
(a) Tenant fails to pay any Rent or other monetary
obligation when due, and such failure continues for 5
days after written notice from Landlord; Tenant will
not be entitled to more than I written notice for
monetary default during any 12-month period, and if
after such written notice any Rent is not paid
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when due, an event of default will be considered to
have occurred without further notice;
(b) Tenant vacates or abandons the Premises;
(c) This Lease or the Premises or any part of the
Premises is taken upon execution or by other process
of law directed against Tenant, or is taken upon
subject to any attachment by any creditor of Tenant
or claimant against Tenant, and said attachment is
not discharged or disposed of within 15 days after
its levy;
(d) Tenant or any guarantor of Tenant's obligations under
this Lease ("Guarantor") files a petition in
bankruptcy or insolvency or for reorganization or
arrangement under the bankruptcy laws of the United
States or under any insolvency act or any state, or
admits the material allegations of any such petition
by answer or otherwise, or admits in writing its
inability to meet its debts as they mature, or is
dissolved or makes an assignment for the benefit of
creditors;
(e) Involuntary proceedings under any such bankruptcy law
or insolvency act or for the dissolution of Tenant or
any Guarantor are instituted against Tenant or any
Guarantor, or a receiver or trustee is appointed for
all or substantially all of the property of Tenant or
any Guarantor, and such proceeding is not dismissed
or such receivership or trusteeship vacated within 60
days after such institution or appointment;
(f) Tenant fails to take possession of the Premises on
the Commencement Date of the Term;
(g) Tenant violates the terms of Article 9 "Assignment\
and Subletting";
(h) Tenant breaches any of the agreements, terms,
covenants, or conditions of this Lease and such
breach involves a hazardous condition and is not
cured immediately upon written notice to Tenant;
(i) Tenant breaches any of the other agreements, terms,
covenants, or conditions that this Lease requires
Tenant to perform, and such breach continues for a
period of 30 days after written notice from Landlord
to Tenant or, if such breach cannot be cured
reasonably within such 30-day period, if Tenant fails
to diligently commence to cure such breach within 30
days after written notice from Landlord and to
complete such cure within a reasonable time
thereafter; or
(j) Any guaranty of the Lease obligations becomes
unenforceable in whole or in part for any reason.
25.2 Landlord's Remedies. If any one or more events of default set
forth in Section 25.1 occurs then Landlord has the right, at its election:
(a) To give Tenant written notice of Landlord's intention
to terminate this Lease on the earliest date
permitted by law or on any later date specified in
such
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notice, in which case Tenant's right to possession of
the Premises will cease and this Lease will be
terminated, except as to Tenant's liability, as if
the expiration of the term fixed in such notice were
the end of the Term;
(b) Without further demand or notice, and without
terminating this Lease to reenter and take possession
of the Premises or any part of the Premises,
repossess the same, expel Tenant and those claiming
through or under Tenant, and remove the effects of
both or either, using such force for such purposes as
may be necessary, without being liable for
prosecution, without being deemed guilty of any
manner of trespass, and without prejudice to any
remedies for arrears of Monthly Rent or other amounts
payable under this Lease or as a result of any
preceding breach of covenants or conditions; or
(c) Without further demand or notice to cure any event of
default and to charge Tenant for the cost of
effecting such cure, including without limitation
reasonable attorneys' fees and interest on the amount
so advanced at the rate set forth in Section 27.2 1,
provided that Landlord will have no obligation to
cure any such event of default of Tenant.
Should Landlord elect to reenter as provided in
subsection (b), or should Landlord take possession
pursuant to legal proceedings or pursuant to any
notice provided by law, Landlord may, from time to
time, without terminating this Lease, relet the
Premises or any part of the Premises in Landlord's or
Tenant's name, but for the account of Tenant, for
such term or terms (which may be greater or less than
the period which would otherwise have constituted the
balance of the Term) and on such conditions and upon
such other terms (which may include concessions of
free rent and alteration and repair of the Premises)
as Landlord, in its reasonable discretion, may
determine, and Landlord may collect and receive the
rents from such reletting. Landlord will in no way be
responsible or liable for any failure to relet the
Premises, or any part of the Premises, or for any
failure to collect any rent due upon such reletting.
No such reentry or taking possession of the Premises
by Landlord will be construed as an election on
Landlord's part to terminate this Lease unless a
written notice of such intention is given to Tenant.
No written notice from Landlord under this Section or
under a forcible or unlawful entry and detainer
statute or similar law sill constitute an election by
Landlord to terminate this Lease unless such notice
specifically so states. Landlord reserves the right
following any such reentry or reletting to exercise
its right to terminate this Lease by giving Tenant
such written notice, in which event this Lease will
terminate as specified in such notice.
25.3 Certain Damages. In the event that Landlord does not elect to
terminate this Lease as permitted in Section 25.2(a), but on the contrary elects
to take possession as provided in Section 25.2(b), Tenant will pay to Landlord
Monthly Rent and other sums as provided in this Lease that would be payable
under this Lease if such repossession had not occurred, less the net proceeds,
if any, or reletting of the Premises after deducting all of Landlord's
reasonable expenses in connection with such reletting, including without
limitation all repossession costs, brokerage commissions, attorneys' fees,
expenses of employees, alteration and repair costs, and expenses of preparation
for such reletting. Tenant will pay such Rent and other sums to Landlord monthly
on the day on which the Monthly Rent would have been payable under this Lease if
possession had
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not been retaken, and Landlord will be entitled to receive such Rent and other
sums from Tenant on each such day.
25.4 Continuing Liability After Termination. If this Lease is
terminated on account of the occurrence of an event of default, Tenant will
remain liable to Landlord for damages in an amount equal to the Rent and other
amounts that would have been owing by Tenant for the balance of the Term, had
this Lease not been terminated, less the net proceeds, if any, of any reletting
of the Premises by Landlord subsequent to such termination, after deducting all
of landlord's expenses in connection with such reletting, including without
limitation the expenses enumerated in Section 25.3. Landlord will be entitled to
collect such damages from Tenant monthly on the day on which Monthly Rent and
other amounts would have been payable under this Lease if this Lease had not
been terminated, and Landlord will be entitled to receive such Monthly Rent and
other amounts from Tenant on each such day. Alternatively, at the option of
Landlord, in the event this Lease is so terminated, Landlord will be entitled to
recover against Tenant as damages for loss of the bargain and not as a penalty:
(a) The worth at the time of award of the unpaid Rent
that had been earned at the time of termination;
(b) The worth at the time of award of the amount by which
the unpaid Rent that would have been earned after
termination until the time of award exceeds the
amount of such rental loss that Tenant proves could
have been reasonably avoided;
(c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the Term of this
Lease (had the same not been so terminated by
Landlord) after the time of award exceeds the amount
of such rental loss that Tenant proves could be
reasonably avoided;
(d) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's
failure to perform its obligations under this Lease
or which in the ordinary course of things would be
likely to result therefrom.
The "worth at the time of award" of the amounts
referred to in clauses (a) and (b) above is computed
by adding interest at the per annum interest rate
described in Section 27.21 on the date on which this
Lease is terminated from the date of termination
until the time of the award. The "worth at the time
of award" of the amount referred to in clause (c)
above is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of New
York, New York, at the time of award plus 1%.
25.5 Cumulative Remedies. Any suit or suits for the recovery of the
amounts and damages set forth in Section 25.3 and 25.4 may be brought by
Landlord, from time to time, at Landlord's election, and nothing in this Lease
will be deemed to require Landlord to await the date upon which this Lease or
the Term would have expired had there occurred no event of default. Each right
and remedy provided for in this Lease is cumulative and is in addition to every
other right or remedy provided for in this Lease or now or after the Lease Date
existing at law or in equity or by statute or otherwise, and the exercise or
beginning of the exercise by Landlord or any one or more of the rights or
remedies provided for in this Lease now or after the Lease Date existing at law
or in equity or by statute or otherwise will not preclude the simultaneous or
later exercise by
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Landlord of any or all other rights or remedies provided for in this Lease or
now or after the Lease Date existing at law or in equity or by statute or
otherwise. All costs incurred by Landlord in collecting any amounts and damages
owing by Tenant pursuant to the provisions of this Lease or to enforce any
provision of this Lease, including reasonable attorneys' fees from the date any
such matter is turned over to any attorney, whether or not one or more actions
are commenced by Landlord, will also be recoverable by Landlord from Tenant.
25.6 Waiver of Redemption. Tenant waives any right of redemption
arising as a result of Landlord's exercise of its remedies under this Article
25.
ARTICLE 26. PARKING
Tenant will be entitled to use only the parking spaces set forth in
Section 1.1(q) during the Term subject to the rules and regulations set forth in
Exhibit D, and any amendments or additions to them. The parking charges set
forth in Section 1. 1 (r), if any, will be due and payable in advance at the
same time and place as Monthly Rent. Tenant's parking spaces will be unassigned,
non-reserved, and non-designated. Landlord reserves the right to adjust the
parking charges in Landlord's sole discretion at any time after 30 days' prior
written notice.
Neither Landlord nor any operator of the parking areas within the
Project, as the same are designated and modified by Landlord, in its sole
discretion, from time to time (the "parking areas") will be liable for loss of
or damage to any vehicle or any contents of such vehicle or accessories to any
such vehicle, or any property left in any of the parking areas, resulting from
fire, theft, vandalism, accident, conduct of other users of the parking areas
and other persons, or any other casualty or cause. Further, Tenant understands
and agrees that: (a) Landlord will not be obligated to provide any traffic
control, security protection or operator for the parking areas; (b) Tenant uses
the parking areas at its own risk; and (c) Landlord will not be liable for
personal injury or death, or theft, loss of, or damage to property. Tenant
waives and releases Landlord from any and all liability arising out of the use
of the parking areas by Tenant, its employees, agents, invitees, and visitors,
whether brought by any of such persons or any other person.
Tenant's right to use the parking areas will be in common with other
tenants of the Project and with other parties permitted by Landlord to use the
parking areas. Landlord reserves the right to assign and reassign, from time to
time, particular parking spaces for use by persons selected by Landlord,
provided that Tenant's rights under the Lease are preserved. Landlord will not
be liable to Tenant for any unavailability of Tenant's designated spaces, if
any, nor will any unavailability entitle Tenant to any refund, deduction, or
allowance. Tenant will not park in any numbered space or any space designated
as: RESERVED, HANDICAPPED, VISITORS ONLY, or LIMITED TIME PARKING (or similar
designation).
If the parking areas are damaged or destroyed, or if the use of the
parking areas is limited or prohibited by any governmental authority, or the use
or operation of the parking areas is limited or prevented by strikes or other
labor difficulties or other causes beyond Landlord's control, Tenant's inability
to use the parking spaces will not subject Landlord or any operator of the
parking areas to any liability to Tenant and will not relieve Tenant of any of
its obligations under the Lease and the Lease will remain in full force and
effect.
Tenant has no right to assign or sublicense any of its rights in the
parking spaces, except as part of a permitted assignment or sublease of the
Lease.
ARTICLE 27. MISCELLANEOUS
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27.1 No Offer. Submission of the Lease to Tenant is for examination and
shall not bind Landlord in any manner. No lease or obligations of Landlord shall
arise until this instrument is signed by both Landlord and Tenant and delivery
is made to each; provided, however, the execution and delivery by Tenant of this
Lease to Landlord or Landlord's agent shall constitute an irrevocable offer by
Tenant to lease the Premises on the terms and conditions herein contained, which
offer may not be withdrawn or revoked for 15 days after such execution and
delivery.
27.2 Joint and Several Liability. If Tenant is composed of more than
one signatory to this Lease, each signatory will be jointly and severally liable
with each other signatory for payment and performance according to this Lease.
The act of, written notice to, written notice from, refund to, or signature of
any signatory to this Lease (including without limitation modifications of this
Lease made by fewer than all such signatories) will bind every other signatory
as though every other signatory had so acted, or received or given the written
notice or refund, or signed.
27.3 No Construction Against Drafting Party. Landlord and Tenant
acknowledge that each of them and their counsel have had an opportunity to
review this Lease and that this Lease will not be construed against Landlord
merely because Landlord has prepared it.
27.4 Time of the Essence. Time is of the essence of each and every
provision of this Lease.
27.5 No Recordation. Tenant's recordation of this Lease or any
memorandum or short form of it will be void and an event of default under this
Lease. Tenant shall, at the request of Landlord, execute a short-form lease and
have it properly acknowledged for the purpose of recording. The cost of
recording such short-form lease shall be borne by Landlord.
27.6 No Waiver. No waiver by Landlord of any agreement, condition or
provision contained in this Lease will be valid or binding unless expressed in
writing and signed by Landlord. The waiver by Landlord of any agreement,
condition, or provision contained in this Lease will not be deemed to be a
waiver of any subsequent breach of the same or any other agreement, condition,
or provision contained in this Lease, nor will any custom or practice that may
grow up between the parties in the administration of the terms of this Lease be
construed to waive or to lessen the right of Landlord to insist upon the
performance by Tenant in strict accordance with the terms of this Lease. The
subsequent acceptance of Rent by Landlord will not be deemed to be a waiver of
any preceding breach by Tenant of any agreement, condition, or provision of this
Lease, other than the failure of Tenant to pay the particular Rent so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such Rent.
27.7 Limitation on Recourse. Tenant specifically agrees to look solely
to Landlord's interest in the Project for the recovery of any judgments from
Landlord. It is agreed that Landlord (and its agents, shareholders, venturers,
and partners, and their shareholders, venturers, and partners and all of their
officers, directors, and employees) will not be personally liable for any such
judgments.
27.8 Estoppel Certificates. At any time and from time to time but
within 5 days after prior written request by Landlord, Tenant will execute,
acknowledge, and deliver to Landlord or such other person as Landlord shall
direct, promptly upon request, a certificate certifying (a) that this Lease is
unmodified and in full force and effect or, if there have been modifications,
that this Lease is in full force and effect, as modified, and stating the date
and nature of each modification; (b) the date, if any, to which Rent and other
sums payable under this Lease have been paid; (c) that no written notice of any
default has been delivered to Landlord which default has not been
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cured, except as to defaults specified in said certificate; (d) that the Tenant
has no knowledge of and that there is no event of default under this Lease or an
event which, with notice or the passage of time, or both, would result in an
event of default under this Lease, except for defaults specified in said
certificate; and (e) such other matters as may be reasonably requested by
Landlord. Any such certificate may be relied upon by any prospective purchaser
or existing or prospective mortgagee or beneficiary under any deed of trust of
the Building or any part of the Project. Tenant's failure to deliver such a
certificate within such time will be conclusive evidence of the matters set
forth in it, and such failure shall be an event of default.
27.9 Attorneys' Fees. If Landlord and Tenant litigate any provision of
this Lease or the subject matter of this Lease, the unsuccessful litigant will
pay to the successful litigant all costs and expenses, including reasonable
attorneys' fees and court costs, incurred by the successful litigant at trial
and on any appeal. If, without fault, either Landlord or Tenant is made a party
to any litigation instituted by or against the other, the other will indemnify
the faultless one against all loss, liability, and expense, including reasonable
attorneys' fees and court costs, incurred by it in connection with such
litigation.
27.10 No Merger. The voluntary or other surrender of this Lease by
Tenant or the cancellation of this Lease by mutual agreement of Tenant and
Landlord or the termination of this Lease on account of Tenant's default will
not work a merger, and will, at Landlord's option (a) terminate all or any
subleases and sub-tenancies or (b) operate as an assignment to Landlord of all
or any subleases or sub-tenancies. Landlord's option under Section 27.10 will be
exercised by written notice to Tenant and all known subleases or subtenants in
the Premises or any part of the Premises.
27.11 Holding Over. Tenant will have no right to remain in possession
of all or any part of the Premises after the expiration of the Term and Landlord
may, at its option, re-enter and take possession of the Premises, reserving its
rights to collect damages sustained by reason of Tenant's unlawful retention of
possession of the Premises or any part thereof. If Tenant remains in possession
of all or any part of the Premises after the expiration o the Term, with the
express written consent of Landlord: (a) such tenancy will be deemed to be a
periodic tenancy from month-to-month only; (b) such tenancy will not constitute
a renewal or extension of this Lease for any further term; and (c) such tenancy
may be terminated by Landlord upon the earlier of 30 days' prior written notice
or the earliest date permitted by law. In such event, Monthly Rent will be
increased to an amount equal to 200% of the Monthly Rent payable during the last
month of the Term, and any other sums due under this Lease will be payable in
the amount and at the times specified in this Lease. During such month-to-month
tenancy, Tenant will observe every other term, condition, and covenant contained
in this Lease.
27.12 Notices. Any notice, request, demand, consent, approval, or other
communication required or permitted under this Lease must be in writing and will
be deemed to have been given when personally delivered, sent by facsimile with
delivery acknowledged by the sending machine, deposited with any nationally
recognized overnight carrier that routinely issues receipts, or deposited in any
depository regularly maintained by the United States Postal Service, postage
prepaid, certified mail, return receipt requested, addressed to the party for
whom it is intended at its address(es) set forth in Section 1. 1. Either
Landlord or Tenant may add additional addresses or change its address for
purposes of receipt of any such communication by giving 10 days' prior written
notice of such change to the other party in the manner prescribed in this
Section 27.12.
27.13 Severability. If any provision of this Lease proves to be
illegal, invalid, or unenforceable, the remainder of this Lease will not be
affected by such finding, and in lieu of each
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provision of this Lease that is illegal, invalid, or unenforceable a provision'
shall be deemed added as a part of this Lease as similar in terms two such
illegal, invalid, or unenforceable provisions as may be possible and be legal,
valid, and enforceable.
27.14 Written Amendment Required. No amendment, alteration,
modification of, or addition to the Lease will be valid or binding unless
expressed in writing and signed by Landlord and Tenant. Tenant agrees to make
any modifications of the terms and provisions of this Lease required or
requested by any lending institution providing financing for the Building, or
Project, as the case may be, provided that no such modifications will materially
adversely affect Tenant's rights and obligations under this Lease.
27.15 Entire Agreement. This Lease, the exhibits and addenda, if any,
contain the entire agreement between Landlord and Tenant. No promises or
representations, except as contained in this Lease, have been made to Tenant
respecting the condition or manner of operating the Premises, the Building, or
the Project.
27.16 Captions. The captions of the various articles and sections of
this Lease are for convenience only and do not necessarily define, limit,
describe, or construe the contents of such articles or sections.
27.17 Notice of Landlord's Default. In the event of any alleged default
in the obligation of Landlord under this Lease, Tenant will deliver to Landlord
written notice listing the reasons for Landlord's default and Landlord will have
30 days following receipt of such notice to cure such alleged default or, in the
event the alleged default cannot reasonably be cured within a 30-day period, to
commence action and proceed diligently to cure such alleged default. A copy of
such notice to Landlord will be sent to any holder of a mortgage or other
encumbrance on the Building or Project of which Tenant has been notified in
writing, and any such holder will also have an additional like period to cure
such alleged default.
27.18 Authority. Tenant and the party executing this Lease on behalf of
Tenant represent to Landlord that such party is authorized to do so by requisite
action of the board of directors or partners, as the case may be, and agree upon
request to deliver to Landlord a resolution or similar document to that effect.
27.19 Brokers. Tenant represents and warrants that it has not consulted
or negotiated with any broker, finder or agent with regard to the Premises
except the broker, named in Section 1.1, if any. Tenant agrees to hold Landlord
harmless and indemnify Landlord against all costs, expenses, attorneys' fees, or
other liability for commissions or other compensation or charges claimed by any
broker, finder or agent claiming the same by, through or under Tenant and such
indemnity shall survive the expiration or earlier termination of this Lease.
27.20 Governing Law. This Lease will be governed by and construed
pursuant to the laws of the state in which the Project is located.
27.21 Late Payments. Any Rent or other monetary obligation due Landlord
that is not paid when due will accrue interest at a rate of the Prime Rate plus
5% per annum (but in no event in an amount in excess of the maximum rate allowed
by applicable law) from the date on which it was due until the date on which it
is paid in full with accrued interest. In addition to the foregoing, Tenant
shall pay to Landlord a late charge of 5% of the amount due.
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27.22 No Easements for Air or Light. Any diminution or shutting off of
light, air, or view by any structure that may be erected on lands adjacent to
the Building will in no way affect this Lease or impose any liability on
Landlord.
27.23 Tax Credits. Landlord is entitled to claim all tax credits and
depreciation attributable to leasehold improvements in the Premises. Promptly
after Landlord's demand, Landlord and Tenant will prepare a detailed list of the
leasehold improvements and fixtures and their respective costs for which
Landlord or Tenant has paid. Landlord will be entitled to all credits and
depreciation for those items for which Landlord has paid by means of any Tenant
finish allowance or otherwise. Tenant will be entitled to any tax credits and
depreciation for all items for which Tenant has paid with funds not provided by
Landlord.
27.24 Relocation of the Premises. Landlord reserves the right to
relocate the Premises to substantially comparable space within the Project,
pursuant to this Section 27.24. Landlord will give Tenant a written notice of
its intention to relocate the Premises, and Tenant will complete such relocation
within 60 days after receipt of such written notice. If Tenant does relocate
within the Project, then effective on the date of such relocation this Lease
will be amended by deleting the description of the original Premises and
substituting for it a description of such comparable space. Landlord agrees to
reimburse Tenant for its actual reasonable moving costs to such other space
within the Project, the reasonable costs of reprinting stationery, and the costs
of rewiring the new Premises for telephone and computers comparably to the
original Premises.
27.25 Financial Reports. Within 15 days after Landlord's request,
Tenant will furnish Tenant's most recent audited financial statements (including
any notes to them) to Landlord, or, if no such audited statements have been
prepared, such other financial statements (and notes to them) as may have been
prepared by an independent certified public accountant or, failing those,
Tenant's internally prepared financial statements. Tenant will discuss its
financial statements with Landlord and will give Landlord access to Tenant's
books and records in order to enable Landlord to verify the financial
statements. Landlord will not disclose any aspect of Tenant's financial
statements that Tenant designates to Landlord as confidential except (a) to
Landlord's lenders or prospective purchasers of the Project, (b) in litigation
between Landlord and Tenant, and (c) if required by court order or subpoena.
27.26 INTENTIONALLY DELETED.
27.27 Binding Effect. The covenants, conditions, and agreements
contained in this Lease will bind and inure to the benefit of Landlord and
Tenant and their respective heirs, distributees, executors, administrators,
successors, and, except as otherwise provided in this Lease, their assigns.
27.28 Terms. The necessary grammatical changes required to make the
provisions hereof apply either to corporations, partnerships, or individuals,
men or women, as the case may be, shall in all cases be assumed as though in
each case fully expressed.
27.29 Definition of Landlord. All indemnities, covenants, and
agreements of Tenant contained herein which inure to the benefit of Landlord
shall be construed to also inure to the benefit of Landlord's beneficiaries and
their partners, agents and employees and employees of their agents.
27.30 Rights Cumulative. All rights and remedies of Landlord under this
Lease shall be cumulative and none shall exclude any other rights and remedies
allowed by law.
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27.31 Change of Building Name. Landlord reserves the right at any time
and without liability to any tenant to change the name by which the Building or
Project is designated.
27.32 Force Majeure. When a period of time is herein prescribed for any
action to be taken by Landlord, Landlord shall not be liable or responsible for,
and there shall be excluded from the computation for any such period of time,
any delays due to strikes, riots, acts of God, shortages of labor or materials,
war, regulations or restrictions or any other causes of any kind whatsoever
which are beyond the control of Landlord.
27.33 Third Party Beneficiary. It is specifically understood and agreed
that no person shall be a third party beneficiary hereunder and that none of the
provisions of this Lease shall be for the benefit of or be enforceable by anyone
other than the parties hereto, and that only the parties hereto and their
permitted assignees shall have rights hereunder.
27.34 No Joint Venture. Landlord and Tenant are not and shall not be
deemed to be, for any purpose, partners or joint venturers with each other.
27.35 Remedies. If Tenant believes that Landlord has unreasonably
withheld its consent in any instance in connection with this Lease, Tenant's
sole remedy will be to seek a declaratory judgment that Landlord has
unreasonably withheld its consent or an order of specific performance or
mandatory injunction in connection with Landlord's agreement to give its
consent, and Tenant shall not be entitled to make claim for, and hereby
expressly waives, any claim for damages by reason of Landlord withholding its
consent.
27.36 WAIVER OF JURY TRIAL. LANDLORD AND TENANT BY THIS SECTION 27.36
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER
OF THE PARTIES TO THIS LEASE AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND
TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, OR ANY OTHER CLAIMS (EXCEPT
CLAIMS FOR PERSONAL INJURY OR PROPERTY DAMAGE), AND ANY EMERGENCY STATUTORY OR
ANY OTHER STATUTORY REMEDY.
Landlord and Tenant have executed this Lease as of the day and year
first above written.
Tenant: Landlord:
INTERNATIONAL COSMETICS MARKETING BROOKWOOD MERIDIAN PARTNERS,
LTD.
CO., d/b/a BEVERLY SASSOON WORLDWIDE
By: /s/ Sonny Spoden By:________________________
Name: Sonny Spoden Name:______________________
Title: Chief Financial Officer Title:_____________________
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Attest/Witness: Attest/Witness:
By: /s/ Susan Russo By:________________________
Name: Susan Russo Name:______________________
Its:___________________________________ Its:_______________________
* * * * * [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] * * * * *
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EXHIBIT "B"
LEGAL DESCRIPTION
THOSE CERTAIN TWO PIECES, PARCELS, OR TRACTS OF LAND, LYING SITUATE AND
BEING IN PALM BEACH COUNTY, FLORIDA, AND BEING MORE PARTICULARLY DESCRIBED
AS FOLLOWS:
A parcel of land being a portion of Parcel "A" of the plat "ARVIDA PARK OF
COMMERCE PLAT NO. 9," as recorded in Plat Book 50, Page 148 of the current
public records of Palm Beach County, Florida being more particularly described
as follows:
BEGINNING at the Southwest comer of said Parcel "A"; thence N. 00 degrees 31
minutes 13 seconds W., along the West line of said "ARVIDA PARK OF COMMERCE PLAT
NO. 9", a distance of 367.50 feet; thence S. 89 degrees 33 minutes 05 seconds
E., a distance of 187.00 feet; thence N. 61 degrees 23 minutes 38 seconds E. a
distance of 20.59 feet; thence S. 89 degrees 33 minutes 05 seconds E., a
distance of 306.40 feet to a point of intersection with the East line of said
"ARVIDA PARK OF COMMERCE PLAT NO. 9"; THENCE S. 00 degrees26 minutes 55 seconds
W., along said East line a distance of 377.45 feet to the Southeast comer of
said Parcel "A"; thence N. 89 degrees 33 minutes 05 seconds W. along the South
line of said Parcel "A", a distance of 505.18 feet to the POINT OF BEGINNING.
[BASIC PARCEL]
TOGETHER WITH that certain irrevocable non-exclusive common easement for
pedestrian, vehicular, and utility ingress, egress, and access upon, over,
across, through, and under the following described parcel as granted by and
subject to the terms and conditions of that certain Declaration of Reciprocal
Easements dated December 7, 1988 and recorded among the current public records
of Palm Beach County, Florida under Clerk's No. 88-338688:
A portion of Parcel "A" of Arvida Park of Commerce Plat No. 9, according to the
Plat thereof as recorded in Plat Book 50, Page 148 of the Public Records of Palm
Beach County, Florida, being more particularly described as follows:
COMMENCING at the Southeast comer of said Parcel "A", thence N. 0 degrees 26
minutes 55 seconds E. along the East line of said Parcel "A" a distance of
377.45 feet to the POINT OF BEGINNING of this description; thence continue N. 0
degrees 26 minutes 55 seconds E., a distance of 20.0 feet; thence N. 89 degrees
33 minutes 05 seconds W., a distance of 70.0 feet; thence N. 0 degrees 26
minutes 55 seconds East, a distance of 25.0 feet; thence N.89 degrees 33 minutes
05 seconds W., a distance of 45.0 feet; thence S. 0 degrees 26 minutes 55
seconds W., a distance of 27.50 feet; thence S. 72 degrees 47 minutes 55 seconds
W., a distance of 57.72 feet; thence S. 89 degrees 33 minutes 05 seconds E., a
distance of 170.0 feet to the POINT OF BEGINNING. [ACCESS EASEMENT PARCEL]
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EXHIBIT D
RULES AND REGULATIONS
1. Landlord may from time to time adopt appropriate systems and procedures
for the security or safety of the Building, any persons occupying,
using, or entering the Building, or any equipment, furnishings, or
contents of the Building, and Tenant will comply with Landlord's
reasonable requirements relative to such systems and procedures.
2. The sidewalks, halls, passages, exits, entrances, elevators, and
stairways of the Building will not be obstructed by any tenants or used
by any of them for any purpose other than for ingress to and egress
from their respective Premises. The halls, passages, exits, entrances,
elevators, escalators, and stairways are not for the general public,
and Landlord will in all cases retain the right to control and prevent
access to such halls, passages, exists, entrances, elevators, and
stairways of all persons whose presence in the judgment of Landlord and
would be prejudicial to the safety, character, reputation, and
interests or the Building and its tenants, provided that nothing
contained in these rules and regulations will be construed to prevent
such access to persons with whom any tenant normally deals in the
ordinary course of its business, unless such persons are engaged in
illegal activities. No tenant and no employee or invitee of any tenant
will go upon the roof of the Building except such roof or portion of
such roof as may be contiguous to the Premises of a particular tenant
and may be designated in writing by Landlord as a roof deck or roof
garden area. No tenant will be permitted to place or install any object
(including without limitation radio and television antennas,
loudspeakers, sound amplifiers, microwave dishes, solar devices, or
similar devices) on the exterior of the Building or on the roof of the
Building.
3. No sign, placard, picture, name, advertisement, or written notice
visible from the exterior of Tenant's Premises will be inscribed,
painted, affixed, or otherwise displayed by Tenant on any part of the
Building or the Premises without the prior written consent of Landlord.
Landlord will adopt and furnish to Tenant general guidelines relating
to signs inside Building on the office floors. Tenant agrees to conform
to such guidelines. All approved signs or lettering on doors will be
printed, painted, affixed, or inscribed at the expense of the Tenant by
a person approved by Landlord. Other than draperies expressly permitted
by Landlord and building standard window treatments, material visible
from outside the Building will not be permitted. In the event of the
violation of this rule by Tenant, Landlord may remove the violating
items without any liability, and may charge the expense incurred by
such removal to the tenant or tenants violating this rule.
4. No cooking will be done or permitted by any tenant on the Premises,
except in areas of the Premises which are specifically constructed for
cooking and except that use by the tenant of microwave ovens and
Underwriters' Laboratory approved equipment for brewing coffee, tea,
hot chocolate, and similar beverages will be permitted, provided that
such use is in accordance with all applicable federal, state, and city
laws, codes, ordinances, rules, and regulations.
5. No tenant will employ any person or persons other that the cleaning
service of Landlord for the purpose of cleaning the Premises, unless
otherwise agreed to by Landlord in writing. Except with the written
consent of Landlord, no person or persons other than those approved by
Landlord will be permitted to enter the Building for the purpose of
cleaning it. No tenant will cause any unnecessary labor by reason of
such tenant's carelessness or indifference in the preservation of good
order and cleanliness. Should Tenant's actions
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result in any increased expense for any required cleaning, Landlord
reserves the right to assess Tenant for such expenses.
6. The toilet rooms, toilets, urinals, wash bowls and other plumbing
fixtures will not be used for any purposes other than those for which
they were constructed, and no sweepings, rubbish, rags, or any foreign
substances will be thrown in such plumbing fixtures. All damages
resulting from any misuse of the fixtures will be borne by the tenant
who, or whose servants, employees, agents, visitors, or licensees,
caused the same.
7. No tenant, or tenant's invitees or licensees, will in any way deface
any part of the Premises or the Building of which they form a part. in
those portions of the Premises where carpet has been provided directly
or indirectly by Landlord, Tenant will at its own expense install and
maintain pads to protect the carpet under all furniture having casters
other than carpet casters.
8. No tenant will alter, change, replace, or re-key any lock or install a
new lock or a knocker on any door of the Premises. Landlord, its
agents, or employees will retain a pass (master) key to all door locks
on the Premises. Any new door locks required by Tenant or any change in
keying of existing locks will be installed or changed by Landlord
following tenant's written request to Landlord and will be at Tenant's
expense. All new locks and re-keyed locks will remain operable by
Landlord's pass (master) key. Landlord will furnish each tenant, free
of charge, with two (2) keys to each suite entry door lock on the
Premises. Landlord will have the right to collect a reasonable charge
for additional keys and cards requested by any tenant. Each tenant,
upon termination of its tenancy, will deliver to Landlord all keys and
access cards for the Premises and Building that have been furnished to
such tenant.
9. The elevator designated for freight by Landlord will be available for
use by all tenants in the Building during the hours and pursuant to
such procedures as Landlord may determine from time to time. The
persons employed to move Tenant's equipment, material, furniture, or
other property in or out of the Building must be acceptable to
Landlord. The moving company must be a locally recognized professional
mover, whose primary business is the performing of relocation services,
and must be bonded and fully insured. A certificate or other
verification of such insurance must be received and approved by
Landlord prior tot he start of any moving operations. Insurance must be
sufficient, in Landlord's sold opinion, to cover all personal
liability, theft or damage to the Project, including but not limited to
floor coverings, doors, walls, elevators, stairs, foliage, and
landscaping. Special care must be taken to prevent damage to foliage
and landscaping during adverse weather. All moving operations will be
conducted at such times and in such a manner as Landlord will direct,
and all moving will take place during non-Business Hours unless
Landlord agrees in writing otherwise. Tenant will be responsible for
the provision of building security during all moving operations, and
will be liable for all losses and damages sustained by any party as a
result of the failure to supply adequate security. Landlord will have
the right to prescribe the weight, size, and position of all equipment,
materials, furniture, or other property brought into the Building.
Heavy objects will, if considered necessary by Landlord, stand on weed
strips of such thickness as is necessary to properly distribute the
weight. Landlord will not be responsible for loss of or damage to any
such property from any cause, and all damage done to the Building by
moving or maintaining such property will be repaired at the expense of
Tenant. Landlord reserves the right to inspect all such property to be
brought into the Building and to exclude from the Building all such
property which violates any of these rules and regulations or the Lease
of which these rules and regulations are a part. Supplies,
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goods, materials, packages, furniture, and all other items of every
kind delivered to or taken from the Premises will be delivered or
removed through the entrance and route designated by Landlord, and
Landlord will not be responsible for the loss or damage of any such
property.
10. No tenant will use or keep in the Premises or the Building any
kerosene, gasoline, or inflammable or combustible or explosive fluid or
material or chemical substance other than limited quantities of such
materials or substances reasonably necessary for the operation or
maintenance of office equipment or limited quantities of cleaning
fluids and solvents required in tenant's normal operations in the
Premises, which shall be stored in accordance with applicable law.
Without Landlord's prior written approval, no tenant will use any
method of heating or air conditioning other than that supplied by
Landlord. No tenant will use or keep or permit to be used or kept any
foul or noxious gas or substance in the Premises.
11. Tenants shall not, prior to or during the Term, either directly or
indirectly, employ or permit the employment of any contractor, mover,
mechanic or laborer, or permit any materials in the Premises, if the
use of such contractor, mover, mechanic or laborer or such materials
would, in Landlord's opinion, create any difficulty, strike or
jurisdictional dispute with other contractors, movers, mechanics or
laborers engaged by Landlord, tenants, or others, or would in any way
disturb the construction, maintenance, cleaning, repair, management,
security or operation of the Building, Project or any part thereof Any
tenant, upon demand by Landlord, shall c all contractors, movers,
mechanics, laborers or materials causing such interference, difficulty
or conflict to leave or be removed from the Project immediately.
12. Landlord will have the right to prohibit any advertising by Tenant
mentioning the Building that, in Landlord's reasonable opinion, tends
to impair the reputation of the Building or its desirability as a
building for offices, and upon written notice from Landlord, tenant
will refrain from or discontinue such advertising.
13. Tenant will not bring any animals (except "Seeing Eye" dogs) or birds
into the Building, and will not permit bicycles or other vehicles
inside or on the sidewalks outside the Building except in areas
designated from time to time by Landlord for such purposes.
14. All persons, entering or leaving the Building between the hours of 6
p.m. and 7 a.m. Monday through Friday, and at all hours on Saturdays,
Sundays, and holidays will comply with such off-hour regulations as
Landlord may establish and modify from time to time. Landlord reserves
the right to limit reasonably or restrict access to the Building during
such time periods.
15. Each tenant will store all its trash and garbage within its Premises.
No material will be placed in the trash boxes of receptacles if such
material is of such nature that it may not be disposed of in the
ordinary and customary manner of removing and disposing of trash and
garbage without being in violation of any law or ordinance governing
such disposal. All garbage and refuse disposal will be made only
through entryways and elevators provided for such purposes and at such
times as Landlord designates. Removal of any furniture or furnishings,
large equipment, packing crates, packing materials, and boxes will be
the responsibility of each tenant and such items may not be disposed of
in the Building trash receptacles nor will they be removed by the
Building's janitorial service, except at Landlord's sole option and at
the tenant's expense. No furniture, appliances, equipment, or flammable
products of any type may be disposed of in the Building trash
receptacles.
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16. Canvassing, peddling, soliciting, and distributing handbills or any
other written materials in the Building are prohibited, and each tenant
will cooperate to prevent the same.
17. The requirements of the tenants will be attended to only upon
application by written, personal, or telephone notice at the office of
the Building. Employees of Landlord or Landlord's agent will not
perform any work or do anything outside of their regular duties unless
under special instructions from Landlord.
18. A directory of the Building will be provided for the display of the
name and location of tenants only. All entries on the Building
directory display will conform to standards and style set by Landlord
in its sole discretion. Space on any exterior signage will be provided
in Landlord's sole discretion. No tenant will have any right to the use
of any exterior sign.
19. Tenant will see that the doors of the Premises are closed and locked
and that all water faucets, water apparatus, and utilities are shut off
before Tenant or Tenant's employees leave the Premises, so as to
prevent waste or damage, and for any failure to comply or carelessness
in this regard Tenant will make good all injuries sustained by other
tenants or occupants of the Building or Landlord. On multiple-tenancy
floors, all tenants will keep the doors to the Building corridors
closed at all times except for ingress and egress.
20. Tenant will not conduct itself in any manner that is inconsistent with
the character of the Building as a first quality building or that will
impair the comfort and convenience of other tenants in the Building.
21. Tenant (including tenant's employees, agents, invitees, and visitors)
will use the parking spaces solely for the purpose of parking passenger
model cars, small vans, and small trucks and will comply in all
respects with any rules and regulations that may be promulgated by
Landlord from time to time with respect to the parking areas. The
parking areas will not be used by Tenant, its agents, or employees, for
overnight parking of vehicles, except with Landlord's prior consent.
Tenant will ensure that any vehicle parked in any of the parking spaces
will be kept in proper repair and will not leak oil, grease, gasoline,
or any other fluids. if any of the parking spaces are at any time used
(a) for any purpose other than parking as provided above; (b) in any
way or manner reasonably objectionable to Landlord; or (c) by Tenant
after default by Tenant under the Lease, Landlord, in addition to any
other rights available to Landlord, may consider such default an event
of default under the Lease.
22. No act or thing done or omitted to be done by Landlord or Landlord's
agent during the term of the Lease in connection with the enforcement
of these rules and regulations will constitute an eviction by Landlord
of any tenant nor will it be deemed an acceptance of surrender of the
Premises by any tenant, and no agreement to accept such termination or
surrender will be valid unless in a writing signed by Landlord. The
delivery of keys to any employee or agent of Landlord will not operate
as a termination of the Lease or a surrender of the Premises unless
such delivery of keys is done in connection with a written instrument
executed by Landlord approving the termination or surrender.
23. Neither Tenant, nor any of its sub-lessees or permitted assigns, nor
any agents or employees of Tenant or its sub-lessess or permitted
assigns, nor other person or entity will under any circumstances all
entry onto the Premises by (i) any inmates of any prison or other
correctional facility, (ii) any in-patients of any psychiatric
facility, (iii) any person who is physically restrained (e.g., by
handcuffs, shackles, strait jackets or under guard) at the
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time he or she enters the Premises, or (iv) any other person who is in
the custody of any governmental authority.
24. In these rules and regulations, the term "tenant" includes the
employees, agents, invitees, and licensees of Tenant and others
permitted by Tenant to use or occupy the Premises.
25. Landlord may waive any one or more of these rules and regulations for
the benefit of any particular tenant or tenants, but no such waiver by
Landlord will be construed as a waiver of such rules and regulations in
favor of any other tenant or tenants, nor prevent Landlord from
enforcing any such rules and regulations against any or all of the
tenants of the Building after such waiver.
26. These rules and regulations are in addition to, and will not be
construed to modify or amend, in whole or in part, the terms,
covenants, agreements, and conditions of the Lease.
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